Just because we are not quite a basket case economy, is hardly a comfort.
Just because we compare favourably to basket case economies like Japan, is no cause for complacency?
The formerly profitable service industries are doing it tough, and the world's best eco
tourism destination has just been put into liquidation.
We now import around 85% of our oil needs, and enough to gradually kill our economy, like a frog slowly brought to the boil, warm and comfortable until it's too late!
China may have stabilised, but the fact that it continues to stockpile commodities and import more and more of its coal from next door neighbour Mongolia, is more bad news.
Many of the projected investments have been shelved.
Profits and export incomes continue to be squeezed by the high dollar, as does consequent tax receipts!
Penny Wong said on breakfast radio, that no single economist saw this coming?
However, several dozen married ones clearly did!
Its just that the, we know best elitists like Penny, simply weren't listening, preferring instead the ubiquitous conformation bias.
Nor should we reduce this to an asinine ideological based, either either argument or winners and losers.
Fund education or pensions, or disability support etc/etc. When we can do it all.
We spend too much!
Simply fixed by removing all of Howard's welfare for the rich programs, and means testing all public largesse.
Keeping some is tantamount to taking bread from the mouths of babes, and costs consolidated revenue over 20 billions annually.
Negative gearing is costing consolidated revenue over 5 billions annually.
Take it away say Sydney Landlords and we'll simply raise rents!
Good luck with that I say, in the most expensive city in the world.
We need to produce surpluses to allow us to continue to borrow at preferential rates! Continued. Rhrosty.

Doing what you've always done while expecting a different outcome is madness.
It follows therefore, we need to do something different.
First cab off the rank is our extraordinarily complex tax system.
40,000 pages, with a loophole per page?
We can make more rules and more complexity and the tax avoidance industry will respond with even more creative and more expensive avoidance schemes.
It is a scrambled rotten egg omelette that can't be unscrambled.
The only choice is to throw it out in its entirety and replace all that convoluted complexity, with a single stand alone entirely unavoidable expenditure tax.
Something that would work for most of Europe as well?
A single stand alone expenditure tax set at just 4.8%, will raise around an additional 100 billion per.
It does this by including the 40% of multinationals, who currently pay no company tax to anyone!
It does that by making sequestering profits in tax havens entirely counter productive.
It does that by making some of the creative accounting schemes, like sending the same sum of money through several subsidiaries, to effectively cook the books, even more counter productive.
A single stand alone unavoidable expenditure tax, collected via the banking fraternity, will eliminate the need for compliance, and the average 7% hit to the bottom line, it creates.
The accompanying repeal of all other tax measures inclusive of fuel excise and the continually cascading GST, will add some 30% averaged to the bottom line; and around 25% to household disposables, making a non contributory 15% super immediately doable.
Microscopic adjustments to the tax rate alone, region by region where necessary, will alone control all inflation/stagnation; meaning, interest rates can be brought down until the AUD hits its natural value of around 65 cents.
The rest of the formula requires very cheap publicly supplied energy, like say cheaper than coal thorium.
The lowest tax rates coupled to the cheapest energy in the world, would have virtually all the high tech energy dependant industries of the world, queuing to relocate here!
Rhrosty.

As someone looking for ideas about how public policy can be improved, or at least get me to think more, I welcome Rhrosty's comments.

As for the article, utter garbage reflective of a propagandist rather than anyone who has a clue about what is going on.

I promised myself i would not read his garbage anymore, but it is always good to be amused.

In 1870, Australia was even further ahead of developed world, yet any reasonable analyis living conditions then pointed to much misry for many Aust's.

These pathetic-type pieces are an insult to the many Australians increasingly struggling with our supposed policy eltes having little clue or guts to make an effort to reverse worsening trends.

I am hoping a Coaliiton govt will begin the badly needed reform.

We Australians who live here still have an opportunity to improve our situation, including for future generations, but we need drastic change which will incliude reform to tax, social welfare, industrial relations and industry policy.

Only aspect that is a concern to me is how the reform will be carried out: either through divisive or fair policies that receive consensus support. We need ideas that support the latter, albeit that some pain my be inflicted.

According to Austin, Australia is the Promised Land.

I'm sitting here at the moment trying to decide whether to accept 4.45% on my small amount of investment money which I need to supplement my part-pension.

Over the past few years my standard of living, already cut to the bone, has further declined because of falling interest rates and increasing costs!

Alan Austin may have a money tree growing in his backyard in France or he may be addled-brained because of his religious bent.

Whatever the reason, his article has no relevance to the bulk of Australians who are struggling and it's set to increase.

Why is he allowed to publish such B....S....!

The kindest thing that might be said about Alan's articles is that they take a glass half full approach to economic data, often at the expense of accuracy. Putting Australia ahead of Norway is one illustration. Some basic data make the point. All figures for 2012 and all in $US.
GDP real growth 3.1%
GDP per capita $55,300
Unemployment rate 3.1%
Budget revenue $282.9 billion; expenditure $206.7 billion
Budget surplus 15.2% of GDP
Inflation rate 0.6%
Net external creditor
Exports $162.7 billion; imports $86.78 billion.
Sovereign wealth fund world's second largest at >$700 billion.

I cite Norway because it is a country I lived in for many years and am most familiar with. It is possible that some others have revealing statistics that undermine Alan's argument further.

Although the Australian government is to be commended for softening the blow of the global financial crisis of 2008-date that does not make it exempt from criticism. The current government has some blind spots and its taxation policies would have to rank high on any list of areas overdue for reform. The fact that only 2% of the Henry reforms were adopted illustrates better than most examples that we have a timid government beholden to special interests that prevent this country being as good as it possibly could be.

This should not be taken as an endorsement of the Coalition. It is just that they are beholden to a different set of special interests. Abbott is being given a free ride to power at present. It would be a fool who would assume that a Coalition government will address the fundamental problems. In my view they will simply make a different set of mistakes.

Alan is right that Australia survived the global financial crisis far better than most countries, but it is hardly due to superior economic management. Australia has enjoyed an unprecedented surge in its terms of trade in the past decade as a result of its close economic relationship with China. Without China, we would have endured a severe recession, like almost every other developed country.

Most countries responded to the GFC just as Australia did with cash handouts, infrastructure and monetary stimulus. It has less effect in Europe and the USA because the depth of the crises there was so much greater, and has left them with huge debt overhangs that will act as a drag on growth for years to come.

Australia also benefitted from entering the global crisis with a comparatively low debt to GDP ratio thanks to years of surpluses. This meant it could afford to spend up when the crisis hit.

Leading Australian economists like Saul Eslake, Chris Richardson and Ross Garnaut have very similar interpretations of Australia’s recent record – it is down to good luck more than good judgement, Governments have squandered the opportunities of the resources boom, the budget should be well in surplus at this stage of the economic cycle to prepare for the inevitable slowdown, and clawing back into surplus is going to be a long and difficult process.

Hello. Interesting discussion. Thanks.

@Rhrosty, re: “Just because we are not quite a basket case economy, is hardly a comfort.”

No. You're as far from a basket case as any nation has ever been.

Re: “Just because we compare favourably to basket case economies like Japan …”

No. Australia now rates better than any economy ever.

Re: “Formerly profitable service industries are doing it tough ...”

Correct. Some are. But not all. Remember, it's the worst economic downturn since the 1930s.

Re: “Doing what you've always done while expecting a different outcome is madness.”

Maybe. What different outcome do you want, Rhrosty? You're travelling superbly at the moment given the conditions. No?

Re: “It follows therefore, we need to do something different.”

Why? Why not accept being the best-managed economy in the history of the world?

Agree with most of your other observations, Rhrosty. Especially on Howard's welfare for the rich and negative gearing. Thanks.

@James O’Neill, Re: “The kindest thing … glass half full approach to economic data, often at the expense of accuracy.”

Not sure, James. An example of inaccuracy?

Re Norway, James, there are about 30 different economic variables. You have selected eight, of which seven are in Norway’s favour. Australia’s GDP growth is actually higher – and more consistent.

On a couple of others, Norway is also ahead – the Gini index and government bond rate. On others the nations are equal – job participation and international credit ratings.

Where Norway settles in fourth place in the world is that taxes are high – 43.2% to Australia’s 25.6%. GDP growth has been patchy since 2008 with nine negative quarters since January 2008 to Australia’s one and a bit, government debt is higher, productivity is much lower, retail sales are negative, interest rates are too low and economic freedom is lagging badly.

The next quarterly figures may be better. Norway is definitely improving.

Re: “The current government has some blind spots and its taxation policies would have to rank high on any list of areas overdue for reform.”

Agree with this absolutely. Thanks, James.

Cheers, AA

I am really surprised people are still reading this blokes output.

From what I read a while back he is on Gillard's payroll. You couldn't write such garbage unless well paid for it.

Hello. Further responses briefly:

@David G: “According to Austin, Australia is the Promised Land.”

Correct. The best-managed economy on all indicators.

But like the ancient Israelites, you will still experience wars, famines and enemies within.

Re: “I'm trying to decide whether to accept 4.45% on my investment money ...”

Lucky you, David! Only Australia and Poland have had interest rates in the optimum range between 2.75% and 5.0%. since 2009.

We're getting 1.2% here in France. The Euro Zone official rate is 0.75%. Norway has 1.5%. Switzerland has zero!

Remember this is the world’s worst crisis since the Great Depression, David.

@Rhian, re: “Without China, we would have endured a severe recession, like almost every other developed country.”

No. The data does not support this. Other countries also export heaps to China - the USA, South Korea, New Zealand, Russia and Japan. None of these averted recession.

Brazil has strong iron ore exports but went into recession in 2009 along with most other ore exporters. Has barely recovered since.

Re: “Most countries responded to the GFC just as Australia did with cash handouts, infrastructure and monetary stimulus.”

Yes and no. No country responded with the speed, quantum and direction though, did they?

Re: “It has less effect in Europe and the USA because the depth of the crises there was so much greater …”

Correct. But why was the crisis so much greater? And why was Europe not impacted evenly? Poland is an intriguing case study, as alluded to in the piece.

Re: “Australia also benefitted from entering the global crisis with a comparatively low debt to GDP ratio thanks to years of surpluses.”

No. Another myth. If valid, then other nations with little or no debt should also have done well through the GFC. And nations deeply in debt would have done poorly.

No such correlation. Several countries which emerged safely from the GFC 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.

Cheers, AA

Alan, I chose a limited number of indicators because they illustrate a point within the word limits imposed by olo in the comments section. They were economic ones but I could equally have chosen social indicators and by most objective measures they place Norway in the top half dozen nations.

It is true that taxes are a bigger percentage of GDP than Australia. But my question would be: what do you get in return? A world class free hospital system; a world class free education system; financial security upon retirement; very low crime rates; superb public transport etc etc. Of course I winced looking at each month's pay cheque, but I also knew that I was free of worry. Taxes are aimed at such items as smoking and drinking. Personal income tax compares favourably with most OECD nations.

Norway opted to remain outside the EU in two referenda. In hindsight that looked like a good decision. They also have an electoral system that gives proportionate representation to the voting public, unlike Australia which thinks it has a good system but like a lot of such beliefs sadly lacks a rational basis.

The late Donald Horne said that Australia was "the lucky country". That is the bit Aussies like to quote. Horne went on to say however, that it was a country run by second rate politicians who share its luck. Never was a truer word said.

AA can never be knocked out by logic. He is one of those people who thinks he knows everything. He will always come back with his arrogance.

Now i being honest here - I believe he is one of the silliest authors that have ever been published in terms of his commentary on economic matters.

But he is indeed good for a laugh.

He has the audacity to criticise Murdoch papers and journalists, but it is he that is an absolute joke.

If he ever got a job working for Labor i would indeed piss myself laughing.

Chris Lewis you have OLO to counter with facts, Alan Austins points;lets read them.

Yes, maybe in time.

First fact is that majority of Aust's dont think much of silly comparisons with other countries. They are far more astute than people living in France about what goes on here.

For a variety of reasons, Labor is going to get the boot (at least I hope so). I have been a Labor voter most of my life, but wont be for a while until it lifts its game.

What do I want Alan?
Well we could do with a reduction in burgeoning record foreign debt; and personal debt, which are still miles too high for any sort of comfort.
I want house prices that resemble something closer to the EU/USA average, rather than the 60% premium we pay here, those of us that can afford it.
I want a return to infrastructure roll-out preceding development, not the reverse of recent years.
I thought the Govt reaction at the start of the GST was right on the money.
Nonetheless, the current leadership is far too timid to take on the big picture reforms we need to set us up for the future.
The baby boomers are hitting retirement age, and there are far too many of them in comparison to the remaining taxpayers.
I want to climb out from under the huge record foreign debt and reclaim our economic sovereignty.
I want a model of foreign investment based on capital need, minus the foreign debt laden speculator, who has crippled two formerly stand-out economies, Spain and Ireland!
I don't want to live in a fools paradise, encouraging everybody except we Australians, to buy property. Which as a consequence, is now out of reach of too many Australians.
We have the highest median house prices in the English speaking world!
I want a parliament and pollies who finally put Australia and Australians first.
I want to see us invest in our own people and their better ideas, not comparatively over priced, over rated bricks and mortar.
I want a Govt that gets back into the housing market, with a huge public housing roll out.
To that end, we do need a much more efficient tax collection system, rather than endemic avoidance, that pollies refuse to tackle for fear of repercussions from a powerful ATO and tax practitioners.
No such reluctance was evidenced when when we outsourced our footwear and textile industries and the jobs of around 60,000.
There's a lot more I want, but OLO word limits!
Rhrosty.

Alan

China now represents about 30% of Australia’s exports, and in the past 5 years exports to China have risen from $23b to $77b, or 27%pa. Other countries also export a lot to China, but I suspect few have grown in reliance on China so quickly in so short a time. Chinese demand and high prices also underpinned the second, and even more important, contributor to Australia’s ability to sustain growth during recent years, from mining investment. In the past 5 years mining investment rose from $24b to $84b. This has also generated spin-offs in other sectors. For example, engineering construction work done rose over the same 5 years from $53b to $119b (all data for FYs 2006/07 to 2011/12)

I agree that debt levels before the GFC would have made little difference to the effectiveness of stimulus packages, but they made a big difference to how economies looked once the stimulus was ended. The resulting high debt levels of Europe and the USA will mean years of fiscal stringency. We didn’t share the same fate because we started from a better base and didn’t need to spend as much.

I think the speed, quantum and direction of Australia’s response was pretty average. We all know about the pink batts and extravagant school funding. One problem is that stimulus spending was not withdrawn once it was no longer needed, and this has contributed to the current fiscal deficit problem, which it seems everyone except Treasury know was coming. Both capital and current government spending by the Commonwealth have grown every year since the GFC. If the government had really followed the “three T’s” of effective stimulus spending – timely, targeted and temporary – then spending should have fallen once the crisis receded.

Just love comparative logic.We are less poor than the rest of the planet.We had a Govt surplus of $20 billion before these morons took control.

The main reason why the world is a mess is that private banks create from nothing all the money to equal our increases in productivity + inflation.

The debt can never be repaid when even our inflationary money gets created as debt.

First we lose out by depreciation of our currency,then having to repay the principal and lastly the interest on what was already ours.This is the same scenaro when our increases in productivity get created as debt.

No wonder banks are the powerful institutions on the planet.They can buy anything or anyone with the click of a computer mouse.

Hi Rhrosty.

Impressive list. All sound aspirations.

Except “burgeoning record foreign debt”.

Where, Rhrosty? Australia’s debt is quite modest in historical terms. No?

Would you agree your Government is delivering your economic wishlist better than any past Australian Government and better than any government anywhere else?

If not, which has done better?

Hi Rhian,

Re: “Other countries also export a lot to China, but I suspect few have grown in reliance on China so quickly in so short a time.”

Pretty sure South Korea and Japan have equivalent reliance, Rhian. Perhaps greater. The time over which that has grown may be different. Why would that matter?

Re: “Chinese demand and high prices also underpinned the second, and even more important, contributor to Australia’s ability to sustain growth during recent years, from mining investment.”

Correct. But the question remains why no other nation with equivalent benefits from trade with China was protected at all during the GFC.

Re: “We didn’t share the same fate because we started from a better base and didn’t need to spend as much.”

But you did spend as much. You spent more than most. Of OECD nations only the USA and South Korea spent more. Their stimulus was slower, however, and less effectively targetted.

Re: “I think the speed, quantum and direction of Australia’s response was pretty average.”

All the evidence suggests otherwise, Rhian. Have you researched this?

Re: “We all know about the pink batts and extravagant school funding.”

Really? What do we know? What the mainstream media told us? Those two strategies were the key reasons Australia’s intervention worked so well. They were extraordinarily effective as all the objective research now shows. Governments around the world wished they had done exactly the same.

Except they could have done without the frenzied hysteria and blatant lies of the Murdoch media.

Re: “If the government had really followed the “three T’s” of effective stimulus spending – timely, targeted and temporary – then spending should have fallen once the crisis receded.”

Yes. But has the crisis yet receded? Not here in Europe it hasn’t.

Cheers, AA

Dear Alan,

We should all be grateful for your article as a perfect example of how to isolate data from information and knowledge.

Your seemingly endless stream of supporting quotes and data with the context and relevance removed is quite frankly astonishing. That said I think you really do believe that “comparative analysis” is a valid substitute for reality.

This is good, very good because the majority of Australians are gradually building up immunity to such techniques.

You didn’t do this all on your own of course. Our government, much of our media, especially the ABC, sections of academia, have become the collective propaganda commentariat. A body representing elitism and intellectualism that is rapidly losing its credibility in Australia with the assistance of journalists like you.

Having been sensitized (subjected) to growing ideological proselytizing from the commentariat, Australians are now better equipped to compare reality with fiction and it is not looking good for you.

The main problem for the commentariat seems to be that your shrinking audience loves being told what it already feels, a bit like a comfort “blankie” really, a little wet corner to suck on when anxiety builds. However, what you really set out to do is to create converts and that is where you fail because the more you do to try to win converts the more you turn them off.

The oft used quote from “The March of Folly” seems so appropriate. Folly is “the pursuit of that which is contrary to self interest”.

Your summary comment is confirmation of your total abandonment of context and relevance. << You will also see starkly how incredibly fortunate Aussies are relative to the rest of the world>>.

After an article peppered with what I call propaganda but you call intellectual rigor, it’s all down to “fortune”. What?

Why didn’t you just title the article “The Lucky Country” and forget the rest.

Sorry Alan, no banana from me but many thanks and keep up the good work

As others have noticed dear Alan is a shill for the ALP and anything he writes should be filtered through that prism. There are many examples of the duplicity, incompetence and potential corruption of this current government; as to duplicity and incompetence this sequence is revealing:

Wayne Swan, May 2010:


We now expect a surplus in three years, three years ahead of schedule.

Julia Gillard, August 2010:


The Budget will be back in surplus in 2013 if I’m re-elected.

Wayne Swan, August 2010 :


Well, we’re getting back into surplus in three years. Come hell or high water.

Julia Gillard, August 2010:


The Budget is coming back to surplus, no ifs no buts it will happen.

Julia Gillard, November 2010:


The budget will be back in the black, back in surplus in 2012-13 … as promised.

Wayne Swan, April 2011 :


We see the surplus in 12-13 as being absolutely fundamental.

Julia Gillard, April 2011:


My commitment to a surplus in 2012-13 was a promise made and it will be honoured.

Wayne Swan, May 2011:


We’ll be back in the black by 2012/13, as promised.

Julia Gillard, May 2011:


We’ll bring the budget to surplus in 2012-13, exactly as promised.

Wayne Swan, August 2011:


I believe we will attain those forecasts, coming back to surplus in 2012/13.

Wayne Swan, August 2011:


The government remains absolutely committed to delivering our return to surplus as we planned.

Wayne Swan, February 2012:


I am determined to produce a surplus in 2012-2013. We have got our colours nailed to the mast.

Wayne Swan, March 2012:


Despite the tough global conditions, we remain determined to return the budget to surplus in 2012/13, and we will get there.

Julia Gillard, November 2012:


We stand by the predictions, the entries in the Mid-Year Economic and Fiscal Outlook. We stand by the figures and we’re on track to deliver a budget surplus.

Wayne Swan, December 2012:


It’s appropriate that we return to surplus.

Wayne Swan, December 2012:


It’s unlikely that there will be a surplus in 2012/13.

Alan, I don't want to sound ungrateful for the very timely response of the Labour Govt, that effectively quarantined us from the GFC.
And yes it is the worst economic crisis since the great depression; and indeed, caused by many of the same factors.
First and foremost, by too much of our finite wealth concentrating in too few hands.
That said, that's all yesterday and circumstances continue to change and worsen.
Foreign debt is over 1.5 trillion, which we're told around the size of our economy!
It's far too large in the current economic circumstances; and for our comparative small population; and indeed, the growing internal structural deficit!
Moreover, I look at it from a perspective of a person who remembers that we were once the third most prosperous nation on the planet and a creditor one at that!
And where an unemployment rate of just 1% was considered shameful?
Also, if management tells us just one thing Alan, it tells us that there is always a better way.
Doing what you've always done gets you what you've always got.
And two massive world wide economic crisis, of the current magnitude are two too many; and tell me at least, that the status quo isn't good enough, nor is she'll be right mate, nor is mortgaging the futures of generations yet unborn!
If what we are doing now, is more or less compounding our problems/sending us to an even worse place, then we do need to try something different!
I think Norway is a good, if relatively conventional western style economic model?
But, I believe we, with our as yet untapped massive resource base, can do far better, and without going down her high taxing road?
I therefore commend my proposed reforms as a very cogent plan for our ultra prosperous future.
The rest is as simple as finding and removing poverty in all its forms and guises, wherever we find it, to lift the well being, prosperity and happiness index of every person extant on the planet! Cuase and effect!
Rhrosty.

