Facebook Google Menu Linkedin lock Pinterest Search Twitter

Advertisement

Economy

Feb 16, 2012

Ignore the anecdotes -- jobs growth is returning

The latest jobs figures confirm that th economy is off to a much stronger start in 2012 than last year.

User login status :

Share

Once again the doom and gloomsters and the Hanrahans will have to eat their jobs statistics and reflect on their beliefs about the Australian economy. Strong jobs data from the Australian Bureau of Statistics backs the Reserve Bank’s decision last week not to cut its cash rate. Unless there’s a significant worsening in Europe or the local jobs market in the next few months, you can just about rule out any more rate cuts. In fact, a rate rise might be in the offing later in the year if we get more months like January for jobs

The figures out this morning show that a total of 46,300 full and part-time jobs were added last month, more than offsetting the loss of 29,000 in December that brought forth a wave of handwringing and grim predictions. That was the largest number of jobs for over a year.

The employment data adds to the growing impression that the Australian economy is gathering pace after being whacked last year by the floods and cyclone Yasi in January, the uncertainty from Europe and a slide in business and consumer confidence.

There were strong performance right across the country. A big fall in the unemployment rate in NSW — down from 5.6% to 5.2% — is great news from the country’s biggest state that for so long has underperformed courtesy of a disastrous Labor government. Victoria was steady at 5.1%. Queensland was also steady at 5.4% but there was a big rise in participation, nearly half a percentage point, led by a surge in female participation. WA was also steady — and still the best in the country — at 4.1% but that also saw a big rise in participation, 0.7%.

The unemployment rate, seasonally adjusted, dipped to 5.1% (5.2% on the smoothing trend basis).

There’s been incessant publicity about job losses lately — the 500 jobs lost Qantas today and the 1000 at the ANZ earlier in the week are the latest examples. AAP even produced a table of recent job losses this morning showing roughly 6000 jobs lost or could be lost. Every one of those losses have generated headlines, grim productions, moans and groans from unions, employers and those involved. And everyone represents a real person facing dislocation.

But as Ross Gittins pointed out in an excellent piece yesterday, anecdotes don’t tell anything like the full story. Compare those 6000 to the 12,300 full-time jobs created in January and the more than 46,000 new jobs for the month. There are no anecdotes floating around about those.

The jobs market is weak in sectors like finance, retailing and some areas of manufacturing. But it is strong in others (and sometimes it’s strong in some sub-sectors of retailing and manufacturing, too). That is constantly overlooked by the jobs alarmists who overcook the numbers or the trends in the economy.

The January numbers also reversed the trend in December, when it was the absence (or, rather, non-seasonal appearance) of part-time jobs for females in the group 15 to 24 that helped produced the sharp drop in that month. “The increase in seasonally adjusted part-time was driven by an increase in female part-time employment whereas the increase full time employment was driven by an increase in male full-time employment,” the ABS said.

The ABS reported an increase in the labour force participation rate, which has been trending lower since the end of 2010: 0.1 percentage points in January to 65.3%. In fact, the economy generally has started 2012 much stronger than a year ago when it was flattened by the supply shock and boost to inflation delivered by the floods and cyclone.

While Europe is still a big concern (and why the market tanked this morning), the economy is solid, as new RBA Deputy Governor Phil Lowe said in his first speech for 2012 in Sydney:

“… the Australian economy started 2012 in relatively good shape. Growth has been around trend and inflation is consistent with the target, and there are reasonable prospects for this to continue. We also have much more flexibility to deal with unfolding events than almost any other developed economy.”

There’s a slew of data to back this up. There was a noticeable pick-up in housing finance in December, after the two rate cuts, but it’s still at multi-decade year lows according to some measures. While retailing is sluggish, it is not a disaster area that many media writers and industry players would have us believe. Women’s fashionwear retailer Noni B lifted profit by a bit more than it expected in the six months to December; The Reject Shop (which was nearly knocked out by the impact of the floods a year ago, closing a just-opened distribution centre in Brisbane) lifted profits in the tough December half-year and expects to lift them again this half and open seven new outlets.; consumer electronics retailer JB Hi Fi wasn’t consumed by the slide in TV prices, the rise of the dollar or weak demand: it survived and reported results slightly better than expected for the December half-year.

Car sales rose in January, which had the best start to a year for five years (since 2007). Online group Carsales.com.au lifted profit 20%.

And Westfield Retail Trust, which owns 50% of the Westfield malls in Australia, along with parent Westfield Group, reported solid profits and a perk-up in sales in December throughout its 55 malls across Australia and NZ. Some sectors were weak, particularly in Sydney, but the group expects sales growth to continue this year.

