The supreme irony of the latest lackluster GDP data is that private demand has been supported by “lively” public spending. There are serious questions about the government’s ability to manage the economy, reports Alain Austin.
Australia continues to lag behind the rest of the world.
Many of the latest results released are at historic lows and push Australia even lower in the global rankings. The latest GDP figures released this week corroborate that Australia is in a serious rut, only saved by demand for minerals mined and exported.
The mainstream media once again preferred to focus on tangential good news, mostly spreading the government narrative:
Annual GDP growth
The increase in gross domestic product (GDP) for the June quarter, announced by the Australian Bureau of Statistics (ABS) yesterday, was a miserable 0.48%. This brings annual GDP growth to just 1.44% for the year to the end of June. (This analysis uses seasonally adjusted numbers. Trend data, preferred by some, shows even worse results.)
This is the lowest annual growth for a fiscal year since 2002-03, in the early 2000s. recession. Before that, the year with weaker growth than today dates back to 1991, during Paul Keating’s “recession we had to have”.
This is the lowest ranking Australia has had since records began. Historically, Australia has always been in the top twenty. During the Global Financial Crisis (GFC) from 2008 to 2013, the ranking was mostly top five. Australia reached the top spot ten years ago in 2009 as shown below.
Construction activity plummets
ABS measures total construction across the country quarterly. This includes homes, farms, factories and other commercial premises built by the private sector and infrastructure built by state and federal governments. During periods of global stability, this will increase every year in well-managed economies, with occasional bumps.
Australia’s last financial year saw a disastrous drop in total construction of 9.41%, the worst reversal since the global recession of 2001. The 2018-19 setback is the fifth decline in Australia’s six-year tenure. Coalition. It is unprecedented. In fact, since recordings began in the mid-1980s, there have only been nine negative years. The current government has chaired five.
ABS measures productivity by calculating the GDP generated per hour worked for each quarter. For most of Australia’s history, this has continued to increased, as is the case in most successful economies. As Australia emerged from the global financial crisis, productivity grew for 16 consecutive quarters from 2011 to 2014. Impressive.
Since then it has moved erratically, but appears to have stalled at around 100 index points since the third quarter of 2016. Until that picks up, there is little hope that worker prosperity Australians are improving. There is no sign of that in the current economic settings.
Retail trade record low
Total Retail turnover for the last fiscal year was $325.4, an increase of only $9.6 billion or 3.04% over the previous year. Since the population increased by 1.77% and inflation was 1.6%, a decline in real dollars relative to the population.
The result for 2018-19 was only slightly higher than the abysmal 2.56% the previous year, the worst result on record. The year before, it was only $3.13. Thus, for three consecutive years, the growth of retail sales has been less than 3.2% and therefore less than the increase in population and prices. This is the only time this has happened in 36 years.
The average growth of the previous 30 years is 6.10%.
Housing starts are stagnating
A good indicator of prosperity is the number of new homes built each year. These include old houses being replaced with new ones, housing estates for expanding populations and new vacation homes for families able to afford them.
ABS recordings the monthly number of housing units approved for construction.
In the last fiscal year, only 188,000 units were approved, down a staggering 18.7% from the previous year. That year was lower than the 2015-2016 fiscal year, which saw 239,000 homes approved.
Housing index down
Trade economy shows rises and falls in home values in 35 developed countries. The latest data for 2019 shows that only seven of those 35 have lost housing value. These are Chile, Italy, Finland, Iceland, United Kingdom, Sweden and Australia.
A history of mismanagement
There is no excuse that the Australian economy has fallen so badly on these indicators, which all reflect the well-being of citizens.
In addition to these six domains of failure for which data arrived this week, remember the other 11 variables analyzed here in July:
- Australian dollar value
- Overall employment
- Youth unemployment
- Hours worked per person
- Average weeks the unemployed spend looking for work
- Workers over 65 forced to return to work
- Interest rate
- Budget deficits
- Government debt
- Interest paid on debt
- Stock market performance
All of these have steadily improved in most countries thanks to the recent post-GFC global boom. They deteriorated in Australia.
By supporting the unemployed, Australia comes one last time without a mother
Booming exports and business profits
Australia should still lead the world in most of these measures, as it did between 2009 and 2013. Exports are at historic highs. the trade balance is in record surplus. the current account went into surplus again – for the first time since Gough Whitlam was prime minister.
Corporate profits are also booming in Australia, as elsewhere in the world. The percentage increase in profits over the last three years, as reported by ABS, were 22.2%, 10.0% and 10.9%.
Policies don’t work
Clearly, big business is eating out while the majority of Australians are finding their income, wealth and quality of life steadily declining. The Coalition’s management of the economy allows foreign predators to extract Australia’s wealth with little or no return to the Australian people, and allows local businesses to escape the tax burden that the majority of working people cannot avoid.
These policies serve neither the economy nor the citizens.
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