As Australia looks down the barrel of an inflation rate close to eight per cent this year, borrowers and investors are wondering how much further official interest rates will rise.
Business is calling for urgent government intervention to address crippling shortages of Lamborghinis on the East Coast of Australia, according to an exclusive report in the Australian Financial Review. Michael West reports.
I’m no economist but neither am I a fool. When somebody tells me that inflation has taken off in Australia and that the cause is largely due to an escalation in the prices of goods and services driven by wage and salary increases and the costs of production I start to take interest.
For a start it can’t be spiralling wages as they have been stuck in the doldrums for years while corporate profits have surged and executive bonuses have ballooned. So we need to look elsewhere.
Morrison and Frydenberg were electioneering and telling us we have recovered and are now the best nation on the planet. We’re not! We don’t manufacture anymore. Not even our own cars since Abbott closed the industry down. Morrison wants us to be a top 10 “arms” manufacturer and the world’s biggest fossil fuel exporter. Mining took us up those 3 notches to 19th. All of which is at a cost that spells the death of the planet and the environment. Maybe Australia needs to lift its game and become less competitive in terms of old standards and find new ones to judge itself on.
We are a resource-rich nation like no other of sun, wind, and oceans and have the potential to be less destructive of our flora fauna land, and the planet on which we rely. We need to become a 23rd-century Indigenous nation.
Frydenbergs “great Fundamentals
Australia’s strong trade performance and pandemic recovery has elevated the nation’s international competitiveness by three spots to 19th in a global survey of 63 countries.
This came after Australia fell to its lowest ranking in 25 years in 2021, the Institute for Management Development World Competitiveness Yearbook showed on Tuesday.
However, the Committee for Economic Development of Australia think tank has warned Australia’s future competitiveness is not assured without lifting its game in a number of areas.
This includes technology, energy, skills and training, entrepreneurship, tax and productivity.
Australia’s worst ranking was in the entrepreneurship category, standing at 61 out of the 63 countries, while workplace productivity tumbled from 20 to 41.
Recession is likely. Share markets, bonds, property, crypto; it’s all falling, just as the cost of living is soaring and central banks around the world are hoisting rates to crush demand and curtail rising prices. Michael West checks out the outlook.
Federal Reserve chairman Jerome Powell plans to address sky-high inflation by hiking interest rates — acknowledging that doing so will suppress wages and worker power. It’s a response that will force workers to bear the brunt of the inflation crisis.
The two men running the Australian economy are completely at odds, fighting each other while saying they’re not. The one who is right is powerless, and the one with the power is wrong. Philip Lowe, the Governor of the Reserve Bank, is trying to get wages up, but he can’t. Prime Minister Scott Morrison could get wages up but he is so deep in the habit of suppressing them that it’s an addiction.
A capitalist economy wouldn’t work as well as it does were entrepreneurs not always trying new ways to increase their profits. The trouble is that not all the ways they try are of benefit to the rest of us, not just themselves and their shareholders. In such cases, governments should not shirk their responsibility to act in the interests of the many not the few. Nor should we fear that, unless we give businesses free rein in their pursuit of higher profits, our business people will lose all interest in running businesses.
Paul Keating was on Fran Kelly’s ABC radio show on Friday. He’d picked up a peculiar thing from the GDP release. The headline number was horrific. Australia’s economic growth had shrunk by 7%, the largest drop on record, wiping out four years of growth and sinking the nation, officially, into its first recession in 29 years. Keating seized on the bright spot though, or at least what he thought was a bright spot. Buried in the National Accounts data and apparently picked up by nobody, yet, were the figures for GDP per hour worked. It was an increase. Yes, an increase, and not a trifling increase either. Growth in GDP per hour worked was up from 0.6% – the average over four previous quarters – to 4.1%. It represents a fantastical rise in productivity – a seven-fold surge in productivity. Businesses have shed millions of workers so wage costs plummeted by 9.3% and wages are usually the highest cost in a business.
India was once the production house for 37% of the global economy the British no, a Capitalist invention Multinational Corporation the East India Company put an end to that and reduced them to 3%. The company owned Britain, the West Indies, and a Colonial Empire as well. Trading textiles, spices, tea drugs and slaves out of tax free ports. It destroyed the worlds biggest textile industry which at the time was India. It then whitewashed the history of the Colonial Empire (ODT)
His country already has a $60 billion trade deficit with China and there are concerns lowering tariffs, and allowing the flow of cheap Chinese products into India, would further increase that deficit.
IN A RECENT SURVEY conducted by the Australian Financial Review, every single economist who participated had the same message for the Morrison Government: the Reserve Bank should not have to rescue the economy on its own.
However, despite the mounting evidence of domestic economic slowdown and the growing risk of a potential global recession, the Morrison Government continues to reject calls for a stimulus. Instead, the Government insists that its tax cuts and “superior economic management” will kickstart the economy and that everything will be fine.
