Pandemic and climate add up to a big shock for global recovery
Labour shortages, supply chain blockages and the energy price crunch create conditions ripe for an inflationary spiral and a return to higher interest rates.
A few years ago the then Treasury secretary and I were discussing Malcolm Turnbull’s plan to increase the GST to 15 per cent and cut income taxes. He told me the Treasury economic model showed that such a controversial change to the tax system would have a negligible effect on the nation’s GDP.
You can understand why Turnbull dropped the plan. When the Treasury’s model was publicised it would have been ridiculed by opponents of the plan, not least the opposition. The Treasury model would have been devastating evidence in the court of public opinion.
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Alexander Downer was Australia's longest serving foreign minister, from 1996 to 2007, and most recently Australian High Commissioner to the UK.
