Repairs require more than cuts

Today in The Australian
“It was not intended to make anyone giggle,” treasurer Arthur Fadden said of his ‘‘horror budget’’ of September 1951. The wool boom unleashed by the Korean War had nearly trebled the terms of trade, adding a massive 7 per cent to real gross domestic income. With unemployment falling below 1 per cent of the labour force, the inflation rate had risen to an all-time high of 25.6 per cent and seemed likely to increase further. Yet by 1953 inflation had plummeted to less than 2 per cent, setting the scene for two decades of solid economic growth.

About Henry Ergas

Henry Ergas AO is a columnist for The Australian. From 2009 to 2015 he was Senior Economic Adviser to Deloitte Australia and from 2009 to 2017 was Professor of Infrastructure Economics at the University of Wollongong’s SMART Infrastructure Facility. He joined SMART and Deloitte after working as a consultant economist at NECG, CRA International and Concept Economics. Prior to that, he was an economist at the OECD in Paris from the late 1970s until the early 1990s. At the OECD, he headed the Secretary-General’s Task Force on Structural Adjustment (1984-1987), which concentrated on improving the efficiency of government policies in a wide range of areas, and was subsequently Counsellor for Structural Policy in the Economics Department. He has taught at a range of universities, undertaken a number of government inquiries and served as a Lay Member of the New Zealand High Court. In 2016, he was made an Officer in the Order of Australia.
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6 Responses to Repairs require more than cuts

  1. Blogstrop

    Excellent article, Henry, as is the one by the Australian’s Canberra bureau chief. It’s good to read some sensible commentary as an antidote to the foam-flecked fury of commenters in threads such as that Day 14 one below.
    http://www.theaustralian.com.au/opinion/columnists/costello-showed-the-way-to-go/story-fnmnl1y0-1226913695790

  2. Blogstrop

    See also Paul Sheehan’s appraisal of whether TA is insane or crazy brave.
    http://www.smh.com.au/comment/has-tony-abbott-gone-mad-20140511-zr9io.html

  3. John Comnenus

    My tips for the budget is that the LNP will admit to breaking their commitments and use political spin to say the burden is evenly shared and that politicians and senior bureaucrats who did more than anyone else to create this mess will be hit the hardest with pay freezes and long over due entitlement cuts.

    But the big political selling point will be the infrastructure package that will be funded entirely by the fuel excise. This will be reminiscent of Greiner’s 3×3 program when he fixed NSW roads by introducing a three cent fuel levy for three years specifically to pay for a massive road building program.

    The politics might work, but the policy is poor.

  4. Des Deskperson

    ‘politicians and senior bureaucrats’

    As far as senior bureaucrats go, it only covers those whose terms and conditions are determined by the Remuneration Tribunal. These are Portfolio Secretaries, statutory appointments (Commissioner for Taxation e.g.) and ‘Principle Executive Officers’ – a bunch who don’t fit into either of the first two categories but who are presumable deemed important enough to warrant the Tribunal’s attention. They include Governor of the Reserve Bank and the DG of the National Library.

    It doesn’t include the 2,700 odd SES whose remuneration is set by their agencies through contracts. In 2012, the median remuneration package of an SES band 3 was around $360,000 pa. There is no salary cap on these people.

  5. .

    It’s good to read some sensible commentary as an antidote to the foam-flecked fury of commenters in threads such as that Day 14 one below.

    Nonsense. All we have done is present alternatives, point out lies and defend ourselves from childish attacks from rabid Liberal party supporters who support socialism.

  6. Squirrel

    As Henry points out, the Australian public now is less receptive to self-sacrifice for the greater good than in earlier days, but I believe the politics of this can be won – particularly if the Government is sufficiently adept and persistent in selling the message that this is, as much as anything, for the benefit of the younger and future generations. That, surely, is the way, to outflank Labor and the Greens.

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