Mal’s Coalition cascades into chaos

When we posted How are the ‘adults’ managing our economy? on The Political Sword in April it seemed as if Turnbull’s administration of his Coalition couldn’t get any worse. We were wide of the mark! Now he sits apprehensively and indecisively on his house of cards, on tenterhooks lest he lose his balance, praying it doesn't collapse.

That piece was written as the 2017 Budget was being prepared. Scott Morrison was warning us about what we might be in for. Knowing that debt would increase, he tried to butter us up with talk of ‘good debt’ (spending on infrastructure) and ‘bad debt’ (recurrent spending on, for example, welfare). With his credibility in the doldrums, it is doubtful if anyone listened, let alone believed him.

The April piece on TPS began:
Who will ever forget the insults, the slurs, and the slander that the Coalition heaped upon Kevin Rudd, Julia Gillard and Wayne Swan as they managed the economy through the Global Financial Crisis and beyond? They were depicted as children playing games in their political sandpit with no idea of what they were doing, making one catastrophic mistake after another.

Remember how the Coalition boasted that the children should get out of the way and let the adults take over, insisting as they did that they were the experts at economic management. So convincing was the rhetoric that the electorate believed them and has consistently rated them as superior to Labor in economic management in opinion polls.

Recall the ‘debt and deficit disaster’, a mantra with which they assailed Labor for years. Remember the ‘intergenerational debt’ they accused Labor of accumulating.

Since their election in 2013 they have had their chance to show their much-vaunted expertise under the skilled management of Tony Abbott and Joe Hockey, and then Malcolm Turnbull and Scott Morrison, with Mathias Cormann a consistent shadowy presence. How have they done?
We know how they have done – appallingly. The Coalition’s incompetence and mal-administration is now legend.

Here are some contemporary facts:

Wages growth is the weakest on record, dating back to the late 1990s. Underemployment remains high with an increasing trend towards part-time work, creating the “gig” economy.

Reserve Bank governor Philip Lowe warns that record high household debt and record low wage rises are constraining consumer spending and hurting the economy.

The economy is under performing and will continue to do so through 2017 and beyond.

Stephen Koukoulas summarized the situation in The Guardian as follows: 
Based on the performance of the economy since the last fiscal update in December 2016, the budget is likely to confirm that this is a big-spending, big-taxing government with a strategy for continuing budget deficits and rising debt as it funds some of its pet projects.

It is all but certain that government debt will remain above 25% of GDP in 2017-18 and the forward estimates, meaning the government will be the first in the last 50 years to have spending at more than a quarter of GDP for eight straight years.

At the same time as spending is entrenched at high levels, the tax to GDP ratio is set to exceed 23% of GDP for only the eleventh time in 50 years. Tax revenue is growing solidly, in part in line with the expansion in the economy.

It is also close to certain that the level of net government debt will be projected to reach 20% of GDP, up from 10% when the Coalition won the 2013 election and the highest since the 1940s when the war effort boosted borrowing to record highs.
At as 30 June 2016, gross Australian government debt was $420 billion. In June 2017 the Turnbull government breached the $500 billion mark, (expressed alarmingly by some economists as half a trillion dollars) thereby doubling the deficit it inherited from Labor. Gross debt is projected to exceed $550 billion this year. Morrison is hoping to recoup some of this in this year’s budget with his $6 billion tax on the banks, but still intends to give a $65 billion of tax cuts to business!

We all know that housing affordability is worsening, locking out of the market young folk who do not have wealthy parents. The Coalition refuses to do anything about this as it sticks to negative gearing and the generous tax concessions around capital gains, thereby perpetuating the advantage moneyed investors enjoy over the young.

And as for the NBN, it continues to be a hybrid, copper-dependent mess that is not delivering what business needs, is rolling out far too slowly, and eventually will cost more than Labor’s superior FTTP design. It has been an Abbott/Turnbull debacle from the moment Abbott instructed Turnbull, then communications spokesman, to ‘Demolish the NBN’. Will it ever recover from that?

