Australia’s net worth is the latest number to confirm that the Turnbull government is among the least competent economic administrations in the developed world. And, needless to say, the most disastrous in Australia’s post-war history.
Australia’s net worth tumbled in the two years Tony Abbott and Joe Hockey were PM and treasurer — by a staggering $114.6 billion. It has collapsed by a further $76.2 billion since Turnbull and Morrison replaced them.
This is truly astonishing given that the last four years have brought steady recovery from the global financial crisis. The last two have posted exceptional trade volumes, commodity prices, corporate revenues and gross profits.
Virtually all economic indicators show that the current global boom is benefiting only the minority of Australia’s rich entrepreneurs and the large, mostly foreign corporations. The majority of Australians are going gradually backwards.
[Hard data confirms inequality is growing, with corporate Australia the clear winner]
The latest net worth figures confirm Australia’s economy overall is also suffering badly.
Net worth is the measure of federal government assets minus liabilities. Assets include cash, deposits, investments, land, buildings, equipment, infrastructure and heritage and cultural assets. Liabilities include superannuation and other employee liabilities, debts to suppliers and government borrowings.
The numbers are released monthly by the Finance Department — with a frustrating three-month break between May and August. Unsurprisingly, this data is released late on a Friday evening.
Last Friday night’s update — for August 2017 — shows net worth at -$396.7 billion. This makes 20 consecutive months deeper than -$340 billion. The lowest this ever reached under Labor was -$263.8 billion. That was at the depths of the GFC, the worst recession in more than 80 years.
The history of net worth is quite instructive. As much as any indicator, it highlights the stark contrast between Labor and the Coalition. This is why it is rarely, if ever, mentioned by the mainstream media.
Net worth remained negative throughout most of the dismal Howard years, despite the rivers of gold from the mining investment boom. And despite the healthy global trade in meats, wool, minerals, energy and other commodities. This is attributable partly to the extensive sell-off of profitable public assets — usually at bargain prices.
After fluctuating between -$30 billion and -$75 billion for most of the period from 1999 (when this data set began) to 2005, the value crept up through 2006 to break even in April and May. Between May 2006 and November 2007, net worth fluctuated between -$1.7 billion and $22 billion.
At the time of the 2007 election, it was a lowly $15.2 billion. But at least it was positive — at last.
Then came that extraordinary period of energetic reform which rocked the economic world — but which the Australian media steadfastly refused to report accurately.
In the brief period between gaining office in November 2007 and the onset of the GFC, the outcomes achieved by novice PM Kevin Rudd and treasurer Wayne Swan were impressive.
In their first nine months, 225,500 new jobs were created. Gross debt had been stuck around $60 billion for four years. Rudd’s regime reduced it to $52.4 billion within a year and increased the net money in the bank from a puny $22 billion to $48 billion.
Former treasurer Peter Costello had set the 2007-’08 budget parameters for a surplus of $10.6 billion. Swan re-jigged things and delivered an actual surplus of $19.8 billion — the highest in Australia’s history.
[Turnbull spins ‘debt is good’ as Australia’s net worth collapses to an all-time low]
Exports rose quickly after relations with trading partners were restored. This enabled Labor to achieve a trade surplus within its first year, thus ending a string of 77 monthly trade deficits.
Net worth surged from the modest $15.2 billion Howard left behind to a record $36.1 billion in six months. From that level in May 2008 it surged again by August to $74.6 billion — more than three times higher than the Coalition’s peak.
It stayed above $64 billion until December 2008, by which time all developed economies, including Australia’s, were in close to free fall following the collapse of the world’s stock exchanges, the bankruptcies of major bank and finance groups and the dramatic disintegration of trade and commerce.
Net worth declined through the GFC along with most other indicators — although, surprisingly, neither GDP growth nor employment levels suffered badly in Australia.
Net worth reached its nadir in September 2012, at -$263.8 billion. With employment relatively buoyant and the economy still in positive growth, this gradually improved thereafter. By April 2013, net worth was back above -$250 billion and by July had lifted above -$200 billion.
At the time of the 2013 election, net worth was -$205.9 billion and headed steadily towards positive territory again as the last of the developed countries emerged from recession.
But instead of continuing to surge ahead, as the Coalition promised, the opposite happened. Dramatically so.
Net worth fell below -$250 billion in July 2014, then below -$300 billion in January 2015. By August 2015 it had collapsed to -$320 and economists heaved a sigh of relief when the Coalition sacked its leader and treasurer.
Things then worsened rapidly: -$350 billion was breached in January 2016 and -$400 billion in September 2016.
The Coalition has thus doomed future administrations to crippling interest payments on the bad debt, or cuts to services, or punitive tax hikes, or all of the above.
Net worth confirms as clearly as any measure that Coalition fiscal policies that seek to grow the economy by serving the big corporations first and foremost in fact have the opposite effect.
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