Economy

There is a legitimate concern that Australians have become addicted to debt. I grew up in a household where my father would do anything to avoid incurring debt. Any number of scabby shortcuts leap to mind – we always repaired our own shoes, specialised in leftovers and there was an unfortunate period when Dad insisted on cutting our hair.

Assuming Treasurer Jim Chalmers actually delivers the budget he announced on May 9, it should put to rest the myth proclaimed endlessly – without evidence – by the opposition that the Coalition is a better economic manager.

Treasurer Jim Chalmers was so excited about the rabbit he was going to pull out of the hat that he couldn’t wait for budget night to tell the world he was about to deliver the first surplus in 15 years.

With the prime minister in Britain to attend the coronation of our unelected head of state and the treasurer back home doing last-minute bean-counting ahead of Tuesday’s budget, the Greens’ Adam Bandt seized the moment to pose the key question confronting Australia: What kind of country do we want to be?

The public’s expectations for the review of the Reserve Bank were high. Some hoped it would mean an end to crippling interest rate rises. Others saw the prospect of staff and board members being held accountable for the false and misleading forward guidance that had suggested interest rates would remain around historic lows until 2024.

As the May budget draws closer its outlines are becoming clearer. It looks like it will embrace the incremental ‘don’t scare the horses’ approach that has so far defined Labor’s first year in office. Revenue gains will be largely banked, but otherwise efforts at budget consolidation will be modest.

The review of the Reserve Bank of Australia delivered this week is, according to one economics professor, ‘a watershed moment in Australian economy policy, on par with floating the dollar in 1983’. That’s probably an overreach but, hey, it’s okay for economists to disagree about things.

The global drift towards a recession with entrenched inflation was quite enough for central banks and governments to grapple with. Now add to that concerns about the stability of the financial system.

Budget repair is the major fiscal policy challenge the Albanese government faces right now. Although it has committed to expenditure savings, such efforts are unlikely to be sufficient to do much to repair the structural deficit. That means the net burden of tax will need to be increased.

Serving and former bureaucrats are glued to the hearings because the evidence has ranged beyond details of the unlawful debt recovery scheme to the wider culture of the federal public service and how it has interacted with executive government. What’s being exposed reveals how dramatically that relationship has deteriorated.