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The Forum > Article Comments > Fact-checking Australia's likely next PM > Comments

Fact-checking Australia's likely next PM : Comments

By Alan Austin, published 29/7/2013

Mr Abbott's address to the Australia-Israel Chamber of Commerce in Melbourne on Monday of last week contained about twenty readily identifiable falsehoods.

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I agreed wholeheartedly with the views expressed in this article.

It is a pity that the Coalition front bench have learned nothing about the changes in economic theory that are consequences of Nixon's warranted destruction of the role of gold in money and the move from fixed exchange rates. The Labor Party has failed to explain to the public the consequences of those changes, probably because the leaders accepted the neo-liberal philosophy long after it proved to be in denial of the evidence. Australia needs to shift towards the policies and philosophies of the Scandinavian countries, particularly Denmark, Sweden and Finland, all of which are more egalitarian, and happier more successful communities, than the USA, the Eurozone or Australia.

Hockey often comments on the national debt without understanding that a sovereign government can never go broke over debts in the currency it issues. Howard and Costello ignored the advice of the Reserve Bank from 1998 so that by 2007 there was no Government debt but government owned real assets were substantially lower and private citizens were deeply in debt. That private debt helped make the GFC situation much worse as the private sector struggled to cope with the consequences of those debts, consequences which do not apply to domestic sovereign government debt..

The sovereign government doesn't need to indulge in upper class welfare by borrowing to fund its purchases. If the expenditures are to acquire new needed infrastructure in periods when there is underemployment of people and resources then spending to acquire those infrastructure capital items will not be inflationary.

A sovereign government's main task is to monitor demand in the economy and overcome the variations in the enthusiasms of the worthwhile industries. That sometimes requires the ability to pick winners and competent public servants and ministers are probably at least as good at that as the leaders of individual large businesses.
Think about BHP and the Magna Copper purchase, the direct reduction plant built in WA, or the recent share buy-back history (and the recent history of Rio Tinto).
Posted by Foyle, Monday, 29 July 2013 10:11:30 AM
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Notwithstanding the rosie glow of Mr Austin's analysis of Australia's economic credentials, some people (who actually live in Australia) have reported another point of view, as follows:

Boom's $190bn windfall 'wasted'

"AUSTRALIA has squandered nearly all of the $190 billion windfall from the resources boom over the past decade through a raft of unsustainable government spending programs and tax cuts."

By David Uren and Sid Maher
The Australian July 29, 2013 12:00AM
http://www.theaustralian.com.au/national-affairs/booms-190bn-windfall-wasted/story-fn59niix-1226687205325
(Login req'd)

Some see the glass mostly empty, but some see the glass overflowing for glossy political purposes. So who are you going to believe?

Cheers all.
Posted by voxUnius, Monday, 29 July 2013 10:51:52 AM
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Good work Alan; we increasingly rely on the work of free-lance and 'citizen' journalists like yourself.

I think Abbott is a serial liar and that he tried to cover his own lies by coining 'Juliar' when all she did was alter one policy when forced to do so in minority government.

Mainstream media, particularly the '70% Murdoch' newspapers let these porkies go unanswered intentionally because Abbott works for their corporate interests and advertizing customers. Hence I rarely read their papers and when I do it's only to check the latest bullsh-- they're putting around. I get my news and analysis from independent websites and blogs such as this. I've long thought The Australian's 'analysis' from the likes of Ergas and Sheridan to be poorly substantiated opinion. This article of yours would trump anything I've seen them write.
Posted by Roses1, Monday, 29 July 2013 10:52:39 AM
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There is no doubt that the capitalists and their stooges in the Coalition are working night and day to help Phoney Tony ease into the P.M.'s chair.

Abbott, who has the riveting personality of a doorknob, puts on his gravitas face and, on cue, his ears flapping like a maddened elephant, recites all his three-word slogans ad nauseum.

Who will save us from the horror of an Abbott win?

Perhaps it's time the Lord sent another flood!
Posted by David G, Monday, 29 July 2013 11:03:38 AM
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Oh dear oh dear, you've been so quiet recently. Have you not seen labor implode ... again?

Poor old Alan and his Labor cronies are falling in behind the labor strategy of attacking Tony Abbott.

It is expected as they choke on the current New Guinea disgrace of their recycled nutjob leader and the stabbing of their heroine and the departure of all their former front bench heroes.

They choke just like their current saviour (The one they supported dumping sometime ago) when he tried to mouth the words 'Soverign Borders'.

Come on Alan where is your article condemning labours current Asylum Seeker Debacle?

Or is it that you you support their current disgraceful treatment of asylum seekers?

Don't answer by refering to the opposition and John Howard. I bet you can't do that.

Come on Alan where is your article explaining Labours intent to explode the budget black hole .... again ... sigh. Why is your current recycled saviour indulging in spend spend spend and tax tax tax behaviour?

Of course you won't address that either.

Dodge and weave and fudghe Alan. That is what labor does and you are typical of that too.

Your credibility is as shot as labor's.
Posted by imajulianutter, Monday, 29 July 2013 11:21:58 AM
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Alan, you’re such a tragic.

You take Abbotts statements and then apply a variety of qualifiers to each to try to make them meet your criteria of false.

You have scoured the planet to find bits of research and opinion that suits your claims. This is so much like “the worlds greatest treasurer”.

Most in Australia are much smarter than you because we know that you can make any economics look great if you spend what was left in the bank and rack up the rest of the $350 Bn on the nations’ credit card. Simple!

Your observations will appeal to the rusted on’s but you are just a transparent leftie joke.

I think your box of hypocrisy is running low, desperate times eh?

Anyway I give you 5 for persistence, 1 for content and 2 for technique.
Posted by spindoc, Monday, 29 July 2013 11:50:11 AM
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Vox Unius: You may well be right that $190 billion was "wasted" although that is debatable. What you ignore is that 6 of the past 10 years were under a Coalition government and the report you quote lays the blame squarely at the Coalition's door for policy failures in dealing with the mining boom windfall.

Julianutter: your argument might be more convincing if you applied your critical eye to the bloviating of Abbott, Bishop, Hockey and Morrison just to quote four of the more conspicuous purveyors of half truths and downright lies of recent times.
Posted by James O'Neill, Monday, 29 July 2013 1:07:54 PM
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The reality is that since labor got into power, productivity has decreased, debt has soared, unemployment has increased, and government regulations are strangling small business.

This government is a flop.

There are far more lies in AAs post that in Abbotts.
Posted by Shadow Minister, Monday, 29 July 2013 3:31:13 PM
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Some really poor reasoning from Mr Austin.

He can't wake up to the fact that we were saved from the GFC by the mining boom. His pedantic and trivial nitpicking reinterpretation of Abbotts speech is bizarre. Really, do you need to draw a distinction between the mining boom and the "china resources boom". That is simply nuts.

FACT: Australia did reasonably well DESPITE Labor's wasteful spending because of the miners,not Wayne Swan.

FACT: Labor spent the savings.

If you want lies just look at Gillard and Rudd's statements on record.

FACT: Lots of jobs have been lost because of the carbon tax.
Posted by Atman, Monday, 29 July 2013 4:50:37 PM
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Aaaaw, Alan. You forgot to mention the superlative efforts of the world's certified best treasurer, none other than Wayne got-the-sack- Swan. He was just such a champion in delivering all those dozen things you found wrong with some speech that we now pay enough interest each year on his debt to fund the entire Gonski increases, half a dozen new hospitals and we could throw in an entirely new ABC so you could spout your biased rubbish amongst friends. Get ready for some post election improvements that will really get your blood pressure pumping.
Posted by Captain Col, Monday, 29 July 2013 6:36:46 PM
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Let’s fact check the fact checker.

1. “Golden age of prosperity that has been lost”. This is a value judgement, hard to either prove or disprove. Per capita GDP is higher than in 2007, but growth is slower, government debt is higher, and the unemployment rate has risen significantly since 2007.

3 “GDP growth per head has been just one third of the Howard era" On this, Abbott is right and Alan wrong. Alan’s reference includes an annual average growth level including an implausibly high growth forecast rate of 4.3% for 2013. Abbott quotes per capita growth, which Alan does not. Annualised per capital growth has been 0.8% under Labor compared to 2.3% under Howard (real seasonally adjusted data from ABS Cat. 5206.0).

Table 1:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Mar%202013?OpenDocument

4. “Australia's fundamental strengths owe far more to the reforms of previous governments than to the spending spree of the current one”. Another value judgement. Some independent analysts questioned the benefits of the stimulus., e.g. http://www.google.com.au/url?sa=t&rct=j&q=australia%27s+response+to+the+GFC&source=web&cd=11&cad=rja&ved=0CH4QFjAK&url=http%3A%2F%2Fwww.business.uwa.edu.au%2F__data%2Fassets%2Fpdf_file%2F0018%2F2254050%2F12-28-Australia-and-the-GFC%2C-Saved-by-Astute-Fiscal-Policy.pdf&ei=DiL2UdaVKMPCkwWou4GAAg&usg=AFQjCNEcEDBb1Mvy0KdZwG8mTwFYmFFCMg).

Australia entered the GFC with surpluses and small debt by international standards, giving it scope for aggressive fiscal stimulus.

5 “Australia's debt position is better … because we started better”. Abbott is right here, and Alan is misrepresenting the argument. Countries with comparatively low debt before the GFC mostly emerged with relatively low debt.
http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/weorept.aspx?sy=2006&ey=2013&scsm=1&ssd=1&sort=country&ds=.&br=1&c=193%2C542%2C122%2C137%2C124%2C181%2C156%2C138%2C423%2C196%2C935%2C142%2C128%2C182%2C939%2C135%2C172%2C576%2C132%2C936%2C134%2C961%2C174%2C184%2C532%2C144%2C176%2C146%2C178%2C528%2C436%2C112%2C136%2C111%2C158&s=GGXWDN_NGDP&grp=0&a=&pr1.x=38&pr1.y=13

6. Alan’s claim that “Australia is in fact doing better than every economy” is wrong. Our growth rate between 2006 and 2013 ranks 7th of the Advanced Economies – pretty good, but not better than everyone else:

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/weorept.aspx?sy=2006&ey=2013&scsm=1&ssd=1&sort=country&ds=.&br=1&c=193%2C542%2C122%2C137%2C124%2C181%2C156%2C138%2C423%2C196%2C935%2C142%2C128%2C182%2C939%2C135%2C172%2C576%2C132%2C936%2C134%2C961%2C174%2C184%2C532%2C144%2C176%2C146%2C178%2C528%2C436%2C112%2C136%2C111%2C158&s=NGDPRPC&grp=0&a=&pr.x=29&pr.y=15#download

7. Productivity is volatile and cyclical – the most common cause of a short-term increase in productivity is an economic slowdown, when employment slows faster than output. Latching on to one or two quarters doesn’t make sense.

Comparing productivity over the Howard and Rudd/Gillard governments, labour productivity growth was about half a percentage point higher under Howard. There are reasons for this unrelated to policy, but that’s another argument. Anyway, the speech was making a point about policy initiatives, not data
Posted by Rhian, Monday, 29 July 2013 7:22:47 PM
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Kevin Rudd “There are no circumstances under which I will return to the leadership of the Australian Labor Party in the future”."

Anybody really believe he meant that one at the time?

Now about that fact checking.

R0bert
Posted by R0bert, Monday, 29 July 2013 7:36:00 PM
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There are so many wrong things in the comments supporting Abbott that I have had to be rather selective.

Rhian wrote;
5. “Australia's debt position is better … because we started better”. Abbott is right here, and Alan is misrepresenting the argument. Countries with comparatively low debt before the GFC mostly emerged with relatively low debt.
We did not start better. Howard and Costello continued the idiotic policy of sell common good assets started by Hawke and Keating and while we had less government debt we, the public, owned less assets.

Howard ignored the advice form Reserve Bank Governor, Ian Macfarlane, that financial institution regulation was far too slack. If anyone looks at total debt it was private debt, issued by banks, that was out of control. Public debt used to provide worthwhile infrastructure and services is never a problem when there underemployed resources in the area serviced by a single sovereign currency.

Abraham Lincoln said it well;
"The money power preys on the nation in times of peace, and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light upon its crimes."

Professor Bill Mitchell, in today's blog wrote;
"There is nothing intrinsically important about the monetary system. It is a means to an end – to ensure real outcomes are reached to improve the lives of everyone."
Posted by Foyle, Monday, 29 July 2013 8:21:05 PM
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Greetings all,

Intriguing discussion, as always. Thanks.

@Foyle: Agree with most of your observations. Not sure, however, that Scandinavian nations are “more egalitarian, happier and more successful” than Australia. Is this based on recent data?

Definitely way in front of the USA and the Eurozone. Correct there.

@voxUnius: Yes, that’s an interesting piece by Uren and Maher. The response from James O'Neill seems valid.

@imajulianutter: No, not at all, Keith. There are plenty of critiques of the asylum seeker policy. Here and elsewhere.

No, the current administration is not spending and taxing. Mr Bowen’s emphasis now is definitely on cutting spending. Correct?

