Australia is failing economically because of our climate-obsessed, bureaucratic ruling class. By David Pearl, a former Treasury assistant secretary, in The Australian.

By the standards of the 1990s and early 2000s we are an inefficient, low-growth and inflation-prone economy. Since the pandemic, we have suffered the largest fall in living standards of any OECD economy.

This cannot be described as bad luck — indeed, world demand for our iron ore, coal and natural gas remains remarkably strong — but as an act of self-harm.

Step by step, our governments, both Labor and Coalition, have dismantled the open, flexible and market-based economy we had at the turn of the century, where resources were allocated by consumer-directed price signals, not bureaucrats.

Public debt, spending and tax burdens have been lifted to record highs, funding an expanding welfare state and uneconomic public works.

 

Australia’s federal and state governments are in the middle of a once-in-a-generation spending surge that Westpac has likened to the mining investment boom of the 2000s in terms of scale and impact.

 

And once again we have fallen for the false promises of regulation and protectionism, putting the unions in charge of the labour market and (by subsidising expensive wind and solar generation) saddling ourselves with a whole-of-economy energy tariff.

How did this happen? Who is responsible? As it happens, Australia’s main three economic institutions went DEI/woke:

Treasury’s slide started in the early 2000s, while the Productivity Commission and the RBA — which are independent of government — lost their way more recently. Under former secretary Steven Kennedy, Treasury has been captured by progressive economic ideology (this began under some of his predecessors).

The department once led by John Stone now supports permanent fiscal stimulus, never-ending deficits, a centrally planned green economy, uncapped welfare and higher taxes on savers and investors. There is no evidence that Kennedy offered a syllable of blunt advice to Jim Chalmers after the 2022 election, starting with the need to scale back spending and take pressure off inflation.

Instead, Kennedy publicly claimed energy bill subsidies would reduce inflationary pressures rather than merely disguise them, as every economist knows.

Nor has Jenny Wilkinson, the Treasurer’s pick as Kennedy’s successor, made a good start to her tenure, releasing — almost as her first act — shoddy and politicised modelling on the economic implications of net zero.

Under Danielle Wood — another Chalmers’ appointment — the Productivity Commission has become no more than a run-of-the-mill progressive think tank; a public service version of the Grattan Institute, which Wood formerly led. …

In common with the rest of bureaucratic Canberra, the Productivity Commission has been captured by climate change ideology. So much so that Wood, in a speech before the August economic roundtable, could not bring herself to acknowledge that pursuing net zero entailed any cost, instead describing it as an “economic prize”.

It beggars belief that today’s Productivity Commission is cheering on 21st-century protectionism, only this time it’s not infant industries consumers are paying higher prices for but the renewable energy lobby.

Then we have the RBA and its board, which (effectively) printed hundreds of billions of dollars during the pandemic to fund ballooning Morrison government deficits – undermining its supposed independence and fuelling our post-pandemic inflationary crisis.

Having caused this harm, former governor Philip Lowe and his successor Michele Bullock then boasted about keeping Australian inflation higher for longer, keeping the cash rate too low as they prioritised a tight labour market.

So sad. Australia was looking so good in the 1990s. Now it is doomed to a lower standard of living and — if immigration isn’t fixed soon and turned around — no living at all for some (starting with Jews).