You don’t need Stephen Hawking to work these ones out. The principle of such holes is simple — if stuff goes out faster than stuff goes in then it gets bigger.

There’s the Treasurer’s problem.

Now, Morrison has argued that his only issue is how fast stuff is coming out of the hole — spending. But, as his first midyear budget review makes clear, he has an even bigger problem with how fast stuff is coming in — income. Stagnating wages growth is the elephant in the government’s Cabinet room. Low wage growth means low income tax receipt growth.

In fact, the expected income tax receipts have been reduced in MYEFO by $11.5 billion over two years.

The government’s response has been to ignore this side of the hole equation and focus instead on cutting.

Cuts to health, cuts to education, cuts to family day care, cuts to aged care.

But none of this will help with wage growth. In fact, all it will do is rattle the confidence of average wage earners who will choose not to spend.

This is the critical point and it’s one to which the new Prime Minister seems alarmingly deaf.

Malcolm Turnbull is fond of saying it’s the most exciting time to be alive. And maybe it looks that way from his lofty vantage.

But in his rush to throw innovation money at start-ups with a cool app idea, he forgets about the people who populate the bulk of the Australian economy.

Working people who might not have a disruptive digital idea, but are simply working their guts out in the real economy.

Truck drivers, teachers, garbage collectors, wards persons, nurses, council workers.

People doing tangible work for often pretty modest pay.

Turnbull doesn’t seem to put a great deal of stock in their confidence.

Yet these are the people who spend all their wages, and probably then some, in the real economy. This, in turn, props up other wage earners such as waiters, bar staff and builders.

From the perspective Turnbull has occupied for his entire working life, I suspect the street-level of the Australian economy looks fairly boring.

Yet in between all the managerial talk about innovation and streamlining and digital development, this is where an Australian Prime Minister needs to focus.

This PM, however, only seems interested in such average wage earners as potential payers of GST.

And this is the point where Premier Mike Baird can’t be let off the hook either.

Here is another leader fond of tweets and trams and talk.

But again he seems only interested in talking about real workers when it comes to his hope to see them paying more GST.

People have a right to be very cranky about this.

When John Howard first introduced the GST, the idea was that it would enable the states to cut ­inefficient taxes that were holding back employment and stinging working people.

Yet we still have a tax on jobs in payroll tax and a tax on moving house in stamp duty. What gives?

The government needs to start recognising that sustainable, secure employment for people engaged in the real economy is critical if you want to secure stronger wage growth.

It’s the only way that hole will get filled.

Mark Morey is acting secretary of Unions NSW

http://www.dailytelegraph.com.au/news/opinion/fill-the-budget-black-hole-with-higher-wages/story-fni0cwl5-1227659585604

 

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