In the current conditions, a flattening of the recession curve can only be achieved through fiscal support.

If not enough support were provided (and/or this support were withdrawn too early), then there would be a high risk to precipitate the economy into a recession far worse than any we have seen in recent times. This is because the shock we are facing (i.e. the pandemic) is not only global, but unprecedented in terms of how it affects behaviors, and of uncertain duration. In this context, concerns about balancing the budget are of secondary importance.

In fact, any attempt to re-balance the budget now would result in a deeper recession.

This in itself would make debt less (not more) sustainable. Furthermore, if we look specifically at Australia, the 10 year government bond yield is as low as 0.92%. Coupled with a low debt to GDP ratio, this means that Australia can sustain even a sharp increase in deficit through this recessionary phase. Of course, this is a position that will eventually need to be reversed, but not now and not until we are on a consolidated recovery path.

The Australian economy is going through a severe recession. The Reserve Bank predicts GDP will contract by around 10% and will not regain its pre-recession levels for several years to come. And that forecast is built around the current extensive levels of fiscal support. Prematurely unwinding that fiscal support is a serious threat to the recovery.

Rather than trying to bring the budget back into balance now, the government should be waiting until the recovery is clearly secure, to the point when unemployment is low, and wages are growing briskly.

We need to maintain the basic size of programs like JobSeeker and JobKeeper so that spending in the economy does not collapse. While there are some glitches in these programs due to their fast roll-out that should be addressed, overall the amount of income support provided by these programs is broadly consistent with the amount of fiscal support the economy needs.

Without such income support, it is wishful thinking to believe that private sector investment will drive a recovery if the government were to tighten its belt at the same time that households are tightening theirs. Even prior to the COVID crisis, weak private sector demand was holding back investment, leading to the Reserve Bank’s unusual calls for more fiscal stimulus. The need for ongoing fiscal support is all the greater now.

Keeping fiscal support in place at approximately the current levels is the best recipe for getting the budget back in balance over the medium run. Growing the economy, getting business cash flow pumping and getting unemployment down will also bring more tax revenue in and reduce the call on programs like JobSeeker and JobKeeper. A premature turn to austerity will threaten that virtuous circle and run the risk that we end in the kind of doldrums seen following the UK and other European austerity programs in the 2010s.

Interest rates on public debt are at record lows and in a deflationary world are expected to remain low indefinitely.

As long as Australia's economic growth rate exceeds the interest rate on government bonds, we should be able to pay off the debt over time readily. And that's before any use of unconventional monetary policy to help deal with budget deficits.

As a society, we should not accept the conservative ideology of a hasty return to budget balance that would damage the employment prospects of young people irreparably by excluding them from the labour market when they are just starting out. Women are being hit hardest by this "pink collar recession" and it's time they were shown proper respect and treated fairly instead of being regarded as dispensable add-ons to the national workforce.

The carrying cost of long-term debt is less than 1% pa and net debt/GDP is around 20%.

In other words, Australia has a lot of "fiscal space". The economy is now suffering from weak demand as a consequence of the initial large supply shocks caused by COVID-19. Strong fiscal measures are crucial to our recovery.

The government’s response to the COVID-19 crisis highlighted that providing social insurance is one of the key roles for government in a modern, democratic society, with an independent central bank tasked with monetary stability. I have no doubt that the timely and substantive income support provided by the government prevented a much deeper economic downturn.

Continued support will be required throughout the crisis and during the initial stages of the recovery. Concerns with an increase in government debt are now second order and this is not the time for a misplaced austerity approach, as the experience of Europe post-GFC shows. A combination of slightly higher inflation, economic growth and a more efficient tax system will in time reduce the government debt to pre-Covid-19 levels.

To be very clear, having a low government debt allowed the government to provide the response that it did. Indeed, we should aim to return to low debt levels once the economy is growing again, but not now in the middle of the crisis.

If governments do not provide ongoing fiscal support, the global economy risks a debt-deflationary spiral (lower wages/prices, higher real debt/default), similar to the Great Depression.

I have argued for ongoing fiscal support as part of a CAMA panel discussion of "COVID-19 and Policy Choices".

My key points related to fiscal policy were as follows:

• The long-run consequences of the COVID-19 recession are not yet determined and will depend primarily on fiscal policy responses

• The potential role of monetary policy is limited by the effective lower bound and already low long-term interest rates

• The economy is not going to self-adjust due to tax/industrial relations reforms or spontaneous private investment

• Precautionary saving under uncertainty will keep cost of fiscal stimulus low

• Fiscal stimulus most effective when there is large degree of economic slack (e.g., Fazzari et al., 2020).

