There is much less inclination today than there once was to use fiscal policy as a counter-cyclical stabilisation tool. Significant fiscal challenges in the long-term include health spending and responding to population ageing, as the very important work by officers of the Australian Treasury has made clear. But there would be very few countries, if any, which would not envy Australia’s fiscal position.
The capacity to respond, if need be, to developments in the future is virtually without peer. This seems light years from the situation in the late 1970s. I have said little here about the changes to microeconomic policies, which do so much to determine the economy’s supply-side responsiveness. That is because my field of interest and expertise is in the macro sphere.