Frydenberg puts economy at heart of campaign race

As Scott Morrison hits the road this week to reconnect with NSW and Victorian voters on the domestic economic issues that normally determine election results, Josh Frydenberg has drawn the battlelines. As the economy roars back from the Covid-19 pandemic and lockdowns, he has a good story to tell. In July last year, Jim Chalmers made a valid point when he said: “The most important test of this government’s management of the recession and its aftermath is what happens to jobs and the businesses which create them.’’ As the Treasurer made clear on Sunday, he is happy to fight on those grounds, with unemployment at 4.6 per cent, a 12-year low, and set to fall further according to the Reserve Bank, which is expecting 5.5 per cent economic growth next year.

Other key economic indicators are also strengthening, with the private sector ideally positioned, as government support peters out, to lead growth in investment, production and further job creation. More new businesses started up during Covid than in the years prior and are well cashed up, with a $150bn increase in business cash holdings in the past two years. An additional 1.4 million people are in work since the Abbott government was elected in 2013. The gender pay gap has narrowed. Major tax cuts have been legislated. After its first recession in almost 30 years, Australia is one of just nine countries to maintain its AAA credit rating from the world’s three leading agencies. A fortnight ago, an exclusive Newspoll for The Australian showed 40 per cent of voters believed Mr Morrison and the Coalition would be better at leading the economic recovery compared to just 26 per cent backing an Anthony Albanese-led Labor government. Despite perceptions it is the better economic manager, the Coalition is heading into the election, due by May, in a parlous position. Newspoll shows that on the two-party-preferred vote, the opposition leads by 54 to 46 per cent. Learning from Bill Shorten’s mistakes, the Opposition Leader is making Labor a small target. A redistribution of boundaries is tipped to be unfavourable for the government.

The Coalition also faced a negative outlook at this stage before the 2019 election. Now, as then, Mr Frydenberg is preparing to campaign hard on what should be a positive for the government – its record in steering the national economy. Week by week, in the lead-up to the last election, Mr Frydenberg, focused on setting its record against Labor’s economic promises. In coming months he will do so again, concentrating on which side will better steer the private sector to lead recovery and employment. Scott Morrison will concentrate on the same issues. National security will also be a key concern for voters. Our ability to improve our defence preparedness, however, depends on our economic performance.

Tax office and Treasury data, as Simon Benson writes, shows the government is on the right track. We had 40 per cent fewer business failures in 2021 than in the same period in the years before Covid. Programs such as JobKeeper, the Cash Flow Boost and the SME Guarantee helped keep businesses in business and millions of workers in jobs, staving off the “tidal wave” of business collapses and insolvencies that would otherwise have resulted from state government lockdowns. State restrictions remain problematic. For the sake of tourism businesses and staff, Queensland Premier Annastacia Palaszczuk and West Australian Premier Mark McGowan should relax restrictions for fully vaccinated visitors. The commonwealth must encourage them to do so. If it is to maintain momentum, the Morrison government should also heed the advice of the business sector and resume the skilled immigration program to address serious shortages of qualified workers and help boost growth.