Economy up, living standards down, and ScoMo starts a war as a distraction. Only 29 more days to go!
The national accounts figures were ostensibly good news for the Government. GDP growth at an annual rate of 3.1 per cent is brilliant. The next OECD economy I think is the UK with 2.1 per cent.
Jacob Greber in the AFR put it this way:
- Sluggish business investment, falling profits and faltering wages growth have overshadowed a surge in export-driven economic growth as the most sustained squeeze on national income on record heads towards an unprecedented fourth year.
In a stark display of the divergent forces driving the economy, official figures showed gross domestic product rose by an annual 3.1 per cent in the first three months of 2016, the strongest annual growth in 3 1/2 years.
At the same time they confirmed that living standards shrank 2.6 per cent in the 15th straight quarter of falling or stagnant real net national disposable income per capita.
The star performer was exports, and the laggard business investment, as this graph shows:
Business investment was down because falling investment in mining was not replaced by investment in other areas.
The volume in exports shows up in GDP, but does not translate into national income because of lower prices, and profits going to overseas investors. Here’s the terms of trade:
The tide was rising when Costello was treasurer, but ran out when Swan was trying to balance the budget in his last few years.
Malcolm Turnbull’s response was:
- So far, so good. This confirms the direction we’re leading the country in terms of our economic plan, but there is much more work to do, and we are seeking the support of Australians to complete that work on July the 2nd.
Of course his plan hasn’t really started to work yet, and the central plank, the company tax cuts, probably won’t survive the Senate.
Chris Bowen was out of the blocks criticising (see that last link), so ScoMo decided to start a big distraction. Morrison:
- It’s a war on growth, it’s a war on capital, it’s a war on mums and dads who just want to invest in a property. He will continue to seek to attack growth with these toxic taxes.
And there was talk of using taxes as bullets.
Turnbull earlier this year spoke against the use of “violent metaphors”, but backed his treasurer in:
- Bill Shorten has declared war on business, on the family businesses of Australia. He is denying them the tax relief that in the past he himself has said they deserve.
The first casualties of Shorten’s war on business are Australian jobs. It is a fact: he has declared war on business.
- Sounds like the Liberal Government’s getting more desperate by the day.
- I think the Prime Minister and Treasurer might want to reflect on the use of that language today, especially today, I think the Australian people have a right to be disappointed in the Prime Minister’s language.
Malcolm Turnbull is not Tony Abbott, he’s worse.
I believe Labor actually supports a tax cut for small business, but it’s hard to know when the discourse is debased to the extent it is.
Other than that a couple of themes have obsessed the media. One is the superannuation policy. It’s too complicated for me, so I sympathise with Julie Bishop and Sarah Hanson-Young. Alex Malley of the CPA told the 7.30 Report somewhere between 20 and 30 per cent of the Australian population would be impacted, not just the 4 per cent claimed by Turnbull.
I understand there were eight changes to super in the budget. Some of them were also attacked by Tony Negline, superannuation expert at Chartered Accountants Australia and New Zealand. He effectively says that limiting voluntary contributions to $25,000 each year will increase pension payments.
Other than that the people like Patricia Karvelas of the ABC have been trying to get Shorten and Tony Bourke to say that they will accept Fair Work Australia’s judgement if they eliminate penalty rates.
It’s a “gotcha” that can then be quoted as saying they find the elimination of penalty rates acceptable.
They aren’t that stupid, but Karvelas et al waste a lot of our time banging away. Same as Kerry O’Brien used to, and Leigh Sales does now.
Update: This is the graph that was in the AFR article I linked to, but not in the online version. It shows how national production has not translated into income in recent years:
It’s from an article by Laura Tingle, which sums things up pretty well. Lower commodity prices mean that we are giving the stuff away for practically nothing.
Meanwhile she thinks neither party has a genuine plan for growth. I think that’s a bit unfair on Labor, but they don’t make the case well for themselves.
Another worry is that the big company tax cut is in fact effectively unfunded. Labor makes this criticism, but is then spending the ‘saving’ themselves.