Fiscal stimulus in an age of debt: how much stimulus are we planning?

by John Daley

Australia has a budget problem: the federal Treasury is repeatedly over-estimating future budget balances, which in turn is encouraging forecast-led denial among policymakers about the need for budget repair. In this background information for a talk at the Economic and Social Outlook conference in Melbourne, Grattan CEO John Daley raises some tricky questions about fiscal stimulus, and calls for correctives including the creation of a “pessimism-generator” and the injection of more judgment and common sense into budget forecasting.