Communications Minister Anika Wells was ridiculed this week for using Ooshies to explain Jim Chalmers’ changes to negative gearing and capital gains tax. More likely, she simply adapted the presentation the Treasurer used to explain his plan to fix the housing crisis to caucus. No doubt there was evil landlord Ooshie, exploited first-home-buyer Ooshie and greedy developer Ooshie. Unfortunately, Jim and Anika forgot that developer Ooshie has to borrow hundreds of millions of dollars, spend years wrestling with the planning Ooshies and sell houses for more than they cost — or he and the creditor Ooshies go broke.

Construction company Bathla collapsed last week owing more than $3 billion, leaving more than 2,000 half-built homes in limbo and another 13,000 proposed dwellings that may never be built. Far from rushing in to build new dwellings to accommodate Albo’s migrant millions, the investors have vanished.

In Sydney, where Jim’s magic has worked hardest, home values have fallen almost $100,000 on average since February and 93 per cent of capital-city suburbs have fallen over the past three months. Not quite the slight slowing of growth that Treasury’s modelling projected.

Credit where it’s due. Labor has created the perfect buyers’ market. There just aren’t any buyers. Or investors. Jim has fixed the housing crisis rather like the original Jim fixed things on television.

Chalmers calls his budget the ‘most productivity-focussed yet’ and the most reform-oriented since the 1990s. Former Productivity Commission chairman Gary Banks, in a speech last week, wasn’t convinced, saying the Treasurer ‘doth protest too much’.

The mystery of Australia’s disappearing productivity is not terribly mysterious. Productivity means getting more bang for your buck, whereas Australian governments in general and Jim’s in particular spend more and more to get less and less.

We have poured billions into wind, solar, transmission, batteries, pumped hydro (the money pit that is Snowy Hydro 2.0), green hydrogen, and gas-fired generation for when the wind and sun don’t show up for work. Indeed, in Narrabri, even the gas hasn’t shown up for work, as Santos has spent more than a decade on a regulatory odyssey extracting approvals to extract gas from one of the country’s largest gas resources. As Banks says, we have spent ‘more capital to produce less reliable electricity’. And not just a bit less. The Productivity Commission estimates that labour productivity in electricity has fallen by nearly one-third.

Building a national freight railway from Melbourne to Brisbane should be productive, but shelving construction north of Parkes is not. Instead, Chalmers poured billions into Melbourne’s CFMEU-infested Suburban Rail Loop, where the productivity measures are as substantial as an on-site stripper’s apparel.

Digging a billion-dollar hole is an input. What matters for productivity is what comes out the other end. Which is not much when you don’t even get a hole, just a whole lot of nothing. Regis Resources spent years securing approvals for the McPhillamys gold mine, only for Tanya Plibersek to render it unviable to preserve the dreaming site of the blue-banded bee.

Discussing AI, Chalmers wrote this week that it was technology that drove Britain’s extraordinary productivity gains in the 19th century: spinning machinery, iron, steel, coal and steam. True. But the Industrial Revolution didn’t happen because the Chancellor of the Exchequer established a Future Made in Manchester Fund.

Chalmers’ enthusiasm for AI needs a reality check. AI can help an engineer design a gold mine more efficiently. It cannot make the mine productive if Plibersek won’t let him build it. AI cannot save the government from itself.

Anyone who has used AI for any length of time knows it comes with at least two traps for new players.

The first is a pathological desire to please. Ask whether your half-baked housing plan, marinated in ideological rancour, will work, and it will assure you that not only is it brilliant but thoughtful, nuanced and transformative. Call it Artificial Ingratiation. Experienced users learn to distrust the sycophantic flattery.

The other trap is hallucination. When AI doesn’t know the answer, it just makes up one that sounds plausible and states it with complete confidence. Experienced users check everything. So, when Treasury comes up with a model of your housing plan that sounds too good to be true, it was almost certainly cooked up by an intern using ChatGPT. But even Treasury has warned Jim that AI might not deliver his productivity miracle.

The government’s bad ideas don’t just kill productivity in the public sector. Increasing energy costs – a triumph of climate alarmists on both sides of the aisle – have added another drag to an economy in which market-sector productivity has stagnated for a decade, while productivity in the non-market sector has fallen to its lowest level this century. Taxpayer dollars have poured into the NDIS and other government-funded activities. These services produce important social benefits, but when employment and spending rise faster than output, productivity falls, and weak market discipline makes waste and fraud harder to contain.

Chalmers is a fan of Paul Keating, but their conceptions of productivity bear no resemblance to each other. In 1993, Keating said workplace agreements should be based predominantly on improving the productivity of individual enterprises, ‘as the only means of guaranteeing sustainable wage increases’. Today, productivity improvements as the quid pro quo for worker benefits have disappeared, buried beneath mind-bogglingly complex awards, pattern bargaining, rigid regulations and union privileges.

The Hawke-Keating government had the wonderfully self-deprecating Peter Walsh, author of the brilliant Confessions of a Failed Finance Minister. Walsh fought white elephants like the Multifunction Polis and imposed the spending discipline that produced three consecutive surpluses. Chalmers, on the other hand, has Katy Gallagher as his Finance Minister, who, when she was asked what in the budget would increase productivity, responded lamely, ‘There’s a glossy, an A4 there’. One could almost hear the ghost of Walsh demanding an expenditure review of the printing bill.

Which brings us back to AI. Chalmers may be right that artificial intelligence is the greatest productivity opportunity of his lifetime. But while AI enhances natural intelligence, it also enhances natural stupidity, or Jim Intelligence. AI turns into JI. Darryl Kerrigan said of propositions that bore no discernible relationship to economic reality: ‘Tell ’em they’re dreaming.’ The next time the Albanese government says it has fixed productivity, tell ’em they’re hallucinating.