Writing on
Poll Bludger, Bushfire Bill has made the telling point that every time someone talks down our economy, another small business, and larger ones too, are placed in jeopardy. And who is it that most often talks our economy down? You know. Tony Abbott and Joe Hockey. And when they need a little help, Andrew Robb and Mathias Cormann are always at the ready.
Yet we know that when they come out and disparage the economy, it is entirely a political strategy. Not for a moment do they believe that the economy is performing as poorly as they portray. When they go overseas they talk it up; they claim ‘bragging rights’ for Australia. Yet here they talk it down.
First, let’s get an idea of how consumers and businessmen view the economy, then look at the extent of the ‘talking down the economy’ problem, and finally we’ll take a look as BB’s novel counter move.
Business and consumer confidence are a reflection of how the state of the economy is viewed by those who manufacture or sell goods on the one hand and those that buy them on the other. There are several measures used in Australia. Although Greg Jericho shows in his comprehensive article in May about consumer confidence in
The Drum that its correlation with other measures of economic activity is imprecise, he does agree that
“consumer confidence is worth measuring, if only because it does give us insight into how consumers feel, and how the economy is being reported, and how well the Government is selling its view of the economy." Roy Morgan runs a
weekly consumer confidence rating. This is
the last report – 3-4 November. It shows the rating
“has risen strongly to 115.4 (up 2.7pts) driven by increasing confidence about the next 12 months with 41% (up 3%) of Australians expecting their family to be ‘better off financially’ this time next year and 29% (up 2%) expecting ‘good times’ for the Australian economy over the next 12 months.” Another is the
Westpac Melbourne Institute Index of Consumer Sentiment,
which is an average of five component indexes which reflect consumers' evaluations of their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and the next five years, and buying conditions for major household items. Compiled from a survey of 1,200 Australians, index scores below 100 indicate that pessimists outweigh optimists. Historically, from 1974 until 2012, Australia Consumer Confidence averaged 101.85 reaching an all time high of 127.67 in January of 2005 and a record low of 64.61 in November of 1990. This week it is at a 19-month high, the best since April 2011, at 104.
For business confidence there is the
Australia Business Confidence measure.
The National Australia Bank's monthly survey of business confidence measures current performance of the non-farm business sector and is based on a survey of around 350 small to large sized companies. Historically, from 1997 until 2012, Australia Business Confidence averaged 6.13 reaching an all time high of 21.10 in May of 2002 and a record low of -31.60 in January of 2009. A survey taken in mid October shows it was -1 in September, down from 0 in August. A look at the graph shows it has hovered three to four points above or below zero for about a year. This week a survey by the Australian Institute of Company Directors shows that confidence among the 500 company directors surveyed is at its lowest level in two years, which the spokesman attributes to the slowing local and global economies, low consumer confidence, a high Australian dollar, regulation, and low productivity.
It is against this background of measures that we need to ask what is affecting the attitudes of consumers and businessmen. As with all measures of economic activity, the factors are complex, multiple, and interacting, but some stand out as likely to be highly relevant.
The situation in Europe appears to weigh heavily on both consumers and business. The gloom that we hear almost every day about Greece, and if it’s not Greece, it’s Spain or even Italy, is depressing. People are worried about a Greek default and a possible domino effect across Europe and the globe. The US economy is also a worry and all the talk of the US economy going over a ‘fiscal cliff’ has frightened people. It is noteworthy that since President Obama’s re-election just a few days ago, concern about the fiscal cliff at first diminished, but has escalated again after recent tough talk from both the Republicans and the President.
Another factor that must still occupy people’s minds is the GFC. Many were over-committed when it hit – maxed out on their credit card and struggling with mortgage repayments on their McMansions, homes they really could not afford. The GFC brought them up with a jolt, scared them about their spending, and pushed them towards austerity and saving instead of spending. This persists, although it may now be easing. We saw this when the first cash payments were made in response to the GFC, where much of the payments was banked. This was an appropriate response as many were living beyond their means, putting purchases on the never-never, and headed for financial distress. Consumers felt less confident, they spent more prudently, and business suffered as consumers bought less. Having created a ‘buy now, pay years later’ mentality among his Harvey Norman customers for years, Gerry Harvey screamed blue murder because his customers were no longer buying as before.
No doubt there are other local as well as global factors that influence people’s attitudes and confidence, and that of businessmen, but it is hard to discount the negative talk of the Leader of the Opposition and the Shadow Treasurer, as well as the Shadow Finance Minister, Andrew Robb, and the Assistant Opposition Treasury Spokesman, Mathias Cormann, as a contributory factor to the less than healthy confidence ratings of consumers and businessmen.
