Alan
You persist in misrepresenting the quotations you use. The quote you cite does not say “Australia has done better” because it entered the GFC with low debt; it says “Australia's DEBT POSITION is better … because we started better”. (Sorry to shout, but you persist in ignoring this). Abbott is not correlating GDP growth with debt before the GFC; he is correlating debt after the GFC with debt before the GFC. And he is right.

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

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

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

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

I’d still like your comments on household net wealth, seasonally adjusted productivity estimates, per capita GDP growth; and which, if any, indicators show Australia’s economic performance as “better than any other economy, ever”

Hi Rhian,

Thanks for your persistence. Much appreciated.

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

Three problems here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Happy to explore all this further.

Meanwhile, what are you data sources on productivity?

Thanks. Cheers,

AA

AA,

Your statements are getting more and more ridiculous.

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

Greece, Portugal, Italy, and Spain might disagree!

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

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

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

Labor performed worse than the Howard government.

Alan
There is no stand-alone measure of economic competence. Growth, unemployment, debt, household incomes, debt etc are all subject to factors beyond Government control. But all contribute to the evidence of economic management.

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

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

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

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

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

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

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

Hi Alan
Today’s government economic statement provides some interesting data for our discussion:
http://www.budget.gov.au/2013-14/content/economic_statement/html/index.htm

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

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

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

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

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

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

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

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

Will you accept that the Government shares my view, stated above, that “the contribution of the resources expansion, terms of trade and growth in China to Australia’s relatively strong economy” has been important?

I have not read the article, but good luck Rhian. This guy knows it all.