Reserve Bank Governor Philip Lowe (Image: AAP/Joel Carrett)

There's a huge and growing divide in Australia over economic policy on wages and jobs, and it's going to determine the country's economic trajectory for the next few years. And there's a very great deal of nonsense being peddled about it by interested parties.

Australia's jobs market is now booming -- both because of Australia's success in handling the pandemic and massive fiscal stimulus, and because we've cut off the supply of temporary labour to employers by closing our borders. Hundreds of thousands of foreign students, temporary visa workers and working holidaymakers are no longer here to put downward pressure on wages in the occupations they tend to work in: retail; hospitality; care services; agriculture.

Yesterday's May jobs data saw unemployment fall to pre-pandemic levels, at 5.1%, after 115,000 new jobs were created and participation rose to 66.2%. Participation has completely recovered from the recession collapse of 2020 and is now back in record territory, led by female participation.