Australian Economy

Depending on how the Albanese government tackles Australia’s economic challenges, it could become a very big target

Usually the speeches of treasury secretaries are relatively bland, echoes of their political masters. But an address this week from Steven Kennedy was something quite different.

One economist described it as “unplugged”. It gave not just a blunt assessment of the challenges the Australian economy has, but offered a bracing critique of what needs to be done.

Kennedy mightn’t be a household name, but people should remember that it was advice from him and his colleagues that steered an initially reluctant Morrison government to JobKeeper, which kept so many businesses and workers afloat during the pandemic.

The Kennedy speech may reflect the Albanese government’s view that it wants a public service that’s more independent in its advice.

A side-on close shot of a man wearing a blue suit and black glasses.
Treasury Secretary Steven Kennedy says post-pandemic government spending will be higher than spending before COVID.(AAP: Lukas Coch)

On the other hand it might involve some cunning politics, because it was run past Treasurer Jim Chalmers (the usual protocol). Kennedy is saying things that it would be difficult for the Treasurer to say.

Kennedy’s core fiscal messages can be boiled down to these imperatives: The budget needs to be brought under control, so we are in a position to respond to future shocks. This means spending must be contained. And the tax system should be made fit for purpose.

Anthony Albanese won office by making himself a small target. What Kennedy is advising, for the best of reasons, would make the government a big target.

Leaving a legacy

Albanese said before the election he wanted to leave a legacy. You don’t leave a legacy by just managing government, or even by undertaking some limited reform.

The Hawke-Keating government left a major legacy. It did so by tackling robustly the issues that circumstances threw up to it. What it ended up doing far outstripped the program on which it was elected.

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