@spindoc: No, the opposite is true. The article measures Mr Abbott’s statements against objective data – NOT any subjective opinion of falsity. Happy to provide further data if desired.

@Shadow Minister: No, the opposite is true. Please refer here:

http://www.tradingeconomics.com/australia/productivity

This shows dramatically that productivity has increased for nine consecutive quarters – from what was already a high base. Australia’s productivity has been the world’s best for two years now.

It is a curious thing that you, along with Mr Abbott and Mr Hockey, persist in saying things which are so easily proven to be completely false. Why is this?

@Atman: No, there's no evidence that the mining boom saved Australia from the GFC. None whatsoever.

It didn’t hurt. But doesn’t explain Australia rocketing from 12th-ranked economy when Labor took over in 2007 to the world’s best-managed economy in 2009/10. Many other countries export minerals to China. These include the USA, South Korea, New Zealand, Russia and Japan. None of these was spared the ravages of the GFC.

Brazil also had strong iron ore exports but found no protection. It went into recession in 2009 along with other ore exporters and has barely recovered since.

Similarly with other minerals. Russia, USA and South Africa all export quantities of gold, as does Australia. Of these, only Australia escaped recession.

Strong commodity prices? Always good to have. But other exporters enjoyed the same profit windfalls, without the same outcome, didn't they?

Looking forward to continuing the conversation.

Cheers,

AA
Posted by Alan Austin, Monday, 29 July 2013 9:12:24 PM
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One of the main reasons that the public have fallen prey to so many Coalition and pro-Coalition media lies about the economy is because private debt - as opposed to public debt - is out of control. All the cited global fiscal statistics that 'prove' the health of the Australian economy go nowhere when people are justifiably worried that they cannot sustain their private debt levels.

While our public debt is at a very manageable 21% of GDP, indeed best in the world, our private debt stands at 105% of GDP. The only country with a higher household debt is Ireland at 124%. The UK (98%), US (87%) and Canada (91%) come close, but we compare very unfavourably with Japan (67%), France (48%), Sweden (60%) and Italy (45%).

Countries that experienced massive housing booms in the 1990s and 2000s are now understandably crippled with massive private debt. So too, the more countries privatized their public services, the more people had to borrow to finance exponential increases in health, education, insurance, transport and general household expenses. Cheap clothing from China can only go so far in offsetting a $2500 monthly mortgage payment and a $400 monthly family health insurance premium.

In Australia, both sides of politics have created this crippling user-pays society and the conditions that led to the housing boom. However, the Coalition is much more likely than the ALP to grossly exacerbate the situation by letting loose the same austerity agenda that has proven catastrophic for so many countries.
Posted by Killarney, Monday, 29 July 2013 10:20:30 PM
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Hi Rhian,

Thanks for your critique. Appreciate this.

Re 1.

This is about the specific matter of prosperity. Wealth and income. Not job levels, rate of growth or debt.

To evaluate this, we must examine the relevant indicators.

The day after your first house loan, Rhian, did you say, “Omigod, the $50,000 in the bank is gone! I now have a debt of $350,000. What a poor destitute person I am suddenly!”

Re 3.

Data used is here:

http://www.tradingeconomics.com/australia/gdp-growth-annual

It includes the first quarter of 2013 only. Easily compared with other nations.

Which line are you looking at in Table 1 of ABS Cat. 5206.0, Rhian? There are 108 lines.

How do you make OECD comparisons with this?

Re 4.

The problem with Nicolaas Groenewold’s paper is that he “sets out to begin to fill this gap within the framework of a small VAR model of the Australian economy ...” [page 8]

Unfortunately, conventional economic modelling has proven inadequate with the GFC. Just as traditional economics didn’t work in the Great Depression.

Yes, surpluses and small debt are positives, but they don't explain Australia’s surge to the top of the world, do they?

Several countries which emerged securely from the GFC actually went in with huge debts at the outset: Israel, Switzerland and Singapore.

In contrast, Spain, Finland, Iceland and Chile all had modest debt and budget surpluses in 2008 yet suffered severe reversals.

The evidence confirms deficit and debt were not important.

Re 5.

The critical outcome is not just the debt they emerged with, but overall economic health – income, growth, national wealth, jobs, inflation, tax rates, productivity, savings, terms of trade, credit ratings.

On these, Australia is top of the world – by a mile – and streaking further ahead. No?

Re 6.

Growth is one factor. There are others. See 5, above.

Re 7.

No-one is “latching on to one or two quarters”, Rhian. The linked chart shows productivity growth for nine consecutive quarters! Off a high base.

Still seems all the data supports the article. But happy to look at other relevant info.

Cheers,

AA
Posted by Alan Austin, Monday, 29 July 2013 11:20:21 PM
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There are many porkies in AA's manipulation of data notibly:

1, GDP growth from 2007 to 2012 was on average about 2.2% with about 1.2% of this occurring within the mining sector. With population increasing about 1.5% p.a. during this time, the non mining income relative to costs dropped.

The rising unemployment and increased casualization of the work force left many people feeling worse off.

Abbott's statement was correct.

2. Labor has introduced 22000 new regulations that have greatly increased the cost of business. The IR reforms have crippled small businesses and increased retail costs. The new inability of one man independent businesses to get ABN numbers has shut out 130 000 people from self employment etc, etc.

The Heritage foundation is a small group with limited knowledge of Aus, but even in this report it notes the negative effect of the labor government.

3. AA deliberately uses the growth figures not adjusted for population growth. Subtract the population growth and Abbott's figures are correct and AA is telling porkies.

4. UNICEF set up for child welfare? Really AA that is cherry picking in the extreme.

5.6. AA's comparison is facile. Spain, Finland, Iceland and Chile' economy were all very different.

Having Zero debt to start with and a huge mining boom is why Aus pulled through so well.

7. Multifactor productivity according to the ABS decreased by an average of 0.7% from 2007 to 2012. It increased between '96 to '04, and flattened after that.

8,9,10, Even Dudd is admitting the damage the carbon tax has done to industry and cost of living and is trying to move to a floating carbon tax at a lower value.

11. This was an aspirational statement, and AA's comment is irrelevant.

12. China is Aus's single largest consumer of commodities, and so AA's argument is purely semantics.

finally:

"And where are Australia's fact-checkers and what are they doing?"

a) in Aus not France,
b) Doing their jobs, not making things up like AA.
Posted by Shadow Minister, Tuesday, 30 July 2013 10:39:51 AM
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Hi again Shadow Minister,

Are you sure you have data to support those claims of yours?

Actual data. Really?

As an exercise, have a shot at this multiple choice quiz question:

In his speech on Monday of last week to the Australia-Israel Chamber of Commerce in Melbourne, Tony Abbott said, “The Howard/Costello Government … presided over what now seems like a golden age of prosperity – that’s been lost.”

Is this true?

On how many of these 25 variables was Australia performing better during the Howard/Costello years than now?

1. income – GDP per person
2. GNI income per person
3. interest rates
4. income disparity
5. inflation
6. health care
7. pension levels
8. superannuation
9. personal tax levels
10. company tax rate
11. indirect taxation rate
12. international credit ratings
13. economic freedom
14. personal savings
15. current account as a % of GDP
16. foreign exchange reserves
17. value of the local currency cf the US$
18. value of the local currency cf the euro and the pound
19. productivity
20. overall quality of life
21. balance of trade current
22. balance of trade history
23. terms of trade
24. government 10 year bond rate
25. world ranking on economic management

(a) twelve, about half
(b) only four
(c) one
(d) none

Thanks, SM,

Cheers,

AA
Posted by Alan Austin, Tuesday, 30 July 2013 11:18:10 AM
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Does anyone still read this bloke?

When I want fantasy I go pick up a Harry Potter, definitely not an Alan Whatshisname.
Posted by Hasbeen, Tuesday, 30 July 2013 11:32:03 AM
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AA,

Most of the variables you gave are not indicators of good economic management, the ones that really count the coalition is better in all of them namely:

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.
Posted by Shadow Minister, Tuesday, 30 July 2013 11:32:18 AM
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'No, not at all'. Going on past performances Alan, you'd now qualify as Mr Negative.

Lol.
Posted by imajulianutter, Tuesday, 30 July 2013 12:15:07 PM
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Hi Alan

re q1: Economic growth is the norm in the Australian economy. Every government since WW2 has left office with real GDP higher than when they were elected, so to say Labor has achieved this says nothing about its comparative economic performance. A more meaningful comparison would be the relative growth in GDP, which has slowed under Labor (see below).

Net wealth as a percentage of household disposable income rose under Howard but has declined under Labor:

http://www.rba.gov.au/chart-pack/household-sector.html

Re q1, q2 and q7. The data I used are from the ABS for Australian statistics:

GDP per capita (chain volume, seasonally adjusted, series ID A2304404C)
Mar-96 ___ $11,843
Dec-07 ___ $15,444
Mar-13 ___ $16,069

Annualised % increase:
Mar-96 to Dec-07 = 2.3%
Dec-07 to Mar-13 = 0.8%

GDP per hour worked index (chain volume, seasonally adjusted, series ID A2304192L)
Mar-96 ___ 78.7
Dec-07 ___ 97.5
Mar-13 __ 104.5

Annualised % increase:
Mar-96 to Dec-07 = 1.8%
Dec-07 to Mar-13 = 1.3%

Shadow Minister’s point is also right - total factor productivity looks even worse than labour productivity.

The GDP data not adjusted for population growth are closer to your numbers, but the per capita estimates above are a better measure of economic performance.

GDP (chain volume, seasonally adjusted, series ID A2304402X)
Mar-96 ___ $216,118M
Dec-07 ___ $328,464M
Mar-13 ___ $374,210M

Mar-96 to Dec-07 = 3.6%
Dec-07 to Mar-13 = 2.5%

Re q5 - the international debt and growth data I use are from the IMF WEO database. I agree a more important question of general economic performance, but that is not relevant to the argument you are trying to critique. The quote you try to falsify says: “Australia's debt position is better than that of some other countries – not because we've done better, but because we started better." The data show a very strong (and unsurprising) positive correlation between countries’ debt positions before the GFC and their positions after. The six countries with the lowest debt in 2006 also had the lowest debt in 2013 (Australia, Denmark, Estonia, Finland, Norway and Sweden). Abbott is right.
Posted by Rhian, Tuesday, 30 July 2013 1:32:10 PM
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@Atman: No, there's no evidence that the mining boom saved Australia from the GFC. None whatsoever.

Absolutely wrong. Without the mining boom we were cooked. You are implying that mining had no bearing on the GFC by stating that it did not "save" Australia. You do not even concede that it was a substantial contributor. This is grossly misleading.

You deceitfully talk of one million jobs, not mentioning that the unemployment rate has gone up since 2007. Does the concept of net jobs mean anything to you?

Fact check Gillard Carbon Tax promise and her promise to Andrew Wilkie. No need, everyone knows about those lies.

We need to get rid of the Labor Party . Now.
Posted by Atman, Tuesday, 30 July 2013 2:21:51 PM
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Alan
You say “Australia is in fact doing better than every economy”. In fact, IMF data show that Australia’s economic growth between 2006 and 2013 ranked in the bottom half of growth rates - 111th of 185 countries for which it published data for both years:

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/weorept.aspx?sy=2006&ey=2013&scsm=1&ssd=1&sort=country&ds=.&br=1&c=512%2C666%2C914%2C668%2C612%2C672%2C614%2C946%2C311%2C137%2C213%2C962%2C911%2C674%2C193%2C676%2C122%2C548%2C912%2C556%2C313%2C678%2C419%2C181%2C513%2C867%2C316%2C682%2C913%2C684%2C124%2C273%2C339%2C868%2C638%2C921%2C514%2C948%2C218%2C943%2C963%2C686%2C616%2C688%2C223%2C518%2C516%2C728%2C918%2C558%2C748%2C138%2C618%2C196%2C522%2C278%2C622%2C692%2C156%2C694%2C624%2C142%2C626%2C449%2C628%2C564%2C228%2C283%2C924%2C853%2C233%2C288%2C632%2C293%2C636%2C566%2C634%2C964%2C238%2C182%2C662%2C453%2C960%2C968%2C423%2C922%2C935%2C714%2C128%2C862%2C611%2C135%2C321%2C716%2C243%2C456%2C248%2C722%2C469%2C942%2C253%2C718%2C642%2C724%2C643%2C576%2C939%2C936%2C644%2C961%2C819%2C813%2C172%2C199%2C132%2C733%2C646%2C184%2C648%2C524%2C915%2C361%2C134%2C362%2C652%2C364%2C174%2C732%2C328%2C366%2C258%2C734%2C656%2C144%2C654%2C146%2C336%2C463%2C263%2C528%2C268%2C923%2C532%2C738%2C944%2C578%2C176%2C537%2C534%2C742%2C536%2C866%2C429%2C369%2C433%2C744%2C178%2C186%2C436%2C925%2C136%2C869%2C343%2C746%2C158%2C926%2C439%2C466%2C916%2C112%2C664%2C111%2C826%2C298%2C542%2C927%2C967%2C846%2C443%2C299%2C917%2C582%2C544%2C474%2C941%2C754%2C446%2C698&s=NGDP_R&grp=0&a=&pr.x=50&pr.y=12#download

Most of the economies ahead of Australia are developing countries such as China and India, and I would accept that these are likely to grow faster than a developed country. Nonetheless, in an article about fact checking, one might expect a greater degree of precision.

