The Coalition have no idea where we are headed
I doubt Malcolm Turnbull or Scott Morrison, the supposed standout, go-to man for the Liberals, would understand the significance of the latest Wage Price Index. But here is the truth of it.
Australians are poorer today, in income terms than we were at the beginning of 2014. This has happened on the present government’s watch and their existing policies will ensure it gets worse.
The growth in the Wage Price Index released last week shows growth at the lowest on record with real wages having barely moved over the past year. They remain well below productivity growth, meaning the average worker’s share of the national income has fallen and company profits have risen.
Malcolm Turnbull and Scott Morrison keep telling us that our economy is in transition. But this is nothing more than code for: we have no idea where we are headed!
Currently, the labour market is bogged down with low employment growth, flat working hours and an underutilisation rate of 14.6 per cent excluding the suppressed participation rate which accounts for at least another 2 per cent.
Real GDP growth remains well below its trend rate (before the GFC) and is being propped up by the on-going government deficits. Australia is in an income recession evidenced by a fall of 1.1% in real net disposable income over the year to December 2015, nationally.
Private household debt has been increasing now for the last twenty years; the product of a credit explosion that rose from an historically steady 40-45% of net disposable income in 1996 to a peak in the September-quarter 2006 of 152% of disposable income, aggravated by the much heralded surplus years of the Howard administration.
The economic stimulus provided by the Rudd government in 2008 created a plateau for a few years but from 2012 it has been on the rise again.
Australian households are currently carrying record levels of debt, mostly mortgage related, currently at 186% of disposable income and interest payments on that debt at 8.7 % of disposable income.
This means that the Reserve Bank would, if it were to raise rates, trigger an avalanche of personal insolvencies that would not only further reduce non-government spending, it would be the catalyst for the mother of all recessions, if not depression.
Since the March-quarter of 2005, the divergence between real growth in output, that is, income that is generated by the economy, and real net national disposable income, has been getting wider and wider.
Which means that while the economy was pumping out mining exports at increasing volumes, Australian households were going backwards in real income terms. Only the extremely wealthy were receiving the benefits.
At this point, the balance sheet of the households holding the debt becomes very precarious and rising unemployment coupled with falling economic growth threatens major debt delinquencies.
The fall in real income has declined in line with the collapse of the mining contribution to real output growth. It has been exacerbated with declining export prices which have, in turn, had a devastating impact over the last 12 months in Australia’s current account (trade) and contributed to the flat wages result.
In other words, our capacity to purchase imports has fallen and Australian workers are not sharing in productivity growth. It means that Australians overall are poorer even though we are still producing more than we were a year ago.
It is against this morbid background that Malcolm Turnbull is trying to convince voters that he, his treasurer, Scott Morrison and a cabal of equally incompetent dreamers, or outright liars, should be returned to government on July 2nd.
Their ignorance of, or their unwillingness to address, the one necessary action to arrest this alarming situation, i.e. a major spending boost, is the most obvious reason they should not be returned to office.
If they are returned, we will be the ones to suffer their foolishness. Waiting for the economy to return to normal, as if this is some sort of normal cyclical process, will in time, prove to be a false analysis.
We are not transitioning to anything more than the road to continued decline.
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Are they waiting for new instructions from Rupert?
Malcolm Muck and Snotty likes to say “We are transitioning” but they don’t say where we’re heading because they’re ignorant of what that might be or too frightened to tell us because they know that under their plan, the destination is not the Promised Land.
“We’re Heading to Doom” would be more appropriate for Malcolm Muck and Snotty to be telling the cameras so they can upset ignorant people who wrongly think they know anything worthwhile in providing sustainable socio-economic futures for us all.
Must be time for an even bigger tax cut for Gina, Twiggy, James and co.
It was obvious in 2012 that this plastic government didn’t have a clue except for the Coots-With-Queer-Ideas-From-a -Parallel-Universe’s (aka IPA) wish list and now we really are seeing the fruits of this stupid ideology.
