Cartoon of the Week

 

Two panels of a strip cartoon by First Dog On The Moon

Another time bomb left behind by a politically & fiscally incompetent current member of the World Wide Speakers Group and sometime Liberal MP for Cook, Scott John Morrison

 

Then Prime Minster Scott Morrison & Treasurer Josh Frydenberg - political mates and housemates before the Liberal-Nationals Coalition sank the ship of state. IMAGE: The Australian, 26 August 2020

 

On 5 July 2018 then Australian Treasurer & Liberal MP for Cook Scott Morrison unveiled his plan to overhaul the Goods & Services Tax (GST) state distribution scheme.

This involved changes which ‘would protect all taxpayers, update the grants commission process and deliver certainty to States and Territories. “This problem has been kicked down the road for too long and it is time we now got on and fixed it,” he said. “A fair and sustainable transition to a new equalisation standard will be ensured, through an additional, direct, and permanent Commonwealth boost to the pool of funds to be distributed among the States."

By 12 November 2018 the Australian Coalition Government now lead by Prime Minister Morrison introduced Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018 which was duly passed by Parliament and became law on 29 November 2018.

On 25 February 2019 Treasurer John Frydenberg put his signature to this contentious document.

Thus a political and fiscal time bomb with a relatively long fuse was activated…...

The Age, 14 November 2022, p.3:

A deal put in place to placate Western Australia when its share of GST revenue was tumbling is on track to cost the nation's taxpayers 10 times more than forecast, helping drive up federal government debt and interest payments to record levels.

Originally pulled together by then-treasurer Scott Morrison in 2018 before being put through parliament by his successor, Josh Frydenberg, the deal that expected to cost $2.3 billion is now on track to cost more than $24 billion. [my yellow highlighting]

WA, which delivered four seats to Labor at the May election on the back of a 10.6 per cent swing, is vowing to fight to keep the arrangement, due to expire in 2026-27.

Morrison struck the deal at a time when WA's share of the tax pool had fallen to an all-time low of 30 cents for every dollar of GST raised within the state. Its iron ore royalties were effectively being redistributed among the other states and territories based on a Commonwealth Grants Commission formula that takes into account each state's revenue sources and expenses.

Under Morrison's deal, from 2022-23 WA must receive a minimum of 70 cents in the dollar before increasing to 75 cents in 2024-25. When the policy was put in place, it was expected iron ore prices would fall and WA's share of the GST pool would therefore rise. Instead, prices have soared.

The Morrison government ensured other states and territories wouldn't be worse off, which requires the top-up funding for the deal to come from outside the $82.5 billion GST pool.

It was originally forecast to cost federal taxpayers $2.3 billion over three years, including just $293 million in 2021-22, but the surge in iron ore prices has meant more top-ups and for longer.

The October budget revealed that last year, the deal cost $2.1 billion and is forecast to jump to $4.2 billion this financial year. By 2025-26, the cost of the entire deal is on track to reach $22.5 billion, with another $2-3 billion likely the year after that.

Throughout the entire period, the budget is expected to be in deficit, forcing the extra cash to be borrowed. In percentage terms, the blowout in cost is larger than the NDIS, aged care, health or defence.

Independent economist Chris Richardson said the deal had been ill-conceived from the beginning with the cost to be borne by future taxpayers.

He said all significant spending programs needed to be properly assessed, including the GST deal.

"Yes, the politics of it are difficult. But we have a whole host of other issues, like the NDIS, and the economics of them have to be dealt with," he said…….

The extra borrowing for the GST deal has contributed to the lift in gross debt, which on Friday reached a record $909.4 billion.

Treasurer Jim Chalmers said the cost of servicing the debt was getting more expensive and was the budget's fastest-growing expense. [my yellow highlighting]

Australian Federal Election 2022: and the economic outlook gets gloomier for us all

Bottom line, cost of living and other economic pressures are not going to ease anytime soon, with almost half of all businesses now passing on cost increases to customers.

Australian Bureau of Statistics (ABS), media release, 28 April 2022:

Source: Business Conditions and Sentiments, April 2022

More than half (57 per cent) of all businesses experienced increases in the cost of doing business over the three months to April 2022, with almost a quarter (21 per cent) reporting costs had increased to a great extent, according to data released today by the Australian Bureau of Statistics (ABS).

Consistent with the results from March, most of these businesses had seen increases to the cost of fuel or energy (83 per cent) and the cost of products or services used by the business (82 per cent).

ABS Head of Industry Statistics, John Shepherd, said: “More than half of the businesses with higher costs (52 per cent) did not increase their prices. For those that did increase prices, 42 per cent had partially passed on costs and 6 per cent had fully passed on the increases to customers.”

Businesses also provided information about other actions they had taken in response to increased business costs.

“Over a third (39 per cent) of businesses had made changes to their operations or processes and 17 per cent had renegotiated payment terms with customers and suppliers,” Mr Shepherd said.

The results also provided information about business staffing levels. One in five businesses (18 per cent) did not have enough staff in April 2022, consistent with findings in January 2022.

More than four in five businesses (84 per cent) with staff shortages were unable to find suitable staff, rising from 69 per cent in January. Uncertainty due to COVID-19 was less likely to be an influence on staffing levels (36 per cent compared to 62 per cent in January).

Further information, as well as insights into supply chain, are included in Business Conditions and Sentiments. 

So how does the Reserve Bank see household finances across Australia in April 2022?

 

Although global financial systems have held up during the COVID-19 global pandemic, by April 2022 the Russian invasion of Ukraine and subsequent risk of financial stress caused by sanctions had become a factor in the international financial equation. Thus far any risk for Australia's economy appears to be considered manageable.

However, with interest rates expected to begin to rise again by June 2022, real wages growth still in what has been an 8 year-long stagnation with no light on the horizon, home insurance rates predicted to rise by more than 10 per cent on the back of widespread flooding on the Australian east coast, a continuing shortage of affordable housing stock with overall housing supply also expected to significantly drop and, annual residential rental growth continuing to rise sharply, the next few years may not be as manageable for some households.

Here are excepts from the Reserve Bank’s assessment of household and business finances.

Reserve Bank of Australia, Financial Stability Review April 2022, Household and Business Finances:

The incidence of household financial stress is low and declining, but a small share of households are vulnerable to cash flow shocks …

The share of APRA-regulated lenders’ non-performing housing loans was just 0.9 per cent at the end of 2021 – lower than before the pandemic (see ‘Chapter 3: The Australian Financial System’). Almost all borrowers who have exited loan payment deferral arrangements available earlier in the pandemic are now up to date with their repayments. The recent strength in employment is likely to have offset the unwinding in fiscal policy support for most indebted households. For the small number of borrowers who are currently experiencing repayment difficulties, liaison with banks indicates that the vast majority had been experiencing problems prior to the pandemic, and that early indicators of financial stress in other borrowers (such as households reducing their prepayments) remain very low.

Households in flood-affected areas of New South Wales and Queensland are facing significant challenges. To alleviate near-term financial challenges, government disaster-relief payments and hardship assistance from lenders have been made available. Recent estimates suggest that the number of insurance claims is higher than following the 2011 Queensland floods and Cyclone Yasi; although, to date, the total value of claims has been lower as fewer homes require rebuilding. Banks direct exposures to the most heavily affected households are small relative to total lending.

More broadly, the small share of borrowers with low liquidity buffers are more likely than other borrowers to have their financial resilience tested if they experience an adverse shock to their incomes or expenses, including through higher inflation. The risks for households with low liquidity buffers are likely to be even higher for those whose payment buffers have been declining (as opposed to low and stable) and for those who also have high levels of debt. The Securitisation data indicate that, for owner-occupiers with variable-rate loans, the overall share of borrowers with a loan six or more times their income and a buffer of less than one month of minimum repayments has declined since the beginning of the pandemic, to just below 1 per cent (Graph 2.4). The share of owner-occupier variable-rate borrowers with low and declining buffers has decreased to around 2 per cent over the same period. Declines in the shares of both groups of vulnerable borrowers are partly due to lower interest rates.

Historically, renters have been more likely to experience financial stress than indebted owner-occupiers. According to the Household, Income and Labour Dynamics in Australia (HILDA) survey, around one-third of renters reported at least one instance of financial stress (such as being unable to pay a bill on time or heat their home) in 2020, compared to one-sixth of owner-occupiers (Graph 2.5). Although renters are unlikely to pose direct risks to the stability of the financial system (as they have less debt), financial stress for renters could translate to repayment difficulties for indebted landlords or pose indirect risks by constraining household consumption and so economic activity. Renters with a combination of low liquidity buffers prior to the pandemic (equivalent to less than one month of disposable income) and high housing cost burdens (rental payments equivalent to more than 30 per cent of disposable income) were much more likely to report financial stress than other households. Around 15 per cent of renters were vulnerable based on this metric in 2020.

Although the value of consumer debt has declined over recent years, there has been strong growth in households using buy now, pay later (BNPL) services. BNPL services are generally a form of short-term financing that allow consumers to pay for goods and services in instalments. It is estimated that the value of BNPL transactions increased by around 40 per cent over the year to the December quarter of 2021, and the total number of BNPL accounts was equivalent to around one-third of the adult population (although some people have more than one account). There have been some increases in the incidence of late payments on these products. However, the value of BNPL transactions remains relatively small compared to other forms of personal finance, with the value of domestic personal credit and charge card purchases on Australian issued cards around 15 times larger than BNPL transactions in the December quarter of 2021.

… including a small share of borrowers who could struggle to service their debts as a result of higher interest rates and/or inflation

….Around 60 per cent of all borrowers currently have variable-rate loans, with around two-thirds of these being owner-occupiers. Scenario analysis using information in the Securitisation dataset indicates that if variable mortgage rates were to increase by 200 basis points:

• just over 40 per cent of these borrowers made average monthly payments over the past year that would be large enough to cover the increase in required repayments (Graph 2.6)

• a further 20 per cent would face an increase in their repayments of no more than 20 per cent

• around 25 per cent of variable-rate owner-occupiers would see their repayments increase by more than 30 per cent of their current repayments; however, around half of these borrowers have accumulated excess payment buffers equivalent to one year’s worth of their current minimum repayments that could therefore help ease their transition to higher repayments

• the share of borrowers facing a debt servicing ratio greater than 30 per cent (a commonly used threshold for ‘high’ repayment burdens) would increase from around 10 per cent to just under 20 per cent.

One caveat is that households’ average monthly mortgage payments over the past year may have been larger than might reasonably be expected going forward, especially as previous spending patterns resume alongside the recovery in economic activity. It is difficult to draw inferences about the capacity of investors with variable-rate loans to make higher repayments, as they tend not to make excess mortgage payments (and other forms of saving are less visible in available data).

Most borrowers with fixed-rate loans are also likely to be able to handle the increases in their repayments when their fixed-rate terms expire. 

Many borrowers have taken advantage of very low interest rates on fixed-rate products in recent years; in late 2021, almost 40 per cent of outstanding housing lending had fixed interest rates – roughly double the share at the start of 2020. Around three-quarters of currently outstanding fixed-rate loans will expire by the end of 2023……

Read the full analysis here.

Coverage of 2022-23 Federal Budget Night commences at 7.30pm tonight Tuesday, 29 March 2022 . Following of this a cash splash announcement....

David Rowe, 28 March 2022

The Australian Treasurer & Liberal MP for the Kooyong electorate in Victoria Josh Frydenberg will deliver the 2022-23 Federal Budget at approximately 7.30 pm (AEDT) on Tuesday 29 March 2022. 

Budget Papers will be posted on https://budget.gov.au/ on the night. 

The Treasurer's Speech will be shown on ABC TV Live at 7.30pm and a Budget Night 2022 News Special, Analysis & Reaction will be aired from 8 to 10pm.

Budget Night lockup of select journalists will begin at 1.30pm on Tuesday afternoon. Access to embargoed Budget Papers will be further restricted again this year using the pandemic as an excuse. This in turn will limit the degree to which initial analysis of this election year national budget can escape the ideological control of the Murdoch-Costello-Stokes media triumvirate. 

To ensure that most journalists would use Morrison Government budget talking points over the next news cycle rather than in-depth analysis, the following promises contained in tonight's budget papers were released yesterday in a joint media release (with suitable quotes) by the Treasurer, Prime Minister, Deputy Prime Minister & Minister for Communications, Urban Infrastructure, Cities and the Arts:

Infrastructure promises made in that media release with no timeframe context

• $3.1 billion in new commitments to deliver the $3.6 billion Melbourne Intermodal Terminal Package (VIC), including:
• $1.2 billion for the Beveridge Interstate Freight Terminal in Beveridge, taking the total investment to $1.62 billion;
• $280 million for Road Connections, including Camerons Lane Interchange, to the Beveridge Interstate Freight Terminal;
• $740 million for the Western Interstate Freight Terminal in Truganina;
• $920 million for the Outer Metropolitan Ring - South Rail connection to the Western Interstate Freight Terminal.
• $1.6 billion for the Brisbane to the Sunshine Coast (Beerwah-Maroochydore) rail extension (QLD)
• $1.121 billion for the Brisbane to the Gold Coast (Kuraby – Beenleigh) faster rail upgrade (QLD)
• $1 billion for the Sydney to Newcastle – (Tuggerah to Wyong) faster rail upgrade (NSW)
• $678 million for Outback Way (NT, WA, QLD)
• $336 million for the Pacific Highway - Wyong Town Centre (NSW)
• $336 million for the Tasmanian Roads Package – Northern Roads Package – Stage 2 (TAS)
• $200 million for the Marion Road – Anzac Highway to Cross Road (SA)
• $145 million for the Thomas Road – Dual Carriageway – South Western Highway to Tonkin Highway and interchange at Tonkin Highway (WA)
• $140 million for Regional Road Safety upgrades (WA)
• $132 million for Central Australian Tourism Roads (NT)
• $120 million for the Adelaide Hills Productivity and Road Safety Package (SA)
• $46.7 million towards the Athllon Drive Duplication (ACT)

Additional promises for existing projects

• $2.264 billion for the North South Corridor - Torrens to Darlington (SA)
• $352 million for the Milton Ulladulla Bypass (NSW)
• $320 million for the Bunbury Outer Ring Road (Stages 2 and 3) (WA)
• $200 million for the Tonkin Highway Stage 3 Extension (WA)
• $45 million for the Ballarat to Ouyen – Future Priorities (VIC)
• $68.5 million for the Cooktown to Weipa Corridor Upgrade

  

A fact sociologists worth their salt know, the better economists remember & conservative politicians can never accept – it is units of labour which drive production & productivity in any economy

The Conversation, 12 January 2022:

Australians are getting a stark reminder about how value is actually created in an economy, and how supply chains truly work.

Ask chief executives where value comes from and they will credit their own smart decisions that inflate shareholder wealth. Ask logistics experts how supply chains work and they will wax eloquent about ports, terminals and trucks. Politicians, meanwhile, highlight nebulous intangibles like “investor confidence” – enhanced, presumably, by their own steady hands on the tiller.

The reality of value-added production and supply is much more human than all of this. It is people who are the driving force behind production, distribution and supply.

Labour – human beings getting out of bed and going to work, using their brains and brawn to produce actual goods and services – is the only thing that adds value to the “free gifts” we harvest from nature. It’s the only thing that puts food on supermarket shelves, cares for sick people and teaches our children.

