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Economists are finally calling out the Albanese government’s economic wrecking ball. The government is responding with its standard excuses: everyone else is wrong and it’s all the coalition’s fault, anyway. This is the same revolting script Anthony Albanese tried to use to shift blame for the anti-Semitism crisis that culminated in the mass-murder of Jewish Australians at Bondi.
Shifting blame for the economy is nowhere near as disgusting, but it’s just as obviously bullshit. We can all see that violent anti-Semitism spiked under Albanese’s watch – and so did inflation. From 2022 on, inflation suddenly jumped – and kept climbing.
Is it any wonder?
When Anthony Albanese was asked last week whether government spending was contributing to the uptick in inflation, he immediately rattled off a list of government handouts. He talked about cheaper medicine, Medicare bulkbilling, the guarantee of three days per week of subsidised childcare.
In other words: spending, spending, spending and yet more spending. In case it had escaped these clowns, spending is exactly what drives inflation. It’s one thing when it’s consumer spending, quite another when the only big spender in the entire economy is a socialist government.
I wondered whether he had misheard the question, but the reality is that the Labor government thinks the solution to inflation is to go long on handouts. What he doesn’t seem to understand is that these handouts are part of the problem, not the solution.
They are contributing to the unsustainable growth in government spending which, in the context of inflexible supply in many parts of the economy, is simply adding to inflationary price pressures.
Currently, government spending accounts for nearly half of Australia’s GDP. These are levels not seen since WWII or the 1980s. In the 2020s, the government’s share of the economy has almost doubled.
For a short time, Jim Chalmers thought he had discovered a new secret sauce. By introducing universal electricity rebates, he figured the headline rate of inflation would be lower – this is arithmetically correct – and the Reserve Bank would do the right thing by adjusting the cash rate based on this manipulated figure.
Alas, the good folk down at the bank see through this sort of thing and concentrate on the trimmed mean figure of the CPI. But think about if Chalmers had been correct, he should have doubled, tripled or even quadrupled the rebates. He would have slain the inflation dragon while allowing the bank to cut the cash rate. How good would that have been?
But here’s the thing: it has become increasingly clear that Chalmers simply doesn’t understand how the economy works. When confronted with the unwelcome CPI release last week, the Treasurer pulled out all the talking points given to him by Treasury and attempted to tell us that black is white.
When that fails, just shoot the messengers.
Despite concerns raised by a number of senior economists including AMP chief economist Shane Oliver and HSBC chief economist Paul Bloxham, that public spending had fuelled inflationary pressures and had crowded out private sector activity, the Treasurer said their claims were not supported by the facts.
Economists aren’t being bamboozled by a cheap politician’s excuses.
AMP chief economist Shane Oliver has rebuffed claims from Treasurer Jim Chalmers that his criticism of government spending levels was politically motivated, doubling down on his view that state and federal spending was pushing up prices.
Dr Oliver denied he was favouring one side of politics over another, instead pointing to record public spending which he said was “leading to concerns about capacity constraints” and putting upward pressure on inflation.
“I’m just analysing the situation as it is. We have seen inflation surprise on the upside. Whether we think there’s going to be a rate hike or not is beside the point,” he told Sky News.
But apparently everybody is wrong but Treasurer Zippy.
Dr Oliver’s public spending concerns were also shared by HSBC chief economist Paul Bloxham, Judo Bank’s Warren Hogan, independent economist Chris Richardson and the OECD, among others.
It’s all just a vast, right-wing conspiracy, no doubt.
