Paul Kelly discusses Middle-class financial woes.
'The Albanese government is trapped into its political standing has plummeted but its central challenge - high inflation and falling living standards - defies and quick or substantial solution. Its future is heavily hostage to the Reserve Bank and the inflation reduction trajectory.
'The government faces a prolonged period of economic water torture'.
'Labor's resort to hysterical attacks on Peter Dutton - accusing him of protecting pedophiles ... will be counter-productive to the extent and reveals the extent of Labor's political panic.'
'Living standards per head have plummeted over two years by an astonishing 10 per cent, personal taxes have lifted 18 per cent on a year ago, and borrowers are hit with interest rates rising 13 times and set into next year. Energy prices will stay high, for many entry into the housing market is unaffordable, and many people feel trapped urban congestion and pressures. '
'The inflation trajectory belies projection, New Reserve Bank governor Michele Bullock has signalled the bank is willing to increase the cash rate beyond the 4.35 per cent hike. In Bullock's last meeting 10 days ago her warnings were ominous - the inflation thrat was now homergown demand and broadly based, a dangerous trio..
Jennifer Westacott said: 'A decade a policy inertia has left Australia in a dangerous position. Without reforms the nation faced lower living standards, fewer high-skilled jobs and fewer new oppotunities. leaving the nation 'tremendously at risk'.
Economist Chris Richardson, tells Inquirer: 'There has been a huge in our drop in our standard of of living. Its down almost 10 per cent since the artificial from the extra money we got frpm the extra money we got from the covid-driven from the September 2021 peak. This is a much bigger fall in living standards that we have seen in any recession in living memory'.
'The problem is you can't do much about it, certainly not effectively. Its the cruelist political problem for governments to have.'
'Dutton's problem is the need to persuade the public that the Coalition is actually the superior party to manage the the economy, revive productivity and deliver higher living standards. That is a seperate test. For the Coalition , exploiting Labor's woes won't soffice politically.'
You can see the various problems. Tax cuts are likely to delay any trajectory of interest rate decline. They will assist taxpayers at the cost of borrowers. Even more serious, if the inflation battle is not going well, the tax cuts will put pressure on the RBA to raise rates further. It would see a stark conflict between fiscal and monetary policy . Richardson says: 'Tax cuts don't lend themselves to be flexible to being flexibles on timing but neither does a fight against inflation'.
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