Peter Hartcher has an excellent read in the SMH on the fissures that blew wide open in the Liberal Party this week, and the gathering sense of doom around Tony Abbott’s leadership.
The piece explains that cabinet ministers, in a briefing from RBA governor Glenn Stevens and Treasury secretary John Fraser, were told that the missing factor in the Australian economy is confidence.
They emphasised that the elements of a faster-growing economy were in place, with the standout exception of confidence. The Australian dollar has fallen dramatically, restoring much lost competitiveness. Interest rates are low. Wages are not growing but remain stable. Inflation is well in check. The services and agriculture sectors are poised for growth. But business confidence is low. It fell after the federal budget last May and has remained feeble since. And that means that firms are reluctant to take risks, to invest, to expand, to hire. Both Stevens and Fraser emphasised this point, according to multiple cabinet ministers who were present.
Abbott and his Treasurer have failed to generate business confidence. Many in the Liberal party are looking to Turnbull to achieve what the Abbott government has not. To win the confidence of the community and the business community.
I noted this week the somewhat contradictory impact of the strategy of disaffected government MPs that they are fomenting more instability at a time when confidence and uncertainty is a drag on the economy they say they want to help.
Malcolm Turnbull, who has firmed as the clear alternative to Abbott, can box clever and will have some ideas rolling around in that considerable mind of his on how he might deal with this. But he’s not (yet) challenging for the leadership. In the absence of a challenger and a plan, there are no guarantees that the current campaign against Abbott can achieve much for confidence, and might simply compound the gloom that has businesses reluctant to invest and consumers wary about spending up.
That said, Abbott and treasurer Joe Hockey have completely failed so far to inspire confidence in Australian business and consumers. And after this briefing from Stevens and Fraser – Australia’s top economic public officials – they will be clearly appraised of the need to redress it if they can manage to hang on to power for at least another budget cycle.
You can read the full SMH piece here.