When your objective is to prevent a country from changing, it comes with a price. It’s a price that Australians are now paying as we face stagnation across all the major areas controlled by the federal government.
Our biblical-sounding seven years of wage stagnation — the RBA now predicts wages growth will still be at less than 2.5% until 2022 at the earliest — and our current tepid economic growth of just 2% are well-known. Less attention has been paid to the major productivity slump that has set in since 2013, despite regular warnings from the Productivity Commission, which the government has persistently ignored.
And while our jobs growth has been strong, it hasn’t been enough to prevent unemployment from rising back to 5.3% — or prevent Australia from falling into the ranks of the also-rans in the OECD on unemployment. In 2013, Australia had the eleventh-lowest unemployment rate in the OECD, narrowly behind Brazil and Iceland. Now we’re ten places lower in the rankings. Our rate is much higher than economies like Germany, the US, UK and New Zealand, where sub-5% and even sub-4% unemployment is the norm.
Worse, our jobs growth is now being driven entirely by the public sector, fuelled by government spending in education, health and social care: in the three months to August, ABS data shows, the economy put on a net 64,000 jobs — including 64,600 health and social care jobs and 82,000 education jobs. Major private sector employers like retail and construction are shrinking, and manufacturing is in freefall. It lost 37,000 jobs in the August quarter alone, seasonally adjusted, despite a bipartisan revival of Australia’s traditional protectionism in areas like anti-dumping and defence manufacturing.
That economic picture reflects the policies of the Coalition since 2013. In retrospect, the prime ministership of Malcolm Turnbull was marked by two policy decisions that have helped prop the economy up ever since. The first was his abandonment of the Coalition’s traditional refusal to fund urban infrastructure and, along with investment by the NSW and Victorian governments, a lift in infrastructure investment from the dire state Tony Abbott left it in. This enabled a much-needed “pipeline” of infrastructure spending to support growth.
The second was a politically inspired embrace of Labor’s policies on health and schools funding, which saw massive additional funding channelled into those sectors with their vast, mainly female, workforces. They have been the only workforces that have seen anything like substantial real wages growth in recent years. Both of these results have prevented the economy from falling into a serious slump since 2018, and illustrate the virtues of policy flexibility and the willingness by Turnbull to turn away from tradition to deliver outcomes.
But in the private sector, only a (now defunct) residential construction boom, fuelled by low interest rates, stimulated jobs growth — though not enough to provide any wages growth. Only a surprise spike in commodity prices stopped GDP growth from flatlining this year. The government has otherwise left the economy to its own devices. Its response to wage stagnation was to ignore it, encourage temporary migrant workers, demonise unions and endlessly predict wages would shortly pick up. It devoted considerable effort to trying to cut taxes for multinationals that already rort the tax system, before giving up tax reform of any kind.
Now it fetishises a balanced budget based on rising taxes rather than supporting growth. The result is an economy where business can delight in minimal growth in their wage costs. But economic growth has been crippled by stagnant household spending and, as the RBA has repeatedly pointed out, the government’s ever-rising tax take from Australians.
And it’s an apt result for a government whose entire economic policy is to oppose the other side’s reforms and look after the powerful interests that provide political donations — in other words, to maintain the status quo. But the stagnation that now characterises the Australian economy, and the policy vacuum that created it, applies beyond the economy to the nation as it whole.
Stagnation has become the defining characteristic of the nation itself under a government determined to maintain the status quo — to lock Australia firmly in place, incapable of progressing.
Tomorrow: climate, energy, Indigenous recognition — how a lost decade beckons a stagnating country
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But Surplus
The story you tell is so clear, why can’t the Opposition tell it as well? Not a recent failure. Is it an ALP condition? Would the Coalition in opposition be equally inadequate? Was Abbott’s effectiveness in that role a special case? Is it the media’s fault? Is it structural, so accept it?
I reckon the ALP could have won the last election with a rock-solid promise to fully restore ABC funding to pre-2013 levels and guarantee of no harassment for proper reporting. The ABC could then have shown some courage in their coverage to counter the endless propaganda from the MSM, confident of a better future for the organisation if they expose bullshit and malfeasance ruthlessly and immediately.
A proper commitment to a federal ICAC and to a properly planned phasing out of coalmining would have helped a lot as well.
It would not be so bad if the stagnation did not stink as badly as it does.
I don’t know. I’m just not sure of my fellow Australians these days. People seem to prefer spin and lies from politicians and certain media to the truth. Maybe burying their heads in the sand makes them feel better about things. I don’t think it’s reached the level of surrealness of the US, but I just don’t know.
I seriously! The ABC?
While this government practises strict border control against boat refugees it allows 93,000 economic refugees to fly into Australian airports every year, its pretty clear duttons all about politics and nothing about real border control.
I think even the wage and employment statistics paint a misleading positive picture of the economic returns to labour vs capital.
Increasingly workers are taken on as contractors though many don’t realise that the apparently decent ‘wage’ they are offered is actually paying them eg o invoice as a contractor and so they are expected to cover their own costs and risks such as workers compo, professional indemnity insurance, sick leave and holiday pay, superannuation and so on. Carrying these economic risks and levies for employers reduces the effective ‘wage’ they are getting bit is hard to see in ABS statistics unless you look at the labour share of national income and dig into the figures.
Many people are now expected to work in the cash economy to avoid the attention of Centrelink ato or visa enforcement thereby avoiding payroll superannuation levies and income tax and cannibalising the public revenue system and community services including availability of decent aged, sole parent, and disability pensions and what used to be called ‘social security’ benefits.
The downward pressures on formal wages are immense but invisible, and yet the ALP basically turns a blind eye being apologists for rampant market capitalism and having kicked this process off through blind adherence to the TINA ideology in the 1990s.
I thought maintaining the status quo was the definition of a “conservative”.
Depends on the status quo dunnit. Howard for instance wanted to revert to the 1950’s.
The Howard Govt may have wanted to return to the 50’s in social conservatism terms but they were quite pomo in their economic policies .and redistributed wealth according to their neo-liberal ideologies . They managed quite well to encourage and foster entrenched permanent large divisions of inequalities ..Nothing 50’s Keynesian about them..
Culturally and socially we have also entered an age of stagnation.
The cultural sector is seen as the enemy by this government, traditional media channels that might that have previously conveyed a sense of national identity and character are in decay, funding for the ABC is cut, funding for the Australia Council is siphoned off to Ministers’ favorites and the changing Australian culture is resolutely ignored, not analysed and explored. Socially – domestic violence, homelessness, poverty, exclusion – lots of hand wringing and blame.
But one area not stagnating is our democracy itself. Its actually regressing with calls by senior ministers to cut the welfare payments for those who dare protest, imposing invasive and unwarranted drug tests on the employed, increasingly secretive and unaccountable government and support for a crude majoritarianism with no regard for wider citizen rights.
The prosecutions of witness K and Collaery, together with the steadfast refusal to assist or defend Assange, are the major hallmarks of our horrifying slide into a police state.
My disappointment in the ALP for failing to take a principled stand on these issues is profound, and they would lose me as a member if I had any better choices.
Morrison deciding to mimic Trump shows the absolute contempt he has for truth, decency, and voters.