Hey Big Spender – de Jasay on the challenge of fiscal discipline

A great column by a favorite liberal commentator, and a very interesting character as well. Born in Hungary in 1925 he came to Australia and studied in Perth before he won a scholarship to Oxford.  

A political Parkinson’s Law lays it down that “Entitlement spending expands to push the budget deficit to the limit just short of bankruptcy”. It expands driven by electoral rivalry, and for the same reason it is very hard, sometimes politically suicidal, to shrink it. This law plays a part in the choice of a government’s “lifestyle”.

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3 Responses to Hey Big Spender – de Jasay on the challenge of fiscal discipline

  1. Bruce

    True, except. If anyone remembers a Mr Costello and the big surplus, at the time there was immense pressure to spend anything over a surplus of 1% of GDP. Mr Costello for his credit was able to set up the Future Fund to at least partly cover public service retirement commitments. A provision which just about no one else in the world has managed. So some of the surplus did at least get saved.

    Unfortunately the problem with piggy banks is they get raided.

    So, corollary of the Political Parkinson Law is the Party Party Party Law, which says if you run surpluses above 1% you must throw a big party to spend any excess.

  2. Cory Olsen

    Like Abbott’s Paid Parental Leave scheme designed to top Labor’s PPL scheme. There’s always an incentive for politicians to over promise and then bankrupt the state in an attempt to outdo political opponents.

    (labor examples; BER, Laptop for every student, green power subsidies, auto subsidies, sub development etc..)

  3. This is the exact tactic being used by Labor and Greens introduce massive new taxes and then reduce taxes and increase handouts for the people on lower incomes and as the current line is going “What is the opposition going to do about the $70 Billion black hole?” My fear is that it could work electorally as it is pretty difficult to reduce the handouts to people on the lower incomes regardless of removing the carbon tax. Maybe a freezing the handouts indefinately until the budget is balanced is the way to go and there will at least be a boost in business incomes with the CO2 tax removed leading to more revenues.

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