An open letter to Treasurer Josh Frydenberg

Thu, 07 Nov 2019  |  

This article was written on 8 October 2019: It was on the Yahoo Finance website at this link 


An open letter to Treasurer Josh Frydenberg

Dear Josh,

On a range of policy issues, we do not see eye-to-eye.

But on the big picture view of the economy, I am sure we at one that the best thing policy can achieve for the Australian economy is sustained, strong economic growth. This means a growth rate that is sufficient to give a job to everyone who wants one, where real wages are rising and where there are improvements in the well-being of every day Australians.

As I look at the economic scorecard since you have been Treasurer, I am bitterly disappointed to see that economic growth has slumped and is no better than during

I see the unemployment not only heading higher, but the level of underemployment rising to a point where one in 12 people with a job are not working the number of hours they would like.

I look at wages growth and see stagnation, and in per capita terms, the thing that best measures true economic progress, the economy is going backwards. A per capita recession, if you like.

Then I look at what is being done about this fragile state of affairs.

To its credit, the Reserve Bank is easing monetary policy but as I am sure you are aware, the cash rate is getting close to zero which could create policy concerns for the Bank if the economy remains in the doldrums. Sure, it could implement negative interest rates or embark on a program of quantitative easing, but the impact of these policies on growth and jobs is unpredictable and may be hard to unwind, even if they work.

Which brings me to the crux of my letter to you.

You are in charge of Commonwealth government spending and taxing policies which together amount to around $1 trillion per annum. Last financial year, as you recently noted, there was an unexpected narrowing of the budget deficit from the time of the May 2018 budget.

The balanced budget you delivered occurred with the Government’s tax take for 2018-19 a remarkable $11 billion higher than forecast, while government spending was over $6 billion lower than forecast.

These differences totalled nearly $18 billion, or 0.9 per cent of GDP. That’s the difference between 2018-19 GDP growth of the actual 1.9 per cent and something closer to trend at 2.8 per cent. This money was withdrawn from the economy by your government and it is a critical reason why GDP growth has collapsed so disconcertingly.

If you are fair dinkum about being a Treasurer that wants to preside over a strong economy, where there is full employment, rising real wages and improvements in individual well-being, how about using your policy powers and prowess to get a bit of extra cash into the economy?

Don’t take my word for it.

I speak to a lot of business people around Australia and no one – yes no one - I have met in the past few months disagrees about the need for the government to do something immediate to get the economy back on track. In the mean time, their businesses are suffering and their willingness to hire and invest is severely constrained. There is unanimity from financial market economists that fiscal policy needs to be eased to get the economy back to full health. These are not the loonie left types – they are arguably some of the best practical economic types in Australia.

In simple terms, there is an urgent need for the government, your government, to pump some money into the economy via the tax system and spending if you want to not only avoid higher unemployment, but to actually get the economy back to full employment.

You are the Federal Treasurer in a Liberal Party government. The Liberal Party claims that “low taxes” are in its DNA, yet your own budget documents show you will be one of the highest taxing Treasurers in Australia’s history.

How about giving back a bit of the tax and unspent funds sitting the government’s coffers to the private sector so that they can be the driver of growth and job creation and complement the policies of the RBA in getting wages growth and inflation back to a decent level?

It is easy to do.

A few strokes of a pen and a fast track of the required legislation through the Parliament and before year-end, some extra cash can be in the hands of those who will spend, invest and employ. 

I would welcome any opportunity to meet with you to further discuss these matters and to outline some key areas where pro-active fiscal policy can help deliver growth. I cannot recall who said it, but if the government of the day gets policy and economics right, they get the politics right.

Just think, going to the election in 2022 with the economy going strongly, with the unemployment rate in the low to mid 4 per cent region and with wages growth accelerating?

You’d be Winx-like odds to win.

I look forward to hearing from you and trust you can deliver a policy framework that lifts economic growth, lowers unemployment, increases real wages and bring better times for all Australians.

Yours sincerely

Stephen Koukoulas
Managing director, Market Economics

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How Labor lost the federal election SO badly

Thu, 07 Nov 2019

This article first appeared on the Yahoo Finance website on 20 May 2019 at this link: 

How Labor lost the federal election SO badly

The Coalition did not win the election, Labor lost it.

The tally since 1993 for Labor is a devastating seven losses out of nine Federal elections. By the time of the next election in 2022, Labor will have been in Opposition for 23 of the last 29 years. Miserable.

The reasons for Labor’s 2019 election loss are much more than the common analysis that Labor’s policy agenda on tax reform was a big target that voters were not willing to embrace.

Where the Labor Party also capitulated and have for some time was in a broader discussion of the economy where it failed dismally to counter the Coalition’s claims about “a strong economy”.

In what should have been political manna from heaven for Labor, the latest economic data confirmed Australia to be in a per capita recession. This devastating economic scorecard for the Coalition government was rarely if ever mentioned by Labor leader Bill Shorten and his team during the election campaign.

This was an error.

If Labor spoke of the “per capita recession” as much as the Coalition mentioned a “strong economy”, voters would have had their economic and financial uncertainties and concerns confirmed by an elevated debate on the economy based on facts.

This parlous economic position could have been cited by Labor for its reform agenda.

Why animals are a crucial part of the Australian economy

Thu, 07 Nov 2019

This article was written on 31 October 2019: It was on the Yahoo Finance website at this link: 


Why animals are a crucial part of the Australian economy

Animals are a critical part of the Australian economy, either for food, companionship or entertainment.

But every month, millions of sheep, cattle, pigs, chickens, fish and other animals are bred and then killed. Most of them are killed in what we define as ‘humane’, but no doubt tens of thousands are horribly mistreated, as are a proportion of the animals we keep as pets.

Animals are slaughtered to provide food for human food consumption, to feed other animals (your cats and dogs are carnivorous) and for fertiliser.

The Australian Bureau of Statistics collects a range of data on animal slaughterings and the most recent release of the Livestock and Meat data release included the following facts.