Despite the current world economic recovery, Australia's gross debt has reached eye-watering levels and household income plunges to record depths with no relief in sight. Economics correspondent Alan Austin reports.
JUNE HAS offered no joy for Australia’s wage earners, welfare recipients and families.
Misery for the majority was reflected in household income, household savings, underemployment, infrastructure investment, economic growth and total debt. That’s according to the Bureau of Statistics (ABS) March quarter finance and wealth figures and monthly data for June — just released.
Income fell again in the March quarter to $278.6 billion, after a significant fall the quarter before. Using ABS household numbers, household disposable income is now $29,640 per household per year. That is down from $31,960 six months ago. It is well below the $31,650 at the end of 2013.
The decline over the six months for the whole population was a staggering $20.4 billion. That is the largest dollar decline in history and the steepest percentage drop since the 2002 recession.
Household net savings increased by a puny $7.69 billion in the March quarter this year. That is the lowest rise since June 2008.
The total increase for the 12 months to the end of March was just $57.94 billion, the lowest since 2008-09, when the global financial crisis (GFC) was beginning to take its toll.
Total national savings
This was just $12.95 billion for the March quarter, the third quarter below $13 billion since Scott Morrison has been treasurer. The previous time was March 2010 at the depths of the GFC.
Total national savings for the four quarters to the end of March were just $63 billion, a fraction above the $59.94 billion for the previous year. The last time Australia had consecutive years this low was 2005 to 2007.
Investment in capital projects has stalled under the Coalition. Annual expenditure rises have averaged just 3.6% over the last four years. This ABS series has shown substantial growth since the beginning of the mining investment boom — until now.
In May, 711,913 people were unemployed. This makes seven consecutive months the total has been above 710,000. The last time that happened, before the Coalition was elected in 2013, was back in 1997.
The ABS underemployment data showed the trend estimate worsened from 8.7% in December-February to 8.8% in March-May. This means Australians needing to work more hours – in many cases desperately – numbered 1,129,585 in May, the highest in Australia’s history. This is 197,155 more workers than when the Coalition was elected in 2013. (Seasonally adjusted, the May number is 1,129,146, just below the all-time high the month before.)
Australia’s quarterly growth in gross domestic product (GDP) was at or near the top of rankings among developed nations throughout the Labor years. It is now among the lowest.
Of the 35 developed countries in the Organisation for Economic Cooperation and Development (OECD), Australia’s 0.3% now ranks equal 27th.
For the first three quarters of this financial year, Australia’s cumulative quarterly growth has been 1%. That is the lowest first nine months since the recession of 1991.
Australia’s annual GDP growth, now at 1.7%, also ranks 27th in the OECD. This measure reflects the capacity of the economy to generate wealth and income and to provide jobs for workers and revenue for nation building.
Gross government debt
Australia’s gross debt finished the financial year at $501 billion, an increase over the 12 months of $80.6 billion — the highest in Australia’s history. The second highest increase in any financial year was $62.1 billion in Joe Hockey’s first year as treasurer, 2013-14. That contrasts with just $23.4 billion in Labor’s last full financial year, 2012-13.
Disturbingly, the increase in the debt over the Coalition period – now $231 billion – has not been needed to deal with any global recession and has not built any significant infrastructure. Rather, it represents revenue not collected by the Australian Tax Office from the large, mostly foreign, corporations now reaping record profits.
Booming corporate sector
Online stockbroker Commsec reported last Friday (30 June 2017) that over the last 12 months, companies that increased their share prices by more than 75% included Sims Metal, Monadelphous, Seven Group Holdings and Costa Group.
Earlier in June, a Commsec report was headed ‘Record profits. Strongest sales growth in 6 years’.
It boasted that:
‘Company operating profits rose by 6% in the March quarter to record highs.’
So June was a great month for the big, highly-profitable companies. Another dismal month for the majority of Australians. Whether it has been a good month for Malcolm Turnbull and Scott Morrison depends on what they are seeking to achieve — and for whom.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
Scott Morrison pointing the way to a $725 billion debt ceiling. A frightening prospect. pic.twitter.com/R0r7XMAgUw— David Jones (@davidjo555) May 10, 2017
Just the facts. Subscribe to IA.