Feb 5, 2013

The Australian economy under Abbott: a (rough) Crikey guide

The Australian economy may not look significantly different under an Abbott government, despite the Coalition's rhetoric. Bernard Keane and Glenn Dyer with the Crikey crystal ball.

How would the Australian economy fare under a re-elected Labor government or a newly elected Abbott government?

The answer is complicated: the opposition is refusing to spell out in detail its economic and fiscal policies, and in any event governments respond to changing circumstances in a way often at odds with their stated policies and election commitments. And we don’t know the make-up of the Senate from July 1, 2014 so it’s hard to know what capacity either side would have to get its legislative agenda through.

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53 thoughts on “The Australian economy under Abbott: a (rough) Crikey guide

  1. Barrie O'Shea

    In my 38 years in SMEs, I have had one unfair dismissal case, which was dismissed in half an hour at no cost to me. However, my losses in those 38 years to incompetent or corrupt behaviour by other businessmen would approach $500,000. Not one of those people has lost their house, or been fined or jailed for their actions. In most cases, they have had substantial unpaid tax and superannuation liabilities.

    As you can imagine, the laws that I want changed are not those relating to my workforce. I want to see substantial penalties including jail, for those who, by evading their responsibilities, are able to improve their cash flow and compete unfairly in the marketplace. Despite legislation from both parties, the use of phoenix companies is still rampant.

    So Tony, forget the unions. Stop listening to the Billy Tea Party supporters in your ranks. Give the ATO and ASIC the resources they need to enforce the law. That is the best way to reduce business costs and encourage legitimate businesses to grow and employ people.

  2. Apollo

    The LNP can achieve reduction in CO2 emission by putting the economy into a recession. That’s how the US has been able to reduce its emission.

    The Howard government was better at making work participation higher because they made it a b*tch to be receiving and living on the dole, I heard that the number receiving the dole dropped from 22 or 27% down to 15%.

    I don’t bel dogmatically in a free trade absolute when there is no fair level of play ing field, especially now that most of China’s companies have unlimited backing from the government as they are state own, it’s very hard to compete with them. My suggestion is at least have 1% tariff on products from countries which don’t have carbon tax, and 5% for countries where businesses don’t have the same level of just rewards and protection for the workers and the environment. Might have a levy for Australian companies who outsource to those countries too. It will be interesting the see Bob Katter’s party influence on policy if they have the balance of power.

    I have a good idea to restructure the baby bonus to a planned parental scheme, but I don’t have the time to write it now. TA will be very strong on policy for Australians to “go forth and multiply”.

  3. IC-1101

    Howard made it tough to earn the dole for people that didn’t deserve. If you deserve it — if you’re unable to work, can’t work, mentally disabled — then you should get it. Under a Labor government, the welfare test has always been far too easy. I know students get handouts that basically double as beer money.

  4. Jimmy

    Not sure I agree with some of the assumptions here. Are the MRRT and Carbon taxes reducing growth by that much? Will their removal increase growth by the same amount as growth is reduced by slashing public sector jobs?

    There are also a lot of questions regarding wealth distribution that need answering, the libs are planning to remove means testing for the private health rebate and FTB and slash the School kids bonus, shifting money from low income earners to higher income earners, similarly the Libs plan to stop the $500 super payment for low income earners but keep the variuos tax concessions generally taken up by higher income earners, the ALP has announced anything on this but if they make any changes it will probably be in the opposite direction. Also getting tax payers to pay up to $75k for paid maternity leave is also a poor use of public funds and skewing the benefits towards the top end.

    Also I think the impact on the ability to grow a non renewable energy sector in the Carbon Price V Direct action comparison is well and truly understated.

    On top of it all tighter fiscal policy could well be the worst possible approach if the economy continues to slow.

    I have said it before cutting taxes, increasing spending and increasing a surplus doesn’t work, something has to give.

  5. Jimmy

    “Are the MRRT and Carbon taxes reducing growth by that much? Will their removal increase growth by the same amount as growth is reduced by slashing public sector jobs?” Further to this point, how does the fact that mining company (and others effected by the Carbon Tax) profits are returned to share holders which are not necessarily Australian contrast to the removal of expenditure (ie Public sector wages) that are 100% paid in Australia?

    “eliminating the carbon price (most revenue of which is redirected to free permits to polluters, so the overall impact is limited)” This is looking distinctly short term, what will the impact be as the free permits recede and the direct action doesn’t work?

  6. Joe Magill

    “cut red tape worth $1 billion a year” . I keep hearing this red tape argument but in my 30 year old small manufacturing business I face zero red tape. I complete one ABS return per year which takes a day or two to complete but as a user of the ABS I don’t have any problem with that task at all. If red tape means EIS or land development approvals then I’m not sure that I would liek to see a reduced oversight in this field.

  7. Ruprecht

    Nah, mass public service sackings and cuts to health and education won’t have much impact on the economy.

    Reintroducing WorkChoices and abandoning the NBN won’t provide another drag on the economy.

    We’ll be right.

  8. Hamis Hill

    East Coast LNP state government austerity measures have contracted the economy and certainly and cynically destroyed the federal budget surplus by reducing federal income.
    The other effect of such LNP austerity when projected onto an Abbott administration is a general reduction in money in the economy and so the inducement of interest rate rises.
    So the Bill for the Howard, golden era, mortgage debt orgy will rise to two thousand million dollars a week in interest payments.(Do the numbers; they are important)
    Those who cannot see RECSSION writ large in these figures are simply economic vandals.
    Of course an Abbott administration aping the policies of its state colleagues will be different from a Labor federal government which does not ape those LNP policies.
    To suggest otherwise is simply moronic.

  9. Jimmy

    Joe Magill – ““cut red tape worth $1 billion a year” He may as well say “I’m going to raise Unicorns worth $1b a year” It’s a figure that they will never be able to prove he did or didn’t do because no one can identify “the red tape” let alone accurately cost it.

    The other figure I love Abbott quoting is the number of jobs his govt would create (2m over 10 years I think is the figure is) which given the ALP is up to almost 1m over the past 5 and a bit which included the GFC is very unambitious. In fact the figure is taken straight from the Republican play book where Romeny promised to create X million of jobs in his first term which sounded large but basically was what a monkey would create if he were running the country.

  10. Microseris

    As Ruprect & HH point out, LNP has tunnel vision on fiscal policy. Slash the public service, gut education and health. This increases unemployment with flow on effects across the economy. In Victoria one term Ted has slashed TAFE and VCAL programs and with the savings built a new jail. Got to have somewhere to lock up all the resulting delinquents.

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