RBA, the harsh warning from the OECD to taxpayers

That work is being done because climate change will disrupt production and drive up prices.

“It is not just food production that is affected by extreme weather. It also disrupts commodity production and transportation logistics industries,” he noted.

“These disruptions affect prices in global markets and we are likely to see more of these disruptions in the coming years.”

Barnaby Joyce once warned that the price of carbon would drive the price of a leg of lamb up to $100. Lowe says that climate change will mean that the price of lamb, potatoes, rosemary and the refrigerator in which they are stored will be much more expensive.

Lowe’s broader point is that all of these problems require political solutions.

Just hours before Lowe was to deliver his speech, Sims, now a professor at the Crawford School of Public Policy, told a summit in Canberra that a lack of competition, the country’s approach to “equity” in supply chains and the way governments have sold all assets were hurting the economy.

Australia's former Competition and Consumer Chairman Rod Sims says a lack of competition is hurting the economy and slowing productivity.

Australia’s former Competition and Consumer Chairman Rod Sims says a lack of competition is hurting the economy and slowing productivity.Credit:Alex Ellinghausen

“I think Australia has lost some of its desire for competition and dynamism, which means lower productivity and prosperity,” he said.

Sims not only aimed his criticism at the nation’s politicians who pointed out that courts had approved mergers in areas such as energy, telecommunications and rail transport that later saw “immediate price increases”.

Both of Lowe’s and Sims’ criticisms concern Australia’s low rate of productivity growth.

This is one reason Treasury Secretary Steven Kennedy pointed out last month that slower productivity means less money in government coffers.

“Beyond the short term, budgetary pressures are deeper and will likely require a combination of spending restraint and tax increases to reduce the deficit and debt,” he said.

Kennedy’s perspective is particularly pertinent when you have a budget awash in red ink and increasingly expensive gross debt on its way to $1 trillion and more.

Mindful of the problem, Parliament’s Budget Office last week brought a dose of reality to the whole debate surrounding the stage 3 tax cuts that are likely to engulf the government again over the next 18 months.

Much has been said about the estimated $250 billion cost of tax cuts that skew high income earners. But the PBO said that if a government was serious about upgrading, then it had to hand out an additional $60 billion in tax breaks for the rest of the decade, and most of that went to low-income people and media.


“The Stage 3 tax cuts legislated in 2024-25, which cost about $250 billion over the period to 2032-33, offset some of the impact of the gradual increase in the level, but did not eliminate it entirely: the increase Gradual tier will continue even after taxes are finished. cut,” he found.

If this weren’t bleak enough, the OECD Economic Outlook released this week was even darker, saying the pandemic, the war in Ukraine, the fragmented global economy and climate change-related weather events would mean more shocks to the world. future.

“All else being equal, this would mean weaker potential growth and more upward pressure on prices than otherwise and would pose further threats to the resilience of economies while putting further pressure on social cohesion.”

In the past month, the Reserve Bank governor, the former head of the country’s competition watchdog, the Treasury secretary, an independent authority on the state of the budget plus the OECD all highlighted a number of different but related issues. facing the country and the budget.

Although the federal government regularly talks about the problems facing the economy and its intention to address them in the May budget, it is yet to show signs of the kind of innovative thinking necessary to tackle the plethora of problems it faces.

There isn’t a rug big enough to sweep them off.

Cut through the noise of federal politics with news, insights, and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here.

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