We don’t have to go back far to see examples of the Opposition talking down the economy, despite it being the most robust in the developed world and the envy of G20 finance ministers. Only last month in
Tony Abbott Talking Down the Economy is Living up to His Name, Says Wayne Swan, Erik Pineda reported that Tony Abbott had supported the observation by David Murray, once head of the Commonwealth Bank and Australia’s Future Fund, that he was worried by
Australia's low productivity and too high foreign debt, which…were clear recipes that brought down the economies of many in Europe, specifically that of Greece. Abbott added:
"The lesson of Europe is that countries can go very quickly from a strong position to a parlous position if things aren't well managed… Australia could easily go down the drain, in the same way key economies in Europe did.” Imagine the effect of such an alarming comment on people already worried about the situation in Europe. Wayne Swan retorted that Abbott had
“sunk to new depths of negativity and economic recklessness in talking our economy down," and that for him
“to compare the local setting to that of Europe was both out of context and irresponsible”, as indeed it was. Julia Gillard said it was absurd
"to compare our circumstances to Greece", and that it was
"grossly irresponsible and wrong". She added:
"…markets listen to what political leaders say, this can have repercussions in the real world that matter for the Australian economy." In an October 3 piece in
The Australian:
Abbott talking down economy on mining boom, says Gillard, Lanai Vasek reports that Tony Abbott said:
“a sooner-than-expected end to the mining boom was the result of Labor's poor economic policy and that all booms had to finish but that Labor had stifled the current resources boom with its Minerals Resource Rent Tax.” Julia Gillard responded:
"That is clearly a nonsense remark and it is wrong and inappropriate for anybody to be talking the Australian economy down. We've got a resources boom where we are yet to see the investment peak and the production peak.” Reflect on the effect of that Abbott remark on confidence. Joe Hockey talks down the economy so often it would take several pieces to document them all. He has consistently berated the Government’s economic policies, and echoing Tony Abbott, has labelled the Gillard Government as the worst government in Australian political history, unable to manage money, addicted to spending, debt and deficit, and one that will never bring down a surplus budget. No matter how good the economic news, he will talk it down and turn it into a negative.
Last month,
David Bradbury, Assistant Treasurer had this to say:
“Shadow Treasurer and good news hater Joe Hockey was belting out tunes from his favourite broken record again today with his relentless talking down of Australia's economy.
“The hard facts that Mr Hockey wants to deny are:
“Yesterday's IMF's October 2012 World Economic Outlook showed Australia is now the world's 12th largest economy and has leapfrogged three places ahead under the Labor Government, after slipping back three places under the previous government.
“The Australian economy has been growing for 21 consecutive years, not shrinking as Tony Abbott has said.
“Tax to GDP is lower under this Labor Government than it was when the Liberal Government left office.
“Interest rates are lower than at any time under the former Liberal Government.
“Unemployment remains low at just over 5 per cent and at a time when the world has shed millions of jobs, Australia has created around 800,000 jobs.
“The day after the IMF upgraded the ranking of the Australian economy, Mr Hockey insisted on peddling his doom and gloom in a disgraceful effort to undermine confidence and make life harder for Australian families and businesses…Mr Hockey just wants to distract attention from his $70 billion budget crater and his secret plans to slash tens of thousands of jobs and cut frontline services. Mr Hockey should stop talking the economy down and come clean with how he is going to fund his gaping budget hole.” When Wayne Swan was named Treasurer of the Year by
Euromoney magazine, Hockey talked Swan's accolade down as reported in
Swan soars before hit with the hockey stick. In doing so, Hockey managed to insult the economies of several developing countries, whose chief finance ministers have previously received the
Euromoney award. Said Hockey:
''Over the last few years we've had two Slovakian ministers, a Serbian, a Nigerian, a Bulgarian . . . 2001 a Pakistani finance minister, that's quite an extraordinary one, that one…That's not any basis upon which I can give my endorsement to the Treasurer.” Hockey has not a trace of charity; knocking is his only device. This talking down of the economy is not new. Earlier this year in
Julia Gillard slams Andrew Robb over talking down economy Ben Packham wrote:
“Julia Gillard has accused opposition finance spokesman Andrew Robb of "deeply irresponsible conduct" after he declared Australia's economy was at risk of a European-style meltdown.”
“Mr Robb told The Australian the nation's debt growth had been outstripped only by global financial crisis casualties Iceland and Ireland, leaving the nation vulnerable to a fall in the nation's terms of trade.
