Australia has had ‘game‑changer’ budgets before. How does Chalmers’ stack up? |
Of the many budgets delivered since the Second World War, four stand out as having ushered in or consolidated significant economic reform.
These were Ben Chifley’s in 1942, Bill Hayden’s in 1975, Paul Keating’s in 1989 and Peter Costello’s in 1996.
Joe Hockey’s 2014 budget tried to bring about lasting reform, but its failure tended to make later governments timid.
So, how did those budgets change Australia, and how does this year’s effort compare?
Ben Chifley’s 1942 budget
Chifley’s budget was a reforming budget in three main ways.
First, it facilitated Australia’s step-up to total war in the Pacific, following Japan’s attacks on Pearl Harbor and Darwin. Military spending rose to about 34% of gross domestic product (GDP).
Second, it embedded the Commonwealth takeover of income taxation, removing the states’ power to tax personal income.
Third, it established the modern welfare state by introducing the National Welfare Fund to compensate for higher wartime income taxes for everyone. This fund was intended to pay for future social services, such as unemployment benefits, widows pensions and child endowment.
Chifley’s budget paved the way for later governments to strive to maintain full employment through “Keynesian” techniques of monetary and fiscal management.
Budgetary management from the 1940s to the 1960s was assisted by a system of fixed exchange rates, including for the Australian dollar, that prioritised domestic stability. This system had been established by........