OPINION: The real question that needs answering is what is the government’s long-term productivity plan to get inflation under control and real wages moving again?
In the space of a week we’ve had three important updates on the Australian economy.
The time for setting the baseline is over: Treasurer Dr Jim Chalmers approaches the despatch box to deliver a statement on the economy.Third, the Reserve Bank continued its transition back to neutral interest rates, raising the cash rate Tuesday by ato 1.85 per cent. We can expect more hikes in coming months as they try to tame inflation.
Turning that around means acknowledging that some things can’t be fixed in a year, or two, or five. That’s the hard truth we need to hear.But under either view, the time for setting the baseline is over. No more complaints about a “wasted decade” – though that’s right. The previous government did literally nothing to improve Australia’s flagging productivity growth.
Point one was increased subsidies for childcare and medicines on the PBS. Point two was arguing for higher minimum wages and for those in the care economy, plus investment in industries predicted to provide high wages and “secure” jobs. Point three was unclogging supply chains and investing in skills, and using the National Reconstruction Fund to make Australia less vulnerable to international forces.
Childcare done right is a good idea, but what’s the plan to expand the supply of places? The energy transition plan is vitally important, but let’s not pretend it’s going to lead to predictable drops in power prices in a defined timeframe. And whether Australia becomes a “green energy superpower” is highly uncertain, and depends on a lot more than a slogan. Serious reform of our education and training system goes well beyond a few more TAFE places.
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