As we come to the end of 2019, you’d be forgiven for being confused about the health of the economy.
Treasurer Josh Frydenberg regularly points out that jobs growth is strong, the budget is heading back to surplus, and Australia’s GDP growth is high by international standards.
The opposition points to sluggish wages growth, weak consumer spending and weak business investment.
Monday’s Mid-Year Economic and Fiscal Outlook (MYEFO) provides an opportunity for a pre-Christmas stock-take of treasury’s thinking.
1. Low wage growth is the new normal
Rightly grabbing the headlines is yet another downgrade to wage growth.
In the April budget, wages were forecast to grow this financial year by 2.75%. In MYEFO, the figure has been cut to 2.5%.
Three years ago, when Scott Morrison was treasurer, the forecast for this year was 3.5%.
- ^ Surplus before spending. Frydenberg's risky MYEFO strategy (theconversation.com)
- ^ keen to emphasise (www.theaustralian.com.au)
- ^ Lower growth, tiny surplus in MYEFO budget update (theconversation.com)
- ^ perceptive commentator (insidestory.org.au)
- ^ We asked 13 economists how to fix things. All back the RBA governor over the treasurer (theconversation.com)
- ^ Vital Signs: Australia's wafer-thin surplus rests on a mine disaster in Brazil (theconversation.com)
- ^ Parliamentary Budget Office (www.aph.gov.au)
Authors: Danielle Wood, Program Director, Budget Policy and Institutional Reform, Grattan Institute