One of the striking ironies about microeconomic reform is that it was promoted as a way of reducing Australia’s current account deficit, and therefore our net overseas debt. In the twenty years since, the CAD has remained at about 5 per cent of GDP, and net debt has grown gradually. The defenders of reform have taken two contradictory lines on this today. In The Australian, Michael Chaney makes the standard last-resort argument for failed policy – things would have been even worse otherwise. Meanwhile, as
Ross Gittins points out, more sophisticated supporters of reform have decided that the CAD is actually a good thing. As he says, “Well, if you say so.”