Wednesday, March 6, 2019

Today by Paddy Manning


The R-word
Per-capita recession, income recession, actual recession?

Source

Australia’s economic growth is slowing down, according to weaker-than-expected national accounts data released today, which both cruels the government’s re-election pitch and makes the job harder for the Opposition, if it is successful in May. The Sydney Morning Herald reports that Australia is now in “per-capita recession”, meaning that the economy would be shrinking if not for population growth. Yesterday, ACTU secretary Sally McManus argued that Australia was already in “income recession” – wages failing to keep up with the cost of living – backed up by research showing living standards in decline for the first time since 1991–1992. The prime minister’s warnings of a recession under Labor, repeated yesterday, are beginning to sound less shrill, because the prospect of both a recession and a Labor government are increasing.

Scott Morrison and Bill Shorten have made competing economic pitches at The Australian Financial Review Business Summit over the past two days. Morrison’s speech touched on trust, which he called “the currency of a strong and prosperous economy”. This is borderline humorous given that a freedom of information application by Labor revealed [$] on Monday that there was no Treasury modelling behind the Coalition’s pledge to create 1.25 million jobs over the next five years. And today we learn that the government has been misrepresenting Treasury advice on the impact of Labor’s negative gearing reforms on the housing market.

Trust? This government squandered it long ago. But the PM made some interesting points, including on inequality, saying that “the bottom 10 per cent of households by income has achieved the highest income growth of any group since the global financial crisis” – which screams for a fact check (watch this space). Morrison also issued stock-standard warnings like “this is not a time to experiment with economic management” and “[Labor] only need one term … to really stuff it up”, and said the coming election would be a contest of the politics of envy versus enterprise.

Shorten’s speech this morning, by contrast, argued that after five years of wage stagnation, “getting wages moving is not anymore a war-cry for class warriors but is regarded as the number-one social and economic issue in the nation”, and promised the next election would be a “referendum on wages”. Labor, if elected, would restore penalty rates; make equality for working women a priority, particularly in low-paid feminised industries like child care; and crack down on sham contracting, the rorting of skills visas and labour hire.

Shorten was friendly with the business audience – making comments like “no employer, no job” – and said he would govern like Hawke, by consensus and negotiation in the spirit of the Accord. Moderator Phillip Coorey posed the question (which I have also pondered in the past), “What’s your basic plan for growing the economy?” To which Shorten answered: “A fair go for all”, and went on to cite investment in education and infrastructure, as well as wages, climate and energy policies. Not especially convincing, but one Shorten response rang very true: “The government is on their third prime minister, they’re on their 11th energy policy, their fifth defence minister … Over summer wherever I went … I had people come to me and say, ‘I’ve never thought about voting Labor before. Don’t agree with everything you’re saying. But just promise us you’ll be stable.’”

The causes of wage stagnation are complex and linked to weak productivity growth. Things may come good, as Ross Gittins wrote this week, paraphrasing RBA governor Philip Lowe: “Be patient. As the economy continues to grow and unemployment falls further, workers and their bosses will become more confident, wages will start growing faster than inflation and everything will be back to normal.”

Which may be so, but not this side of the federal election, as the government had hoped. Frydenberg responded to today’s weak growth figures by arguing without a hint of irony that the economy needed a steady hand, and later tweeted: “Worth remembering that in 2000 & 2006 the Howard Govt had consecutive quarters of negative GDP per capita growth & Rudd & Gillard had 5 negative quarters. Better indicator of living standards is real net national disposable income per capita which is above its 20 yr average.” It will take more than a few quibbling statistics to convince Australians that the wages and living-standards problems they’re experiencing are not as bad as they think.


GOOD OPINION

“My Aged Care [the federal government support service] has been such an unmitigated disaster that six years after it was introduced, an Aged Care System Navigator is being trialled to help people ‘navigate’ the aged care system. The absurdity of needing a second service to assist people to use the first service brings to mind an episode of Utopia.”

While the media focus is on nursing homes and the aged care royal commission, Dr Sarah Russell, director of Aged Care Matters, notes that the stories about in-home care are “equally appalling, albeit for different reasons”.

BAD OPINION

“Advice from security and intelligence agencies indicates a large number of single male transferees living on Manus Island and Nauru are preparing to use the loopholes in Labor’s medivac bill to come to Australia … People with character and behavioural concerns will be held at the [Christmas Island] North West Point facility.”

Prime Minister Scott Morrison, ahead of his trip to the reopened immigration detention centre on Christmas Island today.

The Number

The amount of water missing from the Murray-Darling Basin, which should have been restored as environmental flows after taxpayers spent $3.5 billion on infrastructure subsidies, according to a new ANU study.

The Policy

“There are signs that deteriorating conditions in the housing market are having a stronger than expected negative impact on consumer spending and dwelling approvals … Risks to the outlook appear to have tilted more to the downside … [and] include growing uncertainty around the global outlook and several domestic risks, particularly risks associated with the housing sector.” 

The first-ever NSW pre-election budget update notes that economic momentum has slowed more than previously expected.

The list
 
FILM

“His foray into the genre is a curious hybrid, subverting some of its conventions while upholding others. Audiard’s pair of gunslingers might be self-conscious but they’re also typically invulnerable, making short work of anyone fool enough to try them. The director’s aim was to carve a furrow of his own, he says, neither neoclassical nor postmodern in the Tarantino vein. ‘I wanted to make an “appeased Western”, about characters finding peace within themselves for the first time since they were kids.’” 

comment

“The delusion that the decent treatment of those remaining on Nauru and Manus Island will inevitably trigger an impending armada of asylum seeker boats – an almost textbook example of Canberra groupthink – lies behind the wilful destruction of 1000 fellow human beings.”

ARCHIVE

“Pyne is always the first to clap after speeches. He is first to his feet for prayers. There is something of the child in his desire to do well. He was just 20 when his ophthalmologist father died. Almost immediately, he was running for parliament – so young the Liberal Party had him take his face off election posters. He grew up very quickly, and then he stopped.” 

Paddy Manning

Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is also the author of three books, including a recently updated unauthorised biography of Malcolm Turnbull, Born To Rule?

 

The Monthly Today

The NBN-ding story

New developments in the interminable debate over broadband in Australia

Drought doubts

Bipartisanship is not an end in itself

Rhetoric vs reality

The government has no agenda for addressing the worsening economy

Lift-off on climate

Labor, the Greens and key crossbenchers are working hard


From the front page

The NBN-ding story

New developments in the interminable debate over broadband in Australia

‘The weekend’ cover

‘The Weekend’ by Charlotte Wood

The Stella Prize–winner returns with a stylish character study of women surprised by age

Penthouse magazine cover Aug 1993

Tasteful sexuality

An oral history of the Warwick & Joanne Capper ‘Penthouse’ shoot

Rhetoric vs reality

The government has no agenda for addressing the worsening economy


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