The New Daily

Australia’s growth, debt ‘worse than Gillard years’

New OECD figures paint a picture of a frightening economic turnaround.

Australia has lost the mantle of 'miracle economy'.

Australia has gone from the stand-out economy through the global financial crisis (GFC) to the worst performer in terms of growth trajectories among the world’s wealthiest nations, according to new data.

The Organisation for Economic Cooperation and Development (OECD) figures for the last quarter of 2015 show exactly how the economy is performing in relation to the rest of the developed world during a period of global recovery. And the answer is: surprisingly badly.

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From 2008 to 2013, Australia — alone in the OECD club of 34 wealthy democracies — maintained economic growth, avoided widespread job losses, increased productivity, expanded its trade and grew incomes and wealth.

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After taking government in 2013, former Treasurer Joe Hockey said Australia’s debt was at disastrous levels. It’s become worse since then – a problem that is now the concern of his successor, Scott Morrison. Photo: AAP

Yes, government debt increased, as it did in 32 of the 34 OECD countries. But not by much.

Now, everything has changed and Australia’s economy has gone from rooster to feather duster, ranking as the worst performer in the OECD in terms of direction and growth trajectories through a range of key variables during the current global upswing.

Australia is the only member country not to record improvement over the last two years in any of those six key indicators of economic wellbeing and it alone has seen deterioration in five of those six.

Mouse over the graphs below for more detailed statistics

Jobs: down

At the time of the 2013 election, Australia’s unemployment rate was 5.6 per cent, ranking 7th in the OECD, behind Norway, Switzerland, Mexico, Germany, Japan and South Korea.

The figure is now higher at six per cent, a situation shared with only five other OECD countries – Turkey, Norway, Austria, Switzerland and South Korea. Australia now ranks 14th in the OECD on jobs. The unemployment chart for the UK, shows a steady improvement since 2013. Australia’s trajectory has been the opposite.

Economic growth: maintained barely

ABC

German Chancellor Angela Merkel faces the problem of falling productivity at home. Photo: ABC

Australia’s gross domestic product (GDP)  grew 0.6 per cent in the December quarter of 2015 compared to 0.8 per cent for the last quarter of 2013, putting it on a list of 16 slipping countries.

Productivity: down

Germany is the only other rich country where productivity has fallen in the last two years.

Balance of trade: disastrously down

Of the 34 OECD countries, 12 have maintained a reasonably steady balance over the last two years, 14 have seen their balances improve and eight have experienced a deterioration. Of those eight, Australia is the worst performer, experiencing its worst ever deficit in April 2015 with June and December also rating among the lowest.

Wealth: declining

Credit Suisse measures median wealth each year for 215 countries. The charts for 2013 and 2015 show Australians’ median wealth fell from $US219,505 to $US168,291.

Debt: increasing steadily

Norway and Switzerland were the only OECD countries not to increase borrowings when the GFC hit in 2008. All other governments accumulated debt until 2012 or ’13.

Thereafter, debt levelled off in seven countries – Belgium, Estonia, Greece, Italy, Mexico, Portugal and the UK. Fifteen well-managed countries began to repay their debt and now have lower levels than in 2013. The remaining 11, including Australia, are still piling on the debt and it is expected to get worse.

Missing out on the recovery

Men holding glasses of stout

Ireland is leading the global economic fight-back. Photo: Getty

No country has improved on all six variables over the last two years.

The outstanding economy is Ireland which improved on five variables, missing out only on wealth. Next were the Netherlands, Italy, New Zealand, Israel, the Czech Republic, Poland, Hungary, Luxembourg and Slovakia, which improved in four areas.

Only Australia failed to improve on any of the six variables and record deterioration in more than three areas.

Disturbingly, the data shows no progress since Prime Minister Malcolm Turnbull and Treasurer Scott Morrison replaced the hapless Tony Abbott and Joe Hockey last September.

For the six months from August 2015 to February 2016, gross debt increased by $25.05 billion.

That is more than for the same period the year before and compares with $28.25 billion added in the entire last Gillard/Rudd year.

top-stories-harrison-ford

  • Billi2

    Is anyone surprised, does anyone still believe the Liberals are good at managing the economy.
    They have destroyed confidence, starved the economy, killed of personal incentive, catered to the rich while kicking the poor, reduced investment in the future, nearly killed the CSIRO and other wealth developing scientific bodies.
    Debt has become a religious boogieman but what household or business has not grown without debt.
    Conservative governments the world over have lost the plot and our bunch are leading the world in poor management.

    • Rye an

      They still believe in the ‘trickle down’ justifying tax cuts for the wealthy………..Reaganomics never worked but they still pretend it does.

