The government’s fiscal and spending setup is starting to wreak havoc on the economy and the news is about to get worse.
The Office of Statistics will publish the latest key economic data, known as the national accounts, tomorrow.
The report is expected to reveal that Australia is suffering from slow economic growth, sustained by record levels of government spending.
Australia has long been stuck in what is called a per capita recession.
In simple terms, that means the average Australian is getting poorer and our standard of living is declining.
And that’s not going to change anytime soon.
Treasurer Jim Chalmers has sought to leverage government grants such as electricity price discounts and childcare support to address the cost of living crisis Australians are enduring.
But the contradiction is that economists continue to warn that Chalmers’ spending – which is at record levels – is prolonging people’s pain.
Treasurer Jim Chalmers has tried to make a virtue of all his spending… but he’s prolonging people’s pain.
It comes as the amount of tax collected by the government is falling because commodity prices have fallen in recent months and fewer international students are attending our universities in the wake of a government crackdown.
In other words, there is less tax money to spend, but more is being spent anyway – using debt to pay for it!
And unfortunately, the more state and federal governments spend, the less likely they are to lower interest rates.
It’s that simple.
Chalmers’ high spending is “building up” inflationary pressures, preventing the Reserve Bank from lowering interest rates to counter the sluggish economy.
Worst of all, we know this government spending won’t stop.
With a federal election campaign just around the corner, both major parties will want to tempt voters with costly election bribes.
There is even a reserve contained in the budget that allocates billions of dollars to do just that.
The fact that the election is likely to be a close contest only increases the chances of more spending.
The upcoming elections will be the equivalent of an arms race between the major parties.
It will lock in unsustainable recurring spending, increasing the national debt, and future generations will one day have to pay it.
In the meantime, we all must face paying interest on the debt.
This is becoming one of the largest items in the federal budget, as the debt reaches the trillion-dollar mark with no end in sight.
You would think that would lead to higher taxes.
The government will simply continue to spend, and that will make life harder for average Australians.
Tomorrow’s national accounts figures will reveal just how weak economic growth in Australia really is.
The only reason we are growing and not going backwards is because of record government spending and high levels of immigration, despite the pressure being put on the university sector.
Mining profits have plummeted, down nine percent this quarter.
Business taxes have fallen across the board, which will contribute to an expected $30 billion deficit when the next budget is passed.
Instead of growing the economic pie, as Paul Keating used to advocate, we are simply increasing debt levels.
And that is without the government legislating economic reforms that could help regain control of the debt.
No wonder speculation is growing that the government wants to go to the polls early, ahead of next year’s budget, which is scheduled for April.
Delivering bad economic news in droves won’t help Labor win the next election, so why would Albo wait until after the budget to go to the polls?
The best answer is that you probably won’t, unless you think you can’t win, of course. In which case he will wait as long as he can before handing himself over to disaffected voters.