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‘I have always believed in miracles’ proclaimed a clearly overjoyed Scott Morrison, as he is poised to continue his Prime Ministership after his party won the apparently ‘unwinnable’ election about a week ago. The Prime Minister is entitled to his beliefs, but one wonders whether he can ignore the harsh reality of a substantial growth slowdown of the Australian economy and its sombre ramifications.

In March of this year, media reports were full of references to the fact that the Australian economy was experiencing ‘per capita recession’ – see here, for example. While the economy was not in a recession in a conventional sense (two consecutive quarters of negative overall GDP growth), growth in recent quarters was so slow that it fell below the population growth. Thus, per capita growth on a quarterly basis became negative. Here is how one leading Australian economist puts it:

“National accounts figures show that the Australian economy grew by just 0.2% in the last quarter of 2018…The shocking revelation was that Gross Domestic Product per person (a more relevant measure of living standards) actually slipped in the December quarter by 0.2%, on the back of a fall of 0.1% in the September quarter.

These are the first back-to-back quarters of negative GDP per capita growth in 13 years – since 2006…”

Per capita recession, if it persists, can be insidious, as it puts downward pressure on real wage growth which, in turn, can stymie household consumption growth. Given that household consumption represents 60% of Australian GDP, sluggish spending by households, in turn, puts downward pressure on per capita GDP growth. This is happening against a background of falling property prices in major metropolitan areas which effectively attenuates the role of a positive ‘wealth effect’ on consumer spending. It is also possible that Australia, like other OECD economies, has entered an era of ‘secular stagnation’ typified by persistent sub-par growth.

Despite these warning signs, the notion of per capita recession and its ramifications hardly featured during the election campaign. Yet, post-election, the Reserve Bank Governor has declared his hand. The RBA Governor stands ready to cut interest rates to support faltering growth and has expressed concern that this may not be enough unless there is adequate fiscal support.

The Prime Minister and his team are keen to project an era of continued prosperity built on the back of imminent tax cuts while brandishing the notion of a budget surplus. One wonders whether Scott Morrison and his colleagues in government are on a fool’s errand. Even if tax cuts are expeditiously done (which appears to be a big if), a well-known empirical regularity is that ‘tax multipliers’ are usually lower than ‘spending multipliers’  (that is, tax cuts have a moderate impact on aggregate demand relative to government expenditure, especially on infrastructure) and may not be enough to offset the impact of sluggish consumer spending on aggregate demand. Moreover, given that the Morrison government has pinned its credibility on attaining a budget surplus next year (and perhaps over the term of the new government), it has placed self-inflicted limits on pro-active fiscal policy. Instead of a growth strategy articulated in terms of significant investments in health, education, infrastructure and renewable energy which could stave off the risks of secular stagnation, the government appears committed to attaining a budget surplus regardless of changing economic circumstances.

The ‘miraculous’ election victory of the centre-right coalition suggests that the majority of Australian voters have, once again, entrusted their faith in the status quo. Unfortunately, accepting the status quo also means accepting the grim reality that poverty in Australia is high by OECD standards.

A recent evaluation uses an accepted international benchmark to conclude that more than three million people – or 13.2 % of the population – fall below the poverty line (defined as those earning below 50% of median income and adjusted for housing costs). The report also suggests that Australia has the 14th highest poverty rate among 34 OECD countries – see here for comparative data.

During the campaigns that were held prior to the Federal elections, one heard a lot about taxes and budget surpluses, but hardly anything about ways in which poverty in Australia can be reduced on a sustainable basis. Does anybody recall the major political parties making a bold and compassionate commitment that they will seek to reduce poverty in Australia to one of the lowest levels among OECD nations over the next five years? Such a proclamation would require a serious rethinking of inclusive economic and social policies and go beyond hackneyed statements about a ‘fair go’ society.

The Australian government funds both short-term and long-term awards geared towards developing countries.  Usually, Australian tertiary institutions make competitive bids to implement these awards. The International Business Development Unit of Griffith University recently won a bid to mount a short-term training programme geared towards mid-ranking bureaucrats in Indonesia representing a diverse range of ministries. The theme of this programme is ‘labour market forecasting needs for education policy’ which falls under the rubric of ‘Australia Awards Indonesia (AAI).’

I have the pleasure and privilege of being appointed a ‘course leader’. The programme has three components: (1) a pre-course component in Jakarta (2) an in-course component in Australia (Brisbane, with short study tours to Adelaide and Canberra) (3) a post-course component in Jakarta. The programme started in February of this year and concludes in July.

I have been involved with many short-term training programmes, mainly on behalf of the ILO, and also participated for three years in a New Delhi-based programme that was supported by IDRC, Canada. This capacity building initiative was geared towards early career researchers in South Asia. If I use these programmes as benchmarks, I would rate the current training programme for Indonesian policy-makers highly. I particularly like its emphasis on requiring participants to build a feasible and readily usable project that they could implement once they return to work in the post-training phase. I am expecting some concrete outcomes, such as new estimates of the digital economy using raw data from the labour force surveys, and original estimates of ‘NEET’ (young persons ‘not in employment, education or training’) also drawing on raw data from multiple surveys. Some participants are keen to develop an Indonesian version of a regular series on ‘Employment Outlook’ using an adapted Australian template. While the participants will be professionally enriched from these exercises, the beneficiaries are expected to be both broad and diverse.

Former Australian Prime Minister Kevin Rudd holds forth in a long, combative essay and develops his thesis of the ‘complacent country’. This is a self-conscious attempt to distinguish his ideas from Donald Horne’s memorable work on Australia as a ‘lucky’ country. ‘ The Rudd essay receives significant coverage in the Guardian.

Rudd takes the current Conservative government to task. Former Prime Minister Malcolm Turnbull is dismissed as ‘Tony Abbot with manners’ (ouch!). The current Prime Minister Scott Morrison is vilified as someone whose cultivated image of ‘suburban mediocrity’  is merely a veneer to hide the true colours of a hard-right Pentecostal and Christian ideologue.

Rudd portrays himself as being part of the sensible, but lonely, ‘centre-left’ and lambasts both the ‘chic left’ and the ‘far right’.  He calls for Australia to recommit itself to a large-scale immigration programme and his vision of ‘Big Australia’. He warns the Labour Party that it must take seriously his view that it is ‘at war’  with the noxious ‘Murdoch press’.

It remains to be seen how his views will be received by the mainstream political parties in an election year. Rudd has a flawed personality, but he is shaping up to be a public intellectual whose ideas are worth reflecting on even if one disagrees with them.

Is India in the grip of an employment crisis? This question has acquired a good deal of salience in the wake of media reports that the Indian government has tried to suppress an official report that shows that unemployment has reached historically unprecedented levels. The key findings of the report were leaked to a leading financial newspaper in India.

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