The list of policy failures in the RBA, Treasury and Abbott Government is long but none is more damaging to the nation right now than the lack of any viable post-mining boom economic narrative. Let’s run through where each is at.
The RBA has engineered itself a dreadful policy bind by failing to foresee the mining bust and then panicking when it arrived by deliberately stoking the dormant housing bubble. By driving down interest rates without preparing any new tools to handle the housing bubble and what that would do to the Australian dollar, it has cooked its own goose. The narrative it uses to support this can-kicking is that it is endeavouring to “rebalance” the economy from the mining boom towards a housing boom. This ignores the fact that it can’t drive up household and international debt without creating huge external risk, which it has itself warned regularly about post-GFC. Yet it whines constantly about a lack of confidence holding the rebalancing back.
In short, its narrative is at best oxymoronic and probably much worse than that.
