AARON PATRICK: Under Anthony Albanese and Jim Chalmers, Australia has become the has-been economy of Asia

What have Japan, South Korea, Taiwan, Indonesia, Malaysia and China got in common, apart from their geography?

Each country, and most others in Asia, will beat the Australian economy this year on three crucial measures: inflation, employment and trade.

Two-year forecasts published by the International Monetary Fund overnight expose the poor state of the Australian economy compared with the rest of the region, from the juggernaut that is China to tiny Macao.

As the world tries to find its way through what Treasurer Jim Chalmers described today as “a really dangerous time for the global economy”, the figures produced by the global economic policeman are an indictment of Dr Chalmers and Anthony Albanese.

Australia, with its educated workforce, rich natural resources and sophisticated economic institutions, should be an example to the Asia-Pacific of how to manage the energy shock.

Instead, what was one of the world’s wealthiest countries a century ago looks like an economic has been.

Policy failure

The most obvious example of Australia’s policy failure is inflation, which the IMF predicts will average 4 per cent this year, the worst of Asia’s developed economies. The region-wide forecast is 2.4 per cent.

Inflation is a crucial test of a governmental competence. It destroys savings, directs investment into unproductive assets, including gold, and fuels workplace disputes. Inflation will eliminate the benefit from two income tax cuts — one per cent a year — Dr Chalmers repeatedly cites, including today, as a contribution to reducing living costs.

Credible economists have repeatedly argued the Albanese Government is driving up prices by running budget deficits. Despite Dr Chalmers’ repeated, dishonest assertion the Government has found $114 billion in “savings”, he has overseen a historic increase in the size of the state.

Dr Chalmers’ portrays Australia’s economic challenges as unexceptional. “The International Monetary Fund is expecting slower growth and higher inflation around the world, and we are as well,” he said today.

While inflation is a global problem, most of the region has it under control. Japan, Korea, Taiwan, Singapore, Hong Kong, China, Thailand and Malaysia will report inflation this year and next year at or under the Reserve Bank of Australia’s 2.5 per cent target, according to the IMF.

Australia’s won’t reach the target for years, according to official forecasts.

Consequences

Many Australians might be less concerned about rising prices if unemployment stayed low. Apart from New Zealand, Australia will suffer the highest unemployment of all developed economies in the region over the next two years.

The consequence for thousands of Australians, many of them young men and women desperate to start their careers, will be devastating.

For most of the past two decades, Australia has had a good record of maximising employment.

In recent years, sustaining low unemployment has become harder. Thanks in part to governments that thrive on regulations, Australian business is less efficient than it could be. Poor productivity will force the Reserve Bank of Australia to raise interest rates higher than they would otherwise be, making borrowers poorer, economists say.

One example of many is the 2023 closure of the Australian Building and Construction Commission, an agency created to fight corruption on building sites. Shut by the Albanese government to please building unions, the ABCC’s absence allowed criminal gangs to seize control of government worksites, driving up costs for everyone.

An inquiry in Brisbane today heard testimony from a former state public servant in charge of workplace inspectors. He was told by a CFMEU official the union would not call him because it could go straight to the “top dog” — the deputy of the whole government department.

Washington view

The IMF forecasts Australia will experience slower economic growth than most of the region and report poorer current account balances, a measure of trade and investment. Even New Zealanders will grow their economy faster over the next two years than Australia, according to the IMF.

Dr Chalmers is travelling to Washington today to attend meetings organised by the IMF where he’ll enjoy the heady experience of mixing with the global financial elite. He will portray Australia as an economic equal.

The IMF economists’ work show Australia isn’t keeping up with the world. By introducing or increasing subsidies for electricity, factories, childcare, university students, GPs and others, temporarily cutting fuel taxes and operating an uncontrollable disability industry, the Albanese government is implementing policies the IMF and other international bodies have spent decades fighting.

Next month’s budget will be the primary vehicle for the government to respond to the energy shock. Ironically, the crisis will reduce the Budget deficit by increasing tax revenue, giving the government cover for even more subsidies.

Dr Chalmers, in promising a “very, very responsible budget”, suggests two contradictory acts: cut spending and increasing it.

“One of the reasons why there will be savings in the budget ... is because we need to make sure that we’re not putting additional upward pressure on inflation,” he said today.

“We also need to make sure that we have room to respond should some of these more serious and more severe scenarios, published by the IMF, play out.”

Given the treasurer’s verbal dexterity, he might convince many that’s possible. But the numbers don’t lie.