None of this is evidence of the sort of gloom that appears to grip so many commentators for whom the simple economic narrative is that the mining sector is doing fine by the high dollar and higher bank funding costs are wrecking the rest of the economy. The data simply doesn’t show that, regardless of however many anecdotes emerge about job losses.

Get a free trial to post comments
More from Crikey

Advertisement

We recommend

From around the web

Powered by Taboola

61 comments

Leave a comment

61 thoughts on “Ignore the anecdotes — jobs growth is returning

  1. The great challenge of this area of economic management is that it is better for everyone if resources can move to to where the need is but the people whose role is redundant bear all the pain. And they’re the ones covered forensically on the evening news. The pain suffered by redundant workers is what gives economic rationalists a bad name. The economic benefit whish is greater than the loss but spread across many people is not so apparent.

    It is the government’s role to manage the transition as it affects communities. As industries have their heyday and then decline we should not resist the change but manage it.

  2. I agree with Gittins and yourselves that sensational staffing cut stories don’t indicate much of anything. But neither, I submit does ABS unemployment figures. These have been comprehensively rorted over the years to under report the issue. For example, if ABS survey respondents have been employed in a paid or unpaid capacity for as little as one hour in the previous fortnight, they’re counted as “employed”.

    Also, people who may have been retrenched or have otherwise lost their job who have a working spouse on average wages and, perhaps, a few thousand in assets and savings probably won’t (or can’t) register as unemployed because they’re not entitled to any income support or employment service support. The same applies for recent school leavers and young people up to the age of 25 who reside with working parents. Substantial numbers of people in those situations won’t be registered as unemployed so they won’t influence the participation rate making the unemployment rate will look artificially small.

    It’s one thing to ask people not to draw conclusions from sensational headlines, but let’s not swallow the little ABS employment statistics tell us uncritically and ask us to believe we’ve never had it so good.

  3. Perhaps the coalition have forgotten that Ansett Airways completely closed down during their watch? Now how many jobs did that cost?

    “… It is found that due to sectoral multiplier and flow-on effects each job lost in such an important sector leads to a loss of approximately 3 extra jobs in the economy as a whole. The empirical results are broadly consistent with previous studies. Overall, the Ansett collapse brought about an indirect loss of 54880 jobs in 105 sectors of the Australian economy”

    See – Ansett? Discussion Paper No. 137
    By Valadkhani, Abbas
    Google it!

  4. Senior Treasury officials in estimates just said a similar thing today in response to Greens Senator Larissa Waters questioning of mining industry claims of them having a ‘jobs multiplier effect’.

    Dr David Gruen, Executive Director of the Macro Economic Group, stated;

    “In a well-functioning economy like ours, with unemployment close to its lowest sustainable rate, it is not the case that individual industries are creating jobs, they are simply re-distributing them… there really isn’t a multiplier.”

  5. Who are the circulator’s of negative anecdotes prey tell? The usual culprits? I am surprised that this story at least attempts to set the record straight despite the expected standard facetious barbs. No good news story without a few put-downs.

  6. What my be lost on some is that the Oz economy is undergoing a transformation that may end up making Keating’s re-modelling look pedestrian in hindsight.

    There are three significant factor, viz; the economic mess of most of the developed nations, the resources boom and its effects on our dollar and consequently every exposed industry, and fundamental change brought about by technology, largely the internet.

    The days of relying on housing and retail are long gone, and should not be missed. Relying on housing is unsustainable, relying on retail to supply largely unskilled labour is not going to see us enriched as a nation. I won’t be lamenting their reduced impact on the economy.

    Manufacturing is a different proposition. While not subscribing to the idea that we must have a car industry, just because, it seems reasonable to think that a country that can’t manufacture anything is going to find itself in trouble one day, when the mines run out and the farms are barren.

    As others have said, we shouldn’t be stopping it, but we should be supporting those who are suffering in the transition. Most of us will be there one day.

    And in all of this, the most politically inept government for many a day just continues to produce the best policy and reform outcomes that we have seen since Keating, and comparable to no other govt since the war.

    Again, we are the lucky country, muddling through in spite of ourselves, in spite of a hung parliament, a bereft Labor party and a clueless opposition.

    How? I don’t have a clue.

  7. But don’t let our good fortune stop the whinging and the whining, or blowing up when we have to pay for our own health insurance because we earn a quarter of a million dollars per annum.

    Keeping a head held high and being thankful for what we have, well that would be positively unaustralian.

