Here is my wrap-up of the economic dimensions of PM Pauline’s speech yesterday.
Housing affordability and immigration
Hanson’s primary economic claim was that excessive immigration had put undue strain on public services, housing, rents, and infrastructure.
She contended that the cost-of-living dilemma is a result of Australia’s population growth outpacing the country’s ability to build homes, roads, and hospitals.
In order to reduce housing demand and improve living conditions for current Australians, she proposed a significant decrease in immigration.
Hard to disagree with that. We have growing shortages, forecast to worsen, in all these categories under the immigration-led growth model.
Sadly, the return of capital gains discounts and negative gearing will cost the budget more, and the stock will grow from $300bn over a decade.
Industrial competitiveness and energy costs
Another major economic theme was energy.
Hanson contended that renewable energy regulations had increased electricity prices and hurt Australian manufacturing, rejecting the net-zero transition.
She argued that affordable, dependable energy is necessary for heavy industry, mining, agriculture, and households, and she supported preserving and growing the use of coal, gas, and nuclear power.
But gas remains the marginal cost price setter for East Coast power. After taking money from Gina, Hanson has shifted away from gas taxes and a strong reservation policy to a Norway-style co-investment model that will do nothing to lower gas prices for decades.
This means that regardless of what kind of base load power she chooses, the price will not fall and will probably rise.
This single policy makes her cost-of-living and industrial renewable policy platforms a joke.
Tax reductions and help from living expenses
One Nation supported a number of direct cost-of-living initiatives:
- lowering the cost of petrol and diesel by halving the federal fuel excise.
- Hanson said that a 50% reduction in tobacco excise and a freeze on future rises would undermine the black market for illegal cigarettes
- lowering the tax on alcohol.
- encouraging couples to split their taxable income in order to potentially lower their total tax burden.
This will be expensive for the budget. The last time the PBO looked, it was $70bn over a decade. Tobacco would pay for itself by making legal smokes more popular. Halving the alcohol excise would cost $30bn over a decade. The fuel excise would cost $100bn over ten years.
So far, she has to raise $200bn + 30bn per year for housing concessions. For simplicity, let’s assume the cost is over one year. $50bn in new costs is 7% of the ex-GST federal budget.
Cutting back on bureaucracy and government expense
Hanson contended that rather than low taxes, excessive government spending is the root cause of Australia’s budgetary issues.
She suggested eliminating or shrinking organisations she believes are superfluous, such as SBS, reorganising the ABC, cutting back on Indigenous and climate-related programmes, and eliminating what One Nation calls government waste.
The party asserted that these savings might support its tax cuts and other initiatives.
$50bn in cuts are a lot, but may be possible. Interest rates would probably fall.
A labour market that is increasingly focused on business
The speech marked a shift toward policies that support small businesses and employers.
Hanson argued that increased labour expenses can harm small businesses and jobs, criticising some workplace laws and opposing recent hikes in minimum pay.
These initiatives, according to its detractors, would lower workers’ real salaries and bargaining power.
My view is that this would only be the case if immigration were cut to zero simultaneously.
Australian ownership and economic sovereignty
Hanson stressed a more independent Australian economy with greater backing for homegrown businesses, infrastructure, and local jobs, in line with One Nation’s long-standing programme.
The larger One Nation programme includes investments in water infrastructure, apprenticeships, and policies that prioritise Australian workers while limiting foreign control over vital assets.
Again, I ask, where is the money coming from? Long-term borrowing is fine if secured against productive assets, but would you trust PM Pauline over the market to make that decision?
Overall, this is a mishmash of corruption, bad ideas, uncosted dreams, and three ripper ideas: ending immigration and slashing government spending, plus tax cuts.
It would probably trigger another runaway housing bubble even without immigration.
I would punt on it to throw out the immigration-led model and then punt ON once that was done.
