Is this a good election for the government to lose? If you are a current Coalition parliamentarian, the answer would be in the negative. Opposition looks grim and those useful income supplements that come from being in government – for ministers, obviously, but for chairing government committees and the like – immediately evaporate if the Coalition loses. At the time of writing, we don’t know the result. But thinking strategically, a case can be made that being in office over the period 2022 to 2025 will present significant challenges with few obvious solutions, particularly given all the nonsense spouted by all sides of politics during the election campaign.
There is nary a mention of the economic clouds that have gathered overseas and the impact this will have on Australia. It is clear that national security will also require much more attention, given developments in the Ukraine as well as China increasingly asserting its authority.
In retrospect, Covid will look like a walk in the park, particularly as the federal government’s main response was simply to spend a whole lot more of other people’s money – the favourite pastime of all politicians. The opposition leader, Anthony Albanese, makes much of his belief in ‘the power of government to make a difference in people’s lives’ – no, he isn’t speaking ironically – but this statement may come back to haunt him if the economic situation here turns seriously pear-shaped.
If economic growth falters, the rate of unemployment rises and inflation continues at a high level, then there is only so much governments can do to protect citizens. All that stuff about making sure that ‘no one is left behind’ will have a very hollow ring to it as swaths of the population are left behind.
And here’s a series of political assertions made by shadow treasurer, Jim Chalmers, that won’t age well. ‘The most meaningful thing that we can do to grow the economy, in my view, is to get cleaner and cheaper energy into the system. That’s not the only thing – TAFE plays a role, childcare reform, investing in advanced manufacturing and the care economy, boosting our digital infrastructure – all of those things are crucial to get the economy growing.’ A long list that will amount to nothing if economic growth stalls.
Let’s also take a look at what has been happening to some major economies in recent months. The UK is on the brink of recession and living standards are being smashed, particularly as a result of higher energy prices. The latest lift in the energy price cap, which took effect in April, raised power prices by more than 50 per cent. There will be a further increase in October. With inflation uncomfortably high – around 7 per cent – the Bank of England has acted to lift official interest rates. They have been raised on four occasions since December last year.
The Johnson government is in considerable disarray, concerned about the cost-of-living pressures that the citizens are now bearing but with few measures – a tweak here and there with taxes and handouts – to do much to relieve them.
In the US, inflation hit a thirty year high in March and remained above 8 per cent in April. While the labour market is still very strong, the Fed is now embarking on a series of demand-suppressing interest rate increases that will push up the living costs of many Americans. Energy prices remain at elevated prices, affecting drivers and costs in general.
While the Fed may be aiming for a soft landing in which inflation falls significantly while the pace of economic growth is largely maintained, there are several reasons to anticipate more of a hard landing. Monetary policy has a known tendency to overshoot.
China’s extreme reaction to Covid – particularly its extended and comprehensive lockdowns, including in the major port city of Shanghai – has caused on-going disruptions to supply chains that are affecting all developed countries, including critical parts for manufacturing.
No one knows for sure how China’s economy is travelling – the official figures are clearly made up – but it’s obvious that growth will be much lower than anticipated several years ago and many citizens will notice the effect. (It’s of course impossible to ignore being locked down for weeks on end.)
The embargo on the export of fertilizer by China (and Russia) in 2021 has caused the price of urea, in particular, to more than double, leading to higher food prices and potentially to food shortages. In addition, the invasion of Ukraine by Russia has direct effects on the supply of grains for export, putting more pressure on food prices. Many grain-importing countries in the Middle East, including Egypt, will be badly affected.
In more general terms, our former best friend, China, is now seen as a potential security threat as that country cozies up to some of our Pacific neighbours. There is already a strong China presence in PNG.
That the Solomon Island’s prime minister, Manasseh Sogavare – always known as a loose canon – would strike a deal with the Chinese should not have come as a big surprise. The bigger issue is whether Australia will be sucked into a bidding war in the Pacific to prevent the Chinese becoming even more influential.
And let’s face it, Labor is weak on national security matters. There is still a large residual rump within the parliamentary party who remain very attached to China; they don’t fully accept the threats. And with a number of high profile individuals outside the parliamentary party – think here Bob Carr, Paul Keating, Kevin Rudd – goading them on, this is unlikely to change soon.
The bottom line is that the next three years might just be a good time to be lounging around on the opposition benches. Mind you, I would recommend doing a whole lot more than lounging. The Liberal party has to figure out what it really stands for and go about making these principles of government marketable to the electorate.
Rather than pushing the line that governments can make a [beneficial] difference in people’s lives – Albo’s position – the Liberal party should make the case for limited government and people making decisions for themselves and their families by standing on their own two feet.
Surely there are sufficient numbers of voters who are sick of being treated like toddlers to make this argument attractive? Add in the economic catastrophe of the Labor way – even higher government spending and debt – and the party could be onto a winner. It will be a long way back but you have to start somewhere.
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