Economic reform in Australia has been a triumphant success. From the mid-1980s on, it pulled our relative economic fortunes out of their decades-long decline and propelled us through the Asian crisis. Reform was built on simple and compelling principles, including some that affronted the common-sense beliefs of many ordinary Australians. Surely tariffs create jobs? Well, they don’t — and so we cut them.
But having made such progress, we’ve gone backwards in one area, and all in the name of a kind of faux economic rationalism. Enter fiscal populism. Rather than simply getting budgets into operating surplus — mostly a very good thing — Australian governments have embraced the notion that all debt is bad. But most of the time debt is only bad if it’s used to fund recurrent expenditure — see Charles Dickens on the difference between small, sustained operating profits and sustained losses; it’s the difference between happiness and misery. But debt can also help us fund investment.