Originally published in Crikey – 24 November 2017
Ten years ago, an epoch began which set Australia apart from the rest of the world in two remarkable respects. Neither is widely understood, even today.
The first was the extraordinary transformation of Australia’s steadily deteriorating economy. This deterioration had been masked by vast cash inflows from mining investment and the unwarranted sale of public assets and concealed by a cravenly uncritical media.
Initiatives taken by the incoming Rudd government – elected a decade ago today – were many. They included skills training, releasing control of the Reserve Bank, cutting business red tape, assisting first home buyers, ending abuses by the banks (well, some abuses) and restructuring the tax system.
Within months, the nation’s productive capacity was greatly enhanced. New jobs created in just nine months totalled 225,500. Productivity accelerated. Exports rose quickly after fractured relations with trading partners were restored. This enabled Labor to achieve a trade surplus within its first year, ending a 77-month run of deep trade deficits. Gross debt – stuck around $60 billion for four years – was down to $52.4 billion by mid-2008. Net money in the bank increased from a puny $22 billion to $48 billion.
Former treasurer Peter Costello had budgeted for a 2007-08 surplus of $10.6 billion. After just seven months, new treasurer Wayne Swan delivered an actual surplus of $19.8 billion, the highest in Australia’s history.
Then came the global financial crisis – the worst economic downturn in 80 years – which hit Australia initially more severely than most economies. Gross domestic product slumped badly, the jobless rate shot up, household income dived, the sharemarket lost 34% of its value in two months and business and consumer confidence collapsed.
The Rudd government responded with the world’s fastest and most extensive fiscal stimulus package. The first stage, announced in October 2008, comprised $10 billion in cash payments to poor families and welfare beneficiaries, first home buyer assistance and funding for job programs.
This kept retailers solvent over Christmas – and thus rescued wholesalers, importers, transport, service providers and others.
In February 2009, with the global recession deepening, Rudd implemented a breathtaking $42 billion stimulus program. This funded cash payments to most workers, new school buildings, community housing, insulation and solar hot water systems, rural road and rail reconstruction and extensive regional infrastructure.
The genius of these programs was that they generated jobs — and flow-on activity — literally in every community, however small and isolated. In this, Australia led the world.
By 2010 Australia’s was the Western world’s stand-out economy with positive GDP growth, low unemployment, strong trade, optimum interest rates and low debt. An extraordinary run of 18 trade surpluses in 19 months started in April 2010.
From 2010 to 2013, the economy strengthened further while the rest of the developed world struggled. After six years, at the time of the 2013 election, Australia’s economy was not only the best in Australia’s history but the best in the world — by a mile. Some say the best the world had ever seen. This was its profile:
- Unemployment: 5.8%;
- Hours worked per adult per month: 86.6, highest on record;
- Productivity: 100.6, rising in a continuous 17-quarter streak;
- Median wealth per adult: US$219,505: highest in the world;
- Economic freedom: Heritage score 82.0, highest in the OECD;
- Interest rates: 2.5%;
- Budget deficit: $18.8 billion, down from $43.4 billion the previous year;
- Gross debt: 28.6% of GDP;
- Net debt: 11.4% of GDP;
- Value of the Aussie dollar: 92 US cents;
- Economic growth in a 22-year positive streak; and
- World’s best economy on the IAREM.
The second extraordinary phenomenon of the Labor period was the bizarre lock-step campaign by virtually all the mainstream media to falsify this impressive record. Day after day, the headlines screamed “disaster”, “debacle”, “failure”, “mess”, “shambles”, “incompetence” and “shame”.
The Murdoch media has not stopped condemning Labor’s economic management. From just last month: “Even now, the full damage of Labor’s ill-conceived interventions in the economy and the national balance sheet have only started to be counted.”
Meanwhile, those in Europe and elsewhere marvelled and piled on the accolades, including:
- Triple A credit ratings with Fitch in 2011, completing the full set for the first time;
- Euromoney’s world’s best treasurer award;
- Infrastructure minister of the year award from UK-based Infrastructure Investor;
- The vote to chair the G20 group of the world’s 20 major economies;
- A seat on the United Nations Security Council;
- Tributes from the OECD for a 29% increase in overseas aid between 2007 and 2011; and
- The plaudits of national leaders, finance ministers, economists, Nobel laureates, global religious leaders, industry chiefs, global agencies and others.
Ah, you crazy Australians!