• Reduction in aggregate demand due to “Keynesian supply shocks” are best addressed using social insurance (Guirrieri et al., 2020).

• But as restrictions ease, we will need sustained stimulus (forward guidance) given a huge negative output gap (Berger et al., 2020).

The critical fiscal support should be targeted towards supporting consumption expenditure along with skills enhancement and supporting people to get back into employment via child care support and adequate income support for the unemployed. As activity picks up there may also be a good case for targeted support for business investment expenditure via accelerated depreciation.

Personal tax and general company tax reductions, in current circumstances, will not provide the same stimulus to immediate expenditure and are thus not appropriate for the purpose of lifting output and employment while impacting on the budget bottom line.

Government spending must be increased to match the scale of this crisis.

But it is equally important that Government spending is wise, efficient and equitable.

Government must support the community directly and immediately. It must also press on with addressing Australia's many long-standing policy issues including: low productivity growth; climate change; tax reform; skills and education; the adequacy of our welfare system; housing access and affordability; and our ageing population.

The natural limit to national government spending is the creation of high and damaging inflation.

It is the role of governments, which have their own national currency, to create enough demand in the economy to achieve full employment and a fully operating economy. We are not close to either high product inflation either high asset inflation. But we are dangerously close to high unemployment and the closure of efficient businesses.

Government spending does not have to create public debt as spending can be monetised.

When monetary policy is at or near the effective lower bound as it is now, fiscal policy support is critical.

Concerns about the level of public debt per se are typically based on the "household fallacy" and are entirely misguided in the context of a modern economy with monetary sovereignty and an inflation targeting central bank.

Inadequate aggregate demand leads to reduced output and unemployment, with adverse consequences for individuals and society as a whole.

Governments have a responsibility to work to reduce this harm. Incurring debt distorts the composition of current output as well as future output when revenues are raised to repay the debt.

The damage from these distortions can be limited through careful design of current stimulus programs and future revenue raising, whereas the damage from inadequate demand is unavoidable.

Stimulus spending on infrastructure, education, social housing and green energy would mean coming out of the pandemic with a more productive, inclusive and sustainable society. Failure to act is a failure of government.

The debt is not a problem per se. Government expenditure during a downturn (which accumulates debt) is a concern if it is directed toward purposes that will not serve to support Australia's economic stability and recovery, or if it is so substantial and/or financed in such a way that it creates inflationary pressure. Neither appears to be the case now.

Also, Australia's debt-to-GDP ratio is very modest compared to peer nations.

A debt funded fiscal stimulus will help to counter insufficient aggregate demand associated with the pandemic driven sharp drop in household consumption, business investment and international trade, and in recognition of the limited available stimulus which can be provided by monetary policy.

The fiscal stimulus should be complemented by supply side measures to enhance national productivity and capacity to repay the debt over the medium and longer term.

Supply side reforms include ingredients of the fiscal stimulus, including taxation reform, better alignment and operation of commonwealth and state expenditure responsibilities, and business assessment in choosing investment projects. Other structural reforms include a reassessment of the objectives and design of regulations and reform of industrial relations.

The size of the national debt (if in AUD) should only become a concern if the interest obligations on the debt get to such a point that their payment (and principal repayments) threaten the future ability of the government to make expenditures to provide a desired level of government services.

At the current level of interest rates, future obligations from debt-financed expenditures are small, and the level of current debt is relatively low, such that rolling-over debt when it comes due (issuing new debt to replace old) is unlikely to be a significant problem.

If there is felt to be a concern, then financing some part of current stimulus measures by increasing tax rates on higher income/wealthy individuals would be unlikely to negate the stimulus and (in my view) have merit on distributional grounds.

The recovery from the downturn induced by Covid-19 and the measures required to contain it will be slow, vulnerable to setbacks, and in the absence of ongoing support from both monetary and fiscal policy, accompanied by persistent high levels of unemployment, with long-term adverse consequences for both the unemployed themselves and for the broader Australian community.

Moreover the 'tailwinds' which assisted Australia's long run of continuous economic growth over almost three decades prior to the current downturn (a high migration intake, our economic relationship with China, and the housing/credit boom) will be either much weaker, or absent altogether, for at least another year and possibly longer. With the scope for conventional monetary policy stimulus exhausted, and the effectiveness of unconventional monetary measures uncertain, the case for on-going fiscal support for economic recovery is compelling.

