Reducing inefficient public spending can reduce disincentives to work and help to finance tax cuts. Furthermore, public expenditures can be redirected towards productivity-enhancing physical and human capital accumulation rather than, for example, the provision of subsidies for declining industries.
[16] Currently, for the terms it offers, the RBA is prepared to satisfy whatever amount of funding is demanded in its daily market operations to keep money market rates low. If liquidity conditions were to tighten up, we would expect to see more demand in our daily operations, which we would be prepared to accommodate.