Alan,
The best economic theory work is now done at the University of Missouri, Kansas City, (UMKC) and by others following a similar line of reasoning.

In a paper delivered to the Field Institute the Chair of UMKC described the fiscal space in which a successful sovereign government can operate and provided a diagram in slide 49 of her presentation. If the current account balance and the government balance is plotted for any period the result shows whether the private sector is operating in a long term sustainable area of the fiscal space chart.
See;http://www.fields.utoronto.ca/video-archive/2013/11/221-2524

I have plotted Australia's position each year for the last 60 years.
In every year of the Howard/Costello era Australia operated in the unsustainable area and therefore the economy was set to crash when the property bubble burst.

It was really the gang of four, Rudd, Gillard, Swan and Tanner who rescued Australia by supporting demand through prompt deficit spending.

One rule is that a Sovereign Government (SG) can never go broke buying things for sale in exchange for the sovereign currency whether what is for sale is labour or building or domestic produced consumer goods. The SG can contribute to inflation if it doesn't ease up on its purchases if full employment inflation looms.

But, there are two different types of inflation and Australia mainly suffers from the second, namely, asset value inflation. The cause of that inflation is too much money in the hands of those who have too much and who are therefore looking for somewhere profitable to invest their excessive incomes and thus bidding up asset values. Negative gearing and franking credits aggravate this situation.

Meanwhile, in our super-duper rootin-tootin economy which comes out on top of the post-GFC list, we have massive problems with basic resource provision, most significantly water, and with infrastructure and services, we have massive economic activity which is simply chasing the tail of extraordinarily rapid and downright STUPID population growth without leading to significant improvements for the pre-existing population. We are NOT seeing overall improvements in our basic services and infrastructure. We are not seeing the eradication of poverty. We are not seeing a healthier environment, either natural or human. We are not weaning ourselves off of our addiction to fossil fuels. And we are not moving towards a more sustainable society.

In other words, our fantastic economy is NOT giving us a better quality of life… or a more secure future!

So….. exactly what IS it doing then ??

You’ve got to wonder how economic analyses of the sort you have presented here Alan can completely miss all of this sort of stuff.

If you considered the things that the economy is supposed to provide and be intimately connected to, in the real world, at all levels from personal to national, then I think your analysis would show a very different result regarding the state of Australia’s economy and how it might compare internationally.

Alan,
Your methodology is weird. The use of tweaked raw data for incommensurate variables introduces large arbitrary weighting bias towards some measures and against others that can’t be justified by any measure of relative importance. It also can't capture the inevitability of different levels of variation of different measures (debt to GDP ratios vary much more than inflation rates).

At the very least, I’d suggest you use a commensurate measure such as rank or percentile on each of the criteria and, if you insist on weighting, do so explicitly and with justifications.

A couple of other observations:

Are you targeting economic wellbeing, or economic management? You seem to be having a bet each way. If management, I’d suggest that growth rates not levels are a better measure of financial variables (wealth and income). A country that starts poor will still have low income and wealth even after many years of excellent economic management; while most rich countries are still rich even after years of relative mismanagement.

“Wealth” is massively influenced by asset prices. In particular, the growth of Australia’s wealth in recent years is mainly due to the resources boom and rising house prices, further buoyed by the high exchange rate. I’m not sure these belong in a measure of economic management. Growth in the real capital stock might be a better measure of underlying wealth.

Employment ratios are heavily influenced by culture and demographics – the proportion of the population of working age. Again, I’d suggest direction of change is a better measure of performance here than levels.

Don't be such a doom-monger, Ludwig.

>>...we have massive problems with basic resource provision, most significantly water...<<

A shortage of water may be a problem up where you live (but given the rainfall up there, it would be a tad surprising) but we Sydneysiders have at least planned ahead on that front. We have full dams at present...

http://www.sca.nsw.gov.au/water/dam-levels

...and a desalination plant in mothballs, ready for the next down-cycle.

