You have to laugh when you look at the economic record of this government. Either they just can’t win a trick or they really are economic imbeciles.
I’m backing the latter because no one with an ounce of credibility could get it so wrong, so often.
The latest faux pas has become evident in the Wage Price Index for the December quarter, released by the ABS this week. What it tells us is that wage growth in the private sector was 0.5% for the quarter and just 2% for the year.
This is the lowest recorded level of wage growth since 1997.
The result has serious ramifications for the deficit this year, given that Scott Morrison’s MYEFO last December assumed wages growth would be 2.75% in 2016-17.
They also assumed real wages (the difference between the Wage Price Index and the Consumer Price Index), would grow by 0.5% in 2015-16. All indications, at the moment, suggest this is not going to happen.
That means the December MYEFO projections will not be realised and an even larger deficit is now on the cards.
The irony here is that suppressing real wages growth over the last two or three decades, has been a deliberate ploy of the neo liberal mindset intent on exploiting unemployment and rising underemployment.
Scott Morrison’s own ideology has come back to bite him and his government where it hurts; their own credibility as economic managers is in tatters.
On its own, a larger deficit is not an issue. It’s better than a surplus which takes money out of circulation and forces people to replace that money by taking on private debt. The rising deficit is just responding to a generalised decline in economic activity, falling employment and suppressed wages growth.
The problem is that the current deficit spending is not contributing to the economy. It is not adding value to the bottom line, our GDP.
In that sense therefore, it is wasteful. It is wasted on maintaining offshore detention centres, on excessive tax expenditures like superannuation, mining subsidies, negative gearing and private health insurance rebates.
It is also wasted on excessive payouts and entitlements to politicians, not just in parliament, but also when they leave. Funny how that is never an issue.
With the government now having boxed themselves into a corner on tax reform and some ministers, e.g. Kelly O Dwyer, appearing confused as to what Labor’s tax policies will do for the economy, they are increasingly looking like lost sheep.
And all this is of their own doing. So intent, it seems, are they at introducing reforms in the senate to block minor parties gaming the system, they have dropped the ball on actual government allowing Labor to step in quickly and fill the vacuum.
One suspects history will look back on the past two and a half years and judge it as one where golden opportunities were plenty but affirmative action went missing.
The budget deficit will be no more than a by-line, but the incredible incompetence demonstrated by a bunch of amateurs posing as economic saviours, will be the headline.