  8. news of the decrease in unemployement on ABC radio (classic FM) actually had the opening line along the lines of… “homeowners hoping for an interest rate cut are set to be dissapointed as lower unemployment figures….”

  9. Hey Jaywhar,
    Yes it’s depressing isn’t it. Typical news coverage says, “Inflation fears as dollar falls!!” on one day followed by “Unemployment fears as dollar rises!!” the next.

    They’re pathetic. Thay of course think they’re clever bcause bad news gets attention but what actually happens is that they’re taken less seriously.

  10. On the other hand,I subcontract for three different retailers with five outlets.These outlets span northern/central Adelaide and forty kilometres south into the hills.So far this year I’ve had scattered days that add up to roughly a fat week,worst start to a year in the twenty years I’ve been in Adelaide. I could do with another GFC.This is worse.

  11. Bernard,

    Before everyone gets too excited, the ABS now includes anyone working 1 hour a week as employed.

    There were 23 million less hours worked in the reporting period.

  12. BOBALOT….and so does Tony for that matter…i also heard from world renowned expert on everything, Eric Abetz, that these figures represent bad news for everybody. Thank God for the thruth from such a sage as eric.

  13. Far be it from me, of all people, to invoke argumentum ad verecundiam but, Dr David Gruen, Executive Director of the Macro Economic Group… with unemployment close to its lowest sustainable rate, and yet the polls show the MM is preferred over the government for economic management!?!??
    A large proportion of this country’s electorate have O/S rels. and connections so they know how fortunate they are to be here and how those rels. would do anything to be able to come here . and yet… and yet…
    A long bow perhaps but I feel it’ll be the soi disant Nu Oz who might save this government – they know, or have heard, what societal collapse means and would be highly unlikely to usher it in here.

  14. @Suzanne Blake: The official definition of “Unemployment” hasn’t changed like you are implying. It’s definition has been the standard for measuring unemployment since about the end of World War 1 when the ILO was formed.

    There are 6 different types of unemployment measured (U1…U6) and the U3 definition for unemployment is pretty much the standard definition for unemployment rate. U3 is (per the ILO definition) occurs when people are without jobs and they have actively looked for work within the past four weeks. This is the International standard for measuring unemployment.

    The only thing that has changed is the name of the unemployment type used as the standard for unemployment. Before 1994 there were actually 8 different forms of measuring unemployment and U5 was the type considered to be the “official rate.”

    In 1994 U3 and U4 were removed and U5 was renamed U3, U6 became U4 and so on.

    The definition of what is now referred to as U3 is identical to the definition of what used to be called U5 and U3 is now considered to be the Official unemployment rate of any country just as it used to be when it was called U5.

    So your attempt to try and portray the name change as some sort of insidious Leftist plot to make the Labor Government’s figures look better has no basis in truth whatsoever.

    U6 is the only form of official measurement of unemployment that includes people working part-time that would like to work full-time. It is still measured by the ABS but at no point will they ever refer to it as the “Official Unemployment Rate” (and it has never been the official rate) because every country on the planet has agreed that the term “Official Unemployment Rate” refers to people without work that have tried to get a job in the last 4 weeks and have done so since World War 1.

    I eagerly await your backpedal or attempt to claim the UN has been fudging the figures to make Labor look good. It ought to be good for a laugh.

  15. @Bobalot it may be that the definition changed while on Howards watch, but it does not change the fact that there was less work available in January compared to December.

  16. Right you are Bernard. I triple guarantee you, there are no American soldiers in Baghdad. We have them surrounded in their tanks. And similarly, all this talk about household debt bubbles and the high Australian dollar is just alarmism.
    Seriously, you should read Alan Koehler, your fellow columnist’s piece from yesterday, he has nailed the issue.
    And I recommend reading This Time is Different by Reinhart and Rogoff.

  17. @Bobalot + Khan: The definition of work didn’t change.

    It has been the same since the end of World War 1.

    The UN changed the designation for what is called the “Official Unemployment Rate” from it’s old label “U5” to its new label “U3” in 1994 but the definition stayed the exactly the same.

    Anyone who doesn’t have a job and has looked for work in the last 4 weeks is considered to be unemployed no matter where in the world you are.

    John Howard, the ABS, Julia Gillard, the “Guv’mint,” etc. aren’t responsible for this, the UN is.

    More specifically the ILO – which is the UN body charged with defining what the term unemployment means – is responsible and they haven’t changed their mind on what employment means since World War 1.

    @Khan the article clearly states that there were 46,300 extra jobs in January. So there was more work available in January than in December not the other way around. In fact there was more work available in January than in November too.

