The Evolution of Fiscal Policy in Australia

Abstract

This paper examines the evolution of Australian fiscal policy and the fiscal policy framework over the past quarter-century. Following the early 1980s recession, a sustained fiscal consolidation saw the general government budget balance (for all levels of government) move from a deficit of 3½ per cent of GDP in 1983-84 to a surplus of 1¾ per cent five years later in 1988-89. A severe recession in the early 1990s interrupted this process, and the budget returned to sizeable deficits which peaked at 4¾ per cent …