‘Something is wrong with this place’: Kelty slams state of economy

Labor luminary and former ACTU boss Bill Kelty has slammed the quality of economic management in Australia, saying taxes and spending are too high, and there is “something really wrong” when living standards are falling at the same time commodity prices are booming.

Kelty let fly in a written submission to a parliamentary inquiry into legislation to manage the nationwide distribution of cash, which has been the subject of a lengthy row between the banks and Armaguard, which is two-thirds owned by Linfox.

Kelty, who works with Linfox Armaguard Group as a non-executive director, slammed a provision in the bill that sets aside $400 million of taxpayers’ money as a safety net should Armaguard run into crisis and need to be taken over.

The company’s view is that banks should “pay a fair price” rather than taxpayers being on the hook.

Kelty said the $400 million “crisis powers” contingency was effectively a subsidy for the big banks and retailers. He said it was a “totally entirely inappropriate public policy” and “a policy of lunacy and stupidity”.

Moreover, it was a metaphor for the shoddy standard of economic management.

“The reason we are here today is that we have a bureaucracy that is too interested in looking at the symptoms and ignoring the cause,” said Kelty.

“A government that is apparently prepared to fund another $400 million of the public’s money to take over the problems but without repairing the model.

“Our taxes are increasing, government expenditure is rising faster than prices. It does say something is wrong with this place.”

— Bill Kelty, former ACTU boss and Armaguard director

“It is just part of a bucket where we pay for quarantine centres that are never used, Commonwealth Games that are not held in the country, infrastructure costs that are the highest in the world or at least approach those levels, where [the cost of] some tunnels are now the highest in the history of humanity.

“Where we simply cannot build enough houses because we did not train enough workers.”

Australian Banking Association chief executive officer Simon Birmingham said Kelty was wrong about the $400 million being a taxpayer-funded subsidy because should it ever need to be activated, the government will levy the banks to repay the money.

Kelty, who with former prime minister Paul Keating was a co-architect of Labor’s greatest era of reforms, went further in decrying the economic state of the nation.

He said this month’s OECD annual review, which showed Australia second only to Italy in having the biggest reduction in real wages since 2021, was both “hard to comprehend” and a “sad reflection in this nation”.

“But commodity prices have been rising and our terms of trade have significantly improved. We know that it is not just the terms of trade, but volumes have increased,” he said.

“But we know the underlying malaise. Our productivity has fallen and is the third lowest in the OECD. Investment is too low. Our growth per capita is non-existent.

“But our taxes are increasing, government expenditure is rising faster than prices. It does say something is wrong with this place.”

He said the situation had been “years in the making” and was “not just about the government of today”.

Persistent high inflation: OECD

The OECD’s annual employment outlook found persistent high inflation had contributed to a 5.1 per cent decline in Australians’ real wages since March 2021.

In contrast, the average OECD member country enjoyed a 5 per cent improvement in its workers’ living standards over that time.

“This sustained erosion of purchasing power points to persistent pressures on household incomes, even as the labour market has remained broadly solid,” the OECD said of Australia.

“These pressures are compounded by a decline in the real minimum wage between April 2025 and April 2026, placing Australia among only 11 OECD countries where this occurred and further weighing on the incomes of the lowest-paid workers.”

Kelty said the Armaguard cash distribution negotiation had been more difficult than any of the renowned reforms of which he was a part, including superannuation and waterfront reform, because “there has been no clear national objective” in terms of fair pricing, investment, safety and security or a fair adjustment process.