It was the spillover of public sector stimulus that lasted for too long, not price gouging by companies that fuelled the inflation outbreak, writes Johnkehoe23.
The false narrative peddled by some anti-business groups and commentators that unfair business profiteering is fuelling inflation is being debunked.
Reserve Bank of Australia governor Philip Lowe and Treasury secretary Steven Kennedy have admitted as much in parliamentary testimony and other public remarks that, with the benefit of hindsight, the stimulus was overdone.
Separate analysis from Outlook Economics director and former Treasury modeller Peter Downes estimates the payments to business such as JobKeeper and cash flow support was about triple that required to compensate for losses from shutdowns. Murphy calculates the jobless rate is about 2 percentage points lower over three years than otherwise would have been the case. That’s about 300,000 extra Australians in work.Nevertheless, after the initial shock of the pandemic and lockdowns, politicians, bureaucrats and central bankers clung to the stimulus for too long and found it challenging to unwind when the worst of the downturn had passed.
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