Re productivity
The productivity series in your graph is a trend – manipulated to smooth out fluctuations from period to period. So it’s not surprising you observe productivity growth for nine consecutive quarters. The seasonally adjusted numbers from which they are derived show productivity fell in the March quarter 2011 and June 2012, and was flat in September 2011 and March 2013. So really, growth in 5 of 9 quarters.

Compare the trend series ID A2304364W (reproduced in your chart) with the seasonally adjusted series ID A2304192L:

Table 1:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Mar%202013?OpenDocument

You say productivity has come off a “high base”. Not so. seasonally adjusted productivity fell between September 2009 and March 2011. It has since picked up, but the 2.6%pa growth in the past 2 years is hardly stellar. The chart exaggerates the improvement because it is scaled with a minimum y axis of 96, making the modest improvement of the past few quarters look stronger than it really is. Good statistical practice would set the axis minimum at zero - but then, you'd hardly discern any productivity growth at all.
Posted by Rhian, Tuesday, 30 July 2013 3:30:47 PM
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Alan Austin
re; @Foyle: Agree with most of your observations. Not sure, however, that Scandinavian nations are “more egalitarian, happier and more successful” than Australia. Is this based on recent data?

I have a copy of the book by Phil Zuckerman, "Society without God" written after 14 months of study in Denmark and Sweden. Also there is a chart in Dr Pasi Sahlberg's address to the Univ of Melbourne, Education faculty in September 2012 showing where Finland fits into eleven measures of wellbeing. Finland rated first in two, second in three, third in three, second in four and 6th in the eleventh. Sahlberg's presentation is at;
http://events.unimelb.edu.au/recordings/68-how-finland-remains-immune-to-the-global-educational-reform-movement
It is well worth watching. Other charts therein are also very informative.

I have quoted several times in these arguments statements showing that Howard and Costello repeatedly ignored advice provided by the Governor of the Reserve Bank from late 1998 that the financial regulations needed to be tightened. People who have no mortgages feel wealthy when fixed assets such as homes go up in value. But people who had taken on oversized mortgages (the young) to get a home had to reduce their other spending power with aggregate demand consequences. But those mortgage increases were underwritten by lax prudential behaviour by financial institutions and when the GFC hit all Australian banks had to be bailed out. The Federal Governments investor guarantees were instituted because the banks were about to collapse.

Too many people who comment on your type of article have no real understanding of economic theory, particularly the way money theory changed after Nixon accepted the theory of Keynes that money needed to be decoupled from gold. Section 6 of Ch.10 of Keynes' "General Theory" was an excellent exposition on money.
Posted by Foyle, Tuesday, 30 July 2013 4:30:18 PM
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Why are so many pro-Coalition commenters here insisting that Australia was debt-free when Labor took office? Government debt in December 2007 was just under $60 billion, and the year after that it was just over $60 billion. Then the GFC struck and the rest is history.

Had Howard retained office, his government would almost certainly have addressed the GFC by implementing savage austerity cuts and cutting taxes to supposedly stimulate business – running up both public and private debt. This would have come on top of the full implementation of Work Choices, which would have already accelerated the casualization of the workforce, the loss of the minimum wage and the driving down of wages in general.

Combined with the massive levels of private debt created by Howard-Costello’s user-pays society and the housing boom (the seeds of which were admittedly sown by Hawke-Keating), I strongly suspect Australia’s economic health would more likely resemble the UK, US and PIIGS economies by now – mining boom or no mining boom.
Posted by Killarney, Tuesday, 30 July 2013 7:45:03 PM
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Good morning all,

Intriguing discussion. Thanks

@Shadow Minister, some questions to ponder:

Re: “Having Zero debt to start with and a huge mining boom is why Aus pulled through so well.”

If so, why did no other country with zero debt pull through? For example, Luxembourg, Russia, Ukraine and Chile.

How come the other nine triple A-rated nations – that is, those emerging strongest from the GFC – went in with average debt above 50% of GDP?

Canada and Switzerland are the second and third ranked economies in the world now, behind Australia. Correct?

How is this possible if in 2008 Canada had debt at 66.5% and Switzerland at 41.8%?

Is there any actual evidence anywhere that debt at the outset had any impact whatsoever?

Regarding debt as an indicator of prosperity, SM, have you ever bought a house? Can I ask you the question posed to Rhian?

After signing the mortgage, did you say, “Omigod, the $50,000 in the bank is gone! I now have a debt of $350,000. What a poor destitute person I am suddenly!”

Regarding your “indicators of good economic management, the ones that really count.”

You list six:

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.

Measured comparatively, where does Australia rank now in the world?

First?

Where did Australia rank in 2006 and 2007?

Tenth? Fifteenth? Twentieth?

The ethical challenge, SM, is acknowledging the global financial crisis.

It’s a bit like observing travel, tourism and retail in Australia plummeting in the first quarter of 2001 compared with the last quarter of 2000.

Do we blame the government for its criminal incompetence? Or do we note the impact of the Olympic Games?

Or when we observe inflation in Australia exploding in 2001 to three times the previous level, do we blame the treasurer for losing control of the economy? Or do we acknowledge the one-off impact of the GST?

We can choose the way of integrity, SM. Or we can choose the way of Tony Abbott and the Murdoch media.

Cheers,

AA
Posted by Alan Austin, Tuesday, 30 July 2013 9:06:01 PM
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Killarney
I guess you’re referring to gross debt, which is not the measure most commonly used to evaluate and compare governments’ fiscal positions. Most analysts look at net debt, and that is also the measure typically reported on by government (and preferred by the Australian Government).

According to the budget papers, the Commonwealth’s net budget position changed from a surplus of $29,150M in 2006-07 to a deficit of $161,603M in 2012-13.
Table C.8:
http://www.budget.gov.au/2013-14/content/bp3/html/bp3_08_appendix_c.htm

Although gross debt was positive in 2006-07, relative to GDP it was at its lowest level in decades.
http://www.tradingeconomics.com/australia/government-debt-to-gdp
Posted by Rhian, Tuesday, 30 July 2013 11:36:47 PM
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Hi Rhian,

Thanks for this input.

Agree almost entirely on economic growth. No question Australia's rate has slowed since 2008.

The lies that must be exposed are:

(1) that growth has stopped or been reversed.

It hasn't.

(2) the slowdown is the consequence of decisions in Australia.

To illustrate, consider economic growth in these 13 comparable countries in calendar 2006:

Australia 3.1%
Austria 3.8%
Belgium 3.4%
Denmark 3.1%
Germany 4.3%
Hungary 3.8%
Iceland 3.3%
Ireland 3.4%
Italy 3.0%
Netherlands 3.3%
Norway 3.3%
Spain 3.9%
Switzerland 3.5%

Average 3.48%

These are the OECD members with 2006 growth between 3.0% and 4.5%. So there’s no cherry-picking.

Data: http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate

Where are they now – growth during calendar 2012?

Australia 3.1%
Austria 0.7%
Belgium -0.5%
Denmark -0.9%
Germany 0.0%
Hungary -2.7%
Iceland 1.4%
Ireland -1.0%
Italy -2.8%
Netherlands -1.5%
Norway 1.9%
Spain -1.9%
Switzerland 1.4%

The average, excluding Australia’s abberant number, is negative 0.49%.

Similar results with other time periods. Say, averaging growth over five years before 2008 and comparing them with five year averages since.

Similar results also with other groupings. We could look at all 34 OECD nations. That would include Greece which went from 5.7% growth in 2006 to -5.7% in 2012 and Slovakia which went from 10.8% to 0.7%.

We could try all mineral exporters. That would include Brazil which went from 5.49% to 1.4% and South Africa which went from 4.6% to 1.5%.

We could try all nations which had zero debt before the GFC. That would include Luxembourg which went from 8.2% down to 1.7% and Ukraine which went from 9.6% to -2.5%.

Any way we compare GDP growth across the globe, Australia is the one stand-out among comparable nations, despite the rate slowing significantly during the GFC.

So can you see how isolating this one variable without reference to the GFC's impact or the experience of comparable economies seems pretty tawdry, Rhian?

It’s like comparing Australia’s economy in 1936 with 1926 without acknowledging the Great Depression.

This is precisely what Mr Abbott, Mr Hockey and the tame economists working for Murdoch are doing.

No?

Cheers,

AA
Posted by Alan Austin, Wednesday, 31 July 2013 12:29:43 AM
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AA,

I take your admission that comparing:

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.

Labor performed worse than the Howard government.

As far as starting with No debt and large mining industry you give me as a comparison Luxemborg? What planet are you on?

Canada, Brazil and Norway alone have a comparable mining industry and performed very well in the GFC. Canada had a larger debt and did not perform quite as well.

And yes we do blame the government for its criminal incompetence.
Posted by Shadow Minister, Wednesday, 31 July 2013 7:55:32 AM
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Hi again SM,

Regarding your six variables, this seems the situation:

a. Net federal debt:

Rose during the Fraser period, fluctuated under Hawke/Keating, dropped under Howard, and rose during the Rudd/Gillard/GFC period.

Compared with other nations, Australia was below average under Fraser, above average under Hawke/Keating, about average under Howard and exceptionally strong during the Rudd/Gillard period.

b. Unemployment rate:

Worsened disastrously during the Fraser years, improved greatly under Hawke/Keating, continued to improve under Howard and dropped back slightly during the Rudd/Gillard/GFC period.

Compared with others, Australia was below average under Fraser, above average under Hawke/Keating, average under Howard and near world’s best during the Rudd/Gillard/GFC period.

c. and d. GDP growth rate and GDP growth rate per capita:

Poor during the Fraser years, improved greatly during the Hawke/Keating period, continued to improve under Howard but dropped back during the Rudd/Gillard/GFC period.

Comparatively, Australia was below average under Fraser, above average during the Hawke/Keating period, average through the Howard years and best by far in the developed world during the Rudd/Gillard/GFC period.

e. Multifactor productivity growth:

Depends on the data. Your sources, SM?

f. Better regulatory environment for small business.

Depends on the data. Heritage Foundation rates the Rudd/Gillard period as best in Australia’s history, best in the entire capitalist world [OECD] and third best in the world, behind Hong Kong and Singapore.

Have you other sources, SM?

On all the following, however, Rudd/Gillard have done way better than Howard – despite the GFC!

1. income – GDP per person
2. GNI income per person
3. interest rates
4. income disparity
5. inflation
6. health care
7. pension levels
8. superannuation
9. personal tax levels
10. company taxes
11. indirect taxes
12. international credit ratings
13. economic freedom
14. personal savings
15. current account
16. foreign exchange reserves
17. value of the currency cf the US$
18. value of the currency cf the euro and the pound
19. productivity
20. quality of life
21. balance of trade current
22. balance of trade history
23. terms of trade
24. 10 year bond rate
25. world ranking on economic management

Cheers,

AA
Posted by Alan Austin, Wednesday, 31 July 2013 8:57:37 AM
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Hi Alan,

I leveled at you the criticism that you selected “bits of research and opinion that suits your claims”.

To which you responded, << @spindoc: No, the opposite is true. The article measures Mr Abbott’s statements against objective data – NOT any subjective opinion of falsity. Happy to provide further data if desired.>>

Looking back at the responses to your article we see the might of OLO hitting you with contrary “objective data” to your “objective data”.

Not to be outclassed you respond to your “quality“ being questioned by switching to “quantity”. You still don’t get it do you?

The progressives come equipped with masses of narratives to explain their ideology, this is specifically designed to impress the proletariat and establish the mantra of “intellect”. What you fail to understand is that if you did have an intellect you could “think” beyond your ideology, but you can’t so you are stuck with narrative theory.

No doubt you will continue impress the many that also cannot think it through for themselves.

It’s getting tougher to be a proselytizer is it not?
Posted by spindoc, Wednesday, 31 July 2013 8:59:56 AM
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Hi Alan

You say the lies that must be countered are:
“that growth has stopped or been reversed”
If Abbott said this, he's wrong. But that not what the quotes you cite say, or even imply.

“The slowdown is the consequence of decisions in Australia”
Economics is not a precise science, and this is a matter of interpretation. A legitimate case can be made either way.

Personally I agree that the growth slowdown had little to do with government policies, but I disagree that government policies are the main reason for Australia’s stronger economic growth compared to most developed economies. I don’t think government made much difference either way. In politics, oppositions blame government for the bad elements of economic performance, and government claims credit for the good bits. Both overstate Government's capacity to influence growth. Both legitimately point to evidence supporting their arguments, but often tell only the part of the story that suits them. The verdict should be “partly true” for both.

