Anthony Albanese may have an economics degree from the University of Sydney, but he’s still a lousy economic manager.
It shouldn’t take three years of study to know that excessive government spending fuels the dumpster bin fire of inflation.
The Reserve Bank has made this abundantly clear as Australian borrowers miss out on relief and Albanese wonders how he can get re-elected next year.
In marginal seats, Aussie home owners are looking with envy at their counterparts overseas enjoying the benefits of rate cuts.
Australia now has a cash rate of 4.35 per cent, which surpasses those of Canada and New Zealand. This comes after four rate cuts in Australia and three in New Zealand during the year.
The Australian inflation crisis is now a home-grown phenomenon. There’s no use blaming Covid supply constraints and ‘global factors’ now.
In times of significant economic turmoil, such as during lockdowns or a global financial crisis, governments are required to undertake substantial spending measures to preserve jobs and prevent the economy from plunging into a situation akin to the Great Depression.
Keynesian economics, named after the economist John Maynard Keynes, has been widely accepted as a sensible approach, particularly in the aftermath of the 1930s economic collapse that left a third of Australians unemployed.
Anthony Albanese is proof that having an economics degree doesn’t stop you from being a bad economic manager (he is pictured with his fiancée Jodie Haydon)
But under Labor, government spending has surged to record levels outside of a global economic catastrophe – and despite unemployment being still low at 4.1 per cent.
Labor came to power in May 2022 when lockdowns had already ended and there was little need for government stimulus, with interest rates still at a record-low of 0.1 per cent.
Despite that, 55 per cent of Australia’s total economic growth during the past two-and-a-half years has been the result of spending by federal, state and local governments, figures from the Institute of Public Affairs think tank show.
Yet, for all that waste, Australia’s economy expanded by just 0.8 per cent in the year to September – marking the weakest growth since the 1991 recession outside of the Covid lockdowns.
Australia has now also been in a per capita recession for a record seven quarters – where output for every Australian has been going backwards.
In another bit of economic stupidity, Labor governments are expanding the public service, with the ALP dominating at a state level too.
The public service is bloating – even though private sector employers are struggling to find staff during a skills shortage.
Albanese was probably too busy being a student activist with Labor’s left faction trying to change the world rather than understanding that governments need to live within their means (he is pictured during the early 1980s)
This has worsened Australia’s productivity crisis and kept services inflation high – with annual immigration levels at record-high levels above 500,000.
If businesses can’t produce as many products, they have little choice but to pass on the costs to consumers.
IFM Investors chief economist Alex Joiner says high population growth is adding to demand and therefore stopping rate cuts.
‘The RBA has been consistent in its thinking that the level of demand exceeds supply and that creates risks for inflation,’ he says.
‘Nonetheless, we have added to demand via population growth, public demand and public employment.’
Australia is now home to 2.5 million public sector employees.
This is a massive one-third increase from 1.9 million just two years ago, new IPA data provided exclusively to me reveals.
During that time, the number of Australians in the private sector has risen by just two per cent to 11.8 million – up from 11.6 million in 2022.
Since August 2022, the public sector has added 600,000 new workers compared with just 200,000 in the private sector.
The total number of new public sector workers since then has already outstripped by 40 per cent the number created from August 2014 to August 2022.
When the Coalition was last in power, between 2014 and 2022, 76.5 per cent of jobs were created in the private sector and 23.5 per cent were in the public sector.
But from 2022 to 2024, this has completely reversed, with 82.1 per cent of all new jobs being in the public sector, and just 17.6 per cent in private enterprise.
Australia now has a government debt problem too, with state and federal government spending making up a record 28 per cent of gross domestic product in September.
That jumps to 32 per cent with local councils factored in.
IPA research fellow Lachlan Clark tells me Labor is resorting to record government spending to mask Australia’s economic weakness.
‘The explosion in public sector employment is a worrying sign for the true health of Australia’s economy,’ he says.
‘This expansion, coupled with unprecedented levels of government spending, both fuelled by debt, is dragging Australia’s economy down.’
These unnecessary public servants are also a waste of taxpayer money.
‘While frontline public sector jobs play a key role in maintaining a civil society, many bureaucratic roles are inefficient and counterproductive,’ Mr Clark says.
‘These roles restrict, rather than expand, economic output and are an increasing burden on taxpayers.’
When government debt surges, taxpayers have to spend more on interest payments – meaning less money for other public services.
In financial markets, these are known as bond yields.
Government bond yields have been soaring since Albanese came to power, in a sign investors lending money to Australia are worried and want to be compensated with higher annual interest payments.
Albanese would surely understand the excessive government debt is a threat to all of our living standards.
That’s if he had been paying attention in class at university during the early 1980s – after the Labor Party of that era had learned the painful lessons of Gough Whitlam’s big spending regime.
But Albanese was probably too busy being a student activist with Labor’s left faction trying to change the world rather than understanding that governments need to live within their means.
