The news that Australia’s growth domestic profit (GDP) had fallen for the first time in five years sent shock waves around the country when it was announced earlier this week.
Economists immediately arched up and Federal Treasurer Scott Morrison said it was time for the country to pull its socks up and get back into the business of making money.
After campaigning hard on the promise to drive jobs and growth, it’s no doubt more than a little disappointing and, some would say, embarrassing that the government has failed on this issue in the first year of reelection.
After steadily climbing for fives years in a row, Australia’s GDP dipped by 0.5 per cent in the September quarter – a much larger drop than expected by even the best economists out there.
Mr Morrison, being hounded with questions from reporters, said the numbers were a strong warning bell that the government needed to act fast.
The numbers are “not just a reminder, not just a wake-up call, but a demand to support economic policies that drive investment and jobs”, he said.
So what kind of policies are we talking about then? Infrastructure would surely be a big one as new projects open doors for thousands of tradies, engineers and experts across the country.
Tech is one of the biggest sectors set to bring in jobs and the big bucks over the next few decades, so the government will no doubt ramp up this area, too.
Most of the new jobs will likely focus on supplying work for the younger generation – sorry over 60s, it looks like the government will be leaving us behind again – to drive long-term investment and growth.
So why exactly did the GDP fall so fast and so furiously this past quarter? One reason is the government wound back its spending, accounting for 0.1 percentage points of the 0.5 per cent drop, and business investment also fell.
While previous drops have been accredited to major events or disasters, it looks like this one was all the government’s doing.
Labor treasury spokesman Chris Bowen delivered his own harsh assessment of the news.
This is the second-worst economic growth result in 25 years,” he said.
“It’s only the fourth negative quarter since 1991, and on the only other occasions there were good reasons. In 2011 it was dealing with Cyclone Yasi in Queensland, in 2009 it was the greatest international downturn since the Great Depression, and in 2000 it was the aftermath of the Sydney Olympics.
It is also the case that this figure is worse than 2011, worse than 2000, and comparable with 2009, in the middle of the global financial crisis.”
Aside from finger pointing though, it looks like it really is time for Australia and the government to sit up and pull its finger out if we’re to get the economy back in the black by 2021 as promised.
With talk lately about foreign ownership and bringing in skilled migrants, some are calling for the government to work on boosting the economy by giving jobs to Aussies and producing more products in-house.
Others though, argue the best way to quickly grow the economy is to bring more people into the country to drive spending this way.
Either way, it looks like the government will be focusing a lot on the economy next year – once they return from their summer vacations – and doing it’s best to deliver its election promise.
What are your thoughts on this?