Australian Economy

Drought of economic ambition blots Aussie election

Australian incumbent Prime Minister Scott Morrison and Opposition Leader Anthony Albanese during the second leaders’ debate of the 2022 federal election campaign at the Nine studio in Sydney, Australia May 8, 2022. Alex Ellinghausen/Pool via REUTERS – RC2Z2U9FFWRW

Register now for FREE unlimited access to Reuters.com

MELBOURNE, May 20 (Reuters Breakingviews) – Hells Gates would be an apt place to decide an election. As Australia’s right-wing coalition government makes a last-minute push ahead of Saturday’s ballot, their decision to channel some A$5.4 billion ($3.8 billion) to shore up the diabolically named river section underscores why incumbents under Prime Minister Scott Morrison are struggling to stay in power.

The funding represents the biggest slug of the biggest single new item in the March federal budget. Hells Gates is a tired idea to boost agriculture that has been rejected several times since it was first proposed more than 80 years ago. Its resurrection appears to be the Liberal Party’s thank you to the National Party for backing its insipid 2050 net-zero plan. The dam proposal lacks a solid economic rationale, however. It’s “high risk, low return”, according to the Australia Institute think tank.

The wasteful initiative takes advantage of Australia’s ability to mostly cruise for three decades, largely by extracting and exporting iron ore and coal while feverishly building and selling highly leveraged homes. Morrison’s government abandoned its fiscally conservative dogma to pump money into the system during the pandemic while helping minimise the death rate by closing international borders. The jobless rate just dipped to a 48-year-low of 3.9%. And although national debt has swelled recently, it sits at less than half of GDP, an enviable ratio among developed countries.

Register now for FREE unlimited access to Reuters.com

Even so, low unemployment makes it more likely that interest rates will keep rising, putting more pressure on homeowners facing falling prices. Wages are growing at 2.4% against inflation of 5.1%. China, one of the largest buyers of Australian goods and services, is slowing down. Unemployment and underemployment Down Under also could be as high as 18%, reckons market research firm Roy Morgan.

Against this backdrop, there’s a paucity of ideas from politicians, including Labor Party leader Anthony Albanese. Plans to help first-time homebuyers are piecemeal and financially fishy. After three years of water scarcity, bushfires and floods, tackling climate change should be a bigger priority. Related investment could provide a significant boost. Sustaining Australia’s growth in the coming years will be tougher. Whoever becomes the next prime minister will be under pressure to end this drought of economic ambition.

Follow @AntonyMCurrie on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

CONTEXT NEWS

– Australians go to the polls on May 21 to elect the next federal government. The coalition of the Liberal and National parties is hoping to secure a fourth consecutive term, with the Labor Party trying to return to power for the first time since losing office in 2013.

– Securing a majority requires winning 76 of the 151 seats in the House of Representatives. The term of office is usually three years.

– Australia’s official unemployment rate was 3.9% in April, according to data released by the Australian Bureau of Statistics on May 19. The March figure also was revised down to 3.9% from 4%. It’s the lowest monthly rate since 1974.

– The ABS also released data a day earlier showing that wages in the three months to the end of March grew at an annual rate of 2.4%.

Register now for FREE unlimited access to Reuters.com

Editing by Jeffrey Goldfarb and Katrina Hamlin

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button
SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.