The investment deficit in other infrastructure - rail services spring to mind - is slowly being addressed, but is principally a failure of political will, rather than the result of any economic issues.

>>...we have massive economic activity which is simply chasing the tail of extraordinarily rapid and downright STUPID population growth...<<

Whoa there! Massive economic activity? Where?

>>We are NOT seeing overall improvements in our basic services and infrastructure.<<

Who's "we" Kemo Sabe?

Once again, even though it progresses at snails pace, improvements are taking place all the time down here in Sydneyland. Our parks are well maintained, our streets are clean, our domestic services (garbage collection etc.) has over the years become the best I have seen anywhere in Australia.

>>We are not seeing the eradication of poverty.<<

Along with many other countries, bro. It isn't just a matter of waving a magic wand, you know. And I hesitate to point it out, but your own ideas about closing the borders and becoming "self-sufficient" are certainly not designed to address that particular problem either.

>>We are not seeing a healthier environment, either natural or human.<<

Honestly, I give up. If you cannot see that we are the healthiest we have ever been, with an extended lifespan and one of the best healthcare systems in the world, then I simply don't know what to say.

See, you have finally silenced me!

I don't see anything in Coalition ideology, that supports economic growth, rather contraction. Nor is the reduction of mining venture investment helping.
Nor is the continuing reduction in tax receipts, employment, or employment growth.
The coalition is clearly reaping an economic whirlwind of its own making, by talking down the economy.
There is a formula for growth, which includes quite massive tax and other reform and simplification!
Much of which will be resisted by the rich and powerful, and other vested interest, with skin in the current complexity.
After quite massive tax reform and vast simplification, the second part to economic growth is energy.
Cheaper than coal thorium energy appears the way to go; particularly, given we own enough of this currently wasted resource to power the world for 70 years, by which time, the world will have solved the fusion energy conundrums surely!
Majority shares would confer a level of control, in who is appointed to a board, and who is the senior executives; meaning, no government, even one that seems as hopeless as this one, never ever needs to concern itself with the day to day management of any corporation.
We seem to be losing our vehicle building industries, the home of much of our corporate R+D, due to visionless troglodytes, and a patent aversion of employee owned co-ops, which as a much leaner and the least costly/most cost effective form of private enterprise, would have allowed us to continue building cars?
Ideally, right hand drive electric vehicles, for which we would have found ready markets in India, Malaysia, Singapore, Hong Kong, Malta and other parts, where Britannia had former colonies?
Yes we are finding new energy resources, and isn't that timely with what's happening in the Crimea and the Middle East?
The government needs to reinstate the government owned oil and gas corporation. So we are no longer at the mercy of foreign nationals!
Rhrosty.

Rhian,
I suggest that you need to look at some of the slides which accompanied the article presented by Dr Stephanie Kelton to which I drew attention in my first comment.

In the fiscal space diagram Australia has been regularly losing ground in domestically owned capital goods. If our SG budget balance and our CA balance are plotted you will find that in most years the plot is to the left of the sloping S - I = 0 line (sloping 45 degree line). John Howard deliberately favoured citizens (particularly those with young families) going into debt with the banks rather allowing citizens to accumulate savings through a deficit budget and maximum employment.

If you do not understand this point please read Modern Money Theory available as chapters at; www.neweconomicperspectives.org

Ludwig
Our electoral cycle precludes sensible economic planning. Somehow we need to break our Westminster System into the USA's three arms (Presidency, Parliament, Supreme or High Court) without incurring the problems of the presidential system. Parliament's only responsibility should be to pass laws. Having cabinet ministers run the economy is little short of crazy.

After WW2 Australia planned the introduction of the consumer goods industry which led to the expansion of other industries. Soon we will not be able to afford all the imports we will need once we have almost no productive industries of our own. Ore and coal are capital assets and we are selling those to maintain our living standard. That is a blinkered policy.

Requiring every negatively geared activity to operate as an individual entity and to be able to pass on losses for a very limited time, say two years, might improve housing affordability