Voters may not have guessed it from some of the more fanciful numbers and forecasts bandied about in this largely uninspiring campaign but Australia has entered a period of economic uncertainty. Our economic growth – long a standout among OECD member states – has been declining steadily, and is forecast to dip below 2.75 per cent by the fourth quarter of 2016. Wages and incomes are stagnant. And with the Hawke/Keating/Howard-era economic reforms fading in impact, productivity growth has slowed appreciably.
Australia is more indebted and more vulnerable to external shocks than it's been in 25 years, which makes the scale of the choice facing voters on Saturday significant. At stake is the prosperity many of us now take for granted, but which will be hard to sustain if Saturday's winning party fails to confront and effectively deal with the triple issues of taxation, public spending and economic reform.
Opposition Leader Bill Shorten has had an impressive campaign, dispelling the popular initial view of him as an apparatchik appointed above his level of competence. He's invested in ideas and policies – some of them out of left field, such as limits on negative gearing investment properties – and he's marketed them ably. Mr Shorten has also sought, not without some effect, to rehabilitate Labor's reputation for competent economic management, promising a Labor government would deliver a budget surplus at the same time promised by the Coalition.
Yet in key areas his policy prescriptions suggest a party that's not yet ready for government. His budget surplus forecast is predicated on assumptions, savings, and cuts so far into the future as to strain credibility. He's abandoned the Coalition's planned cuts to education and health, and announced a swag of unfunded election promises over the past five weeks. These measures are very likely to increase Australia's government debt-to-GDP ratio and its vulnerability to economic squalls emanating from China and north Asia.
As for the Coalition, it's a campaign irony that Prime Minister Malcolm Turnbull has failed to fully demonstrate the eloquence, the intellectual depth and the vision he's widely believed to possess. Conjecture was that Mr Turnbull would (and should) reveal more of his natural character and instincts during campaigning – not only to distance himself from his predecessor but to foster a clear mandate for change. If Mr Turnbull has disappointed Coalition progressives with his apparent willingness to leave the climate change and marriage equality policies of Tony Abbott in place, and failed to scale the rhetorical heights, his grasp of the economic challenges ahead for Australia is firm.
The Coalition deserves credit for recognising the necessity for cuts in public-sector spending and for giving this imperative effect by, among other things, promising to rein in superannuation tax concessions. Its decision not to substantially bribe voters is similarly enlightened. Mr Turnbull's reluctance to fully embrace budget repair and the need for overdue tax reform notwithstanding, the Coalition promises stronger, more effective government than Labor.
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