Home › Forums › Polo’s Rabble › 5 Reasons Aussies Should Feel Smug
- This topic has 3 replies, 2 voices, and was last updated 12 years, 1 month ago by Penta2.
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- February 27, 2012 at 10:20 pm #3961ROBKeymaster
I have a personal theory. When a country starts talking about “exceptionalism” then it’s already started on the decline.
WE’RE not Greece, in case you were confused. I suppose our government’s about as stable.
But our collective fiscal funk has recently compelled Treasury supremo Martin Parkinson to point out this obvious geographical fact. So let’s cut through the persistent gloom and doom and look at how our country stacks up.
1. Government debt and deficit
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As a proportion of gross domestic product, the IMF says we owe 24 per cent. The US has racked up 100 per cent, Italy 120 per cent and Greece 152 per cent.
Yes we have a deficit – tiny by world standards. The IMF says it was minus 2.8 per cent in 2011 and the government has crossed its heart and hoped to (ahem) die that it will be a surplus by 2012-2013.
France’s comparable figure was minus 5.7 per cent, Spain’s minus 8 per cent and the US’s – tut tut – minus 9.5 per cent. Greece’s is ratcheting up so fast it will be wrong before I type it: the 2012 forecast is 6.7 per cent.
That country is now widely expected to default and Fitch’s credit rating of ”C” reflects it. Ours is ”AAA”.
2. Resources and economy
Remember we were the only Western nation that didn’t go into recession during the global financial crisis. One of the reasons was mining.
An embarrassment of riches from resources means we can feed the insatiable industrialisation of developing Asia. Indeed, the governor of the Reserve Bank, Glenn Stevens, told Friday’s parliamentary economics committee the boom is ”still building” and ”will take the share of business investment in GDP to its highest level for 50 years”.
The mining tax – whatever you think of it – is designed to spread the proceeds.
Meanwhile, most commentators believe the EU is back in recession and Greece never climbed out of it.
3. Interest rates
Here they are relatively high on a world scale, precisely because our economy is strong and needs to be kept in check, but they’re also far lower than they were in the 1980s.
As a consolation to mortgage holders, the RBA has a loaded gun if it needs to shoot its way out of another crisis. And if you are cashed up, you are laughing all the way to the proverbial.
4. Employment and wages
This is what’s really making us uneasy. And it is hard to ignore headlines about mass redundancies in industries struggling due to factors like the high Australian dollar – for example, manufacturing – as they scramble to stay viable. Others – think retail and media – are under pressure because they’re at the pointy end of dramatic consumption shifts.
But it’s important to keep it in context. Unemployment last month actually fell slightly to 5.1 per cent, which boffins consider close to full employment. Although that is expected to tick up as global growth slows, some industries, like tourism and mining, are even reporting worker shortages.
Perhaps it’s our comparatively cushy existence in Australia that causes us to fixate instead on cost-of-living pressures, however it seems we should stop our whinging. CommSec research using The Sydney Morning Herald archives shows we have far more purchasing power for goods – wages relative to prices – than our parents and grandparents 30, 40 or 50 years ago. Housing is another story.
Want a little more perspective? In Greece they’re contending with unemployment of more than 20 per cent and a 22 per cent cut to the minimum wage.
5. Retirement
God bless super. As controversial as its introduction was – and however inadequate it ends up being – it’s a salvation for our sunset years. What’s more, it’s in our names and our control. Many Greeks are instead getting 12 per cent wiped off their pensions.
So it seems Australians’ confidence – which a global Nielsen survey of 56 markets has just found is the highest in the developed world – is justified. - February 28, 2012 at 12:13 am #13421Penta2Participant
Australia does seem to be doing very well and relatively unaffected by the credit crunch. I guess the reliance on mineral resources might be a problem one day, as with any economy skewed to one sector. I don’t know how climate change is affecting Australia. I remember a lot of concerns about drought and salination a while ago, but the big floods may have mitigated that since. If not, I guess you could have problems with rising global food prices. Otherwise, it looks pretty rosy from here. It’s dire pretty much everywhere in Europe except Germany. But if they have to bail everyone else out, they might start having problems too.
- February 28, 2012 at 8:37 pm #13422ROBKeymaster
The level of reliance on mining is a bit of a misperception – even here. It contributes about 5% of gdp (and that’s the boom). Significant, but hardly as important as people seem to think.
Here’s a good piece on the actual break down. http://www.smh.com.au/business/how-keynes-not-mining-saved-us-from-recession-20100606-xn7h.html
- February 28, 2012 at 11:25 pm #13423Penta2Participant
Thanks. We could do with a bit of Keynesian cash injection here at the moment – but no, it’s all cuts and austerity and more cuts as the economy predictably flatlines, with a touch of QE on the side, which just goes into the banks’ balances.
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