Alan,
Why are you running the Labour lie that 'government tax revenues are falling'.
Government revenue in Australia rose this year by 7.5%. It hasn't in fact fallen.
Is it that you are gullible in accepting labor propaganda or lack comprenhension skills or are you being a liar and deliberately repeating the original lie.

We in Australia all understand the truth and it seems few of us are duped by the inane repetition of the lie by ourlocal commentators. You ought to read the letters pages of our newspapers. You would soon see the disdain in which the lie is held and the disdain being poured upon thosr fewer and fewer commentatprs who repeat the lie.

Alan,

Your distance from Australian reality must be the reason you can regurgitate Labor's sales spin. The deficits posted by Labor have in every instance far overshot the budgets because their revenue estimates in the budget have been described by economists as "optimistic" and expenditure has always exceeded budget.

Socialists generally keep spending until they run out of other people's money. Just about everyone in this country has seen this and are no longer listening. Looking from the EU the state of the Aus economy is good in spite of Labor's efforts, but already warnings have come from the ratings agencies that the AAA rating is not guaranteed if the deficits continue.

Cohenite, an impressive list of lies, and that is just on the 'surplus' (or should I say Wayne Swan's mirage).

But the one that most ordinary voters remember is "there will be no carbon tax under the government I lead".

http://resources3.news.com.au/images/2013/04/30/1226632/603243-130501-leak.jpg

Bill Leak nails it in one again.

Good morning. Interesting discussion. Thanks.

@James O'Neill, re: “by most objective measures they place Norway in the top half dozen nations.”

Correct. The article places Norway in the top five on economics. I’d say fourth. On social issues, first.

Re: “my question would be: what do you get in return?”

Agree completely. Excellent summary, James.

@Spindoc, re: “Your seemingly endless stream of supporting quotes and data with the context and relevance removed is quite frankly astonishing.”

Correct. The actual data frequently astonishes.

Re: “context and relevance removed”? Do you mean Australia’s deafening ‘We’re all being rooned’ mainstream media chorus?

Is any factual statement or item of data incorrect, Spindoc?

@Rhrosty, re: “too much of our finite wealth concentrating in too few hands.”

Correct. One causal factor of the GFC.

Re “circumstances continue to change and worsen.”

What is worsening in Australia, Rhrosty?

Re “Foreign debt is over 1.5 trillion, which we're told around the size of our economy!”

Told by whom? Pretty sure it is not that high. According to the AOFM it’s 20.7% of GDP, lowest among wealthy nations:

http://www.tradingeconomics.com/australia/government-debt-to-gdp

Re: “It's far too large in the current economic circumstances; and for our comparative small population”

According to whom? No independent economist agrees with you, Rhrosty.

Re: “Moreover, I look at it from a perspective of a person who remembers we were once the third most prosperous nation on the planet …”

Rhrosty, that’s the point of looking at the actual data. Australia is clearly the best-managed economy in the world on objective measures. Not just third.

Recent shifts are that you have expanded national wealth enormously with infrastructure development, increased productivity impressively, gained four triple A ratings for the first time, and have world-beating numbers on economic wellbeing overall.

Re: “And where an unemployment rate of just 1% was considered shameful?”

What was job participation back then?

@Everyone, finally:

No-one has answered the question regarding the observation that Australia now has economic outcomes better than at any past time and better than anywhere else.

“If not, which has done better?”

Anyone able to have a shot?

Cheers, AA

Well guys, you all gave it your best shot, yet he came back again and again like the dumb knight in the Monty Python movie as he had limb after limb cut from his body.

But it is not hard to prove his out of touch bias. Just look at his reponse to Rhrosty who stated
"We all know about the pink batts and extravagant school funding.”

Really? What do we know? What the mainstream media told us? Those two strategies were the key reasons Australia’s intervention worked so well. They were extraordinarily effective as all the objective research now shows. Governments around the world wished they had done exactly the same.

Now lets get that quote and send it to 1,000 anonymous homes in Australia and see the response. Do you think even 10% will agree with him.

Australia has better economic outcomes than most other countries, but not better than the Howard government, and mostly because of the strong economic position that Labor inherited.

Juliar's spending is out of control. Her claims that revenue is $12bn short is in spite of a 7.6% revenue increase. Also we are looking at a $17bn deficit, which shows that Labor's promise of a surplus was never going to be achieved even with Labor's wildly optimistic revenue predictions.

Labor's answer is not to reign in record spending levels, but to increase taxes, (or savings in Labor speak).

I am looking forward to September when the incompetent Swan will find himself unemployed and I don't think any real business will touch him with a barge pole.

yes, my opinion was the Howard govt was better. It had a clear agenda from start and carried out many of its aims, including lowering public debt.

Nevertheless, an Abbott led govt is going to face much tougher economic circumstances and he and his govt will need to lift the standard. If not, much misery lies ahead. It is not just going to be a need to better balance the books, but to better balance production versus consumption

Alan,

In your response to comments you did not address the fact Australia's Tax revenue is actually increasing.
Are you standing by your claim '... government revenues are falling.'?

Or are you now in denial of truth. Did you know a lack of respect for truth and a lack of understanding of loyality are the prime indicators of a pathological personality? Sufferers exhibitions of these deficiencies worsen as the stress of having to face the consequences and delusions of previous untruths and the self evident lack of respect increases. Oh and typical sufferers of this malaise commonly lack any sort of foresight, show appalling judgement and suffer cognitive delusion.

Lol.

Alan
I agree with you that Australia’s economy looks very good compared to most developed economies. I don’t agree that government is mainly responsible for that.

The main difference in the effect of China’s economic growth on Australia compared to say, Japan or Korea, is that we mainly export mineral commodities and Korea and Japan mainly export manufactures. Because minerals supply is inelastic, strong unexpected growth in demand leads to much higher prices for a period, and this is what prompts investment, if those high prices are sustained. Hence, the rapid growth in Australia’s export values to China in the period under discussion IS relevant, because it reflects the larger effect of China’s demand on Australia’s growth in this period.

The most telling statistic accounting for Australia’s strong economy is the terms of trade, which doubled in the 10 years to 2011 due to high export prices. Even though it temporarily dipped in the aftermath if the GFC, its low in 2009 was still 84% higher than it had been a decade earlier. Nothing like this has happened to the Australian economy over such a prolonged period for more than a century, probably since the gold rush.

Unless the government can claim credit for this – which of course, it can’t – then it can’t claim the credit for Australia’s relative economic strength. This is also why the government is being criticised for not moving into surplus sooner and not establishing an effective Future Fund to prepare for the inevitable unwinding of the in terms of trade which now looks to be underway.

Where do you get your data saying Australia’s stimulus was better, larger and sooner than other countries? This suggests it was not exceptional in size, composition or timing:

http://astrid.eu/Dossier--d1/Note-e-con/PRASAD_SORKIN_G20-economic-plans_03_09.pdf

Alan and Rhosty
The AOMF data Alan quotes are for government debt. Australia’s gross foreign debt is mostly private. It stands at $1.5 billion, or about 95% of GDP. The more usual ration cited is net debt, and this is $747b, or just under 50% of GDP

To give credit for the current economic situation, one has to forget the Rudd and Gillard government economic mismanagement, for example:

. the pink batts fiasco, without any effect whatsoever on climate change;

. the billions wasted on the BER (Julia Gillard Memorial Halls) without any resulting improvement in education standards;

. the many billions committed to the NBN without a cost benefit analysis, that will result in Australia having the highest broadband prices in the developed world;

. the knee-jerk halting of the live cattle export trade;

. the mining tax which has reaped virtually zilch revenue, but caused mining companies to choose offshore locations for future investment;

. the science- and economic-unjustified carbon dioxide tax, that has helped destroy Australian industries' natural advantage;

. the unjustified raising of the cost of employing labour through the mislabelled Fair Works Act, e.g. penalising weekend businesses and part-time jobs out of existence with over-the-top penalty rates;

. implementation of a Murray-Darling Scheme that will ensure fresh water for the dammed (formerly salt-water) Murray Mouth lakes, but reduce water allocation for food producers.

Bonjour.

Brief responses, as requested:

@imajulianutter, re: “Why are you running the Labour lie that 'government tax revenues are falling'.”

Is anyone claiming revenues are falling overall, Keith? Haven’t seen that anywhere.

Is that a “Labour lie”? Or are you still reading Murdoch papers?

The article states "tax revenues are diminishing” in the context of company profits being squeezed, job opportunities declining and wages not rising as anticipated. Hence several revenue streams are indeed diminishing. Others are stagnating where rises were anticipated. Some are rising on track. A few are rising faster than expected.

Schedule 5506 of the ABS reveals 2011-12 tax revenue declined in general sales taxes, excises other than crude oil and LPG, agricultural production taxes and a few others.

Overall, revenue will rise year on year. But not at the rate Treasury has been predicting. All set out transparently in the forward estimates.

@Chris Lewis, re: “Now lets get that quote and send it to 1,000 anonymous homes in Australia and see the response.”

Chris, that is precisely your problem. There is the narrative sold by your mendacious media which some happily buy. And there is the reality which the data reveals.

For example, did the rate of fires, property damage, injuries and deaths in the insulation industry go up during the 2009-10 pink patts project, or go down? By what factor?

Can you see, Chris, how dopey it is to ask people who are duped if they realise they are being duped?

About as smart as trying to research ministerial integrity by reading the Sydney Morning Herald.

@Shadow Minister, re: “Australia has better economic outcomes than most other countries, but not better than the Howard government.”

Australia was 11th ranked in the world in 2007. It is number one now by a mile. Compare the value of the dollar, job participation, interest rates, taxes, pensions, economic freedom, productivity, AAA credit ratings, etc. etc. etc.

Achieving this (a) during the worst crisis since the 1930s and (b) without the rivers of gold after Mr Costello sold off so many productive assets is impressive. No?

So cheer up!

AA, i think you have some real issues, particularly your lack of regard for any other person's point of view. You certainly have no regard for democracy because you always have excuses by people being brainwashed by the media. I now notice the culprit is the SMH rather than the Australian.

I have put down a 2012 version of my 2010 piece (publihsed by the ANU)on the Home Insulation Scheme and i ask readers to comment whether it was not researched properly or was merely decided by media bias.

http://epress.anu.edu.au/wp-content/uploads/2012/08/ch082.pdf

In regard to previous post, i am not asking whether you agree or disagree with my article's point of view. These sort of issues always have divided opinion, albiet the ANU thought it was ample enough to have it published.

What i am eager to know is whether anyone agrees with AA's view that this work was the result of myself being brainwashed by the media, which i find personally insulting given the effort i made to systematically go through all submissions to the Senate inquiry,as well as thousands of newspaper articles.

Fact is that there have been various academic pieces (reviewed) done on the HIP, and i am yet to see one that views the HIP as a policy success.

But heavfen forbid, AA probably will tell us how stupid academia has become because it is not agreeing with his point of view.

The HIP is indeed an important reminder why govt's need to do their job properly, not just waste money simply to boost GDP, although i would like to know how wasting many hundreds of millions of dollars is productive anyway.

In 2007 unemployment was just over 4%, net debt was non existent, and business confidence was at an all time high.

Last year the tax revenue from mining was 4x the peak that the Howard government received and this year tax revenue has increased again by 7.5%, yet Labor cannot manage a surplus, the AAA rating is now threatened, unemployment is 5.6% and creeping up, business costs are soaring, there are 20 000 new regulations to comply with, and business confidence especially among small business is at rock bottom.

So if other countries have been cursed with Socialists governments for longer than Australia and have fared worse, that still does not mean that we are doing better now than under Howard.

"So if other countries have been cursed with Socialists governments for longer than Australia and have fared worse, that still does not mean that we are doing better now than under Howard."

That's correct. What dear Alan cannot see is that Australia is still doing relatively ok compared to other nations which have governments of a similar ilk to Gillard's mob, primarily because those other nations do not have the inherent advantages Australia has.

All the comparatitve indices which dear Alan lists to show Australia's relative fortune do not reflect in any way on this government; Australia is doing relatively ok IN SPITE of Gillard.

As I have said before the real comparison is with what Australia would have been without Gillard. Every policy she has overseen has been an unmitigated failure, disastrously implemented, unplanned, ideologically corrupt.

On top of that we see the alp poisoning the well so their pernicious, vile influence will remain after Gillard is booted out.

The only saving grace to come out of this will be for Gillard to face criminal charges along with her paramour Wilson.

Hi again Rhian.

Re: “Because minerals supply is inelastic, strong unexpected growth in demand leads to much higher prices for a period, and this is what prompts investment, if those high prices are sustained.”

Yes and no, Rhian. Prices were higher for a while, but not for long. When the iron ore price dropped in October 2011, Australia’s economy still surged.

Why was Australia the only ore exporter to avert recession? Brazil exports almost as much. Also enjoyed high prices. Brazil went into recession in 2009 along with other ore exporters. Has barely recovered since.

So no evidence that ore sales to China were critical.

Yes, you are correct re investment, Rhian. But the investment that did the trick was not mining. The critical investment in 2009-10 was in insulation, school buildings and other public facilities.

Re: “The most telling statistic accounting for Australia’s strong economy is the terms of trade, which doubled in the 10 years to 2011”

Not really. During the first eight years of that period, Australia’s economy languished. You only got through by selling off productive assets. Your economy surged to the top of the pops in 2010. You got your AAA ratings in November 2011.

So what happened in 2009-10 different from the previous 8 years? And different from the rest of the world?

It wasn’t the terms of trade.

Re: “Unless the government can claim credit for this – which of course, it can’t …”

The Government should get credit, Rhian. It gets credit abroad. Just not in Australia.

Re: “Where do you get your data saying Australia’s stimulus was better, larger and sooner than other countries?”

All the economists who have studied this, Rhian. Example:

http://www.oecd.org/economy/outlook/42421337.pdf

Refer figure 3.2. The size of the pale blue column is much greater than anywhere else – about four times the OECD average.

Plus Joseph Stiglitz:

"You were lucky to have, probably, the best designed stimulus package of any of the countries, advanced industrial countries, both in size and in design, timing and how it was spent - and I think it served Australia well.”

Cheers, AA

Dear Alan has no idea; any reasonable anlysis of the Swan stimulus package shows it was a relative failure; see for instance:

http://catallaxyfiles.com/2010/05/13/did-the-stimulus-work/

Even at this stage Swan and the rest of this mob were lying and obfuscating; obviously the overseas commentators who dear Alan relies on are as gullible as him; maybe they're in some of those 90000 jobs created by the stimulus;

http://www.thechronicle.com.au/news/rudd-announces-second-42b-stimulus-package/161053/

The only thing real about Swan's stimulus is the cost, $42 billion; even if there were 90000 jobs created, which there wasn't, they were created at a cost of just under $1/2 million each.

1/2 a million each for 90,000 imaginary jobs.

Dear Alan and the alp.

Remember it when you vote folks.

Hello Shadow Minister,

Re: “In 2007 unemployment was just over 4%, net debt was non existent, and business confidence was at an all time high.”

Wrong, wrong and wrong, SM.

In 2007, Australia’s employment record was just average relative to comparable countries. The jobless rate fluctuated between 4.2% and 4.6% through 2007.

The rate in the USA was also between 4.4% and 4.7%.

Then the GFC hit, didn’t it? Every developed nation in the world lost millions of jobs. Except one. Australia alone maintained high employment. Incredible!

The USA rate today is much higher than Australia's – Europe is more than double.

http://www.tradingeconomics.com/euro-area/unemployment-rate

No, Australia’s debt dropped to 9.7% of GDP in 2008. It was never “non-existent”. That was about average in the OECD then.

Australia’s is now only 20.7% – despite the worst global downturn since the Great Depression. That's about one fifth of today's OECD average. Just amazing!

Business confidence actually declined during 2007, SM. Businesses were happy to see the back of Costello who had squandered so many great opportunities. Selling all that gold at rock bottom prices. Losing billions gambling on foreign exchange markets. Selling off the rivers of revenue. Wasteful spending with nothing to show for it. Just so disappointing!

Re: “Last year the tax revenue from mining was 4x the peak that the Howard government received.”

Really, SM? Including company tax? Your source?

Re: “the AAA rating is now threatened”

Nonsense. All three rating agencies have reaffirmed Australia’s triple A. Why do you think Howard and Costello never achieved that, SM?

Re: “business costs are soaring, there are 20 000 new regulations to comply with, and business confidence especially among small business is at rock bottom.”

Hardly, SM. Australia now ranks top among OECD nations (and third in the world behind Hong Kong and Singapore) in Heritage Foundation’s survey of economic freedom. This reflects ease of producing and investing and freedom from onerous regulation. Brilliant!

http://www.heritage.org/index/ranking

Much higher than Howard and Costello ever achieved.

SM, you have been reading newspapers again, haven’t you? Not the path to knowledge or wisdom, is it?

Cheers, AA

And so it goes; the misrepresentations and outright lies continue.

In respect of unemployment, seasonally adjusted the unemployment rate is now higher than it was at the height of the GFC:

http://catallaxyfiles.com/2013/04/11/how-is-that-stimulus-working/

The only difference is now there has been a $300 billion debt turnaround generated by dear Alan's government.

So, just to clarify, unemployment now higher than during the GFC but debt hugely increased.

And of course the current unemployment is far below what the world's greatest treasurer promised:

http://catallaxyfiles.com/2013/04/12/another-broken-promise/

Hello again,

Some follow-ups briefly:

@cohenite,

Yes, that Catallaxy Files piece has done the rounds. No credibility, however, Anthony.

It asserts: “There is no obvious reason why those countries should have been excluded.” This is in reference to excluding India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey.

Well, to economists the reason is glaringly obvious. We must compare like with like. Always. Fundamental principle. Australia’s wealthy, liberal, democratic, free enterprise economy must be compared with like economies.

I personally prefer to do straight OECD comparisons. Which would include Mexico and Turkey. But no way can you include the others with integrity.

Fair enough, Anthony?

@Chris Lewis:

Have just read your paper, linked earlier. Yes, it does read as a cut-and-paste of Murdoch’s pink batts narrative. I found no evidence anywhere that you have tested, or even questioned, claims made in News Limited stories.

You appear to assume all their reports are factually accurate. Fair observation, Chris?

Because the things they consistently got wrong you got wrong. The things they got right you got right. You seem to have ignored the facts they ignored. Perhaps you were genuinely unaware of them. And the hostile witnesses they relied upon you relied upon – the Opposition, Murdoch media, anti-Rudd unions and anti-Labor business.

Their confusion of settings and outcomes appears to be your confusion also, Chris. And the crucial independent research they ignored you ignored. Notably that from the CSIRO.

As with virtually all Australia’s media, including the ABC, you seem not really to understand the fundamental purpose of the scheme – which to observers who don't read The Australian was overwhelmingly accomplished.

Instead you assert at the outset it was a “debacle” – without explaining why – and proceed as though that is a given.

Just three questions, Chris, if you are happy to pursue this:

What do you regard as the scheme's fundamental purpose?

Why did you include Rodney Tiffen in your references? His research reached the opposite conclusion from The Australian’s and yours. No?

Why no reference to the findings of the CSIRO?

Thanks, Chris.

Cheers, AA

Austin, i am not asking for your opinion. Cant you read. I consider you an absolute joke as a scholar and journalist. I also think many others do too. I will leave it there in order not to come as too crude.

I was asking other forum members

AA,

Unemployment in 2007 started at 4.5% and when labor took over was about 4.3%. This is compared to the unemployment under Labor today which is 5.6% trending upwards consistently.

The US hit a higher peak, and is now trending down at less than 8%.

As for economic freedom:

"Australia’s economic freedom score is 82.6, making its economy the 3rd freest in the 2013 Index. Its overall score is 0.5 point lower than last year, with score gains in freedom from corruption and business freedom offset by declines in labor freedom and the management of government spending. "

Which means the improvement is in spite of the negative influence of the government.

As for the credit rating, comments from S&P:

"Ratings agency Standard & Poor's that Australia will be at risk of losing its coveted AAA credit rating if the federal government does not demonstrate a stronger commitment to eliminating the budget deficit.

S&P has reportedly told both the government and the opposition that it understands the need for a current budget deficit, but warned that the AAA rating could be jeopardised within five years if the government does not demonstrate a concerted effort to restore the budget surplus and the national debt continues to climb."

The Howard government had a AAA rating, but the scarcity of government bonds (debt) made the rating difficult. This was no problem under Labor.

From a quick reading of Chris Lewis' well researched paper on the HIP scandal, one would have to be bloody-minded to disagree with its observation that it was a poorly planned and executed program.

