Hi again Rhian,

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

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

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

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

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

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

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

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

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

Further lies from Mr Abbott’s budget speech here:

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

And from Mr Hockey here:

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

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

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

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

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

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

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

Cheers,

AA

Hi Alan

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

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

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

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

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

Hi Rhian,

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

The second statement is mostly correct.

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

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

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

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

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

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

That is the exact opposite of the truth, Rhian.

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

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

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

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

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

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

Thanks, Rhian,

Cheers,

AA

joker,

(sorry might have got your name wrong),

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

AA,

by your own measure with falling growth and productivity, rising debt and unemployment, Australia is one of the most poorly managed economies in the world. Rudd inherited a diamond and is giving us coal.

Alan , you say “… we find Australia’s economy now OVERALL is not only better than at any time in Australia’s past, but better than any other economy anywhere – ever.” The trouble is that there is no way to verify this claim. Whenever anyone points out that other economies are faring better on some indicators, you’ll drag out others in an effort to “prove” your case. But let’s give it a go anyway.

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

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

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

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

Hi again Rhian,

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

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

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

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

Regarding Singapore, the original assertion was this:

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

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

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

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

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

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

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

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

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

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

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

No?

Cheers,

AA