We’re living under growing fear of ‘banana republic’

Paul Kelly is correct to assert that the cause of the nation’s inflation lies not so much in excessive absolute consumer demand but in deficient supply (“Labor trapped in the slow lane”, 7-8/9).

Since the government is so inept in creating the right conditions for industry to invest, innovate and lift productivity, and is actually exacerbating the problem by crowding out the private sector through its massive spending programs, the Reserve Bank is forced to throttle consumer spending by maintaining relatively high interest rates.

In effect, consumers are being punished due to incompetent economic management. The future is looking even bleaker as the government places all bets on renewable energy, a most inefficient energy source that is underperforming worldwide and is being increasingly challenged by nuclear power and natural gas. The nightmare scenario of a banana republic continues to hover.

Ron Hobba, Camberwell, Vic

With the release of the economic data this week, Australians should be concerned about the state of the economy and the abysmal growth rate. Why is this occurring, despite record government spending and immigration? Without these two components, it is very likely Australia would have been in recession.

Paul Kelly’s interview with UNSW economics professor Richard Holden illustrates what made Australia a success story over the past 40 years: flexible labour market, an open economy to the world and a reduced reliance on income tax.

The Albanese-Chalmers economic plan has reversed all these Hawke-Keating initiatives. They have done the opposite. This government either doesn’t understand the “market economy” or simply wants to implement a government-controlled economy.

Peter Fuhrmann, Watermans Bay, WA

Paul Kelly is right to challenge the Albanese government about the adequacy of policy reform to drive economic growth (“Labor trapped in the slow lane”, 7-8/9), especially as economic reform has been stagnant for decades in Australia.

It is revealing that much attention is given to the Reserve Bank and it’s macroeconomic role, but little attention is given to the Productivity Commission and its role. It is the Productivity Commission that makes recommendations for microeconomic reform that will drive productivity and economic growth.

Recommendations of the Productivity Commission have been gathering dust on the shelves for years. Governments over the years have paid more attention to the Reserve Bank than to the Productivity Commission. It is beyond time that the PC recommendations were dusted off and implemented, especially with respect to tax reform.

David Muir, Indooroopilly, Qld

It seems Jim Chalmers’ version of economics left out the section on the importance of the primary dollar. His policies suggest he believes taking $10 from the left-hand pocket via a tax and placing it in the right-hand pocket as a bonus represents a financial gain.

You didn’t need to be an expert to foresee that discouraging our primary industries and increasing the cost of doing business via industrial relations changes, extra red tape, green lawfare and high energy prices would result in a slowing economy and our golden goose on life support.

Bruce Harvey, Moorine Rock, WA

The Weekend Australian’s lead editorial calls to mind previous ruinous stagflation periods through which many of us lived (“Without care, stagflation lies just around the corner”, 7-8/9). Who could forget the abandoned building sites in Kings Cross, and the stalled Sydney EastLink project in the early 1960s or the “recession we had to have” in the late 1980s. The Reserve Bank and the incumbent Treasurer can pull all the interest rate levers they can find, but when the underlying cause of inflation – too much money chasing too few goods and services – is not addressed, inflation and stagflation will continue unabated, and the experience of Argentina will be repeated here. Fundamental tax reform to fund government in a non-discriminatory manner that does not destroy the motivation to produce and exchange goods and services is long overdue. All cards should be on the table in finding and adopting a tax system to replace the existing model.

John McRobert, Indooroopilly, Qld