Productivity has tanked under this Government and Treasurer, Josh Frydenberg, is floundering. Result? Australia is providing a classic study in how not to build a productive economy. Alan Austin reports.
The way forward
The critical issues Australia must address in light of its glaring productivity failures include:
Forget the culture wars for a moment ask what this government has been doing for the past 6years. Ask why Vic is still the most progressive State and still the 2nd best most livable city after 7 years at the top. Morrison Dutton News Corp have been talking us down reporting that “Crime” was out of control in Melbourne when in fact the rate has been falling. This government works soley for itself is failing despite News Corp,Ch9,and the IPA (ODT)
ALL THE WAY WITH DONALD J SAY MORRISON ECONOMIC MANAGER
Australian two-way trade with China in 2017-2018 was 24.4% ($194.6 billion) of total trade. In contrast, Japan was our second largest trading partner, accounting for 9.7% ($77.6 billion). China was Australia’s largest export destination — with about 27% of all exports, valued at $123.3 billion.
If Australia were a business, it would be marked down for its high risk-profile through its inordinate reliance on one customer — known in economics as monopsony.
In terms of reliance on China, Australia places 11th on the league table, ahead of such “stand-out” economies as North Korea, Mongolia, Turkmenistan, Solomon Islands, Eritrea, Angola, Oman, Myanmar, Mauritania and the Republic of Congo, according to the CIA World Handbook.
The only other significant nation that comes close to Australia’s 27% export figure is South Korea (25%). New Zealand is at (19%), Singapore (12%) and Indonesia (11%). Trading figures fall away after this.
An investigation by The Age, The Sydney Morning Herald and 60 Minutes can reveal that a criminal syndicate known as “The Company” used Crown-linked bank accounts and high-roller rooms to launder its funds, with Crown licensing and paying syndicate members to generate turnover in its Melbourne and Perth casinos.
John Howard romps in in 1st, 2nd and 4th positions with the worst quarterlies
Harold Holt comes 3rd and 5th
Labor’s Paul Keating is 6th.
Consecutive negative quarters – and bearing in mind the definition of recession is two negative quarters in a row – this time ranked by annual negatives:
Mr Howard is the winner with four quarterly negatives in a row (and the worst annual result at negative 2.943 per cent)
Mr Holt had three in a row (and an annual negative 1.237 per cent).
Mr Keating had four in a row (and an annual negative 1.147 per cent)
Investors haven’t been this pessimistic since the global financial crisis of 2008.
The 180 degree turn around by the Media is as remarkable because we had just as much to worry about when Abbott delivered his first budget. Yet the media in the main were puffing up Frydenberg and Morrison as the primo money managers of our economy. Interest cuts won’t have the retired spending their savings and that’s the cash they are after Superannuation because the middle class and working class workers are in debt and it’s growing (ODT)
The Government has turned to do what Wayne Swann did to fight the GST handed out money but not quite as universally across the board. More to those that don’t need it and less to those that do. Ins some cases over x10 times more to those at the top and they refuse to budge saying it’s all or nothing rigid management. Blame the opposition as Tony Abbott did (ODT)
The national accounts released on Wednesday were, by any measure, poor. A 0.4 per cent lift in the March quarter, half of which was statistical noise, took annual growth to its lowest level since the GFC.
Yet Scott Morrison and Treasurer Josh Frydenberg cannot show any sign of panic given just three weeks ago they were telling voters the economy’s fundamentals were sound under their watch. Hope households use their engorged tax refund cheques and the cut in interest rates to spend up, pumping money into the economy.
Ch9 has Gittons Murdoch McCrann wider than the Wealth and income gaps as economic truthsayers (ODT)
Remember this: a strong, healthy economy is one where demand is always threatening to push inflation above the target zone. Our inflation rate’s been below the target for three years.And this amazing fact: the world real long-term interest rate has been falling for years and is now at zero or below. That’s a sign of strong growth?It’s time Treasury and the Reserve stopped kidding themselves – and us.
Conditions aren’t being helped by the crude trade policies being pursued by the US, which are damaging its major trading partners with flow-on effects to the rest of the world, while hurting segments of its own economy in the process.
Donald Trump’s unconventional trade negotiations are having a detrimental effect on US economic conditions.Credit:AP
The Fed has now backed off on its attempt to use what had been benign conditions in the US – where the economy was growing strongly, if perhaps unsustainably, in response to the debt-funded Trump tax cuts and spending – to normalise its policies.
Is it any wonder the LNP do what ever Newscorp asks they just might print the facts (ODT)
Annual growth in gross domestic product (GDP) in the December quarter was a dismal 2.34%. The quarterly rise was just 0.18%. The latter ranks an appalling 32nd out of the 36 OECD members. It ranks 77th out of the 92 countries worldwide which record growth quarterly. Lowest ranking ever, by far.
