The message from the RBA is clear – the economy needs stimulus.
But the government’s strident opposition to all suggestions from Labor has left them little room to move.
The only things keeping us out of recession are population growth and government spending. But the government has vowed to cut immigration and government spending.
They could bring forward their planned tax cuts and infrastructure spending, except that would put their much-vaunted budget surplus at risk.
And they won’t separate their 3 stages of tax cuts to wait and see what the economy is like in the mid-2020s because trying to get the third tranche passed in isolation would be an impossible sell as it disproportionately favours high income earners.
They could listen to everyone about the urgent need to increase Newstart except they have already rejected that.
They could advocate for wage rises for people other than politicians and judges and senior public servants but they are committed to reducing penalty rates for the lowest paid instead.
They could limit negative gearing to new properties to stimulate construction but they campaigned hard that that would lead to falling property values and increased rents.
They could rein in unsustainable tax concessions for capital gains, family trusts, superannuation and franking credit refunds but they have already decried these as a tax on retirees (whilst ignoring the fall in return to retirees who have fixed term deposits).
They lambasted Labor’s response to the GFC of giving a one-off cash handout to those on low to middle incomes ignoring that this is a way to provide stimulus without embedding systemic cuts to revenue.
They could allow the experts at Infrastructure Australia to evaluate, prioritise, and co-ordinate infrastructure spending that brings the greatest return but instead they choose piecemeal projects to prop up the vote in marginal seats and to appease the Nationals.
They could reduce power bills by 10% immediately by not charging GST on them. But they rejected that suggestion from ex-Senator Leyonhjelm.
They could insist, as part of the development approval process, that some gas is reserved for domestic consumption at a fair price, but they won’t.
They could embark on building affordable public housing but instead, they are looking to allow first home buyers to get into the market with a 5% deposit and even greater debt.
Despite current policies leading to rising GHG emissions every year, the government has committed to more of the same with another $3.5 billion over 15 years from 2018-19 for their Climate Solutions Package. At the same time, they will spend $3.1 billion over five years from 2019-20 to support North Queensland in recovering from the 2019 flood and a great deal more in drought assistance.
The Coalition’s Climate Solutions package claims “An electric vehicles strategy is expected to reduce emissions by up to 10 million tonnes by 2030”, except they haven’t got one and, in fact, sent out Michaelia Cash to screech about Labor’s plan.
In late March, the Parliamentary Budget Office (PBO) warned that Australia’s ageing population could simultaneously subtract 0.4 percentage points from the annual real growth in revenue while adding 0.3 percentage points to the annual real growth in spending over the next decade. In real terms, that would equate to an annual cost to the budget of around $36 billion by 2028–29 (larger than the projected cost of Medicare in the same year). But the government has no plan to prepare for our changing demographics.
Whilst spruiking the headline unemployment rate and the jobs created, the government is studiously ignoring the rising underemployment figures, the increasing insecurity of jobs, and the millions of Australians living in poverty.
They could invest in research and development to help improve productivity, but instead they have slashed funding for R&D.
In the past five years the population has grown by just 8%, but government spending has risen by an incredible 21%. By sheer luck the mining boom has increased revenues by 27% but windfall gains like these are not sustainable.
The Daggy Dad “please like me” tour, backed up by his affable side-kick doing slide shows of endless cherry-picked graphs, is nothing more than an advertising campaign. Their claims of strong economic management are based on unrealistic assumptions about future wage growth and consumer spending and completely ignore Australia’s spiralling household debt.
They are reliant on precarious revenue from resources and seem clueless about the importance of diversifying our economy and building new industries to take up the slack caused by technological disruption and the inevitable demise of the fossil fuel industry.
Photo shoots and fibs might get you elected, but they don’t do anything to shore up the walls as the hole deepens.
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