Australia’s Econ­omy is a House of Cards

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By Matt Bar­rie & Craig Tin­dale.

I recently watched the fed­eral trea­surer, Scott Mor­ri­son, proudly pro­claim that Aus­tralia was in “sur­pris­ingly good shape”. Indeed, Aus­tralia has just snatched the world record from the Nether­lands, achiev­ing its 104th quar­ter of growth with­out a reces­sion, mak­ing this achieve­ment the longest streak for any OECD coun­try since 1970.

Aus­tralian GDP growth has been trend­ing down for over forty years
Source: 
Trad­ing Eco­nom­ics, ABS

I was pretty shocked at the com­pla­cency, because after twenty six years of eco­nomic expan­sion, the coun­try has very lit­tle to show for it.

Brief Report on the Home Loan Lend­ing Round­table

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To its credit, the House of Rep­re­sen­ta­tives Stand­ing Com­mit­tee on Eco­nom­ics, Finance and Pub­lic Admin­is­tra­tion decided to hold an “Inquiry into home loan lend­ing prac­tices and processes”, in the form of a one-day round-table dis­cus­sion with inter­ested par­ties.

They invited a diverse group: all the major banks were asked, as well as rep­re­sen­ta­tive of non-bank lenders, mort­gage insur­ers, val­uers, com­mu­nity rep­re­sen­ta­tives, reg­u­la­tors, and yours truly. We were asked to con­sider four top­ics:

  • To what extent have credit stan­dards declined in Aus­tralia in recent years?
  • Have declin­ing credit stan­dards caused an increase in the num­ber of loans in arrears and the num­ber of repos­ses­sions?

Total, total bull­shit”?

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Oh dear. When Nas­sim Khadim from The Age asked me to com­ment yes­terdy on the elec­toral asser­tion being made by the Lib­eral Party–that ris­ing State debt was putting upward pres­sure on inter­est rates–I responded that the asser­tion was:

Total, total bull­shit. It’s like say­ing that some­body dropped a peb­ble into the ocean and that caused a tsunami. And you can quote me on that.”

Well, I expected just to see the “peb­ble and tsunami” anal­ogy turn up in the report. Instead, I saw the first two sen­tences of the above–and learnt the hard way that edi­to­r­ial stan­dards at Australia’s major dailies are no longer as reserved as I took for granted:

Sub­mis­sions to Par­lia­men­tary Enquiry released

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As you may know, the House of Rep­re­sen­ta­tives Stand­ing Com­mit­tee on Eco­nom­ics, Finance and Pub­lic Admin­is­tra­tion has arranged an Inquiry into home loan lend­ing prac­tices and processes, to which I have been invited. The sub­mis­sions have just been released; click on the link to access them.

My sub­mis­sion is here for speedy ref­er­ence. Apolo­gies to all for the absence of posts recently, but if can be allowed some Aussie ver­nac­u­lar here, I’ve been busier than a blue-arsed fly in recent weeks, and (now you’ll have to allow a very inept mix­ing of metaphors!) won’t get my head above water for some weeks yet.

Debt­watch gets a men­tion in Par­lia­ment

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It’s not yet the main topic of debate between Lib­eral and Labor, but some of the argu­ments in Debt­watch have at least made their way into Hansard cour­tesy of a speech by Lau­rie Fer­gu­son. The full extract from the speech is shown below.

This makes a mock­ery of the claim by the Prime Min­is­ter that we have never been bet­ter off. Whilst the Howard gov­ern­ment crows about the suc­cess in the econ­omy, which was largely inher­ited from Labor and fuelled by the raw mate­ri­als demands of India and China, there is an alter­na­tive real­ity of an out-of-con­trol per­sonal debt spi­ral. Steve Keen from the Uni­ver­sity of West­ern Syd­ney writes: