When one takes a close look at the just-released MYEFO, one can rightly shudder with trepidation for the future of the Australian economy.
Pretend prime minister, Scott Morrison, who goes by the name Scomo, and his pretend treasurer, Josh Frydenberg, have set a forward estimates budget target that is scarily like the bad old days of the Howard-Costello era.
They are projecting a surplus in each of the next three years. This is economic madness, made obvious by an already declining consumer spending trend, falling house prices and record private debt.
It’s another case of rubbery figures, most likely worked backwards to deliver a set of numbers that mask trouble ahead, rather than an economic stimulus to get things moving forward.
The thinking, one suspects, is that they can explain away a poor December 2018 quarter, which might well be negative in growth terms, but not have to face the results of a June quarter, 2019, which may well find the economy in recession.
A poor, possibly negative December quarter will be made public in the quagmire of electioneering for a May federal poll, or even after a snap March poll, if Scomo thinks such a move is beneficial to his chances of remaining prime minister.
This erratic leader of his party, one that is self-destructing a little more as each day passes, has no plan beyond conning the Australian people into thinking he has delivered the goods.
Both he and Frydenberg are drowning in their own rhetoric of self-congratulatory praise for outcomes not yet realised.
Both Labor and Coalition governments have delivered continuous deficit budgets for the past 11 years, including 2018-19. Sadly, neither can see that it had been these deficit budgets, modest as they have been, which have kept the good ship Australia, afloat.
If there was a debt and deficit crisis in 2013, as so boisterously claimed by the present government, then what do we call it now, when by their own pathetic management, things are twice as bad.
The future looks decidedly dark. A falling housing market will put the banks on high alert for mortgages that are now higher than the value of the properties they are financing. The banks will want to bring those loans down to more acceptable levels.
Mortgagees on fixed salaries and stubbornly low wage increases, will not have the resources to raise the money needed to meet the banks’ demands. The result: foreclosure.
Given that consumer spending is already slowing, such moves by the banks will further exacerbate the trend. This will do nothing to arrest Australia’s record private debt levels which will then lead to a rise in unemployment.
This is what Labor will be facing when it wins government in March or May next year. Not a pretty picture, but one which Labor has faced before.
Bill Shortens’s announcement of a plan to construct 250,000 new homes over ten years is exactly what is needed. It won’t do much to arrest falling house prices, but it will inject some much-needed activity to help offset the anticipated fall in employment.
What won’t help, is budget surpluses which starve the economy of money. How hard can it be to get this message across? How hard can it be to explain this to supposedly intelligent men and women, successfully?
The one saving factor is that neither Morrison or Frydenberg are likely to realise their overly ambitious forward budget estimates. No prime minister or treasurer over the last eleven years has been able to achieve that.
In all likelihood, the status quo will be preserved. And while a coalition in opposition will see this as Labor’s failure, this time, it will be their credibility that is well and truly discredited.
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