Treasurer’s fairy story full of fake forecasts

OH dear. Doesn’t Treasurer Jim Chalmers know that you read out fairy stories to trusting young children at bedtime not in the middle of the day?

His Economic Statement was built on economic forecasts from Treasury that could have been written by Hans Christian Andersen – or better still, the Brothers Grimm.

Times are, well, grim right now and will get, well, grimmer – especially for nearly 14 million wage and salary earners and their families.

But trust me, he said, and really trust the Treasury forecasts, as everything miraculously starts to get better next year and then really better in 2024.

That’s because we, this shiny new Albanese Labor government – have a ‘plan!’

Now, ‘The Plan’ doesn’t actually do anything right now to reduce or counter all your financial pain.

Yes, inflation is running at nearly double the average wage rise – and that’s before you factor in the latest surge in gas and electricity prices, and before I, Treasurer Chalmers, take back in September the 24c cut in the petrol price.

Furthermore, interest rates, and home loan repayments, will continue to surge, with the next hit coming from the Reserve Bank on Tuesday when it will increase its official rate by 0.5 per cent, with more hikes to follow before Christmas.,

The banks are likely – I’m just joking, certain – to whack borrowers with Tuesday’s increase immediately.

As for depositors getting a higher rate on their deposits? Well, we – and the banks – will ‘get back to you’.

What exactly is ‘The Plan’? It seems to be just the ‘best of all possible worlds’ forecasts from Treasury.

The shimmering fairy story that Chalmers held out at the end of the rainbow was that by the middle of 2024, two years away, wages growing at 3.75 per cent would finally nudge ahead of inflation which will have miraculously fallen to just 2.75 per cent.

That’s of course – although Chalmers somehow forgot to mention this – before tax. After tax, the average forecast wage increase would be lucky to have kept pace with that fantasy inflation forecast.

Did it occur to our young new treasurer there was one gigantic hole in the wonderful fairy story he was spinning? It was all built on Treasury at least semiaccurately forecasting the future, not just into 2023, but indeed all the way through both 2023 and 2024 and deep into 2025? While he was at same time detailing how Treasury couldn’t even get close to forecasting the present, what’s been happening this year!

Chalmers laid out how Treasury had ‘forecast’ in its PEFO that inflation in the 2021-22 year would be 4.25 per cent. Wednesday’s figures showed it was actually 6.1 per cent.

What’s the PEFO? It’s Treasury’s supposedly fully independent Pre-election Economic and Fiscal Outlook. It was put out on April 20 when just under 10 months of the 2021-22 year had gone. And further, well after Russia invaded Ukraine, causing the global energy problems.

That’s to say, Treasury was ‘forecasting’ 10 months of the past and 2 months of the present, May and June.

Yet Treasury couldn’t get close – close? 4.25 per cent against the 6.1 per cent reality! – on the critically important inflation forecast.

And yet Chalmers seems to believe – he certainly wants you to believe – that the very same Treasury will be dead accurate with its forecast of inflation coming right back to a nice unthreatening 2.75 per cent by the middle of 2024, to deliver 14 million workers their manana – tiny real wage rise. It’s fantasy on which he is going to build his entire policy structure – trying to keep wage increases from chasing the high inflation reality.

Thank you treasurer, for telling us what the ‘Albanese Labor government Plan’ is: a Treasury fairy story of fake forecasts.