Thanks John. You certainly know your stuff.
3 years ago it was amazing we had climate action the big polluters were paying, NBN optic fibres being rolled put, Gonski adapted, NDIS about to start, and then the poor misguided public thanks to scare campaigns from murdoch and we are reduced to a pile of shit please vote flr Labor Bill to get us out of this mess.
The LNP are not interested in the revenue side of the budget ledger, there are billions and probably tens of billions to collect, that the LNP are ignoring because some of these corporations donate to the Liberal Party, instead of paying their responsible amount of taxation to our country that would benefit all of us: http://www.theguardian.com/news/datablog/ng-interactive/2015/dec/18/do-you-pay-more-tax-than-australias-biggest-companies it is NOT a fair go, and it is being ignored by the LNP.
Scott Morrison’s interview on ABC 7:30 Report last night was something to behold.
If you ever wanted evidence that he hasn’t a clue and tells outright lies, this interview was it.
Morrison, when he lies or doesn’t know what he’s talking about, has gotten into the habit of talking fast, and the more he doesn’t know or the bigger the lie, the faster he talks.
It’s as though he believes if he fast talks it makes him sound like he knows what he’s on about, and it scoots past the lie allowing little time to challenge it. This is also born out in that he sandwiches lies between propaganda statements that are gloss overs or snow jobs of unpalatable information.
The poor interviewer is not given a chance to challenge any single statement because they come rapid fire and scattered to the point of sounding aimless. There’s no single target, and that’s probably a deliberate tactic.
Those with half a nous see this is as someone way out of his depth trying to fumble through and avoiding examination, but sadly there are too many out there who see this as someone who knows what they are on about.
By the way Leigh Sales would not have questioned Morrison to any degree even if he spoke slowly and paused on each point waiting for it to be examined. She is rightfully being pilloried across social media for the blatantly biased way she interviews against Labor and for the Liberals.
Liars, not dreamers. They know exactly what they are doing.
I watched the Media call with Morrison and Cormann knowing with their history of lies and misinformation, was bound to be more. I wasn;t wrong. What a beat up, the Coalitions campaign has been going so badly a diversion was required and it was delivered. Trouble form Scumo and Motor Mouth it was so full of holes it sank long before the conclusion of a total disaster.
Tony Burke was so quickly out of the blocks to call the misinformation nothing but lies lies and more lies, it obviously didn’t take him long to digest the numbers which even to my untrained ear had to be manufactured, contrived and at best what is commonly called ‘fiddling the figures’
I watched the Sky News refugee on Lateline, the ABC latest recruit from the Murdoch ranks David Lipson who this time even he couldn’t say anything positive to back up the 2 incompetent idiots representing this country as our economic gurus, Lord helps us!
I searched for a link to the double act by the hapless and strangely all record of that 30 min fiasco is in cyberspace somewhere. Odd that as Sky are usually very keen to retain performances by their stable stars. I did find this short about face from Morrison this morning after Tony Burke and Penny Wong had finished with them. Lookee here, the numbers have changed. Last night Morrison was adamant his $67 billion Labor black hole was correct, exact, no doubt about it……this morning from ABC News this tiddler.
The Government has defended its claim over Labor’s budget “black hole”. Treasurer Scott Morrison has said the funding gap was ‘between’ $32 and $67 billion.
I rest my case. Have a nice day.
To avoid any confusion with Davids I will revert to my sometimes used David 1 as earlier
Black Holes & flying pigs
Two observations I made about the Snotty Morrisscum 7.30 interview last night are:
1) Snotty’s fast talk was the same as his parliamentary filibustering: the deliberate act of continuous talk to deny proper debate because he has nothing worthwhile to say; and
2) Snotty signed off by saying, “Thanks Red.” That was an unfortunate revelation for Leigh Sales because it demonstrates their familiarity which is not helpful for her role as a purportedly objective interviewer.
