The government’s budget forecasts for inflation have been demolished by the Reserve Bank (RBA) in its latest Statement of Monetary Policy, released as the fourth week of campaigning draws to a close.
The RBA’s quarterly statement updates its economic forecasts and the May edition makes plain that the Bank expects high inflation to be a feature of the Australian economy for years to come.
While the March budget from Treasurer Josh Frydenberg predicted inflation for the current financial year of 4.25%, and in 2022-23 of 3%, the RBA now expects CPI to reach 5.5% in June, and 4.25% in 2022-23. Both are substantial upward revisions from its last Statement in February. Inflation is forecast to still be at 3%, the top of the RBA’s target rate band, in mid-2024.
The government’s inflation forecasts are now so adrift of reality that the RBA’s estimates for its preferred index, the much lower trimmed mean, is still higher than the budget forecasts across this and coming years.
This means big real wage falls for workers. The RBA says it now expects wages growth “to pick up to around 3% by the end of 2022. Wages growth is then forecast to strengthen further as the unemployment rate declines, to be 3¾% by mid-2024.” But that means workers will only begin seeing real wages growth in 2024 — and will have lost at least 1-2% a year in real wages each year until then. Workers in professions with poorer wages growth — construction, retail, the gig economy — will go backwards even further.
The Statement came on another difficult day for Scott Morrison, campaigning in Perth, where the Liberals are trying to prevent the loss of at least two seats. Morrison continues to be dogged by questions about the Solomon Islands debacle — which we discovered yesterday had been exacerbated by Morrison’s refusal to call Solomons Prime Minister Manasseh Sogavare for several months, allegedly on the advice of intelligence agencies. That “no speakies” is Australia’s formal policy in relation to a Pacific neighbour is remarkable enough; even more ridiculous is that the very agencies who were clueless about the Solomons-China deal are still purporting to speak with authority on the country.
Morrison also fielded questions, inevitably, about Malcolm Turnbull’s contribution to the campaign, via a speech to a Washington thinktank, in which he suggested the election of teal independents “will mean the capture of the Liberal Party will be thwarted by direct, democratic action from voters. People power, you might say.”
The best Coalition response to Turnbull would have been to stolidly ignore him, but Deputy Prime Minister Barnaby Joyce immediately took the bait — as Turnbull doubtless would have hoped — and lashed out at Turnbull as “entitled” and “tossing out his former allegiance to the party that made him the prime minister of Australia”. Given how toxic Joyce is in urban Liberal electorates, that’s exactly the kind of contribution that would reinforce the former prime minister’s comments.
Anthony Albanese, campaigning in Sydney, has continued what has turned into a running battle between journalists desperate to ask gotcha questions and a leader keen to talk about actual policies. He today began hitting back at journalists, pointing out he hadn’t received a single question about a major economic speech he’d delivered yesterday, and listing his long schedule of activities during the day in response to a journalist insistin he was on some form of light duties.
Back during the 2019 election campaign, it was a deliberate tactic of News Corp journalists accompanying Bill Shorten to yell at him during his campaign media conferences demanding to know what his climate policies would cost. Other journalists from outlets like Ten joined in as well. The tactic wasn’t to elicit further information about an important policy issue, but create the impression of chaos in Shorten’s campaign and disrupt his messaging. All completely fair for political parties to do to their opponents, and News Corp is a political party — but it demands the privileges of being both a political party and a media outlet.
When Albanese made his initial campaign stumble on unemployment and interest rates, Crikey was among those who castigated him over it and claimed it showed a serious problem for a man purporting to be at the centre of economic debate — how could a man aiming to be the prime minister and to be addressing major economic issues not know the basics? But yesterday’s alleged “gaffe” in Albanese needing notes to discuss NDIS policy detail — when the media broadly shows little interest in NDIS flaws and underfunding — said far more about a corporate media that is simply unfit for the purpose of meaningful public debate.
Putting aside that News Corp is a political party and its employees are political staffers and not journalists, there is no clear evidence that we have more than a small handful of journalists at major outlets capable of either engaging with policy detail or of seeing through the lies and spin that politicians produce, and which have become a hallmark of the Morrison government in particular.
But at this point, voters can only elect a new government, not a new media.
