The high price of Australia's policy shortcuts
As Australia grapples with declining productivity and mounting economic challenges, the government continues to favour gimmicks over crucial reforms to housing, regulation and fiscal policy.
This post follows from Tuesday's essay on Australia's temporary fiscal surplus and the misguided government spending that may well leave the country mired in a decade of deficits.
I'm going to build on that theme today, starting with the Labor government's seeming obsession with cheap gimmicks instead of meaningful reform, perhaps none as blatant as Anthony Albanese's (Albo) recent focus on chips. Not the silicon type that everyone from China to the US is racing to build; we're far too sophisticated for that!
No, I'm talking about potato chips. Believe it or not, but this was in a real tweet sent by the Prime Minister of Australia:
It would be funny if it weren't so sad. To stop potato chip makers from allegedly "ripping Australians off" by putting too much air in a bag, Albo wants to roll out "stronger unit pricing", which sounds nice except that, as the helpful community note slapped on his tweet noted, we already have pretty good unit pricing in Australia:
"Unit pricing is already mandatory under the ACCC code since 2010. It does nothing to address high prices, shrinkflation or transparency."
As for whether "shrinkflation" is obscuring the true amount of measured inflation, the Australian Bureau of Statistics (ABS) already makes adjustments for changes in quality and size:
"The use of transactions 'scanner' data in the Australian CPI, which provides detailed item information, enables the ABS to identify and adjust for quality change arising from shrinkflation."
I was hopeful that this Labor government, having learnt its lessons from the failed Bill Shorten campaigns in 2013 and 2016 and the chaos that was the Morrison government, would bring some much-needed common sense to policy-making. It pledged to be transparent; to be everything that the previous government was not.
But alas, what we have a government that is somehow "more secretive" than its predecessor and appears content with symbolism over substance.
Productivity, not potatoes, are the key
The third and final piece of analysis last week was a report from the Bank for International Settlements (BIS), titled: Productivity in the post-pandemic world.