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No wonder they call economics the dismal science. Even the normally smiley Treasurer, Jim Chalmers, has been looking a bit grim in his media appearances as he rolls out daily servings of bad news on the economic front. And, is that a touch of grey we're seeing around his temples? If so, it's understandable.
He and his cabinet colleagues have a huge mountain to climb and an avalanche of problems to deal with on the way up. The energy shock, supply chain interruptions, inflation, cost-of-living pressures, rising interest rates, acute skills shortages - the list goes on. The gloss on the shiny unemployment figures the former government used to lavish praise on itself will soon be dulled if things get worse - and indications are they will.
History shows when interest rates rise - as they have to if inflation is to be tamed - recession often follows. But if the R word is scary enough, the S word - stagflation - is even scarier. Stagflation visited itself on the developed economies after the oil shock of the 1970s. Because the price of energy shot up, so did the cost of manufacturing. Demand subsequently fell and unemployment grew but prices remained high because of ill-considered government stimulatory interventions. Living standards dropped. High inflation and economic stagnation entered into a toxic relationship which took years to untangle. Let's hope it doesn't rear its ugly head again.
Tradies are a handy barometer of the state of the economy. One who recently did some work for The Echidna talked of mates refusing to offer quotes beyond seven days out because the cost of materials was rising so sharply. He said some had to scale back the work they did because they couldn't get labourers, one so much so he was downing tools and retiring early. It was not just the war in Ukraine or China's COVID-related supply chain issues causing problems. A huge chunk of Australia's softwood stock was lost when plantations were incinerated in the Black Summer fires.
There are stories of galloping prices across the economy. Even the humble iceberg lettuce is now fetching up to $10 a pop, thanks to a spike in transport and fertiliser costs, both courtesy of the Ukraine war. The mid-week san choy bao - once a fun, low-cost meal option - is now looking more like a luxury.
And Jim Chalmers says inflation is only going to get worse before it gets better. He has some tricky footwork ahead of him if he is to avoid the avalanche rumbling down the mountain. Meanwhile, The Echidna is stepping out of the burrow to check on the choko vine. Dismal, I know, but with the cost of greens on the rise, it's come to that.
HAVE YOUR SAY: How is inflation affecting your daily life? How are you curbing your spending? Email us: echidna@theechidna.com.au
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IN CASE YOU MISSED IT:
- The Reserve Bank lifted official interest rates by 0.5 per cent, taking the cash rate to 0.85 per cent. Reserve Bank governor Philip Lowe said the hike was brought on by higher than expected inflation and was one of a number of increases expected in coming months.
- As south-east Australia shivered through the first week of winter, plenty of snow fell on the alpine regions, promising the best start to a ski season in two decades.
- The Australian Federal Police announced a crackdown on the Calabrian Mafia in Australia, the 'Ndrangheta. They revealed the crime network had been using a combination of legitimate businesses in construction, agriculture and catering as fronts for its criminal operations and was using outlaw motorcycle gangs as distributors and go-betweens.
THEY SAID IT: "Inflation is like toothpaste. Once it's out, you can hardly get it back in again." - Karl Poh
YOU SAID IT: "There have been nuclear power stations operating in the UK since the 50s. My view is that technology now is good enough for Australia to step up. As to where they are sited, if it's good enough for the US Navy to put 5000 matelots on top of two reactors in their aircraft carriers it's good enough for me. In my backyard? No as I have absolute waterfront on the ocean." - Stuart
"The two main issues against nuclear are: 1) the economic benefits don't outweigh the prohibitive costs; and 2) determining in 'whose back yard' the plants are going to be located. By the time the latter is agreed in any sensible way, we could easily fund and roll out a fully renewable power grid." - Marc
"My knowledge of nuclear is tiny, but I don't see how you can consider it 'clean' when the waste products last for thousands of years. To me, it might solve one problem, but cause a bigger one for generations far into the future, that is if humans are still around then." - Deb
"Obviously there would need to be plenty of discussion before any possible agreement, but it's not an idea that should just be poo-pooed. Nobody wants to live next door to one, just like no one wants to live beside a solar farm, wind farm or coal burning power station, but let's consider the idea, actually do solid research on the idea instead of tying all our life lines to renewables without considering anything else." - Wendy
"Nuclear power? Why? Australia doesn't have a nuclear power industry. There's one sole reactor in the whole country. Developing the necessary workforce and building the industrial infrastructure would take a decade or more. Then we might be able to start building. From overseas experience, the building would take decades more. All for power that's neither cost-competitive nor particularly low-carbon." - David
"In the late 1960s I protested against Australia mining for uranium in the Northern Territory. I believe it is time (overdue, really) to revisit building a couple of nuclear power stations in Australia (using the latest technology) to replace some coal-fired power stations. Of course this will mean finding a place to store the waste, but if the rest of the world can do it, Australia surely can." - Peter
"No, I would never endorse a nuclear reactor in Australia. We must stick with renewables and improve batteries." - Jenny