Austria did not vote their ‘Trump’ in, but Alexander Van der Bannen, so there’s still hope for America and Australia…
Yes, I emphatically agree. The LNP know exactly what they are doing. They are deliberately driving our economy into recession. The language they use does not mean what we think it means – it is specifically designed to deceive.
Thank you for another good article John.
Jennifer, when Leigh took over 7.30, my daughter commented on how bitchy her manner was. Leigh has proven my daughter right, I’m often shocked how biased she is.
Our currency has zero face value because it is not convertible to anything of value since 1971. The viability of the currency is guaranteed because it is the only currency acceptable for payment of taxes and other financial demands of the government. The analogy neoliberals draw between household budgets and government budgets is false. Households use the currency and must finance their spending. The government issues the currency and must first spend before it can tax.
The claim that the government must tax or borrow to ‘finance’ its spending is false under a fiat-currency system. I am sure most politicians don’t understand this.
On Q & A last Monday night, a woman from the audience was very upset by the governments failure to ‘bring the budget back to surplus’, this demonstrates the neo-liberal group-thinking that has permeated through the public debate. The public needs to understand how the economy works, or they need to understand the National Accounts Income – Expenditure model in Macroeconomics. The lady needs to know that the well-fare and well-being of the population will suffer further while ever the government pursue’s a budget surplus.
This can best be explained by using a couple of possible scenarios:
(a) If households and firms spend less than they earn (tend to save), and Imports are slightly greater than exports, then the Government budget will always be in deficit. (b) If the Nation is running a Current Account deficit, ie. Imports are greater than Exports, which is accompanied by a Government budget surplus of equal size, then households and firms will be spending more than they earn (borrowing). This is unsustainable since Australian households are already experiencing massive debt problems as John has described. This is why many households are using their credit cards to pay the electricity bill.
The LNP economic strategy is clear, and its not about Jobson Growth. Compare Costello and Morrison. Both have followed pretty much identical paths.
Step 1: Enact a structural tax cut that will have increasing budget implications through the coming years. For Costello it was personal tax cuts at the top end of the scale, as well as super tax cuts. For Morrison it will be company tax cuts.
Step 2: If in power, enact cuts to spending on services claiming we need to live within our means.
Step 3- If in opposition continually point to budget black holes and debt and deficit disasters.
Step 4- Never ever admit that you have any responsibility for falling revenue leading to budget black holes or debt and deficit disasters. Morrison pointedly refused to talk about the budget implications of his tax cut beyond 4 years.
Its straight out of the neocon play book as described by Naomi Klein.
Good article John once again and i could’nt help but notice the body language between Morrison and Turnbull in top of page photo,, Malcom looke like he’s thinking, God i hate myself for what i have become,and Scott is thinking,My god i cant stand this arrogant know all lefty little prick.
The prime minister, malcolmi’mallrightthankscosmycashisalreadyinthecaymansandyoulotcan’tgetitsoscrewyouall turdbott, and his magic bean counter, scooterwhatarethesenumberthingysthateveryonekeepsaskingmeaboutwheneveryoneknowsihaen’tgotaclue moronscum, are dead right when they say “We are in a period of transition”. We are transitioning from ‘Deep Shit’ to ‘Completely Screwed.’ And Falling.
That they can say it without sweating the shit that is seeping down their freshly pressed suit pants is the amazing thing. Just look at the puss bubbles busting out of our mal’s nose in the title picture above. And that’s AFTER his minders got him spruced up for the days adventures in wonderland, when he was still popular, and while the blood was still wet on the knife.
If there are enough dumb-arses in the country to re-elect them on July 2, so be it, but let them be first up against the wall when the revolution comes.
Bring on Rule 303. With all it’s clauses. A word of warning to anyone who decides to employ machinery produced by our new submarine suppliers. Read the press reports and operating manuals twice before lighting the blue touch paper. (If you can read french.)
