EDITORIAL: Labor’s economic mixed messaging defies logic

Labor ministers love to talk about the perilous state of the global economy.

We are after all living in “uncertain times”, standing at the precipice of an illogical international trade war initiated by one of our closest allies, while wars rage in Europe and the Middle East, providing fuel for global inflation and energy crises.

In his Budget speech last month, Treasurer Jim Chalmers blamed the “volatile and unpredictable” global economy for changing the world for the worse.

Speaking at a rally in Western Sydney on Sunday, Anthony Albanese made the point again, reiterating that these international factors were to blame for any weakness in the economy here.

Then in the next breath, the Prime Minister started on what he was doing about it.

In a word: spend.

Extending income tax cuts. Increasing child care subsidies. Free TAFE. Wiping 20 per cent off students’ HECS debts.

Billions and billions of dollars of extra spending.

Somehow, in Mr Albanese’s upside-down world, this is the way out of a growing government debt crisis. Give people more stuff for free and call it “responsible economic management”.

It’s an absurd contradiction devoid of logic.

And now they’ve been called out on it.

Ratings agency S&P has warned that Australia’s AAA credit rating is at risk if whichever party is in government after May 3 isn’t able to put the brakes on out-of-control spending soon.

The ‘AAA’ rating on Australia may be at risk if election promises result in larger, structural deficits, and debt and interest expenses rising more than we expect,” the S&P analysts said.

“The Budget is already regressing to moderate deficits as public spending hits post-war highs, global trade tensions intensify, and growth slows.

“How the elected government funds its campaign pledges and rising spending will be crucial for maintaining the rating.”

In other words, you can’t ramp up public spending to stratospheric levels to disguise a recession, then ratchet it up even more with no plan on how to pay for it without expecting some long term consequences.

S&P was especially critical of Labor’s “off-budget” spending — a government accounting sleight of hand in which spending is disappeared from the books by classifying it as an investment.

All governments indulge in a bit of off-budget spending but the Albanese Government has taken it to new heights, with Mr Chalmers’ latest Budget including more than $80 billion across the forward estimates.

The result is a Budget black hole that will become increasingly difficult to climb out of.

All this should be fertile ground for an Opposition in an election campaign. Yet the Coalition’s bumbling attack has failed to land any more than a glancing blow.

Australians don’t think Labor are doing a great job managing the economy. But they don’t trust the Liberals to do a better job.