Need I give you any more evidence that our nation is steadily going backwards under the mal-administration of our economy by the Turnbull government?

On top of all this financial ineptitude, we have witnessed chaos writ large as Turnbull and the fractious conservative right squabble about how to handle the issue of same-sex marriage.

The chaos intensified when a postal ballot that will cost $122 million, was chosen. Astonishingly, the ballot won’t be carried by the Electoral Commission, but by the Bureau of Statistics, which has shown that it can’t carry out even a routine census proficiently. The High Court will decide if such an arrangement is constitutional. How the ABS will conduct the ballot is a mystery, as it’s a statistics-gathering organization. Long delays are likely before we will know the outcome of yet another Turnbull government stuff-up.

Then, as if that shemozzle wasn’t enough, Turnbull and his ministers have become entangled in the dual citizenship fiasco. They have been quite unsure how to handle it, and woefully inconsistent in their approach. Turnbull was only too ready in his characteristically sarcastic style to lampoon the Greens after Scott Ludlum and Clarissa Waters discovered their dual citizenship and resigned. “It shows incredible sloppiness on their part” bellowed our PM in parliament. Now, with several of his own ministers, no less the Deputy PM, the Deputy Leader of the Nationals, and his Minister for Industry, Innovation and Science all caught up in the saga, Turnbull’s barefaced inconsistency has been exposed. Canavan has been excluded from ministerial duties, while Joyce and Nash are permitted to continue as if nothing had happened!

All the time Turnbull is fighting a guerrilla war with the hard-right agitators in his party room, who threaten him with retribution unless he follows their dictates. He is so shackled, hog tied, clapped in irons – use whatever metaphor you like – that he is rendered impotent strategically, administratively, politically, and as a leader.

The voters continue to be unimpressed. We have now had the eighteenth Newspoll in a row where the Coalition trails Labor, this time by eight points: 54/46. If this trend continues, by February of next year Turnbull will have passed Abbott’s infamous record of thirty bad polls in a row, Turnbull’s raison d'etre for upending him.

Essential poll shows the same result. Turnbull’s satisfaction score continues on its poor trajectory, now minus 20. The Guardian features images from the Essential Report that illustrate Turnbull’s dilemma graphically.

Now that the Coalition sees defeat coming at election time, worried that Shorten’s “inequality” meme is biting, Mathias Cormann was sent out to launch a panicky attack on him in a speech at the Sydney Institute.

Writing in The Age in an article titled: 'Socialist revisionism': Mathias Cormann's doomsday warning of 'success exodus' under Bill Shorten, James Massola says: ‘Finance Minister Mathias Cormann has painted a doomsday scenario of Australia under a Shorten government, claiming a "cocky" Labor leader is relying on the politics of envy to propel him to the Lodge as people forget the failures of socialism. In an extraordinary speech …Cormann charged Shorten with making a "deliberate and cynical political judgement that enough Australians have forgotten the historical failure of socialism" and exploiting the politics of envy’, even describing Labor’s policies as akin to communist East Germany.  

Need I go on further to convince you of the widespread paralysis that is afflicting Mal's Coalition? You may care to remind yourself of what we published in April, just four months ago, in How are the ‘adults’ managing our economy? To do so click here.

The piece concluded:

The unavoidable conclusion is that this ‘adult’ government is economically incompetent, driven by its conservative rump, quite unable to see its way through the nation’s economic difficulties, incapable of analyzing the economic situation, inept at deriving solutions, bereft of planning ability, and hog-tied by ideological constraints. Moreover, it is so unutterably arrogant that it cannot see its ineptitude. And even if it could, would it be capable of doing anything about it?

As a substitute for informed opinions, all we get is self aggrandizement and platitudes from Turnbull, and a torrent of meaningless drivel from the Coalition's two motor-mouthed financial Daleks: Morrison and Cormann.

How has it come to this with the adults in charge?
Has the situation improved? You be the judge. Click here.

