Clash of economics and culture

The best that can be said about the Albanese government’s economic and political interventions this week is that at least voters have been given fair warning about what to expect from Labor before the next federal election.

As political editor Simon Benson writes in Inquirer on Saturday, a clash of economics and culture is emerging as Labor pursues an ideological agenda that has been hiding in plain sight. Jim Chalmers is delivering on his promise to reshape our governing and financial institutions so they can be harnessed for the ideological and cultural demands of government. Political renovations already have been undertaken at the Reserve Bank of Australia and the Productivity Commission.

Two decisions this week extended Labor’s reformist and ideological ambition. Both decisions will have a very long tail and impact on public policy and the economic flexibility of the nation.

The first was Climate Change and Energy Minister Chris Bowen’s decision to pull Australia out of a research collaboration with the world’s major economies into new-generation nuclear power. The public rebuff of our AUKUS partners, the US and Britain, had the whiff of being politically driven and reflexive to starve Peter Dutton of oxygen in his nuclear energy push and double down on the government’s favoured renewables-only approach.

But our involvement in the Generation IV nuclear pact – which will not be continued – was the result of a treaty-level undertaking that had bipartisan support during the Turnbull government. It was never predicated on Australia having a civil nuclear power industry of its own but it exposed our scientific organisations and researchers to the cutting edge of global research into the world’s nuclear future.

The second signpost to a more culturally driven, interventionist government future was the decision by Jim Chalmers to exert political influence over the investment decisions of the Future Fund. The decision was slammed by former prime minister John Howard as “fiscal vandalism with a great dollop of hypocrisy”. It could be a template for what awaits the union-dominated, trillion-dollar superannuation industry more broadly.

The Treasurer sees nothing extraordinary about the interventions. But together with an anti-business, pro-union, high-regulation, big public sector and low-productivity mindset, the Albanese government is sailing into turbulent financial waters.

Living standards are falling as financial pressures continue build on households. Big business is aghast at the speed and depth of new industrial relations restrictions. Companies are talking openly about a rise in the level of sovereign risk.

Fifty years on from the failed financial experiment of the Whitlam government, the ALP risks repeating many of the same mistakes. The most serious is to assume the good economic times will keep rolling on, until they don’t.

Dr Chalmers has delivered two claimed budget surpluses but presided over a big rise in borrowings and off-balance-sheet spending. The future is one of structural budget deficit and no let-up in the increase in public sector spending. Expectations of a cut to the official cash rate by the RBA are being pushed further into the future by leading economists.

Given the state of opinion polls, Australia is at grave risk of having a minority government in which Labor will be forced to govern with the even more ideologically extreme Greens. This makes the seizure of capital to promote social and cultural aims an even more dangerous pathway for the nation to tread.