That muffled gurgling sound you heard last week was either the remains of the government’s economic credibility swirling around the plug hole, or the strangled sounds of ScoMo and his team attempting to put a positive spin over the disastrous national accounts figures.
Josh Frydenberg insists they are actually good news – proof of the remarkable resilience of a basically sound economy preparing to turn the corner into a rebound the like of which you have never seen. Well, he would say that, wouldn’t he? Irrational optimism, wishful thinking, is an essential part of his job description.
He bases his belief in the silver lining on the idea that the interest rates cuts and the tax bonanza have not yet filtered through. or trickled down, to use the technical term. Just wait for the next quarter – the December accounts will be truly wondrous.
The problem he has missed in his rose coloured glasses is that we already know that a lot of the tax refunds have had no effect at all — in fact retail sales, which we were assured would boom, actually went backwards in July, when some $3 billion was already shovelled into the pockets of hard-working Australians.
And the punters did not splurge it at Harvey Normans – they sensibly paid off some of their mortgages, or more likely have held on to as much of it as they could in the realistic expectation that things would continue to get worse. People are already dipping into what savings they have simply in order to exist. They are hardly in a position to indulge in the spending spree for which Morrison and Frydenberg were hoping.
Because the hardest of the hard facts our political Pollyannas are strenuously avoiding is that ordinary families and individuals are already in recession. On a per capita basis – the measure of actual cost of living – we are going backwards. Frydenberg boasts about the record growth of the Australian economy, but for the punters it is all smoke and mirrors. True, Gross Domestic Product is still inching forward – half a per cent in the last quarter, 1.4 per cent over the year. It is hardly a matter of celebration: as we have been repeatedly reminded, this was the smallest increase in a decade when we were weathering the Global Financial Crisis. But even this paltry figure was an aberration, propped up by the big jump in the price of iron ore and the eagerness of the Chinese to buy it.
Now the price has tanked and the Chinese, for various reasons, are less enthusiastic. The September quarter is likely to see a fall, quite possibly into negative territory. A recession is not out of the question by the beginning of next year.
And what are Morrison and Frydenberg doing to ward it off? Three fifths of five eighths of fuck all, and preciously little of that. Their only clear strategy is bluster: a couple of weeks ago we had the absurd situation where business was being lectured on the need to invest and innovate, as if all that was needed was a vigorous pep talk and the moguls would spring into action like startled gazelles.
But why the hell should they? Not only is the government giving them no incentive or direction, there is no indication that our political leaders have the faintest idea what they are doing, let alone devising a coherent plan of action.
They occasionally mutter ominously about head winds, but then murmur reassuringly that hey, there are some countries doing even worse than we are, so we really have nothing to worry about. And in any case it isn’t their fault: they have been in office for six solid years, but give them a bit more time.
And look at the achievements: record employment growth! Of course it’s a record, because the population is constantly increasing. But in fact employment is only just holding the line; the unemployment rate actually went up last month. And we have actually had a current account surplus – yes, just the one, and see the reservations about iron ore and China above.
But above all, we are delivering a surplus. Surely that will get the masses out dancing in the streets. This is the delusional bubble in which ScoMo and Josh reside. The quest for surplus is now more than a holy grail – it has become an immutable necessity, right up there with religious protection and coal powered energy.
And because it has become untouchable, the real possibilities for getting out of the ec0nomic morass have been unceremoniously discarded. Stimulus measures for the very poor, such as the victims of Newstart? Too expensive, and anyway, if they have a go they will get a go – to a paupers grave, perhaps, but those are the breaks. Beefing up infrastructure? We’re doing quite enough of that, thank you – just wait for next year, or the year after that, or perhaps the following decade.
And the point is that none of this is our fault – it’s all about those bloody headwinds, or the international trade war (but don’t mention Donald Trump started them) or the drought (but don’t mention climate change), or the states (but don’t mention that that it’s only their spending that it is keeping us precariously in the black) or the Reserve Bank (but ignore the fact that it has been pleading for months with the government to do something, anything, constructive).
