Australia’s dismal economic future

The front page story in the AFR today is: Weak incomes for years to come, International Monetary Fund warns. A bit of the story, all depressing:

Real incomes are poised to barely grow over the next six years and living standards are destined for a slowdown, unless a wave of major economic reforms and technology innovation by business can unleash a productivity boom like in the 1990s.

The International Monetary Fund has projected that incomes adjusted for inflation would average just 0.3 per cent growth a year through to 2024, well below the long-term average of 1.8 per cent since the 1960s.

We are still suffering from the effects of the GFC, not the actual financial meltdown which disappeared a decade ago, but from the massive incompetence of the stimulus program put in place at the time. Keynesian economic management – that is, the kinds of stupid ideas that remain au courant within Treasury and the RBA even now – have spiked our ability to grow, with these people unable to work out why wasteful public spending and ridiculously low rates of interest have caused the damage they have. A reminder of the words of our departing former Treasurer on the massive damage he has caused.

“In short, you don’t feel the bullets you dodge. And we dodged a huge one,” Mr Swan, who will not contest the next election, expected to be held in May, said this afternoon.

Mr Swan said the enormous stimulus package devised by the Kevin Rudd Government had worked.

“Ten years ago, there was a deeply weird attraction in some quarters to the idea that a ‘cleansing fire of recession’ wouldn’t be such a bad thing for Australia,” he said.

“I rejected it then and I reject it even more forcefully now, precisely because of the potentially terrible human consequences.

“We did all this knowing full well that our opponents would hound us with slogans about ‘debt and deficit’.

“In departing this place, I have a perspective I didn’t in the heat of battle, and can honestly say I’m happy to wear that criticism as the price of saving Australia from much worse.”

Really, he wouldn’t know which way was up if he didn’t have the words “it’s the other way” painted on his shoes. It is his advisors in Treasury and the RBA who are responsible and who are still there directing traffic. It really is a tragedy.

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24 Responses to Australia’s dismal economic future

  1. teamv

    Good times create weak men, weak men create bad times.

    We need a good depression to really make people realise what is important.

  2. Where are all the millions of Green Jobs and booming Green Technology? That was supposed to be the future.

  3. Bruce of Newcastle

    How amazing that we’re moribund when every business has to pay stupidly high prices for electricity. And because the supply is suddenly unreliable they also have to buy and install generators and UPS to backup the grid, in case it falls over because of nutty green government policy.

    Then there’s the problem of crazy courts and state governments preventing coal mines because of a problem which isn’t actually happening, or iron mines because of a bird or a gold mine because of a mythical creature of legend. Or gas extraction because of green activism. Hundreds and thousands of highly paid jobs fail to be created because of a mythical threats and imaginary concerns.

    Then there’re the crazy taxation policies reducing incentive for businesses to produce here. We’re now one of the highest company tax jurisdictions in the world. Who’d want to run a business when pollies take the profits off you to pay for stupid stuff.

    And finally there is the crazy social policies being inflicted upon businesses, who must now employ poorly qualified people because of skin colour, sexual preference, religion or gender rather than efficient workers of whatever background.

    We are so screwed by the people running this insane asylum.

  4. Grumbles

    Yet somehow Public “servants” will get a far greater “justified” pay rise.

  5. The BigBlueCat

    We need a good depression to really make people realise what is important.

    You sound like Paul Keating and the “recession we had to have”. But perhaps the very real threat of a severe recession would be enough … but somehow I doubt it. You can’t fix stupid, and our political leaders are only as good as the people who vote for them. And Keynesians most definitely should not be put in charge.

  6. Sunni Bakchat

    For Swan to abandon his ideology would be too high a price to pay for the truth. At least he’s honest with regard to his intent. The same could not be said for Bernanke, Yellen, Summers, Krugman, Draghi, et al.
    A Second rate bunch of baby boomer economists schooled on cotton wool paternalism.

  7. MPH

    The coming years will be the biggest transfer of wealth from low/middle income earners to the rich insiders in the history of Australia. Having duped them into bingeing on debt the rich insiders will double dip when the assets get sold to cover the debts that the rich insiders also profit off, not to mention the taxpayer bailouts. It’s quite sickening once you see the whole picture.

  8. teamv

    Grumbles is spot on.

    What as the public service gets at least 2.5% per annum wage increase (likely higher with state and soon to be federal labor in charge) while private industry are told to go without.

  9. Rusty of Qld

    Bruce of Newcastle,
    What does UPS stand for?

  10. anonandon

    Recessions are an essential part of the business cycle and cannot be held off forever. We have been fighting them off for so long the next one will be an absolute whopper.