The HIP would make an excellent case study for use in courses on policy formulation and project management. It will continue to serve as a prime example of the Rudd government's ineptitude.

Thanks Raycom.

AA refers to Rod Tiffen, yet he too said it was well researched, albiet it had a different position.

Hi Alan

In 2009 Australia’s goods exports rose in volume by 3.4%. They decreased by 14.2% across the euro area, 12% in the USA, 27.6% in Japan and 13.2% across all advanced economies. Exports are about 20% of Australia’s GDP, so if Australia had the same contraction in exports as other advanced economies, its GDP would have been 3 percentage points lower. Instead of growing by 1.4% in 2009, the economy would have contracted by about 1½ %

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx

The OECD data you quote were “interim”, with a cut-off date for data of 24 March 2009. Later analysis by the ILO with more complete information puts Australia’s fiscal stimulus in the middle of the pack:

http://www.ilo.org/wcmsp5/groups/public/---dgreports/---inst/documents/publication/wcms_194175.pdf

You are wrong to say that Australia’s fiscal position prior to the crisis was unexceptional. In 2006 Australia’s general government gross debt was 10% of GDP, while the average for advanced economies was 77%. Its net debt was -6% of GDP, while the average for advanced economies was +48%. Its structural balance was +1.8% of GDP, while the average for advanced economies was -2.3%

(IMF data again)

The drop in iron ore prices in 2012 was temporary and small compared to the increase in prices over the past 10 years. Briefly prices dropped below US$100/t , but they are currently back at around $140/t. In 2003, the price was $13.8/t – less than 10% of today’s value:

http://www.indexmundi.com/commodities/?commodity=iron-ore&months=120

You would not expect that to have much effect at all; and if it did have an effect, it would take months to show up in the data (you don’t halt an iron ore expansion because of a 3-month blip in the data). Even so, there has been some effect on markets – BHP put its Port Hedland outer harbour project on hold, for example.

Our terms of trade and export prices reflect coal and energy as well as iron ore prices. All have been strong in recent years. Brazil exports less iron ore than we do and gets a lower price for it. Its terms of trade have not been as strong as ours:

http://www.tradingeconomics.com/brazil/terms-of-trade

Alan
your respobse to me shows you are deluded and have no respect for the truth.

It is in all our media in Australia that Tax revenue is rising. Even on you ABC. Even Swan explained it was the forecasts of revence which are not matching the actual tax revenues. He omitted to say the forecasts were his forecasts

And that Alan is quite different from claiming Tax revenues are dfalling.

But before you rant on about the accuracy of Swan's satement, just remember it was Swan who has stuffed up and was way over optimistic about expected revenves.The reason for that was he wished for a SURPLUS.

You really should read Australian newspapers inastead of your Labor briefing notes.

lol you are becoming a source of great mirth in my world.

You are thrashing about in desperation just as Gillard and Swan are.

Hello,

@Shadow Minister, agree mostly.

Re: “The US hit a higher peak, and is now trending down at less than 8%.”

Correct. Australia and the US were near-identical in 2007. Then the US jobless rate soared to 10%. As happened widely.

Australia’s never exceeded 5.8%. Extraordinary!

Re: “freedom score is 82.6 … the 3rd freest in 2013”

Correct. Higher than Howard/Costello ever achieved.

Re: “The Howard government had a AAA rating, but the scarcity of government bonds made the rating difficult.”

No. Australia gained triple A with Fitch for the first time in 2011. You have always had bonds.

@Raycom, re “a quick reading of Chris Lewis' well researched paper.”

What do you regard as the scheme's fundamental purpose, Raycom?

Were you surprised the principal data source was Murdoch newspapers?

Why do you think there was no mention of the CSIRO's research?

@Rhian, re: “Later analysis by the ILO … puts Australia’s fiscal stimulus in the middle of the pack.”

On quantum, yes. But as Steffen Ahrens found, “mere size of the stimulus does not guarantee success”. More important is “choice of the specific actions taken”.

Australia was alone in (1) speed, (2) quantum of immediate handouts to families, (3) quantum of rapid infrastructure programs, and (4) minimal tax cuts.

The country closest to Australia’s strategy was Poland - the only other OECD country to avoid a technical recession.

Re: “You are wrong to say Australia’s fiscal position … was unexceptional.”

Well, Australia had lower borrowings than average. But you weren’t alone in that.

So questions are:

(a) How did Australia fare through the GFC?
(b) How did other countries fare with low borrowings and budget surpluses?
(c) How did other countries fare with high borrowings and budget deficits?
(d) Is there a correlation?

Answers are (a) incredibly well, (b) badly, (c) some well, some badly, (d) no.

Re: iron ore, your data is correct, Rhian. But if the iron ore price theory had validity, Brazil should have experienced some benefit like Australia’s, if less dramatic. Brazil’s ore export volumes are lower than Australia's, but still vast.

It didn’t.

Cheers.

Well Austin, the main thing you need to recognise is you are just one opinion, and a very ordinary one at that. You might think you are above virtulaly all others, except those who mirror your bias, but most of us know you are not.

In fact, i want to see just one qualified journalist or academic come on this forum and actually confirm that your pathetic efforts have any scholarly qualification at all given some of the difficulties now facing Austs and domestic businesses.

Collectively speaking, our democracy (I speak for Austs who live here)is most likley to boot out Labor due to a belief that it did a very poor job.

In the end, we like to think our own bs counts. But in the end, it is the wisdom of the masses in a well-educated country that will decide. And thank God for that (should one actually exist).

I do hope you will raise a glass of wine (or whatever) to celebrate the verdict of the Aust people come election day.

Rubbish about fiscal stimulus "saving Australia from recession". Great Britain's deficit is 8% of GDP, hows that going for them? Even a die hard Keyensian like Paul Krugman will tell you that when you have an inflation targeting central bank with interest rates above zero, the fiscal multiplier is pretty much zero.

Greetings again,

@imajulianutter, re: “It's in all our media in Australia that Tax revenue is rising.”

Correct, Keith. Overall revenue is rising and will continue to increase for the foreseeable. Some sectors are declining, though, as identified above.

Australia's Shock Horror Disaster Debacle headlines relate to the forward estimates. Substantial revisons downwards in recent weeks.

Happening worldwide, not just in Australia.

@Grim 23, re “Great Britain's deficit is 8% of GDP, hows that going for them?”

Correct, Grim23. Exactly. Britain is an intriguing comparison.

In 2007 Britain and Australia were similar. Both had interest rates around 6%, unemployment within the OECD average band between 4% and 6%, and economic growth within the OECD average between 3% and 5%.

Britain was 9th best-performed economy in the world. Australia was 11th with much lower GDP per capita.

Then the GFC hit. Britain did what most countries did and what the Opposition and media in Australia urged – modest, careful stimulus.

Australia, however, headed off on its own with an extraordinarily energetic intervention. They virtually tipped cash into the streets – even mailing cheques to dead people! They stuffed insulation up every manhole they could find and whacked a new hall in every school yard, whether it had students or not.

Alone in the world, the Rudd Government handed out a staggering 3.3% of its GDP in the first few months. Next highest was the USA which spent 2.4%. Not enough, we know now.

All others, including Britain, spent well below this. The OECD averaged 0.7%.

Then Australia launched an equally rapid infrastructure campaign – also unique in the world.

The rest is history. Australia is clearly the world’s best-managed economy. Not just now but at any time in history. Incredibly impressive given the global downturn.

Britain is still in 9th place – where Australia would be had the conventional strategy been followed. Unemployment is 7.8%, debt is 91% of GDP, interest on savings a miserable 0.5%, GDP growth 0.3%, budget deficit 6.3%. And a hefty dole bill likely to grow. These look like worsening.

So you Aussies can cheer up!

No, really.

"Australia is clearly the world’s best-managed economy. Not just now but at any time in history. Incredibly impressive given the global downturn."

At first blush one would laugh at this but coming from dear Alan we know he means it.

We already have seen how the HIP was a disaster, the BER featured gross cost overruns and exemplifies the point; what was done could and should have been done for half the price, even if you allow for the fact that money was spent at schools which later were closed and myriad other waste and overruns.

Every policy of this government fails on a cost/benefit analysis; the NBN is a classic because it hasn't even had a cost/benefit analysis done!

What about the mining tax which cost more to set up then it will collect because this witless government forgot the tax liability of mining companies is mitigated by the payment of state royalties and that exploration and infrastructure expenditure are tax deductions.

My favourite, even if it only featured relatively small dollar waste, was the set-top box fiasco where the overpriced things [up to 5 times the price of what the price was in the stores] were send to blind pensioners.

That is a fitting symbol of this government; and it is why noone believes Gillard's NDIS will ever work and that it was just a wedge tactic and a distraction.

Whatever happened to the fast train?

Next week it will be a Moon base.

Alan you are delusional.

That still doesn't address my point. How can fiscal stimulus boost demand when the central bank is targeting inflation? If interest rates are above zero, the central bank should have no problem hitting its inflation target. if they fall to zero, there is a case for fiscal stimulus, but monetary policy would still be effective.

Monetary policy in the US, UK and Europe has been extremely tight since mid 2008. Australia had much more effective monetary policy than Britain during the crisis. Fiscal policy has nothing to do with it. Every serious new keyensian macroeconomist will tell you that if interest rates are above zero the fiscal multiplier is zero.

AA,

The only way you can put Juliar's government in any good light is to try and compare with countries that did not have Labor's rivers of mining gold. Given Australia's mining a 5.8% unemployment was an easy mark, and could have been achieved with only a fraction of the wasteful spending. Labor's only claim to economic management is that they haven't yet borrowed to the point of insolvency. There is not one Labor project or policy that has not cost far more than planned and delivered less than promised.

Those of us that actually live in Australia listen to the business associations that make it clear that the cost of doing business in Australia has skyrocketed. Juliar promised to cut red tape, yet has added 20 000 new regulation that small and large business need to comply with, have taken IR legislation back more than 2 decades, and introduced a carbon tax with no compensation for small business.

Tax revenue has dropped because Australian business under the yoke of Labor incompetence is battling.

Morning all,

@cohenite, re: "We already have seen how the HIP was a disaster”

Really? Where, apart from the mendacious media and dodgy academics? Independent economists, environmentalists and occupational safety analysts are highly complimentary. Governments abroad wish they’d implemented the same ‘disaster’.

Re: “the BER featured gross cost overruns …”

Really? What was the budgeted cost? And the actual?

Re: “what was done could and should have been done for half the price”

We come to the point.

Anthony, what was the purpose of the scheme? This is critical, isn’t it?

That has been put to Chris Lewis and Raycom in this thread. No appearance, your worship.

What is your answer? Cohenite? Anyone?

@Grim23, re: “How can fiscal stimulus boost demand when the central bank is targeting inflation?”

It can, Grim23. It did. The evidence is overwhelming.

Tim Harcourt: “Australia went hard and went early and put resources in the right places. As a result, Australia was the only advanced country to have reported positive through-the-year growth to June 2009.”

Re: “Australia had much more effective monetary policy than Britain”

Correct.

Re: “Fiscal policy has nothing to do with it.”

That is is question, Grim23 The evidence suggests it did.

@Shadow Minister, re: “The only way you can put Juliar's government in any good light is to try and compare with countries that did not have Labor's rivers of mining gold.”

Not at all. Julia has a record of better outcomes than any current government or any government in history.

Can you name a better-managed economy anywhere, as measured by outcomes, SM?

Re: “Those of us that actually live in Australia listen to the business associations that make it clear that the cost of doing business in Australia has skyrocketed.”

Not at all, SM. The loudest voices Australians hear are the lying mass media. No?

Re: “Juliar promised to cut red tape, yet has added 20 000 new regulation”

Really? According to whom? How many regulations have been eliminated?

You have read Heritage Foundation’s analysis of Australia’s competitive business costs.

Who do you believe, SM?

You really can cheer up.

If you admit that monetary policy was effective, then by definition fiscal policy is ineffective and wasteful. If monetary policy can hit its target of 2-3% trend inflation, what's the point of fiscal stimulus?

While we are quoting people, how about prominent Keyensian economist Brad Delong:
"Here is the point: an optimizing central bank that cares only about inflation and unemployment because it does not find itself at the zero nominal lower bound and does not fear engaging in nonstandard monetary policy will engage in full fiscal offset: it will take care to make sure that if fiscal policy becomes more stimulative then it will make monetary policy less stimulative by the same amount."
Tim Harcourt did not take the monetary offset into account. In fact few studies take it into account when they really should.

Ultimately the point is that because fiscal stimulus boosts aggregate demand, inflation must also rise as well as GDP. If the RBA is targeting inflation (or preferably nominal GDP) then any fiscal stimulus is cancelled out by monetary policy, leaving a "fiscal multiplier" of zero.

Just for the record, in respect of the BER, and there are many examples but one is typical; Berridale Public School, which received a prefabricated, transportable library under the school halls program with the basic cost being $385,000; yet the total cost of the project is $895,000—an additional $510,000 to deliver and install.

At the time, by comparison, a standard four-bedroom, two-bathroom Timberline homestead delivered and installed to site within 100 kilometres from Lisarow cost only $143,000.

When dear Alan has obfuscated about that he can go onto Gordon East Public school where the BER buildings at the school were costing around $4,870 per square metre, at a time when average house rates were less then a 1/10th of that.

The purpose of the scheme was to obviously waste money.

The HIP was a disaster; lives were lost, houses were burnt down and the efficacy of the insulation was nil.

Austin, i am sorry we are not up to your scholarly standards, but you will be pleased to know i have another peer-reviewed article coming out later this year bagging the BER, another prime example of Labor's poor policy credentials.

I wont you try your luck in academia with your bs.

sorry,last sentence was urging AA to try his hand at academia given his supposed authority on everything and supposed mastery of the facts.

Austin, I have an idea for you. Why dont you attempt an academic article tha argues that the Home Insulation Program was a policy success? Now that would be a feat.

Another idea, based on your latest OLO piece, could be 'why Australian people and businesses have nothing to worry about'. Then send it to all the non-profit religious entities reporting increasing misery.

Greetings all,

Hello again Grim23.

Re: “If you admit that monetary policy was effective, then by definition fiscal policy is ineffective and wasteful.”

Wasteful, yes. Ineffective, no. Effectiveness depends on what outcomes we want.

‘Waste’ is an effective economic variable rarely undertstood by the media commentariat.

Re [Brad Delong]: "Here is the point: an optimizing central bank that cares only about inflation and unemployment because it does not find itself at the zero nominal lower bound … will engage in full fiscal offset"

Probably correct also, Grim23. But the outcomes of Rudd’s 2009-10 stimulus packages were not confined to inflation and unemployment, were they?

They included care for the environment, improving educational resources for schools, expanding social housing stock, expanding other assets for future utilisation, taking advantage of record low cost of borrowings and – centrally – averting the economic and social cost of widespread job losses.

Evaluation of the effectiveness of the HIP and BER must measure all these. Studies that don’t are garbage-in-garbage-out. No?

@cohenite, re: “The HIP was a disaster”

Why? On what criteria?

Re: “lives were lost, houses were burnt down”

Correct. But at one quarter of the rate experienced in the industry during the Howard years. Was the Howard Governnment a disaster four fold?

Re: “the efficacy of the insulation was nil”

According to whom? Not according to independent studies.

http://theconversation.com/pink-batts-not-a-scandal-but-not-as-good-as-claimed-10213

@Chris Lewis and cohenite, I have an idea for you.

Why not collaborate on a peer-reviewed study of John Howard’s 1996 gun buyback scheme? Now there was a disaster, a shambles, a disgrace!

Do you know they bought 650,000 firearms for $320 million. – which they could have easily purchased for a fraction of that price if they'd thought of buying on the second hand market in the USA.

Then, instead of stockpiling the weapons and selling them later when the price rose – or putting them to good use with the army – they destroyed them!

Was there ever a greater debacle in the history of government – $320 million spent and absolutely nothing tangible to show for it at the end?

Cheers,

AA,

"Not at all. Juliar has a record of better outcomes than any current government or any government in history. Can you name a better-managed economy anywhere, as measured by outcomes, SM?"

Yes Howard's government had a far better record, inheriting a heavily indebted economy, by paying back debt, achieving record sustained growth, shrinking unemployment to record levels and raising the living the real wages of the lowest income earners more than any other government in Australia's history.

Juliar inherited a stellar economy and increased debt from zero net debt to record levels, increased the oost of doing business faster than any government in history, introduced regressive IR legislation and record levels of red tape.

This is the worst government in decades and is likely to be left with a handful of seats in a few months.

Austin, do you know the difference between an opinion piece and academic article? Wow, it got published on The Conversation, a site for academic elites, so it must be right.

Once again, why dont you write an academic article (peer reviewed) on the HIP? It would be a good chance for you to establish some credibility and reinforce your own view that you know everything.

Now you have put your silly thoughts on the record again, why dont you write an academic article that suppoorts your contention that the Howard govt's gun buy-back program was a disaster. Now thyat would be some feat if you got that published, and would proably erode the perception towrds academics even further.

You are sounding madder by the minute. You should stop before you go blind.

Greetings,

Hello Shadow Minister.

Re: "Howard's government had a far better record”.

By popular perception, perhaps. By objective facts, no.

Re: “[Howard] inheriting a heavily indebted economy”

No. The previous regime delivered budget surpluses. Keating got inflation down from above 10% to below 4.6% where it has stayed since. Borrowings were low when Howard took office and have stayed low since.

Re: “by paying back debt.”

Yes, some was repaid. Largely by selling productive assets which should have been kept. Not smart. Economists were aghast.

Re: “achieving record sustained growth”

No. Growth started in 1992, well before Howard.

Re: “shrinking unemployment to record levels”

Incorrect. The data, SM?

Re: “raising the living the real wages of the lowest income earners more than any other government in Australia's history.”

Again, incorrect. Data?

Here is a short exercise, SM.

On how many of the following 25 measurable criteria was the Howard Government doing better in 2007 than the Gillard Government is doing now – during the worst economic downturn since the Great Depression?

1. income – GDP per person
2. GNI income per person
3. income disparity
4. interest rates
5. inflation
6. people employed
7. job participation rate
8. personal tax rates
9. company tax rate
10. superannuation
11. health care
12. pension levels
13. personal savings
14. productivity
15. current account deficit
16. current account deficit as a % of GDP
17. international credit ratings
18. economic freedom
19. value of the Aussie dollar cf the US$
20. value of the Aussie dollar cf the euro
21. value of the Aussie dollar cf the UK pound
22. balance of trade
23. industrial production growth
24. foreign exchange reserves
25. overall quality of life

I will give you a nudge. The answer is either

(a) all, or
(b) none

And here’s the great thing, Shadow Minister: If you actually know the numbers, instead of swallowing lies you are told, you will move from the duped-by-the-manipulators category into the knowing-which-way’s-up category.

You will then go through life with a light in your eye and a spring in your step!

Cheers,

AA

AA,

You are hilarious. You seriously expect a few cherry picked measures to mean that Labor was doing better than Libs did. Firstly, after 5 years in office without a continuous recession most factors should be higher. None of the positives are due to labor.

The answer to your question is neither a nor b. Non mining industrial production is down, Standard of living has hardly changed with per capita income closely matched with inflation. Whereas in the decade under Howard, Real incomes increased at about 3-4% continuously, and net debt has soared to orders of magnitude higher than before. (any idiot knows that the current account is a transaction account, and a high current account is generally a sign of investment, and a low current account is nothing to boast about.

Your feeble attempts to dress up Labor's record holds no water in Australia, and Whine Swan will go down in infamy, and when as predicted he loses his seat in September, as with ex NSW no business will hire him.

I have one word for you, Shadow Minister:

Global financial crisis !

AA

So that's your catch all excuse for all Labor's bad decisions? The waste of money on a variety of failed projects, the carbon tax lie and largest tax in the world, the mining tax debacle, etc?

The Labor brand is so trashed here in Aus that most states have gone liberal, and former labor MPs are largely unemployable. In September this will happen to a large chunk of federal Labor MPs. There is a strong possibility that Abbott will have a majority in both houses, and will have the mandate to unwind most of Labor's damage, and put Aus back on the path to long term prosperity.

Hello again, Shadow Minister,

No, not at all. But the GFC is a reality we should keep firmly in mind when assessing the recent economic performance of all governments anywhere in the world, shouldn't we?

Not just Australia's.

All economies suffered to some extent, including Australia's. That is why it is called the global financial crisis.

But here is the amazing thing ...

While every country went backwards on almost every indicator we can measure, the Australian economy actually surged forward on these 25:

1. income – GDP per person
2. GNI income per person
3. income disparity
4. interest rates
5. inflation
6. people employed
7. job participation rate
8. personal tax rates
9. company tax rate
10. superannuation
11. health care
12. pension levels
13. personal savings
14. productivity
15. current account deficit
16. current account deficit as a % of GDP
17. international credit ratings
18. economic freedom
19. value of the Aussie dollar cf the US$
20. value of the Aussie dollar cf the euro
21. value of the Aussie dollar cf the UK pound
22. balance of trade
23. industrial production growth
24. foreign exchange reserves
25. overall quality of life

Have you had a chance to investigate them yet, Shadow Minister? It is truly an extraordinary record. Well worth the effort to explore.

