Blog of the Day
posted by Ian McAuley, May 22, 2015
Are the measures in the Budget the best way to make progress on the structural issues Australia is facing? Ian McAuley and Miriam Lyons suggest a more assured way to revitalise the economy.
The fiscal boost in the Commonwealth budget – $33 billion or 2 per cent of GDP – is probably about right. The Australian economy is going through a difficult post-mining boom transition. Retail, media and other industries are facing disruptions of technological change, and the shock waves of the 1998 financial crisis are still rippling through the economy. Unemployment seems to be stuck above 6 percent (the budget forecasts see no relief), and there is plenty of spare capacity in the economy before inflation becomes a problem.
But there are two questions about the budget. The first is technical: Will that outcome be achieved? The second is more basic: Are the measures in the budget the best way to stimulate the economy? Are they just a fix to deal with immediate fiscal problems or are they grounded in an economic vision for our country? Is the budget only about poll-driven politics or does it help us deal with the hard problems we must confront?
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