Australian economy has grown weaker and workers paypackets leaner under the Abbott-Turnbull-Morrison Government

ABC News, 11 May 2019:

Australia's "strong economy" has been the Coalition's mantra throughout the election campaign.

Earlier this month, the Liberal Party created a meme of a smiling Scott Morrison armed with a lightsaber and dressed as a Jedi alongside the slogan: "The economy is strong with this one."

In Treasurer Josh Frydenberg's Budget speech, the phrase "strong economy" featured 14 times.

And Labor, loathe to campaign on what it sees as the Coalition's territory, has barely challenged this proposition.

Yet the evidence suggests the claim is more rhetoric than reality.

On just about any measure, the economy is not strong — and any enduring pretensions that it is have been undermined by no less an authority than the Reserve Bank of Australia (RBA).

Its latest monetary policy statement has revised down economic growth for this financial year to just 1.7 per cent — more than half a percentage point below its previous forecast.

That contradicts Treasury forecasts in the Budget, which are barely a month old and were reaffirmed by Treasury even more recently in the pre-election economic and fiscal outlook.

Wages growth, despite a recent small pick-up, has been weaker during the past six years than at any time since World War II.

Home values and household wealth have plummeted amid one of the biggest property slumps in Australia's history.

The inflation rate is at a historic low of just 1.3 per cent and has languished below the Reserve Bank's target range of 2 to 3 per cent for more than three years.

Although employment growth has been reasonably strong, driven by the public sector and community services, key sectors that drive the economy are shrinking.

Manufacturing, construction and retail trade have all shed tens of thousands of jobs over the past year — the building industry layoffs are a product of a massive slump in dwelling investment, which the RBA reckons will continue for years.

Some better headline data mask gloomier realities

Only high rates of immigration have stopped Australia lapsing into a formal recession.

The continued expansion — now in its 28th year, the longest period without a recession in recent world history — disguises a "per capita" recession that is driving down living standards.

Similarly, an unemployment rate mired at 5 per cent, which is not high by the standards of recent decades, disguises the true weakness of the labour market.

More than 13 per cent of the workforce is underutilised — either unable to secure work at all or the hours they need — and a disproportionate share of the jobs growth in recent times has been poor quality: casual and contract jobs in relatively low-wage, low-productivity sectors.

The Reserve Bank is betting on the unemployment rate staying where it is, but others are less optimistic.

Westpac's Bill Evans, one of the most long-standing and respected market economists, predicts that developments in the labour market over the next three months will disappoint the RBA with a "deterioration of the labour market" over the coming six months and "continued weak inflation".

This downturn in the economy is largely homegrown — the product of weak wages growth and the unwinding of an unsustainable property boom that left households saddled with enormous debts.

If there's also an external shock, perhaps from a trade war sparked by Donald Trump's tariffs on our largest trading partner China, it will open up the possibility of a double-whammy.

Yogi Berra, the legendary US baseball star and coach, famously observed that "it's tough making predictions, especially about the future", and it's a maxim that's often born[e] out in economic forecasting.

But you don't need a crystal ball to realise that whoever forms government after the federal election will inherit a sluggish economy, not a strong one.

ABC News, 12 May 2019:

The Reserve Bank's new line in the sand gets its first big test with the latest reading from the jobs market this week.

The new line, as set down in the RBA's latest Statement on Monetary Policy (SOMP), can be roughly defined as the unemployment rate holding at 5 per cent through 2019 and 2020 before drifting lower.

The persistent head-winds of low inflation has seemingly blurred, if not blown away, the RBA's previous markers — parallel lines which were intended to corral inflation between 2 to 3 per cent for as far as the eye can see, or an economist can forecast.

Governor Philip Lowe made it clear a further improvement in the labour market was needed to get the economy out its rut and back in the groove, growing at its full potential.

No back-tracking on this one for the RBA. Lower unemployment and underemployment — where workers are searching for more hours to make ends meet — will soak up the spare capacity sloshing around the economy, inflation gets back to where the RBA wants it and GDP grows at its long term trend, or better.

That's still a long way off, even using the RBA's recently updated and far from pessimistic forecasts......

According to the Australian Bureau of Statistics, over the twelve months to the March quarter 2019 the living costs for self–funded retiree households fell by -0.2%, while the living costs for age pensioner households and other government transfer recipient households rose by 0.3% and 0.2% respectively. Employed households living costs remained unchanged over the same time period at 0.1% above CPI.

It should be noted that penalty rates for retail workers will be further reduced by 15% of the base wage rate on 1 July 2019 and 1 July 2020 as per Fair Work Commission 2017 decision.