The impending federal election will be a referendum on economic policy, the like of which Australia hasn’t seen since 1993. The Turnbull/Morrison government has been a weak economic manager, relying heavily on Big Australia immigration numbers to artificially boost headline GDP numbers. In per capita terms, Australia’s wealth and productivity have been going backwards. We have been in a per capita recession.
Annual net overseas migration of more than 230,000 has flooded the labour market, holding down wages. It has also increased demand for housing in our major cities – a leading cause of Australia’s housing affordability crisis.
Treasury’s reliance on big immigration numbers to boost headline GDP figures has created complacent and slothful economic policy. It’s not hard to increase nominal growth by bringing more people into the country, carrying with them their assets and bank accounts.
It means that politicians can avoid the main driver of per capita GDP growth: micro-reform and productivity gains. ‘Productivity’ has become the missing word in Australia’s economic debate.
Neither Liberal nor Labor is going into this election with a productivity policy. The best that can be said about the Morrison government is that it plans No More Harm to the economy – a status quo option. On the Labor side, red danger lights are flashing. Bill Shorten’s frontbench has developed the most regressive, radically anti-growth policy in the nation’s history. In 1993, John Hewson’s Fightback package (an experiment in libertarian economics) was rejected by the electorate as too risky. The Liberals lost the unloseable election.
Labor is now campaigning on an extreme left-wing equivalent of Fightback. Whereas Hewson wanted to minimise government involvement in the economy, Shorten wants to maximise it, to extend the reach of the state into every investment, staffing, regulatory, taxation and wage-setting decision.
The shadow treasurer, Chris Bowen, has said that anyone who studies Labor’s economic policies and doesn’t like them should vote for someone else. On that basis, no well-informed voter could possibly vote Labor. Every hard-working, enterprising Australian has something to lose from Labor’s radical manifesto: a business, a job, a car, a tax refund. Here are Shorten’s six economic sins:
- Labor is promising tax increases of more than $250 billion, mainly on business and investment. This is a fiscal sledgehammer with the potential to flatten the national economy. Chris Bowen argues that Labor has taken the ‘hard decisions’ on tax. In fact, the easiest, softest policy in Canberra is to fill Treasury with other people’s money. It’s much harder politically to cut expenditure, to upset the pork-barreling of interest groups – and Labor has done none of that.
- The only good thing the ATO ever does is to pay a limited number of taxpayers a refund. Labor now plans to confiscate the income tax refunds of shareholders who have already paid company tax on their franked dividends. This is, in effect, a double-taxation policy. If Labor is willing to confiscate the tax refunds of investors then no part of the economy is safe from punitive state action.
- Shorten has announced that he wants to increase the proportion of new electric cars sold in Australia from 0.2 to 50 per cent in a decade. This can only be achieved by taxing the wheels off petrol-fuelled cars, either directly or through harsh emission p Either way, the moment a Shorten government is sworn in, the value of every petrol-fuelled car in Australia (for most families, their second most valuable asset) will drop. This is on top of Labor’s commitment to the Paris Agreement and 50 per cent renewable energy, policies certain to drive up electricity prices and cause blackouts.
- After the 1907 Sunshine Harvester Judgement, the minimum or living wage in Australia was determined not by labour productivity or economic conditions, but by the general cost of living. This was economically unsustainable, part of the ‘Post-Federation Settlement’ abandoned by the Hawke government in 1983. Not deterred by past economic failure, Shorten has pledged to bring back the living wage. It’s part of his plan to re-regulate the labour market, running the economy ‘like a union organiser’.
- While Shorten and Bowen are frequently in the news, the media needs to better inform voters of the whacky economic agenda of the shadow finance minister, Jim Chalmers. Notionally, his job is to identify budgetary cost savings, but he hasn’t identified one. Instead, he has announced his intention to turn Canberra’s Finance Department into a so-called ‘Entrepreneurial State’. It will use taxpayers’ funds to become an investment bank, lending money to businesses that can’t access finance elsewhere. Again, this is a replay of past Labor failures, such as WA Inc. in the 1980s. Chalmers Inc. is an economic-casino-in-waiting, a reckless experiment in government picking winners.
- There was a time when the Labor movement supported low rates of immigration as a way of helping Australian workers with employment and wage rates. That time has long past. The ACTU now backs a Big Australia permanent immigration rate of 190,000 per annum. Labor MPs believe that the people coming into the country are likely to vote for them, hence their enthusiasm for bigger permanent and refugee numbers.
Given the economic folly underpinning Labor’s platform, why hasn’t the Morrison government been able to rip it to shreds politically?
The Coalition’s problems go back to Turnbull’s Labor-lite era, which left it lacking the credibility to argue alternative approaches. Take electric cars; rather than fighting green sentiment in the virtue-signalling golden triangle of east Melbourne (Kooyong, Higgins, Goldstein), Josh Frydenberg caved into it, announcing ‘A global revolution in electric vehicles is underway’ with ‘Australian consumers set to be big beneficiaries’. The government can’t pull apart Shorten’s electric car plan because 16 months ago its own Treasurer was complicit in advancing similar dross.
Remarkably at the 2016 election, Turnbull insisted on running a ‘positive campaign’, eschewing attacks on Shorten. As incredible as it may seem, Morrison looks set to repeat this mistake.
In 1993, John Hewson gave Paul Keating an armory of political missiles and Keating fired them with laser-like effect. Shorten has given the Coalition plenty to aim at him but in terms of political grunt, today’s Liberal Party couldn’t knock the top off a custard.
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