What is your opinion?
How do you assess the Coalition's performance?

Can it regain traction before the next election?

Let us know in comments below.

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Who will ever forget the insults, the slurs, and the slander that the Coalition heaped upon Kevin Rudd, Julia Gillard and Wayne Swan as they managed the economy through the Global Financial Crisis and beyond? They were depicted as incompetent children playing games in an economic sandpit with no idea of what they were doing, making one catastrophic mistake after another. Remember how the Coalition boasted that the children should get out of the way and let the adults take over, insisting as they did that they were the experts at economic management. More…


Comments (9) -

  • Ross

    9/3/2017 5:21:39 PM |

    Widely acknowledged as the worst Federal Government in Australian history and yet the main stream media still think Malcolm and his government are fantastic. All they need is a little time and a little bit of luck and the next election is theirs according to some in the media.    
    When the coalition is soundly spanked at the next election you would expect the same media to shine a large powerful spotlight on a new Labor government. Something they have not done to the standard weekly fiasco, debacle, scandal, cock up and confluence of events that are the mainstay of this coalition government.
    The mainstream media have bent over backwards to try and get some traction for the government but the punters are still unimpressed. You can't put lipstick on a pig seems to be the public's opinion.
    If Malcolm, and Barnaby for that matter, can make it to Christmas let's see how the media reacts when he finally achieves the magic 30 negative Newspolls in a row. They can forget about traction because the wheels will have well and truly fallen off at that point.

  • Alan Luchetti

    9/3/2017 7:39:41 PM |

    You (and Koukoulas) have just agreed with the coalition that the debt and deficit of a currency issuer is a disaster. What really is disastrous is the debt and deficit of currency users. And what exacerbates the debt and deficit of currency users is the removal of currency from the economy, a practice known as "return to surplus", "budget repair", "sound finance" and  "fiscal rectitude".

    By all means attack the economic record of this putrid government for its fragile growth, misallocated spending, high underemployment and inequality exacerbation but don't imply that the answer to those deficiencies includes starving a slack economy of currency with "budget repair" and "return to surplus".

    Yes, it is hypocritical of this government to wail "debt and deficit disaster" incessantly while in opposition and then oversee ballooning debt and deficit when in office, but had they kept their promise to return to surplus and pay off the "debt" we'd be worse off now than we are.

  • Ad astra

    9/5/2017 7:32:12 AM |

    Ross
    You are right. The media has been complicit in keeping the Coalition in power by not being sufficiently critical of its policies and performance. I see that Andrew Bolt is now promoting Tony Abbott as the only hope for the Coalition, which shows how distorted the media has become!

  • Ad astra

    9/5/2017 7:44:36 AM |

    Alan Luchetti
    You are right. The obsession with ‘paying off Labor’s debt’, (now hugely inflated by the Coalition), is crazy economics. The economy will suffer if austerity is chosen as a way of paying off debt.

    Although Morrison still talks about ‘budget repair’, he has no idea of what to do. To date, his incompetence in implementing effective economic measures is sheltering the economy from any feeble ideas he may have in the recesses of his vacuous mind.

  • Ad Astra

    9/5/2017 2:09:49 PM |

    Folks
    This is an analysis by Alan Austin, Crikey's economics reporter, of the Turnbull Coalition's performance on the employment front, long after bellowing about 'Jobs and Growth' ad nauseam.

    "Remember 'Jobs and Growth'? Neither does our workforce

    Families with breadwinners in and out of work know already what the latest jobs data from the Australian Bureau of Statistics (ABS) proves. The situation is much worse now than it was four years ago.

    This is the opposite of the message spruiked by the Coalition government and the mainstream media.

    The ABS released two documents in August — the standard mid-month job numbers for July and a later, more detailed folio. Both confirm it is harder to find work now, despite the sustained global economic recovery.

    There are 10 main measures of the jobs provided in any developed economy. Of these, eight have deteriorated in Australia since the 2013 election. Five have collapsed quite disastrously. Two have barely moved.