We already have discussed in previous forums the contribution of the resources expansion, terms of trade and growth in China to Australia’s relatively strong economy. I think these were far more influential than you do. I don’t think you’re a “liar” or “tawdry” for playing down these factors, but nor do think Abbott is a “liar” or “tawdry” when he downplays the GFC’s effect on Australia’s growth. Again, I’d rank you both “partly true”.

Likewise, I accept growth has slowed less in Australia than other developed economies. But most people do not live in developed economies. To claim that our economic growth is the best in the world is wrong.

I think your arguments are misleading on debt, productivity, and GDP growth per capita. I also disagree with your point that the mining boom is not ending, but we haven’t discussed that one yet.

I partly agree with several of the points you make. But to be credible as a “fact checker”, you should impartial, willing to explore all the evidence, and give credit for legitimate argument on both sides. I don't think you do that.
Posted by Rhian, Wednesday, 31 July 2013 11:56:26 AM
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AA,

Thanks for acknowledging that Labor is the party of debt and unemployment.

Debt,

The only liberal government that had debt rise was the Frazier government, after Whitlam trashed the economy and left it in deep recession.

Hawke Keating drove it to record highs,

Howard repaid all the debt,

Rudd / Gillard ran it back up to new record highs.

Unemployment

Rose drastically under Whitlam,

Dropped slowly under Frazier,

Rose again under Hawke/Keating

Dropped to record lows under Howard,

Rose under Dudd/Gillard.

Productivity rose under Howard, dropped under Dudd/Gillard - ABS figures.
Posted by Shadow Minister, Wednesday, 31 July 2013 12:39:18 PM
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Morning all.

@Rhian, thanks for this.

Where we differ:

(a) Importance of assessing economic performance within the international context. Australia was 12th-ranked economy globally in 2007. It is now first by a street.

(b) Australia’s bizarre fixation on depicting borrowings as an indicator of failure. This is the equivalent of religious or superstitious nutters who believe ‘neither a borrower or lender be’ and who never take out a mortgage. Just weird. And seldom the way to prosperity.

(c) Impact of pre-GFC debt and surpluses on weathering the GFC. Evidence is compelling it had none whatsoever. Refer Luxembourg, Russia, Ukraine and Chile.

(d) Impact of minerals export volumes and commodity prices on weathering the GFC. Evidence suggests none whatsoever. Refer South Africa, USA, Brazil and Russia.

(e) Impact of trade with China on weathering the GFC. Evidence suggests little, if any. Refer Euro Area, South Korea, New Zealand and Japan.

(f) Impact of the extensive 2009-10 stimulus packages on weathering the GFC. Evidence suggests these were critical. Refer economic analysis from the IMF, OECD, UN and independent academia.

(g) Australia’s economic health now relative to earlier periods. Evidence shows Australia is significantly more prosperous now than earlier.

(h) Australia’s economic health now relative to other nations. Australia’s economy is now healthier than any other economy anywhere ever.

Have endeavoured to link to data sources. Happy to provide more.

Hence these are clearly untrue:

“The Howard/Costello Government … presided over what now seems like a golden age of prosperity – that's been lost” [Mr Abbott last week]

"The Treasurer said that it was a budget for jobs and growth. In fact, unemployment increases and growth decreases." [Mr Abbott, May]

“… the reality is that the cupboard is bare.” [Joe Hockey. May]

“The Gillard Government will be remembered as the most profligate and wasteful custodian of the Federal Treasury in Australian history.” [Julie Bishop, March]

These are clearly false and malicious and ought not be stated or implied. When they are, they should be exposed and condemned, along with all other porkies.

Back later to tie up loose ends.

Cheers,

AA
Posted by Alan Austin, Wednesday, 31 July 2013 6:23:29 PM
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'The only liberal government that had debt rise was the Frazier government, after Whitlam trashed the economy and left it in deep recession.'

This says otherwise:

http://4.bp.blogspot.com/-6goWIsM6G1A/UckTj1RK3QI/AAAAAAAAA-Y/l7xeukzBgx0/s1600/Chart2+June+2013.jpg

There is also that little matter of the OPEC oil crisis and Nixon's severing of the dollar from the gold standard and the runaway inflation that both of these fuelled - which can be seen in the high debt levels of the Fraser years.

The myth of Whitlam era debt was all part of the carefully contrived media beat-up that set the stage for the 1975 Dismissal. The powers that be (draw your own conclusions) were not prepared to tolerate any more 'socialist' reforms from a lefty government. Whitlam debt fantasy was, and is, a brazen lie of epic proportions, which Australian politics has never recovered from
Posted by Killarney, Wednesday, 31 July 2013 7:06:11 PM
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Alan, you’re shifting the goalposts from fact checking Abbott’s speech to a general discussion of your diagreements with the opposition’s economic analysis; at the same time assuming I share their view, which is only partly true.

Re a), I agree that we need to take into account international context when assessing Australia’s relative economic performance. That’s why I think you underestimate the importance of China, resources and the terms of trade. I wish you’d stop writing as though the OECD comprises the whole world economy, though.

Re b) the quotation from Abbott you critique does not address whether it was appropriate to go into debt in response to the GFC (I think it was), but the fact that Australia’s good fiscal position before the GFC gave it a much better platform for borrowing than countries that were already heavily in debt. The data confirm this.

Re c, d, e, and f – none of these points are raised in the Abbot quotes you cite.

Re g) and h), the evidence is mixed. Refer to my answer above on GDP growth verses levels, and household net wealth (which you have so far ignored). Likewise for “golden age of prosperity”. By your measure, Australia in the 1930s depression was an age of prosperity because real GDP was higher, in average, than in the 1920s.

“Unemployment increases and growth decreases”. That is exactly what the budget forecasts actually predict for 2013-14:
http://www.budget.gov.au/2013-14/content/bp1/html/bp1_bst2-01.htm


“Australia’s economy is now healthier than any other economy anywhere ever.” Well, it depends what you mean by “healthy”; it’s hardly a term with a precise definition in economics. Other countries past and present have recorded higher GDP and income levels and growth, higher household wealth, stronger employment growth and lower unemployment, higher consumption and investment, a stronger balance of payments, less inequality, and less government and (especially) household debt. In fact, I can’t think of any major economic indicator on which Australia’s economic performance is better than any other economy, ever.

None of the verifiable facts you quote from Abbott are actually wrong; though the interpretations are, of course, debatable.
Posted by Rhian, Wednesday, 31 July 2013 7:19:54 PM
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It's not debt per se, rather is it debt for investment or debt a la Detroit. The GillRudd government is definitely of the latter, what is to be expected from winners of the Labor patronage machine?
Posted by McCackie, Wednesday, 31 July 2013 9:48:09 PM
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Hi Rhian:

Thanks again.

Re: “To claim that our economic growth is the best in the world is wrong.”

Correct. Hope I haven’t claimed that. It's not even best in the OECD.

It does, however, shine in any grouping of comparable nations.

Re: “you’re shifting the goalposts from fact checking Abbott’s speech to a general discussion of your disagreements with the opposition’s economic analysis”

Maybe.

Is the assertion that the Rudd/Gillard Governments have worsened Australia’s economy true or false?

That’s the issue under analysis. Data examined so far confirms it’s false.

Re: “The quote you try to falsify says: ‘Australia's debt position is better than that of some other countries – not because we've done better, but because we started better.’ The data show a very strong (and unsurprising) positive correlation between countries’ debt positions before the GFC and their positions after. The six countries with the lowest debt in 2006 also had the lowest debt in 2013. Abbott is right.”

Not at all. That's only if you measure “having done better” by debt levels post GFC.

If you do this, then certainly there’s a strong (and unsurprising) correlation.

But economists don’t just consider debt. They look at the real measures of success - income, growth, jobs, inflation, taxes, productivity, savings, terms of trade and credit ratings.

There is no correlation whatsoever between low debt before the GFC and these outcomes, is there?

If anything, it’s a reverse correlation. Virtually all countries with low or zero debt at the outset did particularly badly on those variables. [Luxembourg, Russia, Ukraine and Chile.] Except Australia.

Most countries with budget surpluses at the outset also performed badly on those outcomes. [Spain, Finland, Iceland, Chile.] Except Australia.

Countries with huge deficits and debt at the outset actually emerged pretty well. [Israel, Switzerland and Singapore.]

So economists seek other explanations, consistent with the facts. As it happens, we find it when we check correlation with the 2009/10 stimulus packages.

Which means “we have done better” is actually true.

Mr Abbott’s denial is false.

As are the other statements noted in the article. No?

Cheers,

AA
Posted by Alan Austin, Thursday, 1 August 2013 1:22:51 AM
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Greetings again,

@Killarney:

Yes, agree with almost all your observations. Thanks.

Just not sure that Australia’s private debt is too high. Yes, it’s higher than other countries but, generally, the higher the debt the better the long-term outcomes. Provided, of course, investments are appropriate, interest rates are low and repayments manageable.

Most informed opinion abroad re Australia’s government debt is that it’s too low for the times. This may be shown in due course to have been a significant lost opportunity.

@Shadow Minister:

Re: “GDP growth from 2007 to 2012 was on average about 2.2% with about 1.2% of this occurring within the mining sector.”

Correct. That is my point. Growth has continued. It has not stopped or reversed. Hence wealth has continued to increase, albeit more slowly during the GFC.

Hence assertions that Australia is now less prosperous than in 2007 are false.

Correct?

Re: “The rising unemployment and increased casualization of the work force left many people feeling worse off.”

Correct also. “Feeling” worse off.

Your country is matched only by North Korea in having a mainstream media which tells people the opposite of the truth in order to make them feel a certain way.

North Koreans are told their government is extraordinarily brilliant so they feel good.

In Australia it's the other way around.

@Atman:

No, there’s no evidence whatsoever that the mining boom saved Australia from the GFC.

Yes, it helped Australia’s economy tick over through the Howard years. But during that period, Australia’s economy actually slipped from 6th ranking in the world [in 1996] back to 12th [in 2007].

Too many problematic questions with that hypothesis, Atman.

If minerals exports and high prices were so important, why did Brazil, South Africa and the other mineral exporters find no protection from the GFC?

If trade with China was important, why did other nations with even stronger trade links find no protection?

If the mining boom was so vital, why was Australia slipping backwards?

I understand this hypothesis has been repeated ad infinitum by your media and many politicians, Atman.

But it just ain’t true.

Cheers,

AA
Posted by Alan Austin, Thursday, 1 August 2013 1:44:19 AM
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AA,

It is always easy to fudge the figures if you leave things out.

The population has been growing at about 1.4% p.a., and as 98% are not employed in mining, the roughly 1% p.a. non mining GDP growth has left the rest of the country -0.4% p.a. worse off.

Correct?

Anyone actually living here can see that retail, tourism etc are all suffering, and with unemployment and job casualization increasing, most Australians are not feeling better off.

WRT Brazil and South Africa, comparing them with Aus is facile as they are largely manufacturing for export intensive, most of their economy was badly hit, the mining sector did help shield them.

Canada is a much closer mix, and also fared relatively well.
Posted by Shadow Minister, Thursday, 1 August 2013 3:43:46 AM
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"...Australia remains the envy of the advanced economic world..."

http://www.theage.com.au/business/australian-position-enviable-20130731-2qzlg.html

''But it's also partly due to surprisingly sensible macro-economic management. They've just messed up much less than is the norm in advanced economies.''

"Willem Buiter, a former chief economist for the European Bank for Reconstruction & Development, is in Australia this week on a rare visit."
Posted by Poirot, Thursday, 1 August 2013 10:09:45 AM
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Alan
You persist in misrepresenting the quotations you use. The quote you cite does not say “Australia has done better” because it entered the GFC with low debt; it says “Australia's DEBT POSITION is better … because we started better”. (Sorry to shout, but you persist in ignoring this). Abbott is not correlating GDP growth with debt before the GFC; he is correlating debt after the GFC with debt before the GFC. And he is right.

I agree that economists consider many things besides debt as measures of economic performance. But debt is one of the things they consider, and it’s perfectly reasonable for Abbott to consider it too.

You say there is a reverse correlation between debt before the GFC and economic performance after. This is wrong. While some countries with low debt before the GFC fared quite badly, some countries with high debt fared very badly (Greece, Italy, Portugal). If you correlate the debt levels of advanced economies with their economic growth rates since 2006 (the two data sets in my links above), you’ll see the correlation, though weak, is in the opposite direction. High debt in 2006 is associated with lower GDP growth in 2006-2013.

You say ‘“we have done better” is actually true. Mr Abbott’s denial is false.’ Can you point to any statement in which Abbott denies that Australia’s GDP growth post-GFC is lower than other developed countries?

you say
‘As are the other statements noted in the article. No?’ No, indeed!

I’d still like your comments on household net wealth, seasonally adjusted productivity estimates, per capita GDP growth; and which, if any, indicators show Australia’s economic performance as “better than any other economy, ever”
Posted by Rhian, Thursday, 1 August 2013 12:01:34 PM
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Hi Rhian,

Thanks for your persistence. Much appreciated.

