Most economists and conservative media outlets are demanding the Albanese government spends no taxpayer funds in response to the energy crisis.

They are wrong, both politically and economically.

First, the politics: In a crisis, voters rightly expect their politicians to do more than shrug their shoulders and say there’s nothing they can do.

Economists who demand no new spending because it is considered fiscally irresponsible and inflationary would never run for Parliament because it would be too risky for them. They would rather sit in their armchairs pontificating.

Take the case of the halving of the fuel excise.

Economists complain this would be inflationary, forcing the Reserve Bank to increase interest rates again. Yet cutting the fuel excise itself reduces the inflation rate.

True, it doesn’t reduce the so-called trimmed mean inflation rate that the Reserve Bank concentrates on. But to increase the trimmed mean rate, the cut in fuel excise would need to stimulate the economy substantially, increasing the risk of a wage-price spiral.

Would motorists decide to go on holidays and travel long distances........

© The New Daily