  18. Hey Suzanne…. here is the video of Kim Sattler(Union Heavy) telling Barbara Shaw(Aboriginal Representative) about false comments attributed to Tony Abbott supplied to her by Gillard’s media wing: http ://video.theaustralian.com.au/?2196542421 (minus the space)

    Whats the punishment for inciting a riot again? Prison time isn’t it?

  19. @ Geewizz

    “Suzanne, video of the Gillard Media Wing incited riot and Kim Sattlers(Union Heavy) part in it:

    video.theaustralian.com.au/?2196542421”

    Yes its an open and shut case. Gillard’s Office with her knowledge or without, deliberately wound up Sattler and possibly Shaw, if not directly, certainly indirectly, to create a race riot situation.

    She refused to answer questions in Parliament since this new video emerged, saying she has already made her statement to the public and Partliament and hiding behind the AFP.

    She is now showing more signs of guilt and cover up. I met she was shocked when this new video emerged.

    Shameless ly ing again.

  20. Bernard,

    I’ve put some comments on this issue in response to your editorial. Worth a skim if I say so myself.

    Averages Bernard … and yes there are jobs coming through in mining – my goodness there should be. The hole in the ground sector is going like the clappers.

    Nothing else is.

    This economy should be having major labor shortages, “totally unjustifiable” wage pressure and soaring inflation to boot. But it’s not. Thank heavens.

    There are labor shortages, and wage pressures and obscene living cost hikes … near the mines.

    It is not that unemployment – as an overall total – is rising. It’s not dropping… not in any meaningful lumps. And if ever it was going to drop it would be now.

    You CAN have a booming economy where simultaneously the very boom and its effects exacerbate the existing pressures for structural change in the old, industrialised less efficient sectors. Trade exposed locals and exporters get hammered. It is in effect a reduction in the protectionist cover provided by the exchange rate. It shuts down the steam driven economy.

    And those impacts are not felt as an average. They are felt as a regional, localised, personalised wallop. They are sectoral. The devil is in the detail.

    Bit like market research really. Numbers and generalities can bury a lot of angst in recording improving or static averages. And where that angst is – and on whom these inexplicable changes are imposed – is very politically significant. Labor heartlands. And the aspirational suburbs of subcontractors whose Macmortgages are bolted to the vulnerable and trade exposed industries.

  21. @ GeeWizz

    “Hey Suzanne…. here is the video of Kim Sattler(Union Heavy) telling Barbara Shaw(Aboriginal Representative) about false comments attributed to Tony Abbott supplied to her by Gillard’s media wing: http ://video.theaustralian.com.au/?2196542421 (minus the space)

    Whats the punishment for inciting a riot again? Prison time isn’t it?”

    which is why Gillard refuses to comment now.

  22. The statistics are one thing, but what of the quality of the ‘jobs’, rather, careers current and likely to be available in the future? Will they mostly be ‘service’ sector employment? What is it like for older people finding employment? Perhaps questions to ponder in a ongoing article?

  23. SB and Geewhizz,
    I know this is a complete waste of time but, THERE WAS NO RIOT. The only damage done to the building was done by the police. THERE WAS NO RIOT. If inciting a protest is now going to be a criminal offence then this is a sad day for democracy. The only upside would be seeing Alan Jones and friends go to jail for organising the convoy of incompetence. THERE WAS NO RIOT.

  24. Nick did you watch the video??

    Kim Sattler deliberately attempted to incite a confrontation with Tony Abbott based on mistruths.

    It’s clear for all to see in the video. What is it with Union Heavies and walking the fine edge of the law?

  25. dear nick the hippy,
    please see the attempt at a change of subject as the ploy that it is, to sidetrack the discussion and have it focus on irrelevant things, which are seen as damaging to the government. these posts have nothing to do with the economy or employment, but as the employment figures show the economy is not doing too badly. the neo-cons have no answers for this and cannot use good news to hammer the government so they need to distract and nullify the discussion. i emplore you (and others) to ignore this obvious ploy.

  26. The economy is doing quite well, all things considered.

    The problem is that it’s going to turn pretty sour sometime in the fairly near future, just like the rest of the world, and our current Government is not doing a lot to prepare for that outcome, because they’ve apparently bought the same bullshit line everyone else has: “Australia is different”. We’re not different, we’ve just been (fortunately) held up getting to the party by Mining Boom 2.0. The problem is Mining Boom 2.0 is never going to employ more than a few percent of the population and sends most of the wealth it generates overseas.