You will then see how it happened that from ranking in the world at about 11th in 2007 your economy zoomed up to first in 2009-10. And first by a HUUUUGE margin.

On at least those 25 measures your economy is now performing much better than at any time under the previous regime. Just ask anyone on a pension, or paying a mortgage, or paying tax or spending Aussie dollars overseas.

It is truly impressive, Shadow Minister. Well worth celebrating. Especially as, if there is a change of Government later in the year, as you are predicting, you could easily slip back to 11th place again.

Cheers,

AA

No response to Berridale or Gordon East dear Alan?

Youy list of Australian 'wins' is odd.

"Economic freedom"

What a joke; tell that to myriad farmers such as the Thompsons, Peter Spencer etc 'labouring' under green tape; and what about the CO2 tax and attendent legislation limiting what industry can do because of the scam of AGW.

Australia no longer has an aluminium industry, oil refining has left; manufacturing is in tatters.

"Overall quality of life"; pensioners are now facing the exciting prospect of choosing between eating and power; what quality of life!

You are an unabashed spokesperson for the ALP, a party so degenerate it now plays wedge politics with the disabled.

Nothing, no policy, however intrinsically worthwhile, espoused by Gillard or Rudd has been effectively implemented; it is a party made up of the useless and the ideological and the tainted.

Its supporters are somewhat less in statute.

AA,

As for your indicators, you cherry pick a few indicators that look good, but they either have nothing to do with Labor, or are not glowing endorsements.

1. income – GDP per person
2. GNI income per person
Kept pace with inflation. Hardly a surge.

3. income disparity
4. interest rates
Interest rates have been dropped by the RBA to rescue the economy, hardly something to boast about.

5. inflation
Mainly due to the low cost of imports.

6. people employed
Dropping as a % of population.

7. job participation rate
No change from 2007

8. personal tax rates
Implemented the tax drop promised by Howard, and then increased taxes with levies and removal of a plethora of tax rebate. So taxes are surging ahead.

9. company tax rate
No change in tax rate, except increases in carbon tax, company tax etc.

10. superannuation
No change yet.

11. health care
The health care reform has been a stuff up with no change in patient waiting times.

12. pension levels
13. personal savings
With all the redundancies, people are scared of losing their jobs, and so are paying down debts.

14. productivity
Less efficient businesses have gone to the wall in droves. Productivity increases also largely driven by the high value of production from the increased mining.

15. current account deficit
16. current account deficit as a % of GDP
This is a trading account based on imports, this tends to increase with investment in production. This has dropped with the decrease in manufacturing. Net government debt has soared.

17. international credit ratings
Under threat from S&P from labor overspending.

18. economic freedom
All indicators tied to government have fallen.

19. value of the Aussie dollar cf the US$
20. value of the Aussie dollar cf the euro
21. value of the Aussie dollar cf the UK pound
22. balance of trade
23. industrial production growth
19-23 Due to mining not Labor. Non mining production has dropped.

24. foreign exchange reserves
Due to mining not Labor

25. overall quality of life
Gone backwards for anyone earning more than the average.

Morning all,

@cohenite, re: “No response to Berridale or Gordon East”

You haven’t responded to this: why didn’t Howard buy 650,000 guns on the US secondhand market in 1996? Couldn’t he have bought them for half the $320 million spent in Australia?

Think it through, Anthony.

Re: "Economic freedom. What a joke; tell that to myriad farmers 'labouring' under green tape”

Australia’s economic freedom index is 82.6. No-one claims it’s 100/100. Point is that it’s higher than any other OECD country. And higher now than at any time during the Howard/Costello years.

Correct?

Re: “what about the CO2 tax and attendent legislation limiting what industry can do because of the scam of AGW.”

What about Australia’s emissions falling dramatically since the scheme was introduced, share prices increasing, inflation contained?

@Shadow Minister, re: “As for your indicators, you cherry pick a few indicators that look good”

Not at all, SM. The point of listing those 25 variables is precisely to avoid the cherry-picking ploy of Australia’s Opposition and mendacious media. We must read the whole story.

Re: “Hardly a surge.”

Some variables surged in absolute terms, like productivity and growth. Even Joe Hockey said last year GDP growth was “extraordinary”.

Others are regarded as ‘surges’ in relative terms by economists who have watched Australia leap so far ahead of the rest of the world.

Re: “Interest rates have been dropped by the RBA to rescue the economy, hardly something to boast about.”

Well, it was the boast of your Opposition that “interest rates will be lower under a Coalition government.” Just nonsense, isn’t it?

Re: “people employed Dropping as a % of population.”

Not at all. Job participation trend is now 65.1% and has been flat for seven months. This is marginally lower than the all-time high of 65.8 in late 2010, but much higher than the 63.5% achieved by Howard/Costello during their sixth year in charge.

Again, this must be evaluated in global comparative terms.

On all variables, SM, please check the actual data. You will see the claims, above, are quite valid.

This will definitely brighten your day!

Cheers

'Correct, Keith. Overall revenue is rising and will continue to increase for the foreseeable.'

'A challenge for Australia: to respond to the huge reductions in revenue growth over the next four years.'

Gillad said that and you parrotted

'Company profits are being squeezed,job opportunities are declining and wages are not rising. Hence government revenues are diminishing. Grim remedies are required.'

Now you admit Gillard's and your statements are wrong.

Not it is not so simple, Alan, to admit the fundamental error without assessing the impact your error has on the conclusions you draw from it, in your article.

Our problem is increased spending that is guaranteeing huge uncontrolled deficits well into the future. If we continue with the current policies, ie those that are causing that increasing indebtedness, we will very quickly finish up as bankrupt as your European socialist economic basketcases.

Now Alan, try and tell us that greater indebtedness won't stuff our future or tell me how much debt is ok or, given their record and lies, how Gillard and Swan or Labor will ever produce a surplus or a deficit of a less than a ten billion deficit annually. Last years was over 45 billion

As I say Alan, you afford me much mirth with your backflips, swan dives and gillard cr-p regurgitations

hi Alan,

sadly more dire news for you this morning.

The polls show a further slip in Labor popularity today. There's now a 14 point gap in the two party prefered.

The Australian, I know The Murdoch Press, today reports the revenue forecasts for this year and next have been revised down by 17 bil and 20 bil respectively. Swan said this years deficit would be 12 bil. He'll revise that up again.

Alas Alan worse is to come. After reading The Australian I picked up the Financial Revue. One of the leftie media mouthpieces of Fairfax.

They reported exactly the same and ADDED that the deficits for the next few years will now be in the region of 60 to 80 bil per year.

Gee that sounds awfully like the European deficits before their meltdown. With the current government policies and their absolutely awful record of underforecasting of the size of their deficits how long do you think it will be before we are as broke as the European Socialist Utopias. Until this morning I thought it might take a decade ... well with these latest figures and estimations ... I guess you know where I am leading you.

Oh and last night we had the staged pantomine, on Q and A, of our PM being quizzed formally on TV by a large group of school students. Seventeen year olds who cannot yet vote.

Guess what Alan. Our PM tried to deceive them. She was asked about tax revenues and deficits.
Julia answered with the example that Company Tax receipts were down. She then used lawyer-speak to suggest and encourage the youngsters to assume the extrapolation of that message meant the total revenues were down.

She did not use the words forecast or total revenue receipts at all in her answer.

Now Alan that was deliberately deceptive. It is the type of behaviour we come to expect of our Julia and her government. It is the reason why more and more people are shaking their heads in disbelief and turning away from them.

Cheers Alan.

i think you guys are asking too much. With propagandists they have no reason to actually discuss the implications of current trends. it is beyond their capacity. That is why they are what they are. It is a lot easier just to look at numbers.

Hello again imajulianutter,

Re: “A challenge for Australia: to respond to the huge reductions in revenue growth over the next four years.”

Correct. Revenue is still rising overall. The rate of revenue growth, however, is declining. Much lower than Treasury had forecast.

Re: “Company profits are being squeezed, job opportunities are declining and wages are not rising.”

Correct.

Re: “Now you admit Gillard's and your statements are wrong.”

Not at all. Ms Gillard’s statements are all true. Discomforting, perhaps, but correct. So are mine, unless you can indicate an error somewhere.

Re: “Our problem is increased spending that is guaranteeing huge uncontrolled deficits well into the future.”

No. The record of your current Government is that deficits and borrowings are controlled. That is why Fitch Ratings gave Australia the triple A rating in 2011 it never gave the Howard Government.

And that is why Australia has the best profile of any economy in the world. Ever.

Correct?

Re: “revenue forecasts for this year and next have been revised down by 17 bil and 20 bil respectively. Swan said this years deficit would be 12 bil.”

So was Ms Gillard right to advise “grim remedies”?

Seems so.

Re: “the Financial Revue. One of the leftie media mouthpieces of Fairfax”

Fairfax? Leftie? Hmmmm. A while since any Fairfax paper was Leftie on anything.

So, if grim decisions are called for, who do you trust, Keith?

Is trade with China a good thing? Which party arranged that? Which party opposed it?

Are strong deregulated banks a good thing? Which party fixed that? Which party opposed it?

Tarrifs? Strong Aussie dollar? Snapping the stick of inflation? Restoring Budget surpluses? Etc.

Between 1975 and 1983 the Coalition took Australia from 9th ranked economy to 16th. No?

Then between 1983 and 1996 Labor took Australia from 16th to 5th.

Between 1996 and 2007 the Coalition took Australia from 5th to 11th.

Between 2007 and 2010 Labor took Australia from 11th to 1st – and now first by a street.

Who do you trust in tough times?

Your call, Keith. I don’t live there any more.

Cheers,

AA,

"Not at all, SM. The point of listing those 25 variables is precisely to avoid the cherry-picking ploy of Australia’s Opposition and mendacious media. We must read the whole story."

That is a clear falsehood. You have only chosen the indicators that make Labor look good, and ignored those that don't. To make it worse, digging deeper into these indicators as I did shows that some are irrelevant, and others have nothing to do with labor, or are in spite of Labor's negative influence.

Labor's abysmal polling is because of its poor record of fiscal management. Labor has not only delivered 4 record deficits, but it has failed to meet its budgets every year, both overspending, and reduced revenue. Every policy has over promised and under delivered, and Juliar's record of lying and breaking nearly every promise she has made has alienated most Australians. The latest Newspoll (and pretty much every other poll) show that no one trusts them anymore.

http://resources.news.com.au/files/2013/05/07/1226636/433152-130507-federal-newspoll.pdf

No you don't live here any more and that begs the question; Which planet do you live on?

1. You agree with Brad Delong's quote which means you admit that an inflation targeting central bank will engage in full monetary offset. That means that the fiscal multiplier is zero.

2. In terms of "saving Australia from recession", inflation and unemployment are the only outcomes that matter. If you agree with the Brad Delong quote, I can't see how you can still claim that fiscal stimulus boosted aggregate demand and saved the economy.

Greetings,

@Shadow Minister, re: “You have only chosen the indicators that make Labor look good.”

No. Have looked at them all. Not all make Labor look good, but most do. The key indicators are impressive indeed, given the worst economic downturn since the 1930s.

Happy to discuss further.

@Grim23:

No, I’m not agreeing entirely with DeLong’s argument. But not rejecting it completely either. Could be his laws are like Newton’s on physics – they don’t always apply at the extremes.

I’m not sure about this, however, so would appreciate your further input.

Because here’s the thing:

The world faced extreme events in 2009. Most Western government were urged – in the words of Australia’s Ken Henry – to “go early, go hard and go households” with Keynesian stimulus.

Only one nation gave more than 3% of GDP directly to families, then followed that with rapid infrastructure spending, all the while keeping tax rates pretty much level. Poland came close, but was slower and allocated a smaller % of GDP.

Most other Western economies took the easy option of cutting taxes. And what funds they did hand out were allocated more slowly.

We know the outcomes. Australia and Poland alone in the OECD avoided two negative quarters. Australia and Poland recovered better than other nations, with Australia well ahead of Poland.

Countries which undertook more moderate stimulus – such as the USA, Canada and Mexico – still went into a technical recession, but are recovering better than those whose stimulus was weak and slow or non-existent.

No other variable explains Australia’s phenomenal success, does it?

Trade with China didn’t help the EU, Japan, Taiwan or South Korea.

Having surpluses and low debt didn’t help Spain, Finland, Iceland and Chile. Moreover, some countries which survived the GFC reasonably well went in with huge debts at the outset, including Israel, Switzerland and Singapore.

Having strong iron ore prices didn’t help Brazil or any other ore exporter.

Grim23, have you read anything Brad DeLong has written about Australia’s success? I’ve tried. No luck. Please provide links if you know of anything.

Thanks, Grim23.

Cheers,

I would say that most of the countries hit are in the Eurozone, so big fiscal stimulus in one country would work, because each country doesn't have its own monetary policy. Also, most central banks weren't brave enough to do unconventional stimulus when interest rates hit zero, so fiscal stimulus would have had some effect, as central banks were no longer really "aiming" to hit a target. Thats why there was some correlation

If you want some links, then the best blog for this is The Money Illusion.

Here's a post on monetary offset. Read point 6 in particular. Fiscal austerity is deeper in the US than the Eurozone, but monetary policy is easier. US is growing faster. Money wins. http://www.themoneyillusion.com/?p=21008

Here's a couple of posts about Australia, talking about the stable growth rate of NGDP. Australia has a much higher trend growth rate than other countries, which put us in a better position to start with.
http://www.themoneyillusion.com/?p=12985
http://www.themoneyillusion.com/?p=20684

Ultimately tight monetary policy causes slow NGDP growth, not financial crises or fiscal austerity, and only easy money can support faster NGDP growth, not fiscal stimulus.
Yes, fiscal stimulus can "work", but only because the central bank allowd it to. Do you really think the RBA would let Australia fall into recession? Particularly when they started off from a much better position than other central banks, with interest rates not even close to zero here. Monetary stimulus would have done the job anyway, without any waste or extra debt. That's why fiscal policy never "saved" us.
Here's some more posts discussing fiscal stimulus and monetary policy in general:
http://www.themoneyillusion.com/?p=874
http://www.themoneyillusion.com/?p=2512
http://www.themoneyillusion.com/?p=5776

Fiscal stimulus in unnecessary. Money always wins

Hi again Grim23,

Thanks for those links. Have now read them all.

Still believe the evidence is sufficient that fiscal stimulus was critical in saving those few economies – Australia most notably among them – from the devastations of the GFC.

I accept the points in those articles that monetary policy is significant, as are having a sound private banking system and other economic bulwarks. But the verifiable outcomes through the GFC really do not sustain the claim that fiscal intervention was neutral, or harmful, do they?

Would you agree, Grim23, that the ultimate test will come if, as now looks likely, there is a change of government in Australia?

Will the Coalition Government continue the program of targetted spending using low-cost borrowings and modest deficits which has made Australia’s economy the envy of the world? Or will it revert to selling off productive assets to overseas buyers as previously?

It will be intriguing to observe!

Cheers

Your argument simply isn't consistant with standard macro theory; the fiscal multiplier is zero under inflation targeting. Even keyensians like paul krugman, brad delong, michael woodford, ben bernanke, greg mankiw, frederik mischkin and christie romer will attest to that if interest rates are positive.
In Australia interest rates never got close to zero.

You argument does not support recent events, with no correlation between "austerity" and economic growth. Nor have you refuted any of the arguments made in the links.

While Australia recovered quite quickly, other nations have done better since. Germany is one example, where the fiscal stimulus was average but growth has been faster than Australia's since 2010.

There is still not sufficient evidence that Australia would not be in the same position were it not for the fiscal stimulus. I find it hard to believe that the RBA would have let Australia fall into recession without fiscal stimulus, nor do i doubt that it had the means to stabilise nominal GDP growth, especially with the fortunate position of positive interest rates.
I think the fact that we were the only country with interest rates which never went below zero is just as persuasive as your argument about the relative size of the stimulus. I think it is more persuasive given the wider context and evidence. I think your mistake is assuming that correlation implies causation.

AA,

No you haven't included the key indicators. I guess that all you are going to do here is spruik the labor line with the assumption that if you say something long enough people might believe you.

So far that isn't working for labor.

and propoganda wont work here, rightfully so.

Most Aust's know we are going down the tube, regardless of what international comparisons say, albeit their grief is temepered by knowing our luck of minerals in the ground.

They expect govts do indeed react to concerns, not produce poor policies, waste money, and increasingly suck up to an authoritarian state.

Labor had his chance, but it stuffed up, end of story. Another option needs to be given a go.

As for AA, he knows jack ... You are wasting your time even communicating with a know all

Chris,

you are being too kind to Alan. Why don't you tell him the truth.

He knows nothing and his behaviour here is that exhibited by a pathological personality.
ie no respect for honesty and a lack of understanding of loyality.

Greetings all,

@Grim23, re: “Your argument simply isn't consistant with standard macro theory”

Maybe not. But is it consistent with reality?

Re: “You argument does not support recent events, with no correlation between "austerity" and economic growth.”

My observations are that of OECD countries – and another 44 capitalist nations – only Australia helicopter-dropped 3.3% of GDP, followed by rapid infrastructure investment, keeping tax rates level. No?

Only Australia then averted recession, keeping employment high, inflation low, borrowings low and growth steady.

Poland had the second best stimulus, and came second surviving the GFC. Nations with moderate stimulus suffered moderately and are recovering moderately. Nations which stimulated poorly suffered badly and are still suffering.

That’s about it, Grim23. Happy to review the data.

Re: “While Australia recovered quite quickly, other nations have done better since. Germany is one example, where fiscal stimulus was average but growth has been faster than Australia's since 2010.”

Nonsense. Australia’s annual GDP growth is 3.1%. It has been above 3% for the last full year.

Germany’s is now 0.1% and falling. It has been below 3% since the 2nd quarter of 2011. Correct?

Re: “There is still not sufficient evidence that Australia would not be in the same position were it not for the fiscal stimulus.”

Sheesh! Shadow Minister and I have just gone through 25 variables on which Australia is now travelling as well as or better than in 2007 – before the crisis!

Australia is clearly better-managed now than at any time in its history – and WAAAAY better than any other nation ever. Correct?

What, may I ask, Grim23, would you regard as “sufficient evidence”?

Re: “I think the fact that we were the only country with interest rates which never went below zero is just as persuasive ...”

Again, Grim 23, just false. Most OECD countries kept interest rates above zero. No?

Re: “I think your mistake is assuming that correlation implies causation.”

No. It’s not an assumption. It’s a conclusion.

@Shadow Minister, re: “No you haven't included the key indicators.”

Really, SM? Which ones would you like to consider?

Cheers,

Yes, we all have our faults, but he is the weirdist peson i have come across. Sort of personality that would offend people on all sides of politics, as indicated on this forum alone, not just because of his overblown opinion of his own ability, but also from his arrogance.

He who thinks he knows everything, often knows very little. With AA i rest my case.

He is totally out of touch with most Australians and he has total disregard for their opinions.

Again, i ask Austin to have a go at an academic publication with his ridiculous lines and lies. He sure is good at telling eeryone how crap we are, expect for those who write opinion pieces in agreement with his holiness (himself).

In your eyes the relative size of Australia's fiscal stimulus is good enough evidence in favour of fiscal policy. In mine its not. You think that there is correlation between a country's fiscal stimulus and its growth. I dont.

You still haven't explained how fiscal stimulus could boost demand while the RBA is targeting inflation. The two are murually exclusive.

You are ignoring the fact that only in Australia and very few other countries did interest rates not reach zero.

You are ignoring the strong evidence since the crisis that monetary policy wins over fiscal, such as in the US, which has grown despite austerity. And Britain, why employment is at record levels, NGDP is growing, despite the "austerity" and poor RGDP figures. Or Europe where austerity is less severe but mobey is tighter and growth is slower.

I've already explained that bigger stimulus packages would work in the Eurozone, because the countries share a currency. But overall the effect would be zero.
I also explained why stimulus would work in countries with interest rates at zero. This explains why for most countries in the OECD more fiscal stimulus is associated with higher growth.
But Poland and Australia are different. Poland was one of the few other countries where interest rates didn't hit zero. Sweden also performed fairly well, without interest rates hitting zero. Neither countries are in the Euro. All three countries started in much better positions.

Here's a link with more detail as to why these countries did the best.
http://marketmonetarist.com/2012/12/10/sweden-poland-and-australia-should-have-a-look-at-mccallums-mc-rule/

Here's more links about how Australia's monetary policy saved it from the crisis. Note the absense of discussion of fiscal policy. Monetary policy adequately explains it.
http://marketmonetarist.com/2012/11/19/the-export-price-norm-saved-australia-from-the-great-recession/
http://thefaintofheart.wordpress.com/2011/02/24/australia-does-it-better/

And one for Poland
http://thefaintofheart.wordpress.com/2011/02/27/poland-didn´t-miss-many-beats/

And now you can see Germany's faster recovery:
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

Is that not sufficient enough? Is there anything left to explain? Not only does the theory back my argument up, but your simplistic assertion that countries with bigger fiscal stimulus grew faster is easily explained away by looking at the evidence. Again, correlation does not imply causation.

