1. Unsustainable growth of government debt
Commonwealth and State govts debt currently approx $800B. At average interest cost of 4% pa, this means interest payments of $32b. By 2020, debt will be approx $1Tr. With average interest costs of, say, 8%, this will mean a national interest bill of $80b. Average liability of 25 million Aussies for government debt will be $200,000.
2. Household debt by 2020 will be of the order of 2 times household income.
Debt per household by 2020 will be even higher than current crisis levels. Extreme house prices help to explain excessive debt levels, but also a consequence of consumption-focus of most Australians and current very low rates of interest. This will change with the severe recession to come, possibly by 2020.
3. Falling numbers of full-time jobs and increasing numbers of people who declare themselves underemployed, with wages barely growing.
Very poor employment prospects help to explain wages barely growing. Is Australia a high wage growth or a low growth nation? With the world's highest immigration (relative to population) we need to generate more jobs if wages are to keep rising.
4. Uncontrolled increases on housing prices in Sydney and Melbourne.
Rapid population growth is one of the sources of excessive house prices. Growth of near 20 % in the past year in Sydney and Melbourne house prices is another unsustainable Australian trend. Is a soft slowing possible, dear readers? More likely a hard landing leading to severe recession.
5. No realistic prospect of reducing debt to manageable levels with existing policies.
The Coalition has no plans to lead to budget surplus, merely to 'balance the books'. Does Australia need a severe recession to fix the various unsustainable trends currently wrecking the Australian economy.
6. No apparent way to avoid expensive and unreliable electricity in coming 5-7 years.
Batteries are improving but are currently unable to cope with whole days with little sun and no wind. Gas or coal-fired electricity generation is required but prospect of this look poor. Price and reliability of supply will be highly likely to pressure people whose wages are static and where welfare is limited.
7. No apparent way to avoid sharply rising costs of living for ordinary Australians.
As well as expensive electricity, prices of water, basic foods and other rises will produce many more strugglers. People struggling to keep paying excessive mortgages will feel real pain and many will lose their homes.
8. Rising cost of debt servicing by governments will limit necessary spending on defence, border security, welfare, education and both national and regional infrastructure.
Servicing rising government and household debts against a background of high costs and low wages growth will limit spending on all the categories of government spending listed above. Household spending will also be heavily constrained.
9. Equity between states has become unacceptable.
Compare WA's GST rebate with that of the Northern Territory. Or allocations of Federal handouts for infrastructure spending.
1.10. Unworkable degree of national political cohesion will severely limit any government's ability to govern.
A populist Senate and an unreasonable Labor opposition in the Reps makes effective governing impossible, at least with the current government. We need a Treasurer willing to leave the 'she'll be right' rhetoric to telling it how really is, and to make clear sense in doing so.
We shall outline such a program next week, but one thing is sure - current policy settings are leading Australia into a big mess and deep recession.
Fiona Prior sees a theatre piece that is so blackly funny and gruesome it is more an old Australian tall-tale of the ilk of Sweeney Todd, than a theatre piece that is highly sophisticated and well written. More of Sydney Theatre Company’s The Bleeding Tree here.
Image of the week