    To iron out statistical variations, we will use the seasonally adjusted figures, where available, averaged for the last two months. So we are comparing the average of June and July 2017 with the average of June and July 2013. (File and column numbers will be available in the discussion following this article, on request.)

    1. Number of people unemployed

    In June/July 2013 this averaged 689,300. It is now up to 730,100. In a well-managed economy this should be steadily reducing towards zero, although realistically that will never be achieved. If Australia got its jobless rate down to 3.0%, as in Switzerland, Japan and elsewhere, the jobless number would be close to 390,000. That should be Australia’s target.

    2. Unemployment rate

    Four years ago this was 5.68%. It is now 5.65%. This is one of only two measures which have not deteriorated. But this needs to be interpreted carefully. This figure counts as “employed” people working as little as one hour per month, so the next two items need to be examined simultaneously.

    3. Percentage of all workers with full-time jobs

    In 2013 this was 69.72%. It is now down to 68.53%. This, together with other stats, shows the economy is now providing fewer full-time jobs than Australian workers need.

    4. Monthly hours worked per adult

    This is the best measure of the level of employment any economy is generating, as it takes into account full-time jobs, part-time jobs and population shifts.
    In June/July 2013 this was 86.07. It never fell below 85.7 through the entire Labor period, even during the global financial crisis.

    Since the 2013 election, however, it has been below 85.7 for 42 of the 46 months. It has been below 85.0 twenty times, and collapsed below 84.0 once. It is now 85.46.

    5. Number of people underemployed

    This measures workers who have at least one part-time or casual job but need — often desperately — more hours to generate a liveable income.
    Four years ago this was 911,300. It has now blown out to 1,129,100. That’s up 23.9% — by nearly a quarter. Both the total workforce and the adult population have increased by just 6.2% over that period.

    6. Long-term unemployment

    In 2013 workers unemployed for more than a year numbered 132,000. There are now 160,400. That’s up 21.5%, compared with the 6.2% population rise.

    7. Average number of weeks the jobless spend looking for a job

    Four years ago this was 37.52. It is now more than seven weeks longer at 44.94.

    8. Youth total unemployed persons

    In 2013 jobless 15-19 year-olds numbered 113,200. Now 134,000. That’s up 18.3%, while the youth population has increased only 1.7% in that period.

    9. Youth 15-19 unemployment rate

    Four years ago this was 14.63%. Now up to 17.27%. This is worse for boys than for girls. In 2013 this was 15.58% for males. It is now 18.94%.

    10. Job participation rate

    In 2013 this was 64.94%. Now 65.03%. This is the second number which has not worsened. But most of the small increase in people now in the workforce has been added to part-time workers or the unemployed.

    So they are the ten key stats. But here’s the extraordinary thing: back in 2013 Australia and the world were emerging from the worst recession in 80 years. In the 2012-13 financial year, 13 rich, developed countries were still in recession.

    Today, in contrast, the world is enjoying one of the strongest trade and corporate profit booms in memory. No developed country is now in recession.

    So why such a deterioration in just four years during a period of sustained global recovery? Is the current administration handling the jobs portfolio particularly ineptly? Or did the Gillard Government — which had Bill Shorten as Minister for Employment and Workplace Relations — manage things pretty well? Or both?

    Is this why the Coalition is now focusing its attack on Bill Shorten’s character rather than his actual performance when in government?"

    lnk.edition.crikey.com.au/.../AoHY3kwU8lSqWJQSV6VAxjU

  • Ad Astra

    9/6/2017 1:17:11 PM |

    Folks
    Economics reporter Alan Austin has written another informative piece in Crikey this morning about our economy:

    Company profits boom while regular Aussies suffer record-low wage growth

    Australia is at last sharing in the extraordinary, worldwide trade and company profits boom. At least, Australia’s big corporations are. Monday’s figures from the Australian Bureau of Statistics show gross operating profits for the full financial year to June reached all-time records in several sectors.

