On the face of it, yesterday’s capital expenditure data for the June quarter was good news and a continuation of a steady stream of positive economic data. The ABS’ “Capex” report looks at both actual investment and expected investment, and yesterday there was a solid rise in what is now the third estimate of spending for the present financial year — more than 17%, with big rises in planned investment for manufacturing (24%) and other industries (mostly service sector companies — 19%). The long, long fall in mining investment is also now down to its last dribs and drabs, as well.

The RBA will be pleased with these development and there will be plenty of opportunity for the bank to expand on these data in September with a series of public appearances: RBA governor Phil Lowe has three scheduled appearances, deputy governor Guy Debelle two, plus speeches by the assistant governor in charge of the bank’s economics work, Luci Ellis, and her head of economic analysis, Alex Heath. Both Lowe and Debelle are making major speeches in late September. The RBA board, as usual, will meet on Tuesday, and, unusually, Lowe is due to make remarks at a dinner in Brisbane that night — so he will be able to speak to his post-meeting statement.

Clearly, the signs are that the economy is doing better than most people think, especially consumers. Job creation has returned to 2015 levels after levelling off for most of 2016, retail sales are growing again (the 1.5% rise in volume terms in the June quarter was the strongest rise for more than three years), and investment is looking rosier. Housing investment is slowing, but not plunging as all the alarmists claimed it would. Iron ore, copper lead, zinc, aluminium and many rural commodity prices are rising or have rebounded in the past two months, and mining company profits have rebounded strongly. 

[Congratulations Australia — your wages still aren’t growing]

But there is one gaping hole in this story and that’s low wage growth. And the RBA has elevated that to perhaps its most central concern for the next year, according to its 2017-18 corporate plan released yesterday. In the Monetary Policy section, the bank observes:

“In Australia, wage growth has declined to a low level over recent years, reflecting spare capacity in the labour market, low inflation outcomes and expectations, and the adjustment of the economy to the end of the mining investment boom. These factors are expected to dissipate slowly, resulting in a gradual pick-up in wage growth over 2018 and 2019, although spare capacity is likely to remain in the labour market. Consistent with this, consumer price inflation is forecast to increase gradually and remain consistent with the medium-term inflation target over the Bank’s two-year forecast period to mid 2019. The Bank has assessed the risks around the inflation forecasts to be balanced.”

Concomitant with low wages growth is the bank’s concern about household debt:

“Movements in asset values and leverage may be more important for economic developments than in the past given the already high levels of debt on household balance sheets. This suggests that the trade-offs for monetary policy may have become more complex at the current low levels of interest rates. Policymakers are wary of the implications of a further substantial build-up in debt and recognise that the high debt levels mean that monetary policy’s ability to stimulate growth may be more limited than in the past.”

This is all a marked contrast with the bank’s 2016-17 corporate plan, which used similar language to express concerns about debt but didn’t mention wages.

Since last year’s plan, overall annual Wage Price Index growth has been at almost exactly 1.9%, quarter after quarter. Private sector real wages growth this year has been negative. No wonder the bank has identified it as a problem.

[Shorten’s blasphemy on corporate tax cuts draws rent-seekers’ rebuke]

This is perhaps partly an explanation of why the government has been more interested in attacking Bill Shorten as a socialist/Kiwi/Brit/Cuban/business lackey, etc, lately rather than talking up a strengthening economy — which they’re perfectly entitled to do, especially given jobs growth has been so strong.

But cast your mind back to 1995, when Paul Keating was prime minister, John Howard had returned as Liberal leader and the economy was racking up a slow but solid recovery from the Recession We Had To Have. Keating kept pointing out that the economy was getting stronger despite lingering high unemployment. But Howard had a brilliant counter-punch: he dismissed growth as “five minutes of economic sunshine”. It hit a nerve in an electorate that didn’t feel like the economy was recovering, not when unemployment was above 8%.

The Turnbull government has a similar problem now. Voters don’t feel like the economy is growing — and nor should they, given companies are stiffing them on wage increases (with the encouragement of the government), underpaying them and demanding further industrial relations deregulation to strip workers of pay and conditions. In talking up the economy, Treasurer Scott Morrison and his colleagues have to tread a fine line in not eliciting a cynical response from voters who don’t care about business investment levels, only the fact that power prices are surging and their wages are stagnant while CEOs are making a motza.

Meantime, the drip-drip of poor wage growth data continues every quarter, and those predictions of a lift in growth keep getting pushed back — now, in the RBA’s view, to the year after next. And thus, most likely, after the next election.