    • vas

      I suggest you look at a minerals price and a mining investment graph covering 2005 to 2013 and maybe you might learn something.

    • Bruce

      It appears to me that we need a another political party to vote for. LNP and the Labor party have demonstrated themselves to be useless and incompetent. Their greatest gift to the Australian people is their ability to navel gaze and insult the intelligence of Australian voters. I will not be voting for any of the major parties. Its time for a new beginning !

      • Agree with you, there is only one thing that count in economics making the most from all our resources(HR etc…), and both our major parties have proved useless in term of policies to achieve this essential goal, albeit Labor made a wish recently for full employment but ignored in the same breath half of our population, our around 50 and over population including our mature aged workers etc…,so another pointed zero.
        Since after Paul Keating our major parties have thrived in mediocrity, labor just a bit less, overall major parties were very poor because our parliament like in the West is full of legalmentarians spending days about the regulatory aspect of policy and small prints which most of the time end up in robbing Peter to dress Paul.

    • Daniel Shepherd

      The Gillard Government left huge time bombs in the form of NDIS, ridiculous skills college funding models and NBN while the budget was supposed to be funded by the Mining Tax, which wouldn’t collect a dime even if it had stayed in effect based on current prices.

  • edweirdo

    The fall in the wealth of Australians, in US dollar terms, is due entirely to the variation in the value of our dollar to the American dollar.
    Our dollar was speculated up to ridiculous levels and then speculated back down again. The ‘real’ wealth of Australian has probably increased slightly over the past three years even if you take out the silly increases in Melbourne and Sydney because of the housing bubble.

  • WSherlockScottHolmes

    The liberal party has never been able to run an economy. The Howard years were wasted. And the current mob…

  • Bah, humbug

    “From 2008 to 2013, Australia alone in the OECD club of 34 wealthy democracies, maintained economic growth, avoided widespread job losses, increased productivity, expanded its trade and grew incomes and wealth. Yes, government debt increased, as it did in 32 of the 34 OECD countries. But not by much. Now, everything has changed and Australia’s economy has gone from rooster to feather duster, ranking as the worst performer in the OECD in terms of direction and growth trajectories through a range of key variables during the current global upswing.”

    Gee, that doesn’t sound right. I thought we did terribly from ’08 to ’13. At least, that’s what the coalition and its many supporters said, and continue to say. Maybe some of you could explain this to me, and also why we fell off the perch after that, when the coalition was elected.

    • Alan Austin

      It’s all Labor’s fault, Bah, Humbug. Everyone knows that.
      But when we look at the trajectories of all the variables, they nearly all started to turn negative in the period September 2013 to mid 2014.
      So whatever it was Labor did to destroy the economy, they clearly did it around September 2013.

      • vas

        Nonsense. The mining royalties from the resources crash are the main reason. The cash tap was switched off. Virtually all mining infrastructure investment stopped around 2012, when mineral prices started dropping and hit bottom around 2013

  • Rye an

    The Authoritarians don’t like to be reminded that there ever was a GFC or high value $A because they might be asked how we survived unscathed for so long.
    Whitlam had the oil crisis
    Hawke had to deal with the stagflation Fraser Howard left him.
    Not a good time to win the ‘parcel’

  • David

    Australia’s economy was propped up during the GFC by China. China is having problems of its own right now and is no longer propping us up.
    Rudd and Gillard inheritted an economy in good shape and proceeded to spend and tax our way out of that. The incoming Liberals have done little to reverse the direction. Hence the worsening situation we now find ourselves in.

  • Cherie

    Such an awful myth that the Liberals are better at managing the economy – absolute rubbish. They only manage the economy to favour the wealthy at the expense of the health of the country.

    Is the Alan Austin commenting on this article the same as the author?

  • Chris

    Absolutely!

  • GRB

    Most of the comments so far on this article would have to be the funniest I have ever read. Don’t any of you understand what Rudd, Gillard, Swann and co did to current and especially future spending requirements for the budget and Australia during their tenure, all to make it look like things were improving and an the way to a balanced budget.

    Spending for promised initiatives as pushed out well into future years budgets while handouts were given out to anyone who would vote for them. Now we are in the situation where none of this can be reversed and we have to find money to pay for it all.

    Add that to all of the tax deductions they and previous governments gave us and where are we?

    No one wants to give up the unaffordable benefits they have already been given and everyone still wants the future unaffordable ones like NDIS, Gonski etc.

    So the government cannot cut spending or the recipients will cry and they cannot cut tax benefits or everyone will cry and they cannot increase taxes so there is only one solution.

    Stuff the country and increase debt. And get rid of them so the other lot can try to stuff it up even further!

