Can the collapse of Australia's economy be slated home to Joe's cluster cock-ups or is it a failure of the Coalition's neo-liberal ideology? Alan Austin delivers his customary forensic assessment of our former treasurer.
BY HIS own criteria, Joe Hockey as treasurer has been a disastrous failure. We know from his gung-ho assurances in Opposition what he wanted to do: more jobs, budget surpluses every year, stronger trade, higher profits and, of course, eliminate the terrible debt.
The tally of specific areas of the economy Hockey and Abbott promised to improve comes to 23, if we wade through all their pre-election speeches. So how many of those 23 variables have improved?
The answer is none. Zero. Zip. Null set. Not a single one. The data is conclusive: 23 out of 23 failures.
Hockey said in 2013:
“It will be my number one imperative to safeguard the economy against a significant downturn and to turbo charge economic growth and jobs.”
"It will be my No.1 imperative to safeguard the economy against a significant downturn and to turbocharge ... growth and jobs." - Joe Hockey— news.com.au (@newscomauHQ) June 24, 2013
1. Economic growth: heading for recession
Growth under Labor for the year to June 2012, according to the Australian Bureau of Statistics (ABS), was 3.8%. Not bad. To June 2013 it was 2.2%. After the change of government, it rose to 2.7% in June 2014, but fell back to a dismal 2.0% in June this year. It is likely to have fallen further in September.
2. Unemployment: rising
This calendar year, the seasonally adjusted jobless rate has fluctuated between 6.0% and 6.4%. This is well above the 2013 range, before the last election, between 5.4% and 5.8%.
3. Debt: up 60 per cent
Labor left a net debt in 2013 of $178.1 billion, an amount Abbott and Hockey described as “spiralling out of control”. They said they could reduce it by $30 billion. Finance Department figures released last Friday show the debt projected for this financial year is $285.8 billion — up $107.7 billion on Labor’s “disaster”, or 60.5%.
4. Budget deficits: no end in sight
These are not just much higher than Labor’s, but the variations from estimates – for which Wayne Swan was pilloried mercilessly – have also been worse. Deficits under Labor varied from Treasury projections by between 25% and 40%. The projected deficits under Hockey have been astray by far more.
5. Balance of trade: new record lows
“This Government’s wilful disregard for Australia’s interests is demonstrated clearly in the area of trade.”
When Hockey condemned Labor with that falsehood in June 2013, that month’s trade deficit was -$475 million. ABS figures this month show the deficit has been greater than -$1,000 million every month this year and greater than -$3,000 for three of the last five — setting new all-time lows.
6. Income: record falls
“Without a significant improvement in our productivity growth ... we are facing the slowest decade of national income growth since the National Accounts were first introduced in the 1950s. That is not acceptable to the Coalition.”
That was Hockey’s complaint in December 2013. Under his regime since, Australia’s real net national disposable income stopped growing altogether. It has actually fallen for the last five quarters. This is the first time since the series began in 1973 there have been five negative quarters together. Not even during Paul Keating’s recession we had to have, or the GFC.
7. Wages: lowest recorded increases
Wages are growing at their slowest pace since levels were first recorded in 1997. The rise for the year to June was just 2.3%. The rise in the year to June 2013 was 2.9%. And 3.8% back in 2012.
8. Company profits: falling
In the June quarter this year, company gross operating profits fell by 1.9%. Over the full year to June 2015 the cumulative decline was 3.9%. For the same quarter in 2013, the increase was 3.1% for an annual 1% lift.
9. Higher taxes
Budget papers show the Government expects to collect $385.3 billion in taxes this financial year. That is 6.9% above last year’s $360.4 billion. And 10.4% higher than Labor’s $326.4 billion take in 2012-13.
Taxes are higher both in dollars and as a percentage of GDP — the opposite of what Hockey promised.
10. Construction: worst decline on record
“Our growth package will stimulate the construction sector and create thousands of jobs as the economy transitions from resource-led growth to broader-based growth. This new infrastructure will drive and support the next wave of national prosperity.”
That promise in Hockey’s first Budget speech has been shattered spectacularly.
ABS figures show all sector engineering construction fell from $129.0 billion for the year to June 2013 down to $124.0 billion to June 2014. It declined even further to $106.4 billion for the year to June this year. That staggering drop of -14.2% is the worst annual decline since the series began in 1986.
11. Global competitiveness: slipping
The World Economic Forum’s Global Competitiveness Report ranked Australia 20th out of 144 countries in 2012-13. The ranking fell to 21st in 2013-14, then to 22nd in 2014-15. Problem areas included infrastructure, innovation and – surprise – economic management.
Four further Hockey fails were analysed here at Independent Australia in July:
12. Youth unemployment: defying the global trend
13. Terms of trade: disastrously down
14. Interest rates: below optimum
15. Economic freedom: fallen behind New Zealand
Rounding out the 23 are:
16. Job participation
17. Long term unemployment
19. Infrastructure development
20. Business confidence
21. Small government
22. Government spending
23. Government waste
Hockey has clearly flunked every single challenge he set himself. But what makes this bizarre is that he had absolutely everything going for him: a healthy set of books at the changeover, a strengthening global environment, a public mandate for reform, a strong majority in the lower house, a Senate keen to support sound legislation and an extraordinarily benign press.
Whether his replacement does any better will be the test of whether Australia’s economic collapse is due to Hockey’s incompetence or a failure of the Coalition’s philosophy. We shall soon see.
Meanwhile, let’s hope Joe is at least average as a diplomat.
You can follow Alan Austin on Twitter @AlanTheAmazing.
The author will provide of ABS file numbers and other data sources on request.
He is available to engage with readers on any aspect of this analysis.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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