While in Indonesia, where perhaps he should stay, Treasurer Jim “Chicken” Chalmers once again warned about himself:
Chalmers said “deeply concerning global conditions” would provide the backdrop to next month’s budget.
“Inflation stalks the world, with central banks responding decisively and bluntly; global growth is slowing; most risks are tilted to the downside,” he said.
“The United States and United Kingdom’s economies are in reverse, and China’s is decelerating. Meanwhile, in Europe, the war in Ukraine has sparked an energy crisis that shows no signs of abating.
“The IMF managing director has warned that we can’t rule out another global recession”
Whenever the Treasurer mentions runaway inflation and a weak budget you should supplant both with the words “Chicken Chalmers” for it is he that is causing it.
The budget could be fixed in a jiffy if resources were taxed properly. In particular, tearaway energy exports. Related, energy is the outstanding feature of Australian inflation in the year ahead.
Utility bills are on track to add 2.5% to the CPI and 5% over two years. The only driver is stratospheric gas and coal prices which are driving electricity prices crazy.
Australia has oodles of cheap gas and coal but Chicken Chalmers refuses to use reservation or export levy policies to cut the Australian tie to international prices.
According to Labor sources, this is because he was “scarred” by his experience of the Rudd Government’s attempt to impose a super-profits tax in 2010. That is, he is a policy coward.
The second feature of runaway future inflation is residential rents which comprise 7% of the CPI. Rents are now running at 10% which will add another 0.7% to the CPI in the year ahead. Thankfully there will be a significant offset in falling building costs but Chicken Chalmers is doing his best to prevent that as well by rebooting mass immigration directly into the surge. This will, of course, send rents crazy.
To get a grasp of just how bad this policymaking is we need to add one more factor. Chicken Chalmer’s mass immigration reboot will also squash still weak wages.
The end result of the two blunders – refusing to regulate energy and deregulating people flows – is a bath of blood for real incomes:
Chicken Chalmers came to power promising cost-of-living relief and rising wages. Instead, he’s going to reverse 13 years of real wage gains inside a year.
This is the worst debut of any Treasurer since Jim Scullin heralded the Great Depression in 1929.
Nigh on one century ago.