New Prime Minister to tackle economy, inflation and cost of living

Australians will vote for a new prime minister on Saturday.

Opinion polls so far show the race is too close, but whoever wins will have to grapple with burning issues like rising cost of living and rising borrowing costs after the country first raised rates. in more than a decade. .

Economic concerns have been front and center in the main candidates’ domestic campaigns: incumbent Prime Minister Scott Morrison of the ruling Liberal-National Conservative coalition is defending his position against his closest rival, the opposition, the leader of the Labor Party Anthony Albanese.

The economic problems that have arisen, such as rising inflation, are largely out of the control of either party, analysts say, but whoever wins will have to address them.

“Whoever comes into government is going to have to address the economic situation, they’re going to have to address issues including inflation, cost of living pressures and of course global uncertainty right now thanks to issues like the war in Europe,” he said. Zareh Ghazarian, Senior Lecturer in Politics and International Relations at Monash University.

Prime Minister Scott Morrison speaks at a news conference during a visit to a housing site in the suburb of Armstrong Creek on May 18, 2022 in Geelong, Australia. The Australian federal elections will take place on Saturday May 21.

Ratnayake Asanka | Getty Images News | fake images

Inflation in Australia hit a 20-year high in April, with the consumer price index jumping 5.1% year-on-year as petrol and food prices rose. It prompted the central bank to raise rates higher than analysts expected for the first time in more than a decade.

In the meantime, however, wage increases failed to keep pace. The data showed that wages in Australia increased by only a modest 0.7% in the first quarter.

Opinion polls earlier conducted by the Sydney Morning Herald showed the main opposition Labor Party in the lead, but that advantage has shrunk to 51%-49% on a bipartisan preference basis, where votes are ranked by preference and are distributed to the two highest candidates. . It was 54%-46% two weeks ago.

Nearly 6 million voters out of an electorate of 17 million have already cast their ballots through mail-in ballots or in-person early voting, official data showed, according to Reuters.

focus on growth

Both Labor and the ruling coalition will have to tackle cost-of-living issues and challenges to economic growth, according to political observers.

“One of the things that the parties have shared is that they are really talking about pursuing economic growth. We haven’t really seen a party talk about… going the way of some European countries in the past, of having very frugal policies.” Ghazarian said.

“Like the Coalition, the [Labor Party] seeks largely to repair the budget through economic growth rather than austerity and its priority areas of energy, skills, the digital economy, childcare and manufacturing have significant overlap with the Coalition,” said Shane Oliver, chief investment strategist and chief economist at Australian financial services firm AMP.

The Labor Party will likely seek to be more “interventionist” in the economy, compared to the coalition, Oliver said.

It will hurt the economy, it will drive China further and further away from Australian products, to raise tariffs.

stewart-jackson

university of sydney

He noted, however, that the difference in the tools they will use to manage the economy will be “relatively minor.”

“While there may be a little more nervousness in the investment markets about jobs, it’s hard to see a big impact on the markets if there is a change in government,” he added.

Whoever wins ‘will fight’

Whether Labor or the Liberal-National coalition wins, they will “struggle” to manage the economy, according to Stewart Jackson, senior lecturer in the Department of Government and International Relations at the University of Sydney.

Jackson pointed out that inflation has been driven by external events such as the increase in oil prices caused by the war between Russia and Ukraine.

chinese factor

He also pointed to another factor surrounding Australia’s relationship with China.

Jackson said that the coalition government has picked fights with China and that is not a good thing.

“I see this [as a] Zero-sum game,” he said. “It will hurt the economy, it will drive China further and further away from Australian products, to raise tariffs.”

Shortly after the pandemic began, Australia’s relationship with China, its largest trading partner, deteriorated dramatically. That followed Australia’s support for a call for a global investigation into China’s handling of its initial Covid-19 outbreak.

Those tensions were extended when China imposed sanctions on a large number of Australian products. They ranged from the imposition of tariffs to the imposition of other prohibitions and restrictions, affecting Australian products such as barley, wine, beef, cotton and coal.

“Labour… have also been campaigning on economic management, and have been criticizing the government for what they perceive as poor management of the economy,” Ghazarian said.

“As a result of that, the question of who is a better economic manager, although normally it would be a coalition force, I think this time it has not been as strong as it has been in the past.”

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