National accounts mark Coalition 'F' for Fail on the economy

The final report on the Morrison Government’s economic management was a damning indictment of failure, as Alan Austin reports.

LAST WEDNESDAY’S national accounts confirm what voters have apparently already decided — that the Morrison Government was not that great at economic management after all.

In fact, the latest numbers from the Australian Bureau of Statistics (ABS) validate what Independent Australia and other alternative news outlets have reported for at least the last four years — that this has been the worst period for economic management on record.

Economic growth

Quarterly growth in gross domestic product (GDP) for the March quarter was a puny 0.75%, bringing annual growth to a modest 3.35%.

Of the 34 members of the Organisation for Economic Cooperation and Development (OECD) which have now posted March growth figures, the average annual growth is a healthy 5.94%.

The Netherlands, Denmark, Italy and Spain are above 6%. The United Kingdom, Poland, Iceland, Hungary and Austria are above 8%. Ireland, Israel, Portugal and Slovenia are all above 9%.

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When Labor was last in office, Australia had consistently stronger growth than all these economies. Annual GDP growth ranked in the OECD’s top nine through most of the last Labor period and first in 2009. It now ranks 31st out of 38, the lowest ranking ever.

Australia’s economic growth over the last four years is the shallowest of any four-year period on record.

Share of income going to workers

Yesterday’s stats show the share of total national income going in wages and salaries compensation to workers fell to the lowest level on record for any March quarter. See blue chart, below.

Simultaneously, the percentage going to corporate profits hit an all-time high of 31.1%. This confirms election campaign claims that real wages have declined steadily while company profits have soared.

Wages growth

Since Josh Frydenberg (remember him?) became Treasurer in 2018, Australia’s real wages growth has been close to the OECD’s lowest. Wages grew just 2.4% in this year’s first quarter. With inflation at 5.1%, that’s a substantial real wage cut.

Productivity

Productivity remains well below historic growth rates at just 104.9 index points for the March quarter. That’s a smidgeon above the 104.0 six months earlier and confirms a shallow rise from 103.0 points recorded seven quarters ago in June 2020.

Household spending higher than income

Household disposable income rose a puny 0.6% in the March quarter, but was at least an increase. This measure of the well-being of Australian households has bounced around alarmingly over the last four years with three quarters actually negative, including one before the pandemic arrived.

Very little of the March increase reflected wage rises — which are long overdue. The ABS explained that households received $2.8 billion in non-life insurance claims related to floods, which added 0.8 percentage points to the saving-to-income ratio.

This ratio fell from 13.4% to 11.4% as the increase in household spending outpaced growth in household income.

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Record commodity prices and record mining profits

The terms of trade rose 5.9% in the March quarter with exports and imports both up strongly.

As the ABS explained:

‘High demand for Australia’s mining and rural commodities amidst supply constraints in other producing nations and global uncertainty contributed to the rise in export prices. Mining operating surplus rose 14.7% to reach $69 billion, reflecting strong commodity prices across coal, LNG and iron ore.’

Continuing record debt

The last Treasury report before the Election showed the Coalition added a total of $616.8 billion to Australia’s gross debt over its journey. That contrasts with just $213.2 billion added by the previous Labor Government — nearly three times the quantum, but without a long-term global financial downturn. And with no infrastructure assets to show for the outlays.

Since 2012, Australia has added more gross debt to GDP than any developed nation except Costa Rica. Australia has tumbled from ranking fourth in the OECD on gross debt to GDP in 2013 down to ranking 19th today. See pink graph, below.

Record trade values

The reason these dismal outcomes on economic growth, wages, household income, productivity, debt and other indicators are so appalling is that exports of commodities to China and elsewhere are in a phenomenal boom. See grey and green chart, below.

If the government of the day had ensured a fair share of the vast wealth being shipped offshore was retained for the benefit of Australians, its coffers would be overflowing. They aren’t.

Media gets a dunce cap also

Last Wednesday’s outcomes not only judge the Coalition harshly but condemn those in the mainstream who insisted Morrison was the main man for money management.

The editorials of most mainstream daily newspapers in Australia supported the return of the Morrison Government at last month’s Election. Exceptions were The Age, The Sydney Morning Herald, The Canberra Times and The NT Times, the last being the only Murdoch outlet to do so. Most editorials falsely asserted the Coalition was managing the economy competently.

Leading the pro-Coalition campaign was the ABC’s Leigh Sales who told viewers in her election-eve 7.30 interview with Anthony Albanese that:

“Surely it’s hard to dispute that the outcomes for Australia are among the best in the world and Scott Morrison was the bloke in charge of that.”

That was a statement, not a question.

No, Leigh, Australia now ranks 31st out of 38 developed countries on economic growth, down from the top nine a few years ago. It is near the bottom in most other key outcomes. Your bloke delivered that. Please look at the actual data.