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  • Australia’s emissions are rising at a time they need to fall quickly

    Australia’s emissions are rising at a time they need to fall quickly

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on August 31, 2023

    The latest quarterly greenhouse gas emissions survey shows that Australia is heading in the wrong direction – and that needs calling out.

    The latest Quarterly Greenhouse Gas Emissions data came and went last Friday with little coverage. As Policy Director, Greg Jericho writes in his Guardian Australia column this meant that much of the terrible news was missed.

    In the past year, Australia’s greenhouse gas emissions have increased with the rise in transport emissions undoing any of the good that comes from falling emissions out of the electricity sector. At a time when we should be on a clear path to reducing emissions by at least 43% below the 2005 level by 2030, we are heading in the opposite direction.

    The figures also highlight the weakness of our 2030 target. The only reason we are even halfway to achieving that cut is because Australia includes land use in its calculations. Without including the faux cuts in emissions that come from using 2005 and the massive land-clearing that occurred that year as a baseline, Australia’s emissions would be just 1.6% below 2005 levels.

    Next week the June quarter GDP figures will be released.  We know exactly when they will be released and they will receive massive coverage, including a press conference by the Treasurer soon after 11:30am on Wednesday. By contrast, the quarterly greenhouse gas emissions data is released at random times with now warning and without any minister fronting media to discuss, explain and defend the government’s policies.

    We need to treat the greenhouse gas emissions release with the same level of attention we give to GDP, and we need to demand what the government is doing to ensure in 3 months time with the next release the figures will show a fall, rather than a rise.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Urgent Need for Australia’s Climate Industry Policy

    Urgent Need for Australia’s Climate Industry Policy

    by Charlie Joyce in The New Daily

    Charlie Joyce

    Researcher

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    Originally published in The New Daily on August 28, 2023

    For the first time in decades, Australia is talking about industry policy.

    And the interest is coming from all sides.

    At Labor’s recent national conference, the Electrical Trade Union (ETU) led a successful motion demanding the Commonwealth government invest big money to support domestic clean technology industries.

    The Business Council of Australia (BCA) released last week a report that called for a reinvigorated government industry policy to develop advanced manufacturing and renewable sectors, among others.

    Several landmark reports, including by the Centre for Future Work, have all reached the same conclusion: Government must invest big in industry policy to accelerate the clean energy transition and build Australian renewable industries.

    No doubt about climate crisis

    Business, unions, and civil society are all singing from the same sheet. Clearly, something has changed – but why?

    The past year has seen tectonic shifts in the global policy landscape.

    The climate crisis is now impossible to ignore.

    The past eight years have been the eight hottest on record – and July may have been the hottest month in 120,000 years. The northern hemisphere has been buffeted by floods, fires and natural disasters, and Australia is anxiously anticipating the coming El Niño summer.

    The costs of climate inaction are clear. However, awareness is also growing of the profound opportunities of climate action.

    In the United States, President Joe Biden has embraced climate action as an economic and jobs opportunity. Decarbonisation has been put at the heart of his administration’s “modern American industrial strategy”.

    The Inflation Reduction Act (IRA) and the Infrastructure and Jobs Act direct between $US750 billion and $US1.2 trillion to expand clean tech manufacturing, renewable energy generation, and sustainable infrastructure.

    In just its first year, this legislation has driven massive private sector investment, and already created more than 170,000 new green jobs.

    In China, long-term government investment and industry planning in renewable tech has given that country global dominance in the clean energy supply chain.

    Last year, the Chinese government invested $US546 billion into clean energy – more than the rest of the world combined. This included the installation of 107GW of solar output, roughly equivalent to the entire historical installed capacity of the US.

    The International Energy Agency (IEA) estimates China holds 60 per cent of global manufacturing capacity for most clean technologies.

    The rush is on to keep up

    Suddenly, the world is rushing to keep up with the US and China’s investment.

    The European Union now plans to invest more than $US1 trillion into renewables over the next decade and the EU is expected to reach 2030 clean energy targets years ahead of schedule.

    The governments of Japan, Canada, South Korea, India, and even Saudi Arabia are also all investing substantially in clean tech manufacturing.

    Back in Australia, senior government ministers declare their ambitions to make Australia a “renewable energy superpower”. But it takes more than just aspiration to achieve that.

