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  • AFR Editorialist

AFR opines - a sensible economic policy agenda

At a time of economic challenges, the Australian parliament is spending a lot of time just getting basic things – such as the legislation on which Malcolm Turnbull won a double dissolution election – through the Senate.

After defending the borders and ensuring law and order at home, ensuring a secure supply of energy, and preferably a cheap and plentiful one, should be a priority of government. Yet while federal Parliament spent much of the week arguing over how much to tax holidaying backpackers for picking fruit and vegetables, the lights went off again in South Australia when there was no solar or wind to make up for the coal-fired power it has mothballed just as the interconnector to Victoria's dirty brown coal brown was interrupted. More than 200,000 households lost power along with BHP Billiton's massive Olympic Dam mine. As chief executive Andrew Mackenzie fumed, the second blackout in two months means "Australia's investability and jobs are placed in peril by the failure of policy to both reduce emissions and secure affordable, dispatchable and uninterrupted power". Australian federal and state Labor governments have plunged headfirst into romantically ambitious renewable energy targets with little regard for energy security – and then cried crocodile tears for workers retrenched from coal-fired power stations.

Keeping the lights on in South Australia isn't all that is being ignored. Australia's AAA sovereign credit rating is in danger because the political class is incapable of reining back the budget promises it made when the national income outlook was more buoyant. The projected date for returning to surplus – 2020-21 – is now a shifting target, and the budget savings delivered to date, most notably $8-9 billion in superannuation concession over the next four years, look underwhelming compared with the $37 billion deficit forecast this year alone. Getting the budget back on track is not going to be achieved by arguing over how much students on holiday should be taxed to do work that Australians don't want to, even with a 12 per cent jobless rate for 15-to-24 year olds.

Such a jobless rate should underline the alarm over the declining educational performance of Australian primary and secondary students in maths and science, as confirmed by yet another study this week. For Labor and the so-called progressive class, this is a signal of the need to pour even more money into the system. Yet, by any measure, Australia has never spent more on schools. The education deficit will only be overcome by properly incentivising good teachers and allowing engaged local communities to hold their school leaders accountable for their performance.

There won't be any more money anyway until Australia revives its productivity growth. The passage of the Australian Building and Construction Commission act through the Senate is a victory for the Turnbull government and should lower the inflated cost of building in Australia. Yet this flagship piece of legislation on which the government fought and won an election was resisted tooth and nail by a Labor party not willing to admit there was any problem, let alone criminality, on the nation's worksites. Labor's wilful blindness seems entirely driven by the fact that it is financed and influenced to the point of small 'c' corruption by the law-breaking Construction, Forestry, Mining and Energy Union. So its passage had to be secured by distasteful and unprincipled horse trading.

But the ABCC achievement is not nearly enough. Burned by the 2014 budget, the Coalition government is yet to grasp the nettle on fixing the budget and retaining our AAA credit rating. More needs to be done to set out a more compelling narrative on the economic reform needed to revive national income growth. The deep worry is that, abetted by dumbed-down media debate, Australians have become so complacent after two decades of rising prosperity that they actually prefer not to take the steps required to preserve it.

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