I’m ok. I’ve got Uncle Joe’s old L-E. And a few boxes of new projectiles.
Transition doesn’t necessarily mean a good thing, one could be transitioning from the life of Riley to living on the streets.
I think I heard that from Jobson Groth on the radio the other day.
There is a long held belief that the conservatives abandon ship in times of great upheaval and financial insecurity. Like the two world wars or depression, recession et al. There are times when I look at Turnbull, and what he is doing, and wonder if he is actually on the progressives side and is simply sabotaging the conservatives?
But you are so right John Kelly. They haven’t any idea what to do to stop the impending recession.
They will not arrest the failure of the economy becuase they don’t know how without upsetting their voter base and potential employers when they finally get what they deserve.
They will simply hand over to the progressives and stand back and criticise whilst actively covering the shitstorm they created. Especially if Trump wins in the US and war with either China or Soviet Russia is inevitable. Trump is equally incompetant but want to be the hero whilst covering for his inadequacies and using war in the way Bush mark II did. If LNP wins this election you can guarantee we will be off to war with the Donald.
I have this sneaky feeling that the IPA, that shadowy and rather secretive mob of “faceless manipulators” who are currently moving into the limelight more and more is safe LNP seats have much more to do with this than most people .. in fact, the MAJORITY of Australians .. know about!! I know I’m “poorer” per fortnight as my Pension no longer goes anywhere near what value it had prior to the invasion of this current LNP government (and that means the political assassination of Labor during the Abbott Opposition) .. so even on an individual level this is hurting me badly let alone Australians as a whole.
Another pertinent and astute article, John.
Bring back Sarah Ferguson
Have you noticed the tactic being employed by ScoMo and other LNP pollies recently? They completely ignore the question and start chanting slogans, then when called to task they claim they “don’t accept the premise of the question”!! They then go on chanting the slogans.
Personally I find this type of behaviour incites hatred and a desire to commit violent. Surely that is illegal??
“On Q & A last Monday night, a woman from the audience was very upset by the governments failure to ‘bring the budget back to surplus’, this demonstrates the neo-liberal group-thinking that has permeated through the public debate.”
I remember that woman well. When I heard her ask her question, I immediately knew she was wrong from the perspective of MMT, and I knew that both Albanese and Pyne would fall into the trap of playing to the neoliberal myth of the virtue of surpluses. I’m glad you made the effort to point this out here, Don.
We have much work to do.
Silkworm, I went further than that. I started shouting at the television. A sure sign I’m either losing patience or becoming a grumpy old man.
John, how about an impatient grumpy old man?
silkworm and John Kelly,
the same happened in the 1st debate between Shorten and Malcolm Muck. The last person to ask a question was blithering about all the Australian debt and deficit and when are we going back into Surplus, so that his school age daughters might have a chance.
Malcolm Muck predictably waffled about how it was a Liberal priority but unfortunately Shorten didn’t address the fallacy of the need for surplus and no debt.
Labor needs to take the lead in espousing MMT; if not before the election, at least after the election when they are sharing government with their allies in the Alliance. That way Australian citizens will have three years to learn of the benefits that spending and realistic debt bring to a vibrant socio-economic system.
John Kelly – where were you when I needed your help?
I have been having this tremendous battle with 3 very Right Wingers, who have been telling me how wrong I am about taxes not used for government spending,
Apparently even though I quoted legislation down to the Section number, that was insufficient, apparently section 81 of the constitution overides my quotes.
John – I think its stopped now but it got really vitriolic and personnal, ots not resolved but there is a stand off.
I suspect that it will either die now or fire up again.
But through it all, it went on for about 5 days – kept to the facts, and at no time was I offered anything resembling a fact (except section 81 of the Constitution) to counter my claim, but I did not know how section 81 pans out in modern money terms.
