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Andrew Bolt is wrong on the economy and the budget

Peter Switzer
18 April 2016

By Peter Switzer

One of my nightly commitments after I finish my TV show at 8pm is to listen to my colleague Steve Price and his sidekick Andrew Bolt on 2GB, 4BC, 3AW and a host of stations around the country. When politics heats up, like it did last night, with the Senate bringing on a double dissolution expectation, it’s always instructive to hear the thoughts of one of the country’s most right-wing thinkers.

Andrew is also set to have his own show on the Sky News Channel, so he’ll be a colleague of mine there too, so it makes me want to ask: “Whose giving him his economic briefings?” They’re way off beam, way too negative and it means he was telling his radio audience that the upcoming Budget will be all bad news. He thinks there’s no money as well so he can’t see any scope for positives to come out of Scott Morrison’s mouth on May 3, the new day for the Budget.

In case you aren’t a Bolt follower, Andrew was a mate of Tony Abbott and has never shown a great passion for Malcolm Turnbull. Malcolm is too left-leaning for Andrew, being a climate change believer, an ABC supporter and someone who hasn’t appeared on 2GB since becoming PM!

Andrew even argued to Price last night that there are some conservative members of the Liberal Party, who’d live with an election loss to Labor to wrestle back their influence over their beloved political party. Price found that unbelievable but Bolt insisted there are significant Liberals out there who hold this view.

Anyway, that’s just background before I test Andrew’s regularly referred to challenged economy, which we live in right now and which will be the foundation for the Budget in two Tuesday’s time.

So here’s the latest on the economy:

  • The last economic growth number we got was a 3% result, which was way over the 2.5% level many economists predicted. If you take the last six months and multiply those two quarters of growth, you get 3.4%. That’s the preferred measure of the Reserve Bank.
  • Unemployment defied critics, dropping from 5.8% to 5.7% in March. This time last year, economists were telling us to hold our breath for a 6.5% top out for the jobless rate. This is not a sign of a terrible economy and, combined with the growth number, says Joe Hockey’s last Budget, combined with a lower dollar, has really helped our economy.
  • In the year to March, a total of 235,300 jobs were added, which again looks like a pretty good economy.
  • Job advertisements rose by 0.2% in March, after falling by 1.2% in February. Job ads are up 10.7% on a year ago, which has to be a plus going forward for the economy.
  • The NAB business conditions index rose from +8.2 to +12.3 points in late March – an 8-year high. That says businesses are feeling good about being in business now.
  • The NAB’s business confidence index rose from +3.4 points to +6.1 points. This says the future is looking pretty good, despite what doomsday merchants are arguing.
  • The average credit card balance rose by $52.30 (1.7%) to $3,166.60 in February, which is a big jump and says something positive about consumers’ willingness to spend.
  • Tourists from mainland China and Hong Kong rose to a record 1,326,076 over the past year (up 23.5% over the year) and just shy of tourists from New Zealand (1,326,851 visitors over the past year).
  • Total new loans (personal, business, housing & lease) rose by 3.5% in February, after a 3% fall in January. Lending was just 5.5% shy of the 7½-year high recorded in September. Total lending is down 0.7% on a year ago.
  • The Australian Industry Group Australian Performance of Manufacturing Index increased by 4.6 points to 58.1 in March of 2016 from 53.5 in the previous month, taking it to its highest level since April of 2004 
  • The average credit card balance rose by $52.30 (1.7%) to $3,166.60 in February. 
  • The Westpac/Melbourne Institute index of consumer confidence fell by 4% in April to 95.1 – a 7-month low. A reading of 100 is the dividing line separating optimism from pessimism. This is a worry but the figure can jump around on concerns such as an early election. 
  • Dwelling starts fell by 5.1% in the December quarter after lifting by a revised 2.3% in the September quarter. Work started on a record 220,845 new dwellings over the year to December, well above the decade average of 164,317 dwellings. And we know builders aren’t fast workers so there should be plenty of jobs and demand from builders over the next year or two, which is good for the economy.
  • Dwelling approvals rose by 3.1% in February, after falling by 6.6% in January and rising by 8.1% in December. 
  • Retail sales were flat in February after a 0.3% lift in January. Annual spending growth eased from 4% to 3.3% – the weakest annual growth in 2½ years — but the number is still pretty good. February is never a good month after we’ve spent madly over Christmas.

My final point

In the 12 months to February 2016, the budget deficit stood at $36.1 billion (around 2.2% of GDP), down from $44.7 billion in the year to January and the lowest rolling annual deficit in almost two years (since April 2014).

And furthermore, The Department of Finance says the underlying deficit for February was $743 million lower than the ‘profile’ forecast and “primarily relates to lower than expected cash payments and net future fund earnings, partially offset by lower than expected cash receipts.”

As you can see Andrew, while there are some worrying spots, such as consumer confidence and retail sales, home building looks good for a year or two, businesses are positive and the big growth and job numbers are very positive.

And overnight, Wall Street didn’t react badly to the failed Doha oil meeting and the oil price didn’t fall too much, so it looks like stock markets might not be too sensitive to lower oil prices, which is a plus for our stock market and our super returns.

And even China’s latest economic data surprised China-haters and explains why our stock market didn’t sell off yesterday, when other Asian markets fell on the Doha news.

All up, this Budget is going to be set with a pretty good economy, which means there could easily be some good news. And don’t forget that Australia’s debt to GDP, while too high, is one of the lowest in the western world.

Hope that helps, Andrew.

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