‘It is important to go to the supply side. Thatcher, Reagan, that's an inspiration. Supply side can actually help create and strengthen the economy and that is what we are determined to do, provide a boost to aggregate demand, where appropriate, but to encourage supply-side reform because that will be important to the recovery.’ Josh Frydenberg, National Press Club Address, 24 July 2020
‘You take inspiration from lots of different sources. I also take it from Howard and Costello. But the reality is that Thatcher and Regan cut red tape, cut taxes and delivered stronger economies.’ Josh Frydenberg, Insiders, 26 July 2020
At the National Press Club on 24 July 2020, Treasurer Josh Frydenberg noted that ‘not everyone is a Keynesian…’. Indeed, not everyone. But maybe Mr Frydenberg is, at least to the extent that he follows a line often attributed to John Maynard Keynes, ‘When the facts change, I change my mind.’
In 2020 as the Covid-19 pandemic raged globally, as Australia shut its borders and some states shut in their people, massive government income support was introduced. The government was a little slow coming to recognise the need for such measures. Once they had, they wanted the support rolled out as quickly as possible. Frydenberg, Scott Morrison and their colleagues recognised that a demand side boost was absolutely necessary to sustain economic activity. Sustaining that activity, keeping employees tied to their employers, was also needed to ensure the social fabric did not tear irreparably.
The government was uncomfortable, though, with this approach. Even as much of the previous five years of Coalition government had been spent trying to reposition away from the Hockey/Tony Abbott budget of 2014, Frydenberg did not want to give away the Liberal Party's reputation as a lower tax, lower spending party of government. Even if the reputation outpaces the reality of Coalition government budgetary management. The Treasurer, given his record of public comment, did seem to be articulating a position he genuinely held.
'Governments seem to assume each new disruption is an anomaly that will not be experienced again, at least not by the current governing generation. Demand side responses are extended, with an apparent assumption of a long period of stability before the next disruption.'
Just as Joe Hockey, Treasurer after the governments of Kevin Rudd and Julia Gillard, seemed to articulate a genuine view when he told us on budget night 2014, ‘The days of borrow and spend