A report released today by the Australia Institute’s Centre for Future Work shows Western Australia’s recent budget deficit is the result – not the cause – of deteriorating economic conditions. Contrary to calls for fiscal austerity and public sector downsizing, the report showed that budget deficits play a useful role in stabilising the economy during downturns.
“In reality there should be no alarm about the WA state deficit. Deficits are acceptable, and positive, during periods of weak economic growth,” said Dr. Cameron Murray, Senior Economist at The Australia Institute.
The report found that the modest growth in public sector payrolls during the 2014–17 period supported a cumulative total of $3 billion in additional GDP, $1.3 billion in additional consumer spending, and $450 million in additional state revenues.