    Admittedly Labor are doing a better job than the Liberals, who spent a decade squandering the biggest opportunity this country has ever (and probably will ever) had for prosperity on fostering a real estate bubble and middle class welfare, when they could have been building world-leading public infrastructure and creating a SWF to spread the benefits of the mining boom out over the whole population for a timespan of decades.

    But not being as bad as the last guy doesn’t make you good. It just makes you less worse. Labor don’t have the same opportunities now as the Liberals did, but they’re squandering them nearly as badly.

  27. Suzanne Blake is correct (for once) but overall Australia is surviving quite well compared to the rest of the world as exampled by Spain which is now being plunged into mass unemployment.

    We all benefit from the mineral’s boom but that is more reason why we should all share in the profits ala a tax that can be used by the government for infrastructure projects etc.

    However surely this article diverts from the real news of the decade- will he or won’t he (as in Kevin Rudd )?.

    The SMH is now frothing at the mouth and unless this question is answered heads will begin to explode in news rooms all over the country. It’s their story and they want an answer.

    Although one question has never been asked : why would a minority government risk changing leaders when they must rely on 3 Independents for their vote and no-one has bothered to ask them whether they share the love for Kevin?.

  28. Less worse is about the size of it DrSmithy.

    The Coalition’s history of squandering revenue while watching infrastructure struggle to cope with growing demands is a worry for many voters. Using a Senate majority to pass WorkChoices legislation in it’s most strictest form without taking it to the election is an indication that Coalition ethics is also not much to be desired despite all the blubberings about the Carbon Tax ‘lie’ (even ignoring Abbott posed the possibility of a CT or ETS previously).

    The Labour Government has also wasted tax dollars in the disastrous pink batts affair while there were many more projects screaming out to be funded and the elusive VFT remains just that – as elusive as under Howard.

    More evidence that the political landscape in Oz is about smoke and mirrors. Abetz’s performance is just another tick in that box just as almost any politician avoiding answering questions honestly.

    There really is not much choice in such a sad political line-up but it could be worse. Both Lib and Labs have not woken up to the reason why the last election resulted in a minority government, other than blaming the ‘voters’. Is it too negative to say it really is pitiful.

  29. Bluepoppy…

    While there were obvious problems with the delivery of the stimulus package – mostly arising from severely underestimating the number of shonks and grifters that would flock to a government teat – as a point of economic pedantry the outcomes of emergency government spending are rather unimportant.

    Would be nice if we got something useful out of it – but that is not essential. Economically speaking.

    Most of us remember Keynes’ enthusiasm for building pyramids. He also suggested a more culturally appropriate stimulus package:

    “If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.” General Theory Book III S VI

    A curiously biblical layout to Mr Keynes isn’t there? … chapter and verse.

    Now if I was a knuckle-scraping Friedmanite – a consistent enthusiast for Hockeynomics, say – I’d be running the argument that it is actually far preferable for the government to waste money – bury it in old pits – than risk investing in an industry, product or service which would exclude private investors.

    If they were real freemarketeers, they would be far more concerned with the total collapse of the private roof insulation business in the wake of the Canberra batts torrent than any minor political scandals that can be conflated in the gutter press. Young Aussie battlers – crushed by a massive government stimulus. Compensate them – the real victims of this spectacularly successful scandal. Try selling a batt in Queensland today.

    A serious free-marketeer – those concerned with defending their virtue – would be demanding that the government restrict it’s stimulating to the economic extremities and keep it’s hands off the private sector.

    But they’re not serious. They’re politicians.

  30. Economically speaking you are correct Peter Ormonde, if viewing these sorts of programs as purely a mechanism of stimulating growth – but at what cost.

    A stimulus should at least attempt to produce a benefit (other than just a stimulus), and preferably not wasteful. The reality is Australia was already well placed to offset the GFC due to better regulatory mechanisms and a booming mining sector albeit the benefits not felt across all sectors.

    The building industry has always been deemed the most appropriate target, having the widest spin-off effects but I reckon this is short sighted and hardly a wise approach to using resources or as a base to re-thinking our economic approaches in terms of sustainability and free-market blind faith.

    Why not use the money more wisely in other infrastructure and community projects (roads, public transport, measures to ease traffic congestion, reducing elective surgery cues, disability sector, dental care for low income earners etc). These would create a stimulus across a number of sectors.

    Throwing money at consumers ($600) to stimulate the retail sector was equally short sighted and any stimulus would be equivalent to a Christmas run-on that is all over before it starts. Nothing in that stimulus promoted the touted long term goals of job security. It was largely irrelevant in terms of the GFC.

