New PM to tackle economy, inflation, cost of living
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Australians are voting on Saturday for a new prime Minister.
According to polls, it is close but not impossible to predict the outcome. But whoever wins the race will be faced with important issues like rising living expenses and increasing borrowing costs as a result of the nation raising rates for the first-time in over ten years.
Economic concerns have been at the front and center of domestic campaigning for the front runners — incumbent Prime Minister Scott Morrison from the ruling conservative Liberal-National coalition is defending his position against his closest rival opposition, Labor Party leader Anthony Albanese.
Analysts agree that economic issues such as the rising inflation are out of both parties’ control. However, whoever wins, will be required to deal with them.
Zareh Ghazarian is a senior lecturer in Politics & International Relations at Monash University. She stated that “whoever comes into government will need to address the economy, they’ll be required to address inflation and cost of living pressures as well as global uncertainty due to issues like the war in Europe.”
Scott Morrison is the Prime Minister of Australia at a Press Conference during his visit to Armstrong Creek on May 18, 2022, in Geelong. Australian federal elections will be held Saturday 21 May.
Getty Images News | Getty Images News | Getty Images
Inflation in Australia hit a 20-year high in April, with the consumer price index jumping 5.1% on an annual basis as petrol and food prices climbed. This led to the central bank raising rates at a higher level than expected by analysts, the first increase in over ten years.
Meanwhile, however, wage increases failed to keep pace. The data showed that wages rose in Australia by 0.7% during the first quarter.
Opinion polls by the Sydney Morning Herald earlier showed the main opposition Labor Party in the lead —but that lead has narrowedIt was 51%-49% on the two-party preferred basis. In this system, votes are ranked according to preference and given to top two candidates. Two weeks ago, it was at 54%-46%
According to Reuters, close to 6 million votes have been cast via postal vote or early in person voting.
Concentrate on growth
According to political observers, both Labor and the ruling coalition must address the cost of living and economic growth challenges.
The parties have shared the belief that economic growth is what they are talking about. We haven’t really seen a party talk about … going down the path of some European countries in the past, of having very frugal policies,” said Ghazarian.
“Like the Coalition,” [Labor Party] is largely seeking to repair the budget through economic growth rather than austerity and its priority areas of energy, skills, the digital economy, childcare & manufacturing have a significant overlap with the Coalition,” said Shane Oliver, head of investment strategy and chief economist at Australian financial services firm AMP.
Oliver stated that Labor Party is likely to seek more economic interventionistism than the coalition.
This will harm the economy and cause China to turn away more from Australian products.
Stewart Jackson
University of Sydney
He did however point out that any difference in their tools for managing the economy would be “relatively small.”
He said that while there might be some nervousness about Labor in the investment markets, there’s no way to predict a major impact on markets when there is a government change.
Winner will be the one who’struggles’
Stewart Jackson, senior lecturer in the Department of Government and International Relations at the University of Sydney, said that no matter which party wins the election, the Liberal-National or Labor coalitions “will struggle to manage the economy.”
Jackson noted that inflation was driven by external events, such as an increase in oil prices due to the Russia-Ukraine War.
China factor
He also highlighted another element that influences Australia’s relations with China.
Jackson claimed that China has fought the coalition government and it isn’t a positive.
“I see that.” [as a] zero sum game,” he said. It will harm the economy and cause China to turn more away from Australian goods, to raise tariffs.
Australia’s relations with China, Australia’s largest trading partner, began to deteriorate shortly after the outbreak. This was due to Australia’s support for the call for an international conference. global inquiry into China’s handling of its initial Covid-19 outbreak.
These tensions grew when China placed sanctions on an array of Australian products. They ranged from levying tariffs to imposing other bans and restrictions — affecting Australian goods including barley, wine, beef, cotton and coal.
“Labor … has been campaigning on economic management as well, and they’ve been criticizing the government for what they perceive as being mismanagement of the economy,” Ghazarian said.
“As a result of that, the issue of who is a better economic manager — while it would usually be a coalition strength — I think this time, has not been as strong as in previous occasions.”
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