It’s not the economy, it’s the politics, stupid!
It may not be a case of “it’s the economy, stupid” after all.
Monday saw a Nielsen poll charting Labor’s prickly relationship breakdown with voters.
In short, it remains on speaking terms with just one in four of them. The Nielsen survey snapped Government MPs out of dreams of a nascent recovery based on two previous Newspoll surveys which showed them clawing their way into the low thirties. More to be done but heading in the right direction? They wish.
Tuesday saw the Reserve Bank follow up its aggressive stimulus bias in monetary policy with all the double-edged sword implications such action comes with.
On the plus side, of course, is the promise of extra pocket money for borrowers. But on the negative side is a loss of earnings for self-funded retirees trying to eke out an existence on savings. And then there’s the fact that the central bank only steps in when its assessment is that the economy faces more risks on the downside than on the up.
This was its clear message on Tuesday. Having lowered the cash rate by an unusually high 50 basis points last month, it decided not to wait to see how that played out dialling in another 25 basis point cut this month in a bid to prise open the wallet of the cautious consumer.
Still, mortgage savings are always welcomed by customers - assuming they get them that is. Accordingly, Wednesday started out with the now familiar post rate-cut pantomime.
It goes like this. The big four banks, who together spend hundreds of millions of dollars each year telling customers how much they care, suddenly go all coy and refuse to make eye contact or step into the spotlight.
Their shameful absence in turn leaves the stage free for a well rehearsed chorus of MPs, employer bodies, unions, media, and jilted customers all eager to sing from the same song-sheet about what bastards the banks really are.
It is a formulaic little routine and was just warming up on Wednesday when the Australian Bureau of Statistics stepped in with one of the more attention-grabbing acts yet: First quarter growth figures showing the economy going gangbusters in early 2012 with consumers less cautious than thought, the economy less anaemic than thought, and even the December quarter better than previously thought.
Coming in at 1.3 per cent, the March quarter result was more than twice market predictions leading to annual growth of a remarkably brisk 4.3 per cent.
That’s a whole percentage point above what Treasury calls “trend growth’’ of 3.25 per cent. It is also the fastest rate of expansion achieved here since September 2007 - before the onset of the GFC.
Wayne Swan could hardly contain his delight which is perhaps understandable given (a) the pressure on his budget, (b) the ire of next months’ politically toxic carbon price, and (c) the general siege mentality gripping the Gillard Government.
Doomsayers and doubters had been proved wrong. Australia’s economic performance was indeed the envy of the world and the best of any comparable country.
Joe Hockey was visibly uncomfortable. He had no choice but to promptly front the cameras for to delay would have been noteworthy in itself.
When he did emerge it was close to comical.
“Are you suspicious that this is an economic mirage?’’ asked one reporter.
“Well no, the numbers are the numbers. I totally accept that the numbers are the numbers,’’ Mr Hockey ventured somewhat cumbersomely.
“What Australia wants is stability, certainty, predictability. If we had those factors in play, coming out of Canberra, we’d be doing even better.’‘
Amen to that most voters would say. But then, the lack of stability is hardly the exclusive fault of the Government.
Thursday rounded out the economic-political mis-match with bullish employment data showing the jobless rate at 5.1 per cent in May - up a touch from 4.9 in April admittedly but with 40,000 new full-time jobs created. Leaving aside that economists used to regard a 5 per cent rate as full employment, the figures suggest solid growth continuing in the current quarter contrary to the warnings of some economists in recent days.
Tony Abbott and Mr Hockey have correctly argued that now is the wrong time to introduce a “carbon tax’‘.
But what this week has taught us is that the reason is not so much a weak and vulnerable economy as a weak and vulnerable government.
In other words, it’s the politics stupid.
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