    Across the world, big money is being spent empowering renewable industries. The global clean technology race has begun, and Australia is barely on the track.

    The Australian government must act now.

    Promisingly, the Commonwealth government set aside funding in the 2023 budget to investigate the changing global, clean energy, industrial landscape and prepare Australian policy responses before the end of this year.

    This suggests the government already realises its present policies – including the National Reconstruction Fund, the Powering the Regions Fund, and the Clean Energy Finance Corporation – are inadequate to this competitive challenge.

    The bottom line is that we need to spend more – much more.

    Centre for Future Work research presented to the recent National Manufacturing Summit estimates Australia must spend between $83 billion to $138 billion over the next decade to proportionately match the US IRA in fiscal supports.

    The ETU and the Australian Manufacturing Workers Union (AMWU) have gone further, suggesting a total investment of $152 billion.

    More than just spending

    But spending alone is not the answer.

    To ensure a new Australian industry policy actually works to drive decarbonisation, rebuild manufacturing, secure supply chains, and create secure, well-paid jobs, that money must be spent effectively.

    This means any government support for private industry comes with conditions attached, particularly concerning fair pay, secure working arrangements, and rights to collective bargaining.

    This means planning and co-ordination across various levels of government, the private sector, trade unions, and other stakeholders to ensure policy has maximum impact and money is spent where it is needed most.

    This means developing an expanded, skilled, and inclusive workforce through investment in apprenticeships and TAFEs.

    This means ongoing performance monitoring, backed by enforceable
    requirements (like claw-back provisions) to ensure businesses receiving public finance are accountable to public expectations.

    And beyond just grants and subsidies, government should not be afraid to make direct, public equity investment in private, clean-technology companies.

    This ensures the Australian public will share in the profits of successful subsidised ventures, not just bear the cost of unsuccessful ones.

    The growing consensus around the need for a new Australian industry policy provides an opportunity to reshape the Australian economy, rebuild manufacturing, and create thousands of secure jobs – all while acting on the climate crisis.

    It’s time for the Commonwealth government to make it happen.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Australia at risk of exclusion from renewable manufacturing boom

    Australia at risk of exclusion from renewable manufacturing boom

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    Australia risks being left out of lucrative new markets for renewable energy-related manufacturing unless government provides an urgent, domestic response to match powerful incentives introduced by the U.S and several other industrial nations.

    The finding is published in a new report released today by the Australia Institute’s Centre for Future Work, as part of the 4th National Manufacturing Summit, being held in Canberra.

    Key points:

    • There is an overseas manufacturing boom in the productions of batteries, electric vehicles, renewable energy generation and transmission equipment, and other renewable energy products.
    • This boom is being driven by incentives provided by the Biden Administration’s Inflation Reduction Act, and similar supports in the EU, China, Japan, Korea, and Canada.
    • Meanwhile, Australia is considering its response, but no clear strategy has been announced.
    • The report estimates the proportional investment required to match the American IRA in the Australian context at between $83 to $138 billion over 10 years in fiscal supports and incentives to match U.S. benchmarks.
    • Several qualitative best practices should also be included in the Australian response to the IRA to generate maximum economic, social, and environmental impact: these include strong labour and environmental standards attached to subsidised projects, public equity participation, and parallel investments in training for workers to fill the new jobs.

    “The extraordinary response by industry to the U.S. measures confirms that these policies are having an outsized effect on the volume and location of sustainable manufacturing investment,” said Dr. Jim Stanford, Director of the Centre for Future Work and co-author of the report.

    “It also confirms that Australia must move quickly with its response to this new industrial landscape, or risk losing its chance to leverage our renewable energy resources into lasting, diversified industrial growth.”

    Charlie Joyce, a research fellow at the Centre and co-author of the report, noted: “The global race for clean technology manufacturing is well underway, and Australia is barely on the track.”

    “Australia has many advantages when compared to other competitors in this market, including an unmatched endowment of renewable energy sources and ample deposits of critical minerals.

    “However, the painful legacy of decades of policy neglect for domestic manufacturing has left our industrial base in poor shape to seize the opportunities opening up ahead of us.”

