I’ve been waiting all week for Joe Hockey to bash Howard and Costello over the head for being union stooges. Well, that’s what he does to academics who claim the government’s IR reforms leave non-unionised workers worse off.

The government skated over a number of amazing figures in the mid-year economic and fiscal review, but none more amazing than the claim that inflation is going to fall this year – and Johnny and Pete said that is because Workchoices will keep wages down.

Yeah, right. The government’s forecast is for the CPI growth to fall from 2.9 per cent in 2006-7 to 2.75 per cent this year. See, there’s no need for the RBA to run around lifting interest rates.

At the same time, drought and international markets are pushing up food prices, oil’s continuing to do what oil does, there’s an acute shortage of labor but we’re somehow going to achieve 2.25 per cent employment growth, the economy is “popping rivets” with predicted growth of 4.25 per cent and the world economy continues to go gangbusters despite the US wobbles. Anyone see a hot snow load here somewhere?

One can’t help suspecting there’s much more hope than belief in that inflation number.

Also overlooked was that quaint and forgotten thing called the current account deficit. The treasurer’s rather unfortunate phrase “go for broke” comes to mind when you see his department predict the deficit will blow out from $59.2 billion last year to $71.25 billion. Put another way, 5.7 per cent of GDP last year and 6.25 per cent this year.

Of course we’re not supposed to worry about current account deficits anymore… apparently it just magically takes care of itself eventually. Tell that to the Americans now that they’re massive deficits are finally coming home to roost.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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