On the eve of Treasurer Jim Chalmers delivering what is expected to be a dire mid-financial year economic update, The Economist magazine has delivered a scathing assessment of the government’s management of the Australian economy.
Australia is not ranked among the world’s 20 best-performing economies in 2024, ranking 21st over the past two years after previously being in the teens.
Australia is far behind countries like Spain, Italy, Greece and even Mexico.
Australia’s economic performance is ranked similarly to that of the United States (ranked 20th), where in the recent presidential election Democrats lost the White House due to a Trump campaign that condemned their management of the economy, capitalizing on frustrations. of traditional voters. .
The respected magazine blames Australia’s housing crisis for our poor performance this year, citing “rising housing costs” as a key factor behind the nation’s economic woes. Other factors weighing on performance include persistently high core inflation and anemic economic growth figures.
Tomorrow, Chalmers will deliver his final economic update of the year, which is expected to reveal sluggish growth, rising deficits and out-of-control government spending in recurring spending areas such as the NDIS.
Today highlighted some of the challenges but attempted to use bad economic news to scare voters that a coalition government would “come for Medicare, medicines and pensions”. He also sought to bolster his own economic management credentials by citing previously achieved surpluses.
A collapse in commodity prices has turned past surpluses into future deficits, according to updated economic forecasts, as Labor continues to make new spending commitments (such as HECS debt forgiveness and investments in care child) despite the accumulation of debt under his watch.
On Wednesday, Jim Chalmers will deliver his latest economic update for the year, which is expected to reveal sluggish growth, rising deficits and out-of-control government spending in recurring spending areas such as the NDIS.
The national debt is now over $1 trillion and rising, and neither major party has yet revealed a strategy to pay it off.
The annual interest bill on the accumulated debt – without even paying it – is now one of the most important items in the budget, eclipsed only by spending on welfare, health and defense, condemning future generations to the unenviable task of having to pay someday. back.
The Economist’s assessment flies in the face of efforts by senior government ministers, including the Prime Minister and Treasurer, to argue that the Australian economy continues to “punch above its weight”. Instead, our position compared to similar OECD countries has been lowered.
It’s not the kind of news Labor needs to lead next year’s election, scheduled for the first half of the year. The worsening state of the Australian economy makes it more likely that Labor will rush to the polls ahead of next year’s budget, set for April. Maybe already in February.
Delivering a full budget showing bad economic news just before an election would undermine the Labor Party’s efforts to present itself as the best economic managers during a campaign.
But with the cost of living crisis still persisting and Australia trapped in a perpetual cycle of quarterly per capita recessions, there is no way to hide the poor state of the national economy. Regardless of when the next elections are called.
Before the 1996 election, then-opposition leader John Howard mocked Prime Minister Paul Keating for offering “five minutes of economic sunshine” before the economy fell again.
Fast forward to today, and the Peter Dutton-led opposition could well try to do the same in the run-up to the election if Labor looks to add to the twin surpluses it passed on before all the budget figures for the next four years turn red.
The worsening state of the economy makes it more likely that Labor will rush to the polls ahead of next year’s budget, set for April. Maybe already in February, writes Peter van Onselen
The Economist’s scathing assessment, along with the release of the fiscal update, comes as a new poll reveals a majority of Australians are dissatisfied with Anthony Albanese’s performance and believe the country is “on the wrong path.” “.
The Essential survey also revealed that 47 per cent of Australians believed 2024 has been a worse year than they anticipated.
It also found that 68 percent of voters focus on which party is most likely to improve their situation over the next three years when they cast their votes. This sets up a showdown between Albo and Dutton over which party leader is best placed to manage the economic challenges ahead.
The Economist ranks OECD economies country by country based on the performance of their GDP (economic growth figures), stock markets, consumer prices, unemployment rates and debt levels.