  11. John Constantine

    We can still afford to import containers full of military style assault weapons to arm State death squads.

    Once the State has machine-gun checkpoints on every street corner, we will not only have Cheerful Squalor, but our tourists will be impressed by our Spontaneous Demonstrations of Cheerful Squalor in support of our Revolutionary Struggle.

    Comrades.

  12. Bruce of Newcastle

    Rusty – Uninterruptible power supply (wiki).

  13. Tezza

    The IMF and economists generally still don’t seem to put 2 and 2 together to understand why we have negligible productivity growth, and therefore why real per capital income growth will remain negligible.
    In addition to the macro idiocies that Steve rightly mentions, a key reason for negligible productivity growth is that we are spending enormous amounts on equipment to effectively duplicate our electricity system, whose ubiquitous output becomes both hugely more expensive and of lower ‘quality’ – that is, less reliable.
    The major policy frontier in Australian politics – ‘effective climate change policy’ – is deliberately destroying productivity. To that ubiquitous failure, add Gonski destroying school standards at enormous cost, foreign university students destroying tertiary education standards, etc, etc

  14. Squirrel

    After bursts of reform in the 80s and 90s it’s been back to the traditional Australian ways of living large on resources booms and money borrowed from thriftier folk overseas.

    The real tragedy is that the sections of the economy which face genuine competition, or something fairly close to it, have to carry the costs of the large (and growing) sections which are not subject to any such competitive forces – in spite of what they might tell themselves and anyone silly enough to listen to them.

    This, in turn, helps to explain our politics – influential sections of the population can advocate and vote for things which make them feel good about themselves without having to wear any real cost.

  15. Roger

    We are still suffering from the effects of the GFC, not the actual financial meltdown which disappeared a decade ago, but from the massive incompetence of the stimulus program put in place at the time.

    What…you mean Ken Henry is not a genius?

    {Rhetorical)

  16. Pete of Perth

    Malaysia my Second Home is looking more attractive with every passing day.

  17. One ScoMo doesn’t make a Spring

    How can we have time to concern ourselves with the economy?
    You know there’s more important stuff to campaign on like climate, gay rights, pronouns, equal pay, ruinables, UN , giving govmint more power, free stuff, me, me, me….

  18. John Constantine

    The services that the Auditors provide to Scientology are provided to poor bastard Australia by their ABC.

    Their sbs viceland have a dock on l. Ron hubbfilth on now.

    Questions like, have you ever had unworthy thoughts about L. Ron Hubbard have their analogies in the ABC gotchas like:

    “Have you ever had unworthy counter revolutionary thoughts about Windmills?.”

    Comrades.

  19. John Constantine

    Their ABC q and a program is an open auditing process, Scientology style.

    Operating high level thetan snowcone exposes the thoughtcrimes of the unworthy.

    The economic genocide of the racist colonialist settler culture of old Australia is the revolutionary struggle.

    You lose your family if you do not wholeheartedly support Cheerful Squalor.

    Comrades.

  20. mundi

    IMF is probably over predicting.

    In Australia and USA we have so-called right governments, who are acting exactly as a left keynesian government would.

    And despite having such massively left governments, they are called ‘far right’ because even their massive government spending and deficits are not enough.

    We are looking at a huge swing to the left. Shorten will win. Bernie sander will be president. Goverment will blow past 50% of GDP. This will officially make western civiliation majority socialist.

    Living standards for individuals in western civilisation have peaked.

  21. Petros

    That Malaysia thing is interesting all right, Pete of Perth. Maybe Penang could be liveable. Not sure about KL and now the high speed rail to Singapore is on hold I don’t think I could handle living there for long. What’s the tax rates over there BTW?

  22. Todd Myers

    In short, you don’t feel the bullets you dodge.

    How very true, Mr Swan. Very similar to the Broken Window Fallacy. You don’t experience the economic growth you dodged thanks to Keynesian government policies taking resources from the private sector and using them inefficiently to throw up some shade sails that contribute nothing to the quality of our childrens’ education.

  23. Fisky

    It’s very odd that productivity has absolutely TANKED in the last 15 years, because that precisely coincides with the massive ramping up of immigration, which we are told is good for productivity!

    I hope economists haven’t been lying all along, it would be a bad look!

  24. Fisky:
    I just had a look at our productivity graphs and the situation looks just like shit. To me – someone who has no experience in reading graffs ‘n stuff, but can see a disturbed plot arising, it appears the chaotic political/bureaucratic circus of the last fifteen years is reaching the point of disintegration.
    WASF. *
    *(We Are So Fucked.)

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