Regarding the article’s point 5: “Australia's debt position is better than that of some other countries – not because we've done better, but because we started better."

Three problems here.

The first is using debt level as a stand-alone indicator of managerial competence. Just not valid. But it's a bit technical, so wasn't addressed in the article.

Second, Mr Abbott says “some other countries”. This minimises Australia’s actual performance on debt – which is better than the vast majority of comparable countries. But that’s also a quibble.

The third and main issue is the clause “not because we have done better”. This seeks to convey that Australia’s low debt position is solely the result of having low 2007 debt, and deny that other decisions were critical.

He asserts or implies this frequently. It’s not true.

Yes, an inverse correlation between low debt before the GFC and economic performance is evident.

Consider all developed nations with 2007 debt below 20% of GDP.

These are Australia, Estonia, Luxembourg, New Zealand, Russia and the Ukraine. All but one suffered badly – with between four and seven negative quarters of growth and serious job losses.

Australia alone emerged well on all the indicators of good economic health.

Ireland and Iceland started just above 20% and both did particularly disastrously.

The data suggests no correlation between high debt at the outset and outcomes during the GFC.

Those starting with high debt – above 40% – which did well include Canada, Germany, Poland, Sweden, Switzerland and the USA.

Those starting with high debt which did poorly include Austria, Belgium, France, Netherlands and Spain.

Some started with extraordinarily high debt – above 80% of GDP – and still emerged well, including Israel and Singapore.

Hence Mr Abbott’s frequent assertion or implication that low debt in 2007 is what saved Australia has no support from the data.

Have you looked at the correlation between stimulus packages and economic outcomes, Rhian?

Happy to explore all this further.

Meanwhile, what are you data sources on productivity?

Thanks. Cheers,

AA
Posted by Alan Austin, Thursday, 1 August 2013 9:23:14 PM
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AA,

Your statements are getting more and more ridiculous.

"The data suggests no correlation between high debt at the outset and outcomes during the GFC."

Greece, Portugal, Italy, and Spain might disagree!

The greater the debt the less secure it is considered, which is why Greece imploded. Some debt is not that bad, but no debt is better.

But once again thanks for admitting that for the prime economic indicators:

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.

Labor performed worse than the Howard government.
Posted by Shadow Minister, Friday, 2 August 2013 11:42:46 AM
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Alan
There is no stand-alone measure of economic competence. Growth, unemployment, debt, household incomes, debt etc are all subject to factors beyond Government control. But all contribute to the evidence of economic management.

On the relationship between debt and growth – if your maths isn’t up to a regression, just plot a scatter chart and add a trend line on the data above. It will show you are wrong. Or, use the OECD data for the same period. It shows the same thing.

On the correlation between stimulus and growth, I have never said there should not have been stimulus, and have already said I think it appropriate we went into deficit. We disagree on how well the stimulus was crafted and how significant it has been to Australia’s relative economic strength, not on whether there should be stimulus. For what it’s worth, my view on this is straight fiscal orthodoxy – governments should maintain small structural surpluses (averaged over the business cycle) which allow them flexibility to go into deficit when the economy turns down without a long-term drag on the economy from high and rising debt. Labor has taken deep into structural structural deficits (though the Coalition was taking us in that direction before 2007), and that concerns me:

http://www.aph.gov.au/~/media/05%20About%20Parliament/54%20Parliamentary%20Depts/548%20Parliamentary%20Budget%20Office/Parliamentary%20Budget%20Office%20Stuctural%20Budget%20Balance.ashx

The productivity data I cited are from the ABS National Accounts. The chart you referred to uses the trend data from this same source. If you insist on reading significance into quarterly changes in productivity (a pretty meaningless exercise, in my view), then the appropriate measure is seasonally adjusted, as trends are explicitly manipulated to eliminate short-term variability.

Compare the trend (series ID A2304364W, reproduced in your chart) with the seasonally adjusted series (ID A2304192L):

Table 1:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Mar%202013?OpenDocument

Do you now agree that the budget papers show that “unemployment increases and growth decreases” in 2013-14
Posted by Rhian, Friday, 2 August 2013 11:54:04 AM
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Hi Alan
Today’s government economic statement provides some interesting data for our discussion:
http://www.budget.gov.au/2013-14/content/economic_statement/html/index.htm

1. Mining boom
From today’s statement:
“The challenges of transitioning away from the resources mining investment boom towards broader based growth are clear”, and “managing the passing of the resources investment peak is the key near-term economic challenge facing Australia”

In your article, you declared this statement false:
"At the Press Club recently, Mr Rudd declared that the mining boom was over and that Australia needed to be ready for life afterwards."

Will you now accept that Abbot’s view and the Government’s on the mining boom are actually very similar?

2. Unemployment and Growth
From today’s statement:
“With the forecast moderate slowdown [in economic growth], and the unemployment rate expected to increase slightly over the next year … “,

Will you now accept that Abbot was right at budget time, and is still right, in saying “"The Treasurer said that it was a budget for jobs and growth. In fact, unemployment increases and growth decreases”

3. Debt and Deficits
From today’s statement:
“A medium-term consolidation and path back to budget surplus is appropriate to strengthen medium-term budget sustainability”

Will you accept that Government does not share your view that debt and deficits are not relevant to evaluating economic performance?

4. China and the terms of trade
From today’s statement:
“In recent years, strong economic outcomes have been supported by a record surge in resources investment, as businesses responded to high commodity prices driven by strong growth in China and other emerging market economies.”

Will you accept that the Government shares my view, stated above, that “the contribution of the resources expansion, terms of trade and growth in China to Australia’s relatively strong economy” has been important?
Posted by Rhian, Friday, 2 August 2013 2:21:42 PM
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I have not read the article, but good luck Rhian. This guy knows it all.
Posted by Chris Lewis, Friday, 2 August 2013 4:15:24 PM
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Good morning Rhian,

Responding to your penultimate post first:

Agree with most of this. Except:

Re: “On the relationship between debt and growth – just plot a scatter chart ... It will show you are wrong.”

Not sure I’ve claimed correlation between debt and growth. Growth is only one outcome. Other measures of economic performance include inflation, interest rates, tax levels, productivity and jobs – participation and unemployment. Plus currency value, terms of trade and credit ratings.

The observation that five out of the six lowest debt economies all did particularly badly through the GFC related to overall performance, not just growth.

On productivity, Rhian, I’ve checked the seasonally adjusted series (A2304192L) and don't think this changes anything.

What basis do you believe Mr Abbott has for his oft-repeated assertion: “Labor has overseen a marked fall in Australia’s productivity performance”?

Re: “Do you now agree that the budget papers show that “unemployment increases and growth decreases” in 2013-14?”

Unemployment increases, yes. Growth decreases, no.

Now, to your latest post, Rhian:

1. No. Mr Abbott is wrong on both counts. He misquoted Mr Rudd, who referred to “the China resources boom”. He is also wrong to claim the mining boom was brought to “a premature end” by Labor.

2. No. GDP growth is projected to remain positive and continue among the world's strongest, certainly among comparable countries.

Yes, the jobless rate is rising. But will also remain among the lowest in the world, accompanied by participation rate amongst the highest.

Mr Abbott’s assertion that Labor’s past six years shows an “anaemic job creation record” remains false.

3. Yes, agree with this.

4. Yes, agree with this also. Trade with China has been important in kicking Australia’s economy along for decades now. But there’s no evidence whatsoever that it was a factor in Australia’s sudden surge in ranking from the 12th-best managed economy in 2007 to the best in the world now – by a mile.

So the assertions in the original article regarding the multiple lies by Mr Abbott last week would all seem still fair fact-checking.

No?

Cheers,

AA
Posted by Alan Austin, Friday, 2 August 2013 4:26:07 PM
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Hi Alan

Re productivity – see the data in my post above. Labour productivity growth was higher under Howard. As Shadow Minister shows, the comparison on multifactor productivity is even worse.

The seasonally adjusted productivity data disprove your claim that we have had nine successive quarters of productivity growth. If your wages rose by $10 in January, fell $5 in February, rose $12 in March and dropped $6 in April you would probably, using the moving average methodology used to estimate trends, have recorded a rising trend in wages in the past 4 months. But you would not have had four successive months of rising wages.

Re growth claims. If you are driving at 60kpm, and slow to 30kph, your speed decreases. If GDP expands by 2 ¾ 3% in 2012-13, and slows to 2½% in 2013-14, economic growth decreases. A decrease in growth is not the same as a decrease in GDP.

Re boom. The resource boom IS a China resource boom. Abbot and Rudd are not talking about different booms.

I can’t see a single “fact” in your article that has actually be disproven.
Posted by Rhian, Friday, 2 August 2013 5:22:36 PM
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Hi Rhian,

Thanks again for your diligence here.

Yes, agree on productivity. ABS trend series A2304364W shows an increase for 9 of the last 9 quarters, and improvement from 97.7 to 104.8 points through the Labor period.

Seasonally adjusted series A2304192L shows an increase for 5 out of the last 9 quarters, with two negatives and two flat, and similar overall improvement from 97.5 to 104.5.

The former is used simply because tradingeconomics.com uses that data for international comparisons. Which is pretty important. And which most Australian analysts refuse to do.

That the rate of growth was steeper before 2008 is neither questioned nor relevant.

I’ve noted Shadow Minister’s reference to multifactor productivity and requested his data source. No appearance, your worship.

Again, Rhian, is there basis anywhere for Mr Abbott’s repeated assertion that Australia has had “recent productivity decline”?

Regarding rates of growth, you are entirely correct.

Australia’s rate of GDP increase will rise and fall. But GDP is projected to continue to increase.

The falsehoods in the presentations of Mr Abbott, Mr Hockey and other Coalition spokespersons are that growth will stop or be reversed under Labor.

That happened in Australia for one quarter when the GFC first hit, and again in 2011 following severe floods, but not since. It is not projected to recur.

What shows Mr Abbott’s falsehoods that prosperity is “lost” or that Labor has “clobbered the economy” to be particularly tawdry is Australia’s relative performance.

Do you agree these are the economic growth figures for 13 comparable economies in calendar 2006, Rhian?

Australia 3.1%
Austria 3.8%
Belgium 3.4%
Denmark 3.1%
Germany 4.3%
Hungary 3.8%
Iceland 3.3%
Ireland 3.4%
Italy 3.0%
Netherlands 3.3%
Norway 3.3%
Spain 3.9%
Switzerland 3.5%

Average 3.48%

Data: http://www.tradingeconomics.com/country-list/gdp-annual-growth-rate

And do you agree this is where they all are now – growth during calendar 2012?

Australia 3.1%
Austria 0.7%
Belgium -0.5%
Denmark -0.9%
Germany 0.0%
Hungary -2.7%
Iceland 1.4%
Ireland -1.0%
Italy -2.8%
Netherlands -1.5%
Norway 1.9%
Spain -1.9%
Switzerland 1.4%

The average, excluding Australia’s extraordinary number: negative 0.49%.

Mr Abbott is a liar, Rhian. Impossible to dispute that.

Cheers.

AA
Posted by Alan Austin, Friday, 2 August 2013 7:38:08 PM
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Rhian,

You are right, AA has yet to prove a single point he is trying to make. Full analysis shows that everything that Abbott says is correct. The only thing that is clear is that in spite of AA's cherry picking of variables that the economic management of Howard in 2006 was vastly superior to that of Dudd or Gillard, who displayed a level of incompetence in every area. The stimulus was badly handled, and most was spent long after the need for it had gone.

Now we have a budget update where instead of a surplus promised in 2012/3 we are looking at a further $100bn of debt in the next few years future and unemployment shortly reaching 6.25% and probably getting worse.

So Alan, we are sick of your twisted logic, you can put lipstick on a pig, but he still looks like Rudd.

We have a treasury that is hostage to the idiots Labor calls treasurers, and keep on putting out wildly optimistic forecasts that lets labor continue spending like drunken sailors and appear shocked when as last year revenue only grew by 7.8%.

The sooner we get rid of these labor clowns the better.

Even as AA admits that Howard outperformed Dudd/Juliar in every important variable:

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.

AA continues to try and wiggle and tell us that black is white.
Posted by Shadow Minister, Saturday, 3 August 2013 9:08:23 AM
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I have observed with bemusement and occasional amusement Rhianna's (sorry, might have got your name wrong) attempts to paint black as white and vice versa - much verbiage only possible by completely ignoring that the GFC ever happened, that those who did not follow the road taken by Australia are now in chaos, that despite the GFC Australia continues to grow (now for 22 years in a row, despite what TA says). Not only that, but as I understand it, Australia's methods have been so successful they have been the catalyst for a swing against austerity methods overseas.

Still, perhaps Howard deserves some thanks - for hoarding taxpayer's money rather than spending it on physical and social infrastructure, thus leaving Labor a lot to spend on (health, education, technology, jobs...) when the GFC struck. Very lucky indeed that the LNP had been tipped out by then, or we'd still be waiting for the theory to kick in - that austerity measures are about sacking people until they get a job. Apologies Colbert Report.
Posted by jcro, Saturday, 3 August 2013 12:42:47 PM
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Alan and jcro

I have never denied that Australia’s growth has been better than most developed countries since the GFC.