    “If we don’t support domestic manufacturing to quickly enhance its production, skills, and technological capabilities, all that will happen is we will replace one set of unprocessed minerals: coal, oil and gas; with another: raw lithium and related critical minerals.”

    “Without action, most of the spin-off benefits of the renewable energy revolution for industry, technology, value-added and diversification will pass us by,” said Mr. Joyce.

    The report estimates the proportional investment required to match the American IRA in the Australian context at between $83 to $138 billion over 10 years in fiscal supports and incentives to match U.S. benchmarks.

    “That is a big fiscal ask by any standards, but not out of reach for Australia,” said Dr. Stanford. “But the common claim that Australia cannot afford to undertake proportionately equivalent measures is not convincing.”

    “Our federal budget is in much better shape than the U.S. And the government has committed to other, less pressing priorities which are just as expensive – such as nuclear submarines, Stage 3 tax cuts, and ongoing fossil fuel subsidies.”

    Please see the full report, Manufacturing the Energy Revolution: Australia’s Position in the Global Race for Sustainable Manufacturing, by Charlie Joyce and Jim Stanford.

    The paper is being released at the 4th National Manufacturing Summit, being held at Old Parliament House in Canberra from 8.30am to 4.30 pm on Thursday, August 3, co-sponsored by Weld Australia, the Centre for Future Work, and several industry bodies.


    Related research



    Manufacturing the Energy Revolution



    Full report

  • Manufacturing the Energy Revolution

    Environment & Jobs, Labour Standards & Workers’ Rights

    Manufacturing the Energy Revolution

    Australia’s Position in the Global Race for Sustainable Manufacturing
    by Charlie Joyce and Jim Stanford

    Authors

    Charlie Joyce

    Researcher

    Jim Stanford

    Media release



    Australia at risk of exclusion from renewable manufacturing boom

    Australia needs to respond quickly to powerful new incentives for sustainable manufacturing now on offer in the U.S. and several other industrial countries, or risk being cut out of lucrative new markets for manufactured products linked to renewable energy systems.

    That is the finding of a major new report from the Centre for Future Work. The report catalogues new incentives for production of batteries, electric vehicles, renewable energy generation and transmission equipment, and other renewable energy products provided under the Biden Administration’s Inflation Reduction Act and parallel public programs.

    Many other industrial countries, including the EU, China, Japan, Korea, and Canada have already implemented major new incentives to support the expansion of the manufactured products and technologies that will be required for those systems.

    Australia is considering its response, but with no clear announced strategy yet.

    The report provides evidence that the U.S. incentives and content requirements are sparking an unprecedented expansion in manufacturing investment in the U.S. and other industrial countries.

    This response confirms that active climate industrial policies are having an outsized effect on the volume and location of sustainable manufacturing investment. It also confirms that Australia must move quickly to respond to this new industrial landscape, or risk losing its chance to leverage our renewable energy resources into lasting, diversified industrial growth.

    The report notes that Australia has many advantages in the global race for sustainable manufacturing – including an unmatched endowment of renewable energy sources and ample deposits of critical minerals. However, the painful legacy of decades of policy neglect for domestic manufacturing has left Australia’s industrial base in poor shape to seize the opportunities being opened up by the global energy transition.

    The report estimates the proportional fiscal effort that would be required to match the American IRA in the Australian context. The government would need to commit $83 to $138 billion over 10 years in fiscal supports and incentives to match U.S. benchmarks.

    The report also catalogues several qualitative best practices that should be incorporated in the Australian response to the IRA, to generate maximum economic, social and environmental impact: including strong labour and environmental standards attached to subsidized projects, public equity participation, and parallel investments in training for workers to fill the new jobs.

    The paper was released at the 4th National Manufacturing Summit, being held at Old Parliament House in Canberra from 830am to 430 pm on Thursday, August 3, co-sponsored by Weld Australia, the Centre for Future Work, and several industry bodies.



    Full report

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  • If the unemployment rises to 4.5% who is likely to lose their job?

    If the unemployment rises to 4.5% who is likely to lose their job?

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on July 13, 2023

    The RBA is currently targeting a 4.5% unemployment rate, and that is going to hurt young, low skilled and low paid workers,

    The next 12 months ahead look to be a time of rising wages, and rising unemployment. The Reserve Bank is trying to raise unemployment in order to prevent rising wages. It’s target of 4.5% will see around 130,000 to 150,000 more people unemployed than is currently the case.