    The schools projects as a stimulus at least provided some schools with long overdue improvements to accommodation even if the lack of oversight and planning led to the same queue of shonks and grifters; and a few projects that could be deemed unecessary.

    However, these sorts of stimulus packages as well as some subsidies tend to create more problems in the long term that I wonder if the short term gains are really worth the pain.

    I am more Keynesian than Friedman (heaven forbid) but it does not have to be all one and none of the other. There is a case for governments staying out of the private sector in many aspects, but a place for governments in providing critical ‘collective’ services which assist in maintaining a higher standard of living. In my experience subsidies such as relate to environmental incentives are well meant but have the side effect of pushing up prices. Much better to contract these services out at a set agreed price if governments must go down the ‘incentivisation’ pathway.

    Equally, many industry-saving subsidies are more of a vote buying exercise in many cases and do not address any of the real economic elephants in the room. These sorts of subsidies tend to favour manufacturing for obvious reasons given the global economic landscape works against these sorts of industries in the developed world. It is bandaid solutions on weeping sores, basically.

    PS: I am not sure Hockey knows exactly what he is – didn’t he advocate for government interference in the highly independent and overpaid Reserve Bank.

  31. Spoken like the slavering socialist you obviously are Poppy!!!!

    When has government spending EVER produced social benefits? It enslaved and impoverishes the middle class, robs us of incentive and grinds our hopes and dreams into a fine paste. And even then we have to have private health cover and send the kiddies to boarding school around the corner.

    For us Orstrayan Tea-baggers, taxation – other than for the purposes of protecting my life and my property – (razor wire, weapons, coppers and the like) is theft. Someone said that once – or was it “property is theft” – yes, that was it. Either way I’m not having that red-haired vixen doing her smash and grab act on me or my property for nuffin! Home invasion!!!!

    “…It was largely irrelevant in terms of the GFC.” You got any evidence for that?
    I reckon Gerry Harvey would be of a different view. So would the kids who got jobs there. Now they are losing them.

    As in the quote above from the prophet Keynes, it’s not what you do with it – its how much you splash about. Some of it – like cash payments – sloshes about quickly and spreads like ripples on a pond. Especially payments to pensioners with all that pent up demand for flatscreens and the baubles of the 21st century. You still whingeing Gerry?

    If you want job security – import a capitalist class from somewhere who knows when they are onto a good thing… who can do something other than manufacture excuses and go begging for handouts when they fall over… again. Someone who knows how to work an edge. You won’t find any here. We don’t do that any more. We just find stuff and dig it up.

    We are typecasting ourselves – or have been typecast – as the world’s quarry… a wide brown Nauru… and as a result we are seeing a pressurewave – a tsunami of global competition – smash into our manufacturing sector – what’s left of it.

    We sell them rocks – they sell us plasmas. That’s a market for you. Dreadful innit?

  32. More Australians are in work than any time in our history.

    True so long as your definition of “in work” doesn’t include “at work”.

    Hours worked have been dropping steadily for months. More people might have jobs, but less work is being done.

  33. Naaaah…not a socialist, more a social democrat and sometimes utilitarian. I could go off on a real tangent and further put it to you that all this talk about jobs is missing the point. Communities are about accessing goods and services and jobs were created to provide those goods and services, first through bartering then along came money. Some of the modern jobs do not produce or create anything, or provide a service.

    Many of them just shuffle non-existent capital around. Remember the 60s and 70s where all the talk of advancements in technology were predicted to improve lives by reducing the number of working hours. What happened?! We are working longer hours due to oft-touted shareholder investment pressures and perceived importance of profits (even if obscene) where staff that have not been downsized are attempting to get the same amount of work done with fewer people. If they are lucky enough to have their jobs and they have not been outsourced OS.

    God help us (if he/she is out there) should we have to fall back on some form of self reliance whether it be manufacturing or agriculture.

  34. Social democrat! Strewth it just gets worse and worse.

    They don’t just shuffle non-existent capital about. They repackaged debt as an asset and sold it to the mugs like it was actually worth something. And the greedy mugs bought it. And Standard and Poor gave it an AAA credit rating. Who would know? Who could guess? And then when it all fell over they went running off to the governments for protection.

    And they are still sitting there – these “assets” – waiting to be written down to the new worthless value… lurking in the notes to balance sheets.

    That’s a bit of a problem with your modern social democracy if you don’t mind me saying. The more you look at it it looks like a strangely corporate sort of socialism … a welfare state for failed capitalists. A modicum of the readies gets sprinkled about amongst the rabble – just enough to keep everything steady – but the great beneficiaries of the State – those with their snouts most firmly in the trough – wear suits and inhabit skyscrapers.

