Labor leader Anthony Albanese is threatening — is promising — to unleash exactly the wages-prices spiral that would send interest rates really rocketing higher and devastate the finances of millions of Australians. …
After loosely talking about wanting “real wage rises”, he went on to make the “obvious” promise — with inflation at 5.1 per cent, as prime minister he would push for wage rises of 5.1 per cent plus.
So, if inflation kicked up to 7 per cent, [he] would have to push for 7 per cent-plus wage rises across the entire economy.
And if inflation then kicked up to 10 per cent, he’d be demanding across-the-board 10 per cent-plus wage rises.
That’s the “easy” disastrous bit: Economic Ineptitude 101. …
Promoting 5 per cent-plus wage increases when inflation is 5 per cent, is exactly what leads on to 7 per cent inflation. Then, rinse and mindlessly repeat at 7 per cent, and you are headed for 10 per cent inflation.
That’s exactly the future that would force the Reserve Bank to raise its official cash rate not to the 2-3 per cent it currently intends, but to 5 per cent; and then 7 per cent; and indeed even to 10 per cent and potentially higher. …
Got a $600,000 loan and being hit with a $100-a-month repayment increase? How would you fancy repayments going up by $1000-1200 a month? By $3000-$3600 a month?
Do you think a 5 per cent wage and salary increase — before tax, mind you — would compensate?
That’s if you didn’t lose your job like over 10 per cent of workers did into the 1990s — and lose their jobs for years if not permanently, not months like with Covid — the last time we had a wages-prices-interest rate spiral.
It would be all thanks to a blunderingly inept PM, “supported” by equally inept deputy-PM and treasurer, who are all clueless about the economy and seemingly don’t care.
Promising wage increases to match inflation was indeed a naive and stupid thing for Mr Albanese to do. Fortunately he is now walking it back, but it shows how little he understands:
Anthony Albanese is trying to walk away from his latest economic blunder by suggesting he’s not saying that Labor supported a wage rise of at least 5.1 per cent to keep pace with inflation.
The Opposition Leader, accused of being reckless and a “loose unit” on the economy, has avoided using the figure of 5.1 per cent today as have his frontbench colleagues as they go into another bout of damage control and spin after Albanese has publicly blundered.
Labor can see the damage being done and more importantly the much worse damage that will be done if Albanese’s “absolute commitment” to linking the current minimum wage case to the headline 5.1 per cent inflation rate.
After a lifetime of left wing activism, Anthony Albanese knows dangerously little about reality.