At the core are economic and jobs growth. Without these, inflation, income distribution, the environment, productivity and the budget balance don't matter much. Who cares about the budget balance if your economy is mired in recession with entrenched high unemployment? Even the US doesn't anymore as it runs budget deficits at levels unimaginable a few years ago.
Indeed, some of the indicators mentioned above are the means to the end of economic growth and job creation. Low and sustained inflation is not an end in itself - it is a means to enhance competitiveness, ensure investment is mainly productive and not speculative and when achieved, is a vital building block that underpins growth and job creation.
So how's Australia going?
Stunningly well. The economy is growing and jobs are being created. Australia is starting its 21st year without a recession - something that rarely if ever happens anywhere in the World. Employment is rising and the unemployment rate is very low. To sustain that growth, both fiscal and monetary policy have for the past year been restrictive because there was a fear that demand was too strong and that Australia was running out of workers. The risk was overheating. And fair enough.
Recently, as these tight policies started to bite and the fact that the external environment (obviously outside the control of local policy makers) turned down, we've seen slower economic growth and job creation has eased. Hence the RBA's prudent move earlier this week to start a monetary policy easing cycle. To date, the softer growth outlook has not prompted the Government to change tack on fiscal settings. This is prudent and bold. It will give the RBA more confidence to do the heavy lifting this time around with rate cuts.
As the Government starts to set the background for its mid-year fiscal update (due for release sometime before Xmas), it will keep a tight reign on spending. The Government can trust the RBA to cut rates as required if growth and inflation ease further. To be sure, Treasurer Swan and Finance Minister Wong will let the automatic stabilisers work, so the task of returning to surplus in 2012-13 will be a bit harder, but there is no sense of any fiscal loosening which is exactly right for how we look at the economy into 2012.
The Australian economy is in great hands. The economy is the envy of just about every other country in the World. RBA Governor Glenn Stevens highlighted just how good when he recently said that he would not swap his role with any other central banker, anywhere. Enough said.
In terms of economic management, I'd rate Australia at 9.5 out of 10.