    And all the while we become more unequal… in everything from income to working hours… less fair and more selfish in how we see the world.

  35. PO – lay off Poppy, you’re puching way above your weight. Poor Blue obviously never read the Doonesburys re the ”pop’n’fresh” airheads of the Raygun/Thatch era, aka in the pom vernacular as ‘lodesamoney’ without realising/knowing/caring that tax had to be paid, and NHS, and insurance, and raw materials. Shock horror when the bills arrived.
    Very much like mad Terry McCrann’s stunning defence (in w/e OZ) of the poor, suffering altruistic banks, doing their best for their penurious shareholders with a business model relying upon “over leveraging 15-20 times”. If anyone wants a laugh, followed by deep depression they should read his fatuous para. on buy a $600K house with a $50k deposit.
    Debt bubbles burst. One of the shysters to come out of the 1930’s bathing in champagne was Gulbenkian and, when asked his secret, said “By selling too early!”

  36. Well yes, creating money out of nothing (debt) is part of the problem and it goes a lot deeper than just the fractional reserve system.

    A social democracy, which can take many forms, and is often marked by changes which see less or more government involvement depending on prevailing political trends is the best of a bad bunch.

    A social democracy is not perfect but perhaps the least worst approach – and the one most likely with the right government to fling those noses out of the trough with appropriate regulation and a reduction in middle class (or ‘upper Middle Class’ as Manne puts it) and corporate welfare.

    Social democracy also provides universal health care, education and public ownership of some utilities and services such as law enforcement and emergency services – if one forgets the outsourcing disease and predominance of economic rationalism that seems to have struck some government functions of late. It is odd how those who oppose nationalisation of industry/services of any kind are quite happy to allow foreign investment of resources even when the company is ostensibly a Chinese Government controlled entity. There are numerous oddities, contradictions and discrepancies in much of Right thinking.

    A social democracy is the most malleable and lends itself to a number of permutations. Perhaps that malleability is also a curse but what is the alternative?

    All systems of government, even socialism or the free market libertarians have to navigate and deal with human failings.

    Whatever we end up with it should be far more egalitarian than what we have now. Where wage disparity is not extreme and where the great unwashed (us) wield no influence when compared to that of a priveleged powerful few. How do ordinary folk get the impetus to turn things around. I confess I don’t know other than to keep voting Independents or Greens.

  37. Yes you’re right I reckon Poppy… least worst is probably about as good as we can get.

    Not sure it is up to making the sort of transition required over the next few years. It is a huge challenge and pits us directly against short-term self-interest.

    Unfortunately the rhetoric and dumbing down of the last 20 or so years has so entrenched self interest as the basic foundation of our consumer politics that our competing political brands seem incapable of leading.

    Not sure we can afford the squabbling least bad option. We’ll see. If it can happen anywhere it can happen here. A sensible pragmatic lot here by and large.

  38. Not all social democracies are the same. When running chronic deficits, at some point the deficit spending has to stop. The only other solution to eternal deficit spending is eternal economic growth. It’s a bit like continually adding debt to your household, which is fine if you are getting a pay rise every year. Lose your job, and the chickens come home to roost.

    What we see in Europe is the end game of chronic deficit spending by social democracies. Though high unemployment is an outcome, the cessation of payment for unproductive work is a step forward as it enables the economy to shift investment and resources to more productive areas.

    Of course, the pain of the austerity measures are then born disproportionately by those who lose their jobs and this is a social disaster. It was the avoidance of an outcome like we see in Europe that the ALP government went so hard and early with its stimulous package. Though one can quibble about some elements of its execution, in my view they did the right thing.

    The main difference between Australia and European social democracies is low government debt as a percentage of GDP. We have the Howard government to thank for that.

  39. I suspect a decent vote of thanks goes to the Chinese Politbureau as well David.

    This is an interesting paper from the Treasury looking at the history of Australian Government Debt. Table 5 is interesting. http://treasury.gov.au/documents/1496/PDF/01_Debt.pdf

    As is the comment on page 11 that the debt reductions under Howard/Costello were a result of asset sales. And I would add that some credit should go to an increasing GDP thanks to Beijing.

    Wasn’t so much what we did here … it was the world.

  40. @DR Smithy:

    More lies, damned lies and statistics.

    Australia rates as one of the highest ranked nations on the unpaid overtime stats.

    Stop trying to talk down Australian workers work ethics.

    The reason productivity is dropping is because we are approaching full-employment meaning employers are hiring people they wouldn’t typically hire if they had more choice.

