Why not? For the four reasons I have just listed.
The Reserve Bank knows that if it raises interest rates so high that they capsize the economy, all fingers will be pointed at it, not at Albanese and Chalmers.
So how is the job likely to do? Not as well as supporters of the new government had hoped, but not as badly as its opponents had predicted. At this early stage, however, when we’re so fully aware of the last batch’s flaws, we have every right to hope for improvement.
We can hope that the new government will not play favorites and foes like Morrison did.
Whatever happens to the economy over the next few years, one thing we can be sure of is that the Libs will claim to have put an economy back in tip-top shape. Morrison and Frydenberg have spent the entire campaign telling us how “strong” the economy is.
It is in some respects, but not in others. It is certainly true that the job market is in better shape than it has been in decades. At 3.9%, the unemployment rate is at its lowest in 48 years and underemployment is at its lowest in 14 years. The proportion of people of working age who are employed has never been so high.
You’d expect that to mean wages are also rising sharply, but not a little. Wages have struggled to keep up with prices over the past decade and, with the recent price spike, have fallen far behind.
This is partly because, thanks to low business investment in better equipment, there has been little improvement in labor productivity. Living standards have not improved much since the Coalition took over in 2013.
It’s weak wage growth that most explains why the high cost of living seemed the biggest issue in this election. And it’s the cost of living that helps explain why voters have turned to the self-proclaimed big economic managers.
Corporate profits are doing well, but the Liberals have failed to give ordinary working families their fair share of the treat – and have allowed many of their jobs to become less secure. And that’s before you get to the huge budget deficits that the government itself was planning stretching farther than the eye could see.
There is one problem that it is reasonable to expect Labor to care more about and do more to solve: growing wages faster. Can a government do much about wages? Sure. They can start by urging the Fair Work Commission to increase awarded wages based on prices. And give their own employees a decent pay raise after years of wage deductions.
A staunch liberal friend thinks it was a good election for his side to lose. He thinks the global economy is likely to weaken and that this, combined with our problem of using higher interest rates to control inflation, could push us back into recession.
I’m not that pessimistic.
There may be difficult times ahead as the world deals with its various problems. But the Reserve Bank knows that if it raises interest rates so high that they capsize the economy, all fingers will be pointed at it, not at Albanese and Chalmers.
Ross Gittins is the economics editor.