Jim Chalmers, about to deliver his third budget in just 19 months, is now facing a moment of economic and political truth that could very well determine the fate of Anthony Albanese’s Labor government.Alex Ellinghausen
We still have a strong jobs market , poor productivity growth and a long-awaited lift in wages – but living standards are falling.Some of these interconnected issues are long-term problems. The slowdown in productivity, for instance, has been worldwide and dates from around the global financial crisis of 2008.
Even Reserve Bank governor Michele Bullock noted this week the sticker shock she suffered when fuelling up her vehicle at the weekend. Global oil prices, pressed up by the ongoing tensions in the Middle East, are beyond the control of the central bank and the federal government. But treasurers tend to cop the blame for the pain anyway.The most obvious is the decarbonisation of the Australian economy.
Another problem is around the higher education system, which has been creaking for years. The $3 billion promise around HELP repayment levels is just the start of a desperately needed policy overhaul.The population growth that has kept the economy afloat is putting pressure on infrastructure, be it from simply housing people to the roads or rail systems required to move those people around their communities or to jobs.
Just as easily, the economy could slow, which would push people out of work that would exacerbate the cost of living pressures facing many Australians. That would force the Reserve Bank into cutting interest rates – but the political benefit from that would be offset by the tens of thousands of people put out of work. That would be political poison.
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Source: FinancialReview - 🏆 2. / 90 Read more »
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