Drought in economic ambition jeopardizes Australian election

Outgoing Australian Prime Minister Scott Morrison and Opposition Leader Anthony Albanese during the second leaders’ debate of the 2022 Federal Election campaign at Studio Nine in Sydney, Australia, May 8, 2022. Alex Ellinghausen/Pool via REUTERS – RC2Z2U9FFWRW

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MELBOURNE, May 20 (Reuters Breakingviews) – Hells Gates would be a suitable place to decide an election. As Australia’s right-wing coalition government makes a last-minute push ahead of Saturday’s poll, its decision to channel some A$5.4 billion ($3.8 billion) to shore up the section of the river on behalf of diabolical highlights why the incumbents under Prime Minister Scott Morrison are struggling to stay in power.

Funding is the biggest slug of the biggest new item in the March federal budget. Hells Gates is a tired idea for boosting agriculture that has been repeatedly rejected since it was first proposed over 80 years ago. Its resurrection appears to be the Liberal Party’s thanks to the National Party for backing its vapid net zero 2050 plan. The dam proposal, however, lacks a solid economic rationale. That’s “high risk, low reward,” according to the Australia Institute think tank.

The wasteful initiative takes advantage of Australia’s ability to mostly sail for three decades, mostly mining and exporting iron ore and coal while feverishly building and selling highly leveraged homes. Morrison’s government ditched its fiscally conservative dogma to pump money into the system during the pandemic while helping to minimize the death rate by closing international borders. The unemployment rate has just fallen to 3.9%, its lowest level in 48 years. And although the national debt has ballooned recently, it stands at less than half of GDP, an enviable ratio among developed countries.

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Even so, low unemployment makes it more likely that interest rates will continue to rise, adding pressure on homeowners facing falling prices. Wages increased by 2.4% against inflation of 5.1%. China, one of the biggest buyers of Australian goods and services, is slowing. Unemployment and underemployment Down Under could also reach 18%, estimates market research firm Roy Morgan.

Against this backdrop, there are few ideas from politicians, including Labor leader Anthony Albanese. Plans to help first-time home buyers are piecemeal and financially dodgy. After three years of water shortages, bushfires and floods, tackling climate change should be a bigger priority. Related investments could provide a significant boost. Sustaining Australia’s growth in the years to come will be more difficult. Whoever becomes the next prime minister will be under pressure to end this drought of economic ambition.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

BACKGROUND NEWS

– Australians go to the polls on May 21 to elect the next federal government. The coalition of Liberal and National parties are hoping to secure a fourth consecutive term, with Labor attempting to return to power for the first time since losing office in 2013.

– Obtaining a majority requires winning 76 of the 151 seats in the House of Representatives. The term of office is generally three years.

– Australia’s official unemployment rate was 3.9% in April, according to data released by the Australian Bureau of Statistics on May 19. The March figure was also revised down to 3.9% from 4%. This is the lowest monthly rate since 1974.

– The ABS also released data a day earlier showing wages in the three months to the end of March rose at an annual rate of 2.4%.

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Editing by Jeffrey Goldfarb and Katrina Hamlin

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.

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