Greetings all,

@Grim23, re: “In your eyes the relative size of Australia's fiscal stimulus is good enough evidence in favour of fiscal policy.”

No. The evidence is not the size of the stimulus. That was an observed policy instrument. The evidence is in the outcomes - high and stable job participation, low unemployment, optimum interest rates, low taxes, strong economic growth, surging productivity, low inflation, increased services, increased pensions and benefits and low borrowings from abroad.

Re: “You think there is correlation between a country's fiscal stimulus and its growth. I dont.”

Correct. Nations with strong stimulus did better than all those with moderate stimulus and better still than those with weak or no stimulus. That’s an empirical observation.

Re: “You are ignoring the fact that only in Australia and very few other countries did interest rates not reach zero.”

Not at all. The original article refers to Australia’s “well-placed interest rates”. It asserted “They [Governments in free enterprise economies] can also vary the money supply, interest rates and tax rates.”

It was also observed in dialogue with David G, above, that “Only Australia and Poland have had interest rates in the optimum range between 2.75% and 5.0%. since 2009.”

Re: “You are ignoring the strong evidence since the crisis that monetary policy wins over fiscal, such as in the US”

No. Not ignoring it. Just giving greater weight to other factors based on observed outcomes.

Re: “But Poland and Australia are different. Poland was one of the few other countries where interest rates didn't hit zero. Sweden also performed fairly well, without interest rates hitting zero.”

Not true, Grim23.

Only Japan and Switzerland in the OECD had zero benchmark interest rates. This does not support your case.

Re: “And now you can see Germany's faster recovery:”

Again, just blatantly false. Your link shows no such recovery.

Here is where you will see Germany’s actual GDP growth - flagging disastrously:

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

And here, in contrast, Australia’s strong growth:

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

It is vital we use accurate and applicable data, Grim23. Perhaps this is why we have reached different conclusions.

Cheers,

As you should know, there is no meaningful difference between 0.5% and zero percent benchmark rate.
If famous nobel prize winning economists can talk about the federal reserve having a "zero rate policy", then that technical detail should not be important. that just shows how out of touch you are with the sophisticated macro debates going on at the moment.
The point is rates can go no further in countries other than poland and australia. I have provided you with plenty of reasons why your figures don't support your clsim of the effects of fiscal stimulus. In your reply you dont even mention the links, or reply to all of my criticism. Either you didn't read them, or you can't refute them. But they explain Australia's and Poland superior performance without reference to fiscal stimulus. I suggest if you want to learn a little macro, you should read them. What i am saying is not controversial, every single new keyensian economist and every market monetarist will tell you the same thing!
As for Germany, the world bank data said it grew faster in 2010 and 11. My links are sound.

Hi again Grim23,

Thanks for your persistence.

This is worth working through. Because Australia will showcase stimulus versus austerity if there is a change of government.

Anyway, here’s why you are not convincing. Take the first link in your penultimate post:

“...basically three reasons for the success of monetary policy in the three countries:

1) Interest rates were initially high so the central banks of Sweden, Poland and Australia could cut rates without hitting the zero lower bound.

2) The demand for the countries’ currencies collapsed in response to the crisis, which effectively led to “automatic” monetary easing. In the case of Sweden the Riksbank even seemed to welcome the collapse of the krona.

3) The central banks in the three countries chose to interpret their inflation targeting mandates in a “flexible” fashion and disregarded any short-term inflationary impact of weaker currencies.

[end of quote]

This is just nonsense, Grim23.

Point one:

Sweden’s interest rate was 4.0 in 2007 – same as Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Luxembourg, Netherlands, Portugal, Slovakia, Spain and the USA.

Poland’s was 5.25 – same ballpark as Estonia, South Korea, Mexico, Norway and the UK.

Australia’s was 6.74 – similar to Hungary and New Zealand.

Others higher still – Brazil [11.25], South Africa [11.5], Iceland [14.04] and Turkey [15.96].

So having “interest rates initially high” does not distinguish Sweden, Poland and Australia in any way, does it?

Point two:

Demand for all of those currencies collapsed during 2008. If you are measuring value of the currency against the US dollar, they all took a hit. None was spared.

Again, nothing special about Sweden, Poland and Australia, is there?

Point three:

In what way did Sweden, Poland and Australia “choose to interpret their inflation targeting mandates” differently from other nations?

Is there evidence they did? Nothing apparent.

So can you see, Grim23, how these arguments are not really persuasive?

The function of econometrics is to identify which countries succeeded. And then determine on the evidence what they – or in this case it – did differently from everybody else.

Cheers,

AA,

What rubbish, you left out net federal debt in your list which is a very key indicator. Also unemployment. You included irrelevant measures such as the current account, and your claim that these are better than under Howard is also a lie. GDP growth under Howard was mostly pushing 4%.

Australia is clearly managed far worse than any time since Whitlam.

A debate over numbers is not that important, besides showing Austin's bias and flawed personality in the way he shapes his ordinary economic opinion pieces. I hope he will be answerable come judgement day for his flaws.

What matters is whether anyone, lay person or expert, actually thinks Labor knows what it is doing or is doing a good job. After all, that is how it works in a democracy.

Austin's type of argument may be more suited in authoritarian China where they can bombard society through the media with an elitist version of the facts, often propoganda.

Answer, no, not many Australians think Labor is any good

Ok, I haven't made this point very clear because I was describing things from a keyensian perspective rather than market monetarist.
Monetary policy is about two things; the relative supply and demand for money and expectations about future money supply and demand. Changes in monetary policy can be as discrete as a statement from an official at the RBA that shifts expectations, thats why it can be hard to see the true stance of monetary policy without looking much deeper into the data.

The best way to assess whether money is easy or tight is NGDP growth, relative to trend. On that basis, I don't know of any country that was better managed than Australia and I find it unlikely that even if fiscal stimulus did work, it could hit that target as accurately as the RBA did.

Interest rates are an extremely unreliable indicator of monetary policy, especially during unconventional circumstances and when comparing vastly different countries. So you have to look beyond interest rates to get a true picture of monetary policy.

Hungary, for example, has significant supply side problems due to political instability. The central bank also faces political pressure not to ease monetary policy
http://www.cato.org/blog/slumping-money-supply-not-austerity-plunges-hungary-recession
http://marketmonetarist.com/2011/10/20/please-help-mr-simor/

You cannot compare interest rates in countries with free floating exchange rates to countries with fixed exchange rates. Brazil and mexico both peg their currencies to the USD. They effectively import US monetary policy. Also, countries within the Eurozone share the same monetary policy, so they are not comparable either
http://marketmonetarist.com/2013/01/18/the-feds-easing-is-working-in-mexico/

When looking at interest rates you have to take it with a grain of salt. Low interest rates can signify that money has been tight (as in the US), but lowering interest rates as the RBA just did can reflect the liquidity effect of easier money. And short and long term interest rates can behave differently, depending on how great the change in the stance of monetary policy is.

But sometimes it is useful to compare interest rates across countries, especially if the two countries are similar. This link shows that while interest rates in new zealand were not that low, Australian monetary policy was still far superior.
http://thefaintofheart.wordpress.com/2011/02/24/australia-does-it-better/

This link shows how significant Poland's currency depreciation really was (comment section)
http://thefaintofheart.wordpress.com/2011/02/27/poland-didn´t-miss-many-beats/

Sweden also implemted a negative interest rate on bank reserves, after which its NGDP started to recover strongly.

For these reasons, you also can't easily compare fiscal policy across countries. The monetary conditions are too different, and cannot be assessed by variables like short term interest rates alone. The effects of fiscal stimulus will be completely different in Australia, where we have our own currency and high NGDP growth compared to most countries, to a country like France, which is part of the Euro and doesn't have its own monetary policy, or the US where NGDP growth was much slower before the crisis and interest rates are now zero (ok, 0.25%).

If interest rates in Australia got to zero, you might have a point, especially if our RBA was as inept at the zero lower bound as other central banks. Without fiscal stimulus, rates might have had to go a bit lower, but I have no doubt that in its absense the RBA would have been able to keep nominal GDP growing steadily, especially considering our fortunate starting position of having a high and stable NGDP growth rate, compared to other countries with similar income levels to ours.

Andrew Bolt summarises the achievements of this woeful government:

http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/how_kenny_excuses_the_worst_government_in_living_memory/

Bolt quotes John daly:

“(Growth is) at 2.5 per cent, unemployment’s at 5.5 per cent—you know, this is about as good as it gets. If we’re not running a surplus at this point in the cycle, exactly when is it that we are planning to run one?”

"Andrew Bolt" ! As a source of information !!

Here's the final bit. I had to wait 2 hours to post it.

Macro isn't simple and straight forward. That's why I don't buy the argument that countries with bigger stimulus packages grew faster. It's too simplistic. That may be true for some countries, but for a country in the position that Australia and a few others are in, when you look at monetary policy before, during and after the crisis, it becomes perfectly clear that it is monetary policy, not fiscal policy, that explains the differences in nominal outcomes.
So if you look at the data closely, and examine the monetary policies of each country in its proper context, some countries do stand out. Sweden rebounded after imposing negative interest rates, Poland had a massive depreciation (but mostly trades with the heavily depressed eurozone, which would limit the effectiveness) and this link shows the effectiveness of Australia's monetary policy with respect to commodity prices
http://marketmonetarist.com/2012/11/19/the-export-price-norm-saved-australia-from-the-great-recession/

And that takes me back to the main point. Maybe not in countries with a fixed exchange rate (Eurozone, mexico), or countries with central banks unwilling to try appropriate unconventional mobetary stimulus (US, UK), but in a country in Australia's position, fiscal stimulus and inflation targeting are mutually exclusive!

Greetings all,

@Grim23, thanks for continuing. It’s important.

Are you sure you understand what Krugman, Stiglitz, Quiggin and others are actually saying about Australia?

They observed the easily measurable outcomes through the global financial crisis: only one negative quarter – alone in the OECD except for Poland. Plus extraordinary outcomes across the variables.

As Shadow Minister and I have been discussing, Australia is now – during the worst downturn since the Great depression – as well-placed as or better-placed than in 2007 after the boom years on all these:

1. income – GDP/person
2. GNI income per person
3. income disparity
4. interest rates
5. inflation
6. people employed
7. job participation rate
8. personal tax rates
9. company tax rate
10. superannuation
11. health care
12. pension levels
13. personal savings
14. productivity
15. current account deficit
16. current account deficit as a % of GDP
17. international credit ratings
18. economic freedom
19. value of the Aussie dollar cf the US$
20. value of the Aussie dollar cf the euro
21. value of the Aussie dollar cf the UK pound
22. balance of trade
23. industrial production growth
24. foreign exchange reserves
25. overall quality of life

All measurable.

The Keynesians then point to the dollar value of the stimulus packages which did the trick: $10.4 billion in October 2008. Another $4.7 billion in December 2008. A further $41.5 billion to infrastructure and jobs in February 2009. Finally, the 2009 budget allocated $22.5 billion.

Their argument is quite transparent. Australia had the world’s biggest stimuli – and it gained the best outcomes. Simple and sound. No?

I have read our responses here, Grim23 and several of your links, but have found nothing there which either refutes the Keynesians’ argument, or which advances a more plausible alternative explanation.

When you say, “I don't know of any country that was better managed than Australia and I find it unlikely that even if fiscal stimulus did work, it could hit that target as accurately as the RBA did,” what is the data on which this is based?

Thanks. Grim23. Cheers,

Kipp!? Stupid comment!

The point about Bolt was to point out to dear Alan about the deficit and to once again show that Bolt is a good journalist.

Anyway one has only to bypass the journalists and listen, if you can stomach it, to the conga line of government ministers breaking Gillard and Swan's promises pre-election.

Combet was the latest declaring the collapse of the carbon price in the European Zone, to which these idiots have tied Australia, was a good thing since it would mean compliance with carbon levels would be cheaper.

Wong was on the other night explaining away promised compensation because there was no revenue from the CO2 tax to fund it.

You couldn't make this stuff up.

What dear Alan can never undertsand is the simple fact that whatever good condition prevails in Australia now is DESPITE the incompetence of this gang.

And since Kipp doesn't like Bolt my final advice to those who read dear Alan's exhortations for the Gillard rabble is remind them of what Chico said:

"Who are you going to believe me or your own eyes?"

A list of where the Howard Government far out performed the present government:

1. GDP growth
2. GNI growth in real terms
3. Net Federal debt
4. Unemployment
5. Total tax on companies incl company tax carbon tax etc
6. No Additional tax levies
7. job participation rate
8. personal tax rate decreases over 5 years
9. company tax rate
10. Non mining industrial production growth
11. dental health care
12. Consumer confidence
13. Business confidence
14. Insolvencies business and domestic
15. Government red and green tape regulations
16. Transparency (use of productivity commission for major projects)
17. Immigration control.
18. overall quality of life

Good morning Shadow Minister,

Are you up for a genuine discussion on these issues? I’m game, if you are.

And I promise you I will retract and apologise if I have made an inaccurate assertion anywhere. Okay?

So just a few questions for clarification first:

Re 1, 2, and 14: How do you want to measure and compare these? Are you happy with this authority:

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

Re 3: Do you regard borrowings as an outcome or as a strategy? Is debt/GDP an indicator or a setting? To illustrate the difference, when you took out a mortgage, did you wake up next morning with “Omigoddd!! I suddenly owe the bank $300,000 !” Or were you quietly satisfied that you had made a wise, if perhaps brave, active decision for your long-term future?

Re 4, 7, 10: are you happy with Bureau of Stats data?

Re 6: Do you regard the gun buy-back levy introduced in 1996, the Medicare levy surcharge introduced in 1997 and the GST introduced in 2000 as additional tax levies?

Re 14: what does that prove? When a Government is running things well, businesses are booming and the banks are splashing cash, a lot of drongos try to make their fortune on borrowed money. No?

Re 15: do you accept Heritage Foundation as the authority?

http://www.heritage.org/index/

Re 12 and 13: no contest. The media in Australia has done such an appalling job of misreporting the actual state of Australia’s economic affairs, that it’s a miracle these are not at one tenth of the current levels. Correct?

Re 17. Not an economic variable.

Re 5, 8, 9, 10, 11, 16 and 18: which authorities do you prefer, SM? I have my sources of info, but happy to go with yours.

Thanks, SM,

Cheers

AA,

"Are you up for a genuine discussion on these issues?"

Yes that would be refreshing.

1,2,14,

Trading Economics shows they were all better under Howard.

3,

If I woke up with a $300 000 overdraft and nothing to show for it, yes I would panic.

4 Howard brought down unemployment to just above 4%. Labor increased it to 5.5%

7. No change

10. Non mining industry has dropped in real terms.

6. Even

14. Insolvencies are an indicator of poor economic conditions which is why they are considered a key factor.

12,13, Rubbish has nothing to do with the media, and more to do with people losing their jobs and business conditions falling.

15. No I don't accept the heritage foundation as the authority. This is a small group of undistinguished people patching data together.

17, Considering that this is now looking to cost up to $4bn a year, this is not just a governance issue.

5, 8, 9, 10, 11, 16 and 18, Mostly your indicators, my information shows that under Howard things improved faster than any other government. Prove me wrong.

"Simple and sound" - that's why you're not getting my point. It's not simple at all.

You are looking for a "simple" explanation for Australia's performance by comparing the size of fiscal stimulus to economic growth across countries. But I have already explained that you cannot compare fiscal stimulus across countries with different monetary conditions.

I have explained why monetary factors alone can explain the performance of certain countries which you listed. I have explained how Australia did well because it kept NGDP growing on a stable path, and why high interest rates helped Australia, but maybe didn't do much for other countries.

The links I gave to back up my case were all to sites with very good reputations, but still it's not sufficient for you.

I am the one using the modern keyensian argument. For more than 2 decades it has been a general principle that fiscal stimulus is only needed when interest rates hit zero (ie in a liquidity trap). Krugman will tell you the same. There is a reason why central banks, not governments, are given an inflation target.

Heres another link from the money illusion blog. Its from a US perspective, where interest rates are zero and hence keynesians can support your hupothesis that fiscal policy impacts NGDP. However, the facts are not in their favour.
http://www.themoneyillusion.com/?p=21146

If you don't get it now I don't think you ever will. You deny that I have refuted your argument. You deny that my links refute your argument. But you haven't avtually provided any counter arguments nor have you provided anywhere near as many facts to support your case as I have. If you're not well read on monetary economics that's fine, but don't dismiss arguments in my links from highly regarded monetary economists without providing any coherent argument against their facts.

It's been a good debate, but my last post was pretty comprehensive. I don't think you will ever budge, but i do think you should read the link in this post.

Hi Shadow Minister,

Thanks for this.

Re: “1, 2, 14, Trading Economics shows they were all better under Howard.”

Correct. Average annual growth was 3.65% for the 11 Howard years. Then down to 2.44% average under Labor.

But here’s the extraordinary thing, SM. Australia’s average of 3.65% through the Howard years was about the same as equivalent countries. The USA averaged 3.04%. Canada 3.3%. Some European countries were higher.

Then came the global financial crisis which knocked the stuffing out of every economy. Well, all except one.

In the five years under Labor in Australia, growth was 2.44%. But in the USA 0.54%, And Canada 0.94%. Euro Zone negative 2.3%!

This is why economists around the world use this as one major pointer to the Australian Government being the world’s best economic manager.

Re: “If I woke up with a $300 000 overdraft and nothing to show for it, yes I would panic.”

Yes. Me too, SM. But Australia has got substantial value for that investment. They say some of those insulated buildings will save money for the owners for more than 100 years. All those schools now have better facilities for the kids. The national estate has grown enormously. No?

Re: “4. Howard brought down unemployment to just above 4%. Labor increased it to 5.5%.”

Hmmm. Not sure. What are we comparing here?

After Labor has managed the economy for five years, the rate is 5.5%. In the USA it is now 7.5%.

After Mr Costello had run the economy for five years, the rate was then 6.6%. In the USA it was then only 4.3%.

So, again, in the global context, the performance is much better now. No?

Re: “15. No I don't accept the heritage foundation as the authority. This is a small group of undistinguished people patching data together.”

Why not, SM? Pretty conservative, right wing organisation. No? Who do you trust on this?

Re 5, 8, taxes are lower now, here:

http://stats.oecd.org/Index.aspx?QueryId=21699

Re 9: company tax hasn’t changed.

Re 11: industrial production here:

http://www.tradingeconomics.com/australia/industrial-production

Re 18: quality of life, here:

http://en.wikipedia.org/wiki/Quality-of-life_Index

More later, SM.

Cheers,

Hi Grim23,

Thanks for getting back on this.

Re: “I have already explained that you cannot compare fiscal stimulus across countries with different monetary conditions.”

Maybe. But have you explained how Australia's monetary conditions differed from other nations?

In 2007, 29 OECD countries had interest rates within the range 3.9% to 8.1%. That is, plenty of flexibility. Australia was in the middle of that bunch.

When the GFC hit, what did they all do? How did governments respond? And with what outcomes?

They all did pretty much the same with interest rates. All those 29 countries dropped rates by the end of 2009. Some more than others. Some marginally like Hungary, Poland and Mexico. Some dramatically like the Euro zone countries, Canada, the UK and the USA. Australia was about average.

There seems nothing exceptional whatsoever in Australia’s monetary policy which explains the extraordinary surge from 11th placed economy in the world – around that of the UK and France – to the top of the rankings now – by a huge margin.

Clearly, Australia had a radically different fiscal policy from all the other nations. That is obvious. But monetary policy?

I have read your links, Grim23, and can’t see that anyone has identified anything exceptional about Australia.

Re: “Australia did well because it kept NGDP growing on a stable path”.

Correct. But how did it achieve this? Was the largest set of stimulus packages in the history of the world a factor perhaps?

Re: “For more than 2 decades it has been a general principle that fiscal stimulus is only needed when interest rates hit zero”

Perhaps. Not sure. But the GFC is now prompting significant rethinking of once-accepted precepts. As did the Great Depression in the 1930s.

It seems Australia’s extraordinary success is now giving rise to revisions of economic theory.

You said in an earlier post, Grim23, that “Australia had much more effective monetary policy than Britain during the crisis. Fiscal policy has nothing to do with it.”

What precisely did Australia do that Britain – and the rest of the OECD – didn’t?

Thanks.

Cheers

AA,

Firstly your claims were without qualification. Given that mining revenue only dipped before recovering to levels exceeding anything Howard ever saw, the excuse of the GFC is relatively feeble.

That in the first year of the GFC that stimulus was required was not in question, however, the management of this was appalling. The general economic consensus is that the amount spent was excessive, and extended far too long, for example in the construction industry which was "at risk" of shedding jobs the demand pushed up wages by 10%-20%, and non government projects were shelved due to a shortage of labor, and the majority of the "stimulus" continued to be spent long after the country returned to trend growth.

On top of this the Schools halls project was so badly handled that the cost of these buildings at public schools (that were managed by the government) averaged double the cost of those professionally managed by independent schools. To top it all most of what was offered to the public schools did not match what they actually really needed, and most public school halls did not begin until the need for stimulus had passed.

So while stimulus was needed, a competently targeted stimulus could have achieved the job savings at a fraction of what Labor spent.

