Economists say the only benefit of the economy is that inflation has been eased.
With re-election secured, the Labour government is now facing the harsh reality of addressing Australia’s structural economic issues.
Economists warn that slight easing inflation numbers lies in entrenched issues, such as stagnant productivity, affordable housing and a choking business environment.
Most agree that inflation, once a dominant concern, is no longer a immediate threat.
Independent economist Saul Eslake has linked the early surge in inflation to its response to the Ukrainian war and the pandemic, with authorities printing millions in additional currency to fund the government’s Covid-19 stimulus.
“All of these things are subsided,” he told The Epoch Times. “And the ‘basic’ and ‘heading’ inflation is back to target range. ”
John Humphries, chief economist for Australia’s Taxpayers Alliance, says the country’s inflation issue is further driven by policies from the Reserve Bank of Australia, banks and government.
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“We expect inflation will continue in the near future, unless policy changes suddenly, but the cost of living will continue as economic growth stagnates and housing is affordable,” he said.
I still want a productivity treatment
With ease of inflation, economists have put a deeper focus on concern: productivity.
“Productivity is on the same level as it was eight years ago, and the Mullian economy is why so many people struggle,” Humphries said.
He warns that Australia’s anemia growth is patched with superficial measures, but that long-term reforms are being sacrificed for short-term political victory.
“Australia desperately needs significant tax cuts, reduced regulations on small businesses and cheap energy prices if they want to kickstart the economy,” he said.
Humphreys considers workers’ tax measures (including moderate income tax cuts and proposed standardized deductions of $1,000) to be iconic gestures.
Gigi Foster, a professor of economics at UNSW, warns that reelection of workers could encourage further interventionist measures to be implemented.
“The real question is whether labor disrupts bad opinions policies that only do minor damage, or whether they interpret election results as an order that drives taxes and regulations even further, whether it approaches economic ruin,” she said.
Ongoing business closures
Business closures are an ongoing issue.
“This is partly due to overregulation and bureaucracy, and part of the difficulty of finding reliable workers, which is why there is weak demand,” Foster said.
“The government can deal with the first two most quickly.”
She also links workforce departure to deeper social disruptions.
“Many workers today seem inward-looking and have varying degrees of social impairment,” she said.
“If the government really cares about Australia, it will not be subordinated to the state, but will begin a long march towards a recovery of healthy, functional and confident communities.”
Eslake said the business closure rate reflects the reopening of tax enforcement by the Australian Tax Agency after Covid.
“The rise in business closures comes from ATOs taking action to ensure that businesses meet their tax obligations, particularly those that are granted (actually) exempt during competition to ensure that small and medium-sized businesses that are granted exemptions during competition will not pay taxes during symbiosis,” he said.
The housing solution is not clear
The housing and rental crisis are also a major challenge.
“None of the policies outlined in the campaign will have a significant impact on housing affordability,” Humphries said.
He said high construction costs, tough supply, high immigration rates and urban sprawl all contributed, while political inertia has been exacerbated.
Labour has raised two signature housing bills (supporting to purchase and rent) as key solutions.
“Telepost parties’ policies help some young people enter the housing market, but they do nothing to address the underlying issues.”
There’s no political mood for real change
Eslake agrees and offers a dull political read.
“They know that for all the crocodile tears that have fallen into the challenges facing first-time buyers, they are far fewer than those who already own at least one property.”
“Both political persuasion governments continue to keep housing prices rising,” he added.
