The government’s tax and spending institutions are starting to wreak havoc on the economy, and the news is about to get even worse.
The latest key economic data – known as national accounts – will be released by the Bureau of Statistics tomorrow.
The report is expected to show that Australia is suffering from sluggish economic growth, supported by record levels of government spending.
Australia has been stuck in what is called a per capita recession for some time now.
In layman’s terms, this means the average Australian is getting poorer and our living standards are declining.
And that won’t change anytime soon.
Treasurer Jim Chalmers has tried to make a virtue of his government subsidies – such as electricity price rebates and childcare support – in tackling the cost of living issues facing Australians.
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 it prolongs people’s pain
It comes as the amount of tax the government collects is falling as commodity prices have fallen in recent months and fewer international students are attending our universities due to the government’s crackdown.
In other words, there is less tax money to spend, but more is spent anyway – using debt to pay for it!
And unfortunately, the more state and federal governments spend, the less likely interest rates will fall.
It’s that simple.
Chalmers’ high spending creates inflationary pressure, preventing the Reserve Bank from cutting interest rates to counterbalance the sluggish economy.
Worst of all, we know this government spending won’t stop.
With a federal election campaign approaching, both major parties will want to entice voters with expensive electoral bribes.
There is even a reserve in the budget that sets aside billions of dollars to do just that.
The fact that the elections are likely to be a closely fought battle only increases the likelihood of higher spending.
The next 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 back.
In the meantime, we all have to pay off the interest payments on the debt.
That will be one of the most expansive items in the federal budget as debt tops a trillion dollars with no end in sight.
You would think this would lead to higher taxes.
The government just keeps spending – and that will make life harder for average Aussies
Tomorrow’s National Accounts figures will reveal just how weak Australia’s economic growth really is.
The only reason we are growing at all and not declining is because of record government spending and high levels of immigration, despite the pressure on the university sector.
Mining profits have collapsed, down nine percent this quarter.
Business taxes have fallen across the board, contributing to a projected $30 billion deficit when the next budget is passed.
Instead of expanding the economic pie, as Paul Keating used to advocate, we are only increasing the debt burden.
And that is without the government implementing economic reforms that could help get debt back under control.
No wonder speculation is growing that the government wants to go to the polls early, before next year’s budget, set for April.
Hand-delivering bad economic news won’t help Labor win the next election, so why should Albo wait until after the Budget to go to the polls?
The better answer is that he probably won’t, unless of course he doesn’t think he can win. In that case, he will wait as long as possible before serving dissatisfied voters.