So for my $300 000 overdraft I got $30 000 worth of value.

The comparison of the first 5 years. One received an economy in crisis, and reduced the debt, the unemployment and taxes. Swan inherited an economy that at full employment, producing record surpluses, and growing at 4%, and delivered the 4 greatest deficits in history (even when the economy was growing) pushed up unemployment, and has consistently missed every budget target he set himself.

As far as your indicators are concerned:

1 Tax collected is not an indication of tax rates.
2 Non mining industrial production is collapsing, so stop quoting figures that include mining.
3 Quoting quality of life index figures from 2005 shows what about Labor?

I'm sorry, but your cherry picked indices are generally irrelevant or were better under Howard.

Good morning,

Re: “Firstly your claims were without qualification.”

Correct. And remain so. The last discussion was about GDP growth. No?

Scroll back to my original list of 25 variables where the present Government is doing as well as or better than the previous Government. GDP growth is not there. It’s on your later list.

We are all correct here. You rightly list it as an area of better performance by the previous Government in raw terms. I am right to leave it out. Economists are also right to claim this as a major indicator that your current economic management is best the world has ever seen – because economists always consider context.

Re: “Given that mining revenue only dipped before recovering to levels exceeding anything Howard ever saw, the excuse of the GFC is relatively feeble.”

Yes and no. Mining is important. But it’s only a proportion of your total economy.

Re: “That in the first year of the GFC that stimulus was required was not in question.”

Excellent. Making progress. This has certainly been questioned by many, here and elsewhere, including Grim23.

Re: “The general economic consensus is that the amount spent was excessive, and extended far too long …”

Not true, Shadow Minister. Economic consensus gives it a big tick. General community consensus, which is heavily influenced by Australia’s mendacious media, doesn’t.

Re your criticisms of the school buildings project, some buildings cost more than they otherwise might have in less harried circumstances. But that wasn’t the point of the project, was it?

We can equally argue that John Howard in 1996 could have bought far more than 650,000 semi-automatic guns at a fraction of the $320 million spent in Australia – if only he had gone to the US secondhand market. But that wasn’t the point either, was it?

Auditors put the waste at around 2% overall – about average.

Re: “I'm sorry, but your cherry picked indices are generally irrelevant or were better under Howard.”

Not at all, SM. I listed 25. That's not cherry-picking. They are all relevant and all provable.

Cheers,

Again and again and again I tell you and you ignore it that interest rates are a very poor indicator of the stance of monetary policy!

You say youve read the links but can't see sufficient evidence that monetary policy alone did not get Australia through the crisis.
How about the one that compared Australia to New Zealand? Or the one that showed how our exchange rate perfectly tracked the fall in commodity prices? And that since our exchange rate has been tracking commodity prices we have always had stable NGDP growth? And that since our exchange rate has remained high while commodity prices have fallen our growth has slowed? Or the one that explains that we had significantly higher nominal gdp growth leading up to the crisis, so there was further for us to fall? It was an implicit NGDP level target and a forward rather than backward looking monetary policy that set us apart.

The differences are subtle and require you to look deep into the data. Again, your sinple statistic is too simplistic.

As for the Great Depression, it has been accepted for a long time that it was caused by a sharp contraction in the money supply, not the stock market crash. Ghe stock market crash was, like the one in 2008, caused by expectations of tight monetary policy going into the future.

The question you really need to answer is do you seriously think that the RBA would not have been able to stabilise NGDP without fiscal stimulus?

Hello again Grim23,

Thanks for this.

Re: “Again I tell you that interest rates are a very poor indicator of the stance of monetary policy!”

Okay. If interest rates are a poor indicator, then what measurable variables do you have?

Re: “You say you’ve read the links but can't see sufficient evidence that monetary policy alone did not get Australia through the crisis.”

No. Monetary policy was a factor. But doesn’t explain Australia’s surge, does it?

Re: “since our exchange rate has been tracking commodity prices we have always had stable NGDP growth?”

Two problems with this, Grim23. First, NGDP growth is an outcome, not a setting. What were the strategies Australia applied to achieve this?

The second problem is that Brazil had a near identical exchange rate history to Australia’s during the GFC. Compare the charts of the Aussie dollar and the Brazilian real between January 2008 and June 2010. Near identical. No?

Both countries export minerals. Same global commodity prices. Eerily similar exchange rate declines and rises through the GFC. Brazil started at about 16th and ended up 16th in economic ranking. Australia started at 11th and ended up 1st – by a street.

Can you see how this suggests “exchange rate tracking commodity prices” was not significant?

So what were the decisions which propelled Australia’s economy from 11th ranked to best in the world – and best the world has ever seen – by an impressive margin?

Ken Henry urged Wayne Swan to “Go early, go hard and go households.” Swan did that. He implemented the world’s greatest Keynesian stimulus. Correct?

The world then watched in awe as Australia leapt ahead of every other nation in a single bound – with one negative quarter, rapid recovery of the dollar, low taxes, low inflation, increased services, increased benefits, low deficits, low borrowings and performance on the 25 indicators Shadow Minister and I are discussing as good as or better than achieved through the Howard Government's boom years.

If you claim the stimulus had no effect, then it is fair to ask what did.

Back to you, Grim23.

Cheers,

AA,

If Howard's GDP growth beat Juliar's hands down, then your unqualified claim was wrong.

Most economists realise that stimulus was required, but also realise that the stimulus was too much, too long and poorly managed.

Your comparison to other countries is also disingenuous as no other country had the same proportion of minerals exports, nor a zero net debt. Howard left Australia in a far stronger position than other country in the world to deal with the GFC, which meant that it suffered less than any other country.

Labor could claim some credit if it managed the stimulus in a targeted and efficient manner, but they simply went out and spent like drunken sailors, leaving a legacy of debt that future generations will need to pay.

Hello again Shadow Minister,

Not sure we are on the same page. You may need to clarify.

Re: “If Howard's GDP growth beat Juliar's hands down, then your unqualified claim was wrong.”

What unqualified claim? Can’t find one.

Re: “Most economists realise that stimulus was required, but that the stimulus was too much, too long and poorly managed.”

Really? Who? Based on what analysis?

Just behind Australia in spending quantum were Mexico and the USA. Both had five quarters of negative growth to Australia’s one. Unemployment almost doubled in Mexico, more than doubled in the USA. Both have gone into much deeper debt than Australia.

Most other OECD nations which spent less performed even worse.

Is there any evidence anywhere to suggest that Australia would have done as well had it allocated even marginally less, or more slowly, or targetted differently?

Re: “Your comparison to other countries is disingenuous as no other country had the same proportion of minerals exports, nor a zero net debt.”

Not really, SM. No country had precisely the same proportion – true. But several other nations also export vast quantities of minerals. We have looked at Brazil – which, if you are right about minerals exports, should have done well through the GFC. Same with the other big minerals exporters. No?

Australia ranked ninth among countries exporting to China in 2008. What happened to the other eight? Any protection through the GFC? None whatsoever.

Plenty of other countries had low or zero net debt, SM, including Spain, Finland, Iceland and Chile. They all had 2008 budget surpluses as well - yet all suffered terribly badly.

In contrast, Israel, Switzerland and Singapore went into the GFC with huge debts but are now travelling extremely well.

Evidence is overwhelming that deficit and debt made no difference at all. Unless you have contrary data, SM.

You have heard Professor Joseph Stiglitz and others assert Australia’s quantum and direction were spot on.

So I’m curious to hear which economists claim lower stimuli would have worked, what quantum would have been better, and on what empirical basis.

Thanks, SM.

Cheers,

Yes, interest rates are a poor indicator. A country with 20% inflation would have high interest rates and easy money, but people often say that low interest rates are a sign that money is easy (like they say about Japan, where money has in fact been very tight). So that's why you can't rely on interest rates alone.

The only indication of whether money has been easy or tight is NGDP growth or inflation, relative to trend. Don't take my word for it, ask Ben Bernanke:

"Ultimately, it appears, one can check to see if an economy has a stable monetary background only by looking at macroeconomic indicators such as nominal GDP growth and inflation"

http://www.federalreserve.gov/boardDocs/Speeches/2003/20031024/default.htm

Since the central bank can print infinite quantities of money if it likes in order to hit its nominal target, then yes, the outcome is the the appropriate setting.

As for Brazil, the nominal GDP growth path doesn't look that different compared to Australia. Yes Brazil has had worse real growth, but that reflects supply side problems, and nominal GDP is the statistic we care about for this purpose.

And if you read the links thoroughly you would also have seen the one that explained that where nominal GDP was above trend when the currency rose by less than commodity prices (2004-2008) and hence nominal GDP rose to an annual rate of roughly 10% before the financial crisis, and since the currency has stayed elevated while commodity prices have been falling, nominal GDP has fallen significantly. Is that relationship "significant" enough for you?

Australia has an "implicit" NGDP target; over the past decade NGDP growth has averaged about 6.5%. This is what sets us apart.

Links for Brazilian and Australian NGDP:

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BRAGDPNQDSMEI&s[1][range]=5yrs

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=AUSGDPNQDSMEI&s[1][range]=5yrs

AA,

Here is your unqualified statement that is patently false:

"No-one has answered the question regarding the observation that Australia now has economic outcomes better than at any past time and better than anywhere else."

Which compared to Howard is patently false.

As for the stimulus and your contention that the bigger the stimulus the better the result:

"Henry provided advice to the Rudd Government that without the continuation of the stimulus package, 100,000 jobs would be lost, and GDP would reduce by 1.5 per cent. No modelling was made public to support either of these contentions. After the release of advice, Shadow Treasurer and Minster in the former Howard Government, Joe Hockey, commented that he had never seen a piece of Treasury advice so clearly designed to be released to the media.

Further,graphs printed in the budget papers purporting to show that there was a statistically significant correlation with the size of G20 member countries' stimulus packages and their respective economic performances, however the data had been cherry picked and only 11 G20 economies had been included in the analysis. When all G20 economies were analysed, no correlation existed."

From a Senate inquiry:

Prof. Davidson— "No, I totally disagree with the argument there. Certainly the school halls seem to be the most extraordinary waste of money that we have ever seen in our lifetimes. The Australian reported that $850,000, I recall from memory, was being spent on a single-pupil school and nobody thought to think why would we even think about giving this kind of money to a single-pupil school let alone actually give such an amount of money to a single-pupil school. And in today’s Australian we read that they are spending $2.45 million on a school hall for a school that already has a hall, which will give it an extra 30 square metres of space, but nonetheless most of the kids will still have to stand outside. I cannot believe for one second that this is productivity enhancing expenditure."

Q.E.D.

Aust Banks have a derivative exposure of $20 trillion which is 6 times their assests (our mortgages) or 16 times or our GDP.

Banks view derivatives as a form of insurance but in fact are a complex form of bettin, using our assests as collateral.

The Commonwealth Bank for the first time this year has refused to declare their exposure to derivatives.How can their insurance policy be worth 6 times our mortgages? How can they possibly be bailed out?

To quote Tony Makin, Professor of economics at Griffith University.

"BAD economic policy is invariably based on an economic fallacy. At the industry level, an example of this is that government assistance to manufacturing preserves long-term jobs, and at the macroeconomic level, that boosting unproductive government spending can prevent recessions without harmful lasting effects.

Both of these fallacies warrant rigorous rebuttal, the latter especially since the federal government spent nearly $90 billion on fiscal stimulus, and because the claim is frequently made that it has been the great economic success story of the past five years.

Many still insist that fiscal activism saved Australia from recession following the transatlantic banking crisis, aka the GFC.

Yet, contrary to the crude Keynesian justification offered for it back then, let's not forget that fiscal activism failed to prevent GDP per capita going negative in two successive quarters, a technical recession by this measure. And that the national accounts show it was net exports, assisted by a heavily depreciated dollar, not government spending, that bolstered aggregate demand at the critical time."

Also the paper authored by Emma Aisbett, Markus Brueckner, Ralf Steinhauser and Rhett Wilcox, entitled Fiscal Stimulus and Household Consumption: Evidence from the 2009 Australian National Building and Jobs Plan, indicated that that the direct payments made to households by the Australian government in early 2009 - the Tax Bonus for Working Australians - had no discernible effect on consumption, at least of non-durables. Additionally, the impact of the announcement that payments were to be made had only a small and transient impact. These are telling results and contradict the government's pronouncements on the supposed economic benefits of the fiscal stimulus.

So 3 prominent Australian economists think that the management of the stimulus was incompetent.

Greetings again all,

@Grim23, re: “where nominal GDP was above trend when the currency rose by less than commodity prices (2004-2008) and hence nominal GDP rose to an annual rate of roughly 10% before the financial crisis, and since the currency has stayed elevated while commodity prices have been falling, nominal GDP has fallen significantly. Is that relationship "significant" enough for you?”

Only if it's demonstrable that Australia was different from the rest of the world.

Was it, Grim23? If so, by what data?

Re: “Australia has an "implicit" NGDP target; over the past decade NGDP growth has averaged about 6.5%. This is what sets us apart.”

Perhaps. Where is the data showing NGDP average growth rates for all OECD economies?

And what gave rise to Australia's NGDP growth averaging 6.5%? The stimulus packages?

The question remains: What were the decisions which propelled Australia’s economy from 11th ranked in the world to first – and top by an extraordinary margin?

Thanks, Grim23.

@Shadow Minister, re: "No-one has answered the question regarding the observation that Australia now has economic outcomes better than at any past time and better than anywhere else."

This is correct. On how many indicators are the raw figures better through the Howard years than now? One? Two? Three?

My list has 25 indicators on which outcomes are better now. Correct?

Re your reference to Joe Hockey: He has credibility with whom? By virtue of what qualifications?

Re: “The Australian reported that $850,000, I recall from memory, was being spent on a single-pupil school …”

So, an uncredentialed witness to a hostile political inquiry seems to recall a vague allegation in a Murdoch newspaper by an unnamed source about an unidentified school somewhere … ??

And this proves what exactly, Shadow Minister?

Re: “I cannot believe for one second that this is productivity enhancing expenditure."

Have you checked Australia’s productivity recently, SM?

Extraordinary growth for seven consecutive quarters – best in the world, and best in Australia’s history considering the global environment by far. No?

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

QNulED, SM.

@Arjay, that is extraordinary! What is your source?

Thanks.

Cheers,

AA,

The credentials you wanted: Sinclair Davidson is Professor in the School of Economics, Finance and Marketing at RMIT and a Senior Fellow at the Institute of Public Affairs.

Also I did not refer to Joe Hockey, Professor Tony Makin did, and in the particular article Hockey had caught out Swan presenting fraudulent information to Parliament. Swan was forced to withdraw it.

The three Australian professors, two of which were commissioned by the government to assess the effectiveness of the stimulus package, all were scathing of the effectiveness of the package. It would appear the further you are away from Australia, as Stieglitz is, the easier is is to swallow the massaged information from Labor.

"My list has 25 indicators on which outcomes are better now." Wrong. As I have shown, most of the indicators are irrelevant, and many show no change.

The list I gave are genuine indicators of economic performance, and none of them have any improvement over Howard's time in office. likewise the seven quarters of growth are better than most other countries that suffered under socialist debt, but are poor compared to the previous government. It is notable that during this time of growth, Labor produced yet another record deficit, which is contrary even to Keynesian economics.

The school halls debacle was a showcase in incompetent management. "According to figures from Brumby's state labor government released figures revealing the extent of cost blowouts, fee duplication and poor value for money spent on state primary schools. According to the figures, provided as part of a government submission to a state parliamentary inquiry into the $16.2 billion scheme, the government paid an average of $4842 per square metre for 390sq m halls delivered under the scheme, and $5575/sq m for 160sq m buildings. By contrast, the Catholic Church is delivering school halls to its schools for an average of $2221/sq m.

So was the Labor State Premiere or his treasury lying?

A lot of people want our debt to increase so they can keep their cushy Govt jobs.This why we are reading this article on comparative poverty.

As I said before,our banks derivative exposure to $20 trillion cannot be bailed out and the Commonwealth this yr refuses to reveal their exposure to devivatives.This is the really scary forboding in which our economy is headed.

Alan here is one ref to our Banks Derivative exposure. http://cecaust.com.au/main.asp?sub=releases&id=2013_02_22_CBA_Hiding.html There was until recently an article on http://barnabyisright.com/ 'Tick tick tick Aussie banks $ 15 trillion time bomb.' Also there was an article in Bloomberg and an article in our papers referring to the CBA not releasing their derivative exposure.

All the banks including the Bendgio/Adelaide are into derivatives as a quick way of making money.

Good morning all.

@Arjay, thanks for those links. Will go through them shortly. Intriguing!

@Shadow Minister, thanks for the further references to the authorities. But they don’t answer the question, do they?

Plenty of economists are stroppy with the Labor Government. After all, Australia's experience through the GFC blew out of the water the cosy theories of several schools of economics around the world. Textbooks are being rewritten as we speak. Many monetarists are most certainly miffed.

The question, however, related specifically to your claim that a majority of economists agree with stimulus, but believe Australia’s “was too much, too long and poorly managed.”

Who? What do they claim the specific level of stimulus should have been – as a % of 2008 GDP? And based on what analysis – either comparative, arithmetic or other?

Incidentally, SM, you should know that reference to anybody involved with the Institute for Public Affairs loses rather than gains you credibility.

Plenty of evidence that the IPA is at the forefront of fabrication and falsifying, including this piece here at OLO:

http://www.onlineopinion.com.au/view.asp?article=14376

Re: “The list I gave are genuine indicators of economic performance, and none of them have any improvement over Howard's time in office.”

Not true at all, SM.

First, some items you list are not indicators, but settings. Causes, not outcomes. These include federal borrowings, the company tax rate and tax rates generally.

Second, with several items, the raw data does indeed show Australia is better now than previously. These include job participation, personal tax rates and regulations.

Third, it can be readily shown there were several additional taxes levied during the Howard years.

And fourthly, we must always take into account prevailing global conditions when assessing variables such as economic growth and employment rates. No?

Finally, SM, regarding the so-called “schools halls debacle”, have you read the Victorian auditor’s report?

And do you agree John Howard could have purchased far more than 650,000 firearms for much less than the $320 million spent in 1996 if he had only thought of buying on the second hand market in the USA?

Cheers,

AA,

Your last post finally confirmed to me that you know sweet stuff all about economics. And economic theory is safe from Swan's drunken splurge.

Net federal debt is an outcome or consequence, and is one of the prime indicators. Most of your "indicators" are irrelevant such as the current account and expose your economic ignorance.

For example job participation rate you claim as an indicator is exactly the same under Howard as under Gillard. It means that exactly the same proportion of people are employed or looking for work. Except that under Gillard unemployment is more than 1% higher, meaning that under Gillard a smaller proportion are employed. Not really a good indicator.

Government regulation is more oppressive and if you look at what makes up the index of economic freedom you provided, you would see that the contribution from the federal government has been a negative.

I agree the article you provided on the IPA was a complete fabrication.

heh Austin, why dont you turn this opinion piece into an academic piece and see if it gets published. Now that will be an achievement.

Come on Austin, hundreds of people like this article so give it a go. They cant all be your mates, i would be surprised if they were.

I bet one thing, this rubbish will not get published in any respectable journal because it is is just that, rubbish. You would have to back down in major way to have any hope of publication.

Finally, after all thse years, i finally want to be an academic rather than write opinion pieces. Your mediocrity has seen to that, so i thank you for that.

"heh, Austin,...."

"Come on, Austin..."

hmmmm.....one would imagine that academia would solicit a more fulsome adherence to common courtesy.

(even for those who've previously been published in Quadrant and have visions of future grandeur).

Poirot,

No grandeur on my part, i dont claim to know everything, like Austin does.

In fact, i will admit I am not much of an academic either, but then again who is. It is simply too hard for anyone to claim to know how the world should work or does work.

I just write a few academic pieces as part of my vocation now after years of labouring occupations. I also do research for others, my main source of wages.

Once again, i ask Austin to put his supposed inquiry prowess to an academic publication. He may get away with his garbage analysis in opinion pieces, but i will be surprised if such arguments are not ripped to pieces where referees are involved.

Greetings all. Happy Budget Day!

@Shadow Minister, re: “Net federal debt is an outcome or consequence”

My net debt exploded 20 years ago when I borrowed many times my annual income to buy a house. Turned out alright. Just one regret. Should have borrowed more!

Have you ever had a mortgage, SM? Was that an outcome or a strategy?

One more question on this topic, SM: Australia's government 10 year bond yield declined 7 basis points in recent weeks. It's now much less expensive for Australia to borrow.

The rate has dropped below 3% for the first time since when?

Re: “job participation rate you claim as an indicator is exactly the same under Howard as under Gillard.”

Not at all, SM. Not true.

Are we examining the same data? Check the ABS chart, here:

http://abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6202.0Apr%202013?OpenDocument

Table 18: Labour force status by Sex - Persons 15 to 64 years. Column BO, participation rate: persons, seasonally adjusted.

Is this reliable data, SM?

