Contributed by Joe Montero
Treasurer Jim Chalmers delivered his first economic statement yesterday. It was not good news. Official predictions about the future of the Australian economy were revised. In short, inflation will rise well past 6 percent and be around for some time yet, estimated economic growth predictions will be lower, and Australia is going to do it harder than we have previously been told.
There will be no cost-of-living relief. We are told there is little room in the budget to do this.
The major positive claim about the Australian economy is the so-called low unemployment rate and labour shortage. It is said that this proves that despite some bad numbers, the economy is really in a very good state.
There is dishonesty in the low unemployment claim. The major reason for the labour shortage is some areas is that these have relied on the importation of workers from overseas, mainly to do low paid and insecure work that Australians don’t want to do. This source of labour has dried up through the pandemic. This is the reason labour shortages are not resulting in higher wages.
The reality on the ground is that most of Australia is living form pay day to pay day and just scraping by. Chalmer’s warnings about making tough decisions and tightening the belt offer little comfort, and the political band aid against public angst, is to blame the Morrison government for everything.
Photo from Shutterstock: The rising cost of living is a major political issue
Morrison and his team didn’t help. But is it all their fault? Australia’s economy has been buffeted and continues to be buffeted by headwinds, and the reaction of government. Whatever their political stripes have been similar – cut spending, hold back wages growth, give more reign to the market, along with lifting assistance to private corporations.
The Albanese government is not shifting from, this tradition. But it does face a unique situation. Its legitimacy depends on honouring some community expectations. The main one is to move on to do substantially more to reduce carbon emissions. This and a few other issues constrain the government’s manoeuvrability.
Despite being thin on the details, the economic statement served to deliver the message that there will be spending cuts. There won’t be cost of living relief for those suffering the most. Only modest investment in childcare and medicines through the PBS. Expect the inadequate funding of the social security system to continue. There will be no major boost to health and education. The coming tripartite jobs summit will most likely be a vehicle to impose wage constraint and increased productivity.
At the same time, there will go the go ahead for new gas projects and coal, plus a boost on military spending. The spectre of paying the government’s $1 trillion debt quickly as possible has been raised.
The details of the Albanese government’s economic policy have been left to the coming October budget and beyond.
All this tell us that is going to be business as usual. There is no alternative strategy. Neoliberalism remains. Does this mean no change is possible? Not exactly. The Albanese government remains vulnerable to expectations, and it did not win government on a wave of support. It was pushed into office by a peculiar electoral system and the self-destruction of the previous government. The result showed that a large part of Australia remains unconvinced and demands more change than is on offer.
This brings the possibility of exerting pressure based on a groundswell of rising public opinion. The Albanese government way be able to be persuaded that its survival depends on delivering a change in direction, even if this comes in small and tentative steps.
This calls on activists to get on with the work of building a broad and smart moment on the ground. No one else is going to do it.