Tuesday, 16 December 2014

Tingle on the less than rosy outlook for out economy

In Voters vulnerable as luck deserts Coalition Laura Tingle has some bad news for us.
It has been a truism of Australian politics for decades that the Coalition has traditionally been blessed with good economic luck, while Labor has tended to be voted into office just as things have turned sour: the OPEC oil crisis in the early 1970s in the case of Whitlam; the “banana republic’” fall in the terms of trade, and subsequent sharp reversal, for Hawke and Keating; the global financial crisis for Rudd.

But the mid-year review of the budget confirms that the decades-long run of economic good luck for the Coalition has finally come to an end.

It is not just that economic conditions are difficult and will stay that way, but that the government has to prepare a couple of generations of voters who have never experienced grim economic times for what is to come.

Bad news for the people

While the bad news for the government in the mid-year review is that the decade of deficits is upon us, it is in the bad news for the people that the real dilemmas lie.

The budget forecasts now officially embrace virtually no growth in wages and rising unemployment. That is not just for this year, but for the foreseeable future. It is predicting even weaker household consumption and a weak housing market.

Just where the growth that is forecast to continue comes from when Chinese growth has been downgraded is not clearly spelt out. This is not a recipe to inspire confidence or make voters feel pleased with the world.
She also has some interesting graphs showing the budget bottom line:

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