State of the Australian economy as it enters 2020

On 16 December 2019 Australian Treasurer and Liberal MP for Kooyong, Josh Frydenberg, put out a glowing media release concerning the health of the national economy which bears little resemblance to data his own department released on that same day.

Treasury on behalf of the Morrison Coalition Government informed Australia that it now has less income than was anticipated just prior to the 2019 federal election and, that economic growth is now slower.

Total receipts have been revised down by about $3.0 billion in 2019-20 and $32.6 billion over the four years to 2022-23.

These falls are due to less money coming into Treasury from individuals taxes, company tax and superannuation tax, as well as less dollars being collected through the tax on goods & services (GST) and lower non-tax income.

Federal government net debt is expected to be $392.3 billion in 2019-20 (19.5 per cent of GDP). Gross debt now stands at over $560.8 billion.

Slower economic growth is explained as due in part to decreased production and lower export levels in the farming sector, a decline in iron ore prices, softer wages growth, diminished business confidence & investment uncertainty.

Gross Domestic Product (GDP) nominal growth is 3.25 per cent but is expected to fall to 2.25 per cent in the coming financial year.

Wages growth is still under performing at 2.5 per cent and, there is no guarantee that the revised projection of 3 per cent wage growth by 2022-23 is achievable.

Unemployment is beginning to rise.

The number of people who had jobs fell by 19,700 individuals between the May federal election and October 2019. Employment numbers are projected to fall over the next 5 years in Agriculture, Forestry & Fishing, Manufacturing and Information, Media & Technology.

Cost of living (CPI) is not coming down. CPI rose 1.7 per cent through the year to the September 2019 quarter. This followed a through the year rise of 1.6 per cent to the June 2019 quarter. Retail prices, particularly for clothing, footwear, meat, dairy, bread and cereal products, have risen.

As for the much lauded budget surplus for 2019-20, it has shrunk from $7.1 billion to $5 billion. While the rubbery figures in forward estimates see the expected surplus for 2020-2021 reduced from $11 billion to $6.1 billion, then from $17.8 billion down to $8.2 billion in 2021-22, with the fiscal year after that supposed to bring in a surplus of only $4 billion instead of the projected $9.2 billion.

One can almost hear Morrison ordering a funding red pen through even more health, disability and welfare services/programs in a vain attempt to avoid intensifying the economic squeeze his flawed political ideology is imposing on the nation.

Notes:

* Australian Treasurer Josh Frydenberg 16 December 2019 media release at 

http://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/2019-20-mid-year-economic-and-fiscal-outlook

* Mid-Year Economic and Fiscal Outlook (MYEFO) December 2019 at https://budget.gov.au/2019-20/content/myefo/download/MYEFO_2019-20.pdf

* Pre-Election Economic and Fiscal Outlook (PEFO) April 2019 at https://treasury.gov.au/publication/2019-pefo

* Australian Office of Financial Management (AOFM) federal government debt updates at https://www.aofm.gov.au/

* Cost of Living data at https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6401.0Media%20Release1Sep%202019?opendocument&tabname=Summary&prodno=6401.0&issue=Sep%202019&num=&view=

* Labour Market Information Portal, “Industry Projections – 5 years to 2024” (Excel) at http://lmip.gov.au/PortalFile.axd?FieldID=2787734&.xlsx