On election night in September 2013, Prime Minister elect Tony Abbott declared “Australia is open for business”.
It is a phrase that he and members of his government have repeated time and time again. It is also a phrase that is hard to define – what exactly does “open for business mean”?
One would have thought that an open for business platform would be about boosting economic growth, supporting confidence, underpinning business investment, driving real wages growth and lowering the unemployment rate.
But if these are the hallmarks of a strong and dynamic business environment. the first 15 months of the Abbott government has been a dismal failure.
Let’s have a look at a few basic facts.
Real GDP grew by 2.7 per cent in the first year of the Abbott government, some 0.5 percentage points below the average of the last 30 years.
In terms of confidence, the Westpac measure of consumer sentiment has been below 100 index points in each of the last 10 months, meaning that on average, consumers are more pessimistic than optimistic. The only other times consumer sentiment has been so weak for so long was during the GFC and the early 1990s recession. Even the NAB measure of business confidence, which did get a temporary boost after the election, is below the level recorded before the election
Business investment, on a national accounts measure, has fallen 5.5 per cent since the election and the MYEFO forecasts released earlier this week is forecasting business investment to fall in bother 2014-14 and 2015-16. Business seem to be closing down their Capex, not opening up.
It is not just the business sector copping it.
Wages growth has fallen to probably the lowest level recorded in half a century. The Wage Price index has risen at a record low 2.6 per cent over the past year, the lowest growth rate since this series was first published in 1996. Splicing these wages data onto similar wages measures (AWOTE and the like) and one has to go back to the 1960s to see wages growth this low.
It is not just wages that are getting hit. Since the Abbott government was elected, the unemployment rate has risen from 5.7 per cent to a 12 year high of 6.3 per cent. Not great news if you are looking for work. The problem is compounded when the MYEFO is forecasting unemployment to rise further in the next two years, reaching 6.5 per cent.
The ASX200 closed at 5,145 points the the day before the election in September 2013 – this morning, it is at 5,140 points. No change over the 15 months of Abbott government policies. There has been no boost to investor confidence in the way the Australian economy is being managed. Investors are staying away from Australia. Just by way of comparison, in the US the S&P500 index has risen by 19 per cent over the same timeframe.
All of this may be part tolerable if there were offsets evident elsewhere – say the budget bottom line. But as MYEFO showed this week, compared with the cumulated budget deficit of just $15 billion in the period 2014-15 to 2017-18 presented in PEFO under Labor’s policy agenda, Mr Abbott is delivering cumulative deficits of $104 billion.
At this deficit blow out shows up in the level of gross government debt which was $273 billion at the time of the election – it is $350 billion now and is expected to reach just under $500 billion.
While all the of the failures on these measures cannot sheeted specifically to Mr Abbott and Mr Hockey given the fall in the terms of trade and pig headedness of the RBA is refusing to cut interest rates further, it shows how easily rhetorical flourishes can be hijacked by reality and policy missteps.
These are simple facts on key economic measures. The economy is in crook shape and the Abbott government is doing little or nothing to turn this around.