As Australian investors wipe billions off the value of shares following US president Donald Trump’s latest disastrous intervention – lashing out at China and his own central bank – it seems that our own government is watching on, concerned but unsure how to act. Monetary policy is reaching its limits, with the RBA’s official interest rate heading towards zero. The political imperative of achieving a surplus means there is a limit to how much fiscal stimulus can be ramped up. There are no more tax cuts to tout. Negotiating post-Brexit free-trade agreements with the UK and the EU is hardly going to make up for the escalating trade war in our own region. The solutions offered in Treasurer Josh Frydenberg’s speech to the Business Council today are a case in point. Calling on businesses to stop launching share buybacks and to invest, and writing to the states to get them to tackle slowing productivity growth, only highlights the government’s apparent impotence.
The treasurer today repeated his mantra that the fundamentals of the Australian economy are sound. But then he argued, as The Australian Financial Review reported [$], that the government is doing all that is practicable in terms of policy settings to enable productivity, and that his message to business is to “back yourself and use your balance sheet to invest and grow”. Reaction was mixed.
Crikey’s Bernard Keane commended [$] the treasurer for acknowledging that the government’s business tax cuts had only resulted in a 140 per cent increase in share buybacks and special dividends, and for finally recognising that productivity growth had slowed over the last five years – on the Coalition’s watch. The Australian’s John Durie wrote [$] that it was fine to lecture business, but the federal government has had the Productivity Commission’s “Moving the Dial” report for two years and has done nothing about it, and Frydenberg seems to have “forgotten what the word leadership means”. The AFR’s Robert Guy wrote [$] that “corporate Australia doesn’t need advice on capital allocation from the Treasurer”, and warned that with sluggish growth, “domestic-focused companies may invest alright – just in technology that cuts jobs, slashes employment costs, fattens margins and allows companies to distribute even more in dividends and buybacks”. Shadow treasurer Jim Chalmers said Frydenberg’s speech was “long on finger pointing and short of a plan. Just telling businesses to invest more is not an economic policy … Having no plan to turn the domestic economy around means the Morrison government is leaving Australia dangerously exposed to volatility in the global economy.”
Over the weekend, Reserve Bank governor Philip Lowe told [$] a closed-door gathering of central bankers in the US much the same thing, warning that if all central banks lowered interest rates, the effect could be overwhelmed by political shocks from Donald Trump to Brexit and Hong Kong. He also flagged that unconventional measures, such as negative interest rates, may be necessary, including in Australia. That’s not just a technical term. In a searing piece, ABC business editor Ian Verrender last week wrote that global financial markets were at a pivotal moment in history: “Right now, lenders across the globe are forking out astonishing amounts of money, knowing they will incur a guaranteed loss. If you think this sounds crazy, you’re right. And it tells you everything you need to know, or at least be concerned about, when it comes to the health of the global economy.”
The federal government can’t stop the US–China trade war, but it can act to ensure that Australia is as sheltered as possible from the fallout by targeting areas of weakness in the domestic economy: boosting productivity growth (as the Productivity Commission recommended), boosting wage growth (for example, by raising public-sector salaries or stopping penalty-rate cuts), boosting consumer sentiment (for example, by raising Newstart) and investing in public infrastructure. The treasurer talks about an existing $100 billion pipeline of investments over a decade, but the government’s own advisory body Infrastructure Australia reckons the country needs to spend more like $600 billion by 2035. It’s time to get cracking.
“As doctors we fear a return to a slow, unpredictable and dangerous transfer system and further unnecessary deaths. Senators, you have an opportunity to back the medical profession and help my colleagues prevent unnecessary deaths.”
Victorian CFMEU secretary John Setka, reportedly telling two organisers from the manufacturing division to defect to the construction division with their members “or you won’t have a career left”, in conduct that the national office may yet bring to the Federal Court.
Grief, anger and climate change
Joelle Gergis is one of Australia’s leading climate scientists. She says there is resistance to talking about emotions around science, but she feels grief and anger.
The amount of cash that Chinese billionaire Huang Xiangmo delivered to NSW ALP headquarters in 2015, according to the opening address of counsel assisting the state’s Independent Commission Against Corruption, which is investigating NSW Labor Party donations.
“I announced a new partnership with the OECD to strengthen transparency by tech companies in a bid to prevent online terrorist activity … Australia, together with New Zealand and the OECD, is funding a project to develop Voluntary Transparency Reporting Protocols on preventing, detecting, and removing terrorist and violent extremist content from online platforms.”
“Timothy Andrew Fischer was a rare political beast: a genuinely good man ... He quite literally saved his own party from sliding into reactionary irrelevance after the shock defeat of its leader, Charles Blunt, in 1990. At the time Fischer was seen as an aberration, a stopgap leader, but he hauled his bickering troops together and gave them purpose and agenda; he brought them back to the mainstream. It is doubtful that anyone else could have done it, but Fischer’s unswerving commitment and integrity inspired trust.”
“When Dozer first arrived from a rescue shelter in the Mallee, he flinched at sudden hand movements, and cowered if you came round the corner carrying the hose; but under a benevolent regime he soon became confident and calm. He was very, very good-looking, with large pointed ears, Amy Winehouse eye make-up, and leaf-shaped patterns of dark brown along his spine.”
“Australia’s conservative organs have almost all embraced a mythology, by turns unhinged and incoherent, that seeks to turn Pell from an offender into a martyr. Before the summary was even publicly available, columnists were filing stories that decried a miscarriage of justice.”
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?
As Australian investors wipe billions off the value of shares following US president Donald Trump’s latest disastrous intervention – lashing out at China and his own central bank – it seems that our own government is watching on, concerned but unsure how to act. Monetary policy is reaching its limits, with the RBA’s official interest rate heading towards zero. The political imperative of achieving a surplus means there is a limit to how much fiscal stimulus can be ramped up. There are no more tax cuts to tout. Negotiating post-Brexit free-trade agreements with the UK and the EU is hardly going to make up for the escalating trade war in our own region. The solutions offered in Treasurer Josh Frydenberg’s speech to the Business Council today are a case in point. Calling on businesses to stop launching share buybacks and to invest, and writing to the states to get them to tackle...