Mirabile dictu: Labor is going to deflate us externally

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For seven years now MB has argued for the series of policy positions to help the Australian economy survive and prosper through the post-mining boom adjustment. These have included deep rate cuts, strong macroprudential policy, quality infrastructure spending, mass productivity reform including, crucially, attacking the perks of tax concessions like negative gearing and imputed credit.

These all aimed for one outcome. To lift income while crashing as soon as possible the real exchange rate. In other words, we recognised that post-2011 as the terms of trade deflated that Australian competitiveness had to be repaired. We were too fat for our own deflating incomeand could not compete in the global economy.

Instead, the political economy has made shocking blunder after shocking blunder. The awful RBA nursed its favourite housing bubble back to life, inflating the land prices and the currency. The awful Coalition panicked at its own attempts to repair the Budget and flooded Australia with foreign labour which made the housing bubble worse, as well as destroying productivity via crush-loading. The kiss-arse Treasury just did what it was told, delivering whatever modelling was needed to justify whatever position. The disastrous ACCC allowed a gas cartel to drive energy costs to the moon.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.