A new distraction is upon Australian macro management. It’s the Recessionberg versus Lunatic RBA circus. There’s lots of stories on it but the AFR captures the big yawn:
Economist Richard Holden says the tension between fiscal and monetary policy is “Australia’s big economic dilemma”.
…“Monetary policy cannot deliver medium-term growth,” Lowe told central bankers at a conference in the United States late last month. “We risk just pushing up asset prices.”
…Frydenberg made clear to AFR Weekend the government is sticking to its guns.
…“Our priorities are clear. We’re creating more jobs, cutting taxes, investing more in infrastructure and skills, focusing on the productivity agenda and bringing the budget back into surplus for the first time in more than a decade.”
Let me interpret that for you. The Government wants rising house prices and is using its surplus to stall growth and inflation to force the RBA to deliver cheap money.
Phil Lowe doesn’t really care. He’s just going to bleat as he cuts to cover his butt. If he cared he would already be hectoring APRA to tightening macroprudential.
As for Recessionberg’s agenda beyond that, it’s all lies so banal that it takes four sentences to destroy. On infrastructure the Government is doing next to nothing. On skills it is flooding the place with cheap foreign labour. On productivity, Labor took the needed tax reform agenda to the election and ScoMo destroyed it. On the surplus, it will be gone in six months as the supply side recovers from its shocks and bulk commodities crash into weak global growth.
All this debate is really about is whether to waste money on pre-crushloaded infrastructure or to waste it on a re-inflated housing bubble. Both will be profitless and do nothing to prevent the ongoing slide in living standards. How can they? It’s all cyclical thinking and arse-covering from an exhausted pack of dills at the end of a thirty year flood of good fortune that has dumbed us down to the point of apoplexy.
Genuine reform in the national interest is nowhere in sight:
- tax reform to fix our ‘capital misallocation into unproductive assets problem’ is dead;
- immigration cuts for the same, plus to push business to invest in skills and automation, is dead;
- lifting competitiveness via better not more infrastructure, energy reform and a lower dollar is dead.
These are the things that would lift Australian economic performance structurally. All the above marionettes are jiggling about is how to kick the can for another year to save their own jobs.
It’s not some epochal debate between mighty figures and clashing titans as the asinine MSM makes out.
It’s the mediocre versus the pedestrian as the luck runs out.