Even the technology used to enhance workers’ productivity – or sometimes even replace them – is ultimately the culmination of other human beings doing their jobs. The glorious complexity of the whole economy boils down to human beings, using raw materials extracted and tools built by other human beings, working to produce goods and services.

A narrow, distorted economic lens

The economy doesn’t work if people can’t work. So the first economic priority during a pandemic must be to keep people healthy enough to keep working, producing, delivering and buying.

That some political and business leaders have, from the outset of COVID-19, consistently downplayed the economic costs of mass illness, reflects a narrow, distorted economic lens. We’re now seeing the result – one of the worst public policy failures in Australia’s history.

The Omicron variant is tearing through Australia’s workforce, from health care and child care, to agriculture and manufacturing, to transportation and logistics, to emergency services.

The result is an unprecedented, and preventable, economic catastrophe. This catastrophe was visited upon us by leaders – NSW Premier Dom Perrotet and Prime Minister Scott Morrison in particular – on the grounds they were protecting the economy. Like a Mafia kingpin extorting money, this is the kind of “protection” that can kill you…...

Read full article here.

There is a question now hanging over Morrison & Frydenberg's 2022-23 Budget, geared as it is to fulfill the Coalition's yet to be revealed election promises rather than buttressing the nation against the adverse economic winds blowing through countless CBDs around the country. 

An estimated 50 per cent of the national workforce are currently absent from their employment on any given day due to COVID-19 - either workers have contracted the virus, are home looking after a dependent family member/s who is ill with it, have become a "close contact" and are isolating because of it, or their place of employment has temporarily closed due to lack of customers who are afraid of catching it.

It's not just a question of how far household consumption is likely to fall as this situation continues through at least another six weeks. 

Note: as an example, two previous Household Final Consumption Expenditure falls during the pandemic have been 12.2% June Qtr 2020 & 4.8% September Qtr 2021. Periods in which infection growth intensified. 

Neither is it all about the financial pain being felt by small businesses after every Coalition public policy error compounds economic distress at community level, sweeping away hope and income.

It is also about how much will the inevitable loss of production and productivity carve off the value bottom line of states and territories' State Domestic Product (SDP) and what impact that has on Australia's Gross Domestic Product (GDP) or the level of eyewatering public debt government has to service. 

Does the Australian economy have the resilience to withstand a full year of  SARS-CoV-2 running unchecked in the general population due to the Coalition's political policy of 'living with COVID'?

The JobKeeper Rorts Scandal

JobKeeper has been in the news for many months. Introduced hastily at the end of March 2020, this Australian Government scheme to keep workers tied to their employers during the Covid downturn saved an estimated 700,000 jobs. Initially much of the discussion about JobKeeper related to the enormous $89 billion cost to the taxpayer, debate about winding the scheme back and then ending it as well as concern about how the resulting deficit was going to be reduced.

More recently the focus has been on whether all those entities which accessed the scheme were actually entitled to do so. Billion-dollar businesses were eligible if they suffered a 50% or more revenue shortfall while smaller businesses were eligible if their revenue fell by 30% or more. Entities could access the scheme by either demonstrating the revenue drop or forecasting a drop. Eligible businesses were provided with $1500 per fortnight for each of their employees.

It has become increasingly obvious over recent months that many businesses did not lose the stipulated revenue and yet still obtained JobKeeper.

The rush to set up the scheme, which quickly followed the Government’s reaction to the alarming image of thousands of workers lining up outside Centrelink offices, led to the failure to include an important safety requirement. It should have been stipulated that if the projected revenue shortfall did not eventuate, the money obtained should be reimbursed to the government – just as welfare recipients are legally required to return to the government any overpayments they receive.

The extent of overpayment has developed into a scandal that unsurprisingly is being referred to as a major rorting of the scheme.

According to the Parliamentary Budget Office, over the first six months of the scheme, $13 billion went to those entities whose earnings actually rose.

