Confronted with growing job queues, increasing poverty, record deficits and burgeoning debt, Morrison and Turnbull are looking more and more like rabbits caught in the headlights. Alan Austin reports.
UNIMAGINABLE SIX months ago, it appears Prime Minister Malcolm Turnbull and Treasurer Scott Morrison are handling Australia’s once robust economy more disastrously than their hapless predecessors.
Findings published yesterday show Australia is coming a dismal last in recovery from the global financial crisis (GFC) within the Organisation for Economic Cooperation and Development (OECD).
This coincides with the release yesterday of a list of Morrison’s multiple humiliating back-downs on taxation in just six months and yet another back-flip — on the backpacker’s tax.
Taken together, these paint a disastrous picture of current economic management at a time of global resurgence. This sharpens interest in the forthcoming May federal budget.
Analysis in another online publication yesterday examined progress over the last two years by all 34 wealthy OECD members on six critical economic indicators — jobs, economic growth, productivity, balance of trade, wealth and debt. If this sounds similar to Independent Australia’s annual IAREM analysis, it is. But yesterday’s report uses fewer variables and is confined to the OECD. It applies the simple and readily replicable assessment of whether each country has advanced, maintained its position or deteriorated on each of the six variables.
No economy advanced in all six areas. So clearly the global recovery is patchy. The stand-out was Ireland which advanced on five of the six indicators, missing only wealth. Nine nations improved in four areas — the Netherlands, Italy, New Zealand, Israel, the Czech Republic, Poland, Hungary, Luxembourg and Slovakia. Eleven economies improved on three variables and another 11 improved on only two.
One country – Portugal – experienced just the one area of improvement in employment. And one country alone – Australia – failed to improve anywhere.
Australia was also the only country to record deterioration in more than three areas. It is failing in five — wealth, productivity, trade, jobs and debt. GDP growth remains steady.
The analysis does not claim that the state of Australia’s economy is the worst in the OECD. It isn’t. As the latest IAREM report shows, it was still in the top ten in December. This latest research simply examines trajectories. Clearly, Australia’s direction and rate of change on the critical variables is the worst in the OECD.
This is a dramatic turnaround from 2008 to 2013. Through the global financial crisis Australia alone maintained economic growth, avoided widespread job losses, increased productivity, expanded its trade and grew incomes and wealth.
Disturbingly for Turnbull and Morrison, the data confirms Australia’s economy has worsened significantly since they replaced the discredited Tony Abbott and Joe Hockey in September.
Debt has increased at a higher rate. Actual employment, measured by hours worked per person per month, has fallen. December’s trade deficit at negative $3,524 million is in the four worst in Australia’s history. Wages are rising at the lowest rate since the GFC in 2009.
Productivity may be the one positive for the current regime. After an extraordinary 17 straight quarterly rises beginning in early 2011, productivity slumped in the second and third quarters last year. This typified the failure of the Abbott/Hockey experiment. This was one of the most repeated complaints by Tony Abbott in Opposition. “Everything comes back to productivity”, he said in September 2011. Yet less than a year after his first budget, productivity crunched into reverse.
In the 2015 fourth quarter it recovered slightly, the only positive in six months.
Clearly, the action urgently needed to return Australia’s economy to the best-performed in the OECD – which it was until 2014 – have not been taken. These include curbing wasteful spending, encouraging local enterprise, restoring fractured relations with trading partners, fixing the superannuation rorts and getting the big corporations to pay tax.
The Labor Opposition appears to be ramping up its attacks on taxation, although the mainstream media are taking little notice.
Shadow treasurer Chris Bowen yesterday asked Morrison “to consider his position” in light of five specific Coalition back-flips on taxation. These were:
- Morrison’s well-publicised “concerns” with the “excesses” of negative gearing, but failure to act,
- his attacks on Labor’s proposal to increase tobacco excise which he now seems likely to adopt,
- his attacks on Labor’s policy on superannuation tax concessions which he also now appears set to enact, at least in part,
- his proposal to increase the GST rejected by the prime minister in January, and
- his assurances that he is “quite passionate about” bracket creep — but refusal or inability to act.
Finally, a sixth back-flip on tax emerged yesterday when the Government agreed to review its so-called backpacker tax, scheduled to take effect in July. Turnbull has authorised tourism minister Richard Colbeck to negotiate an alternative to the plan to scrap the $18,200 tax free threshold for overseas workers and tax all earnings instead at 32.5 cents in the dollar. If this goes ahead, tourism and the cost of seasonal labour will almost certainly suffer.
Given all this disarray – not to mention growing job queues, increasing poverty, record deficits and burgeoning debt – the next Budget will be critical for the nation’s future.
So will the decision on whether or not to call an early double dissolution election.
Cartoon of Scott Morrison courtesy of John Graham. You can order other cartoons of John's from the IA store here.
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"It took Joe Hockey two years to crash and burn. It's taken Scott Morrison six months. Impressive," Mr Bowen said.— Ewart Dave (@davidbewart) March 16, 2016
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