Back in 2024 the Treasurer posed for a media photoshoot with artwork of a tamed 'inflation dragon'.
asserted
Treasurer → pose → dragon
It was an indulgent photo opportunity back then, but it looks downright embarrassing now.
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it → look → ?
Jim Chalmers was happy to pose for the pictures despite economists' warnings that the fight was far from over.
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fight → pose → warnings
Perhaps next time he should wait until the dragon is truly slain before posing for the trophy shot.
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dragon → wait → shot
Chalmers can use the excuse of 'international pressures' until he's blue in the face, but Australians facing yet another increase in their mortgage repayments are entitled to ask what he will do to fix the situation.
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he → use → situation
And this is all happening right when house prices are falling, thanks to Labor's broken election promises on negative gearing and capital gains taxes.
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prices → happen → gearing
The Treasurer oversees a federal budget approaching $830 billion in annual spending.
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Treasurer → oversee → spending
Yet the difficult business of slowing demand is still being left to the Reserve Bank, which does that by making borrowing more expensive.
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borrowing → slow → that
Labor ministers keep telling us they understand households are making difficult choices.
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households → tell → choices
They could make a few more themselves, to cut record levels of government spending, in order to put downward pressure on inflation and in turn on interest rates too.
Jim Chalmers with wife Laura at the 2024 Midwinter Ball.
uncertain
They → make → Ball
That same year, Chalmers posed with a drawing of a tamed 'inflation dragon' for the Australian Financial Review magazine
Annual inflation climbed from 4 per cent to 4.3 per cent in September.
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inflation → pose → September
Unfortunately that disparity demands another rate rise.
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disparity → demand → rise
Another quarter point increase in the cash rate next Tuesday would take it to 4.85 per cent, with the effects of earlier rises still working through the economy.
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effects → take → economy
Families would face higher repayments on top of more pricey essentials.
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Families → face → essentials
Anyone who has already cut discretionary spending would need to draw further on their savings, find extra work where they can or simply fall behind.
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they → cut → work
The damage extends well beyond mortgage holders.
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damage → extend → holders
Money absorbed by repayments is unavailable to spend at local businesses.
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Money → absorb → businesses
As customers pull back on their spending, businesses facing higher borrowing costs themselves have less scope to invest, and they can't offer extra shifts or hire new staff.
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they → pull → staff
This squeeze carries the risk of causing rising unemployment.
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squeeze → carry → unemployment
A household struggling to meet its mortgage repayments faces being crushed if mum or dad loses their job.
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mum → struggle → job
But allowing inflation to persist carries its own cost.
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inflation → allow → cost
Wages and savings buy less, household budgets remain under pressure and restoring price stability later on can require an even harsher squeeze further down the line.
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restoring → buy → line
The pain doesn't go away.
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pain → go → ?
Without stronger spending restraint or an easing of international price pressures, another rate rise becomes a necessary evil.
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rise → become → pressures
That is precisely why Chalmers' failures deserve scrutiny.
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failures → deserve → scrutiny
The RBA has a responsibility to contain inflation.
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RBA → have → inflation
The Treasurer has a responsibility to ensure his budget is doing enough to help.
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budget → have → enough
Sadly, the inflation picture has gotten much worse since
The Middle East conflict has pushed up oil prices, but the RBA has been explicit that international pressures are adding to existing domestic capacity constraints.
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pressures → get → constraints
Australia entered this latest shock with too little room to absorb it.
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Australia → enter → it
Weak productivity makes the problem even harder to deal with.
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problem → make → ?
Higher interest rates can't produce cheaper oil or immediately deliver more houses and skilled workers.
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rates → produce → houses
It suppresses spending elsewhere, forcing demand into line with what the economy can supply.
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economy → suppress → what
Government spending restraint can help achieve that adjustment while reducing the burden falling on borrowers.
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restraint → help → borrowers
Simply put, if Labor spends less, the RBA doesn't have to put rates up as often, because spending less puts downward pressure on inflation.
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spending → put → inflation
Public projects require workers, materials and equipment.
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projects → require → workers
When those resources are scarce, which they currently are, governments compete with businesses and households for them, putting upward pressure on inflation.
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governments → compete → inflation
Deferring low-priority projects can release construction capacity.
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Deferring → defer → capacity
Removing ineffective subsidies can reduce demand.
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Removing → remove → demand
Funding new commitments through genuine offsets can avoid making the RBA's task harder.
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task → fund → offsets
Worthwhile programs still have costs.
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programs → have → costs
…and 16 more, not listed.
The Aporia