Alan

Re productivity - according to the ABS, multifactor productivity decreased by 3.1% between 2007 and 2012, and rose by 8.2% between 1996 and 2007 (Table 13, series A2421362J):
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5204.02011-12?OpenDocument

Re growth – you have not presented any quotes from Abbott indicating that growth will stop or reverse, only that it will slow. Which is what has happened, and what the government predicts will happen in 2013-14.

Re debt. Earlier, you said that “an inverse correlation between low debt before the GFC and economic performance is evident.” So yes, you have “claimed correlation between debt and growth”, and its wrong.

I'm still looking for an actual lie here.
Posted by Rhian, Sunday, 4 August 2013 2:53:47 PM
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Hi again Rhian,

“Re growth – you have not presented any quotes from Abbott indicating that growth will stop or reverse, only that it will slow.”

Do you agree that wealth and prosperity, by definition, will continue to increase while the rate of GDP growth is positive - however shallow?

Mr Abbott and Mr Hockey frequently claim Australia’s “economy” or “prosperity” or “wealth” are in decline.

Here are some which state or imply that the economy/wealth/prosperity have declined under Labor:

“Until quite recently, a quarter century of economic reform, had helped to make Australia one of the world’s standout economies.”

“The Howard/Costello Government … presided over what now seems like a golden age of prosperity – that’s been lost.”

“The Hawke/Keating Government understood in a way that no other Labor Government really has that a strong economy was the foundation of a more egalitarian society … By contrast, the Rudd/Gillard Government has not just failed to continue this bipartisan legacy of reform; it’s reversed it.”

“The carbon tax will go because you don’t improve the environment by clobbering the economy.”

These are all falsehoods, directly or indirectly. All from last week’s speech.

Further lies from Mr Abbott’s budget speech here:

http://www.independentaustralia.net/2013/politics/tony-abbotts-budget-reply-porkie-pies/

And from Mr Hockey here:

http://www.independentaustralia.net/2013/politics/sloppy-joe-hockeys-fifteen-biggest-press-club-furphies/

Concerning: “Re debt. Earlier, you said that “an inverse correlation between low debt before the GFC and economic performance is evident.” So yes, you have “claimed correlation between debt and growth”, and its wrong.”

Not at all, Rhian. Pretty sure I have consistently referred to “economic performance” as measured by multiple variables. Not just growth.

Shadow Minister was given a list of 25, above, on which performance is better now than under Howard/Costello.

He offered a list of six further variables, of which five are valid measures.

Will look at your productivity data further, Rhian. It appears from a cursory glance, however, that whatever that series measures appears to have declined just as much between 2004 and 2008 as since.

Something amiss seems to have occurred in 2004-05. Back later.

Cheers,

AA
Posted by Alan Austin, Sunday, 4 August 2013 5:05:44 PM
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Hi Alan

You ask: “do you agree that wealth and prosperity, by definition, will continue to increase while the rate of GDP growth is positive - however shallow.” “Prosperity,” as we have already discussed, is not a precise term and is open to many interpretations. In my view, a period of rising unemployment and falling household wealth does not count as especially prosperous, but you might think other indicators are more important.

Wealth can certainly decrease even if GDP is growing, if asset prices fall. As I have already shown, net wealth as a percentage of household disposable income rose under Howard but has declined under Labor:

http://www.rba.gov.au/chart-pack/household-sector.html

On debt, I am quoting your own words from this forum. You can deny them if you like, but they are there for anyone to see.

On multifactor productivity, you are right that the decline began before Rudd was elected. However, fairly strong growth in the late 1990s and early 2000s meant that productivity at the end of Howard’s term was significantly higher than at the beginning, whereas it has been weak for most of the past six years. Productivity is cyclical so economists tend to look at trends over the whole of a business cycle, and don’t read too much into one or two years’ data (let alone quarterly changes).
Posted by Rhian, Sunday, 4 August 2013 8:35:32 PM
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Hi Rhian,

Re: “In my view, a period of rising unemployment and falling household wealth does not count as especially prosperous, but you might think other indicators are more important.”

The second statement is mostly correct.

My first response to you, last Monday, emphasised: “The critical outcome is not just the debt they emerged with, but overall economic health – income, growth, national wealth, jobs, inflation, tax rates, productivity, savings, terms of trade, credit ratings. On these, Australia is top of the world – by a mile – and streaking further ahead. No?”

So, yes, employment and household wealth are important, but must be considered along with other critical indicators.

Doing this, we find Australia’s economy now OVERALL is not only better than at any time in Australia’s past, but better than any other economy anywhere – ever.

Ask economists to name a better one, Rhian – even the tame academics who work for Fairfax and Murdoch. They cannot.

So all those assertions by Mr Abbott referred to earlier – with terms like “golden age of prosperity ... lost”, “economy ... reversed”, “spook investors”, “threaten jobs”, “hurt every family’s cost of living” and “clobbering the economy” – are plainly false.

Especially offensive, given Australia’s significant decline in world standing through the Howard years, and its spectacular rise to the top since, is the lie that Australia was once “one of the world’s standout economies” but is no longer.

That is the exact opposite of the truth, Rhian.

On productivity, we can say from the series A2421362J data that whatever that measures has declined steadily since 2004.

Or we can claim from A2304364W a strong increase in labor productivity over the last two and a quarter years.

What cannot be asserted, however, is that Australia has had a “recent productivity decline.” [ref T Abbott, A Strong Australia]

Re: “net wealth as a percentage of household disposable income rose under Howard but has declined under Labor.”

According to which graph/data on which page, Rhian?

Are you considering the overall rise in the quantum of disposable income under Labor?

Thanks, Rhian,

Cheers,

AA
Posted by Alan Austin, Sunday, 4 August 2013 10:07:42 PM
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joker,

(sorry might have got your name wrong),

I'm glad you agree that the prosperity we see under Labor is due to the fiscal discipline of the Howard years.

AA,

by your own measure with falling growth and productivity, rising debt and unemployment, Australia is one of the most poorly managed economies in the world. Rudd inherited a diamond and is giving us coal.
Posted by Shadow Minister, Monday, 5 August 2013 5:53:57 AM
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Alan , you say “… we find Australia’s economy now OVERALL is not only better than at any time in Australia’s past, but better than any other economy anywhere – ever.” The trouble is that there is no way to verify this claim. Whenever anyone points out that other economies are faring better on some indicators, you’ll drag out others in an effort to “prove” your case. But let’s give it a go anyway.

Compared to Australia, Singapore has higher real per capita GDP (at PPP), faster GDP growth, a lower unemployment rate, a positive current account, a higher savings rate, and a positive structural budget balance.

Re “recent productivity decline”. Abbot is not lying - that is what the multifactor productivity data show.

Re wealth – you seem to think “wealth” is the same thing as per capita GDP. It is not. The RBA chart I linked to shows clearly that household wealth relative to household income has declined under Labor. You ask which chart I am referring to. If is the one titled “Household Wealth and Liabilities” and can be accessed here:

http://www.rba.gov.au/chart-pack/household-sector.html
Posted by Rhian, Monday, 5 August 2013 1:28:11 PM
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Hi again Rhian,

Regarding: “Re “recent productivity decline”. Abbott is not lying - that is what the multifactor productivity data show.”

Incorrect. Your multifactor data [A2421362J] shows a steady decline since 2004. That is not recent.

Both that chart and the labour productivity series [A2304364W] show a turnaround beginning in 2011. That is recent.

Mr Abbott is clearly wrong. Whether he is deliberately lying or simply ignorant may be worth exploring.

Regarding Singapore, the original assertion was this:

“It [the mining boom] doesn’t explain Australia rocketing from 12th-ranked economy when Labor took over in 2007 to the world’s best-managed economy in 2009/10.”

That Australia has been better-managed than Singapore is evidenced by overall progress through the GFC and since.

Singapore copped four consecutive negative quarters in 2009/10 – three of them greater than 8%! Australia and Poland, alone in the world, had just the one.

Singapore has had five negative quarters since 2010. Australia: one.

Similarly with unemployment. Along with most of the rest of the world, Singapore’s jobless virtually doubled through 2009 from 1.7% to 3.3%. Australia's moved up from 4.5% to 5.8%.

So Australia has clearly had better economic management over the past five years - than Singapore and every other country.

A snapshot now shows Singapore faring better than Australia on real per capita GDP (PPP), GDP growth rate, current account, unemployment and budget balance.

It also has a healthier debt to GDP at 97.9%. This is much better than Australia’s 20.7% - far too low for this stage in the cycle.

Singapore is doing worse, however, on GDP per capita, labour costs, retail sales year on year, and interest rates – with a puny 0.03% offering no return on savings. Much worse on productivity, with seven out of the last nine quarters all negative.

Savings is an interesting one. Does the level of savings indicate good or bad economic management, Rhian?

According to Mr Abbott, it reflects lack of confidence in the government. So, according to Mr Abbott, Singaporeans must have far less confidence in their government than Australians have in theirs.

No?

Cheers,

AA
Posted by Alan Austin, Monday, 5 August 2013 9:33:04 PM
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AA,

The multifactor productivity rose sharply from 1996 to 2004, and even after the drops the productivity in 2007 was much higher than when Howard was elected in 1996.

Labors productivity in 2013 is much lower that when Dudd was elected in 2007.

How do you explain the complete incompetence of the government to predict declining future economic trends when most other economists saw the terms of trade deteriorating, and labor kept predicting business as usual?
Posted by Shadow Minister, Tuesday, 6 August 2013 1:28:18 AM
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Hi Alan,

Is your disagreement with “recent” rather than “productivity decline”?. As with “growth”, the issue appears semantic. If productivity has been trending downwards since 2005 then it has declined both recently and in the medium term.

Your assertion was that Australia’s economy “now” is better than “any other economy anywhere ever.” Not just in 2009.

Singapore took a steeper hit from the GFC that Australia – as you would expect with a small open economy. But its recovery was stronger, and its current economic indicators are better.

Let’s look at where you say Australia outperforms Singapore.

It is unusual, to put it mildly, to maintaining high interest rates are better than low. This makes our economic management look weak compared to international superstars like Afghanistan and Ghana.
http://www.tradingeconomics.com/country-list/interest-rate

It is also at odds with comments from Labor ministers:
http://news.theage.com.au/breaking-news-national/oppn-out-of-touch-on-interest-rates-wong-20130806-2rasd.html

On retail sales – the latest ABS data show that Australia’s retail sales growth at its lowest since 1962; hardly “best ever, anywhere”. Australia’s retail sales rose by 2.6% in the year to June. Singapore’s rose by 3.2% in the year to May (both latest data).

http://www.theaustralian.com.au/business/economics/shopping-strike-worst-in-50-years/story-e6frg926-1226107803079

http://www.singstat.gov.sg/news/press_releases/mrsmay2013.pdf

On unemployment – During the GFC Singapore’s unemployment rate rose from 1.7% in 2008 to peak at 3.3% in 2009; since then it has fallen to 2.1%. Australia’s rate rose from 4% in 2008 and peaked at 5.9% in 2009; it is currently 5.7% and rising. How you can claim Australia’s 5-year unemployment record is better than Singapore’s is beyond me.
http://www.tradingeconomics.com/singapore/unemployment-rate

Re GDP per capita. The convention for international comparisons is to use GDP at PPP, to correct for variations in exchange rates. Your economic welfare is not measured by how many US dollars your income will buy, but how many goods and services it will buy.

Re labour costs: it’s pretty hard to compare, as the Singapore data are not seasonally adjusted or smoothed, whereas the Australia data are trend. But yes, it looks like Singapore’s labour costs are trending upwards while Australia’s are trending down.

Congratulations, you have found an economic indicator which looks better in Australia than Singapore.
Posted by Rhian, Tuesday, 6 August 2013 1:31:08 PM
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Hi Rhian,

Will be back later to respond. Busy elsewhere at the moment.

Meanwhile, two brief questions:

1. Can you please verify the current debt to GDP figures for Australia and Singapore.

Are they 20.7% and 97.9% respectively?

What does this indicate about relative economic performance?

Do you regard Australia's current debt to GDP as an indicator of managerial failure? If so, should Singapore be assessed as an even greater failure - by a factor of 4.7?

2. Is there a country in the OECD which you believe, like Singapore, to have better economic performance than Australia?

More later ...

Cheers,

AA
Posted by Alan Austin, Tuesday, 6 August 2013 2:57:47 PM
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Alan,

I gather that you must hate being shown up for posting lies.

Still can't answer why your measure of productivity was higher under Howard than Rudd/Gillard. Its your thread, you shouldn't hide.

I love the way you keep on reposting the same dross no matter how often it is disproven.
Posted by Shadow Minister, Tuesday, 6 August 2013 3:57:36 PM
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Alan
The data you cite are for gross debt. As discussed above, net debt is the most commonly used measure of fiscal performance as it also reflects financial assets. If you owe $10,000 on your credit card but have $20,000 in your bank account, your financial position is quite different to if you owe $10,000 on your credit card and have a $20,000 overdraft.