Even with the measures enacted since March, Australia's level of public debt is low, by international standards, as a proportion of GDP; financial markets appear to be quite comfortable with it; and at current and likely future interest rates we will have little difficulty servicing it.

Some form of income support needs to be considered for the next few months. Governments should not be worrying about public debt during such difficult times.

Current net levels of public debt are relatively low, especially by the standards of other developed economies, and further fiscal stimulus would be prudent in the face of an economic crisis of uncertain depth and duration. The case is even stronger when the historically low levels of interest rates on public borrowing are taken into account. The Commonwealth can borrow for 30 years at about 1 per cent.

Public borrowing to fund positive-Nnet present value investment in infrastructure boosts economic growth in both the short and the longer term. So long as the rate of economic growth exceeds the running yield on public debt, the debt to GDP ratio will decline over time.

Can we expect the economy to grow faster than 1 per cent per annum in nominal terms over a 30-year horizon? I would have thought that's a shoo-in.
I don't think we need to be overly concerned in current circumstances about the likely impact of the debt-servicing burden on the level of recurrent Commonwealth expenditure.

The nature of the fiscal support matters. I assume the question is focused on a set of good policy options rather than wasteful and distorting policies. I also assume that the support is temporary until there is a recovery.

The problems that face the economy are mainly lack of demand, caused by shut downs and people’s caution about exposing themselves to the virus. They include also disruption to supply chains and increased uncertainty and costs of operating in a Covid-safe way.

Fiscal stimulus is essential to deal with the first, major, problem.

The economy is so far inside its production possibility frontier, and inflation is so dormant, that I support quantitative easing.

Even if the choice is made to borrow from the private sector to support fiscal stimulus, the low interest rates suggest that this would be a lesser future burden than would letting GDP fall further. Recessions, especially deep ones, are very costly to individuals and businesses, not evenly shared and have long lasting effects.

To the best of my knowledge, the Australian Government has not proposed, nor is planning to propose, the withdrawal of ongoing fiscal support to boost aggregate demand during the economic crisis and recovery. The Prime Minister has said that such a suggestion is tantamount to “fear-mongering”. Therefore, rather than running an argument against what may be well be a “straw man”, I shall confine my comments to the second part of the proposition, the case for accepting a substantial increase in public debt as a result of this ongoing fiscal support.

Let me begin with a point that should be obvious but apparently is not. Public debt is not an anomaly. It is an enduring and characteristic feature of the modern economy, the counterpart of an enduring and characteristic asset class, namely, sovereign bonds. As I put in my answer to an earlier National Economic Panel poll in May 2018: “Long-term forecasts are not without risk of error but my strong expectation is that every well-functioning economy will carry a stock of public debt into the Day of Judgement, yielding a flow to interest to bond-holders up until the day preceding the Day of Judgement.”

The Australian Government, in company with the governments of all comparable countries, is under no legal or moral obligation to “repay” the sum of public debt. What it needs to pay is the interest on this debt, preferably with a certainty that ensures that it is never burdened with a risk premium. Therefore, what it needs to calculate is the marginal cost of the interest payments on its borrowings relative to the marginal benefit secured by the use of the capital sum that it borrows. And the interest rate on 10-year sovereign bonds today is less than 1% for Australia – and negative for Germany and Japan!

In an important contribution tabled in April 2020, “Who’s afraid of the big bad debt?”, Deloitte Access Economics calculated the annual interest bill for the Australian Government’s new borrowings at AUD 1.6 billion.

As it turns out, this was an over-estimate, based on the original over-estimate of the Jobkeeper scheme at AUD 130 billion, which yielded an over-estimated sum of AUD 213 billion in new borrowings. But the point stands. In Deloitte’s words: “Never in the two thousand years of recorded history of interest rates has it been cheaper for governments to borrow. Never.”

I submit that the cost of the increase in public debt resulting from the Australian Government’s fiscal response to the COVID-19 crisis, when compared to the enormous benefit of preventing a collapse of the Australian economy and society and the pauperisation of millions of Australians, is trivial – and, further, that it will remain trivial if it were to be maintained in full measure through the critical months ahead of us.

Let me add that my argument for accepting the increase in public debt is not dependent on these ultra-low, < 1%, interest rates that currently prevail. Suppose that the relevant interest rate were equivalent to the average of the 13 years to 2019, as documented in the RBA’s record of the historical yearly range: 4.5%, in round numbers.