    Labour market policy director, Greg Jericho, in his Guardian Australia column, examines which workers are likely to be the ones who will lose their jobs.

    In a bitterly ironic point, he notes that these are the same workers whom Deputy Governor of the Reserve Bank Michele Bullock recently boasted were the ones who had gained the most from the strong employment growth of the past 18 months:

    people on lower incomes and with less education who have benefited the most from the strong labour market conditions

    More worrying is that the Reserve Bank’s own estimates suggest that the rises in unemployment over the next year will see Australia breach the “sahm Rule” of recession, in which the unemployment rate rises more than 05%pts in a year. Oddly however the RBA’s correspondence on the issue revealed in an FOI disclosure has them suggesting that for Australia the recession trigger is a 0.75% rise.

    Either way, history suggests that when unemployment rises in a year by the amount the RBA is estimating it usually keeps rising.

    The RBA’s own estimates show just how close to a recession the economy is set to go in the next year. It already looks likely to hit workers with low skills and low paid jobs, and if the RBA gets it wrong, it will quickly hit many more of society.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Blame Game on Inflation has Only Just Begun

    Blame Game on Inflation has Only Just Begun

    by Jim Stanford in The Canberra Times

    Jim Stanford

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    Originally published in The Canberra Times on June 8, 2023

    Every inflationary episode embodies a power struggle within society over who benefits from inflation, who loses out – and who will bear the cost of getting inflation back down.

    That’s because inflation never affects all prices and incomes evenly. Some prices shoot up, while others grow slowly or decline. Some incomes keep pace with rising prices (or even outpace them), while others lag far behind. Thus the impacts of inflation are always uneven. And this sparks economic and political controversy.

    This distributional conflict is readily visible in current Australian inflation. As prices took off after the lockdowns, corporate profits surged dramatically, reaching their highest share of GDP ever by 2022.

    Meanwhile, wages – which were historically weak even before the pandemic – lagged far behind. In the last two years, consumer prices rose 12.5% (and more for essentials, like food and energy). Average wages grew less than half as much – barely 6% – in the same time.

    That means the purchasing power of workers’ wages is falling. It’s the biggest and fastest real wage cut in postwar history – and record profits from those higher prices are the corollary of workers’ falling real incomes.

    Despite the fact that wages have lagged, not led, recent inflation, the powers-that-be are still targeting workers to bear the brunt of the anti-inflation effort.  The Reserve Bank is now using high interest rates to cool off employment and slow wage growth.

    This inflation has produced clear winners, and clear losers. So it’s a myth to proclaim that inflation “hurts all Australians,” pretending we can all join together in a shared national effort to wrestle prices to the ground.

    Our Centre for Future Work published research showing just how lopsided the impacts of inflation have been in Australia. We analysed official national accounts data from the ABS, including income flows, output data,  and changes in average economy-wide prices.

    From end-2019 (just before the pandemic) to September 2022 (latest data at the time), higher corporate unit profits accounted for 69% of excess inflation (over and above the RBA’s 2.5% target). Unit labour costs accounted for just 18%, and other stakeholders (including small business) the remainder.

    This confirmed that workers are the victims of inflation, not its cause, and raised big questions about the RBA’s determination to target wages (not profits) for tough anti-inflation medicine. Our findings sparked widespread interest and anger. So business peak bodies, and business-friendly commentators, have launched a steady stream of attacks against our report since its release in February.

    RBA and Treasury officials also disagree with our conclusions. They have not challenged our actual numbers: indeed, internal RBA memos replicated and confirmed our finding that wider corporate profit margins account for the lion’s share of higher prices since 2019.

    But despite this evidence, these officials deny soaring corporate profits are a concern in the anti-inflation battle. Profits grew most dramatically in the energy and mining industries, they say. This is certainly true – due in part to sky-high prices paid by Australians for petrol, gas, and other resource-intensive products. So we can’t magically exclude this super-profitable sector from our analysis of inflation, nor our plan for tackling it.