    Productivity will increase when the economy begins to tank and businesses start firing the dead wood.

  41. Australia rates as one of the highest ranked nations on the unpaid overtime stats.

    Some IR reform making it illegal to work unpaid overtime would fix that pretty quickly (along with some of the underemployment problem).

    Of course, business owners and the Liberals (and probably Labor, these days) would be screaming their heads off about it.

    Stop trying to talk down Australian workers work ethics.

    What ? I’m not doing anything of the sort. I’m making the point that there’s not enough work out there to keep current employees busy.

    The reason productivity is dropping is because we are approaching full-employment meaning employers are hiring people they wouldn’t typically hire if they had more choice.

    We are miles away from full employment. Underemployment (ie: people who are ready, willing and able to work but don’t have work to do) is a huge and growing problem. This is happening because our (massively services-biased, another problem) economy – particularly the “everything but mining” economy – is slowing (some would say tanking, but I try to stay positive).

    That is why hours worked is dropping. It’s got nothing to do with unpaid overtime or a poor work ethic. There’s simply less work to be done and employers (to their credit) appear to be reducing worker hours, rather than firing workers.

    Your logic is completely backwards. I can’t even begin to comprehend how you got to the conclusions you did.

  42. Peter,
    Yes, we certainly have benefited from the massive Chinese demand for our resources and the terms of trade that comes from it.

    But surpluses don’t happen by themselves and it takes significant restraint by a government to keep them. We are replete with ideas about what the government should have spent money on, from infrastructure to free dental care. The pressures on governments to spend money on their citizens in order to get re-elected is remorseless and Howard/ Costello, for all your pointing to other very valid factors, persued this as a clear policy option.

    Europe is sinking under enormous government debt and we are not, provided the government doesn’t continue to run the country’s credit card up on the never never.

    By the way, I couldn’t find table 5 in the article you linked to.

  43. Sorry David, I’ll go back and have a look at the paper again and track it down. It was a table of government debt to gdp since 1900. Up and down like a bride’s nightie basically in line with world economic demand for our exports. What we do doesn’t count much. We’re on the receiving end of global conditions.

    It’s debt actually – not just government debt – that is burying European and other countries – not least the US. Not that there’s much choice now other than to to run deficits while the world economy (or at least a lot of national economies) are flat as a tack.

    From memory the Liberals cut about $8 billion in their first term … remember all those “non-core promises”…. living standards and productivity declined while the economy was building up a head of steam with the minerals boom.

    Incidentally smart governments don’t just use spending to buy votes. They make investments in infrastructure or in areas that provide longer term benefits – in the way a dental plan will reduce the demand for other medical and aged care services down the track. Same with railways, public transport, ports … all that sort of stuff. More to it than crude bribery and pork barrelling.

    If you really want to bring on 1929 – start cutting government spending. Exactly the wrong thing to do. Now. Not a big fan of deficits myself – but handy if you need to tread water for a bit.

  44. I saw the chart on govt debt since 1900, Peter. I just wasn’t sure that’s what you were referring to.

    I think government debt is different to private debt. Private debt is riskier and therefore, with the spectacular exception the the USA’s CDOs and NINJA loans, have more rigour.

    The problem with government spending to maintain economic activity is that you can’t do it for ever. The government did the right thing in 2009 because its debt position was so good. The Greeks no longer have that option.

    Though you make a good point about how governments can invest in infrastructure for the good of the future, I do not share your optimistic appraisal of governments’ resistance to pork barrelling. And my side of politics were significant sinners in this area.

    But they did run a surplus.

  45. David,

    “…Private debt is riskier and therefore, with the spectacular exception the the USA’s CDOs and NINJA loans, have more rigour.”

    One hopes this is so. One wishes this is so. One even prays this is so. But even then one remains sadly unconvinced. Those CDO deals – the parcels of interlocking assets and debts onsold became so complex that no one – including the people who actually put them together – had a clue what they were worth, whether that was even positive or negative… let alone the regulators. Black box stuff.

    You’re dead right of course David – you can’t go on pump priming and borrowing forever. Nor would you want to if you get the economy and the taxation settings right. At some point private sector investment recovers and the stimulus can be backed off, the revenue gained from economic growth pays off the debt and we chug on.

    That’s the plan anyway. It would just be a comfort if some – any – of the private investment currently happening actually created some jobs other than in the far flung dustbowls of the Kimberly. But for the most part on the Eastern side of the country, any increased economic activity seems to mean more imports, fewer manufactured exports and retrenchments.

    Shocking side-show ride of a system this. This least worst option.