Lowest point under Howard: 73.2%
Lowest point under Labor: 76.0%

Highest point under Howard: 76.6%
Highest point under Labor: 76.9%

Five and half years after Howard took office [Sept 2001]: 74.0%
Five and half years after Labor took office [Apr 2013]: 76.7%

Even discounting global conditions, Labor has performed better. When we consider the impact of the GFC which has seen participation rates plummet worldwide, Labor has done incredibly well. And Howard was a dismal failure. Correct?

Re: “Government regulation is more oppressive and if you look at what makes up the index of economic freedom you provided, you would see the contribution from the federal government has been negative.”

Not compared with the Howard years, SM. Australia is 3rd in the global rankings now. Top in the OECD. What was the highest ever achieved under Howard?

Please take care, Shadow Minister, who you accuse of knowing “sweet stuff all about economics”.

@Chris Lewis: Pleased to have assisted in clarifying your life’s calling.

For me, I’m content to continue to serve as a humble fact-checker. For mainstream journalists, MPs and academics. No need to join any of them.

Cheers,

For piece of mind, in case some take it the wrong way, i am not criticising opinion pieces or OLO.

i am sure many of my OLO pieces (probably most) also suffer from bias and not enough balance. For example, while i suggest the Aust economy is going down the tube, i dont offer much of an alternative vision.

But with AA, it is different. He mocks most points made that do not agree with his analysis. Even academic pieces are rubbish if they dont agree. Academics who do agree, often referred to by AA in their opinion pieces, are the exception for AA.

That is why i ask AA to have a go at academic pieces, not because academia is perfect (it is not), but because simplistic assertions or a lack of regard for policy trends beyond a silly comparison of numbers is much less likely to be accepted.

Now think about it, why would any journal accept an argument that Aust was not only the best govt in the world, but the best ever, in light of some of the negative trends that are now occurring for many battlers and businesses. It is clearly a nonsense, yet AA justs rips any alternative point to pieces

Chris Lewis,

".....yet AA just rips any alternative point to pieces."

That's the name of the game in debate - yes?

What you're experiencing is frustration.

It's a bit like a tennis match. Some players read and play their opponent's game to such an extent that even absolute champions have trouble meeting their usual standard when playing a particular player.

Yes, OLO is useful and easily accessible, but it caters to a wide range, from the near academic to the common garden variety blather of the supermarket queue.

Poirot, ok, points taken. I should always talk to people in public with greater courtesy. I probably am one of the crudest people that ever got a PhD.

But what infuriated me is when so much detail is given to a particular line of argument, particularly when greater suffering is occurring in Australia.

Now I have been lucky and have worked very hard to get in a reasonably comfortable position, especially since meeting my mrs around 11 years. We have built a new house and have a small mortgage, yet even we are mindful of meeting our future bills. I listen to the bills faced by one neighbour and cringe, merely hoping they will be prepared for a possible rocky road ahead.

Now for the majority that seek a similar lifestyle, mostly borrowing 90% of the house and land value, I know that many are heading for disaster should the card deck (current economy) fall.

Govts are printing money, but this cannot go on forever. It may even backfire, albeit doing nothing is hardly going to avoid much misery.

So when someone tells me that Aust has never had it better, I get rather infuriated given record utility bills, worsening home affordability, and an increasing distortion in Australia’s production-consumption balance. While there is a need to acknowledge both national and international economic considerations, there is also a need to acknowledge that all is not well here rather than claiming we now have our best ever govt.

Chris,

Well you don't come across most times on OLO as crude.

You usually come across as quite measured.

I suppose I shouldn't lecture you too much, as there are a couple of posters on OLO who get up my nose, and to whom I send the odd exaggerated raspberry.

Alan's strength is that he doesn't get side-tracked by opposing argument. He's singularly focused and concentrated on deconstructing opposing argument and offering up his own analysis in reply.

Anyway, stick around. We need all the sensible discussion we can muster around here :)

AA,

I generally refrain from accusing anyone of ignorance without an impressive display. From what you post it appears that you know nothing of economics, it is however entirely possible that you are very good at feigning ignorance.

When you got a mortgage, you also got a house with a prospect of long term capital gains, and income from rent or not having to pay rent. If for any reason, you could not pay the mortgage, you could pay off the debt by the sale of the house.

Which is precisely why there is no comparison with a mortgage and Juliar's debt since there is very little of value left from the $90bn in stimulus or the further $170bn of accumulated debt. If you woke up with a credit card debt worth nearly 6 months income, only a moron would not be concerned.

As for the ABS figures you quote, it is obvious that you are stranger to statistics. If you were doing more than surfing the net to cherry pick data, you would have picked up that the stats deviated significantly from reported figures. An educated person would have realized that the figures were obviously taken in a different context. for example the same data you quote gives unemployment at 6.2% and 6.1% for Feb and March 2013.

The graph from the RBA is http://www.rba.gov.au/publications/smp/2013/feb/graphs/graph-c1.html
The participation rate increased dramatically under Howard ending at roughly 65.5% where it is now (65.3%)

As for "economic freedom" simply using the information you supplied, the influence of the labor government has been negative. If you have a comparison with the Howard years please feel free to provide it.

Even discounting the GFC the Howard government far outperformed Labor which is a dismal failure. Correct?

Good morning all,

Thanks for these responses.

@Shadow Minister, re: “When you got a mortgage, you also got a house with a prospect of long term capital gains, and income from rent or not having to pay rent.”

Correct. Same with the stimulus package investments. No?

Have you see the projections of future savings with the insulated buildings, SM? Or projections of future earnings from social housing or any of the other assets built?

Professor Tiffin says, “The Department of Environment estimated that insulation would cut the normal household’s energy bills by around $200 a year. According to one estimate during the controversy, putting ceiling insulation in 2.2 million homes would save as much energy as taking a million cars off the road ... Another estimate said that ceiling insulation cuts household energy use by up to 45% ... Whatever the actual figures, the environmental benefits are clearly substantial.”

Re: “If you were doing more than surfing the net to cherry pick data, you would have picked up that the stats deviated significantly from reported figures.”

We could look at several charts, SM: original, trend and seasonally adjusted. Proportion of age 15 to 64, or of total population. And yes, there are deviations, outliers and so on.

But the observations, above, remain true.

The graph you have linked has two weaknesses, SM: 1. It doesn't show the measure of job participation used, and 2. shows the dip downwards at August 2012, but doesn’t show the rebound through late 2012 and 2013, does it?

The more serious deficiency with your case, however, SM, is that you appear to be ignoring the global environment.

Please compare the shape of your graph with this one:

http://data.bls.gov/timeseries/LNS11300000

Across the world, job participation has plummetted downwards from 2008 levels. No?

Except in one country. When we look at the overall economic performance of the Howard Government relative to the rest of the world, it slipped back to about 11th place by 2007.

Look at the comparative data now, and Australia is clearly top. Top by an impressive margin. And continuing to forge further ahead.

Cheers,

I find Chris Lewis's logic bizarre. Somehow the federal government is to blame for installation failures of pink bats. What absolute nonsense. The failure lies with the installer businesses they broke the law, they failed to provide training, they failed to provide supervision, they failed to provide a safe work environment. The government provided incentives in effect becoming a partial funding source. Do we blame the Commonwealth bank when they provide finances for housing loans for injuries that occur in the house construction industry?
Do we blame the government for injuries on farms because the government has provided drought relief or flood relief, is the ATO responsible for providing depreciation allowance on capital equipment without ensuring that the companies are putting that money into maintenance or capital equipment replacement and there are injuries in the workplace. We provide diesel rebates for farmers and miners so is the government to blame for every injury that occurs in a diesel powered vehicle? remember this work was not licensed work, the regulation of this work was a state government responsibility. Chris you have swallowed complete bunkum and are too arrogant to admit it, I hope you are not a graduate of the same university as I graduated from because this display of being brainwashed by ill informed mass media would seriously erode the reputation of any tertiary institution

AA,

The federal government is not going to get any revenue from its stimulus expenditure. The pink batts debacle will save home owners about $400m p.a. from an expenditure in the region of $90bn, and the school halls stuff up provided halls that were seldom a priority for double the price they should have cost, for a public school system that is growing very slowly. A number of schools that had millions spent on them were tagged for closure before the halls were built and were closed as the halls were being finished.

So there is bugger all return from the stimulus and should be compared to credit card debt not a mortgage.

The job participation rate in Feb 2013 was 65.1% which was lower than in the final months of the Howard government. But unemployment was higher meaning that there was a significant percentage of people more working under Howard. Comparing Australia against countries that did not have Howard to make the economy resilient is a waste of time.

All your non qualified claims that Australia has the best outcomes of any government have been shown to be false. You are now left trying to play the GFC card to explain all your failures, just as Swan has the last few months.

Hello again,

@Shadow Minister, re: “The federal government is not going to get any revenue from its stimulus expenditure.”

Really? Almost alone in the developed world, Australia averted recession [with Poland]. So the Government receives literally billions in tax revenue other governments have lost. Correct?

Unemployment was projected to reach 10% during the GFC – as happened elsewhere. Australia’s jobless peaked at 5.8% – earning billions in income tax other governments lost – and saving billions in dole payments. No?

Try to look at things the way economists do, SM.

Re: “The pink batts debacle will save home owners about $400m p.a. from an expenditure in the region of $90bn”

Wrong, wrong and wrong, SM.

First, it wasn’t a debacle. Except, perhaps, in the minds of the mendacious media and the poor souls who believe them.

Second, 1.2 million homes save $250 a year [in today’s money] = $300 million a year

For 50 years = $15 000 million

And, if the insulation lasts 100 years average, then $30 000 million

Third, the actual cost was only $2 500 million. No?

It’s the gift that keeps on giving.

Re: “school halls stuff up provided halls … for double the price they should have cost”

No. Auditors found complaints were lower than normal and wastage about 2%. Not bad seeing waste was not the priority. Saving the economy with rapid investment was.

Re: “A number of schools that had millions spent on them were tagged for closure”

How many can you name, SM?

Re: “The job participation rate in Feb 2013 was 65.1% which was lower than in the final months of the Howard government.”

Only if you look at the rate as a % of the total population. Why not the working age population? And only if you compare “final months” and exclude all other data.

Cherry picking, SM?

Re: “All your non qualified claims that Australia has the best outcomes of any government have been shown to be false.”

No. The opposite is true. No country in any period has been shown to be anywhere near as successful.

Cheers,

Slasher, no I am not too arrogant to take criticism. It is quite possible to form different conclusions on a whole matter of issues. Fortunately in a liberal democracy we are free to form our own arguments in accordance to a personal summary of the facts.

But before you bag my scholarship and blame our awful media, even though my argument will be published by a third tertiary institution, take note that the policy destroyed existing businesses as many rogue and new businesses emerged; ignored public service, trade union and business concerns about safety; and wasted hundreds of millions of dollars of taxpayer money.

Given you have a university education, feel free to refute my thesis that the HIP was a policy debacle. However, I expect your summary to be on the wrong side of history. I think the argument that the govt just had to put money out there to offet GDP decline is actually a disgrace for a sophisticated liberal democratic govt. Given the events of the HIP, it may as well just paid out $1400 cash.

At a time when the public role is being questioned by some, I ask you just how do you expect the public to have trust in public institutions when you defend the indefensible. Do you honestly think bagging Aust’s media, which I believe is still quite good when we take account of the electronic and internet components, is a way to win public debate?

The HIP debacle was enough to have me not vote Labor at the federal level for the first time.

But hey, you accuse me of being a poor scholar despite my careful examination of all submissions at the Senate inquiry, and suggest I
was poorly educated through my experience at Monash.

Come on you can do better than that. The HIP was largely the baby of the Labor govt. The debacle, which is largely accepted by most, is therefore its responsibility.

chris. you still have not responded to central premise why does the funding source for pink bats assume responsibility for employers breaking the whs laws, yet no one suggests the funding source for construction loans has responsibility for whs on construction sites, you also sheet home blame to the federal government to bad installations yet the regulation of this activity at the time was solely the responsibility of the state government, is the federal govt to blame for whs incidents on a farm because the farmer gets drought relief?

suggest that you look at the constitution to look at which level of govt is responsible for whs.

the business operators were at fault, is it the govts fault that someone drinks drives and kills someone no it the driver at fault, just as it is the business operator who broke the whs laws

AA,

Just in Tasmania alone School halls closed:

Acton Primary School in 2011.
Brooklyn Primary School in 2011.
Upper Burnie Primary School in 2011.

Juliar's own task force investigating the efficiency of the school halls debacle:

The third and final report into the BER, conducted by former investment banker Brad Orgill, has found Victorian and NSW, have not delivered value for money for public schools under the program with public schools charged an average of up to 60 per cent more for school buildings, despite no differences in quality.

The taskforce has found the Victorian and NSW Governments - who delivered more than a third of the BER program - did not provide value for money in delivering projects and had in many cases delivered buildings of poor quality. The report also made it clear that much of the BER money did not start flowing until after the global financial crisis had officially ended.

Mr Orgill heavily criticised the Victorian government’s handing of the scheme saying the state had delivered a “slow roll out” with “systemic quality issues”.

I am sorry, but article indciates that state govts were also pressured by Rudd Govt to accept a hastily arranged HIP.

SM is right, following shows how BER implemented after GFC ended.

Table 3: Number of P21 Programs, BER Expenditure and Interest Rates, 2009/11
Month Number of project started $ spent (000) RBA interest rate (%)
March 09 2-3 - 3.25%
May 09 48 - 3.00%
July 09 900-1,000 - 3.00%
Sept 09 2,000 600 3.00%
Nov 09 4,000 1,300 3.48%
Jan 10 5,700 2,400 3.75%
March 10 7,000 3,600 3.98%
May 10 8,000 5,200 4.48%
July 10 9,000 6,800 4.50%
Sept 10 9,600 8,200 4.50%
Nov 10 10,000 9,500 4.73%
Jan 11 10,100 10,700 4.75%
March 11 10,300 11,500 4.75%
May 11 10,400 12,000 4.75%
Sources: BER (2011, p. 11); RBA

Cont

As for the pink batts, my error was in using your figures which appear to have changed.

Assuming the savings are $250 per household p.a. (up from your previous $200) the total household savings would be $300m p.a. For a $2.5bn project this would yield a 12% return.

This of course ignores the following:

The $2.5bn only covered a portion of the cost of insulating most homes,
The $500m spent fixing shoddy and dangerous work is not included,
the cost of the 185 houses that burnt down are not included.
Up to 90% of household energy prices are in distribution costs, and savings today will be recovered tomorrow with increased prices, (leaving the net tong term savings at closer to $30m p.a.)

Next I get this drivel:

"Only if you look at the rate as a % of the total population. Why not the working age population? And only if you compare “final months” and exclude all other data."

The reason I use the % of total population is because it is the standard benchmark used world wide not some obscure measure that you have cherry picked from a report.

The final months are used precisely because they are the outcomes the government has achieved. If you want to compare the difference between starting and finishing for the coalition ahd Labor governments, the coalition performance looks even better, as each time they have picked up a financial mess and fixed it up, and labor has done precisely the opposite.

chris, did not realise Monash were handing out degrees in basket weaving. why is the funding source (fed govt) responsible for installers breaking the law, the regulators of whs are state governments, if the fed govt funds the construction of a road are they responsible for people speeding? thats right you have drawn conclusion of federal govt blame because others have drawn this conclusion. are you capable of independent critical thought or do you just insert the needle where others have created the hole?
it must be patterned basket weaving courses being run not originally designed basket weaving courses.

Ok, slasher thanks for the insults, but i will bet my credentials against yours anyday, whoever you are.

My analysis of the HIP has been published in academia because it was deemed good enough.

Now we live in a democracy, and all i can say is that most people think Labor is a joke when it comes to running programs. That is why it will rightfully get the boot, because it is not competent.

As for me, I suspect i will get well paid work for a long time yet, so .... you.

Sorry Poirot, but some tossers deserve it.

I mean what sort of drongo would defend the HIP given the evidence.

I mean one minister was demoted, the program was criticised by govt reviews, and the Govt abandoned it. On top of that, senior Labor ministers (including gillard) slammed it.

And now we have AA claiming env benefits for decades to come, which is supposed to be an excuse for the debacle.

And you stooges have the audacity to question my education ability and learning skills.

I mean who are you, besides being an absolute tosser who cant even see how Labor stuffed up the HIP. What is your credentials? If i specilise in basket weaving, you mus be still learning how to use rocks as tools.

Now i admit that Monash is a bit of a joke, but i never got less than a distinction and all HDs from my third year. I achieved this despite the left wing bias of most uni academics, who mostly did not have much clue given they were stuck in their thought mode limited to good guy (Labor) versus bad guy (Coalition). There were some exception though.

To be honest,and notwithstanding my concern for battlers, I dont think i could ever vote Labor again. It clearly attracts to many tossers and know alls who really dont know that much at all.

Only an idiot could defend federal Labor over the HIP (and BER), and that is being kind.

chris, why are you not able to answer my simple questions?

1. if the federal govt funds a road is it responsible for the cost of users speeding (road accidents and deaths)?
2. If the federal govt funds a farmer through drought relief or flood relief, is the federal govt responsible for whs violations by the farmer?
3. is the commonwealth bank responsible for whs violations that occur on house constructions funded through their loans?

if not why then are you saying the cost of houses burning down or deaths of workers through the whs violations of the operators is some how the fault of the federal govt?

if you cannot answer suggest you ask for a refund from monash, where did you publish, was it properly peered reviewed and who by?

If anyone needs more evidence that Wayne Swan is living in Wonderland, here it is:

Wayne told us as late as last October that the 2012-13 budget would end in a surplus of $1.1bn. Now, just seven months later, he tells us that the deficit figure for 2012-13 will be $19.4bn -- out by a staggering $20.5bn. In fact, none of his budget surplus/deficit forecasts has looked like being realised . This man just cannot be believed.

Yet, he has no hesitation in still boasting about his performance to the ABC's Leigh Sales (Broadcast: 14/05/2013 http://www.abc.net.au/7.30/content/2013/s3759324.htm):

LEIGH SALES: Wayne Swan are you going to contest the election in September?

WAYNE SWAN: Of course.

LEIGH SALES: Do you think you should reconsider that given your track record as Treasurer as Australians may see it could be overpromising and under delivering?

WAYNE SWAN: Leigh there's nothing I am prouder of than my record as Treasurer.

chris, I have the chance to read your article. Academic papers are not summarising submissions of vested interests with references added according to the form guides. Academic papers are the noblest pursuits, the search for truth, critical, objective analysis.
To analyse the pink batts policy in terms of consumer protection and labour standards (your main objections without oversimplifying the issues you have raised) an objective baseline needs to be established. what was the rate of consumer right violations (burnt or damaged houses for simplicity), what was the rate of injuries of workers. then and only then can an objective analyse be undertaken .
Further the next basic question needs to be asked does the funding source of economic activity in our society have any obligation to ensure the economic activity they are funding occurs with a higher consumer and worker standard than what our responsible legislators enact. the next question needs to be, if this is not a standard within our society does the pink batts represent a special class of economic activity that requires a different standard for the financers of an economic activity, if so what other activities are recognised in society as having similar obligations on the financers of economic activity. quite simply you failed to establish an objective baseline of empirical data to enable an objective comparison, in fact you glossed over other analysis that suggest empirical data contrary to your view. you failed to establish a fundamental basis for your argument in terms of either general principles or specific principles for societal responsibilities of financers of economic activity.

Greetings,

Intriguing discussion.

@Shadow Minister, re: “in Tasmania alone School halls closed … Upper Burnie Primary in 2011.”

Really?

From: “Parliamentary Standing Committee on Public Works - New Burnie Primary School”:

1.3 Building the Education Revolution

In the context of considering the amalgamation of existing schools, the announcement in February 2009 of the BER provided an unexpected opportunity to seriously contemplate proceeding with the construction of a completely new school ...

Permission was sought in the application process, to combine eligible BER funding into a single project fund amount. Accordingly, an application was made to the Commonwealth and approved in May 2009.”

True or false?

Re Brad Orgill: How about we stick to quoting what Orgill said, not blatant lies from Murdoch’s manipulators?

Orgill: “Given the context in which the BER program was delivered, it is a testament to those involved that the Taskforce has still only received 332 complaints, over three per cent of BER schools across the nation and at an overall premium on pre-BER business as usual costs of five to six per cent.

“Over 9,000 of the 10,500 projects have been completed since the P21 program was conceived in February 2009. This is a significant achievement. It is clear that the program did in fact deliver substantial stimulus.”

Your quote is from Anthony Klan – one of Murdoch’s most notorious liars. No?

Re: “The $2.5bn only covered a portion of the cost of insulating most homes.”

Untrue. It included the lot.

Re job participation: Why are you quoting February’s figure, SM? We have March and April numbers. Cherry picking?

Do you agree that whatever time series we use, we find:

* The lowest point under Howard was below Labor’s lowest point.

* The highest point under Howard was below Labor’s highest point.

* The average level under Howard was below Labor’s average.

* Five and half years after Howard took office the rate was lower than after five and half years of Labor.

* Howard's level was always below that of comparable nations. The level under Labor is now well above that of comparable nations.

Cheers

Hello again,

@Raycom, you truncated Mr Swan's quote:

“Leigh, there’s nothing I’m prouder of than my record as treasurer. We have an economy 13% bigger than it was before the Global Financial Crisis.

