There is a popular meme on the internet of the TV show *Pawn Stars*. In the meme, the owners of the pawn shop stand at a counter with a perplexed, almost apologetic, look on their face in response to someone offering goods to pawn. The text at the bottom can be customised to suit the circumstance, “best I can do is 20 cents”, etc.
This week our Treasurer Jim Chalmers did the “best I can do” meme. On the day that there was a record fall in productivity, the Treasurer announced a huge new policy to “help”. He announced that he would ban cheques by 2030. People are struggling to pay their mortgage and our economic output is falling in per person terms but the best the Government could do was to ban cheques!
What’s next. A plan to phase out the horse and cart by 2040. A plan to end the use of kerosene lamps by 2050?
Actually, the latter one is not a joke. The Government does want to phase out fossil fuels by 2050 under their net zero plan. That plan is not going very well and is part of the reason we are in such an economic hole.
A month ago, the Liddell coal fired power station in NSW shut. We were assured that electricity prices would not increase because there was enough renewable energy to fill the gap.
Once again the experts were wrong. Over the past month, wholesale electricity prices in NSW were the 5th highest on record (the other 4 months were either during last years market suspension or one month during the 2000s drought). In Queensland, electricity prices were 50 per cent higher last month than the month before.
This has a direct impact on our woeful productivity growth. Higher electricity prices make it more costly to make things, grow things, dig up things and move things. When it costs more to produce the same amount your productivity falls. And then you have to pay more for things in the shop.
The answer to high energy prices is to get more supply of electricity at all times of the day. Our power prices are high because we have a shortage of power when renewables are not working – at night or when the wind is not blowing. To get power prices down we need more power at these times.
It was revealed this week that BHP has called on the government to end our ban on nuclear energy. Once again the Labor party refuse to listen and keep their head in the sand on the cost of living challenges facing Australians.
The other major cost pressure on budgets is housing prices and interest rates. Again the answer here is more supply and less demand by controlling migration. Instead, the government is pushing ahead with record levels of migration, we are bringing in an amount of people the size of Canberra every year.
While land release is largely a state responsibility, the Government has frozen infrastructure spending. If we are bringing in more people, why isn’t the Government building more roads and rail lines to help deal with the influx?
As the Governor of the Reserve Bank told the Senate last week, “If we’re going to have two per cent more people in the country, we need two per cent more capital. That requires investment by business and investment by government, and we’ve got to find a way collectively to do that.”
The Government should take the Governor’s advice and either reduce migration or increases infrastructure investment.
But the main message from the Governor last week was that we must do more to boost productivity to help him fight inflation. As he starkly put it “The best solution to this is a lift in productivity growth.”
Since coming to government a year ago, the Labor party has had no productivity agenda. They did not even invite the Productivity Commission to their much vaunted jobs summit in Canberra last year.
Instead, we have had price caps, more red tape, higher welfare spending and increased taxes. The answer to low productivity growth is not more government. We instead must focus on helping get down the costs of doing business so that prices in the shops go down too. That would be a much better thing for our Treasurer to focus on than banning cheques.
