Anthony Albanese and Jim Chalmers need to come up with a new plan. Rather than handling inflation and soaring interest rates, the fight at the next election could be about who has the strongest long-term policies for growing the economy.
This is front of mind for economists and policymakers because growth is faltering right now. Yesterday, the official statistics bureau unveiled that GDP grew just 0.2% for the December quarter, or 1.5% over the year. This was not entirely unexpected. The Reserve Bank has been increasing rates to slow spending and the economy to bring inflation down and there has been plenty of geopolitical turbulence.
But with inflation now slowing and wages rising, the cost of living might soon fade into the background compared to bigger challenges facing the national economy. This is a challenge for both the budget (which will be tricky timing to navigate as it will be handed down as inflation slows but before it gets back into the RBA’s target band) and the next election.
It will also require a change in political style. Because while it’s, unsurprisingly, popular to offer immediate relief to households – especially when there’s a cost crunch – it’s much harder to propose bigger change.
