For all the headlines about more interest rate cuts, Tuesday night’s speech by Reserve Bank governor Phillip Lowe was most notable for the frank admission that the central bank has been “surprised” by the slowdown in the economy and remains in the dark as to why it has occurred.
More, any rebound in the economy’s fortunes will be tepid at best:
While we are not expecting a return to strong economic growth in the near term, we are expecting growth to pick up. Against this backdrop, the main source of domestic uncertainty continues to be the strength of household spending.
Hence a forecast that low interest rates will be with us for an “extended” period of time. What was more intriguing was the suggestion that the RBA is uncertain about why the economy is sluggish when the strong labour market suggested otherwise.
It was quite brave of the governor to admit that the bank “did not expect this slowdown, so it has come as a bit of a surprise”.
Even after accounting for these three factors — the slowdown overseas, weak growth in household disposable incomes and the drought — part of the slowing in the Australian economy remains unexplained. This is especially so taking into account the labour market data, which continue to paint a stronger picture of the economy than the GDP data.
But while the RBA struggles to explain the slowdown to the fullest extent possible, it has pointed the finger at the Morrison government on three fronts — wage strangulation via the cap on pay rises; soaring bracket creep (which tax changes will only partially redress); and a lack of interest in boosting household incomes.
Notably absent from the speech was any mention of the need for change in labour market regulation, improved productivity or micro-economic reform, which will keep the neoliberal right happy. The right remains in denial about the disastrous impact their policies have had on wages and the wider economy in the middle of what has been one of the strongest and most substantive jobs booms in Australia’s history.
Failures of nerve and heart — traits that have characterised Coalition governments’ economic handling since Tony Abbott’s win back in 2013. Now, not even the RBA knows what’s going on.
Hey he may be faking it, but he’s getting $1 million a year, and a nice guaranteed super courtesy of the tax payers……… guaranteed. So even if our super and retirement funds blow up as a result he’ll be quite comfortable thanks very much.
It’s almost funny isn’t it? Paid so much to know so much/what to do?
And not delivering?
What sort of “productivity” is that?
Klewso, it is easy to take the piss from the Reserve Bank Governor, but maybe we should actually be listening to what he is saying.
If this man feels our economy is in uncharted waters then I believe him.
The frightening thing to me, is that he is thinking about reducing interest rates, again, in the hope of stimulating the economy.
Stimulating the economy is supposed to be the government’s job.
Blind Freddy could have told you, that the tax cheque that a lot people got, went on their power bill or their dental bill or their car service and not on retail.
In the neo liberal economy, no one has a secure job and so, therefore, how can you borrow to buy a house, when you are on contract and , 2 years from now, you may not have another contract.
This economy was the LNP dream, low to no wages growth, many more part time and casual and contract workers with no rights to sick leave, long service leave or even annual leave, an employment system that requires people to sue individually for wages theft, which is rampant.
Result, a per capita recession and a growth rate of 1.4% which was achieved by raising the population by 1.6% which is a faster population growth than India..
Yes, my friends, we are going backwards and our illustrious leader, who thinks god gave him the job and his economic sidekick Joshie are twiddling their thumbs hoping that the economy re-starts without them having to raise a figure.
Why can’t he see that?
* Stagnant wages;
* Running down household savings – just to get by;
* Employers with the whip-hand, over employee salaries and conditions, continuing profits, increased margins by not increasing wages, backed by the government they donate heavily to (to look after their profitable interests) from those profits and on remuneration/deals to themselves;
* The feeling of shaky employment;
* “Forgone” super – thanks to a watchdog with no teeth – that this government had to be dragged kicking and screaming (on behalf of their big financial industry donors);
* A tax cut that will take the heat off employers to up wages, and will go to making up for some of that “frittered” home savings.
And the list goes on about why “consumer” confidence is shot – including being referred to simply as “consumers”?
These failings of governance.
……. Or, to put it another way, “Why can’t he say that?”
“….. “Forgone” super …….. (on behalf of their big financial industry donors) to call a royal commission to look into that abuse of position and watch-dog anaemic somnolence induced by this government’s resource cutting “tax saving” measures ; ….”
