Anthony Albanese may have an economics degree from the University of Sydney, but he is still a terrible economic manager.
It shouldn’t take three years of study to know that excessive government spending fuels the dumpster fire of inflation.
The Reserve Bank has made this abundantly clear as Australian borrowers miss out on relief and Albanese wonders how he will be re-elected next year.
In marginal seats, Australian homeowners look enviously at their overseas counterparts enjoying the benefits of rate cuts.
Australia’s 4.35 percent cash rate is now higher than Canada’s, after four rate cuts this year, and New Zealand’s, after three rate cuts in 2024.
The Australian inflation crisis is now a local phenomenon. It is no use blaming Covid supply constraints and “global factors” now.
During a severe economic crisis, such as lockdowns or a global financial crisis, governments need to spend heavily to save jobs and prevent the economy from sinking into another Great Depression.
This form of Keynesian economics, named after economist John Maynard Keynes, has been considered common sense following the disaster of the 1930s that left a third of Australians out of work.
Anthony Albanese is proof that having a degree in economics doesn’t stop you from being a bad financial manager (pictured with his fiancée Jodie Haydon)
But under the Labor government, public spending has risen to record levels. outside of a global economic catastrophe, and even though unemployment remains low at 4.1 percent.
Labor came to power in May 2022, when lockdowns had already ended and there was little need for government stimulus, with interest rates still at a record low of 0.1 per cent.
Despite that, 55 per cent of Australia’s total economic growth over the past two and a half years has been the result of spending by federal, state and local governments, figures from the Institute of Public Affairs think tank show .
Yet despite all that profligacy, Australia’s economy expanded just 0.8 per cent in the year to September, marking the weakest growth since the 1991 recession outside of Covid lockdowns.
Australia has also been in a per capita recession for a record seven quarters, where the output of every Australian has been declining.
In another display of economic stupidity, Labor governments are expanding the public service, with the ALP also dominating at state level.
The public service is bloated, even though private sector employers are struggling to find staff during skills shortages.
Albanese was probably too busy being a student activist with the left-wing Labor faction trying to change the world rather than understanding that governments must live within their means (pictured in the early 1980s).
This has worsened Australia’s productivity crisis and kept services inflation high, with annual immigration levels at record highs above 500,000.
If companies cannot produce as many products, they have no choice but to pass the costs on to consumers.
IFM Investors chief economist Alex Joiner says high population growth is increasing demand and therefore putting the brakes on rate cuts.
“The RBA has been consistent in its thinking that the level of demand exceeds supply and that creates risks for inflation,” he says.
“However, we have increased demand through population growth, public demand and public employment.”
Australia is now home to 2.5 million public sector employees.
This is a huge increase of a third from 1.9 million just two years ago, new IPA data exclusively provided to me reveals.
During that time, the number of Australians in the private sector increased just two per cent to 11.8 million, up from 11.6 million in 2022.
Since August 2022, the public sector has added 600,000 new workers compared to just 200,000 in the private sector.
The total number of new public sector workers since then has already exceeded the number created between August 2014 and August 2022 by 40 percent.
The last time the Coalition was in power, between 2014 and 2022, 76.5 percent of jobs were created in the private sector and 23.5 percent in the public sector.
But from 2022 to 2024, this has completely reversed: 82.1 percent of all new jobs were in the public sector and only 17.6 percent in private enterprise.
Australia now also has a public debt problem: state and federal government spending accounted for a record 28 percent of gross domestic product in September.
This figure jumps to 32 percent if city councils are taken into account.
IPA researcher Lachlan Clark tells me Labor is resorting to record public spending to mask Australia’s economic weakness.
“The explosion of public sector employment is a worrying sign of the true health of Australia’s economy,” he says.
“This expansion, coupled with unprecedented levels of government spending, both fueled by debt, is dragging Australia’s economy down.”
These unnecessary public servants are also a waste of taxpayers’ money.
“While frontline public sector jobs play a key role in sustaining civil society, many bureaucratic functions are inefficient and counterproductive,” says Mr Clark.
“These roles restrict, rather than expand, economic output and are an increasing burden on taxpayers.”
When public debt increases, taxpayers have to spend more on interest payments, which means less money for other public services.
In financial markets, these are known as bond yields.
Government bond yields have soared since Albanese came to power, in a sign that investors lending money to Australia are worried and want to be compensated with higher annual interest payments.
Surely Albanese would understand that excessive public debt is a threat to all our standards of living.
That is if I had been paying attention in class at university in the early 1980s, after the Labor Party of that era had learned the painful lessons of Gough Whitlam’s big-spending regime.
But Albanese was probably too busy being a student activist with the left-wing Labor faction trying to change the world rather than understanding that governments must live within their means.