The rate cuts that came in June, July and October, which have taken the official cost of money in this country to an all-time low of 0.75 per cent, were done in a bid to drive the unemployment rate down to at least 4.5 per cent if not lower.
Such a low unemployment rate, in theory, would tighten the jobs market to so much wages growth would pick-up.
The government reassured all that its tax cuts, which started from July 1, would “lift household incomes, ease cost of living pressures and boost spending at local businesses”.
A 10-year, $100 billion infrastructure spend that will have us driving four-lane boulevards to multi-storey carparks adjacent to every suburban railway station would ensure a surge in workers.
The field evidence, however, points to something rather different from the rhetoric.
The budget, which had already factored in tax cuts and infrastructure spending, tipped a magical explosion in wage growth to 3.25 per cent next year while expecting unemployment to remain around 5 per cent out to mid-2023.
There’s a gulf between reality and expectations that Evel Knievel would struggle to jump.
Frydenberg, with recent speeches and more to come, is giving himself some room for an economic reset in the mid-year budget. Without a reset, all those quiet Australians will have some unpleasant things to say.