“The Prime Minister said in reality, Australia had received a triple-A rating from all three ratings agencies, a feat not achieved before including under the former Howard government.
“She said Mr Robb's comments were themselves a risk to the Australian economy: "We are at a time in the world economy where there is volatility out of the eurozone." That means that markets are skittish. That means it's an incredibly dangerous time for people to be spruiking nonsense about the Australian economy. And that's what Mr Robb has been doing - talking our economy down." When Robb does appear, we know that dismal, cheerless economic gloom will be all he is able to offer. Mathias Cormann is always ready to join the fray. In the
Senate he asked:
“Will the government now concede that its carbon tax, its mining tax, its massive increases in red and green tape, increased union militancy on its watch and all of its other anti-mining policies and anti-mining rhetoric have hurt Australia's economic fortunes?” to which Senator Chris Evans responded:
“Relentlessly talking down the economy in this country by the Liberal and National parties is absolutely bad for confidence, bad for jobs. What we know is that there is record investment, a record pipeline of coming investment, and the mining industry remains strong.” Cormann went even further in
The Australian last month in
Labor's rush to pull veil over budget black hole a conjuring trick, asserting:
“Labor knows that's a serious problem for its fiscal credibility. It knows that the delivery of yet another deficit, the fifth Swan deficit in a row, will be seen by most for what it is - the conclusive proof (if that were required) that Labor cannot manage money.” If carping was a criterion of success in the Opposition finance team, Cormann would be a star. Talking down the economy has been a consistent Coalition theme for the last two years. It would take many pages to document all the instances. It never seems to occur to the Coalition finance team that all its negative talk is damaging to our economy. Of course, if they actually do know that, it makes their destructive actions all the more reprehensible. They are mimicking the strategy of the US Tea Party that was prepared to bring down the US economy in order to make President Obama look incompetent, and have him replaced by their man, Mitt Romney. They failed.
Why do businessmen not tell Abbott and Co. to shut their damaging mouths? Can’t they see they are wrecking their businesses? While consumer confidence is on the up, the businessmen are still miserable, their confidence dropping. Do they believe the doom and gloom perpetrated by the Coalition so-called finance team? Looks like it! Now for Bushfire Bill’s novel answer to the Coalition’s destructivity, one he offered on
Poll Bludger on
October 24. In response to another blogger’s comment that read:
“The Liberal Party could do itself and Australia a major, cleansing, favour: sack Mr Abbott, Ms Credlin and Mr Loughnane. This trio has spent the best part of four years wrecking the joint”, BB had this to say:
“The line I’ve used with my colleagues in the high-discretionary-spending area of high-end Home Entertainment has been simple:
“Every time Abbott or Hockey trash the economy, you lose another sale.”
“It works a treat.
“I then follow up with:
“If buyers have no confidence, then they won’t go out and make purchases. First cab off the rank will be your $xx,000 widget [insert name of expensive Home Entertainment toy here.]
“It really does get them thinking.
“My killer concluding line is:
“It’s not a game anymore. It’s not FUN anymore. It’s real. The Coalition is talking down YOUR business for no reason. They didn’t get their early election. All they have is a lead in the polls – and that’s fading away.”
“Is the damage they’ve done – and are still doing – to your business worth it?”
“It’s amazing how resonant these few simple lines can be. Even the drongo who wanted Gillard to fall over on gravel and break her face listened, eventually.” Later BB advises:
“The government should start this ball rolling, across all fronts. Put misogyny to one side. It’s important, but not as important as convicting the Coalition of directly affecting confidence and thus the economy.
“The aim of the campaign would be to have the punters so exasperated with the doom-and-gloom talk from the Coalition that they yell at their TV sets, “Just SHUT-UP Abbott!”
“In answer to the objection that “the government would say that”, you just reply:
"That's the government's JOB. Confidence is a real input to the economy. The government has a DUTY to talk confidence up, especially when it's warranted. Without confidence no one gets out of bed in the morning. And anyway, it's the best economy in the world. We SHOULD be bragging about it."
“Hammer it home. Make it stick.
“My own industry is easy, because it’s so sensitive to dorks like Can-Do Campbell saying things like “Queensland is the new Greece.” Other industries are harder nuts to crack, but do-able.
“The good thing about a confidence and anti-trash-talk campaign is that it’s not only clever, but has the virtue of being the correct, responsible and truthful thing to do.” That is very sound advice. It’s time the Government mounted a spirited proactive campaign of ‘knocking the knockers’, not just reacting to their destructive negativity that puts down OUR economy, the one upon which we all rely. What do you think?
