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

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

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

Too many people who comment on your type of article have no real understanding of economic theory, particularly the way money theory changed after Nixon accepted the theory of Keynes that money needed to be decoupled from gold. Section 6 of Ch.10 of Keynes' "General Theory" was an excellent exposition on money.

Why are so many pro-Coalition commenters here insisting that Australia was debt-free when Labor took office? Government debt in December 2007 was just under $60 billion, and the year after that it was just over $60 billion. Then the GFC struck and the rest is history.

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

Combined with the massive levels of private debt created by Howard-Costello’s user-pays society and the housing boom (the seeds of which were admittedly sown by Hawke-Keating), I strongly suspect Australia’s economic health would more likely resemble the UK, US and PIIGS economies by now – mining boom or no mining boom.

Good morning all,

Intriguing discussion. Thanks

@Shadow Minister, some questions to ponder:

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

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

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

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

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

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

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

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

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

You list six:

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

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

First?

Where did Australia rank in 2006 and 2007?

Tenth? Fifteenth? Twentieth?

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

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

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

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

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

Cheers,

AA

Killarney
I guess you’re referring to gross debt, which is not the measure most commonly used to evaluate and compare governments’ fiscal positions. Most analysts look at net debt, and that is also the measure typically reported on by government (and preferred by the Australian Government).

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

Although gross debt was positive in 2006-07, relative to GDP it was at its lowest level in decades.
http://www.tradingeconomics.com/australia/government-debt-to-gdp

Hi Rhian,

Thanks for this input.

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

The lies that must be exposed are:

(1) that growth has stopped or been reversed.

It hasn't.

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

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

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

Average 3.48%

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

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

Where are they now – growth during calendar 2012?

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

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

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

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

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

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

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

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

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

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

No?

Cheers,

AA

AA,

I take your admission that comparing:

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

Labor performed worse than the Howard government.

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

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

And yes we do blame the government for its criminal incompetence.