Did Aus really come close to recession?

I am still amazed by the people out there that think the recession for a large part of the world was a beat-up.

Here's more info on how the rest of the world sees our recent performance.

www.smh.com.au/politics/federal/labor-deserves-some-credit-not-death-at-the-ballot-box-20100817-128at.html

"We may live in a globalised world but it hasn't made our election campaigns any less parochial and inward-looking. Perhaps in an effort to raise Australians' economic literacy, the Economic Society recently sponsored a national tour by Professor Joe Stiglitz, a Nobel prize winner and one of the world's most illustrious economists.

Some brave soul asked him if he'd learnt anything while he was here. Well, he said politely, there were a few things that had puzzled him. He couldn't understand why we didn't know the success of the Rudd government's budgetary stimulus - explained by its size, timing and design - was the envy of the other G20 countries."

I'm voting for apathy.

To be honest I'm really confused. I am well aware of how well, perhaps surprisingly, Labor handled the GFC. Yes, yes, Labor had a lot of cash left over from previous govt. etc., but that is beside the point.

But I also thought that the school building debacle was a right cock-up, and that Gillard should have perhaps even been replaced, and yet look where she is now. Don't like at all.

On the other hand the current Liberal party is hopeless, worst ever. I'm not even sure they can count, some of their economic policy has holes in it that can only be described as amateur. And Abbot keeps replying to questions saying that, for example, he doesn't understand the science of global warming and that is best left to the scientists, yet he still holds an opposing view to 98% of scientists. He's used a similar line for technology and the National Broadband Network.

What a clown. i.e. "I don't understand x, I'll leave x up to the x experts, yet I will now completely ignore and oppose the x experts (for votes)".

You know what? Global warming has spooked me lately, and I've come around to thinking we may just have a chance, if only we can kill off all the baby boomers. **** the economy, I'm voting ecology. There's not much point in a healthy economy if the planet is ****ed, is there?

edit: apologies for swearing and politics, both banned on this forum.

edit edit: I must stop these caffeine fuelled rants

Vote enough Greens = Greens IN (not neccessarily passed onto Lab).

Don't forget you can vote greens but choose to put your prefs elsewhere if you take another 30 secs with your ballot (after 20mins in line why not spend another 30 secs).

^ moby do you mean the privatisation laws that hawke/keating put in place.

seriously from federal to state to local both major parties have privatised and contracted out. currently in qld state labor is selling off everything due to the debt they've created over the last 10+ years.

the more recent howard lib days effected zero debt due to policy and as pointed out by abbot recently it was the policy (started by keating) that got us through, if there wasn't a surplus budget created by the previous governemtn we would now be in dedt to the current levels + the previous deficit would we not?

A recession is defined as two successive quarters of negative GDP growth. We had one negative quarter preceded by a very low positive one. If the terms of trade had not been so high in our favour (due to high Aussie dollar), then we would definitely have (technically) experienced recession.

But what are the effects of GDP growth, after all this is just a bunch of numbers. Two things that GDP growth affects are unemployment and interest rates, and these are the things that the average person directly is affected by. These are the things that the parties should be discussing rather than the term recession.

Two things probably helped soften the downturn, fiscal policy (stimulus) and monetary policy (lowering interest rates). Both were of about the same magnitude. But it is very complex to be able to say how these figures translate directly to GDP growth.

In the end, I don't believe that the Government were the heroes in saving us from a recession because their influence was limited and hard to quantify over such a short time frame. It is also not possible to compare what would have happened if the Coalition were in government because you can't re-run the experiment! So the whole argument about avoiding the recession because of the stimulus package really gives me the ****s, because it really dumbs down something that is highly complex.

Voting greens isn't completely giving a vote to Labor, even ignoring preferences. Just look at how all those votes for Pauline Hanson influenced the Liberals.

BTW, interesting fact, Labor is/was spelled that way in anticipation of the Americanisation of Australian English.

And on the original question the GFC was unnoticeable here. If you didn't read about it in the papers I don't think you'd even notice. Very different what I hear from colleagues overseas. Mass unemployment in certain fields. Complete disaster for some.

@FormulaNova: That's exactly my point, you can't go back in time and give the Coalition a shot to see what happens and them compare afterwards. They probably would have spent a bit of cash in different areas on a different time frame via stimulatory fiscal policy. The sudden drop of interest rates by the (independent) RBA would have said to any Govt that they should think about doing something. The net result would probably have been about the same regardless of Govt. The unemployment rate sharply rose by nearly 2% at the start of the GFC and hasn't come back down yet. Recession is just a technical term, but unemployment is much more tangible effect.

In terms of other approaches, a Gov't only has two things it can do, spend or tax. So the alternative could have been to lower taxes. But this takes longer and is politically unpopular to rectify later. It is much easier to simply make a one-off payment rather than a one-off tax cut.

@EvlPanda: I work in the shipbuilding industry and we have noticed a large and immediate drop off in the whole industry as soon as the GFC started. I think a lot of export industries will suffer until the rest of the world recovers which will unfortunately still be a long time away. This will filter through to the Australian economy and a local stimulus package ain't gunna help it.