Among the list of those who were ineligible but stayed on the governmental gravy train and benefitted from this taxpayer funding were some major companies and very wealthy individuals. A few examples are Specsavers, Luxottica (owner of OPSM and Sunglasses Hut), car dealer A P Eagers, retailers Harvey Norman, Best & Less and Cotton On, private schools Wesley College, The Kings School and Brisbane Grammar, Bond University and New York University’s Sydney campus and the Australian Club in Sydney.

Many of these ineligible entities were able to post enormous profits which enabled them to increase shareholder dividends and give large executive bonuses.

While there is general appreciation of the role JobKeeper played in restricting the job loss from Covid restrictions and lockdowns last year, there has been increasing public concern about brazen rorting of the scheme and the government’s failure to urge the return of benefits from those who were not entitled to receive them.

Shadow Assistant Minister for Treasury Andrew Leigh has been raising the issue in parliament and the media for months. He said, “JobKeeper overpayment is the single biggest waste of money in Australian history, and the Morrison government won’t do a thing to make it right.”

Some entities have voluntarily returned the benefits or part of them.

The publicity that has been given to those who have shamelessly kept money to which they were not entitled has been having some effect. Harvey Norman’s Gerry Harvey, who refused for months to return any Jobkeeper money, finally announced in August that the company would return $6.02 million in JobKeeper funds to the ATO. However, this repayment is less than a third of the estimated $22 million the company and its franchisees claimed in total. According to Andrew Leigh, “Harvey Norman has given us the best advertisement for more transparency into the secretive, rorted jobkeeper scheme.”

According to Dean Paatsch, a director of corporate advisory group Ownership Matters, 88% of the $225 million that companies are returning is from publicly listed companies. Paatsch also has concerns about the lack of transparency with JobKeeper saying it was “extraordinarily generous and had zero transparency compared to the US, UK, New Zealand and other European countries. The interesting thing is that transparency does have an effect in stopping people claiming benefits that they don’t need.”

While Opposition and Crossbench MPs have been raising the issue of waste, lack of transparency and unethical behaviour by those who should not have received JobKeeper funds, the Government has been unmoved. Months ago the Prime Minister referred to questions about the rorting of JobKeeper and calls for the government to take action to have money returned as “the politics of envy” – an incredibly insensitive and arrogant remark given the size of the debt the nation now has – let alone the financial hardship that many people on low incomes have been suffering during the pandemic.

While the extent of rorting by ASX listed companies has been revealed because of their public reporting requirements, there has been no transparency in relation to private entities. Senator Rex Patrick and others have tried to obtain a list of JobKeeper beneficiaries with an annual turnover of $10 million or more. This has been blocked by the Government and the ATO Commissioner. Ownership Matters says publicly listed companies accounted for just 3% of the entire JobKeeper program, which means that private companies accounted for 97%. So the community is not being given the opportunity to see how much rorting was undertaken by these private entities. And, unlike Harvey Norman and other public companies, these unknown rorters can avoid being shamed into returning any funds to which they were not entitled.

While nothing was built into the scheme to actually compel rorters to return money to which they were not entitled, the ATO is taking action to recover some of the money paid to some entities. However, it is unlikely that taxpayers will ever learn the real extent of the rorting - given the lack of transparency about the majority of the scheme’s beneficiaries.

Some light could be shone on the murkier aspects of the JobKeeper scheme as the Auditor-General is investigating the ATO’s administration of the program following a request Andrew Leigh made in December last year. The A-G’s report is due to be tabled in December this year.

The national JobKeeper debt is far greater than it should have been and will create budgetary difficulties well into the future – particularly if governments try to repair the deficit quickly by cutting back on services like health, welfare and education. With inequality and poverty already major problems in Australian society, the fall-out from the JobKeeper rorts debacle has the potential to exacerbate these problems.

As the Morrison Government was responsible for the design and operation of JobKeeper, it is responsible for the massive waste of rorted taxpayer funds. No amount of spin from the Prime Minister or the Treasurer can excuse its incompetence. With the election approaching, we can look forward to plenty of distractions to encourage the community to lose interest in this and all the other rorts as well as the vaccine supply and quarantine failures.