Singapore has no net debt:

http://www.gov.sg/government/web/content/govsg/classic/factually/Factually-310812-IsitfiscallysustainableforSingaporetohavesuchahighlevelofdebt

Singapore’s gross debt is also unusual in that it mostly comprises borrowings to manage the country’s central provident fund – it is easily covered by financial assets. Singapore’s government has run a surplus for all but one of the past 20+ years, and in that time it has not needed to borrow to finance a general government deficit.

http://www.indexmundi.com/singapore/public_debt.html

So yes, Singapore’s fiscal management has been far superior to Australia’s.

You ask “Is there a country in the OECD which you believe, like Singapore, to have better economic performance than Australia?” Probably. But I don’t need to find them to disprove your claims that Australia’s economy is the “best by far in the developed world during the Rudd/Gillard/GFC period”, and that “Australia’s economy is now healthier than any other economy anywhere ever.” You’re trying to shift the goalposts again.

Earlier, you asked, “Does the level of savings indicate good or bad economic management, Rhian?” It is not necessarily an indicator of good management, but it is a positive indicator. Countries with high savings ratios can support high levels of productive investment without the need to borrow large amounts overseas. While Australia’s investment levels are quite good, its savings are low, so it needs to borrow. Hence our persistent current account deficits, and the accumulation of foreign debt they produce. So I think saving is a legitimate consideration when evaluating economic "health".
Posted by Rhian, Tuesday, 6 August 2013 4:01:16 PM
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Hi Rhian,

Our disagreements re productivity may be semantic. But this graph seems emphatic:

http://www.tradingeconomics.com/australia/productivity

A stunning rise beginning nine quarters ago.

Then your multifactor chart, A2421362J, shows a steady decline from 2004 until June 2011 and then a shift upwards to June 2012, where the data ends. This is quite consistent with the labour productivity chart.

So the evidence suggests that since June 2011 there has been a strong improvement.

Surely the period between June 2011 and now is ‘recent’ – rather than the period 2004 to 2011. No?

Re: “Singapore took a steeper hit from the GFC than Australia – as you would expect with a small open economy. But its recovery was stronger, and its current economic indicators are better.”

Don’t think so, Rhian. Recovery has been patchy. Nine negative growth quarters to Australia’s two.

Re: “It is unusual, to put it mildly, to maintaining high interest rates are better than low.”

Correct. Low is better than high. But optimum is better than too low.

So what is optimum? Well, a balance between cost of borrowing – to purchase a house or car, or build an enterprise – on the one hand and a return on savings for retirees and others.

That optimum would seem to be between 2.0% and 5.0% - where Australia [with Poland, Mexico and New Zealand only] has been for the last five years. No?

So Senator Wong’s comments seem reasonable.

Re: “ABS data show Australia’s retail sales growth at its lowest since 1962; hardly “best ever, anywhere”. Australia’s retail sales rose by 2.6% in the year to June.”

Which ABS series, Rhian?

Tradingeconomics shows 2.1% for the year to June 2013. And 4.1% to June 2012. Both higher than several recent years. No?

Yes, Singapore’s rose by 3.2% in the year to May this year. But -0.9% to June 2012.

Earlier data is limited, so this discussion may be inconclusive until we see the June figures.

I wouldn’t take any notice of that piece in The Australian, Rhian. Two years out of date. And was not even true then.

Cheers,

AA
Posted by Alan Austin, Wednesday, 7 August 2013 9:35:12 AM
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Alan,

Even using your website, the productivity increase in the first 6 years of Howard was far greater than in the equivalent labor term. This only uses productivity per unit of labor, and ignores the other major factors.

Using the multifactor productivity, I can't find any figures post June 2012, and your estimates are pure conjecture. The result still stands that total productivity under Howard was better than under Labor, as was the economic management.
Posted by Shadow Minister, Wednesday, 7 August 2013 1:25:56 PM
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We’re covering old ground, Alan. The productivity graph only seems “emphatic” because its axis minimum is set to 96. The actual increase since the December 2010 trough is 2.2%pa. Hardly “stunning”. And the increase in MFP in 2011-12 is 0.2% - hardly a “shift”, especially in the light of the 0.8%pa decline in the previous four years. I refer you, again, to my comments about meaninglessness of short-term changes in productivity.

I think we may partly agree that low or high interest rates by themselves do not indicate good or bad economic performance. Rates can and should vary depending on inflation, stage of the economic cycle, the need to borrow, etc. There is no “optimum range”. Interest rates of 2-5% would be way too high in Japan, where inflation has been negative for most of the past year; and way too low in Turkey, where inflation is over 8%.

Given Singapore’s very high savings rate, large current account surplus and budget surpluses, and typically low inflation, it can sustain lower interest rates than Australia, and has for a long time.

On the Australian article on retain sales - I apologise, I linked to the wrong article. I meant to link to this one, published yesterday, which reports that Australia’s 2012-13 retail sales growth was the lowest since 1961-62:

http://www.theaustralian.com.au/national-affairs/rate-cut-likely-as-sales-growth-hits-50-year-low/story-fn59niix-1226691729203

The numbers are correct, but are based on a year-average methodology, not the through-the-year growth reported in the tradingeconomics.com chart. They use the original data from the ABS, series A3348582J in Table 1:

http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/8501.0Jun%202013?OpenDocument
Posted by Rhian, Wednesday, 7 August 2013 1:31:07 PM
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Hi again Rhian,

The question remains: Is there any basis for claiming “recent productivity declines”?

None whatsoever.

The labour productivity graph shows increases since 2010. The MFP chart shows a decline June 2010 to June 2011, then a marginal rise to June 2012.

So from the moment the June 2012 data was released it became clearly false to assert that there has been any deterioration since Q4 2010.

Re: “The actual increase since the December 2010 trough is 2.2%pa. Hardly “stunning”.”

Are you sure, Rhian?

From 99.8 up to 104.8 is 5.0%. If not stunning, this would seem fairly impressive, given the state of the world.

Several nations considered the world’s best-managed have gone backwards in that time, notably Germany, Japan, South Korea, Switzerland and the UK. And Singapore – gone backwards badly.

This is, after all, the worst downturn since the Great Depression – a reality the mendacious media and Opposition ignore – but a reality nonetheless.

Re: “Rates can and should vary depending on inflation, stage of the economic cycle, need to borrow, etc.”

Agree completely.

Would you agree a well-managed economy would have inflation within the band 0 – 3.5%, interest rates within 2.0 – 5.0%, net borrowings below 40% of GDP, unemployment below 6%, budget deficit below 6% of GDP, productivity rising, stable labour costs, GDP growth above 1%, GDP per capita PPP rising, positive savings and equitably shared wealth?

If no, what are your optimums, Rhian?

If yes, how many nations today are within these parameters?

Re: “Given Singapore’s very high savings rate … low inflation, it can sustain lower interest rates than Australia, and has for a long time.”

Sustainable, perhaps. But why save if interest rates are below the inflation rate?

Re the article: “Commsec chief economist Craig James calculated that the annual growth in sales of 2.5 per cent over 2012-13 was weaker than at any time in the past 51 years.”

Really?

According to tradingeconomics, retail sales incresed 2.1% for 2012-23. That’s well above the negative 1.7% in 2010-11, negative 0.9% in 2010-11, and negative 6.1% in 2000-01.

No?

Cheers,

AA
Posted by Alan Austin, Wednesday, 7 August 2013 8:39:17 PM
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Alan. Yes I’m sure. 5% growth over 9 quarters equates to 2.2% pa
If you need a little help with your maths, try this:
http://www.wikihow.com/Calculate-an-Annual-Percentage-Growth-Rate

I think you, me and any patient soul still following this thread are well aware of what the productivity data show. Let people reach their own conclusions.

And the retail sales data differ because Comsec uses annual averages while your charts show growth through the year. Both are right, they are giving different perspectives on the same data.

On your “would you agree” list, no, I don’t accept these things necessarily signify a “well-managed” economy. As our earlier discussions show, I tend to have less faith than you in government’s capacity to micro-manage the economy. At best, governments capitalise on opportunities and mitigate the risks. But sometimes an external shock or a one-off like changes in the tax rate cause inflation to move suddenly, for example. Would you blame government for the effects of the gulf war on oil, and hence consumer, prices?

Debt is both a legacy issue as a management one. A government inheriting a huge national debt can’t, and shouldn’t, propel it quickly below 40% of GDP. Equally, one inheriting positive fiscal position shouldn’t propel it towards 40% debt, as our current government is doing.

More importantly, though, it looks very much like you’ve cherry picked indicators and targets that look quite favourable for the current government. Why are the current account, household wealth, household debt, housing affordability, retail sales growth, the rate of growth in real per capita GDP, employment growth, and an adequate (as opposed to merely “positive”) savings ratio not on your list? I suspect it is because these do not paint the government in as favourable a light as the indicators you selected.
Posted by Rhian, Wednesday, 7 August 2013 9:20:17 PM
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By the most important factors i.e.

Net federal debt,
Unemployment,
GDP growth rate
GDP growth rate per capita,
Multifactor productivity growth,
Better regulatory environment for small business.

The Howard government was not only better than the Rudd Gillard, but better than Hawke and Keating, and probably the best managed in the world.
Posted by Shadow Minister, Wednesday, 7 August 2013 10:39:13 PM
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Hi Rhian,

Well, I agree with you on almost everything.

Thanks for the rate calculator. Very nifty.

Sorry about missing the pa! But it’s your fault for no space after the 2.2%.

[Just kidding]

Regarding my list of 11 variables, Rhian, that’s certainly not exhaustive. Pretty sure they are the ones most relevant here because they are the ones raised in the speech which is the subject of the article.

I use a master list of 38. You have suggested eight. Of those, all but household debt are on my list.

The ones applied – here and elsewhere – are those most appropriate for the comparisons sought: between nations, between regions, across time, or whatever.

Pretty sure cherry-picking hasn’t been an issue. Definitely try to avoid this.

Re the Australian: “Comsec uses annual averages while your charts show growth through the year. Both are right, they are giving different perspectives ...”

So, using annual averages, how does 2012-13 compare with those earlier years – negative 1.7% in 2010-11, negative 0.9% in 2010-11 and negative 6.1% in 2000-01?

Is it true 2012-13 was weaker than at any time in the past 51 years?

The main problem with that article, however, is completely denying global context. It’s a grave distortion to depict a positive result of 2.6% or 2.1% as anything other than excellent, given the prevailing global conditions.

How many other nations boast such an impressive rise?

In the OECD, only about six have done better. Almost half the OECD has been negative!

Very rare to find any truth in a Murdoch publication, Rhian.

Agree totally on legacy. Absolutely.

So here’s a question for you:

An April opinion piece at OLO by Shadow Foreign Minister Julie Bishop includes this:

“The Howard Government had to find the funds to pay down the $96 billion debt inherited from the Keating Labor government.”

Yes. We know. But how much of that debt did the Hawke/Keating Government inherit from the Fraser Government?

(a) none
(b) about a quarter
(c) about half
(d) about three quarters
(e) almost all

More quiz questions here:

https://newmatilda.com/2013/08/02/say-hello-tony-abbott-and-friends

Cheers,

A
Posted by Alan Austin, Thursday, 8 August 2013 12:05:10 AM
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Alan,

Your question "But how much of that debt did the Hawke/Keating Government inherit from the Fraser Government?"

The answer is virtually none of it. It was nearly all Labor generated.

http://barnabyisright.files.wordpress.com/2010/03/myefo_netdebt_800x600.jpg

As for the New Matilda and Independent Australian, we all know how biased, factually incorrect and unscrupulous most of their authors are.
Posted by Shadow Minister, Thursday, 8 August 2013 9:04:57 AM
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Hi Alan
These are retail sales levels and growth going back to 1983. To verify earlier estimates, check the PDFs on the ABS website.

1983-84 ___ $48b __ 8.9%
1984-85 ___ $52b __ 7.3%
1985-86 ___ $58b __ 11.9%
1986-87 ___ $63b __ 8.7%
1987-88 ___ $69b __ 9.1%
1988-89 ___ $76b __ 9.7%
1989-90 ___ $82b __ 8.3%
1990-91 ___ $84b __ 3.1%
1991-92 ___ $90b __ 6.6%
1992-93 ___ $93b __ 3.0%
1993-94 ___ $98b __ 5.2%
1994-95 __ $105b __ 7.4%
1995-96 __ $112b __ 7.3%
1996-97 __ $115b __ 2.7%
1997-98 __ $121b __ 4.5%
1998-99 __ $127b __ 5.5%
1999-00 __ $135b __ 6.5%
2000-01 __ $142b __ 5.0%
2001-02 __ $154b __ 8.5%
2002-03 __ $165b __ 6.7%
2003-04 __ $179b __ 8.8%
2004-05 __ $186b __ 3.9%
2005-06 __ $193b __ 3.8%
2006-07 __ $206b __ 7.0%
2007-08 __ $221b __ 6.9%
2008-09 __ $231b __ 4.6%
2009-10 __ $239b __ 3.7%
2010-11 __ $245b __ 2.6%
2011-12 __ $253b __ 3.1%
2012-13 __ $259b __ 2.5%

The “negative 6.1%” recorded by trading economics for July 2001 is odd. It is clearly due to the 31.9% growth it recorded in the year to July 2000, which is even odder. Neither of these are near ABS estimates for this period. Trading economics may not reflect the ABS’s adjustments for introduction of the GST, which caused retail sales to rise sharply in June 2000 and fall in July 2000. But even the original changes were not of this magnitude. I think trading economics have an error. If you’re a subscriber, maybe contact them for an explanation.