    The winners are companies in:

    mining;
    finance and insurance;
    electricity, gas, water and waste;u
    professional, scientific and technical services;
    manufacturing; and
    administrative and support services.
    The laggards include:

    accommodation and food;
    retail;
    wholesale;
    construction;
    information media and telecommunications; and
    arts and recreation.
    Mining companies

    Mining profits for the full financial year were up an impressive 59.8% over last year to $101.2 billion. That’s a new all-time record, beating the previous best — back in 2011 — by nearly $8.5 billion.

    No surprise then that the three big foreign miners Rio Tinto, BHP and Fortescue will pay out more than $5 billion in dividends to their foreign and local shareholders.

    Financial and insurance services

    Full-year profits were $5.9 billion, up a staggering 46.9% on last year. What makes this extraordinary is that 2015-16 was up 17.6% on 2014-15, and that year leapt by 21.3% above 2013-14. So, in three years, gross profits have risen 109.6%.

    Manufacturing

    This sector continues its recent recovery with profits up a satisfactory 9.9% to $30.1 billion in the year to June. Although that quantum is below levels achieved from 2005 to 2011, this is the fourth consecutive annual rise, and the strongest.

    Sectors still struggling

    As is expected when jobs, wages, salaries and pensions are depressed, accommodation and food companies are doing it tough, with profits down 10.9% to just $5.9 billion. This is the second annual decline in a row.

    Similarly, arts and recreation profits declined for the second year, this time by 5.0% to $4.0 billion.

    Retail and wholesale both experienced small profit rises, but well below inflation and population increases. Construction profits increased just 3.1%, also below rises in population and inflation.

    Company profits overall

    Gross profits for all sectors combined — which is the main game — reached a new record $304.9 billion. That is up an impressive 21.9% on 2015-16, the highest annual percentage increase since 2002, when the economy was recovering from the early 2000s global recession.

    There was a small decline in the June quarter from the May quarter. But with May being an all-time high by a huge margin, this was expected.

    Two economies

    Clearly, Australia’s national wealth and income are increasing rapidly, as is happening across the developed world. This is evident in the record streak of trade balances, the value of the sharemarket, tourist arrivals, the inexorable growth in gross domestic product — a world-record 26 years — and, now, booming company profits.

    All these — together with the results in company annual reports — confirm that the big corporations are raking it in and executives are dining out.

    The tragedy for Australia is that, simultaneously, other indicators show that the majority of the community are missing out badly on a fair share of the rapidly expanding economic pie.

    Record-low wage rises

    Last month’s ABS wages data show wage growth jammed at 1.9%, the lowest rate ever recorded. As a proportion of Australia’s total income — gross domestic product — wages are now the lowest since records began in 1959.

    People unemployed

    In July, 730,600 people were unemployed. This makes two monthly increases in a row and is the ninth consecutive month the total has been at or above 710,000. The last time that happened before the Coalition was elected in 2013 was in 1997.

    Monthly hours worked per adult

    This is the best measure of jobs any economy generates, as it takes into account full-time work, part-time work and population shifts.

    In July, this tumbled to 85.04. This brings to 15 the number of months below 85.10 during the 22 months since PM Malcolm Turnbull installed the current ministry. The lowest this reached through the Labor period was 85.7.

    What needs to happen?

    Clearly the rich are getting richer while workers and welfare beneficiaries are falling behind5. The budget deficit is stuck in the high thirty billions, government debt keeps rising, infrastructure spending has declined for three years in a row — for the first time ever — and there are inadequate funds for urgently needed services. (My emphasis)

    The critical area the government and its key economic departments must now examine, in light of Monday’s profits data, is company tax paid by the booming corporations.

    If collections are anywhere near the nominal rate payable under Australian law, there should be funds aplenty for all current fiscal and social challenges.

    lnk.edition.crikey.com.au/.../AgmbbuD4k8ShNklrOYlejno

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