Reserve needs to do its bit to help stimulate recovery

There are three major structural issues to worry the punters, if not the government.

• The mid-term budget revised tax receipts down and saved a wafer-thin (projected) surplus only by assuming large firms would be required to pay tax monthly in future, along with several other fanciful changes. Practically no one Henry respects believes the government will deliver a surplus, and the weasel words are beginning to enter the government's lexicon. Memo to Wayne Swan: these word games destroy confidence rather than enhance it.
• The "official" (ABS) measure of unemployment jumped from 5.1 to 5.4 per cent in September. This is a tiny move in the direction of reality, as revealed for years by Roy Morgan surveys. This is another disconnect ordinary Australians are aware of that destroys confidence rather than improve it.
• Productivity remains low, and there is no plan to improve the situation, and in particular no plan to address features of the Fair Work legislation that hamper productivity. The hard times facing many Australians will enforce productivity improvement, but the real reforms that would help lift productivity more decisively are conspicuously absent.

Last week, the government told us all to lift our game on interaction with Asia. Vast vision, windy rhetoric, but sadly little connection to reality. There is already a lot of private and business connection to Asia, such as the much denigrated mining industry. With widespread recognition the white paper lacks any semblance of a plan, this is another distraction from the task of getting on with making a living in a highly competitive, edgy, global economy.

The RBA needs to do its bit to help stimulate recovery, which it should do today with another cut to official cash rates. It cannot overcome structural weakness, however. That is a matter for the next government.