5 July 2020
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Australia isn't broke so what is there to fix Tony?

Peter Switzer
29 June 2017

By Peter Switzer

The latest pitch of Tony Abbott’s to get back his old job (Battle Lines Mk II, I guess) is basically to make Australia right again. It’s a ‘fix up’ promise and though there are echoes of Donald Trump in Tony’s ‘new’ blueprint for political success, one has to ask: just how broken is Australia?

The political system needs a bit of fixing so his proposal to right the Senate has a lot of appeal but referendums and other such stunts often don’t bring happy outcomes. As a country, when it comes time for us to say “Yes” to change, because the Opposition always opposes, our collective voting computer says: “No!”

On the environmental front, something close to a majority of us think climate change is not a huge hoax (like a lot of Tony’s fans think), though I suspect many have doubts about the predictions of doom pedaled by environmentalists and their academic influencers.

Tony Abbott. Source: AAP

A lot of doubting Thomas-types would be happier if they thought the US and other big polluters were making the economic sacrifices that, we as a small polluter, in absolute terms, are being asked to make.

Yep, I get the relative pollution argument and the example we have to set but the critics of climate change win over many of us when they show how insignificant our sacrifices are to overall climate change compared to the economic effects of us being good, corporate citizens of the world.

But it’s the area of Tony’s concerns that I care most about because it’s my long suit. The economy is really not as bad as the anti-Malcolm brigade would have it. That said, let’s see if the data backs me up.

Here are the latest readings on the economy:

  • Australia’s population expanded by 372,805 people over the year to December 2016 to 24,385,625 people. Overall, Australia’s annual population growth rate rose from 1.547% to 1.553% – the fastest population growth in almost three years. Population growth leads to economic growth because more people means more demand.
  • Employment rose by 133,500 in the three months to May, after a gain of 42,300 in the previous three months. It was the biggest quarterly gain in jobs for over two years.
  • Unemployment fell from 5.7% to 5.5% in May - that’s a four-year low!
  • The Bureau of Statistics (ABS) reports that Australian home prices rose by 2.2% in the March quarter to stand 10.2% higher over the year.
  • “The total value of residential dwellings in Australia was $6,602,132.3 million at the end of the March quarter 2017, rising $163,122.9 million over the quarter.
  • This is what the RBA has to say on our economic outlook: “Economic growth was still expected to increase gradually over the next couple of years to a little above 3 per cent per annum.”
  • Interest rates are historically low and are expected to stay there for some time.
  • Sales rose strongly across the economy in May, according to the Commonwealth Bank Business Sales Indicator (BSI). In trend terms, the BSI lifted by 0.8% in May, with sharp upward revisions to the pace of growth in March and April. And at a sectoral level, 18 of the 19 industry sectors were flat or higher in trend terms in May, after an April result, which now shows all sectors recording gains, and sales rose in all the eight states and territories in May.
  • The ABS reported that new vehicle sales rose by 2.9% in May – the fifth rise in six months. Annual sales of both sports utility vehicles (SUVs) and “other vehicles”, like utes, are at record highs.
  • The NAB business conditions index eased from +12.7 points to +12.0 points in May but the long-term average is 5.1. The business confidence index eased from a 7-year high of +13.2 points to +7.1 points but the long-term average is 5.8. Capacity use rose to a 9-year high of 82.4%, which means equipment, machinery, etc. is now being more fully used, which is a good economic omen.
  • The economy grew by 0.3% in the March quarter, after rising 1.1% in the December quarter. Annual economic growth eased from 2.4% to 1.7%. The economy has not experienced a recession for more than 25 years. Four years ago, Australia passed the Netherlands to secure the title of longest economic expansion by an advanced nation in the modern era. 

I could go on but you get the picture. Australia is doing pretty well and while out debt to GDP has grown, on a government debt to GDP basis we still still have one of the lowest percentages in the western world.

On the worrying side, wages aren’t rising too quickly and business investment has been slow to recover from the end of the mining boom. However, given the fact that we’re creating a lot of jobs, maybe the slow wage rises are actually helping those who, a few months, weren’t even getting a wage. And if businesses are employing, I bet investment in machines, equipment and so on will soon show up in the data.

Sure, you could complain about high house prices, first homebuyers battling property investors and foreign buyers but these prices don’t rise forever — just ask those Aussies in Perth right now.

One economic reading I can’t give you is about the damage that a crazy Senate, an always-opposing Opposition and a disgruntled group of conservative politicians can have on an economy.

I can’t guess accurately but I suspect if the Coalition were united, the elected Senators on the cross-bench played a game where they knew how important getting policies passed to boost the economy and to create jobs was and the Opposition represented the long-term economic interests of Australians rather than the short-term political interests of themselves, then Australia wouldn’t be tagged as being broken in need of fixing.

But to do all that, we’d need a leader of great inspirational qualities, who knows his people and can make them believe that this country and economy is damn good and getting better. He would need to talk them through the current challenges so they would believe that we’d be heading in the right direction.

That’s the task I hope the PM can pull off because if he can’t, we could become the broken down place Tony talks about.

Never underestimate the power of negative thinking, if it’s not unchecked. On the flipside, never underestimate what a positive person can do to KO the prophets of doom.

Gee, I hope Malcolm can pull it off because the economy and our psyche really doesn’t need more instability right now.

The key economic indicator that the PM has to watch to see if he’s cutting the mustard is consumer confidence. If he wins over the Aussie consumer, then it will eventually show up in the polls.

Anyone who tells you that politics is about anything more than the economy is too stupid for words.

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