What will be particularly interesting about the election campaign will be whether the Coalition, which has always claimed it has been a “gold standard” economic manager, will have the effrontery to push this tired line after the JobKeeper rorts debacle.

One thing we can be sure of is that the rorters, the JobKeeper Bludgers, will still be laughing all the way to the bank.

Hildegard

Northern Rivers, NSW

Guest Speak is a North Coast Voices segment allowing serious or satirical comment from NSW Northern Rivers residents. Email ncvguestpeak at gmail dot com  to submit comment for consideration.

Sometimes it feels like New South Wales and the rest of Australia is on a COVID-19 negative feedback loop

These days when I wake I am tempted not to immediately look at the bedside clock to check the time but instead to inspect the flashing date on its digital face to confirm which year I’m starting the day in.

And it’s because of little snippets of fact like these…...

In January 2020 the global COVID-19 pandemic quietly entered Australia and the state of New South Wales. However it wasn’t until February 2020 that it became obvious that the virus had firmly established itself here.

That month NSW had an unemployment rate of 4.9% (in original terms) representing est. 215,100 people with no paid employment – an increase of 10,100 on January’s unemployment numbers. 

By July 2020 the unemployment rate had risen to 7.1% when the number of individuals without a job had grown to 222,900. By which time 3,567 NSW residents had contracted COVID-19 and 51 of those people had died.

In June 2021 the highly infectious Delta variant of COVID-19 was confirmed as having entered Australia and New South Wales.

That month NSW had an unemployment rate of 5.0% representing est. 218,900 people without paid employment and, the state cumulative COVID-19 case total had reached 5,637 and 56 people had died of the infection.

So New South Wales ended the month which saw the beginning of the Delta Variant Outbreak with a higher unemployment rate and more unemployed people than it had at the end of the month when the original COVID-19 outbreak began to make itself felt. 

As yet there is no ABS Labour Force data compiled for July 2021, but sadly the growing  infection numbers are available on a daily basis - as of 18 July 2021 the NSW total of cumulative COVID-19 cases since the pandemic began was 6,753 people infected and 60 of that number dead from this viral disease.

I keep looking for the healthy communities and strong economies Prime Minister Scott Morrison has been boasting about since February 2021. Because, right this minute, it feels as though Australia has been catapulted back to the start of this long climb out of a pandemic and, the new 16 June 2021 starting point began with a national cumulative total of 30,291 COVID-19 cases and 910 deaths. 

Nationally the country may have ended June 2021 with a unemployment rate 0.7% lower (in original terms) than the rate in February 2020, but it is such a meagre step forward - given the east coast of mainland Australia is currently fighting a widening Delta variant viral outbreak which threatens to increase the number of people who are out of work for months to come.

No matter how Morrison & Co try to spin the Australian Treasury's 2021 Intergenerational Report, it reveals lacklustre economic growth expected over the next 40 years

In June 2021 the Australian Treasurer and Liberal MP for Kooyong, Josh Frydenberg released the Treasury’s 2021 Intergenerational Report: Australia over the next 40 years

Although a traditionally impartial Treasury complied most of the report’s contents, the partisan political nature of this report can be found kicking off at Line 19 of the Executive Summary, which starts with this untruthful statement:

Australia entered the COVID-19 pandemic from a position of economic and fiscal strength. The budget was in balance for the first time in 11 years…..

North Coast Voices readers would be well aware that 2019-20 national budget papers released in April 2019 forecast a then as yet unrealised balanced budget and return to surplus by 30 June 2020, with surpluses continuing over the medium term. This was a risky assertion to make on the basis of optimistic assumptions not hard facts.

Just how risky became apparent soon after February-March 2020 when the word “surplus” was quietly scrubbed from the Liberal-Nationals political lexicon due to the social and economic upheaval caused by both six years of the Abbot-Turnbull-Morrison Government in Canberra and a highly infectious global pandemic.

