When you have a government raking in billions of dollars in minings company revenue and feeding it into the economy through increased family welfare, income tax cuts you have a ongoing cycle.

Maybe instead of tax cuts we had tax reform- roll in the Family Tax benefit A&B, Baby Bonus (thats $28 billion right there), workplace deductions (theres another $9 billion there), income test the first home owners grant, plus the tightening up of various taxation benefits like car leasing and there is close to $40 billion that can be used to introduce tax reform.

it's not the fault of the central bank. they're trying to guide a 21st century commercial/industrial society with 19th century methods and under constraints set by 14th century political methods.

oz commerce could report activity to government daily, and make surprises something that happens in other countries. but that would require a willingness to design an effective society from people who are on top of the one inherited from the 'glorious' revolution, which was the last (mildly)significant change in british society.

not gonna happen. on the upside, other societies are equally impervious to change, equally nobbled by tradition, and "she'll be right" may continue to be an adequate national philosophy for years.

While finding this article to be agreeable in many ways I have just one line of inquiry regarding this statement:

"real (i.e inflation adjusted) pay has gone backwards under the Howard Government's new wage setting system, with some workers on award pay rates now more than $15 a week worse off in the past 12 months. (This is part of the reason for such strong employment growth, incidentally.)"

- Yeah. Why? Which part of the reason ? Does anyone remember microeconomics - the law of marginal diminishing returns and all that?

Efficient producers engage the optimum number of labour and capital units required to meet production targets.

Or are we to assume that they will suddenly decide to employ more people because some fractional decrease in wages will allow them to further indulge their innate desire to hire as many people as possible?

Efficient producers hire as many employees as they need and no more. A relatively small decrease in wages will slightly increase their margin of profit and that's about it. The main factor driving employment and investment is and always will be higher levels of demand and production.

The Howard government has bent over backwards to push the myth that a lower unemployment level requires lower wages and conditions by necessity. That’s not objective and its not economics. Its base ideology.

I had thought better of Henry Thornton

- Mr Smith