We put in place the most successful response to the GFC and the global recession of any developed economy.

We have an unemployment rate — one of the lowest in the world. We have a big investment pipeline. We have record low interest rates and we have contained inflation.”

All true, Raycom? Does Australia now have economic outcomes better than any nation ever? If not, which has?”

One positive upshot from that appalling Leigh Sales interview is this excellent exposé of the ignorance and herd mentality of Australia’s mass media:

http://www.independentaustralia.net/2013/politics/swan-dive-marked-down-sales-blows-the-budget/

@Slasher1: Yes, one of Chris Lewis’ papers was reviewed, here:

http://www.independentaustralia.net/2012/politics/ministerial-responsibility-in-australia-accuracy-please/

His HIP ‘research’ prompted this here earlier also – so far, unanswered.

“@Chris Lewis: Have just read your paper, linked earlier. Yes, it does read as a cut-and-paste of Murdoch’s pink batts narrative. No evidence anywhere that you have tested, or even questioned, claims made in News Limited stories.

“You appear to assume all their reports are factually accurate. Fair observation, Chris? Because the things they consistently got wrong you got wrong. The things they got right you got right ... Their confusion of settings and outcomes appears to be your confusion also, Chris. And the crucial independent research they ignored you ignored. Notably that from the CSIRO.

“As with virtually all Australia’s media, including the ABC, you seem not really to understand the fundamental purpose of the scheme – which to observers who don't read The Australian was overwhelmingly accomplished.

“Instead you assert at the outset it was a “debacle” – without explaining why – and proceed as though that is a given.

“Just three questions, Chris, if you are happy to pursue this:

“What do you regard as the scheme's fundamental purpose?

“Why did you include Rodney Tiffen in your references? His research reached the opposite conclusion from The Australian’s and yours. No?

"Why no reference to the findings of the CSIRO?”

Cheers

AA,

The schools I listed have now been closed.

http://www.abc.net.au/news/stories/2011/06/22/3250830.htm?site=northtas

"All of the 20 schools on the list for possible closure received federal grants under the Building the Education Revolution (BER) program, worth more than $13 million in total."

A good investment? or a huge waste of tax payers' money?

As for the job participation rate, the reason I chose Feb 2013 at 65.1% is show your statement "doesn’t show the rebound through late 2012 and 2013," as the lie it is.

The job participation rate increased 2% under Howard, yet under labor virtually hasn't moved. Unemployment has though so if you subtract the unemployment rate from the job participation rate, labor far under performs compared to the coalition.

The Coalition were far better economic managers. Correct!

As far as the pink batts are concerned, you have accepted most of my comments showing that the scheme provides very few returns for house holders in the long term and nothing for the government.

As far as the costs involved, there was a limit to the pink batts subsidy, and many houses required the owners to pay in a portion. So again you failed. The scheme did not cover it all.

Gee thanks Slasher and AA.

You guys are clearly superior to the referees that assessed my article. Damn, here I am trying to do the best according to my limited ability, but you guys are clearly the ones I should have been communicating with to do a truthful piece on the HIP.

As for Rod, he has read the piece, and I apologise if any offence was caused by not referring enough to his piece, albeit I disagreed with it.

Thankfully Rod, who is not arrogant (unlike some), has read the piece and said it was very well researched, albeit he disagreed with it. Such supportive comments from Rod, and i et a few, easily surpass views from AA on how one should conduct esearch.

Fortunately, I don’t cater for the wishes of what some people want me to write, within their claims that there is an absolute truth.

Now I would be interested to see what Rod would say of your work, especially the claim Aust has never had a better Labor govt.

Again, we must be free to express our opinion, in academia, the press or wherever. We will get it right sometimes and wrong sometimes. In the end, however, the people will decide what they think of a govt, the only honourable way to decide which elites run the country.

AA, you may be OLO’s greatest read author, but believe me, most Australians don’t agree with you. I wonder why, and I wonder what know alls like you really think of the people.

Surely, you have more faith in a liberal democracy not to believe that the people have been hoodwinked by the press. Oh …, I may be asking too much now.

So adios AA, and lets raise a toast to the next govt of Australia and wish it luck, once the current goon show gets the flick

chris, i am surprised that you are unable to answer basic questions, unfortunately it appears that there is now a Faculty of Programmed Basket Weaving at ANU now.
Maybe we should draw it to the attention of the VC about the appalling academic oversight shown on this paper.
If you were a credible academic writer you would be able to defend the views expressed in your paper. Instead of the nah-nah response.

Slasher, give it a rest.

Like i said, i do my best. My answers are in the paper, published in a couple of university publications.

Now i dont know who you are, but go ahead and write a critique. That is what you are supposed to do in academia when something gets published.

Now, my paper has been read by many a professor, including the four that reviewed it for 2 publications. I think one professor sent it to every MP, certainly the Coalition ones.

One professor used the paper for a public service course, so you might as well have a go a the APS as well.

Like i said before, which some airheads dont seem to understand, you either agree with the argument in general terms or you dont. Funny thing is the ones who disagree all appear to be Labor zealots.

Take your complaints to the universities; they published it.

However, my publications wll be on the public record forever, whether it is any good or not. For now, given referee approval, i am happy with that.

BTW, what is your name; i would like to check your work if you have any. It is always good to learn from rthe masters, or are you a master of bs.

Hello again,

@ShadowMinister, re: “The schools I listed have now been closed.”

Correct. The Standing Committee says no BER money went to them. And your linked article says: “the Commonwealth has the right to recoup funding … if the schools are closed.”

So how is the Commonwealth remiss?

Re: “As for the job participation rate, the reason I chose Feb 2013 at 65.1% is show your statement "doesn’t show the rebound through late 2012 and 2013," as the lie it is.”

Two problems, SM:

1. The missing rebound relates to your graph. Correct?

2. If you wish to compare “final months”, February is not the latest. There was an improvement in April you should not conceal.

Re: “The job participation rate increased 2% under Howard, yet under labor virtually hasn't moved.”

Correct. Participation increased during the Howard years, but less than in comparable nations – despite Australia’s boom.

Job participation worldwide dropped through the GFC. But in Australia remained mostly constant, with a lift to an all-time high in 2010.

Can you see why the world is in awe of Australia now, SM, and regards the previous regime as inept?

Re: “As far as the pink batts are concerned … the scheme provides very few returns for house holders in the long term and nothing for the government.”

The opposite is true. Refer independent research.

@Chris Lewis, re: “AA, you may be OLO’s greatest read author, but most Australians don’t agree with you. I wonder why…”

Hmmm. Australia’s aversion to fact-checking perhaps? In the media, academia and political discourse?

Re: “My answers are in the paper, published in a couple of university publications.”

No, they aren’t, Chris. Slasher1 and I have read your paper. We have asked reasonable questions arising from your assertions, in the spirit of intellectual inquiry. Fact-checking.

You volunteered to join this discussion, Chris. You offered your paper. Slasher1 and I are simply asking you to explain assertions contradicted by objective evidence – of which, curiously, you seem aware.

Are you unwilling to do so? Seems unlikely. You have contributed here indefatigably. So are you unable?

Cheers,

AA,

You can keep on wiggling, but I have got you nailed.

Job participation rate in Sept 2007 was 65.4% July 2012 was 65.2% Feb 2012 was 65.1% and April is 65.3% (From the ABS)

Similarly the unemployment in Sept 07 was 4.2% and was in April 13 5.5%

The points of which are under Labor:

-There was, contrary to your claim, almost no recovery in the last quarter of 2012 and very little in the beginning of 2013.

-Job participation has not changed, yet unemployment has increased, so the net % employed has dropped.

-For similar countries, Canada whose economy is the closest to ours has a roughly unchanged participation rate and an unemployment rate that is trending down contrary to Australia's.

Swan has produced 6 budgets that have been a complete joke. Every single one has been characterized by wildly optimistic revenue forcasts (taken from the very top of the treasury forecast band), and expenditure forecasts that have alwsys been exceeded.

In net terms you can see why the Labor government is widely regarded as financially incompetent.

Hello again all,

Hi Shadow Minister,

You are doing some research. Excellent!

While you have ABS spreadsheets open, here are a few more questions to explore:

1. What was the highest job participation rate Australia ever achieved? Which months? Was this at the depths of the global financial crisis? How can this possibly be explained?

2. Yes, “Job participation rate in Sept 2007 was 65.4%” in Australia [trend figures]. What was the OECD average then?

Yes, “and April is 65.3%” in Australia. What is the OECD average now?

3. “Similarly the unemployment in Sept 07 was 4.2%.” In Australia, yes. What was the OECD average then?

And unemployment in Australia “was in April 2013 5.5%”. What is the OECD average now? What is Canada's now?

It is vital we avoid the trap of the Australia's mendacious media - pretending that the worst worldwide economic cataclysm since the 1930s simply doesn’t exist.

4. Regarding: “There was, contrary to your claim, almost no recovery in the last quarter of 2012 and very little in the beginning of 2013.”

Compare December 2012 with now. Yes, the shift in trend participation rate is only 0.2. But that is actually 103 000 new jobs. Not bad.

Compare that with your Canada, SM, where there was a net loss of 13 000 jobs over that four months. In the UK, the loss was 43 000 in that period.

If you are keen to gain a truly complete picture, SM, you may like to look at the seasonally adjusted figures, instead of just the trend.

You may also like to look at the participation rate among the working age population, which adjusts for the gradual increase in the retired demographic.

Then compare all these with both Canada and the rest of the OECD.

The more we examine the data, SM, the more we understand how governments and economists around the world are looking in stunned amazement at the economic performance of Australia since the beginning of 2008.

Cheers,

AA, do you seriously think i could be bothered wasting my time with you in regard to my article.

Do you think i am stupid enough to think you are a reasonable person you can discuss things with. I have been around long enough to no some one not quite right.

I think most people on this site aware of me, know i am willing to engage with criticism of my pieces, but with you why would i bother with nitpicking like 'why did you not include the CSIRO or given more attention to Rod'. You are hilarious and you expect me to take you seriously.

As for your review of the other paper, you must be kidding. That site is an absolute joke, it mirrors your bias and mediocrity. You should write a criticism of the piece to the publishers and see if you get published. Go on Alan, you are a champion in your own lucch time. You can do it. Give it a go.

you are the biggest dreamer i have ever come across in terms of public discourse. You actually think you are good don't you. But how can your opinion be so out of tune with the clear majority of Aust's?

Again, i could not care less what you think. My summary of the HIP, assessed against texts concerning best public service practice, got published in 2 publications because it was deemed a good article, so who cares what you say. I am have got a lot of praise, with agreement of my analysis in further papers. Refer to the Aust Journal of Public Administration where Dollery and Koort supported much of what I said.

And you can answer my question, do you have regard for majority opinion in a liberal democracy. I aks this because the masses dont agree with your bs or Labor. How do you explain this?

I wont be responding to you again, so i will let you have the last ramble. Your are indeed a champion at that.

SM,i am surprised you would perisist with AA. Do you honestly think he would ever concede. He has internaitonal opinion and his summary of the data on his side, so he now thinks he is some sort of intellectual that can weigh things up.

I mean abit of humility and less arrogance would be a start for him; i am surporised more readrers have not launched into him.

What would he actually know of the Aust experience? I mean does he live here. Does he get any first hand info from people struggling?

I dont understand why the churches would employ him? I think he is kind of evil, so hoping judgment day is not too kind to him, albeit i think he may have that one wrong as well.

'The more we examine the data, SM, the more we understand how governments and economists around the world are looking in stunned amazement at the economic performance of Australia since the beginning of 2008'.

I mean does it get any funnier. Who agrees with this. Graham Young, cant you use this quote as part of a opinion poll.

On second thoughts dont bother, some people dont accept certain evidence, unless it is of course the OECD or the IMF, the same idiots that could not predict the GFC.

Even i knew it was coming (when a labourer) and got my money out, saved a few others too.

AA, i fogot to share the moment with you when the audience cheered loudly at Abbott's budget speech bagging this very poor govt; A bit like when that other overrated PM keating got heckled in parl. when defending Ros Kelly.

I love it when the people speak and express their emotion. Liberal democracy is the best, dont you think AA?

But i will be thinking of you on election day when Labor rightfully gets the flick and most Aust's reject stupid arguments like 'Aust has never had it better'.

Adios amigo, and pray for me that i never read your comments and silly opinion pieces again. Life is too short to waste time.

Chris Lewis,

An brief article and a graph from The Economist......seems to be backing Alan's take on things.

http://www.economist.com/blogs/graphicdetail/2012/12/focus-3

Poirot,

Do you also think Aust is going well?

I read The Economist occasionally, but dont take it as gospel.

I cant see how Aust is going to prosper in coming years wihtout major and painful reform. It has stuff in the ground, which will offset its decline for some time yet. But as far as other sectors, i hold much less hope based on recent trends.

Hopefully the Coalition proves up to the task. It is time to give Labor the flick.

Chris,

I'm not that knowledgeable on economics.

My take is probably simplistic in that as far as I can make out, the West lives wastefully. We don't manufacture our own stuff anymore, for the most part, and rely on China to make, not only things we deem necessities, but also oodles of cheap crap. I read that cheap Chinese imports have helped to keep the US economy viable.

I can't really see the Coalition altering the fundamental status quo to any great extent....as far as I can make out, things haven't really changed since Donald Horne reflected that:

"....Australia's economic prosperity was largely derived from its rich natural resources...." and that Australia "....showed less enterprise than almost any other prosperous industrial country."

http://en.wikipedia.org/wiki/Lucky_Country

AA,

You should try some research sometime, a hint is that cherry picking information is not research. Maybe even opening an book on economics for the first time would be enlightening.

The more we look at the data and Labor's poor management, we realise why one needs to be an economic illiterate to think Labor is competent.

A prime example is: "Compare December 2012 with now. Yes, the shift in trend participation rate is only 0.2. But that is actually 103 000 new jobs. Not bad."

In this time unemployment went from 5.1% to 5.5% which means that the net percentage of people employed dropped 0.2% or an extra 100 000 unemployed. Certainly nothing to be proud of.

Note that in Canada, the US and many other countries the unemployment is coming down whereas ours is going up.

The first couple of years Labor could ride on the back of what Howard had established. Now the results of labor's handiwork is starting to come to the fore with restaurants and shops closing on Sundays or permanently due to the rigidity of the labour market, and major projects being cancelled left right and center because of militant unions.

Greetings again,

@Poirot, re The Lucky Country.

Yes, excellent books. Both.

Since then, economic reforms in the mid 1980s lifted Australia’s performance. From about 20th in 1982 to 6th-ranked in the world by 1996.

Unfortunately in the next period the economy was poorly managed. Australia slipped back in international rankings to 11th by 2007, despite the enhanced competitiveness and growing trade with China, rising commodity prices, and windfalls from the sale of assets such as Telstra.

Most blunders of that period were little publicised. But were highly damaging nonetheless. These include losing $4.5 billion gambling in foreign exchange markets, selling most of Australia’s gold reserves at near rock bottom prices just before the price rose spectacularly and squandering billions derived from assets sales and the resources boom.

Fortunately, Australia then got the settings right during the GFC. And you are not only on top of world rankings now, but ahead by a clear margin and forging further ahead each year. The rest of the world wants to know how you do it!

You have just had all three credit ratings agencies give last week’s Budget a huge tick. Unemployment and debt have both dropped back in the latest figures.

And your productivity has risen for seven consecutive quarters:

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

Yet there’s a global downturn hurting most other nations. Including all those that export loads of iron ore and those that have vast exports to China.

As Joe Hockey says, “Just extraordinary!”

@Shadow Minister, re “In this time unemployment went from 5.1% to 5.5% which means that the net percentage of people employed dropped 0.2% or an extra 100 000 unemployed.”

No, not between December and April, SM. Those numbers aren’t right. It was about 22,000 extra jobless. No?

Re: “Note that in Canada, the US and many other countries the unemployment is coming down whereas ours is going up.”

Not quite right either, SM. Coming down in the US. Going up in Canada. Unchanged in Australia. Unless you cherry-pick really short or really long periods – in which case you can make it go wherever you want.

Cheers,

AA,

Both Fitch and Standard and Poors have issued warnings that the AAA credit ratings may be threatened unless Labor brings it deficits under control.

The restoration of Australia's AAA rating came after six surplus budgets were delivered. In 2003, S&P said Australia "has one of the strongest fiscal positions" and its reinstatement of the AAA rating paved the way for Australian companies to borrow funds at a cheaper price.

Australia already had a AAA rating in 2003 from the single most important agency, Labor then set about pursuing AAA rating from other agencies as a fig leaf for its spendthrift policies.

It is no wonder that Swan is considered the most incompetent treasurers in living memory.

Yes, SM you can rest assured that most agree with your opinion. If it was not for the Coalition also reducing much govt debt, albeit the beneficiary of more prosperous times fuelled by easy credit, priatisation, and better terms of trade over time, just imagine what Aust's net debt position would be.

Most Aust's know this.

I note no bounce for Labor in todays' Galaxy poll; i thought Labor would close the gap a bit by the election, but it looks like most people have had enough of its lack of competence and direction and can see through Aust's luck of having a lot of stuff in the ground.

Thankfully we live in a wise country, albeit we need to implement much change, dont you agree AA?

Again, is not liberal democracy the ultimate arbitrator of a govt's performance? This seems to be a question that many a Labor supporter does not like to answer when things are going bad.

Good morning all,

@Shadow Minister, re “Both Fitch and Standard and Poors have issued warnings that the AAA credit ratings may be threatened unless Labor brings it deficits under control.”

Almost correct. With an election looming, the agencies are warning the Opposition – and maybe voters – not to revert to the profligate spending, foreign exchange losses and the other disasters of the Howard/Costello years.

It's a fulsome commendation of Labor’s strategy, having delivered the world’s best-managed economy, as we have seen.

Moody’s said about the Budget, “Australia's relatively low level of government debt has been one of the factors supporting the Aaa rating.”

Re: “The restoration of Australia's AAA rating came after six surplus budgets were delivered.”

Not quite, SM. Australia first gained AAA with all three agencies in 2011, when Fitch joined Moody’s and Standard and Poors. This came after three deficits were delivered, with two more in the forward estimates.

Australia’s deficits and borrowings, according to the agencies and international economists, are exactly right for the times.

Moody’s again:

“The size of the deficits is such that the gross debt of the Commonwealth government will rise only slightly from its currently estimated 19.3% of GDP to a peak of 20.6% in 2014-15. On a net basis, the peak will be 11.4% of GDP, and the government's long-term forecasts have this figure falling to zero early in the next decade.”

Re: “In 2003, S&P said Australia "has one of the strongest fiscal positions" and its reinstatement of the AAA rating paved the way for Australian companies to borrow funds at a cheaper price.”

Unfortunately, 2004 to 07 saw the squandering of billions derived from assets sales and the resources boom, as the IMF reported in January. Where did all that money go?

So frustratingly inept!

Re: “It is no wonder that Swan is considered the most incompetent treasurers in living memory.”

By whom, SM? Not by the ratings agencies, the markets, economists and treasurers overseas. They are all in awe at Australia getting everything so incredibly well-balanced at the depths of the worst recession since the 1930s.

Cheers,

Please note that Australian voters dont give a continental about 'ratings agencies, the markets, economists and treasurers overseas' when they make their own judgments about a treasurer and a govt.

We make our own minds up and pay little attention to propoganda.

AA,

Now you are just making things up. The warnings of S&P and Fitch were directed at the sitting government, and warning against its inability to meet even one of its budgets.

It's a fulsome condemnation of Labor’s strategy, having delivered one of the world’s worst-managed economy, as we have seen.

It is no wonder that Swan is considered one of the most incompetent treasurers in Australia'a history.

Hello again Shadow Minister,

Re: “Now you are just making things up.”

Not at all. Just quoting the authorities and the statistical data.

But here’s the thing: It looks unbelievable because what authorities and the data tell us is the very opposite of what the Coalition, the Murdoch media, Fairfax media and the ABC try to convey every day.

The problem, of course, is that they lie. Continually, consistently and in chorus.

So the beginning of wisdom is to stop reading/listening to/watching Australia’s media and become well-informed. This also makes us more popular at parties.

Re: “The warnings of S&P and Fitch were directed at the sitting government, and warning against its inability to meet even one of its budgets.”

Not true, SM. As soon as the agencies have any concern at all about a government, they issue a negative watch. For example, Luxembourg’s last Budget was a deficit higher than the previous one, so is now on negative watch with Standard and Poor’s and Moody’s.

Luxembourg! Richest country in the OECD.

Australia’s deficit is decreasing year on year, so on stable watch with all three agencies.

The commentary is aimed at businesses, consumers and investors – and also oppositions and voters.

Re: “It's a fulsome condemnation of Labor’s strategy, having delivered one of the world’s worst-managed economy, as we have seen.”

Not at all, SM. Triple A and stable outlook with all three is a rare commendation. Peter Costello never achieved that, did he?

There is no better-managed economy anywhere in the world, SM, is there?

Re: “It is no wonder that Swan is considered one of the most incompetent treasurers in Australia’s history.”

Only by those who do not have a clue, SM.

Cheers,