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How to Undermine our Future Well-being

While the Australian economy continues sliding towards recession, the mainstream media seems more interested in focusing its attention on the latest popularity contest between Malcolm Turnbull and Bill Shorten.

We shall see if that changes when the 2015 September quarter national accounts figures are released next week. Yesterday, as a prelude to next week’s release, the ABS released the New Capital Expenditure and Expected Expenditure for the September quarter and the picture it paints isn’t pretty.

New Capital Expenditure fell by 20% for the 12 months to September 2015. This was considerably more than economists had expected. Investment in building and structures fell by 23.6 per cent over the same period, and investment in equipment, plant and machinery fell by 12.7 per cent.

To many, these are just boring numbers, not newsworthy enough to deflect attention away from Bill Shorten’s appalling 15% approval rating. But what they tell us is that 2016 does not bode well for employment or employment opportunities.

It also means that the private sector spending calculations built into last May’s budget are deeply flawed and that continued austerity budgeting will sow the seeds of a recession by the middle of next year. For that, Finance Minister Mathias Cormann can take a bow.

One only needs to read the Economic Outlook Statement No. 2 in the May budget papers to visualize the rubbish that must have permeated the minds of those who prepared it and signed off on it.

It reads, “Real GDP is expected to grow by 2¾ per cent in 2015‑16. This is one quarter of a percentage point slower than expected 12 months ago in the 2014‑15 Budget, as a sustained recovery in non‑mining business investment is taking longer than expected. However, stronger non‑mining business investment is expected to drive an increase in growth to 3¼ per cent in 2016‑17.”

The latest Capital Expenditure figures make these estimates look amateurish at best. If the government was expecting to float back to power at the next election on the strength of Malcolm Turnbull’s popularity, they had better think again.

While the June quarter national accounts figures indicated growth of 2.0% p.a. to June 2015, next week’s figures are likely to depress that further and if the slide continues, it could be as low as 0.8% by the end of the fiscal year, making a mockery of the government’s estimates.

What it also tells us is the spearhead measure of extending a 100% depreciation for tradies tools will have little or no impact in reversing the slide, other than to put money in the tradies pockets which, if they are smart, should then be placed in a super fund.

It is indeed surprising that so little attention is paid to the economy by both Fairfax and News Ltd these days. They were literally falling over themselves to highlight every estimate, conclusion and outcome that Wayne Swan and Treasury ever came up with from 2007-2013.

dicAt that time we were told by Abbott and Hockey that our economy was about to collapse and only a Coalition government could restore it to health.

Yet since late 2013, despite all the spin we were fed by the Hockey/Cormann fiscal management team as they set about demonstrating how “the adults” would run the economy, the situation has continued to deteriorate.

We are now at the point where not even a new prime minister, no matter how refreshing he is, and a new treasurer, can escape the bleeding obvious need for some form of stimulus.

Economist Bill Mitchell sums it up succinctly when he says, “Australia is demonstrating how an affluent country can undermine the well-being of its citizens through poorly conceived macroeconomic policy.”

kidsEconomic management of this country should be a prime interest of our media, yet it seems that popularity contests sell more papers and therefore rate more highly.

Labor’s plan to address the revenue issue by focussing on tax expenditures and corporate loopholes should be given greater prominence in the absence of any clear plan by the government.

That it hasn’t thus far, implies a failure of media communication and an undermining of our future well-being.

 

10 comments

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  1. Friday

    It is a shame that the terrific economic stuff labor achieved is still invisible under Abbutt and rupert bulldust. Little billy is too frightened to blow in case he gets a facefull but there are little windows where darts could appear that might generate questions. This morning the king of silence on operational matter was intoning ‘transparency’ and his media beating the welfare cheat drum. Must be an election soon after the new year when an appropriate labor bash moment arises.

  2. stephentardrew

    Driving off the edge of a cliff with a smile on your face and wonderful popularity ratings seems to have a certain use-by-date and that date appears to be rushing up fast like and inexorable freight train. The figures do not lie yet the solution is to give sixteen year olds the vote. Bill here we have it handed to you once more on a platter however this time hiding your head in the ground is not an option. Malcolm’s geriatric NBN; Morrison’s dead economy; health care debacle; Mal’s Slippery problem; Sidonis’ corruption; corporate tax avoidance and off-shoring profits; super concession; negative gearing; disastrous auto industry; screwed by mining sector welfare payments; global warming; Adani corruption and L-NP lobbyist funding larges; Federal ICAC desperately needed; government borrowing its own money then gifting loans to the banks; destruction of renewable energy; etc. the basket is full however the will is wanting and the Bill is at 15%.

