John Fraser: fiscal repair, structural reform for budget

In his first speech as one of Australia’s most powerful bureaucrats, the new Treasury secretary says the Commonwealth budget is quickly growing unsustainable without major fiscal repair and serious structural reform.

Over the past two decades, I have observed the performance of the Australian economy and the debates about fiscal policy and structural reform largely from afar.

My outsider’s perspective was that, while our economy was performing comparatively well and our levels of government debt were well below those of most other advanced economies, this owed much to the hard decisions on structural reform made through the 1980s and ’90s, the fiscal repair of the late ’90s and the good fortune of being endowed with commodities that have been in high demand by China since the early 2000s.

Now, there is a real question as to where our future prosperity will come from as the growth dividend of past reforms fades and growth in demand for our natural resources eases, especially against the headwinds of a weak global economy and an ageing population.

It is hard not to think that the proceeds from the resources boom may have led to reform complacency and, just as importantly, those proceeds financed government decisions that are now harming the structural integrity of the budget. More than ever Australia’s future economic prosperity lies in our own hands.

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