Prelude

Summary

On the 2nd of April 2019 Australia's Treasurer, Josh Frydenberg, rose in Federal Parliament to declare ‘the Budget is back in the black and Australia is back on track’ (Frydenberg 2019). It captured a strange obsession with economic accounting categories, which have taken on a mystical role in the Australian imagination, enamoured with the magic of the Budget Bottomline.

For years fiscal discipline has captivated Australia's political leaders. Each Labor government comes to office pledging not to spend more, either through deficits or taxes. Each Coalition government decries debt and deficit, instead creating Commissions of Audit to slash and burn an unaffordable welfare state.

The constant drum of fiscal responsibility lies at the heart of Australia's experience of neoliberalism. Not only have Australian governments accepted the need for balanced budgets (even if they struggle in practice to achieve them), they have also largely accepted a cap on taxation. The fiscal trade off that marked the long boom after the Second World War, where taxes rose to fund more generous social provision, has eroded. Instead, targeting, user payments and privatisation have sought to ration public dollars by integrating social policy into the market.

Frydenburg's celebrations proved pre-emptive. The forecast surplus never appeared. The projections were already looking wobbly by the end of 2019. In 2020, they were blown apart. As Covid-19 swept through China and Europe, long forgotten health regulations suddenly came into force, and the rules of fiscal discipline disappeared.

As Australia, and the world, briefly switched from prioritising budgets to prioritising health, economic rules, too, appeared to melt. Public spending rose as interest rates fell. poverty and homelessness fell even as the economy contracted. The abstract numbers of conventional economic coverage were briefly replaced by the immediacy of social needs and the essential workers providing care.

Then almost as suddenly, austerity returned. Programs ended. Poverty and homelessness increased. After a brief crisis of faith, fiscal discipline was restored, loudly supported by both sides of politics. The Reserve Bank reneged on its promise to get wages moving, and began increasing interest rates. The world made by liberalisation remained.