Ryan Maddock

FIGHT INFLATION FIRST – THEN SPRINT ON PRODUCTIVITY Although we talk lots about our cost-of-living problems, they’re just a symptom: it’s inflation that’s the cause: - Our wages aren’t buying as much because prices outsprinted them. - Our tax burden is nudging record rates because inflation acts as a tax. - And our mortgage rates are up because the Reserve Bank needs them there to fight inflation. So if we want to start to get on top of our cost-of-living problems, then TINA – There Is No Alternative but to fight inflation first. And whether that happens via the RBA playing a lone hand or if some other spending is also cut to help them along the way doesn’t matter as much as ensuring that the job actually gets done ASAP. But wait, there’s more ... Fixing inflation is vital, but it isn’t enough. There’s a deeper problem. Australia keeps getting spurts of inflation because the productivity engine of our economy is completely clapped out. We start to generate more inflation every time this nation gets more than five minutes of economic sunshine. The solution is a faster economic speed limit. Once this nation does get inflation down, we need to turn absolutely all our energies towards getting productivity up. A decade of being stuck in the slow lane is eviscerating our politics. We’re getting better and better at hating each other, but worse and worse at solving our problems. The most read book in policy circles in recent years is Abundance. It argues that nations need to cut through the thicket of well-meaning regulations that have crippled the ability to advance in everything from housing to health care. But Australia has spent decades becoming the anti-Abundance nation. We’ve stalled our living standards. And unless and until we create a growing pie-per-person, our politics will keep scrapping viciously over stagnant slices of the pie. It’s long past time to get serious on productivity.