The Coalition's debt blowout was well on its way before the pandemic and makes Labor's debt during Global Financial Crisis pale into insignificance, writes Alan Austin.
Australia’s gross debt hit $719.4 billion last Friday, 17 July — a notable number. Not just because it smashed the $700 billion barrier just ten weeks after breaching $600 billion, but because the Coalition has now added more than $426.4 billion.
That is more than double the $213.2 billion Labor added in its five years and nine months from 2007 to 2013.
But here’s the thing. Labor steered Australia’s economy through the worst global recession since the 1930s. That required substantial borrowings. Every developed country except Norway borrowed extensively at that time. Australia actually borrowed far less than most, ending up with the third-lowest debt to GDP of all 36 wealthy OECD member countries when the dust had settled.
In contrast, the Coalition has enjoyed a remarkable boom for all but the last four months of its six years and ten months. In that period all well-managed economies have reduced their debt substantially.
This debt news confirms two realities. First, that the Coalition is vastly less competent at managing finances than Labor. This is not news to those who track Australia’s economy through alternative media.
Second, it exposes as frauds the economics “reporters” in the mainstream media who alarmed voters whenever Labor’s modest debt increased just a tiny fraction but are cravenly silent now.
Readers with good memories will recall the pro-Coalition rottweilers barking madly about ‘skyrocketing debt’, ‘Labor’s debt and deficit disaster’ and ‘Gillard’s debt timebomb’ – without any apparent regard for the immensity of the challenge at hand.
Since then, disastrous decisions have been made with not even a muted growl. From $272 billion in September 2013, the Coalition has now increased gross debt to $719 billion, with no slow-down in sight.
The Coalition doubled all Labor’s debt by April 2017 and doubled all debt accumulated since 1854 in March 2019. It has now trebled all Labor’s debt. The Coalition has now added 62.3% of all gross debt.
Unfortunately, the financial year just ended has seen failures in many other areas as well.
Spending blow-out and revenue shortfall
The latest Finance Department data, to the end of May, shows total spending at $512.1 billion, a thumping $51.8 billion, or 11.2%, above the MYEFO estimate of $460.3 billion.
Revenue over the same period was $447.6 billion, against the MYEFO’s $465.7 billion.
So revenue is tracking at just 87.4% of spending. A quick check with previous Finance Department reports for May shows this is the lowest ratio of revenue to spending since 2001 when former Treasurer Peter Costello was battling the early 2000s global recession. Not even during the global financial crisis (GFC) did revenue collapse this badly.
The interest bill
Interest paid on borrowings in the financial year just ended will be about $17 billion. That is actual cash the Government must transfer to lenders – mostly offshore – instead of to other priorities. This is approximately $1,180 per taxpayer.
Net worth
As IA has reported from time to time, almost alone, net worth is a critical indicator which has declined catastrophically under the Coalition. Tucked away in the monthly Finance Department reports, this measures all federal government assets minus liabilities.
Australia’s net worth has tumbled since 2013 from negative $206 billion to an appalling negative $624 billion, a loss of $418 billion.
Retail recession
Retail turnover for the calendar year to May is just $139.2 billion. That is up just 2.1% over the same period a year ago. With population rising at 1.5% and inflation at 2.1%, this is a substantial decline in real terms. It is the worst, in fact, since the Australian Bureau of Statistics (ABS) began this series in 1982.
Jobless ranking lowest ever
The 7.45% unemployment rate for June announced this week is the highest since November 1998. Australia now ranks 23rd among the 36 OECD members on jobless rates, the lowest since records have been kept.
Youth unemployment is up to 15.3%, the highest also since 1998, apart from one month in the dismal Abbott period, which may have been aberrant. This ranks 19th in the OECD, also the lowest ever.
Hours worked per person per month
This is the best measure of the level of employment an economy generates, as it takes into account full-time jobs, part-time jobs and population shifts.
For the last seven years of the Howard/Costello period, this averaged 86.8 hours. Through Labor’s tenure, it increased to an average 87.4 hours per month, despite the global financial crisis. So this is the benchmark.
Four months after the Coalition was elected in 2013, this fell below 85 for the first time since 2002. It slipped below 84 in December 2014, for the first time since 1994.
It then collapsed below 79 in April this year, for the first time since the ABS series began in 1978. The June figure was 79.95, just up from the all-time low in May.
Global crises then and now
Defenders of the Coalition and the somnolent watch puppies might point to the current global pandemic and its economic devastation and plead for leniency. Three responses to this.
First, most of the deterioration of Australia’s economy happened during the boom years long before COVID-19 arrived.
Second, no allowances were made during the Labor years for the global upheavals then.
And third, the current economic challenges are nowhere near as daunting as those confronted – and vanquished – a decade ago. Currently, of the 36 OECD members, only seven are technically in recession. A majority of 20 still have a jobless rate below 7%.
In 2009, only three of the 36 developed economies averted recession and only one of those kept the jobless rate below 5.9%. Guess which?
Until Australians understand how poorly the economy is now being managed, there is little chance this will change.
Alan Austin’s defamation matter is nearly over. You can read an update HERE and help out by contributing 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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