Abbot’s reference to a “recent productivity decline” is quoting from the World Economic Forum’s analysis of Australia’s productivity.

http://shared.liberal.org.au/Share/eBooks/StrongAustralia.pdf p.96

The quotation is from a speech Abbott gave on 2 May 2012. At the time, the most recent multifactor productivity data available was the 2010-11 edition of ABS Cat. 5204.0. This showed Australia’s multifactor productivity decreased by 1.5% in 2010 11 to its lowest level since 2006-07.

Source (same table and ID as above)
http://www.ab s.gov.au/AUSSTATS/ab s@.nsf/DetailsPage/5204.02010-11?OpenDocument
Posted by Rhian, Thursday, 8 August 2013 4:24:32 PM
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Hi Shadow Minister,

It's important we look at actual data, isn't it? Remember, the mainstream media and the Coalition lie routinely, don't they?

And they fabricate dodgy graphs!

The Hawke Government inherited debt at 19.6% of GDP. The Keating Government left office with debt at 20.8%. Taking interest into account - at the steep rates Fraser left us with - shows virtually all debt in 1996 had actually accrued under Fraser. And we know who the world's most disastrous Treasurer was then, don't we?

Regarding other variables:

Net debt:

Rose under Fraser, fluctuated under Hawke/Keating, dropped under Howard, and rose during the Rudd/Gillard/GFC period.

Compared with other nations, Australia was average under Howard and exceptionally strong during the Rudd/Gillard period.

Unemployment rate:

Worsened disastrously under Fraser, improved under Hawke/Keating and Howard and dropped back slightly during the Rudd/Gillard/GFC period.

Compared with others, average under Howard and near world’s best during the Rudd/Gillard/GFC period.

GDP growth:

Poor during the Fraser years, improved during the Hawke/Keating and Howard period but dropped back during the Rudd/Gillard/GFC period.

Comparatively, very ordinary through the Howard years and best by far in the developed world during the Rudd/Gillard/GFC period.

Regulatory environment for small business.

Heritage Foundation rates the Rudd/Gillard period as best in Australia’s history, best in the entire capitalist world [OECD] and third best in the world, behind Hong Kong and Singapore.

On all the following, however, Rudd/Gillard have done way better than Howard – despite the GFC!

1. income – GDP per person
2. GNI income per person
3. interest rates
4. income disparity
5. inflation
6. health care
7. pension levels
8. superannuation
9. personal tax levels
10. company taxes
11. indirect taxes
12. international credit ratings
13. economic freedom
14. personal savings
15. current account
16. foreign exchange reserves
17. value of the currency cf the US$
18. value of the currency cf the euro and the pound
19. productivity
20. quality of life
21. balance of trade current
22. balance of trade history
23. terms of trade
24. 10 year bond rate
25. world ranking on economic management

Cheers,

AA
Posted by Alan Austin, Thursday, 8 August 2013 4:45:21 PM
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Hi Rhian,

Thanks for the retail sales data. Most helpful.

Yes, I suspect the 2000-01 blip related to the introduction of the GST. There was a one-off spike in inflation that year also.

No, not a subscriber to tradingeconomics. But use the site constantly, so maybe should. (And yes, they do have errors sometimes and do respond to queries.)

So would you agree, Rhian, a 2.5% rise [or 2.1% using the other data) is a good result comparatively?

It's in the top third of the OECD, whose average is about 0.6%. Only 0.36 if we take out Chile’s outlier. And negative 0.9% for the Euro Area.

Is it fair then to report this as a problem area where Australia’s performance is worrisome, rather than a global problem where Australia’s performance is relatively sound?

Re: “the most recent multifactor productivity data available was the 2010-11 edition of ABS Cat. 5204.0. This showed Australia’s multifactor productivity decreased by 1.5% in 2010-11 to its lowest level since 2006-07.”

Hmmm. Yes, I see.

So has no-one pointed out to Mr Abbott that that information is now somewhat dated?

Has he been shown the labour productivity data which reveals a substantial, if not stunning, rise since the end of 2010? Has he been shown your multifactor chart, A2421362J, which shows a shift upwards between June 2011 and June 2012?

Here again, Rhian, the dishonesty issue is not just that the statement is factually dubious – on the definition of ‘recent’.

The greater problem is that comparisons are made between periods without acknowledging the impact of the worst global financial crisis since the 1930s.

No?

Cheers,

AA
Posted by Alan Austin, Thursday, 8 August 2013 6:12:48 PM
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Hi Alan
No, I would not agree 2.5% is a good result comparatively. Not only is it the lowest in decades, it is also lower than in Australia even at the height of the GFC. It may be better than in Europe, but we know much of Europe is a basket case.

I don’t regard retail sales as a particularly valuable indicator. It was you who raised them as evidence of Australia’s supposed strong economy. I thought it relevant to point out how weak they are. I’d prefer to use real per capita consumption (a broader measure adjusted for inflation), which is currently declining in Australia.

Re productivity
I have no idea what Abbott’s advisors tell him, but it’s a bit rich for you to castigate him for quoting numbers that were accurate and the most “recent” available at the time he used them.
Posted by Rhian, Thursday, 8 August 2013 7:43:30 PM
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Re the global recession
The GFC peaked in 2009. In Europe and the USA its after-effects are still lingering, but the rest of the world is moving on. We have had nearly four years of global growth since then - about average growth for the world as a whole (about 3½%), and quite strong growth (>5%pa on average) outside the advanced economies. The GFC is no longer an excuse for the current weaknesses of Australia’s economy, if it ever was.

Australia didn’t have a recession. You say this was mainly because of good economic management, I say it was mainly due to other things. But we do agree that there was no recession.

A recession is measured by changes in output, and productivity measures output per unit of input. So, why should we expect Australia’s productivity to behave as if there had been a recession; or congratulate ourselves that our productivity pattern does not look like countries that did? This is to confise the cyclical with the structural.

Abstracting from cyclical swings, Australia has experienced a structural decline in its multifactor productivity. This has caused expressions of concern from (among others) Kevin Rudd, Treasury, the Reserve Bank, the Grattan Institute, and a host of other competent commentators. Just because Abbott says the same thing, doesn’t make it wrong.
Posted by Rhian, Thursday, 8 August 2013 8:37:07 PM
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Hi Rhian,

Re: “No, I would not agree 2.5% is a good result comparatively.”

Depends who we compare with, doesn’t it?

Most economists would regard Canada, Germany, Austria, Denmark, Japan, Luxembourg, Netherlands, Finland, South Korea, Ireland, France and the UK as 12 comparable modern consumer societies.

No?

Their tradingeconomics average is negative! Australia: +2.1%.

So depends on comparisons.

Re: “Not only is it the lowest in decades, it's also lower than in Australia even at the height of the GFC.”

Do you mean “height” or “onset”, Rhian? For many nations, probably including Australia, this is the height now. It’s a long way from over for much of the world.

Re: “It may be better than in Europe, but we know much of Europe is a basket case.”

Correct. No-one is comparing Australia with Italy, Portugal, Spain and Greece. But the robust European economies – Germany, Denmark, Norway and Switzerland – are also struggling with sales. As are several non-European OECD countries – South Korea, Japan and Mexico.

Re: “It was you who raised them [retail sales] as evidence of Australia’s supposed strong economy. I thought it relevant to point out how weak they are.”

Hmmm. Yes and no.

Raised only to show Australia has been travelling better than Singapore through the GFC. Singapore had nine decreases and only three rises in the last 12 months. Australia, in contrast, had 12 positives.

Re: “How weak they are”.

Well, compared with comparable economies, positive 2.6% is not week at all, Rhian.

Denmark has had 15 consecutive negative months. That’s weak.

Re: “I have no idea what Abbott’s advisors tell him [on productivity], but it’s a bit rich for you to castigate him for quoting numbers that were accurate and the most “recent” available at the time he used them.”

Not at all, Rhian.

He has continued to lie about Australia’s productivity, long after the upturn became apparent.

Refer item 7 in the original article. That was two weeks ago.

Maybe he’s unaware of the recent turnaround. Don’t know. But he is lying and he should stop.

Cheers,

AA
Posted by Alan Austin, Thursday, 8 August 2013 10:31:41 PM
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Alan,

Everytime, you feel the need to cherry pick the figures. The government figures show that NET debt when Hawke took over was about 7.5% of GDP and was 18% when Howard took over.

It would appear that the mainstream media tells far fewer porkies than the unscrupulous contributors to New Matilda and Independent Australia.
Posted by Shadow Minister, Friday, 9 August 2013 2:34:29 PM
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Hi Alan

Item 7 in your articl emade no reference to falling productivity, but spoke of government’s failure to implement productivity-enhancing reforms. You conflated this in this forum with the older reference to falling productivity in this forum to imply that Abbott lied. He didn’t.

Re height of the GFC. It was a global crisis. Global GDP contracted in 2009, but rebounded in 2010 and has grown since. Europe may still be in the doldrums, but the global economy has recovered.

You say “most economists would regard Canada, Germany, Austria, Denmark, Japan, Luxembourg, Netherlands, Finland, South Korea, Ireland, France and the UK as 12 comparable modern consumer societies.”

Similar consumer societies, yes. Similar economies, no. Similar economic conditions, definitely no.

Australia’s terms of trade have surged to their highest level in more than 100 years. Of your comparators, only one (Canada) is a major commodity exporter. Even in Canada the rise the terms of trade in the 2000s was not as strong, and the post-GFC rebound was not nearly as strong, as in Australia. Canada’s largest export market is the USA, which spearheaded the global recession. Nine of your 12 comparators are in Europe, where the economic malaise of major countries quickly spreads to others. Europe’s largest trading partner is Europe.

Australia’s largest export market is China. None of your comparators has the advantage Australia has enjoyed of its largest trading partner recording real average GDP growth of more than 8%pa and import volume growth of more than 10%pa in the three years after the GFC. Between 2006 and 2012 Australian mining investment as a percentage of GDP rose from 2.1% to 6.3%; the total value of mining exports rose by 13.4% pa; and total exports to China rose by 27.7% pa (258% in total - now that truly is a “staggering” growth rate!)

Almost all your comparators had significant financial sectors exposure to the toxic credit instruments whose implosion precipitated the GFC. Australia had almost none.

So no, I’m not impressed that our post-GFC economic performance is better than the comparators you selected. So it should be.
Posted by Rhian, Friday, 9 August 2013 3:37:46 PM
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Hi Rhian,

Re, “Item 7 in your article made no reference to falling productivity, but spoke of government’s failure to implement productivity-enhancing reforms.”

Correct. Mr Abbott said this on July 22:

“Unfortunately, we’ve heard this [Government commitment to boost productivity] from Mr Rudd before, indeed on numberless occasions since 2007 but he’s never actually taken the steps needed to convert aspiration into achievement.”

This is clearly the opposite of the reality:

http://www.pc.gov.au/

Productivity has been a major Government focus with results at last.

No-one expects Mr Abbott to commend the PM for his courage and vision, and congratulate him on the effectiveness the ABS data now confirms.

He has the right to remain silent.

But if he deliberately speaks the opposite of the truth, he should be called the liar that he clearly is.

Labour productivity improvement first became evident in early 2011. That rise has continued unabated. Multifactor became evident in mid 2012.

So denigration since then has been unwarranted. Yet Mr Abbott persists.

Re: “It was a global crisis. Global GDP contracted in 2009, but rebounded in 2010 and has grown since. Europe may still be in the doldrums, but the global economy has recovered.”

Only if we define ‘crisis’ as severe reversal of GDP growth, and only if we regard ‘recovered’ as a return to positive GDP growth.

As discussed earlier, there are other determinants. From Monday: “The critical outcome is not just the debt they emerged with, but overall economic health – income, growth, national wealth, jobs, inflation, tax rates, productivity, savings, terms of trade, credit ratings. On these, Australia is top of the world – by a mile – and streaking further ahead.”

So those economies still suffering badly from high unemployment, low company profits, bankruptcies, high taxes, inflation and other ills are still experiencing the global financial crisis – even if their GDP growth is now positive.

These are many in all regions.

And, indeed, many still have negative GDP growth, especially in Europe, parts of Central America and much of Africa.

The GFC has a way to run yet, it seems.

Cheers,

AA
Posted by Alan Austin, Friday, 9 August 2013 8:23:20 PM
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