Ric Deverell has been around a bit. He’s currently head of global fixed income research and economics at Crédit Suisse and previously worked at the RBA as deputy head of economic analysis, as well as a stint at Treasury.
In his new job, where he’s more free to call out policy problems where he sees them, he says Australia’s “corrosive” politics are preventing governments from doing anything meaningful to rein in spending.
Once voters get used to a welfare program or other benefits, he says, politicians are finding it increasingly impossible to take those benefits away.
In comments to the AFR, Deverell notes:
“Everyone thinks about Howard and Costello as being fiscally conservative but there was actually a huge increase in tax spending during that period because they thought the revenue was real.
“So really all you need to do is wind all of that back, but that goes to this point that it’s almost impossible to take stuff away. You almost need a crisis. Part of the problem is Australia hasn’t had a crisis so you can’t do hard stuff.”
This is something that the Abbott government had to learn the hard way through its disastrous attempts to cut spending across a range of portfolios in the 2013 budget as Joe Hockey sought to end the “age of entitlement” he had railed against.
But it’s also thought-provoking as Scott Morrison prepares to deliver the first Turnbull government budget in three weeks’ time.
There’s more at the AFR >>