    Am I just stupid or is it that we no longer have an opposition in this country? The excuse that being in opposition is thankless is crap you have to make your success. Even a drongo like Abbott could win an election but not this current sniveling lot of rightist labor stooges. What do I hear. Bill is a nice bloke. Bill is a Machiavellian knife thrower lost in his guilt and disingenuousness. There is a subconscious price for being the knife wielding assassin.

    Bill you just aren’t likable nor are you an honest player with the best interest of the country at hand. Have a look at Corby and Bernie Sanders and see how a true progressive acts. Get out of the way because the consequences for this country are dire austerity and ever burgeoning inequality.

  3. diannaart

    Mr Shorten

    You will lead Labor to a 2016 election defeat – not just because you appear very dim against Turnbull’s sparkle but the baggage you carry – nice man or not you were active in the purging of Rudd and then Gillard, your policies still remain Liberal-lite – where are the polices expanding upon the opportunities offered by new, sustainable technology? Where are the opportunities for all young people (not just the wealthy) to educate themselves either in tertiary or in trades (trades which which can grow along with new technology). What will you do about the NDIS scheme? The Gonski scheme?

    Please step down and give Australia a better chance than we have at present with a tame Turnbull playing for his corporate overlords.

  4. Kaye Lee

    “investment in equipment, plant and machinery fell by 12.7 per cent.”

    As John briefly alludes to, the big “job creation” boost in the last budget was to give small business instant asset write-off for purchases up to $20,000 – as many times as the business could afford to buy – which seems like not many according to the figures. I own a small business and, since the delivery car got trashed in a hail storm, I will be buying another one. This will not cause me to employ any new people. I got a new computer set-up too. That also has not meant any new employees. The figures indicate that this incentive had no positive affect whatsoever with capital investment declining.

    These people have no idea and while they continue to pursue supply side economics this country will continue to go backwards. The Coalition’s idea of stimulus is for bosses/shareholders to have more money whereas Labor understands that stimulus must be directed to those who create demand rather than those who stash money away in investments that save them from paying any tax.

  5. jim

    Media ,the way the MSM and the ABC promote the Liberals sticks out like a bulls balls. eg “Shorten wants to increase the tobacco tax there was not one mention that this was Shortens preference to raising the GST oh but however there was some Liberal dolt telling us that this will loose Shorten a lot of Labor voters, thus Labor must be off their rocker, nuts, mad. This was the same slant on all media.all to often the “news “gets cheery picked in favor of the lovely Malcolm. How can he win?.http://www.goforwardtogether.com/2015/11/24/great-propaganda-tricks-of-today-the-dodgy-survey-and-the-things-not-said/

  6. Wally

    Somehow the LNP will feed some spin to the MSM that will place the blame on the previous Labor government or they will dazzle us with some ludicrous reason to blame Bill Shorten. No matter what happens they will never admit that the adults have f@#$ed the country within a very short time.

    I was taken back by an email I received from my super fund, apparently if you are over 55 “You can make additional contributions to your super account via a salary sacrifice arrangement and supplement your reduced income with super income stream payments. This can give your retirement savings a real boost without affecting your regular income“. I do not know if there are any limits but you can basically avoid paying tax on a portion of your income at X rate in the dollar and pay the 15 cents in the dollar levied on contributions to your super.

    That is a saving of more than 30 cents in the dollar for income in the top tax bracket. No wonder we need to increase the GST to 15%!

  7. John.

    I saw Solomon Lew get interviewed on the Business, and, he’s blaming Labor for the mess that we are now in.
    Nothing was said how Labor got Australia out of the GFC!!!
    Now, Australia will be in another recession within the first half of next year!!
    This is what happens when you have got a government’s treasurers that have no idea with economics!!
    Will be very interesting if we have an election before next May, as Morrison wouldn’t have a clue how to get Australia out of the mess that we are now in!!!
    I live in Perth, and, WA’s economy is that bad, the Barnett government is considering freezing public workers pay!!!
    Of course Barnett is blaming the GST, the GST that he singed in the dotted line, but, he wants to change everything relating to the GST!!
    So, notice Australia’s LNP government is pushing Australia in to a rescission, and the WA LNP government has lost it’s AAA+ rating, to AAA, and, it looks like WA will be AA soon!!
    So much for the LNP governments are “better for the economy!!”

  8. Donald Clarke

    Pity this article perpetuates the myth that a growing economy is required for the wellbeing of our society. Given it can’t grow for ever, we need to transition to a new model.

  9. John Kelly

    Donald, you are not the first to say this, but please tell us what the model should be.

  10. Pingback: How to Undermine our Future Well-being | THE VIEW FROM MY GARDEN

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