EDITORIAL: Labor lost in spin and denial on housing and economy

Another day, another barrage of spin and denial from the Albanese Government.

This time it was about the economy and house prices.

The Government insists we have no need to worry.

But that is surely becoming difficult to argue with a straight face.

Let’s start with the economy.

Latest data shows gross domestic product in the year to June 30 eased to 2.1 per cent, down from March’s annual pace of 2.5 per cent.

Australia’s productivity crisis shows no sign of recovering with output for every hour worked shrinking by 0.2 per cent during the last financial year to be flat in the June quarter, meaning higher production costs are more likely to be passed on to customers, which keeps inflation high.

GDP per capita, or the value of all goods and services produced divided by Australia’s population, was flat in the June quarter as overall GDP grew by 0.4 per cent during that three-month period.

The latest data came as three of the big four banks — Commonwealth, NAB and ANZ — forecast another hike this year that would take the cash rate to a 15-year high of 4.6 per cent, with inflation in July remaining above the Reserve Bank of Australia’s 2-3 per cent target for the 12th straight month at 3.5 per cent

Treasurer Jim Chalmers put on his rose-tinted glasses, declaring the economic growth data to be “a robust result in challenging international circumstances”.

And so on to housing.

On Tuesday the Commonwealth Bank warned it expected house prices in Sydney and Melbourne to drop by more than 10 per cent as the combination of higher interest rates and the Federal Government’s property tax shake-up contributed to a fast pace of decline.

Dr Chalmers did his best to again fend off reality.

“It’s wrong to attribute softness in the housing market, or auction clearance rates, to any one factor. House prices and auction clearance rates were already softer before the Budget,” Dr Chalmers said.

Housing Minister Clare O’Neil also went into damage control over Treasury’s modelling about the impact of the Government’s housing tax changes in the Budget, which held that house prices would grow by about 2 per cent less over a couple years relative to no tax policy change.

On Channel 7’s Sunrise, Ms O’Neil was asked about that forecast when prices were falling.

Ms O’Neil argued the housing fall was cyclical.

And also: “What that Treasury modelling says is that the effect of the Government’s tax changes is, over time, growth will be a bit slower than it would otherwise have been,” she said.

But assistant Foreign Minister Matt Thistlethwaite undermined that view.

He conceded there was “no doubt” the Government’s tax changes had contributed to the property downturn.

“There’s no doubt that our policies are part of a suite of reasons, but . . . we needed to make housing more affordable,” he told News 24.

As the numbers continue to fall the wrong way on the economy and housing, the pressure grows.

It will be increasingly hard to keep the spin machine going.