And suppose that Jobkeeper and other relevant schemes were extended by a sufficient duration to yield the originally estimated sum of AUD 213 billion. We would then need to compare the cost of interest payments at AUD 9.6 billion per annum to the benefits secured by the said AUD 213 billion. The conclusion would stand.

Of course, my use of this historic average interest rate is merely for illustrative purposes. In the present reality, we need only to calculate the cost of interest payments at circa 1% compared to the benefit secured by the use of a capital sum of circa AUD 200 billion.

I submit therefore that Australia should accept with equanimity the increase in public debt resulting from the fiscal support required to sustain the Australian economy and society through the current crisis and the recovery therefrom. Prior to the COVID-19 crisis, our public debt stood at well below the OECD average of 72.6% of GDP. And it will stand at well below the OECD average in the post-crisis future, even if none of it were to be “repaid”. It is a matter to be managed, not an anomaly to be excised.

And to those who demand that the debt must be “repaid”, I have a simple request. Please do show us how you calculate the marginal cost of paying an annual interest bill of circa AUD 2 billion, minus the marginal benefit to society secured by the use of circa AUD 200 billion, to be greater than the marginal cost of repaying circa AUD 200 billion – and including in the calculation of cost the deadweight welfare loss of the additional taxation required to meet these respective payments.

Australia has one of the lowest government debts -- as percentage of GDP -- among OECD countries. In December 2019, this debt ratio was 45%. In comparison to Germany (60%), the UK (81%), EU (80%) and the US (107%), Australia's government debt ratio is low. It is similar to Switzerland's and Norway's (~41%), two exceptionally rich countries with a healthy and functional public sector and a thriving private sector. Thus, Australia will be able to increase its public debt substantially, without compromising its financial health.

The economic downturn caused by the Great Lockdown and an ensuing global and national demand shock must be buffered by extensive fiscal stimulus. But I recommend to spend wisely on industries that create demand in the future and help the economy to reduce its carbon footprint (which is likely to increase tax burden in the future to pay for clean up costs). Great areas for public investment are green technology, human capital and internet infrastructure.

Uncertainty about the fiscal support and its tapering has a high cost. The support should continue insofar as governments maintain lockdowns of the labour market. Although difficult to design, a contingent plan for the tapering off of the support needs to be announced as soon as possible.

Without ongoing stimulus over the next couple of years, unemployment will remain too high and the economy will grow more slowly than it should.

In its baseline scenario, the Reserve Bank forecasts unemployment will still be as high as 7.5 per cent by December 2021. Sustained periods of high unemployment can scar those affected and reduce the overall productive capacity of the economy in the long-term.

In this situation, fiscal (and monetary) policy can and should aim to boost aggregate demand to restore economic activity to its potential level.

Now is not the time to panic about higher debt levels. This is a once in a generation, if not a once in a century, economic shock and we should aim to spread the costs over a substantial period.

Australia has the fiscal space to borrow to support the economic recovery.

There is little risk of increased government spending ‘crowding out’ the private sector given weak demand, low inflation and very low interest rates. The Australian Government 10-year bond rate is less than 1 per cent and even with significant additional borrowing the additional debt burden in manageable. Indeed, so long as nominal growth exceeds the rate of interest, debt as a share of the economy will shrink over time, even without budget surpluses.

Australia's situation is that - even if the current outbreak of COVID-19 in Melbourne is quickly resolved and reopening of economic activities within Australia then proceeds smoothly - by the end of September I believe that the labour market will only have returned to about the worst points of the 1980s and 1990s recessions.

The right amount and type of on-going macroeconomic stimulus will therefore provide a necessary support to aggregate demand; and can ameliorate adverse distributional consequences of the recession.

Spending to avoid substantial concentrated costs from recession that would otherwise occur now, outweighs the future costs of repaying debt which are spread over time and across the population. This applies even if the increase in spending needed causes a rise in public debt that would be judged substantial in historical terms.

Of course, it does make the point that wise spending is needed - spending that increases aggregate demand at the right time; that promotes employment creation - and especially among groups most negatively affected; and that avoids unnecessary transfers to groups which do not need support,

As with all things relating to government, timing really matters. There is a time to reduce public expenditure - but it is not now.

In the special conditions of the pandemic, the primary purpose of government spending is not to boost aggregate demand, but to provide income support to workers and businesses who are suddenly unable to work as they normally would. But the case for taking on debt to do this is overwhelming, particularly since interest rates are likely to remain at or near zero for many years to come

The current economic crisis has been largely driven by the consequences of managing the health crisis.

