On election night, in September 2013, Tony Abbott claimed that with the election of his government, “From today I declare Australia is under new management and is once more open for business”.
Well, 13 months on and the signs are not good for Mr Abbott with the business sector floundering, the stock market flat and under-performing and the unemployment rate rising. At the same time, consumers remain gloomy and the prospects for GDP growth hitting its long run trend at around 3.25 per cent are bleak.
Let’s have a look at a few basic facts.
The NAB business survey shows that business confidence is now lower than it was when the election was held. This is a damning assessment from the business community that the “new management” in Canberra has failed to deliver the framework for growth, despite Mr Abbott’s claim that less red tape, no carbon and mining taxes would be good for business and the economy.
At the same time, the ASX is about at the level it was on election day in 2013. That is no change, no upside, no growth in share prices in 13 long months. Either companies are not doing all that well and the soggy share prices are justified or investors are keen to step away from the risks associated with investing in Australian stocks.
[Sidenote: Even with the ructions in the US stock markert in the past month or so, the US S&P500 index is 13 per cent higher today than it was when Mr Abbott won the election].
The problems with the economy under Mr Abbott extend to the labour market. As the numbers stand, the unemployment rate has increased from 5.7 per cent in September 2013 to 6.1 per cent at the latest count, which is the highest in more than a decade. Firms are simply not hiring fast enough and had the ABS not tinkered with the recent seasonally adjusted data, the rate would be higher still.
What is also disconcerting is the fact that the workforce participation rate has fallen from 67.1 per cent to 66.4 per cent. Discouraged workers giving up looking for work? Failed workforce participation policies? Who knows but the employment to population ratio is now at just 60.6 per cent from 61.1 per cent on election day and it too is at a decade low.
Rounding out the malaise, the Westpac-Melbourne Institute index of consumer sentiment has been below 100 index points for the last seven months and is some 10 per cent below the last reading before the election. Consumers are gloomy, nervous, no doubt about their employment prospects and falling real wages.
These are not good indicators and they spell a tough year ahead for business unless policy settings are changed and changed quickly.