This budget, amid talk of deficits, consider the lessons we ought to have learned
-Steven Hail, Adjunct Associate Professor, Torrens University Australia A decade ago, and years before Treasurer Josh Frydenberg promised a budget that was “back in the black”, Prime Minister Julia Gillard promised the same thing. At that time, in the lead-up to the 2012 budget, unemployment was higher than it is today, and inflation and wages growth were so low (1.6% and 2.3%, respectively) as to provide no impediment whatsoever to cutting unemployment further. Yet Gillard was resolute in her determination to bring in a budget surplus, by which she meant a budget that spent less than it took in. She titled her speech to Western Australia’s Chamber Of Commerce and Industry and Chamber Of Minerals And Energy “In the Black” There was “no clearer sign of a strong economy than a surplus”. It would “protect jobs”, provide a “buffer in case the global economy gets worse”, and allow the Reserve Bank to cut rates, “knowing that an interest rate reduction is good for families and business”. Indeed, she added: …let me make this clear once and for all: a budget surplus is not a political target but a potent economic tool. I sometimes wonder whether she remembers this claim. I nearly asked her once, crossing North Terrace in Adelaide, but I chickened out. As with Gillard, so with Abbott Gillard never did get her budget surplus, and she and Kevin Rudd were followed as prime minister by Tony Abbott, who talked of a “budget emergency” that only a run of surpluses could fix. While in opposition, his finance spokesman Barnaby Joyce had gone as far as to suggest that the debt run up by years of budget deficits (spending more than the government took in) was “getting to a point where we can’t repay it”. That was too much even […]