The Government needs to provide appropriate and substantial support to boost aggregate demand to help mitigate the damaging impacts on individuals and families from long term unemployment and lost opportunities. As part of this support there needs to be targeted policies and programs to help key workers (such as young workers) and sectors (such as arts, hospitality and recreation) that have been particularly adversely impacted.

Ongoing fiscal support will be necessary to forestall a deep recession. Such a recession would of itself have dire negative budgetary implications over the longer term. There will however be an opportunity to target the fiscal support to the most adversely affected industries - such as retail, hospitality and the arts.

Any such support should also take into account that women have been the most adversely affected by COVID19 and are thus deserving of additional support, rather than a focus on male-dominated industries such as construction. The government should draw on the considerable international experience in the design of social protection policies that support women.

Given that the economy was in a reasonable healthy state before the crisis, a lot of the effect we currently see is a lack of demand. Boosting demand - in particular by helping those of low income that were hit hardest - that are likely to spend most of the support they receive - can help to boost demand, leaving the economy in a better shape once we get out of the crisis.

The Cash rate is at the Zero bound. The Reserve bank is buying bonds .

Yet this slump in activity is still the worst since WW2. Short term stimulus such as Jobkeeper is important to continue.

What must be avoided are long term increases in social transfer programs.

A lot depends on what form expansionary fiscal policy takes.

Not just a question of demand but also need some supply side responses.

Increased expenditure has to be carefully focussed and managed. Avoid opening the flood gates on permanent expansions in recurrent spending

The public debt will be sustainable if the fiscal support yields a growth in income which exceeds the cost of funds. Since interest rates are currently very low, the burden of the debt is unlikely to be high.

Australia‘s public debt is relative low among OECD countries. It is reasonable to think that a cautious fiscal policy in good times is to allow deficits in bad times to support the economy. Australia can, and I believe should, use this possibility.

One important caveat is that the COVID-19 crisis is not a simple demand shock driven by a lack of consumer demand. Instead it is an unusual crisis where large swaths of the economy have been shut down.

Simply increasing spending will not restart demand in industries where there is no demand. Instead, it may lead to distortions: consumers will not spend in the industries which are shut down. They will instead either save their unspent income or use it to consume in other industries, possibly leading to inflation.

The key is therefore most likely not to simply spend money to keep demand up, but to support businesses for them to survive to the freezing of the activity in their industries. The web of contracts between employers and employees and the networks of established relationships between existing firms constitute the fabric of the Australian economy. It is this fabric which needs to be preserved. The termination of contracts and the closure of companies would make the restart of the economy more difficult and slower after the crisis. Support needs to be provided to businesses for them not to have to fire employees or go under.

In the process, the government needs to be willing to build debt, which will be reimbursed eventually by all Australian citizens.

It is true that hefty fiscal deficits and government spending are both needed now. This does entail a "substantial increase in public debt". However, the main fiscal objective should not be to "boost aggregate demand"---the RBA has done enough thus far to prevent falling prices.

Nor should we cut tax rates at this time---indeed, we may need to raise them, albeit not to the extent of bringing the budget back into surplus anytime soon. Sadly, real aggregate demand and real aggregate supply both need to be depressed now, as a consequence of the the social distancing needed to beat the virus. Nor can we be oblivious to ultra-high public debt.

The main fiscal tasks continue to be hefty spending on testing, tracing, quarantining, treatments and personal protective equipment (including masks for the public where necessary). We also need to continue support of furloughed workers, although on a reduced scale after September, and with more attention to work incentives than has been the case up to this point.

Governments should be very careful about suddenly removing fiscal support suddenly until the economy embarks on a steady trajectory of recovery. However, they should look at reducing the level of fiscal support incrementally as soon as possible.

The amount of public debt that has accumulated during the COVID-19 crisis is at a historical high and must be repaid at some point. The enormous public debt is already turning into an intergenerational problem. With the tax base shrinking as the population ages, it is important to view fiscal policy through an intergenerational lens by considering the repercussions of soaring debt levels that will have to be borne by current and future generations of taxpayers.

The amount of fiscal support is important at this time, but more attention needs to be turned towards reforms that will boost economic growth through increased productivity e.g. through tax reform that rewards income-generating activities and labour market reforms that create job environments that are conducive to meaningful contributions by workers of all ages.

I agree that a level of on-going fiscal support is needed. However, there is a trade-off here. Given the magnitude of the shock, it is not possible for Australia to avoid a decline in demand and a recession. It can only be mitigated. At some point, the cost (of fiscal support) will be larger than the benefit. in addition to the fiscal (debt) cost, there will be the cost to the economy of not adapting in a dynamic way if support is "too generous".