I am afraid that I probably did nothing to educate anyone!
SGB, section 81 simply states that all revenues are to be credited to the Consolidated Revenue Fund. What legislation were you referring to?
Kerri and Silkworm,
This mob of small minded shop keepers, would never have built the Snowy Mountains Scheme or the UNU at the same time.
Menzies used to rant about the expense, yet was happy to open them up for the glory.
This is the time to borrow money and turn the Burdekin River and look to irrigate the inland; keeping money in Australia.
Every $1million sent overseas to buy things we should build here, exports about 40 jobs.
Bob flaming Menzies stopped the CSIRO from working on computers when we were one of the leaders in that field, and told the teams of scientists to work out how to make ‘it’ rain.
During the first world war Menzies joined the Melbourne University Regiment as an Officer because he could serve without going overseas. When the time came to send the Officers overseas because of the high casualty rate, he resigned his commision declaring ‘my brain is too valuable to waste on the battlefield’
He became a big noise in the pro-conscription movement and eventually conscripted my generation and the Vietnam boys.
Menzies was always devoted to Mother England in fact he ensured, in the flag ACT of 1954 that the Union Jack was available to any Australian resident to fly in preference to and in a superior place ahead of the National Flag. This cringeworthy behaviour was no more apparent than in the first months of world war two, both he and Churchill decided to send the Eighth AIF Division to Malaya to protect Singapore. The Sixth Division defeated the Italian Army in Libya and Menzies agreed with Churchill to send that division to Greece and Crete where they were made POW’s by the Nazis.
The Ninth Division fought Two famous battles that became the turning point at Tobruk And El Alamein.
The seventh Division fought against the French Foreign Legion in Syria and then were rushed back to Java and Timor and joined the Eighth Division as prisoners of the Japanese.
If Menzies was working for Mr Hitler he would have an Iron Cross with Diamond Clusters.
The Ninth finally came back to join the reserve CMF soldiers in New Guinea to Push the Nips back. They were the One Division that formed our last fighting force left standing out of Four divisions from the second war. They survived Menzies and the only thing that saved them from defeat and Churchill’s order to sail north to Malaya and the japs, was John Curtain ordered the fleet to return to Australia and we looked to the American for protection and away from Churchill who was prepared to leave Australia to the Imperial Japanese Army.
Don’t let the Liberals tell you how god like was Menzies , when he was a Tamperer and a small minded egotist who only cared for himself and saw the men he sent to die as the Scum of the Earth. By 19501 we still had German Italian and Japanese prisoners in custody and Menzies let the Germans stay Italians went home and most applied to come back. The japs went home and we thought they would be our enemies in our hearts forever. Nazis and Japs were hated universally, for their cruelty the Aussies that hated them are dead, a handful forgave and the baby boomers were protected from the horror of war until the fathers succumbed to PTSD.
He surrounded himself with people who were lacking in the smarts to topple him. They are the people who could simply not accept that democracy requires the defeated party, to in opposition, to respect the will of the people’s judgement and prepare for the next election while holding the government to account; but not dying in a ditch before they let any legislation pass without creating the cess-pit we have witnessed over the last sixty odd years.
The Liberals sing the same bloody song every time they get kicked out by the people and this is why we have a Saw Tooth economic Graph to contemplate and no hope for a big Australia, because the people we elect have for seventy years have been stuck with the legacy of the Fat Blow Hard, where the players are now so boring and narrow coming, as they do from university through head office or an electorate office and turn out to be educated idiots with no ambition for or love of country, Just being there is enough.
The economy we’re transitioning to is, of course, a slave economy. What’s wrong with that? Simple and very exciting.
Much of our GDP growth seems to be pseudo growth. Housing and rent inflation does not really contribute to future income – my view is that it considerably detracts. All that debt and interest paid. All that money tied up in non-income producing assets.
