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The problem with socialism, as Margaret Thatcher so pithily observed, is that sooner or later you run out of other peoples’ money. The other problem with socialism is that socialists just never learn the first problem. Just look at Australia’s current government.
With inflation “vastly overshooting” the RBA’s forecasts, the RBA won’t cut interest rates at its November meeting and “the chances that it won’t loosen policy any further are rising,” says Capital Economics head of APAC, Marcel Thieliant.
In fact, it’s looking much more likely that interest rates will start increasing again.
“There is a real possibility that we are done with rate cuts in this cycle, and the next move could be a rate increase if inflation doesn’t change course” […] VanEck’s investments and capital markets head Russel Chesler says.
So, what’s pushing inflation up?
Inflation has recorded its highest quarterly rise since March 2023 rising 1.3 per cent in the three months to September to an annual rate of 3.2 per cent, driven by higher electricity prices.
In other words, the Albanese government’s demented ‘Net Zero’ policies, and massive government spending to try and hide their impact. Remember that in opposition the government promised nearly 200 times that electricity bills would go down if they were elected. Instead, they’ve gone up, and up, and up. To try and paper over its calamitous failure, the government has resorted to massive spending on ‘rebates’ on electricity bills. Which only drives inflation even higher.
Yet, demonstrating their complete detachment from anything remotely resembling reality, ‘Climate Change and Energy’ Minister Chris ‘Boofhead’ Bowen repeatedly insists that “wind and solar are the cheapest form of energy”. Even more hilariously, Treasurer Jim ‘Zippy’ Chalmers insists that Labor are responsible economic managers.
The economy begs to disagree.
The Treasurer’s economic and budget management are under pressure as inflation unexpectedly surges to 3.2 per cent, the budget bottom line worsens, the labour market shows weakness and any vague hope of an interest-rate cut disappears until well into next year.
In parliament Chalmers tried to get ahead of the bad inflation news and said on Tuesday the market “predicts headline inflation to tick up” because of the state energy rebates being withdrawn.
“That’s already been factored into the forecast of the Treasury and the Reserve Bank for some time,” he said.
But a rise to the highest level in almost three years is no pesky little grass tick, this is a big fat paralysis tick that sends damaging reactions through the system.
The headline inflation rate of 3.2 per cent and the underlying rate of 3 per cent are worse than expected, even with the “factoring in” of the removal of the power subsidies, and are the latest tests, economic and political, to come Chalmers’ way.
The only reason Zippy got away with it for so long is because of a completely unexpected windfall gain, from a sudden surge in Chinese demand for iron ore. But that won’t last forever, especially as China’s own socialist economy totters. And with Victoria dragging the rest of the country deeper into the pit by the day, it won’t be long before the economic vultures come home to roost.
Australians will be paying for Labor’s incompetence, long after Zippy is sent home with a knife in his back.
The most telling political hit was the humiliating backdown over the almost universally opposed plan to tax unrealised capital gains – and the related loss of revenue – which Anthony Albanese had always “left the door open” to dumping […]
during all this backing down and rejection of Chalmers’ reform the Prime Minister has been absent: when the superannuation tax backdown was announced Albanese was on leave; when questions were faced in parliament Albanese was overseas, and as worsening economic news emerges Albanese will be absent from question time.
The PM clearly doesn’t have his treasurer’s back – and Chalmers would be well advised to keep his to the wall for a while.