With an election looming these numbers should remove any lingering doubt regarding the Coalition’s incompetence in economic management.
Treasurer Josh Frydenberg hailed this week’s growth data with the mix of half-truths and blatant falsehoods we now expect from this Government:
‘With the unemployment rate at its lowest level in seven years … our economic foundations are in good shape’
Again, quite false. Australia’s jobless rate is at 5.02% is the same as it was back in 2011, when the whole world was in the worst global financial crisis in eighty years. Australia’s jobless rate then ranked sixth in the OECD. Now, after five years of strong global recovery, Australia ranks 17th.
GDP per capita shrank in the third quarter and on some forecasts it will shrink again in the fourth quarter — which technically would be a recession of sorts.
The maths is pretty simple.
Australia’s population grows at around 0.4 per cent a quarter (1.6 per cent a year). Quarterly GDP growth of 0.4 per cent delivers no growth on a per capita basis.
Population growth may be terrific for the headline aggregate number, but on an individual household level its impact is diluted by, well, the impact of more people.
The consensus call from market economists is for 0.4 per cent growth in the fourth quarter, although many say it could be worse — or “the risks are on the downside”, as they say — after a spate of soft economic data in recent weeks.
Low wages growth is undermining financial stability, curtailing economic growth, driving people into dangerous indebtedness, deepening inequality and undermining the Australian social compact built on the principle of a “fair go”.
Economic truth the LNP don’t want you to know and Trump hides wit the help of Murdoch. Our current economic reality and comparitive standing in the world today. Just over 5years ago Wayne Swann and Julia Gillard had us place 2nd today the the Abbott/Turnbull/Morrison Government has us 20th telling us how ‘grear‘ that is and all Australians have benefited from their boom time.(ODT)
IF the Government thinks the nation’s credit card can afford $144 billion in personal income tax cuts and $65 billion in business tax cuts, why can’t it afford:
to raise Newstart and unemployment benefits;
to raise Old Age Pension and Aged Care services;
to properly fund Disability and Carer pension and services;
to increase Public Housing;
to fund more homeless shelters and homeless services;
to give tertiary students a break on HECS;
to make TAFE free;
to fund more domestic violence shelters and family violence services;
to fund more public education;
to fund more public health, particularly in areas of need;
to fund proper Veterans’ services (not just memorials for pollies to prance around on ANZAC day);
to fund more public transport; and
…the list goes on, feel free to add yours in the comments below.
I say, if we truly do believe in a fair go in this country and our government wants to screech “class warfare”, well, you don’t need to be ALP or Green, just a decent human being to say:
Economic Facts put Australian History into perspective when LNP want to reward the rich with 12.5 bill in tax cuts (ODT)
In 1989, there was one billionaire. In 2002, it reached ten. There were 29 in 2010. Today, it is 76. In 2017, the wealth of the richest 200 grew by about $50 billion or 21% to $282.7 billion. This 21% growth is ten times the growth of wages.
By contrast, between 1989 and 2016 average weekly wages have grown threefold, or thereabouts, over the same period of time.
It is time for workers to reclaim their unions, and to strike for big wage increases and a fair and just society. That and that alone will wipe the smile off the faces of the rich-listers, and begin the process of redistributing the wealth back to those who create it — workers.
Australia ranks 12th in the Open Budget Index, and scores 74, much higher than the global average of 42 and the OECD average of 68. But Australia’s budget could still be more transparent if it included more on the budget’s impact on welfare and tax and by gender.
The Open Budget Index is published every two years and ranks countries using a transparency score, which is based on a survey for each country about publishing of budget documents, budget oversight and public participation.
Drawing on a loose interpretation of international data, Treasurer Mathias Cormann is once again trying to convince us that corporate tax cuts are a path to “jobs and growth”. The reality is that our companies already have plenty of funds to invest – funds they are presently handing back to shareholders and to overpaid corporate executives, writes Ian McAuley.
should the rise in prices be driven mostly by essentials such as utility prices, rents, health and education as has been the case for some years now, this lack of a growth in wage rises will also mean that households will continue to feel the effects of cost of living rises, even as overall inflation remains historically low.
Australia spends more than $10 billion every four years on weapons and military equipment from the United States, with high-tech flying bombs and attack helicopter upgrades among the big-money items.
At a time of record low wage growth, when stressed working families struggle to pay the bills, we hear the same old tune – tax cuts for big business will lead to workers getting pay rises.
But a third of big businesses aren’t paying any tax, big business profits have increased massively, and yet workers’ wages remain at record lows while the casualisation of the workforce is accelerating.
“The fundamentals are good” economy makes global news for tanking. (ODT)
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