The new Treasury secretary, John Fraser, has dismissed concerns that so-called 'austerity' measures are necessarily harmful to economies, saying Britain has done exceptionally well since its controversial austerity package was introduced a number of years ago.
Mr Fraser also says he likes to approach fiscal stimulus measures "with a good deal of caution", and believes there is "no clear cut answer" as to whether or not Australia pursued the right amount of stimulus post global financial crisis.
Speaking publicly as Treasury secretary for the first time, Mr Fraser has told senators in Canberra that he was chief executive of UBS Global Asset Management during the GFC in London, and he found the experience frightening.
He said the pre-GFC behaviour of the financial sector was one reason why he supported tough regulation of the sector.
But he also said economists at the International Monetary Fund needed to take a "dose of humility" after they changed their tune on austerity last year.
Mr Fraser said no economic institution had a "mortgage on good advice" - a pointed reference to the IMF which warned last year that fiscal tightening had done more damage than good in some countries, and that austerity measures did not always work.
"There are many economists in the world, [but] there were few, if any, that picked the global financial crisis," Mr Fraser said on Wednesday.
"I think the whole profession should have a huge dose of humility, [and] I would apply that also to the International Monetary Fund."
All sovereign nations faced different circumstances and they ought to tailor policies to their own conditions, he said.
He said he believed the United Kingdom's austerity program had been a "clear success", as have the post-GFC policies pursued in the United States.
"So they have their view," Mr Fraser said of the IMF's recent anti-austerity warnings. "But as I said, I don't think any group in the world, including ourselves, has a mortgage on good advice."
Asked about the success of economic stimulus packages, and the need for fiscal stimulus in Australia during the GFC, Mr Fraser said he liked to approach stimulus measures with "a good deal of caution".
He said the recovery from the GFC had taken a remarkably long time, and it was hard to imagine how precarious it was at the height of the crisis. But he still thought it was better to approach fiscal stimulus measures with caution.
Mr Fraser said he would prefer Australia to address its fiscal issues "sooner rather than later".
And he admitted that interest rates were extraordinarily low at the moment, after dropping from 2.5 per cent to 2.25 per cent this month.
When asked if these present low levels of interest rates could last, he said "they cannot help but go up".