And if none of that works, we’ll just blame Anthony Albanese – after all, he is responsible for just about everything. He must be – we in the government certainly aren’t.
Delusional, obviously – but ScoMo is receiving encouragement from the usual impeccable sources in the Murdoch media. The Australian’s economic autocrat, Judith Sloan (She Who Must Be Obeyed) assures us that there is no crisis, no catastrophe – a mishap, perhaps, but it’s only a matter of holding the line, staying the course, muddling through, and eventually the casualties will decrease.
They almost certainly won’t – let’s face it. it hasn’t worked in the past. But we can put up with a bit of collateral damage in the cause of ideological purity. Of course if those figures had emerged under a Labor government, Sloan and her troops would have been apocalyptic with self-righteous fury. But hey, we have moved on. Why let the facts spoil a good rant?.
Mungo MacCallum is a veteran political journalist and commentator. His books include Run Johnny Run, Poll Dancing, and Punch and Judy.
mungomccallum@staging-johnmenadue.kinsta.cloud
Comments
6 responses to “MUNGO MACCALLUM. Economy circles the drain.”
The depressing element is that 85% of the voting public seem not to give a toss – too hard or boring and beyond their control. The media’s role in the election and the general apathy bodes ill for the entire future.
Yep! totally agree. The complacent ignorance of our politicians is a sight to behold. The sacred budget surplus is a gap which forces the private sector to fill with assets that cannot be spent on jobs or projects.
It is doubly tragic that Labor has also abandoned the field. They too talk about a surplus.You cannot save or spend a surplus.
It’s not science but normal accounting . A budget cannot have revenue on both sides.Yet thats what their surplus implies.
It’s a promise they say they must keep. No one will remember that for long but sure as hell we will all remember them dropping us into a recession!!!
Queensland is burning. There is not enough water to fight the fires.
Queensland has been in drought for seven long years.
Coal fired power stations in Queensland require up to 600 megalitres of water PER DAY to function, yet keep breaking down in the heat.
Scomo and the muppets are living in denial while the people of Queensland are suffering.
You’ve done it again Mungo. Nailed it.
I don’t know about you but I am looking so forward to the surplus I can hardly contain myself. I think we should have a national holiday, a ‘surplus day’ to signify and celebrate the sheer economic brilliance of the will at taking more of, as it says ‘our money’ off us and out of the economy than it will be putting back into the economy in the same fiscal year (the definition of a surplus) at a time when the economy is just about to totally tank. Anyway, if it does tank, surely the tough love of austerity will work a whole lot better than some wanky socialist idea like stimulus. No, austerity is the way to go, it always works, just look at the recent case of Greece for example. Nuff said! We have to live within our means and the Government is just the same as any household isn’t it! Is it?
A closing thought. As Scomo has made it clear, he is a champion of tax cuts, because he wants to give us back more of “our” money to spend on the things “we” want and government is absolutely hopelessly woeful at doing anything. Hard to argue against that with Scomo running the show. But, if that’s the case why is the Government so salivating at the prospect of a surplus – ie. taking more of ‘our money’ off us than they are giving back. Isn’t that contradictory. Discuss! Oh, I think I know, maybe it’s because of Labor’s debt, which the current government has more than doubled. I can understand them wanting to get rid of the debt. After all with interest rates at about zero, a relatively low public debt / GDP ratio and the fact a sovereign government can’t go bankrupt I can understand why public debt concerns would be the most pressing issue for Scomo, Joshie and the team! Has anyone looked at private debt recently? Just saying.
Brilliant!
Having witnessed the failure of neo conservative theory to produce trickle down wealth, perhaps we are now witnessing trickle up poverty. It does not take a genius to realise that if consumers do not have money to pay for goods and services then businesses that sell those goods and services are going to suffer.
The success of keeping wages low is starting to bite but our neo con overlords do not know how to change course.