All the bluster and fury in federal parliament over things non-economic – the Manus Island riots and death, Senator Michaelia Cash’s sacking of her chief of staff, Labor’s support for parliamentary censure of Craig Thomson and much more – is providing useful cover for Treasurer Hockey’s economic plans.
“Do you think the government is trying to push us into recession?” I asked a former Labor cabinet minister mid-week.
“I don’t think they are – I know they are,” he opined.
Believe that, or not. But even if it were true, what would it mean in the present context?
There has been much head-scratching over Hockey’s early months steering the Australian economy.
A pessimist might say that capricious decisions on fiscal policy and industry assistance signified nothing more than incompetence.
Why refuse aid to SPC, but give it to Cadbury and Huon Aquaculture?
Why bail out Qantas and drought-stricken farmers with cheap debt, while slapping a 1.5 per cent parental leave levy on our 3000 biggest businesses?
Why rant about budget deficits while shovelling $9 billion into the Reserve Bank’s coffers for a raining day?
Why promise more publicly funded water infrastructure in rural communities, but block private sector grain logistics investment in GrainCorp?
Why scare off our mildly subsidised auto-manufacturers while signing free trade agreements to import more heavily subsidised cars from abroad?
It’s a bit confusing.
An optimist would look for a deeper pattern behind all this caprice that would suggest Hockey and his advisers actually have a plan.
What could it be? Business investment data released later today could give us a clue ... if it rebounds. If it doesn’t, Deloitte Access Economics’ phrase “the stall before the fall” will take on an even more ominous tone.
The government still relies on the urgent need to repeal the carbon and mining taxes as its excuse for why thousands of jobs are falling away in manufacturing, resources and retail. (We won’t include public service job losses, as their hot air is not taxed.)
That’s just more bluster and fury. Come on, guys – there must be a plan behind the well-worn slogans.
My guess, and that of some colleagues, is that current Treasury forecasts for unemployment are too low. As Robert Gottliebsen wrote last week (A fragile economy deals a confidence blow to businesses, February 20), an outcome of over 8 per cent would not be surprising.
To get back to the former cabinet minister’s view that the Abbott government is “pushing us into recession”, we are well into the jobs recession – just not a conventionally defined GDP recession.
So why would a jobs recession be a good thing? Obviously, it pushes up national productivity – less productive workers are always first on the chopping block. And Hockey definitely wants to see a return to strong productivity growth.
But what will happen to all those workers? It was sobering to read earlier this week of a sudden influx of Italian workers into the country. While the post-war boom in Italian workers peaked at 17,000 a year, the past year has seen 16,000 Italians leaving their own floundering economy to be sponsored workers (or working students) here.
They may not be so keen to stay when thousands of miners, retail workers, public servants, airline staff, auto workers and more start competing for the few jobs on offer.
If Hockey’s plan is to encourage non-productive jobs to tumble, he must be sure new jobs will grow ... somewhere.
Infrastructure is tipped to be a major source of jobs, but the mechanism for freeing up private super money to fund much-needed roads, rail and logistics interchanges is not yet clear.
Another option is building government-backed projects ‘off budget’ – that is, maintain the austere path to budget surplus while leveraging the government’s strong credit rating to build toll roads.
That’s how the Labor government started its giant NBN project. By insisting it would one day turn a profit, it could account for it off budget and still create thousands of jobs.
Is that the plan, Mr Hockey? Or will today’s business investment figures show such chicanery isn’t needed? We’ll know soon.
Either way, presiding over an economy in which productivity soars – but nobody has a job – isn’t really going to wash with voters. Indeed, no amount of sound and fury in parliament will cover that up.
The still invisible plan of this government had better be revealed soon.