Is Scott Morrison terribly cursed in his job as Australia’s Treasurer or is he mightily blessed? All the February economic data suggests the former. The fact that so little is reported negatively in the media or highlighted in Parliament suggests the latter.
Government debt doubled
Late last Friday the Finance Department revealed Australia’s net government debt is now $323,821 million. That is just over double the $161,253 million left by Labor in September 2013.
Readers will recall that debt. According to the opposition and the media, the 2013 debt — among the lowest in the world at the time — was “massive and growing”, a “disaster”, a “debt blow-out”, “spiralling out of control”, “Labor’s debt time bomb”, an “emergency”, “terrible” and “the nation’s credit card maxed out”. Day after day, week in, week out.
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Joe Hockey claimed the budget “was in freefall” and promised to “stabilise and repay the Labor debt”. To Tony Abbott, the debt was both “skyrocketing” and “a spiral, deeper and deeper”. He said the Coalition had “identified $50 billion of savings, for … a reduction of $30 billion in net debt”.
That net debt has now doubled. Gross debt — the amount on which interest must be paid — is now $476,945 million, an increase of 97.9% over Labor’s level.
Most significantly, the rate of increase continues to rise. Just this financial year gross debt has increased by $7,715 million each month. Over the equivalent period in Labor’s final year, at the end of the global recession, the monthly increase was just $3,687 million.
But the mainstream media has remained marvellously mute. Halleluiah!
According February’s numbers from the Bureau of Statistics:
- Total jobless in January was 720,248. This has been above 720,000 for three months now. The last time that happened before the Abbott/Turnbull period was in 1998 during the hapless Howard years;
- The ratio of full-time jobs to total jobs fell in January to the lowest in Australia’s history — 67.7%;
- Hours worked per person per month — the best indicator of real paid work — are now down to 85.4. Hours worked have been below 85.8 for 14 of Morrison’s 16 months, the worst outcome since 1994; and
- Job participation for men fell in January to 70.0%, another all-time record low.
Media condemnation? Barely a peep.
As Crikey reported last week, wages growth is now at the lowest level since records have been kept.
Australia’s labour productivity collapsed from 103.50 index points in the second quarter of 2016 to 101.90 in the third quarter. This is the third quarterly decline since the 2013 election and by far the deepest. The last decline greater than 1.5 points was in October 1978.
The construction industry’s unprecedented slump continues — despite plentiful labour, low wages, record low interest rates, optional taxes and a strong need for infrastructure.
Engineering construction work from December 2013 to December 2014, in the Coalition’s first year, declined 9.6% over the previous year. That was the most severe decline since records were first kept in the Hawke years. The next year was worse, with activity down 13.0%. It fell a further 19.9% in Morrison’s first full year, to December 2016. Three consecutive years of contracting activity has not happened before.
Media response? Either conniving silence or deliberate denial.
The Australian yesterday ran a piece headed “Australian construction industry efficient: McKinsey” which claimed the sector “is a standout in terms of productivity when compared to several other developed countries”.
Really? Well, it was “over the past 20 years”.
Interest rates at crisis low
At its February meeting, the Reserve Bank kept interest rates at 1.5%, the lowest in history, and well below the level Joe Hockey once asserted was a sign of a mismanaged economy.
Bank governor Philip Lowe confirmed the steady “improvement in the global economy”, which Crikey has consistently reported but the government denies. He repeated that Australia’s economy was “continuing its transition”, which is clearly now a euphemism for “continuing down the s-bend”.
This stream of disastrous news for the Treasurer must frustrate him enormously in view of the current remarkable boom in mineral export volumes at rapidly rising prices and record company profits. The latest balance of trade figure was an astonishing $3.51 billion surplus in December. This came straight after an impressive $2.04 billion November surplus. That December number is the highest in Australia’s history, and the two rises together represent one of the best turnarounds anywhere in the world.
Morrison’s curse, however, is that there is no mechanism for any benefit from the current mining boom — or other strong export industries, for that matter — to yield any net gain to the federal budget, or to the Australian people. Almost all the profits go straight offshore.
Company tax, as Crikey has shown here, here, here and here, is virtually optional. There is no longer any significant royalties regime. And what little revenue accrues from the few janitors and bookkeepers paying PAYE tax is vastly outstripped by the tax concessions the multinational miners seem routinely able to claim.
These are all disasters of the government’s own making. The fact that hardly anyone knows of them is courtesy of the craven mainstream media. Let us rejoice.