PETER VAN ONSELEN: How things are about to get real for Albanese’s amateur finance team

Although the country’s financial team – Finance Minister Jim Chalmers, Finance Minister Katy Gallagher and Deputy Finance Minister Stephen Jones – have no economic qualifications whatsoever, we can hope that they are getting good advice from the government bureaucracy.

As economic conditions look set to deteriorate in the coming months, and possibly years, we need the Albanian government to take the right policy steps to prepare for what lies ahead as a nation, and to minimize the duration of the bad times that lie ahead and will devastate lives.

This week the national accounts are published, which keep us informed about the state of the Australian economy.

The market expects very slow growth, perhaps even to the point where the economy shrinks. That is, there could be a negative economic quarter ahead. Personally, I doubt it, but growth will be bloodless.

We are already in a per capita recession, which means that as individuals we are getting poorer by the day. And we have been in a per capita recession for over a year. But the economy as a whole has not gone downhill so far, even though citizens are suffering.

This is due to skyrocketing immigration, which is expanding the population base and supporting overall growth rates, even as we become poorer as individuals.

But high immigration also brings unintended downsides, such as upward pressure on house prices and making it harder for younger Australians to access the already tight rental market.

Supply cannot keep up with demand.

The Chancellor of the Exchequer, Katy Gallagher (pictured), studied sociology at university and is now responsible for the country’s finances.

If the national accounts confirm that the economy is weakening, we will see new evidence of declining consumption, investment and construction. It also means that the Albanian government can abandon its election promise to build 1.25 million new homes, a target it already appears to be missing.

The next step on this journey to economic oblivion is a weakening labor market and rising unemployment.

These are all global problems in Western democracies at the moment. The difference is that comparable countries elsewhere have already seen their inflation rates fall dramatically.

No, us. Last week we saw just how stubborn inflation is in Australia, with the latest figures coming in worse than the market had expected, despite Labor’s artificial attempts to use the energy cut in the budget to temporarily lower the inflation rate.

Meanwhile, the Reserve Bank has already indicated that it does not expect to cut rates anytime soon. This is in stark contrast to what central banks have done in countries such as the US, New Zealand and Canada.

Their central banks have all cut interest rates because their governments have gotten inflation under control again. Our government simply hasn’t.

Lower inflation and lower rates make it easier to manage an economic recession such as the one that is about to hit. If the RBA cannot lower rates to manage a recession because of persistently high inflation, the risks to the economic well-being and security of Australians are high.

This is not the fault of the Reserve Bank.

It is a conundrum that the entire Albanian government, together with the state governments, creates. They did not have to spend as much in recent budgets as they have. And they did not have to tip to buy votes in the elections. And Chalmers certainly did not have to calibrate tax cuts in a way that contributes to high inflation.

These were all choices made by our finance team, which did not have the necessary economic skills.