Politics Analysis

Australia’s economy: From the pinnacle to the poorhouse in seven years

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The latest GDP figures show Australia’s current economic mismanagement is the worst in decades and among the worst in the developed world, reports Alan Austin.

LAST WEEK'S economic growth numbers confirm Australia’s economy is poorly managed. They also highlight another destructive reality: the more outrageous the Morrison Government’s lies, the more enthusiastically the mainstream media will amplify them.

Recent Australian history

For most of the last forty years, Australia has been near the top among developed countries on most economic outcomes. Through the period of exceptional management from 2008 to 2013, Australia reached the pinnacle.

Since 2013, however, the decline in rankings has been greater in Australia than in any other developed country. Gross debt, for example, blew out between 2012 and 2019 by 17.6% of gross domestic product (GDP). That is the worst debt explosion of all 37 OECD member countries. A majority of those countries actually reduced their debt through that pre-COVID boom period.

Australia’s jobless rate today is a miserable 6.35%. That ranks 81st in the world and a dismal 17th in the OECD. During the last Global Financial Crisis under Labor, Australia ranked third in the OECD.

On annual GDP growth – the figures released by the Australian Bureau of Statistics (ABS) last Wednesday – Australia held top spot through most of 2008 and 2009. On current figures, Australia’s OECD ranking is a lowly eighth.

Other rankings to have collapsed disastrously under the Coalition’s inept mismanagement include wealth per adult, wages growth, productivity, retail trade, infrastructure investment, the value of the dollar and economic freedom.

There is no excuse for this relentless deterioration. The states defeated the pandemic. Vaccines are now available. Demand for Australia’s exports remains strong. Commodity prices are soaring. The trade surplus is at an all-time high. Corporate profits are booming. The Parliament permits this Government to splurge unlimited billions borrowed from future generations.

GDP growth still negative

Treasurer Josh Frydenberg greeted last week’s GDP growth figures with his usual hubris, spin and outright falsehoods.

His speech last Wednesday claimed:

“In the December quarter, Australia enjoyed economic growth of 3.1%, significantly beating market expectations of 2.5%.”

Three deceptions in the one sentence here: Frydenberg is quoting quarterly figures which bounce around erratically. The annual figure is the critical one and this is still negative 1.12%.

Yes, plus 3.1% quarterly growth is strong historically. But he wants us to forget that just two quarters earlier he delivered an outcome of negative 7%. That was the worst result since records began in the 1950s, by far. The second worst was negative 2% in the mid-1970s. 

And finally, Frydenberg compares this miserable outcome with the magical mythical “expectations”.

Forecast follies

Whose “expectations” did Frydenberg’s outcomes “beat” exactly? Well, the markets, of course. It seems they make these ridiculous forecasts precisely to be able to pat the Treasurer on the head and say “Good boy. You exceeded our particularly low expectations.”

A forecast of 2.5% growth is woeful, given the June quarter’s 7% constriction and December quarter outcomes in comparable economies.

Global comparison fraud

Frydenberg also asserted:

“Australia’s performance on both the health and the economic front is world-leading, with our economy outperforming all other advanced economies in 2020.”

This is just blatantly false. Just across the Tasman, New Zealand is streets ahead of Australia. So are many other advanced economies.

Let’s consider three key variables from 2020. On annual GDP growth, Australia has regressed by 1.2% while New Zealand's growth was 1.4%. Australia's jobless rate sat at 6.35% and New Zealand's at 4.9%. Finally, on wages growth, Australia's rate of growth is 1.4%, yet New Zealand's is 4.2%

New Zealand’s GDP growth is just to the end of the third quarter of 2020. It should be even higher when the fourth quarter number is revealed later this month. Based on these excellent outcomes, S&P has just upgraded New Zealand’s credit rating but maintained Australia’s downgraded status.

Ireland also easily beats Australia on all three: it has GDP growth of 1.5%, a jobless rate of 5.8% and wages growth at an impressive rate of 7.5%

Israel, similarly, has much stronger outcomes: its GDP growth receded by 0.4%, it has a jobless rate of 4.5% and wages growth at a rate of 9.9%.

Norway matches Australia’s low wages growth but is ahead on the others. It has regressed by 0.6% on GDP growth, has a jobless rate of 5% and maintained a rate of wage growth at 1.21%. 

Other economies beating Australia on both economic growth and jobs include the United Arab Emirates, Taiwan, Belarus, China, Vietnam and Cambodia. To claim Australia’s economy is “world-leading” is a tawdry lie.

Mainstream media mendacity

How does Frydenberg get away with such brazen misrepresentation? Mainly because he knows none of the mainstream journals will correct him. They are in on the scam.

Headlines last Wednesday included:

  • ‘Household spending gives economy push to full recovery’ in the Australian Financial Review.
  • ‘Economy on track for full recovery’  found in The Australian.
  • ‘Australia's economy grows 3.1% in the past three months as COVID recovery continues’ via 9 News.
  • ‘Latest national accounts data shows GDP has improved’ on news.com.au.
  • ‘ASX, dollar higher after GDP beats tips’ by The West Australian.
  • ‘Australia economy surges into 2021 with cashed up households’ found in Bloomberg.

These reports are all congratulatory. They all dodge the necessary historic and global comparisons. Hence they fail to report the current serious economic mismanagement.

Incidentally, the lift in the stock exchange (ASX) last Wednesday was fleeting. The ASX all ordinaries closed on Friday at 6,943 points, down 252 points from the February 16th peak, a whopping 3.5% collapse, wiping out almost all this year’s gains.

It is sheer Government incompetence that leaves annual growth still negative for the third consecutive quarter, a million Australians without a job, wages falling and, as of last Friday, gross debt more than trebled to $31,800 per man, woman and child.

Alan Austin’s defamation matter is nearly over. You can read the latest update here and contribute to the crowd-funding campaign HEREAlan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.

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