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Analysis and Comment (15)

Servicing the current level of public gross debt is not a problem for Australia. Servicing the current level of public gross debt is not a problem for Australia. Image sourced from www.shutterstock.com

Explainer: the role of budget deficits

There continues to be a great debate around Australia’s fiscal position. Yet, budget deficits are, in fact, a natural outcome of the business cycle. In a policy brief, co-authored by myself and colleagues…
What is the “optimal” level of public debt? Persistent deficits do not automatically lead to a situation where the government resembles a household under mortgage stress. What is the “optimal” level of public debt? Persistent deficits do not automatically lead to a situation where the government resembles a household under mortgage stress.

Debts and deficits: why a string of deficits does not necessarily spell the end of the world

The debate about long-term public finance and the role of government is one that is most definitely needed. However, there are two aspects to this debate that are often conflated. First, there is the issue…
Victorian Treasuer Michael O'Brien has delivered an action budget for Victoria, but is it too late? Victorian Treasuer Michael O'Brien has delivered an action budget for Victoria, but is it too late?

Victorian budget delivers surplus, but will it be a road to reelection?

The Napthine government kicked up the political tempo in Victoria yesterday, courtesy of the latest state budget. Delivered confidently by the new Treasurer, Michael O’Brien, the budget has let loose a…
Tony Abbott’s attack on Australia’s debt and taxation levels is sorely misguided. Tony Abbott’s attack on Australia’s debt and taxation levels is sorely misguided. AAP/ Alan Porritt

Abbott’s budget bluster highlights a deficit of social responsibility

Today’s announcement by the government that it has a $12 billion “black hole” had the status of a confession. It needn’t have. All talk of “black holes”, “revenue shortfalls” and “structural deficits…
Without considerable changes to Australia’s fiscal policies, both state and federal governments are likely to face significant budget deficits for the next ten years. Without considerable changes to Australia’s fiscal policies, both state and federal governments are likely to face significant budget deficits for the next ten years. AAP

Australian governments face a decade of budget deficits

Structural changes in the economy are likely to leave Governments across Australia facing budget deficits of around 4% of GDP for at least the next decade, according to research released today. The Grattan…
A clear-headed analysis of the budget must delve beyond the buzzwords and political rhetoric. A clear-headed analysis of the budget must delve beyond the buzzwords and political rhetoric. AAP

Making sense of a bootstrap budget

Each year the budget is like an annual health check on a patient with many complexities. In a black coat, not a white one, the august Treasurer reports the nation’s temperature, provides much-needed tonics…
System 1 thinkers on the left, System 2 thinker on the right? System 1 thinkers on the left, System 2 thinker on the right? AAP

Budget 2012: Why the experts will get it wrong

It’s an old joke, but hard to resist around Budget time. That is, that economic forecasting was invented to make astrology look respectable. Over the past few days we’ve heard a lot about how notoriously…
Given the RBA’s decision to slash the cash rate by 50 basis points, it’s hard to justify Treasurer Wayne Swan’s pursuit of a budget surplus. Given the RBA’s decision to slash the cash rate by 50 basis points, it’s hard to justify Treasurer Wayne Swan’s pursuit of a budget surplus. AAP

Cutting rates, then tightening fiscal policy? Trying to make sense of the quest for a surplus

The former Governor of the Reserve Bank, Bernie Fraser, hit the nail on the head the other night when he found it absurd that the Reserve Bank could be reducing interest rates one day, while a week later…
Size does matter: rather than be concerned about achieving a surplus or a deficit, the government should be focusing on how to manage its debt. Size does matter: rather than be concerned about achieving a surplus or a deficit, the government should be focusing on how to manage its debt. AAP

Don’t forget the debt: there’s more to fiscal prudence than a return to surplus

Treasurer Swan’s commitment to bring the government budget into surplus in 2012-13 may be a political imperative, but is not good economics. The focus for prudential fiscal management should instead be…
Parlous states: despite staring down the barrel of recession, Victoria is set to deliver a budget surplus. But is this the right move for a stagnant economy? Parlous states: despite staring down the barrel of recession, Victoria is set to deliver a budget surplus. But is this the right move for a stagnant economy? AAP

Is surplus the key to lifting Victoria out of its parlous state?

The Victorian government is set to hand down its budget this week. Premier Ted Baillieu is committed to returning Victoria back into the black, after it spent the first six months of this year in a $341…
Political, rather than economic: economists say there is no direct link to surpluses and lower interest rates. Political, rather than economic: economists say there is no direct link to surpluses and lower interest rates. AAP

Can surpluses lead to lower interest rates?

The Federal Government is continuing its pre-budget surplus sell, with Prime Minister Julia Gillard directly linking its plans to return the budget to surplus to lower interest rates. Gillard will use…
The ability of our politicians to achieve a surplus or balance the budget is spuriously taken as a measure of fiscal responsibility. The ability of our politicians to achieve a surplus or balance the budget is spuriously taken as a measure of fiscal responsibility. AAP

Returning to surplus: the policy wall our politicians can’t see over

The Federal Government’s quest to return the budget to surplus raises many questions and not just about what immediate rationale there is on economic grounds for this strategy. It also raises deeper questions…
Treasurer Wayne Swan is maintaining a slimmed down surplus for 2012-2013 - but storm clouds are rolling over the global economy. Treasurer Wayne Swan is maintaining a slimmed down surplus for 2012-2013 - but storm clouds are rolling over the global economy. AAP

Slimmed down surplus as Swan unveils mid-year budget: experts respond

The Federal Government is still aiming to deliver a slimmed down surplus next financial year, but has downgraded economic growth forecasts amid a slowing world economy and news that Europe may already…
Policy or populism? Wayne Swan may be locking himself into a misguided stance on returning to surplus. Policy or populism? Wayne Swan may be locking himself into a misguided stance on returning to surplus. AAP

Why is Wayne Swan locking himself into a return to surplus?

It is just possible that the Federal Government’s public statements about the need to get back, at all costs, to a budget surplus for the 2012-13 year are based on a grim view of the intelligence of the…
A return to surplus would make Wayne Swan happy, but its economic benefits are contested. A return to surplus would make Wayne Swan happy, but its economic benefits are contested. AAP

What’s so good about a budget surplus?

The Federal Government has come under renewed scrutiny over its commitment to bring the budget into to surplus by next year, with Delloite Access Economics forecasting a deficit of $1.9 billion for 2012-13…

Research Briefs (1)