As in other countries, Australian Governments in the 1970s and early 1980s found themselves presiding over apparently inexorable growth in the public sector. This growth was fueled by public expectations that had failed to adjust to slower economic growth, and that were arguably a cause of that slower economic growth. When a new government took office at the nadir of an economic recession in 1983, it was faced with a quite unacceptable prospective budget deficit. This largely reflected a blowout in outlays, and as there was deemed to be no possibility of increasing the burden of taxation, savings relative to prospective outlays were the first priority for fiscal policy.

Issues and Country Studies
Editor: A. Premchand