OPINION: Australia’s recovery is a solid one. But a search for villains or a culture of entitlement is no substitute for a shot of productivity growth.
That there’s been no honeymoon period for Treasurer Jim Chalmers was underlined by Tuesday’s unexpectedly large interest rate increase.It is designed to contain the global energy price shock and prevent it from being embedded into a damaging wage-price spiral.
Now Australia’s inflation outbreak is less severe than in comparable economies such as the US, Britain and New Zealand. We’re relatively better placed again because the energy price shock and the gathering global food price shock will boost Australia’s export income. It needs to prevent the new energy price shock from pushing inflation much above the central bank’s peak forecast of 6 per cent. This will require a wage round of less than this. Rather than encouraging bosses to hand out higher wages, Dr Lowe now is “committed to doing what is necessary” to return inflation to the RBA’s target of 2 per cent to 3 per cent.
What’s left is mostly empty political promises and a national culture of entitlement to ever-rising prosperity. Flailing around in search of villains such as the big end of town or big energy companies will do nothing to support Anthony Albanese’s pledge to leave no one behind.