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The following is an extract from a recent keynote speech I delivered to a client dealing with red tape and regulations.
Australians are clearly happy with 1,200 deaths on the road each year. The number could be reduced to zero, but at what cost?
The road toll could be reduced to zero. That is no deaths at all on the roads.
We could simply introduce rules and regulations that make it illegal for all cars, bikes, buses, trucks and humans to be on the roads at any time. Ever. Quite clearly, road deaths would be reduced to zero.
Now – obviously – there are issues with this regulatory proposition. You don’t need any economic modeling to realise that these regulations would fail the test of efficiency, productivity and would involve income destruction for society, among many others.
It would be ridiculous to eliminate road deaths in this way.
But how far from no road rules to a complete ban are we willing to go?
Treasurer Joe Hockey released a very short statement outlining a couple of key points on the budget outcome for 2014-15, with the full document to be released next Monday.
Mr Hockey noted that the budget deficit for 2014-15 was $38 billion, which he said was “over $3 billion better [sic] that expected”.
There are, as there always were with Mr Hockey, a few issues with his take on fiscal issues.
Importantly, a lower budget deficit is not always “better”. If it is because the government has tightened fiscal policy into a weak economy, it is plain silly policy – it would have been better for growth and jobs to have had a wider deficit. With GDP growth at 2.0 per cent through to the end of 2014-15 and unemployment locked in at 6.0 per cent or more, who knows, that extra $3 billion may have helped growth.
And $3 billion lower than expected? Expected by whom and when?
Let’s have a look at the evolution of the 2014-15 budget outcome under the stewardship of Mr Hockey as Treasurer.