One of the things politics and comedy have in common is that with both timing can be everything. That's why only time will tell if Josh Frydenberg's decision to deliver words of wisdom on the need to invest to Australian businesses on the same day $30 billion was wiped off the value of the local sharemarket was a good or a bad thing.
Subscribe now for unlimited access.
or signup to continue reading
Frydenberg told Business Council of Australia members they should stop paying themselves and their investors back through share buybacks and increased dividends and start investing in making Australia great again. That is, after all, the only way you are going to see jobs and growth.
Frydenberg was, to be fair, ramming home a point he and his predecessor, and now boss, Scott Morrison, have been making for some time. If Australia is to have a resilient, well-resourced, and strong and vibrant commercial base somebody has to make it happen.
That somebody is, in the government's view, the business community which, according to Frydenberg, needs to start thinking beyond next share buyback plan or dividend allocation.
The less manufactured goods China sells, the less iron ore it will need.
The Treasurer is on the money when he says big business's decade-long preoccupation with pocketing the windfalls from a record period of economic growth has had an adverse impact on our productivity growth.
Citing Treasury figures which suggest few large companies have done much to invest in productivity enhancement in the last 15 years Frydenberg said: "Our productivity growth over the last decade has slowed and we cannot simply rely on high commodity prices to boost national income".
Nobody is about to disagree with the last part of that statement. The unexpected bounce in iron ore prices which put the government in spitting distance of a budget surplus ahead of the election has gone off the boil.
There are two reasons for this. The first is key South American iron ore producers, sidelined for more than a year as a result of a dam collapse, are coming back on line. The second, and perhaps more significant, is the US China trade war is now starting to make its impact felt on the real economy.
The less manufactured goods China sells, the less iron ore it is going to need from us.
The trade war, which ramped up several notches over the weekend, is also what took the wind out of the sails of stock markets around the world on Monday. While Australia didn't fall as much as Japan, $30 billion is a significant one day correction.
This is all the more reason therefore for Frydenberg to take his own advice: "If we are going to create new jobs and enable people to earn more for what they do, we need businesses to increase their capital expenditure and to adopt new technologies".
It's not enough, as shadow treasurer, Jim Chalmers, responded, to issue a clarion call and then leave to others to do the heavy lifting.
The Morrison government needs to follow through on the rhetoric by revisiting its own commitment to the surplus, taking stock of the fact money has never been cheaper - especially if you are a nation state with a AAA credit rating - and dust off its infrastructure shopping list.
Now, given the downward pressures on the economy, is not the time to pocket a surplus while promising tax cuts to the top end of town. What Australia does need right now is much needed economic stimulus. It is what saved us a decade ago.
The tax cuts were core to the Morrison government's election win and probably non-negotiable. But there is more the government could do to insulate the economy, even if it means delayed surpluses. Kevin Rudd would no doubt be happy to advise.