By June 2020 Australia’s net debt was expected to peak at $392.3 billion and, by June 2021 there was an est. $829 billion in gross public debt and $617.5 billion in net public debt on the books and an underlying cash deficit in the vicinity of $161 billion, with no budgetary surplus on the horizon.

That might almost be considered to qualify as good news given some of the forecasts contained in the 2021 Treasury intergenerational report. Because that report clearly shows that the COVID-19 global pandemic could cease tomorrow and it would make little difference to Australia’s long term economic recovery.

There will be no post-pandemic ‘snapback’ which will see the national economy quickly flourish.

From 2014 to the present day successive federal governments have trashed the goodwill and tolerance of our political allies and trading partners with anti-science, climate change denialist polices, demonstrated a crass clumsiness and sometimes downright ignorance of international relations and, the complete absence of diplomacy in negotiations with our largest trading partner. While increasing impacts from climate change will, more frequently than in the post-climate crisis era, see a fall in the seasonal/annual volume of agricultural products for export.

The domestic industry and business mindset that insists employers are doing workers a favour by employing them on a low wage with no job security, rather than recognising that the worker creates cashflow and profits by producing actual goods to sell, will in all likelihood actively discourage decent wage growth over the next 40 years.

According to the Executive Summary in the 2021 Intergenerational Report:

….real gross domestic product (GDP) is projected to grow at 2.6 per cent per year over the next 40 years, compared with 3.0 per cent over the past 40 years. Real GDP per person is projected to grow at an average annual rate of 1.5 per cent, compared with 1.6 per cent over the past 40 years. Nominal GDP growth is projected to slow to 5.0 per cent per year over the next 40 years, compared with 7.0 per cent over the past 40 years. Real GNI is projected to grow at an average annual rate of 2.3 per cent, compared with 3.3 per cent over the past 40 years. Real GNI per person is projected to grow at an average annual rate of 1.3 per cent, compared with 1.8 per cent over the past 40 years. The larger slowdown in GNI growth than GDP growth reflects an assumption that the terms of trade will decline before stabilising at long-term levels.

Real GDP per person = Gross Domestic Product per person adjusted for inflation
Real GNI per person  = Gross National Income (wages & other earned income)
per person adjusted for inflation
Real GDP = Gross Domestic Product adjusted for inflation
Real GNI = Gross National Income (wages & other earned income)
Nominal GDP =  measures total value of the output produced in Australia, by
adding together Real Gross Domestic Product and prices to produce a close estimate.

Australia's terms of trade is calculated as the ratio of export prices to import prices. If this index increases it implies that Australia is receiving relatively more for its exports; if it decreases then Australia is receiving relatively less. An increase in export prices relative to import prices
implies that Australia is better off; thus an increase in the terms of trade
is sometimes referred to as a favourable movement in the terms of trade. [Australian Parliament House Library, retrieved 07.07.21].


After the 2007-08 Global Financial Crisis (GFC) Australia's terms of trade under Labor federal governments peaked in 2010-11 & 2011-12 at 2.1 before falling to 1.0. Subsequent Coalition federal governments peaked at 1.1 in 2020-21. Australia's terms of trade are predicted to return to the 0.9 of the Global Financial Crisis period and stay at
that level until after 30 June 2061. 



Australian Treasury tables attached to the 2021 Intergenerational Report predict that Average Labour Productivity Levels will remain at 1.5
until after 30 June 2061. This is the same level of average labour productivity between approx. 1981 and 2020.


In those same tables Average Gross National Income per person adjusted for inflation is expected to fall from the current 1.8 to 1.3 for the next 40 years. This does not indicate strong wages growth across the board over the next four decades.


After credibly surviving the 2007-08 Global Financial Crisis under a
Labor federal government, Australia now faces forty years of struggling
to move past social and economic consequences of the current federal Coalition government’s six years of poor policy decisions and its appalling mismanagement of the global COVID-19 pandemic once it became clear the virus would breach our national borders.