Today’s GDP figures prove that in this year of the Queen’s Jubilee, the economy and the Queen Mary have something in common – they don’t turn on a dime.
It’s fanciful to think that the figures owe anything to the current government’s policies.
Rather, what they prove is that no matter how incompetent a government is, the institutional momentum can carry things in the right direction for quite some time if their predecessor was competent.
Ironically we’ve had the treasurer and the prime minister lauding the contribution of mining to the result after they’ve done their best to euthanise the industry and discourage anyone from investing in it by putting a special tax impost on it, and talking up the so-called “two-speed economy” and the “Dutch disease”.
If they are allowed to continue in their destructive path our above trend growth certainly won’t continue into the future.
There are a number of lessons out of the figures.
- Manufacturing cannot be the saviour of the economy – it just doesn’t return enough compared to mining or services
- Australia has a competitive advantage in mining and we ought to encourage investment in it, not discourage it by taxing it more heavily than other industries
- Australia was doing something right, there is no case to change from the course of the Hawke, Keating, Howard reforms.
Successful economies are like successful businesses: they are flexible, specialise, abandon their failures and respond to signals. After 5 years resting on our oars, to continue the original nautical metaphor, it’s time to create momentum again and not rely on the past to provide for our future.