As Treasurer Joe Hockey ramps up to present his second federal budget, what is the current state of play? Has the Coalition lived up to its reputation of responsible economic management?
Crikey takes a look at 20 key indicators, and the results are not going to make Joe dance with joy. Most indicators used by economists, businesses and consumers to assess economic health have deteriorated badly under the Coalition government. This list of 20 key variables is not exhaustive.
1. Economic growth
The rate of gross domestic product (GDP) growth through 2014 was 2.5% This is below 2.7% in 2013 and well below 3.1% in 2012. Significantly, Australia has fallen behind many comparable countries, including Canada (2.63%), Sweden (2.7%), USA (3.0%) Norway (3.2%) and New Zealand (3.5%). Australia was well behind regional trading partners Indonesia (4.71%), Malaysia (5.8%), the Philippines (6.9%) and China (7.0%).
2. Income
Alarmingly, Australia’s real gross domestic income has dropped for the last three quarters. From $387.9 billion in March last year, it has slipped to $386.5 billion in December. (ABS trend figures, Table 1, column V).
The only previous times there have been three consecutive quarterly declines since the 1950s were during the 1961 credit squeeze, the 1977 downturn, the global recessions of 1982 and 1991, and the global financial crisis (GFC) in 2009.
3. Gross domestic product per capita
More alarmingly, Australia’s GDP per capita has declined for two straight quarters. One of the most resilient upward curves, this indicator has only deteriorated for two or more consecutive quarters twice since the series began in the Whitlam years. They were the 1991 global recession and the GFC in 2009. (ABS trend figures, Table 1, column AA. The seasonally adjusted figures, column BK, show December marginally above the September quarter, but still below March.)
4. Debt
Net debt in Australia left by Labor in 2013 was $178.1 billion. At the end of March this year, less than 18 months later, it had blown out by 40.4% to $250.1 billion.
Debt is still nowhere near worrisome levels, but it is moving swiftly in the opposite direction to that promised.
5. Deficits
According to the ABC fact checkers, deficits over the forward estimates had doubled by April 2014 over the levels bequeathed by Labor. Since then, revenue losses and increased spending suggest the deficits may have deepened further. We await confirmation in next week’s budget.
6. Interest rates
By Treasurer Joe Hockey’s own reckoning, this is a major failure. He said in 2013 “if interest rates come down today, it is because the economy is struggling, not because it’s doing well”. That was when the rate was cut to 2.5% — where it remained for 19 months. Within six months of Hockey taking charge it fell to 2.25% and was cut again to 2.0% this week.
7. Unemployment
Seasonally adjusted, the jobless rate has fluctuated between 6.1% and 6.3% for the last 10 months. This is well up on 2012-13 levels between 5.1% and 5.7%. (Table 2, column AB).
8. Looking for full-time work
For the last 12 months this has been at 2.8% or 2.9 % of the population. This is the highest level since September 2009, at the depths of the GFC. In 2012-13, this ranged between 2.4% and 2.8%. (Table 2, column AK).
9. Job participation
This has been stuck at or below 64.8% for the last eight months. The 2012-13 range was 64.9% to 65.2%. (Table 02, column AE).
10. Household savings
From a trough in 2009 and 2010 GFC, savings grew steadily through the Gillard/Rudd years to peak at $25.03 billion in March 2012. The figure fluctuated until September 2013 when it was $23.96 billion.
Since then, savings have dropped in all five quarters under the Coalition. In December, the level was $22.73 billion, a decline of more than 5%. (Table 20, column AL).
11. Business confidence
The Abbott government started with a healthy 12 on the ANZ Bank monthly index, well above the negative numbers in parts of the Labor period, but below Labor’s 2010 peak of 19.4.
It has been downhill from there. The level dropped to six for the three months straight after the election, fluctuated between five and 10 for the next 10 months, then plummeted to one in November last year. This year it has registered three, zero and three.
12. Economic freedom
Measured by the Washington-based Heritage Foundation, economic freedom was high in Australia throughout the Labor years, ranking top in the OECD and third in the world behind Hong Kong and Singapore.
During the 2015 ranking, however, Australia slipped 0.6 of a point and lost third spot to New Zealand. The foundation highlighted declines through 2014 “in investment freedom, freedom from corruption, and the control of government spending”.
13. Infrastructure
Public sector engineering construction fell a staggering 19.46% in 2014 from 2013 levels. This is the greatest decline year-on-year since the ABS series began in 1986. (Table 3, column K.) This is down more than a quarter from the level in 2012, the year Australia was awarded Infrastructure Minister of the Year by the London-based publication Infrastructure Investor.
14. Building activity
The value of non-residential buildings constructed in 2014 fell from the previous year by an astonishing 11.3%. The only other decline since this series began in 2000 was in 2010 at the depths of the GFC.
Figures for early 2015 show no sign of improvement. The aggregate for the last two months, February and March, are the lowest since 2005. (Table 51, column BF.)
15. The Aussie dollar
Historically, within 10% of the US dollar has been considered optimum. For most of the last four years under Labor, this was maintained.
Under the Coalition, however, it dropped below 87 US cents in January 2014, below 80 cents in January 2015 and below 76 cents in April.
16. Terms of trade
This measure — reflecting the relative price of exports in terms of imports — has retreated markedly in the last 12 months, falling from near 100 at the 2013 change of government to a lowly 87.9 in the last quarter of 2014.
17. Taxation
Finance figures for March show the government is on track to collect $362 billion in tax revenue this financial year. That is 6.0% above the actual collection of $341.6 billion in 2013-14. That, in turn, was 4.7% higher than the $326.4 billion in the last full year under Labor, 2012-13. This is clearly a high-taxing regime.
Those are the negatives, leaving very few positives. Among these are:
18. Inflation
According to the ABS, this remains within the target band at 1.3%.
19. Productivity
This picked up at the start of 2011 and has continued to rise every quarter since.
20. Credit ratings
Australia has kept the triple-A ratings with all three agencies. But with warnings. Fitch noted in March that “the fiscal position is sensitive to a marked deterioration in economic conditions, especially without offsetting policy measures”.
All this sharpens interest considerably in next week’s federal budget.
All of this is wrong. Scott Morrison said last night it was Labor’s fault. I heard him.
It is the Economic Management we had to have..!!
It appears the LNP adults are managing the economy well. As for all the bad statistics and news, it’s still all DE LABOR PARTY DID IT / FAULT, and the voting sheeples will fall for it come next election.
I think people have already given up on this government regardless of what happens next Tuesday.
Can you please explain how, in the face of these data, the Tories continue to be presented as the “better” economic manager. The only explanation I can think of is the relentless propaganda of the Tory press which, as in so many areas, prefers its own version of he truth.