Before the election, Scott Morrison told the nation we needed a party with a growth policy. Now that the election is over, we’ll hopefully find out what that growth policy is.
Much of the commentariat has decreed it was a crucial mistake for Labor to campaign on announced policies that made the Opposition a big target. The unstated corollary is that the Coalition was right to campaign on no policies, which made them a small target.
That’s all well and good to win an election. But now there’s the little matter of what happens to Australia over the new term in general – and the next challenging year in particular.
There is every sign that the aforementioned unspecified “growth policy” is needed rather urgently. Right now, the government doesn’t have one that we know about.
A little budget surplus, the $1080 tax refunds to start the new financial year, mortgage insurance for a few first-time home buyers, not doing whatever Labor was proposing, promising to flatten the income tax scale and reinstate Joe Hockey’s real federal infrastructure spending in several years’ time doesn’t add up to a “growth policy” for 2019-20.
With Labor’s help, the Coalition got away with telling the electorate it was a successful economic manager, when all but one key indicator is turning down, when the Reserve Bank is about to cut interest rates because of the deteriorating outlook, and when credible private sector analysts are predicting unemployment will continue to rise from here.
The Coalition is riding two bits of good news that aren’t going to last.
The first is continuing good jobs growth – but that’s not sustainable if the RBA and private forecasters are right.
The second is the inability of Brazil’s giant iron ore miner, Vale, to build a safe dam. That has closed a significant proportion of Vale’s production, pushing up iron ore prices and giving the Australian government windfall, higher tax collections. It could take a year for Vale to get back to full steam, but it will and present prices won’t last.
Then there’s Donald Trump with his escalating trade war with China and possible hot war with Iran.
The RBA’s reticence to cut interest rates even after downgrading its economic outlook is partly because our central bankers have little confidence in the ability of monetary policy to do much good in the near term.
And the RBA’s downgrading of household consumption expectations for 2019-20 and Treasury’s own figures on GST collections suggest those $1080 tax refunds won’t be felt.
So what’s the growth policy Prime Minister Morrison will now unveil to counter a weakening economy? It would be very nice to know sooner rather than latter if a self-reinforcing spiral is to be avoided.
It promises to be an interesting challenge to develop policy with the probability of minority government. The key independents have made very clear that they are serious about what genuine climate change and energy action.
The inability of the Coalition to introduce energy policy when it had control of the House of Representatives bodes ill for what will be possible without control.
One thing is certain as the Coalition starts its third term: it can no longer try to blame Labor for any economic problems. The Liberal and National parties unconditionally own whatever happens next.
Winning the keys to the Lodge might prove to be the best bit of the new Morrison government’s term.