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Ignoring workers’ welfare is hurting the economy

Tim Colebatch writes in Inside Story (10.6.17) that economic growth in Australia continues to be slow and uneven, and governments seem unable to distribute its benefits fairly.

'When a Liberal treasurer tells us he is worried that the low rate of wage growth is slowing the economy, then something is seriously wrong.

'In reality, Scott Morrison is probably even more worried about the prospect of a bust in housing prices, which is becoming more likely with each year that passes without action to remove tax breaks for housing investors. That could push Australia into recession.

'And he must be worried that someday the house of cards underpinning China’s rapid growth – the even more rapid growth of poorly secured debt – will collapse, and it might happen on his watch. That could push us into recession too.

'But in the context of Wednesday’s national accounts, Morrison is dead right. Australians’ real take-home pay is falling. Real household incomes are falling. And unless some X-factor can turn that around, the likelihood of wage growth rebounding and the economy accelerating to the growth rates of old is farfetched.

'And that was the key premise of his budget, delivered just a month ago. It projected that average wage growth would double in the next four years to reach 3.75 per cent by 2020. That looked unlikely then. It looks implausible now.'

 

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