The latest economic updates confirm Australia’s economy is declining at an ever-increasing rate under current policies. Alan Austin analyses the latest data.
THE MORRISON GOVERNMENT is consolidating its place in history as Australia’s worst-ever economic manager and among the worst in the developed world.
Recent reports confirm declining wages, deteriorating wealth, rampant corporate tax evasion, a decline in the value of the currency, a shaky credit rating, deepening deficits, ballooning national debt and ever-worsening losses of net worth.
Fresh examples arrive each week of incompetence and waste. The latest is the Government’s appalling decision to allocate vast sums of taxpayers’ money to fly former Finance Minister Mathias Cormann around the world chasing a European job he has no chance of getting.
Wealth declining steadily
The average wealth of Australian citizens has fallen sharply for the second year in a row. This news comes from the annual wealth report by the research division of Swiss-based finance company Credit Suisse.
The 2019 report highlighted Australia as the advanced world’s biggest loser, with a chart showing the loss of wealth per adult four times worse than Norway’s, which had the second-worst outcome. See Credit Suisse’s figure two below. The red print is ours, the rest is theirs.
This year, between January and June, the loss of wealth was the developed world’s third-worst, behind the United Kingdom and Norway. See Credit Suisse’s figure nine below. The purple print is ours.
Credit Suisse notes that exchange rate depreciation, which reflects overall economic weakness, contributed to the drop in wealth per adult in Australia, the United Kingdom and Norway.
New record net debt
The Finance Department’s monthly update for October released last Friday showed Australia’s net debt has broken through $600 billion. Borrowings have expanded from a paltry $161.3 billion when this Government took office.
Australia under the Coalition has now added more debt relative to gross domestic product than any comparable developed economy, as shown here last month.
Of all the prime ministers and treasurers since records were first kept in 1971, Scott Morrison and Josh Frydenberg have had by far the worst debt accrual per year. See chart below.
Three prime ministers reduced the net debt during their tenures — William McMahon, Gough Whitlam and John Howard. Paul Keating added some debt during the 1980s restructure and early 90s recession. Kevin Rudd and Julia Gillard added similarly modest amounts to battle – successfully – the Global Financial Crisis.
Then came the Coalition, which despite promises to reduce net debt and despite global boom times, failed disastrously to do so. It should be noted that of the $440 billion they added to the net debt, most was stacked on well before the pandemic.
Company tax revenue sliding again
As documented here, here and elsewhere, much of Australia’s loss of wealth has been due to the Government’s failure to collect taxes from corporations, particularly the large foreign mining companies. The October finance report shows this is happening again, confirming the observation that pro-big business Tory governments never let a good crisis go to waste.
The total revenue tax shortfall for the year to date to 31 October is $2,109 million. Company tax and the petroleum resource rent tax account for 96% of this.
Recipe for ruin
There is absolutely no excuse for this gross mismanagement. Australia has handled the COVID-19 pandemic remarkably well – thanks to gutsy decision-making by several state premiers – and has not suffered the economic devastation of Europe and the Americas.
Corporate profits continue to surge mightily, with some sectors doing better than others. According to the Bureau of Statistics, gross profits (total corporations gross operating surplus, file 5206.35) jumped 15.5% in 2017 over 2016. Profits increased another 7.5% in 2018, then by 9.7% in 2019 and another 7.9% in 2020. That’s a total increase of 47.0% in four years. These have been phenomenal boom years.
Export volumes remain at historic levels, despite coming off exceptional record highs late last year. Australia's trade surplus rose impressively from $2.62 billion in August – which was not bad – to $5.63 billion in September. That’s the highest September trade surplus ever.
So there is no excuse for the economic outcomes which impact most Australians to be so dismally poor.
It is simply a matter of restoring revenue to the fair and reasonable levels that pre-existed this hapless regime. That means getting the tax rates right, reinstating the minerals rent tax and ensuring corporations actually pay the contributions due. Then cutting the dreadful waste.
Role of the mendacious media
Very few Australian mainstream media outlets mentioned the debt blasting past $600 billion last Friday. The few that did were discreet about it.
Compare that with media treatment during the Labor years.
“We are going into hock to our eyeballs to people overseas. And you've got to ask the question how far in debt do you want to go? We are getting to a point where we can't repay it.”
How much was the net debt then? $24.7 billion — close to the lowest in the developed world at the time. It is now 24 times higher.
Kevin Rudd’s petition aimed at reforming Australia’s media so that these continual deceptions may be curbed deserves full support. The pro-Coalition mainstream media must be boycotted out of existence. Then, perhaps, the Coalition will be shown the door and the economy returned to serving Australians rather than foreign corporations.
Alan Austin’s defamation matter is nearly over. You can read an update HERE and contribute to the crowd-funding campaign HERE. Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001.
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