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The Australian government's decision to cut benefits is based on feelings, not facts

  • jamessnow321
  • Jul 22, 2020
  • 1 min read

In Australia, policy is far more likely to be based on feelings than facts. While there is much talk about the importance of evidence-based policy, ironically, there is scant evidence that such an approach exists. Take the government’s decision to cut the incomes of around five million jobkeeper, jobseeker and other benefit recipients, for example.

The one thing virtually every economist can agree on is that cutting government spending in the middle of a recession will lead to a contraction in the size of the economy and an increase in unemployment. The idea is so uncontroversial that cutting government spending is called “contractionary fiscal policy” while increasing government spending is called “expansionary fiscal policy”. It’s not complicated.

 
 
 

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