  • Ian

    One of the main reasons we got through the GFC was the mining boom that went from 2007 to 2013. Unfortunately the Labor government wasted it. Just look at iron ore prices, which went upwards from about $50 per ton when Labor got in power and were more than $100 per ton from 2010 to 2014; but have now dropped. These are facts that cannot be denied by ideologues.

  • Ian

    Lots of things wrong in this article. eg Claim that government debt increased. No – Labor came into government with $70 billion in the bank, which it fragrantly wasted through a great mining boom – eg check iron ore prices which were over $100 per ton from 2010 to ~2014. Labor left not only a huge debt but also tried to set in stone an increasing unfunded debt.

  • Ian

    If squandering resources resulted in $70 billion in the bank when Labor got in power, what do you call the actions that Labor did to give us ~$200 billion debt?

  • Neil

    Yes, government debt increased, as it did in 32 of the 34 OECD countries. But not by much.

    Not by much? Debt exploded under Rudd/Gillard. It went from zero in 2007 to 10% of GDP very quickly under Rudd/Gillard. Labor started a runaway debt truck which most probably cannot be stopped.

  • Neil

    Not sure what you are talking about. The author uses debt to GDP to
    compare our debt with other countries. He even shows our debt to GDP in a
    Table.

    But the author is wrong when he said our debt increased “But not by much“. When the Coalition lost office the Commonwealth was debt free. In fact we have money in the bank. Commonwealth debt was at -3.8% of GDP when Labor won govt. Yes that is right minus 3.8% ie less than zero. It was at 10% of GDP in 2013 when Rudd lost office.

    I would call that an explosion in debt by Rudd/Gillard. It will double as a percentage of GDP every 5-10 years unless we elect someone who does something about it. We do have a budget emergency

  • You forgot the debt of the States that accumulated thanks to Peter Costello absurd way of implementing the GST, only an economic minnow could have implemented a GST in such a way, personaly I think it was intentionaly fraudulently made knowing the outcome, just to get around Paul Keating and be elected.

    The Debt of the States is forecasted to grow to half of the overall Debt and you are using unemployment figures that only fools would believe in, see Rob Burgess most recent article, both these concepts are an absolute fraud, please feel free to post your comment on debt including the Debt of the States, I am really really really looking forward to your comment including the States.

  • The Greens are just another branch of the Libs now.

  • Neil

    have taking funding way from Holden,Toyota etc which had caused them to close

    Rubbish. Why did Ford close under Gillard? There was no funding taken away. It was there until 2020 under the ATS. It is a lie that the Coalition removed funding. What happened is that after Ford left under Labor, Holden went and asked for even more money than what was promised. Hockey tuned Holden saying saying what was promised until 2020 was enough.

  • Ian

    Super does not belong to the government.

    • Agreed but it is a massive investment pool very few economies have at their disposition.

  • Great point I could not agree more, what’s your view on our States vs Commonwealth fiscal system!

  • Agreed it is broken by design.

  • Neil

    Australia does not count jobs properly

    Australia uses an international definition used in all OECD countries so we can compare unemployment rates from country to country.

    If you work one hour/week with or without pay you are counted as employed. Sounds crazy i know but that definition is used in all OECD countries

    • To get unemployment figures in Australia aligned to France or Germany you multiply Australian figures by 2.5 or 3, a 5% rate of unemployment equals approximatively 15% in France and probably more in Germany.

      Unemployment in Australia is means tested even the partner, Australian unemployment benefits are not an insurance based system and registration is not mandatory.

      Compare Australian figures with France where the unemployment system has run for more than 50 years and is not means tested, neither the unemployed, nor the partner’s income is means tested to receive benefits, where unemployment is a mandatory insurance which covers automatically up to 80% of the last year of income up to 100k maxi of income per year over 12months and similar other countries like France where unemployment is an insurance based system wehere registration is automatic and non means tested with similar benefits expressed in percentage of the last year or months of income and Australian figures by these standards would be 12 to 18%!

      • Neil

        Unemployment in Australia is determined by a telephone poll run by the
        ABS. Being on the dole has nothing to do with the unemployment rate. This from the ABS website

        The ABS uses internationally agreed standards in defining
        unemployment and the key indicators have been measured in a consistent
        way since 1966.

        To be classified as unemployed a person needs to meet the following three criteria:

        – not working more than one hour in the reference week;

        – actively looking for work in previous four weeks; and

        – be available to start work in the reference week.

        HOW DOES THE ABS MEASURE UNEMPLOYMENT?

        ABS measures unemployment by collecting data from a monthly
        survey of about 26,000 dwellings as well as a selection of hotels,
        hospitals, boarding schools, colleges, prisons and indigenous
        communities throughout Australia. Overall, data are collected from about 52,000 people

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