For example, like it or not, there are some sectors which need to make what are probably permanent (structural) adjustments to their operations (e.g.universities). Levels of support which lead to no change (by e.g. universities) in response to the changed demand environment would come at a high cost.

My response presumes that "ongoing fiscal support to boost aggregate demand" means increased government spending (G) to influence total spending (C+I+G). Ongoing fiscal support provided directly to firms and employees (eg JobKeeper) is presumed to be a supply side, not a demand side fiscal measure. Tapered fiscal support of this kind may continue to be necessary, along with retraining assistance for the worst hit sectors (eg travel and tourism) in concert with continued monetary and banking sector support. However, further fiscal measures to 'stimulate' demand, such as direct spending on unproductive infrastructure, cash splashes, increased transfer payments etc should not be countenanced as they ultimately prove counterproductive in an open economy according to standard textbook theory, backed by empirical evidence.

Escalating public debt (issued mostly to foreigners) arising from widening budget deficits at federal and state level will induce capital inflow, drive up the dollar and crowd out net exports, as occurred following the fiscal response to the GFC. Other things equal, large budget deficits also imply a return to current account deficits, consistent with the 'twin deficits' hypothesis.

It's a common refrain that Australia need not worry about its public debt because it is low by OECD standards. This is wrong for several reasons. First, Australia borrows mostly from abroad (unlike Japan for instance which self- funds its deficits), with foreign public debt holdings varying between 60-80% post GFC. Interest paid on foreign public debt, which directly subtracts from national income, was already around four times the foreign aid budget, and a multiple of other federal spending programs like the Pharmaceutical Benefits Scheme.

Second, federal government and much recent COVID-related state government borrowing is not backed by government assets. The federal government's negative net worth position was close to 20% pre-COVID and could now soar to 40% in a few years as federal debt approaches $1 trillion. This will obviously jeopardise the federal (and State) governments' credit ratings, the loss of which will increase interest rates, which will have to rise at some stage given record bond issues and private sector borrowing worldwide. On the trillion dollar federal public debt in prospect, every basis point rise in interest rates would add $100 million extra PDI.

Third, although interest rates are presently very low, they must surely rise in coming years when public debt has to be refinanced given the massive surge in public and private sector borrowing globally. Moreover, official interest rates will rise should inflationary pressures mount, as has historically been the case following large scale public debt monetisation by central banks.

The private sector has overwhelmingly borne the brunt of the economic impact of the COVID19 crisis. Recovery therefore depends on a revival of private sector activity, not government spending. Bringing forward income tax cuts would have aggregate demand and supply (via work incentive) effects, although at this juncture are unaffordable, given the rate at which public debt is rising. Company tax cuts, or increased investment allowances, again would have aggregate demand and supply effects, and should be prioritised over income tax cuts as they would generate more economic activity as previous Treasury commissioned modelling has shown.

Moreover, there are equity issues as those individuals worse-affected by the recession would benefit little from income tax cuts compared to those unaffected, including well paid public sector employees, who would benefit the most.

Instead of focusing on government spending to boost aggregate demand, structural reform measures aimed at the supply side of the economy would be more effective in hastening economic recovery, most notably deregulation of business red and green tape, industrial relations reform and lower company tax, or increased investment allowances.

Governments should provide targeted fiscal support that doesn’t make debt go up too much. Untargeted splashing of extra money is unlikely to be productive and will harm the economy in the medium term.

In a normal depression, I'd say "of course" because when hit by an outside economic shock, you want to stimulate aggregate demand in order to minimise unemployment whilst businesses adapt to the changed environment.

However, this is a depression like none before, entirely caused by the panicked over-reaction of governments and the population due to a fairly minor actual risk.

The government has essentially forced businesses and workers to be idle, and then subsidised both via borrowed money to prevent official bankruptcy and unemployment. That seemed very sensible initially, but the subsidies have prevented the population from feeling the full consequences of the lock down and virus-suppression policies.

There is now the real danger that Australia will for a long time maintain policies that are extremely damaging to its economy, its social fabric, and the health of the population. The priority must now be to get the population to let go of their irrational fears and to let normal economic life return. Governments should now say "We are very sorry, but we cannot borrow indefinitely and have pretend jobs and pretend businesses. Government cannot run most of the economy. It didn't work for the Soviet Union, which collapsed, and we too are now collapsing. We have to open up fully and halt all special subsidies".