“Housing’s combined contribution to GDP generally averages 15-18%, and occurs in two basic ways:
– Residential investment (averaging roughly 3-5% of GDP), which includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees.
– Consumption spending on housing services (averaging roughly 12-13% of GDP), which includes gross rents and utilities paid by renters, as well as owners’ imputed rents and utility payments”.
And as for a triple A rating – how could that be possible with such high private debt. Not much of a measure.
There have been that many dead cats thrown on the table in the past week, it beggars belief.
“It is against this morbid background that Malcolm Turnbull is trying to convince voters that he, his treasurer, Scott Morrison and a cabal of equally incompetent dreamers, or outright liars, should be returned to government on July 2nd.”
Their outright lies belie their incompetent dreams. My belief is that they are not ‘dreams’, merely orders from ‘those who must be obeyed’.
Ian Verrender wrote a piece a few days ago. He cites the same figures about wage growth, or lack thereof. Part of it reads;
“During the past fortnight, as political opponents play Punch and Judy each night on the tele, there’s been nary a mention of the ABCC – the Australian Building and Construction Commission – the immediate establishment of which was so vital, it required the Prime Minister to dissolve both houses of Parliament.
It’s easy to see why.
Cranes jostle for position on crowded city skylines as the frenzied east coast construction boom races towards its inevitable climax. Industrial disputes have fallen to levels last seen six years ago at the height of the financial crisis. And wages are growing at their slowest since records were established in 1998, arguably at their slowest since the last recession 25 years ago.
So there you have it; problem solved. Time to consign it to the vaults and forget it was ever mentioned.”
The rest of the article clearly details why the bank’s need serious investigation. Their interests are profits, however artificially constructed, and any impediment will be obliterated.
“The banking and finance sector is the biggest donor to our political parties, donating more than $1.2 million to both sides of politics in 2014. They don’t do that out of a love for democracy.
They also were the recipients of the largest taxpayer funded support program in history. When financial markets tanked in 2008, taxpayers rode to the rescue, extending a $120 billion lifeline via the Commonwealth’s triple-A credit rating, so they could refinance their offshore loans. Without that, Australia’s banking system would have failed.”
In today’s news, there was this one;
Who woulda thunk the election wasn’t about the ABCC? Who woulda thunk the election was about their masters wishes? Who woulda thunk the timing of the election was dictated by the demise of tiny’s popularity and the possibility talcum was preferable?
Those wishes have nothing to do with Australian’s needs, let alone Australian’s wishes.
Having become disillusioned with ‘new’ dead cats, I will reconcile myself to be doubly disillusioned. Thank you, Mr Kelly. Take care
As per usual John you’re on the mark. Meanwhile mainstream media is a circus of rubbish before election time.
The cream of the crop is this one:
To have written this the journalist must have un-learned accounting, treasury and central bank operations, ignored sectorial balances, ignored the abysmal predictive ability of so called ‘credit ratings agancies’, unlearned what money is, unlearned the global financial crisis.
Barely any of the readers have a clue either far too few pointing out that government ‘debt’ is voluntary, relatively low or even issued after spending.
All I can say Sam_W is write to SMH to explain how their journos are exploiting the limited MSM licences scenario and wrongly depicting neoliberalist policy exploiting our standard of living.
Speak up if you’ve got the goods to speak with expertise. Pound the bastards with inescapable facts.
work camps for unemployed, teenagers and retirees without enough super. Minimal medicare (if any), and cancelled funding for public education. That should fix all the problems!!!!!!!! Or, get rid of the nlpuke!
All this talk about “jobs and growth” . When will the public be told who will GAIN from this growth, and where it will lead us ? Cancer is growth, so are our emissions and ocean acidification, and many other nasties.
Has anyone asked Big Mal for the details of his plan. Timeline? Costs? Milestones? Resources? Specified outcomes per $$$?
My concern is that there are no plans and the IPA are digging up some more selloffs or give aways.
Some one must have seen this plan???????