Malcolm Turnbull can afford a bit of a swagger when he enters Parliament House for the first sitting week of the year on Monday.
Economic news over the long summer break has largely been upbeat, especially when it comes to the politically-sensitive employment market.
A record number of over 400,000 jobs were created in 2017 and forward indicators of employment, like job advertising, suggest 14 months of continuous job gains have further to run.
‘We’re seeing that our policies are backing Australian business, backing Australian enterprise, are working and paying off in that strong growth in jobs,’ Turnbull boasted at a media conference this week.
Furthermore, the International Monetary Fund’s upgrading of its global growth forecasts to the fastest pace in seven years should enable the Australian economy to maintain the pick-up seen over 2017, further fuelling employment growth.
Jobs aside, retail sales figures showed spending in the run-up to the critical Christmas shopping period was the fastest in almost five years.
At the same time, having entered 2017 worrying about housing affordability, the most recent data shows first-time buyers are slowly returning to the fore amid a combination of tighter lending rules enforced by regulators on investors – who had been hogging the market – and state government initiatives.
In November alone, over 11,000 mortgages were granted to first home buyers, the largest number in any month since December 2009.
Sydney’s red-hot housing market has also cooled, dampening concerns about a price bubble.
‘Economic data released over 2018 has been ticking all the right boxes,’ Commonwealth Securities chief economist Craig James says.
Business confidence and conditions remain upbeat, as they did throughout 2017 and consumer sentiment is finally showing signs of improvement after a brittle year.
There has been plenty of back-slapping among government ranks, particularly over the jobs figures.
However, voters have so far not shared in the government’s enthusiasm.
Early opinion polls for the year either showing only a modest improvement for the coalition or the government actually going backwards, keeping Labor firmly in the box-seat ahead of a possible election later this year.
The crucial element missing from the more positive economic outlook is a pick-up in wages growth.
While inflation figures this week remained unexpectedly benign at an annual rate of 1.9 per cent, wages are growing only a fraction ahead of this and the lowest in at least 20 years.
Enterprise bargaining agreement outcomes are also in decline, with private sector arrangements at a 25 year low of 2.4 per cent.
Such agreements used to command a larger premium over inflation because they include productivity arrangements over a number of years.
Turnbull has promised to pursue the remainder of the government’s proposed business tax cuts which would reduce the corporate tax rate to 25 per cent from 30 per cent for all businesses over the first sitting weeks of the year.
The prime minister insists if business tax is reduced it results in more investment and in turn more and better-paid jobs.
He has also promised this year’s budget will also aim for a new round of tax cuts for middle-income earners while keeping the budget on track for a surplus in mid-2021.
Labor not only rejects tax cuts for big business, it also points out the government is actually raising taxes for low and middle-income earners in the interim with an increase in the Medicare levy.
Opposition Leader Bill Shorten said in his first major speech of the year this week that a Labor government would pursue the idea of a ‘living wage’ rather than a minimum wage, drawing howls of protest from the government and business.
So the battle lines are drawn for the next election on wages, although that doesn’t help households struggling to pay their bills now.