Frydenberg right to put full employment ahead of budget repair

It’s hard to feel sympathy for a government that used ignorant scaremongering about the public debt to get elected in 2013, but now doesn’t want to mention the D-word and is being attacked by its own deluded conservatives (plus point-scoring Laborites). Even so, Treasurer Josh Frydenberg has his priorities right in leaving budget repair for later.It’s noteworthy that the governments’ critics have turned their guns on the likelihood...

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Like election promises, many budget forecasts never materialise

You’d think after the fiasco of Back in Black, Josh Frydenberg would have learnt not to count his budgets before they’re hatched. But no, he’s a politician facing an election and nothing else matters.His message in this week’s mid-year budget update is: the virus is in the past and the economy is fixed – as you’d expect of such great economic managers as our good selves.Well, it’s not certain the pandemic has finished messing...

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Inheritance: the major life event no politician wants to mention

When I was growing up, my family didn’t have much. We lived rent-free in a succession of down-at-heel manses (the Salvos called them “quarters”), but my father’s stipend was a small one on which to support four kids.Mum worried about where my parents would live after they retired but, with much scrimping and saving (including making my sisters hand over almost all their wages), they built and paid off a small cottage at Lake...

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Stop kidding: the 2024 tax cut will be economically irresponsible

It’s a safe bet that, once we’ve seen the mid-year budget update on Thursday, we’ll hear lots of economists and others saying the government should be getting on with budget repair: spending cuts and tax increases.That’s despite the update being likely to show that the outlook for the budget deficit in the present financial year and the following three years is much better than expected in the budget last May.It’s also true even...

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Don't let any politician convince you your taxes will be going down

Whenever an election approaches, we can expect the bulldust count to soar on claims about the prospects for the economy and, particularly, about how well the budget’s being managed.Election campaigns inhabit a financial fantasyland, with both sides promising lower taxes, higher government spending and improved budget balances.Our politicians have spent decades training voters to believe that, when it comes to the budget, we can...

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Beware of governments using algorithms to collect revenue

A great advantage of having children and grandchildren is that they can show you how to do things on the internet – or your phone – that you can’t for the life of you see how to do yourself. But a small advantage that oldies have over youngsters is that we can remember how much more clunky and inconvenient life used to be before the digital revolution.When you had to get out of your chair to change the telly to one of the other...

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Panicking financial markets could stuff up another global recovery

In economics, there’s not much new under the sun. When I became a journalist in the mid-1970s, the big debate was about which mattered more: inflation or unemployment. You may not realise it, but that’s the great cause of contention today.With prices having risen surprisingly rapidly this year in the US and Britain – but few other advanced economies – we’re witnessing a battle between people in the financial markets, who fear...

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A quick economic rebound seems assured - but then what?

The good news in this week’s “national accounts” for the three months to end-September is that the Delta-induced contraction in the economy was a lot less than feared – not just by the financial market economists (whose guesses are usually wrong) but by the far more high-powered econocrats in Treasury and the Reserve Bank. So now it’s onward and upward.According to figures from the Australian Bureau of Statistics, real gross...

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When house prices soar, everyone forgets who suffers most

One of the darker arts of politics involves manoeuvring to ensure that election campaigns focus on issues that favour my side over yours, regardless of whether these are the issues most likely to be pertinent to the nation’s needs over the next three years.Because the pollies believe us all to be self-centred, they never try to appeal to the greater good. If the world worked the way it should, you’d expect housing affordability...

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NEW ISSUES IN MACRO MANAGEMENT: public debt, MMT and QE

Talk to virtual Comview conferenceAs you well know, thanks to a long period of weak economic growth, we hadn’t made any progress in reducing the federal government’s debt arising from the global financial crisis of 2008-09 before the arrival of the huge budget deficits associated with our response to the pandemic. This has left us – and all the other advanced economies – with levels of public debt higher than anything we’ve known...

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Interest rates definitely to rise - sometime, maybe

The geniuses in the financial markets – and they must be geniuses because they’re paid far more than we are – think next year will be an absolute ripper. Workers will be getting their first decent pay rise in six years or more. Say, 3 to 4 per cent. Whoopee. Gee, thanks guys.Find that hard to believe? So do I. It’s the logical implication of the bets they’re making that the Reserve Bank will begin lifting its official interest...

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Masterpiece: the spin is Morrison's plan to reach net zero is dizzying

The more our politicians are full of bulldust – known euphemistically as “spin” – the more they rely on our short attention span. They make a grand announcement that doesn’t bear close scrutiny, but the media caravan moves on before it’s had time for a closer look. Well, not this time.I’ve been looking more closely at the Plan to achieve net zero emissions of greenhouse gases by 2050 that Scott Morrison unveiled last week, shortly...

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