    They also claim profits outside of mining have not increased. This is false: non-mining profits have been less spectacular than resources, but profit margins have widened significantly, reinforcing inflation. Consumers are reminded of this every time they visit a supermarket, book an airline ticket, or try to rent an apartment.

    In sum, these arguments cannot deny that business has profited mightily from the current inflation – especially, but not solely, in energy and mining – while workers have suffered.

    A flip side of this class conflict over inflation was starkly visible last week, when the Fair Work Commission announced a 5.75% increase in Award wages. That doesn’t quite keep up with inflation, but it sure helps.

    Within minutes, the same corporate lobbyists so offended by our research, lined up to denounce the wage increase as inflationary. They want Australia’s lowest-paid workers, whose living standards have already declined, to sacrifice further. Little wonder business peak bodies hate ay public attention on their own record profits.

    The blame game over inflation will get more heated in the months ahead. Inflation is likely to ease, as many of the unique post-pandemic factors (supply chains, energy price shock, pent-up demand) that underpinned firms’ price increases gradually abate. But real wages have fallen – and workers, understandably, want to repair that damage.

    So workers will demand wage gains in excess of inflation. And by all rights, they deserve that. That need not cause further inflation, especially if record high profit margins come back to earth.

    Corporations, however, want to sustain their record profits as long as possible. They want to keep wages down, and the RBA seems determined to help. So buckle up: the great Aussie debate over inflation is just getting started.

    Jim Stanford is Economist and Director of the Centre for Future Work at the Australia Institute, and the author of Profit-Price Spiral: The Truth About Australia’s Inflation.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Real wages falls and interest rates rises signal tough times for households and the economy

    Real wages falls and interest rates rises signal tough times for households and the economy

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on May 25, 2023

    You can’t sustain household spending while real wages continue to fall, and households are starting to let everyone know

    The Australian economy – like all economies – is about people. And yet too often company profits are used as a judge of economic health. Throughout the pandemic and in the years since, company profits have soared while the real wages of workers has fallen. This situation is inherently unsustainable with an economy dependent upon household consumption. As policy director Greg Jericho writes in his Guardian Australia column, we are beginning to see households struggle to keep going.

    The Budget delivered this month by Treasurer Jim Chalmers revealed that the next financial year starting in little over a month is set to be one of the worst in the past 40 years. Household consumption is expected to rise just 1.5% – the 5th worst since 1985-86. Even worse if we account for an expected 1.7% rise in population this means in a per capita sense, real household spending is about to fall.

    And when household spending slows, so too does the entire economy.

    We have already see the beginnings of this with sharp slowing in the volume of retail spending being done, all while the amount of money we are spending rises. In effect we are paying more for less. This means the “nominal” figures in the retail trade data hides the weakness in the economy and the pain households are going through.

    With mortgage repayments rising nearly 80% in the past year, households are switching from spending in shops and on services that employ people, to paying off their loans – driving up the profits of banks ever more, but in doing so actually slowing the economy.

    The Reserve Bank is getting what it wanted – a slowing economy, less money being spent and rising unemployment.  But with conditions only seen in recessions expected in the next year, the risk that this slowing will lead to the economy stopping completely is rising, and the Reserve Bank must not raise rates any further and be extremely mindful of the pain they have already caused to households struggling from the fastest increase in loan repayments in over 30 years at the same time as real wage fall faster than they have on record.


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  • Wealth inequality across generations will only fuel voter disenchantment

    Wealth inequality across generations will only fuel voter disenchantment

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 13, 2023

    Millennials are not becoming more conservative as they age – and the rigged housing market is just one reason why

    While income inequality is an often discussed topic, wealth inequality is just as pernicious though often less discussed issue. Worse still the inequality of wealth across generations has lasting impacts for people into retirement.

    Policy director Greg Jericho writes in his Guardian Australia column how economic policies of the past few decades has served to provide those with wealth more of it, while depriving younger people of gaining a foothold that previous generations had.

    The issue is most acute with housing. Housing affability is often debated with some suggesting that because of lower interest rate than in the past owning a home is not as difficult as in the past. But the reality is that the size of the mortgage relative to incomes is so much greater than in the past that even with lower interest rates payments account for much more income than they used to. Whereas for those entering the housing market in the 1980s one incomes was often more than enough, now two incomes is a necessity.

