For a while now our economy has been Dr Jekyll and Mr Hyde. Inflation has been stubbornly high for more than a year, but unemployment is very low and wages growth picking up. What’s more, the government has announced the first surplus in 15 years as a result of booming revenue.
But underneath the surface, problems abound. There is a real chance of recession among our major trading partners, and here in Australia as well. People are suffering from rapidly rising interest rates and cost of living pressures. Many people feel like it’s impossible to get ahead. Productivity is low and growth predicted to drop sharply next year.
How do we fix it? Can we get things working again or are we heading towards a fundamentally different economy where government, business and unions increasingly work together towards their own aims.
Neither side of politics has a real agenda to deliver economic growth, or to address runaway spending in some areas of the budget. What can be done, especially in a polarised political environment, to fix the longer-term sustainability of the Budget and pursue a more productivity focused agenda?
It’s the perennial question: why is economic reform so hard?