This speech was delivered in Armidale to Armidale Chamber of Commerce. This is sadly ironic. Armidale’s population has remained pretty much static for decades. There are many empty shops in the city and it has just gone onto level 5 water restrictions with a real risk of running out of water sooner rather than later. It’s a lovely city in many ways but there are significant problems, not least of which is the dead hand of the National Party and the fellow travellers who keep voting for them.
When are these so called economists going to wake up . The world wide race to the bottom with official interest rates is the biggest con perpetrated on the peasants by the top one percent since the so called global financial crisis. None of the criminals who led the world into the “so called “global financial crisis were tossed in the slammer and they simply restyled themselves as new age economic gurus and talked governments into printing money and lowering official interest rates so they could raid the tiny nest eggs of the lower classes in order to further enrich themselves via the various stock markets and other dubious investments. They then feign surprise when the actions of lowering of official interest rates doesn’t result in miraculous results for workers and the common people. I think it’s time for the tumbrils to start rolling through the streets again.
The Economist’s Hour by Binyamin Applebaum is worth a read. He argues the free market has fractured society and that it’s time for economists to be stopped from calling the shots about everything, particularly social policies.
The Economist’s Hour by Binyamin Applebaum is worth a read. He argues the free market has fractured society and that it’s time for economists to be stopped from calling the shots about everything, particularly social policies.
I agree with him.
A discussion tonight with a patient with no private health cover.
The patient needs her cervix to be examined with a microscope, call a colposcopy.
This is done after 2 abnormal thin prep.
Classified as a level 3 she will be on the waiting list to get on a waiting list of 12 months or more.
We have had two private patients in the last 6 months that have one abnormal thin prep ( a more sophisticated pap smear) and on colposcopy and biopsy they both had invasive cancer of the cervix.
I explained that the public system is world class, it is just overloaded.
My take home message was, anyone who votes for a tax cut votes for a poor public health system and a poor Medicare.
You can extend that to most of Western NSW, here on the coast we are seeing a steady drift of people arriving to pick up their life’s and start again. I expect that movement to continue and likely accelerate. Unfortunately a lot of third and fourth generation are likely to be making distressed sales to cash rich corporates who can hold an assets without having to worry about a short term income.
Dr Lowe doesn’t seem strong enough to tackle the politicians and is trying to humour them, he is no Nugget Coombes.
Do you remember what Tony Abbott did to the head of Treasury, Parkinson?
I think Phil Lowe is attempting to save his job.
How come after the monumental ‘jobs boom’ unemployment is at 5.3% and underemployment is chronic? Anything to do with heavy immigration and population rise.
Furthermore Freudenberg is a lawyer who can talk under wet cement on both sides of any arguement. As a treasurer he is fucking useless, controlled by the right wing bible bashers of the Liberal(?) party. My favourite political memory is when Wetherill Spey him in Adelaide.
“Jobs boom”. What jobs boom? Delivering pizza as part of the gig economy.
Let’s do better. Let’s go for an infrastructure boom.
After all, much of the focus on the RBA’s one stone motherless last interest rate is to avoid focussing on the massive costs of having turned housing into a financial commodity, as well as the deliberate failure to keep anything from the “Mining Boom”. We also have this sad pretence that the RBA rate really matters.
Big Property’s political donations and politicians’ property portfolios have long driven determined denial of our biggest problem – overpriced housing and its associated debt-driven “growth”. At least they are being consistent in doing nothing to arrest recent declines.
Bankster/rentier exploitation has long been unaffordable. At twice disposable household incomes, property debt remains extreme. “Secular stagnation” is in fact the absolutely logical result of the destruction of demand due to ruling class plunder to serve only its greed, waste and tax havens.
We Can Do Far Better! We now have an infrastructure deficit now in the order of $800 billion. Massive public infrastructure investment by Quantitative Easing by the Reserve Bank (thus cutting out the banksters and rentiers) could mean benefitting us instead of the property developers. In the event of a global recession, it would also greatly ease what would be a deeply unpleasant contraction.
trumbull’s and morrison’s Misgovernments were and are lying about the in fact pitiful level of their infrastructure spending. Why not? Who’s asking?