We still can’t see the economic forest for the non-existent trees

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Whine, whine, whine. That’s all we seem to do lately, about everything from taxes to economic strength. Our penchant for pessimism has almost overtaken cricket and amateur cooking shows as the nation’s new favourite pastime.

The minutes from the latest meeting of the Reserve Bank of Australia (RBA) give a clear insight into the various economic factors at play, both here and abroad. It shows that relative stability prevails domestically and that there’s a continued cautious optimism when it comes to Europe, the US and China.

And, without doubt, it shows that we Australians have no idea how lucky we really are.

Much has been said in recent years about the rock-bottom confidence levels among consumers and business owners. We’ve had a serious case of the blues that has prevented us from spending, investing and making even basic fiscal decisions. They’re conditions not conducive to a robust or even steady housing market.

While that’s turning a corner, reflected in strong sentiment survey results, increased home finance numbers and a rebound in house prices the one thing we can’t seem to get over is our false belief that the economy is tanking.

There was a television interview recently with Opposition Leader Tony Abbott, who remarked that a Coalition Government would get the economy going again. While scant on details, Abbott pledged to focus really hard on sparking growth.

Of course, he didn’t mention that the economy is growing and has been, consecutively, year after year, for more than two decades. Even during the GFC.

The mining lobby is already running television commercials in the lead up to the Federal Election in September, crying poor and damning politicians’ implications that spending shortfalls could be plugged from resource sector profits. It’s in a similar vein, albeit much less rabid, to the anti-mining tax crusade we saw from miners a few years back.

Frankly, if you’ve got enough money to stump up for a national advertising campaign, you’re probably not doing it too tough. I mean, you don’t see slickly produced and beautifully shot ads from homelessness charities.

Then there are media commentators who decry the impending end of the economic world as we know it with the same enthusiasm a child might build a sandcastle or eat an ice cream. They’re in print, on television and holding court on talkback radio.

Almost everywhere you look there are dire warnings – either explicit or implied – about the state of the economy. Depending on who’s talking, we’re either on the verge of bankruptcy, in the middle of a recession, mere moments away from the collapse of the mining industry and so on.

Politician, mining lobby, media commentator… whoever the central character, these agitators generally share one common trait. They have a brilliant ability to illicit fear in a broad audience of people without actually saying anything specific. They don’t provide practical examples or even vague evidence of their claims. It’s just “the economy is stuffed!” or “we’ll save you!”

Here are just a handful of actual concrete bites of information:

  • Ratings agency Fitch recently reaffirmed Australia’s AAA credit rating, making us one of eight nations to have the highest of high ratings from all three global agencies;
  • Unemployment remains relatively low by trend standards and exceptionally low by international standards;
  • Gross domestic product growth remains around trend for the year to the December quarter, despite slowing in the second half of the year;
  • Analysts note the start of a pick up in business investment data. Business confidence is also stabilizing;
  • Contrary to continued speculation about the so-called ‘peak’ of the mining boom, capital expenditure data released last month indicates it’s set to stay at current high levels for some time yet;
  • Debts and deficits are scary, even for punters who have no idea what they actually mean, so it’s a common dog whistle on all sides of politics. Australia’s debt as a percentage of GDP is one of the lowest in the developed world;
  • Household consumption is up, consumer confidence is up and retail spending is up.

There’s no doubt that the waters ahead might be a bit choppy at times, but there’s scant evidence to suggest we’re all in a boat without a paddle, veering into a creek of you-know-what. The economy also isn’t perfect, but it has proven itself to be resilient and stable. I’m also definitely not suggesting the current government deserves unquestioning praise for its economic management – it has done well in some areas and poorly in others, to be sure.

Vitriolic and baseless statements from politicians, lobbyists, shock-jocks, business leaders and other scare campaign perpetrators might serve their many and varied personal interests, but they cause more detriment to us, Australians, and our interests.

Shannon Molloy is deputy editor of Australian Property Investor magazine, www.apimagazine.com.au