The world faces increased insecurities as a result of the US and Israel (with little help from others in the West) finally confronting the Iranian theocratic reaction to the modern world.

However, in addition to having brought about economic weaknesses, the Australian government is mired in an inability to change course.

Growth-stifling policies commenced under the Turnbull government and have been turbocharged by the Albanese government’s breakneck spending and regulatory measures on welfare and energy.

These have led to reduced investment and misdirected capital and human resources, lowering living standards.

Misdirected capital resources into government services and low-quality wind and solar energy have resulted in capital productivity now being 19 per cent below its 1995 level. This is aggravated by government spending that reallocates labour from high-productivity private-sector activities to low-productivity government and government-funded activities.

The government – and the hand-picked officials it has selected to advise it – remains incapable of understanding what drives productivity.

Wedded to a crude Keynesian economics, they see spending – government or private, consumption or investment – as having the same effect. For the Prime Minister, his Treasurer, and Finance Minister, the science of government takes income levels for granted, with the key issues centred on how to allocate that income in ways that perpetuate their political support, regardless of national well-being and security.

As a result, this prevents policy changes in the face of adverse external developments.

Thus, while the Canadian Prime Minister, in this week’s address to Parliament, steered clear of the Net Zero rhetoric that has conditioned his politics, Anthony Albanese spent fully one-third of his own address defending the income-sapping renewable energy measures he has presided over, which have caused escalating electricity costs.

In this respect, Labor’s policy is being advanced through measures that build upon long-standing penalties to commercial energy, including:

• The Safeguard Mechanism which is essentially a tax on the top 220 firms, forcing them to abandon energy-intensive activities like agricultural fertilisers.
• The oxymoronically named Capacity Investment Scheme which aims to lock-in two decades of contracts for renewables and the batteries that do very little to enhance their reliability.
• The expensive and environmentally calamitous transmission networks that are necessary to collect energy that is only one-third of the density and far less reliable than the coal and gas it is designed to replace.

In fact, the only way these policies, which drain over $16 billion a year from the economy, can be insulated from causing the inherently precarious system reliability that they deliver is by having a parallel system of reliable fossil (or nuclear) facilities.

The result is a far higher system cost than one without any wind and solar.

Similar economic ignorance is evident in other recent government statements.

These include the announcement by Social Services Minister Tanya Plibersek of 500 additional workers as part of a $4 billion-plus ‘investment’ in tackling family, domestic, and sexual violence.

This was business-as-usual, given that roughly 80 per cent of new jobs have been government or government-funded and bring negative productivity gains.

Similarly, the government introduced new penalties on superannuation earnings, which continue its assault on savings. Blinded by a soak-the-rich philosophy, with this measure, the government further constricts the accumulation of new savings while encouraging the liquidation of existing savings – again unperturbed by and blissfully ignorant of the implications of this for investment, the meat and drink of the productivity increase it purports to be pursuing.

And, again demonstrating its economic ignorance, the government’s priority to addressing the fraught nature of fuel supplies in the wake of the Iranian War turns out to be preventing ‘price gouging’ by energy suppliers. In fact, with thousands of different suppliers, no attempt to obtain such monopoly profits is possible. Oil and gas prices will rise because supply is constrained and because customers, reacting to this, will increase their self-storage in car petrol tanks. Even if this were not the case, holding down prices runs contrary to the beneficial price signal, which discourages demand and encourages the search for alternatives.

The detrimental effects of the current government’s ignorance of basic economics and hostility to those who have accumulated savings have been clear over the past four years in the stagnation they have caused.

In the new, increasingly risky world, the adverse consequences are magnified. If the Albanese government is not replaced within two years, the damage might be permanent, and even if a new Coalition government is elected, it is not clear that it would have the expertise and discipline to make the necessary corrections.