There is now no doubt about who runs Australia’s economy better. Econometrics expert Alan Austin updates the data.
WE NOW have almost three years of outcomes to assess the Coalition’s managerial performance — first under PM Tony Abbott and Treasurer Joe Hockey, then under Malcolm Turnbull and Scott Morrison.
The conclusions are stark. When last in Opposition, the Coalition identified 24 areas of economic management as critical and promised to improve them all. Since gaining office, one has improved, one has remained steady and 22 have deteriorated.
With a strong recovery well underway worldwide, Australia’s once impressive global ranking has fallen on all 24.
The Coalition Government’s only success is that, with the connivance of the mainstream media, it appears to have fooled many Australians into believing the opposite of the truth.
Over the Coalition’s last 24 months, the jobless rate fluctuated between 5.6% and 6.3%. This is higher than Labor’s equivalent range between 5.0% and 5.8%. Hidden, however, is the fact that many full-time workers have been made part-timers. Hours worked per adult have dropped dramatically.
2. Budget deficits
In his 2014 budget speech, Joe Hockey forecast deficits totalling $30.5 billion for the three financial years from 2015-16 to 2017-18.
The updated figures in last month’s final budget outcome are now $102.8 billion. That is a blow-out of 337% — in two years. Those are all Coalition numbers.
3. Government net debt
Labor left net debt in 2013 of $178.1 billion — an amount the Coalition promised to reduce by $30 billion. By the end of June 2016, it had ballooned by $118.3 billion – or 66% – to $296.4 billion.
4. Government gross debt
Labor left gross debt (the amount upon which interest must be paid) of $277.4 billion. This week’s number is $443.2 billion — up by $165.8 billion (or 64.4%).
5. Interest on government debt
Labor paid $8,285 million in net interest in its last financial year, 2012-13. The Coalition paid $12,041 million in the year just ended — an increase of 45.3%.
6. National income
Real net disposable income grew an average of 2.8% per year through the Labor years, which included the global financial crisis (GFC). Under the Coalition, income has fallen by more than two thirds to a miserable 0.87% annual growth.
7. Balance of trade
For a record 18 months, Australia’s trade deficit has been worse than $1,600 million. For ten months, it was below $3,000 million and, in one disastrous month, crashed to $4,142 million.
As shown elsewhere, this is close to world’s worst.
8. Wage levels
Wages are now growing at their slowest pace since records were kept. For the last three quarters, increases have been stuck at 0.5%, a level only recorded seven times since the Hawke/Keating period. Once was during the GFC in 2009, the other six since the Coalition was elected.
9. Job participation
This fluctuated between 64.8 and 65.8 under Labor. It has been below 64.8 for more than half the Coalition period, falling as low as 64.5 for four months. It is now 64.7.
10. Youth unemployment
Globally, this has improved remarkably in recent years. In Australia, this ranged between 9% and 16.4% through the Howard years. The Rudd and Gillard Governments reduced this to fluctuate between 7.6% and 12.2%, consistent with global trends. Under the Coalition, this blew out again above 14% for three months and is now 12.8% — against global trends.
11. Long term unemployment
Labor kept this low, with 135,100 people unemployed for a year or more at the 2013 election, below 20% of the total jobless. It expanded dramatically after the election to peak at 186,300 in January 2015, or 23.8% of those out of work. It is now 162,300, at 22.8%.
A streak of 17 quarterly rises came to a grinding halt in mid 2015, after two failed Coalition budgets. Two consecutive quarterly slumps were followed by three rises. The next figures will confirm whether productivity is back on track.
13. Interest rates
Joe Hockey affirmed in 2013 that interest rates below 2.75% indicate poor economic management. That was the day the rate was cut to 2.5% — where it remained until after Labor lost office. Six months after the election, it fell to 2.25%, was cut again to 2% in May 2015, then to 1.75% a year later. It was slashed last August to 1.50%, Australia’s lowest level ever. This is disastrous for those whose income depend upon interest from their savings.
14. Economic growth
This is one of two areas where the economy has not deteriorated. The growth rate of Australia’s gross domestic product (GDP) in this year’s June quarter was 0.5%. This is below the 0.6% of the June quarter of 2013 and just below the current OECD average.
The annualised growth rate, now at 3.3%, is considered satisfactory. While it is above the 2.0% three years ago, it remains well below the 4.4% at the beginning of 2012.
15. Company profits
This is the one positive in Australia’s economy. According to Commsec’s analysis of 2016 company reports, 88.5% of companies – all but 16 – recorded a profit, aggregate profits (excluding the aberrant BHP result) rose by 6.8%, dividends rose by 6.0% over the year, 92.1% of companies paid a dividend and 65.6% lifted dividends.
16. Increased taxes
Taxes collected from companies has dropped dramatically, requiring extra taxes to be collected elsewhere. Overall, tax revenue in the financial year just ended was up more than $34 billion over Labor’s 2012-13 collections to $362.0 billion, an increase of 10.5%.
17. Construction activity
The value of non-residential buildings in calendar 2014 fell 15.1% from 2013. The value in 2015 was barely improved, at 13.8% below 2013. The first two quarters of 2016 show no improvement.
18. Infrastructure development
The value of public sector engineering construction in calendar 2014 fell 17.0 % from 2013. The value in 2015 was barely improved, at 16.3% below 2013. The first two quarters of 2016 show slight improvement only.
19. Economic freedom
Heritage Foundation ranked Australia’s economic freedom through the Labor years third in the entire world. In 2014, Australia’s score fell and the ranking dropped to fourth. In 2015, Australia’s score fell but fourth place remained. In 2016, Australia’s score dropped further and ranking slipped to fifth.
20. Global competitiveness
This year’s Global Competitiveness Report now ranks Australia 21st in the world. This is down from 20th in Labor’s last two years.
21. Business confidence
The NAB’s monthly index ranged between –9 and +19 during Labor’s last four years. In September 2013, this was a creditable 12. It has never been higher than 10 since and has been as low as 1 several times. The average for the last four months has been just 4.5.
22. Government spending
This was $423.3 billion in the year just ended, up by 15.3% over Labor’s 2012-13 outlays of $367.2 billion.
23. Government waste
Much of the Coalition’s additional spending in its first year was wasted, as shown here and here. Similar lists could be compiled for the period since.
24. Smaller government
Labor’s Commonwealth payments in 2012-13 were 24.1% of GDP. This surged in 2013-14 and 2014-15 to 25.6%. In the last year, it rose further to 25.7% and is budgeted to increase to 25.8% this year.
This compilation should extinguish any lingering doubt about the Coalition’s incompetence in managing Australia’s economy for all. They have succeeded only in allowing big business to generate huge profits. On every other critical indicator, with the exception of annual GDP growth, they have failed to continue Labor’s gradual progress and global leadership.
It is fair to conclude that Australia has exchanged one of the best economic management teams in the world for one of the worst.
You can follow Alan Austin on Twitter @AlanTheAmazing.
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