The other thing to keep in mind is falls in global stock markets and property prices. Many self-funded retirees have seen significant reductions in their net wealth since the GFC. I think they really took a battering during the GFC and will be quite pessimistic until they see their stock portfolios rise back to pre-GFC levels. This is something that doesn't show up in GDP figures.

So perhaps there are some areas that coasted through a small downturn, but some industries and groups are still suffering. IMO it is misleading to analyse the state of an economy purely based on GDP figures.

Coalition saved mega bucks by being tight as a crab's freckle and spending zip on schools, hospitals, social welfare, public service and (generally speaking) raising personal taxes over more than a decade.

This left Labor with a BIG catch up job to get schools etc back from the point of starvation.

Later when the brown stuff hit the GFC fan, the surplus the coalition had tightly held onto meant that Labor did have the 'get outta jail' pass in the kitty when needed.

It still took BIG kahunas to splurge and get the funds into the system (despite loud protests from the coalition that it was folly) via cash hand-outs , then infrastucture spending on a massive scale - which ultimately saved all our bacons. The timing and implimentation was perfect and had an incredibly positive effect.

The irony of the Libs neglecting the schools etc was that the money later thrown at schools etc (and despite media frothing over a handful of rorts) was desperately needed after a decade of starvation and put to (mostly) good use.


It still disgusts me that the coalition clambered for attention and negative press that had us all doubting the govt's (now lauded all around the world) policy to spend the kitty to save the farm. The coalition did everything they could to discredit the policy (even though they may well have done it themselves had they still - god forbid - been driving us back to the 1950's in the ol' FJ Holden).

The attempt to discredit the spending could well have undone the intention (to create spending/consumer confidence etc) and fkd us all.

As in a time of threat to the homeland - it is not the time to play popularity contests, it is the time to knuckle down together to get us all outta the brown stuff. Most likely Labor would have behaved just as appallingly.

They all seem to forget - they are supposed work for us not for themselves. Disgraceful.

Both major parties do not deserve my vote. I don't vote for self-centred children too afraid/ignorant to move this country forward and make it as good as it can be for my kids.

i think there's a few things here that are more about miss information from the media which confuses things.

firstly. state schools are not funded by the federal government. the majority of state school funding comes from the state governments. the federal gov funds the private schools. so a lack of spending in state schools falls directly on state governments. most of those state governemtns are labor.

secondly, the opposition supported the first stimulus package. it was the second and third incarnations that they dissagreed with from a point of view of the size and use of the money. i think the dissasterous schools projects and insulation projects proves that they were right. people often confuse the debate on the second and third packages with the first package.

thirdly, the opposition is not saying it would not have put australia into deficit. they are saying it would have been a smaller deficit and would be paid off faster than the labor party.

fourthly, both parties are focusing on surplus because that's about all the average punter understands and about the only good news. the question to ask is when will either party pay off the debt from the stimulus. ($90b). it's almost imposible to find anyhitng thing. 10 years, 20 years? how long? the only thing out there is that libs are saying their main priority is to pay of the debt and labors is still talking spending.

fifth point - health is the responsibility of STATE governments. yes they receive some funding from federal taxes but it is the States responisiblity. so the STATE is responsible for the infrustructure. it's far to easy to blame the federal government. even the federal labor gov tried to reform the system as it didn't beleive the states were doing the job properly.

and on and on and on......

And - it will probably really upset some people but gotta say :

Labour governments raise taxes and spend money
Conservative Governments lower taxes and cut spending

Which you prefer is your choice, I am sure you will conclude what you think is my choice.

The above is a generalisation, and I know somebody will post a Utube clip that shows I am a fool for even suggesting the notion, but that is essentially the definition of left and right wing politics. Think big, think general, don't quote the liberal government of 1824 or anything like that, I am suggesting the definition of left and right.

The fact a labour government spent alot of money is not very unique. Luckily they had the excuse of a recession to justify their spending and going from record surplus to record defecit in record time. Hopefully they have not got addicted to spending at that rate, and can moderate it for the next four years.

(and ... before you send the boogeyman around again - I don't think record surplus from a budget is any better than record debt.)

^lol,

i've shared the love in the past. i like to vote about the policies but i must be honest i agree with carantoc that the differences between left and right is fairly blatent to me also.

there are 3 things i am certain of.

1. the older i get the more i lean right
2. i am getting older
3. hockey for pm

to much hypothetical in there for me carantoc.

Too much interesting and intelligent debate going on here. I must be in the wrong place...

i can't believe you guys are actually suggesting people vote based on who will make a better oppostion. without meaning to offend. that's so defeatist and is hardly going to "move the nation forward".

logman, if you haven't got the fiscal wise you can't pay for any of the social outcomes you're suggesting. that's the problem every labor governemnt has faced. i guess that's why labor run deficits.

the other point for me is when labor won the last election i was stunned, on record the howard governemnt was probably one of the best governments australia has had. zero debt, low unemployment, low interest rates, dropping taxes, social welfare payments on the increase, general standard of living across the country on the increase, future funds created etc etc...... things were looking very good overall.

flip side of the coin, i figured well at least we will see some positive action regards climate issues now labor has won.

i'm still waiting. they broke nearly every promise the made. even by their own admission they had lost their way and were unable of taking australia forward. in 3 years they self distructed. party philosophy aside, how is that a good thing.