Politics Analysis

Despite media frenzy, Labor continues to lead economic metrics worldwide

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(Cartoon by Mark David / @markdavidcartoons)

At the end of its first full year, the economic data confirms Labor is again emerging as a financial global leader through effective management of the economy, reports Alan Austin.

THE PICTURE OF LIFE in Australia being painted by Prime Minister Anthony Albanese and Treasurer Jim Chalmers is taking striking form with its fresh contours, colours and textures. Last Wednesday’s data drop from the Bureau of Statistics (ABS) for the December quarter provides the final palette for the full calendar year 2023 and six quarters of Labor’s creativity.

The canvas depicted by the mainstream media – which still includes the ABC – is of “a cost of living crisis”, “people really struggling”, “troubling interest rate rises” and “disgruntled voters”. Those were the constant refrains during the night-long vote counting in the recent Dunkley By-Election — when media pundits called on voters to “hold the Government to account” and “send a message to Albanese” and – if they had their way – to replace Labor with the nation’s rightful rulers.

There are two fatal problems with Australia’s economic media reportage, even when they get their facts straight. They seldom make valid historical comparisons and they seem absolutely forbidden from observing the rest of the world. These failures ensure that the reality is seldom reported accurately.

Economic growth in recessionary times

Australia’s economy grew by 0.24% of gross domestic product (GDP) in the December quarter and by 1.55% over the full year. That is dismal by historic standards in Australia but strong relative to the rest of the world.

Annual GDP growth has rarely been lower than this outside the global recessions of 1961, 1975, 1983, 1991 and the 2020 COVID-19 downturn. Remarkably, Australia managed to avoid having annual GDP growth fall below 1.55% throughout the 2008 Global Financial Crisis, despite that recession devastating most of the developed world. That was quite extraordinary.

Although 1.55% is historically low, it ranks tenth among the 38 wealthy members of the Organisation for Economic Cooperation and Development (OECD) today. That’s a huge lift from ranking 28th two years ago.

Only seven OECD members survived 2023 with four quarters of positive growth. They were Spain, the USA, Mexico, South Korea, Belgium, Slovakia and Australia.

Eight nations ended the year in recession — Japan, Sweden, Germany, Luxembourg, the United Kingdom, Finland, Ireland and Estonia. Another three – Austria, the Netherlands and Norway – emerged from recession in December. So these are difficult days.

Strong budget surplus

The highest level of annual spending by any Federal administration was in 2020 under former Prime Minister Scott Morrison when consumption expenditure reached a record 10.42% of GDP. The current Government has reduced this in both 2022 and 2023.

Controlled spending along with more revenue clawed back from tax cheats generated a strong budget surplus last year.

At $22.1 billion – which was 0.9% of GDP – this ranks fifth in the OECD:

(Source: Government Budget Deficit/Surplus List | tradingeconomics.com)

Rapid inflation recovery

Australia’s inflation is now 3.40%, down from 6.12% when the current Government took office in May 2022 and down from 7.48% one year ago.

In contrast, the United Kingdom, Ireland, New Zealand, Norway, Sweden, Mexico, Austria and Estonia all have inflation above 4%. Worse still, Iceland and Columbia are above 6% and Turkey is above 60%.

So while most Australians today would like more spending money and lower prices, that has been true of every generation since the First Fleet.

Jobless still at record lows

Unemployment was 4.06% in January, maintaining Labor’s record of 21 consecutive months with the jobless below 4.4%. This is the first time this has happened since the ABS began collecting this data in 1978.

Among the 38 OECD members, Australia is now back in the top ten on both jobless rates and youth unemployment.

Share of the pie going to workers and owners

Here we see an intriguing feature of Jim Chalmers’ economy. While emphatically redressing the historic imbalance in the share of national income by favouring workers, the Treasurer still respects and protects the business sector.

Compensation paid to employees in 2023 was 9.02% higher than in 2022. That follows the 9.23% lift the previous year. The last time workers enjoyed two years of income surges above 9% was when Bob Hawke was Prime Minister in 1989 and 1990. So Australia is in another period of historic redistribution, arguably long overdue.

And yet the stock market reached new all-time highs five times in the last two weeks, driven by record corporate profits.

Productivity languishing

The one disappointing variable under Albanese and Chalmers so far has been labour productivity, which surged during the COVID-19 pandemic and then declined significantly for five straight quarters beginning in the second quarter of 2022.

From a low of 94.4 index points in last year’s June quarter, this recovered to 95.3 in September and rose again in December to 95.8. Although this is well below the peak of 101.3 in the 2022 March quarter, the trajectory is now upwards.

Credit ratings

Finally, Australia enjoys the world’s highest issuer credit rating with all three major credit rating agencies — a rank it shares with only eight other nations.

So here’s the question. How many economies in the entire world are in budget surplus, have the top credit ratings, have their jobless below 5%, inflation below 4% and achieved positive growth every quarter last year?

The answer is just the one — Australia. So it’s not such a bad tableau.

But those who get their “news” from the mainstream media will never see it.

Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.

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