Yesterday it was Dave Hughes with the punchlines. Today Angus Taylor grabs the mic and swaps jokes for a five-point charge sheet against the Albanese Government’s handling of the economy.
Don’t think a financial adviser like me expects any sympathy, but, right now, the battle between headwinds and tailwinds for stocks isn’t easy to be confident about.
Internationally, we have the Iranians, who have an unusual notion of what peace looks like and the weirdness that is Donald Trump. Add to this a new Fed boss, who doesn’t like forward guidance on interest rates and global inflation that needs oil prices to fall, though Middle East tensions don’t help that.
Locally, the Coalition leader, Angus Taylor has listed the troubles the Albanese Government has brought to the business-building, investing and our standard of living. After reading Taylor’s summary of what he thinks Treasurer Jim Chalmers has created for the economy, I was struck by the thought that I have to read Jim’s book on his idol, Paul Keating, called Brawler Statesman.
I had a brawl or two with the former Treasurer-turned-Prime Minister. Some of it was over what I and others thought were mistakes on the economy. However, given what Taylor, leading economic bodies and economists are saying about Jim’s efforts, it looks like the book was more political than economic!
In fact, as I pointed out yesterday, Jim is now being targeted by comedians like Dave Hughes, who has said that the Albanese Government looks like a team of “idiots” who “treat our money like they found it in a sack by the river, and they have to spend it before someone finds out”.
Of course, like all good comedians, Dave uses exaggeration for comical effect. But he revealed he voted for Labor at the last election, but he wouldn’t have if they told him that they were planning the tax changes that hurt property investors and homeowners in the Budget.
The legendary actor and humourist Peter Ustinov once explained: “Comedy is simply a funny way of being serious”.
And when I was examining the work of Treasurer Paul Keating in the 1980s, I was working with Doug Mulray and Andrew Denton at Sydney’s Triple M radio station who explained that consistently funny comedian’s “rehearse their ad libs”. Undoubtedly Dave had thought about Jim and Albo’s work, such as the misspending on the virtuous NDIS policy, which was clearly dumb and now property players are being asked to make up for the Government’s mistakes.
In case you forgot, the NDIS policy was expected to cost $13 billion for 500,000 needy people but the 2023-24 cost was $48.5 billion, which is projected to go to $52.3 billion in 2025-26. It’s why the Treasurer announced a crackdown in the Budget to save, wait for it, $36 billion over four years. That said, it could still cost about $53 billion a year!
Clearly, while the Albanese Government is good for some Aussies, others are being asked to pay for their generosity, which the Coalition’s Angus Taylor thinks is mispriced and misplaced.
The AFR looked at Taylor’s attack revelations that he’s unleashing today, which can be summed up this way:
- The International Monetary Fund has downgraded our economic growth to 1.9% putting us in 18th place out of the 30 large countries modelled by the IMF.
- The Reserve Bank of Australia chief economist Sarah Hunter warned that the nation might need a period of “high unemployment” to tame high inflation.
- She implied yesterday that a 4th rate rise is still on the cards.
- The OECD says we have had one of the greatest dives in living standards in the developed world.
- Persistent high inflation has contributed to a 5.1% decline in Australians’ real wages since March 2021.
Taylor told the AFR that the Government’s efforts are best described this way: “More spending, more bureaucracy and more public sector workers have not delivered better services or higher living standards.”
If I wanted to be fair, I might say that Jim and Albo wanted to be nice to low income workers, union friends, people on social welfare and the needy in the NDIS program. However, they didn’t work out how to pay for it, which has resulted in high inflation, rising interest rates and now falling house prices, which affects the wealth of all homeowners.
You might call it a nice idea that was not thought through by a team that’s not good at economics. I recall a great cartoon in the 1970s by Tandberg, who had Gough Whitlam sitting in a classroom, with Malcolm Fraser sitting behind him, and on the blackboard was the word: “ECONOMICS” in big print.
And Gough is turning around and says: “This is a great subject. I failed it last year!”
One day, Albo might be in a similar classroom cartoon with Angus and Pauline sitting behind him.
The irony of NDIS saving is that they are spending NDIS savings on other welfare programs that were largely volunteer based before NDIS was invented. There is no saving. Society is being taught that government owes you a living. Worker is sucker. Let’s make volunteering as hard and unrewarding as possible and give NDIS participants a free holiday with their families and support workers.
Government(all parties) should be required to declare to electorate the % of GDP they will spend on each area, the fat bureaucrats then should be given responsibility of delivering best outcome from allocation. Electors would then understand what parties are offering. KISS. Democracy needs to change, not working at present! All too complicated and no-one understands what they are voting for.
Yes Peter another good paper
Agree
Thanks
Peter, you continue to make the same mistake over and over again, yet you haven’t presented any evidence, based on actual economic principles, that “falling house prices … effects the wealth of all homeowners”.
At the very best, falling house prices reduce the paper wealth of all homeowners. It’s a perception, it is NOT a reality. For owner-occupiers, the vast majority of the homeowners in Australia accounting for about 66% of all occupied private dwellings, the loss is mostly on paper. And should they sell they’ll probably buy another property that ALSO has gone down in value.
Net result:
1. for most people, it doesn’t matter if house prices fall;
2. for first home buyers it’s an enormous advantage that previous LNP policies have DELIBERATELY kept out of the market;
3. for renters, lower house value means lower rent in the long term as rent-return is always linked to house value;
4. the only people that would be negatively impacted by falling house prices are those that purchased their properties, sat on their backside, waited for the house price to go up, use -ve gearing to lower their taxable income and then sell at an artificially inflated price, pocket 75-80% of the capital gain thanks to Howard era 50% CGT discount … and then repeat this passive, lazy investment on another property outbidding the poor bastards that could NEVER save enough for a deposit when house prices increase at a rate 3-5 times faster than salaries.
Economists should have ZERO tolerance for these passive investors that contribute next to nothing to our economy, that lock massive amount of money on existing properties and whose aim is to ensure housing supply stay low so that their Pozzi scheme stays alive.
dante crisante
1. for most people, it doesn’t matter if house prices fall and the rest of your conversation in the diatribe is very insulting. particularly POINT 4.
You are WRONG on these less than brilliant points.
HOUSE PRICES DO MATTER A LOT TO MOST OF US AS THEY ARE THE AVERAGE PERSONS BIGGEST INVESTMENTs, especially if the house is leveraged against a small business trading overdraft or say a loan to educate children or grandchildren or any other purpose people may choose to borrow on.
Well Peter, I would love to hear your response to each of Dante’s comments.