Frydenberg’s economic strategy: you’re on your own

The government’s got nothing.

That’s the clear message from the treasurer’s second major speech of the week, the aptly named Downer Oration, delivered last night in Adelaide.

On the economy, it proposes to sit back and continue waiting. Despite efforts by some in the press gallery to dress up some anti-union legislation as an economic agenda, and idle talk of more tax cuts, Josh Frydenberg made clear that we’re on our own.

After this week, it’s not clear exactly what kind of evidence the government needs to be convinced that its do-nothing approach to economic leadership is inflicting serious economic damage. If falling wages growth and jobs growth turning negative, despite interest rates below 1% and a round of tax cuts, isn’t enough for what passes for the brains trust within the Coalition to realise there’s a problem, then what will?

Judging by Frydenberg’s speech, the government thinks everything is going just fine. “The Australian economy has proven to be remarkably resilient and there are reasons to be positive,” he insisted.

The basis for this, as it turned out, was that the government had finally returned the budget to surplus — something Frydenberg mentioned dozens of times. The fact that, as the Reserve Bank has repeatedly pointed out, this has come at the cost of a dramatically increased tax take from households wasn’t mentioned.

The treasurer also pointed to mining investment and house prices as positive signs. In fact, Frydenberg dwelt at length on house prices, providing details of price increases in different cities and auction clearance rates.

I guess when most economic data points are going the wrong way, you’ll seize on anything positive you can. But there’s something deeply disconcerting about a federal treasurer, amid deepening economic gloom, talking about real estate speculation and the failures of the housing market as a source of economic optimism.

As for what the government itself might do, other than sit back and watch housing return to its previous heights of unaffordability, Frydenberg offered nothing. He did, unusually, refer to the Productivity Commission’s Shifting the Dial report from 2017 — unusual in that you can count on one hand the times a government minister has ever referred publicly to that report. Indeed, state ministers and senior bureaucrats have referred to that report more often than the government that commissioned it.

Would Frydenberg be adopting the recommendations of that report? Say, 5.1, “adopt a proper vehicle for reducing carbon emissions that puts a single effective price on carbon”? (In fact the speech does not mention climate change even once). Or developing an energy policy, something Frydenberg knows a bit about? Or 4.1, ensuring there are proper benefit-cost analyses for public infrastructure projects? Or 2.5, ending the great pharmacy rort?

No fear. Twenty-two of the recommendations, Frydenberg noted, “are either the sole or joint responsibility of the states.” They should get on with it. The only thing Frydenberg promised was to get on with cutting environmental regulation (another area that Frydenberg knows a bit about).

The nearest he came to referring to meaningful reform was a flirtation with ending vertical fiscal imbalance — a pet topic of the Coalition, although only for discussion, never for action — but he concluded “our Federation for all its faults has served us well”.

“There is no room for complacency,” Frydenberg declared at the end of his speech. It’s the kind of thing you say when everything’s going wonderfully and you fret people will allow their focus to drift away from the job. But the government’s treasured “quiet Australians” are facing falling wages growth, and more of them are looking for work. Entire sectors, like retail and manufacturing, face recession-like conditions. The government’s sugar hit tax cuts have disappeared without trace.

The government’s entire economic policy is complacency.

What do you think about the government’s economic agenda… or lack of it? Send your thoughts to boss@crikey.com.au. Please include your full name for publication.