Australians are now poorer, in greater debt and with fewer job prospects — Alan Austin analyses Australia's miserable economic trajectory under the Abbott-Turnbull Government.
BEING THE MONTH the government announces its excellent plans for a rosy future for all, May is usually a time of optimism and celebration. With or without cigars.
May 2016, however, delivered far more bad news than good.
The actual data released by the Australian Bureau of statistics (ABS) and other agencies shows Australians became significantly poorer than they were the month before.
Jobs
Workers with full-time jobs fell for the third month in row. ABS figures show full-time employees are now only 64.6% of the work force an — all-time low.
Actual work hours generated by the Australian economy have fallen substantially since the last election. Throughout the Rudd/Gillard/Rudd period, monthly hours worked per adult ranged between 90.5 and 84.5. Since then, this indicator has dropped steadily. Last September it dipped below 84 hours for the first time since 1994. Then in April, below 83 for the first time. It is now 82.78.
Job participation
The percentage of the population in the workforce fell to 64.8%, annulling all gains since the last election.
Debt
Gross debt for May blew out by a staggering $14.8 billion (just up to 27 May). That is the highest monthly increase in post-war history, greater even than during the depths of the global financial crisis when the Rudd regime was building a new hall in every schoolyard and insulating a million homes.
The increase over the last three months is a staggering $29 billion, bringing the total blow-out since the last election to $160.6 billion. That’s an increase of 58% – up from $277.4 billion to $438 billion – in less than three years.
Interest rates
Joe Hockey affirmed in 2013 that interest rates below 2.75% are an indicator of a poorly-performing economy.
He said ominously,
“If interest rates come down today, it’s because the economy is struggling."
That was when the rate was cut to 2.5% — where it remained for 19 months. Six months after Hockey became treasurer it fell to 2.25% and was cut again to 2% in May last year.
This May, it was slashed to 1.75%, the lowest level ever in Australia. This is disastrous for elderly retirees and others whose income depends on interest on savings.
Trade
The trade deficit announced in May was -$2,163 million, extending the streak of deficits greater than two billion dollars to an appalling all-time record of 13 consecutive months.
Business confidence
The NAB’s business confidence index decreased from six to five in April, well below the 12 recorded in September 2013, when the Coalition was elected. The next figure will reflect how the business community views this year’s budget.
Wages
Salary earners have experienced their worst year for a lift in living standards since records have been kept. The increase in total hourly rates of pay, according to the ABS, was just 2.1% for the year to the end of March. This continues a steady decline in the rate of pay rises since the last election. In the year to September 2013, the rate was 2.6%. This fell to 2.5% in June 2014, then to 2.3% in March 2015.
The minimum wage was increased this week by 2.4% to $672.70 a week. Whether this flows on to an overall rise for all wage earners will be seen after it comes into effect in July.
Economic growth
The one positive in May was the March quarter increase of 1.1% in gross domestic product, lifting it to an annual 3.1%. While better than was predicted with Scott Morrison as treasurer, this reflects a marked deterioration relative to the rest of the world.
For most of the Rudd/Gillard period, Australia’s annual GDP growth was the strongest among developed countries and one of the best in the world. It is now seventh in the Organisation for Economic Cooperation and Development (OECD) and 82nd globally.
Global headwinds?
There is no evidence for the constant claim by finance minister Mathias Cormann and treasurer Scott Morrison that Australia is experiencing difficult global conditions. The opposite is true, as the worldwide surge in GDP attests.
Of the 34 comparable developed economies in the OECD the majority have advanced over recent months on all the above indicators.
Gross debt has been reduced in 19 OECD countries, held steady in one, increased marginally in nine and blown out in only five — including Australia. Job numbers are holding steady in 23 countries, growing in nine and declining in only two.
Trade is buoyant across the world with 10 of the 34 most prosperous nations recording their highest ever trade surplus in the last year or so. Only four countries recorded their lowest: Canada, Mexico, Sweden and Australia. Only two countries cut interest rates to boost activity — Hungary and Australia.
Indicators to come
Analysts now await the next set of numbers on production, productivity, profits and tax revenue. These will either confirm or correct the miserable trajectory of Australia’s economy so far this year. Just in time for the election.
You can follow Alan Austin on Twitter @AlanTheAmazing.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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