I mean, for real, it would be funny if it wasn’t making us all poorer at the fastest rate in one hundred years.
The RBA’s Friday Statement of Monetary policy was definitive:
The trajectory of inflation is also uncertain due to the ongoing evolution of supply shocks. Some factors that have boosted inflation over the past year are reversing, though it will take some time before the effects flow through to prices paid by consumers. Spot shipping costs and other upstream price pressures stemming from pandemic-related disruptions to supply chains are unwinding quickly. Much of the initial surge in commodity prices in response to Russia’s invasion of Ukraine has also reversed. However, energy prices remain much higher than they were at the beginning of the year. The effect of this on domestic electricity and gas prices is expected to be much greater than had been envisaged earlier in the year, and a further significant lift in utilities prices is now expected in 2023. How far and how quickly this flows through to retail bills, and how large the second-round effects on businesses’ costs and prices will be, is hard to predict. On top of these largely global factors, inflation in Australia has also been boosted by flooding and other bad weather, which has damaged crops and so increased food prices. The most recent round of flooding looks set to prolong the effect on food prices to at least the end of the year.
Food price spikes will pass quickly and do not have spillovers. The RBA can afford to look through these. Energy is much more problematic because it is enduring, as well as an input cost into everything with widespread spillovers.
What is Albo doing about it? Whatever it is, don’t call it weak:
Anthony Albanese has warned gas companies that the length of time being taken to make a decision on price control should not be mistaken for a lack of resolve.
As Opposition Leader Peter Dutton accused the government of having no idea what it was doing other than engaging in thought bubbles, Mr Albanese revealed cabinet would discuss options next week.
Soon after, the Australian Competition and Consumer Commission, which has been consulting stakeholders, will report to government which plans to make a final decision by the end of this month.
“We want this to be co-operative, but that should not be read as we are not prepared to take action if the energy suppliers are not prepared to co-operate here.
…On Friday, Australian Workers; Union national secretary Daniel Walton returned serve by accusing the gas giants of “whining”.
“The gas exporters are incredible lobbyists. Over the past decade, they’ve proven they can get a bunch of resources ministers, from both parties, to sing their tune,” he said.
“Australia can’t afford to be duped yet again by their spin. We need the whole government to stand up to them and call their bluff because their threats are farcical.
“Whining that people shouldn’t call them names and forecasting a ‘chill’ in investment – both claims should be laughed out of the room.”
The contrast between Walton and Albo is awful for the latter. His government is only taking its time because Resources Minister Mad King was duped by the gas cartel in the first round of “co-operative” negotiations and then fled on a junket paid for by the same.
Then Treasurer “Chicken” Jim Chalmers botched a second opportunity by doing nothing about energy in a budget now burning in a dumpster.
This is not a considered plan taking time. It is ministers falling on their faces.
So, why would the Evil Gas Cartel listen to Albo’s idiots now? It won’t and it’s not. The gas price has been trending up throughout the debate and hit its highest price in seven weeks on Friday:
There was some brief power price relief on good weather last week:
But there is no relief in sight in international gas and coal markets. The European winter panic has passed but prices are still $45Gj in Asia:
Coal prices have eased too but are still at $540 per tonne:
Both are 1000% above historical averages!
And, so, Australian electricity futures are still at levels far above the burning budget’s terrifying projections:
Albo’s approach to collaborative policymaking is a relic. These days, attempted policy reforms channeled through public discussion confront the power of oligopolies, lobbies, and captured media, leading directly to chaos.
Economic interests are foaming at the mouth. State premiers are still at each other’s throats. The RBA is on the warpath. Confusion and anger are rising in the polity.
Sky News is a great example of the mushrooming lunacy. When I appeared on the channel a few months ago to prophesise all of the above, I was shocked to discover that nobody had a clue what I was talking about. Now they have complete certainty, but are completely wrong!
These days, reform has to be imposed and you let the interests chase you, not the other way around.
