He has always had a way with words but former Prime Minister Paul Keating’s description of the Australian economy as “idling at the lights” has a ring of truth about it.
In calling for a government-led infrastructure boost, Mr Keating said the Scott Morrison government had a “surplus virus’’ that was preventing it from using low interest rates to build infrastructure.
With economic growth at just 1.4% and with monetary policy having run out of effectiveness, Mr Keating argued it was time for the government to develop a growth agenda.
While we Victorians might quibble with his idea that a fast train between Newcastle and Sydney is the best possible use for some infrastructure spending, it is hard to say that he doesn’t have a point, especially with the Reserve Bank having long urged for infrastructure spending to help to raise wages and cut unemployment.
Surplus can be good but only at the right time
“The economy is idling at the lights, it’s like the car idling at the lights, waiting for the lights to turn green again to take off,” Mr Keating said on Alan Jones’ radio show.
“The economy at 1.4 per cent is simply idling.”
Mr Keating said there are times when running a budget surplus is the right thing to do – after all, he ran a surplus as Treasurer as did the Howard Government that came afterwards.
However, now was not a good time to be running a surplus, with the economy being different to a corner shop that needed to always turns a profit.
The economy is different to a corner shop
“The budget of the Commonwealth of Australia is not like the budget of a corner shop that in the end must be able to close the door on Friday night and be in surplus.”
Mr Keating said the with interest rates so low, it was a great time for the government to take advantage and invest in very large infrastructure projects.
He said one way to ensure such projects went ahead was to make sure they had bipartisan support and made a lasting economic impact rather than being projects that were simply championed by local politicians.
Projects need to bring substantial economic benefits
He claimed his idea of a fast train Newcastle and Sydney that could be extended to the NSW south coast, would deliver many economic and social benefits.
Some of those benefits include taking price pressures off Sydney property values and opening up the Hunter Valley and giving a boost to the Newcastle property market.