An open letter to Joe Hockey, the Treasurer in waiting
An open letter to Joe Hockey, the Treasurer in waiting
Dear Mr Hockey
If the opinion polls are right, you will be Australia’s 37th Treasurer on 15 September 2013.
All the very best to you if in fact that is the case because economic policy, economic growth, job creation and rising living standards are key aspects of macroeconomic management. I hope you can extend the current era of 21 years of growth for at least another three.
I must say that when I see your leader, Mr Abbott, talking economics I am worried you will not be able to deliver some of the promises you are starting to articulate. Budget surpluses and lower debt are the means to an end, not the end themselves. Your focus on the surplus and debt is unnerving, a point all the more evident when we look to the fiscal austerity being delivered in much of Europe, the UK and even in the US.
If I am wrong and you are right, I assume you would expect the Australian economy to be “doing better” in the years after you move to the Treasury benches.
To that end, can I offer a very simple and professional challenge – that you will not do any better than the current economic indicators show on GDP growth, inflation, unemployment, wages and interest rates.
By way of background and as things stand, annual GDP growth is 3.1 per cent, the annual inflation rate is 2.2 per cent, the unemployment rate is 5.4 per cent, annual growth in the wage price index is 3.7 per cent and the standard variable mortgage rate is 6.45 per cent. These numbers can be verified from the ABS and RBA websites. They are correct.
If the economy will be better run under your stewardship, as you claim, I would assume you will be achieving better outcomes than these results, otherwise your claim does not stand up to scrutiny.
The crux of the challenge is that, on 30 June and 31 December in each of 2014, 2015 and into 2016, we take a snapshot of the latest available data for GDP, inflation, the unemployment rate, wages and interest rates.
If as Treasurer you claim these results to be of your making, as you should, you will rightly claim success if GDP growth is above 3.1 per cent, inflation is below 2.2 per cent, the unemployment rate is below 5.4 per cent, wages growth is above 3.7 per cent and the mortgage rate is below 6.45 per cent.
If the majority of these indicators are in your favour at each benchmark period, you will be a winner (so will the Australian economy!) and I will happily donate $500 to Canteen, the children’s cancer support group. If a minority of these indicators are in your favour, I do not expect you to donate anything, but I think you would agree that you will have under-performed. That said, it would be nice if you could give something to Canteen.
I hope you consider this challenge in the good spirit with which it is intended. Perhaps you will convince me to come around to your thinking in the months ahead as you reveal more details of your policy agenda. If you do happen to be Treasurer on 15 September 2013, I hope you can deliver the same sorts of macroeconomic outcomes that have been seen in recent years and not get too hung up about surpluses and debt.
I look forward to hearing from you.
Kind regards
Stephen Koukoulas