    But what is often forgotten is that while interest rates were higher at times in the 1980s and 1990s those rates fell and with them did the payments all the while incomes rose. As a result those who bought homes in the 1980s and 1990s saw their repayments as a share of income fall to very low levels – levels unheard of now.

    And while the arguments about whether housing is more or less affordable can turn on definitions of affordability, the fact is that for the first time fewer than half of people aged 30-34 own their own home.  That’s not through choice, but through the reality of a housing market that is locking out younger people.

    This in turn sees younger generations have less wealth at  their age than did their parents and grandparents.

    It is little surprise that Millennials are not becoming more conservative in their voting as they age in the same way that did Baby Boomers and Gen Xers. The wealth inequality will have ongoing repercussions for political parties who have in the past taken it as given that older voters will vote for them.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

    Australia’s Gas Use On The Slide

    by Ketan Joshi

    The Federal Government has released a new report that includes projections of how much gas Australia is set to use over the coming decades. There is no ambiguity in its message: Australia reached peak gas years ago, and it’s all downhill from here:

  • With the impact of rate rises still to come the RBA is wise to pause

    With the impact of rate rises still to come the RBA is wise to pause

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 6, 2023

    Perhaps as much as a third of the rate rises since April have yet to fully hit the economy

    Since April the Reserve Bank has increased the cash rate by 350 basis points from 0.1% to 3.60% – the fastest and largest increase since the late 1980s. But as policy director Greg Jericho notes in his Guardian Australia column, perhaps as much as a third of the rate rises have yet to fully flow through to the economy.

    While the interest rate of new mortgages has risen the full amount, the average rate of all mortgages has only risen around 209 basis points – with many mortgage holders still yet to have their repayments increase due to the rate rates in December, let alone those in February and March.

    The Reserve Bank noted this in its statement and stressed the need to gather more information before deciding whether to increase rates or keep them steady.

    The most recent GDP figures show the economy overall has slowed and the signs of inflation are that the peak has been reached and much like the USA, it is not heading down. While the path to 3% inflation might take some time there seems little sense of long-term expectations rising and the 350 basis points worth of rises makes it clear the RBA is prepared to act if it believes inflation is accelerating.

    The Centre For Future Work has been calling for a pause in the rates and it welcomes this decision by the RBA.  There is minimal risk from observing the data after 10 successive rate rises. And workers whose wages have not kept pace with inflation will be relieved that the RBA is paying heed to warnings that slowing the economy too fast in an environment where inflation has peaked only increases the risks of sending the economy into a recession


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • With interest rates set to rise another 3 times, no wonder consumers are feeling grim

    With interest rates set to rise another 3 times, no wonder consumers are feeling grim

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on February 16, 2023

    The Reserve Bank now forecasts real household incomes will take longer to recover than they did during the 1990s recession and is also projecting economic growth at historical lows. Australian consumers are right to feel worried about the future.

    Right now Australian consumers have less confidence than they did in April 2020 when the entire world was locked down and the pandemic was raging without any prospect of a vaccine.

    That might suggest that Australians are overly pessimistic, especially given unemployment is at generational lows of 3.5%, but when you look at the statements of the Reserve Bank and its projections for the next 2 years, it is little wonder Australians are worried.

    Last week the RBA not only lifted the cash rate for the 9th straight time, it signalled that there would be a plural number of rises to come. In response, the market now anticipates at least three more rate rises, with a slight chance of 4 more. That would be easily the fastest and largest raising of interest rates since the late 1980s. And Australians are well aware of what occurred after the 1980s rate rises.

    Indeed even the Reserve Bank is anticipating a sharp slowing of the economy. While not suggesting a recession is imminent, in its latest Statement on Monetary Policy the RBA forecast 2 straight years of GDP growth of less than 1.8%. That would equal the record length of less than 2% growth during the 1990s recession. In reality, anytime Australia’s economy has grown by less than 2% for just one year there has been either a recession or near recession conditions such as during the GFC.

    Australians are right to be wary especially as their standard of living has suffered a sharp decline in the past year as incomes fail to keep up with inflation.

    The Reserve Bank of course does need to be concerned about inflation but given the expectations of recessions of slight contractions in the UK, USA and Europe the risk of a recession should be weighed much higher than they currently are.


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