There is nothing to panic about, but nor is there anything to celebrate, in today’s Mid-Year Economic and Fiscal Outlook statement handed down by Treasurer Josh Frydenberg and Finance Minister Mathias Cormann. The MYEFO shows that the government’s economic strategy has not changed, even if it should have, and so the focus is already shifting to what might be announced in next year’s budget to turn things around. The government is making a virtue of staying the course, and the treasurer insisted this morning that “in our 29th consecutive year of economic growth, Australians can be confident about their economic future”. But almost all the news in today’s MYEFO is bad, which is why headline figures were released in advance, or were the subject of well-informed speculation: the approximately $33 billion hit to Commonwealth revenues over the next four years was flagged [$] in The Australian; the lower wage-growth forecasts were signalled by Nine Media; and the lower-than-expected surplus of $5 billion for 2019–20 was tipped by economist Chris Richardson.
Finance Minister Mathias Cormann put the best gloss on the government’s economic management credentials: “Despite significant global economic headwinds, [and] domestic challenges like drought and bushfires … our economy continues to grow, employment growth remains strong, wages continue to grow faster than inflation, disposable incomes are growing at their fastest rate in more than 10 years, and we remain on track to return to surplus this financial year. That is even after significant revenue writedowns, after legislating significant income tax relief, after continuing to provide record funding for the essential surpluses Australians rely on, and after the additional investment in key priority areas addressed in this budget update [namely, extra drought and aged-care funding].” It is not a bad summary of why the Coalition was returned in May – rightly or wrongly, the punters believed all that was at risk.
Nine Media’s economics editor Ross Gittins unpicked a number of these claims in a pre-emptive strike this morning, writing that there was scant evidence of global economic headwinds, while domestic weakness was “home-grown and all too evidently a sign of poor economic management”. Economist Stephen Koukoulas tweeted that the government must be extremely nervous about achieving the all-important surplus, which at the forecast $5 billion was “less than the average absolute forecasting error between MYEFOs & the final budget outcome. A lot needs to go right to get to surplus. Will be some money shuffling in the months ahead.”
The surplus is definitely fragile: the MYEFO document itself acknowledges that a sensitivity analysis shows it could be effectively wiped out by an earlier-than-expected fall in the iron ore price. But MYEFO is based on a mix of conservative and optimistic forecasts: it assumes higher tariffs as the US–China trade war escalates, although last Friday officials announced a tentative deal to roll some of those back. On the flipside, the MYEFO states that “following the usual practice, the forecasts assume a return to average seasonal conditions in 2020–21. Herd and livestock production will take longer to recover than grain production, as herds first need to be rebuilt which can take a number of years.” With the Bureau of Meteorology last week forecasting [$] that there will not be substantial rain until April, that seems unlikely.
Undeniably, today’s MYEFO paints a much gloomier picture than the government had hoped to be able to present at the end of 2019. As Guardian Australia reports, shadow treasurer Jim Chalmers went in hard this afternoon: “Growth downgraded, unemployment higher, wages growth weaker, business investment dismal, the government’s economic credibility destroyed – that’s the mid-year budget update in a nutshell,” Chalmers said. “The economy is much weaker and the government has no idea and no plan to turn things around.”
The concept of having a plan to grow the economy is itself suspect, but at least it incorporates a sense that government will pull the levers available to it – from increasing Newstart to boosting public-sector wages. Instead, the government seems to be in a standoff with the economy – waiting, hoping, praying for it to grow.
“When Corbyn said that on Brexit he was neutral, that was quite the defining moment. The voters saw that as pathetic, that he couldn’t take a position on the biggest issue, so how could he run the country? Labour’s hysterical claims that the Tories would sell the NHS to Trump just weren’t believed. For voters it showed the desperation of Labour that they would make up these lies in an attempt to distract from their lack of a clear Brexit position.”
“At the time the Murray–Darling Basin Plan was conceived it used the best available science, this does not mean it’s the best science. We need to do more work to make sure we have the best science available and to make the lab fit the paddock. We need artificial timeframes to be removed and projects that deliver for real world outcomes. These projects also need to be accepted by the local communities as they are the people that they deliver for.”
The amount of community-sector funding that is at risk, according to the Australian Council of Social Service, after the federal government’s decision to stop providing additional funding from July 2021 to address gender-based pay inequality.
“McDonald’s confirms the Company has taken over the operation of the Mildura and Irymple restaurants, effective immediately, and Robert Vigors has left the system and is no longer involved. McDonald’s will be engaging with its employees regarding the change in arrangements, to ensure the ongoing operation of the restaurants.”
McDonald’s takes back its Mildura and Irymple franchises after video of a racist attack on Robby Wirramanda Knight by Robert Vigors, who was the franchisee, and Karen Ridge sparked a social media backlash.
“It’s a good time to fight robots in Australia, thanks, in part, to a 110-kilogram metal crocodile. Everyone competing in the Robowars National Championship at Brisbane State High School’s Performing Arts Centre knows of the exploits of local machine DeathRoll on the American TV show BattleBots. Jules Pitts worked on the croc-themed bot and accompanied it on its US sojourn in 2019, when DeathRoll tore apart some highly fancied international competitors.”
“‘I was supposed to have a script, and had mislaid it,’ Didion explained in the essay, published in 1979, realising her own story of vertigo and nausea at the time was ‘not a movie but a cutting-room experience’. Actor Mia Barron will perform the entirety of Didion’s essay, in a performance also called The White Album, during the Sydney Festival, in a work devised by LA-based theatremaker Lars Jan of Early Morning Opera, with Didion’s blessing.”
“Opposition Leader Anthony Albanese’s own overland voyage through central Queensland last week began a bid to win back support in the Sunshine – and key coal-exporting – State. It also signalled a contentious change in Labor’s messaging on coal and climate change, which risks eroding its support elsewhere.”
Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is also the author of three books, including a recently updated unauthorised biography of Malcolm Turnbull, Born To Rule?
There is nothing to panic about, but nor is there anything to celebrate, in today’s Mid-Year Economic and Fiscal Outlook statement handed down by Treasurer Josh Frydenberg and Finance Minister Mathias Cormann. The MYEFO shows that the government’s economic strategy has not changed, even if it should have, and so the focus is already shifting to what might be announced in next year’s budget to turn things around. The government is making a virtue of staying the course, and the treasurer insisted this morning that “in our 29th consecutive year of economic growth, Australians can be confident about their economic future”. But almost all the news in today’s MYEFO is bad, which is why headline figures were released in advance, or were the subject of well-informed speculation: the...