Today’s national account figures show that GDP per capita fell by 0.4% during the June quarter. This is the 6th consecutive quarter of negative GDP per capita growth, showing that Australia is in a per capita recession amid an ongoing inequality crisis.
Key Points:
GDP per capita growth of –0.4% represents the 6th consecutive quarter of negative per capita growth in Australia while total GDP growth of 0.2% is historically weak.
Household consumption fell by 0.2%, the weakest growth rate since the COVID-19 lockdowns in the September quarter of 2021.
Government expenditure contributed 0.3% to GDP growth.
Interest rates are a blunt instrument that are causing normal Australians significant financial pain while the tax system is turbocharging wealth inequality.
“Today’s figures show that Australia’s economy has gone backwards for a record six consecutive quarters once you take into account population growth,” said Greg Jericho, Chief Economist at The Australia Institute.
“They confirm that households have been smashed by high interest rates despite our research showing that inflation has been mostly driven by company profits and supply-side factors. Fortunately, government spending has helped stop the economy from shrinking.
“Today’s figures highlight again how necessary the change to the Stage 3 tax cuts were, which will deliver some much-needed relief to low- and middle-income households rather than overwhelmingly benefit the rich.
GDP growth figures released today show the economy almost grinding to a halt. The economy grew by only 0.2% for the quarter and just 1% over the last year. The release of these GDP figures shows that the Reserve Bank is wrong when it says, “the economy is running a bit hot” and it is time to start cutting interest rates.
The only reason the economy has seen any growth is because of the contribution of government spending. Without this contribution the economy would have shrunk by 0.2% this quarter. Worst still, without the government’s contribution the economy wouldn’t have grown at all over the last year.
This highlights just how weak the private sector is right now. Household spending is down. Business investment is down. The private sector has been smashed by the rapid rise in interest rates, demand has dried up and production is grinding to a halt.
The current economic conditions highlight how close the Australian economy is to recession and how damaging high interest rates have been to the economy. With inflation falling in Australia and around the world it is time for the Reserve Bank to follow other central banks and cut interest rates.
On this episode of Follow the Money, Ebony Bennett discusses the latest in federal politics with Professor Mark Kenny, former Chief Political Correspondent for The Sydney Morning Herald, The Age and The Canberra Times.
This discussion was recorded on Tuesday 3 September 2024 and things may have changed since recording.
Guest: Mark Kenny, Director, ANU Australian Studies Institute // @markgkenny
Host: Ebony Bennett, the Australia Institute // @ebony_bennett
Repeat delays are testament to how fiendishly difficult it is to get changes to electoral law right. The most recent delay has been attributed to constitutional concerns: how to design laws that limit political finance without violating freedom of political expression, which is protected by the constitution.
The High Court has reined in legislative overreach, and may get another chance to do so: last month former state independent candidates wrote to Premier Jacinta Allan arguing the carveout in Victoria’s political donation laws for the major parties’ funding vehicles is unconstitutional. Victoria introduced strict donations caps ahead of the last election. There were three independent MPs in the state’s lower house. After the election, none remained.
Only in politics does the winning team get to change the rules of the game. The risk is that MPs may vote to skew the electoral system to their own benefit, at the expense of a level playing field.
The Albanese government has given some clues of its plans, including a cap on donations, and a cap on spending of somewhat less than $1 million per candidate. One million dollars sounds like an eyewatering sum, but putting up a viable challenge to a sitting MP does not come cheap. The Australia Institute calculates each MP enjoys almost $3 million in incumbency advantages, plus non-financial benefits.
Four decades ago, faced with a series of economic, political and social crises, business and government leaders in Australia and many other nations were convinced by a well organised ideological insurgency of the need for what at first was presented as a series of technical changes in economic policy. However, neoliberalism quickly became a revolutionary agenda for re-ordering the social democratic state.
Captured: How neoliberalism transformed the Australian state directs attention to the central role of state power not just to remake markets, but also to remake a broad swathe of political life, social policy and citizenship.
Republicans have tried to pin the Vice-President as ‘Comrade Kamala’, but are her economic policies all that radical? On this special After America and Dollars & Sense crossover episode, Dr Emma Shortis and Dr Greg Jericho discuss Harris’ economic agenda.
This discussion was recorded on Friday 30 August 2024 and things may have changed since recording.
To mark PPE@10 this feature starts a series of posts to celebrate ten years of Progress in Political Economy (PPE) as a blog that has addressed the worldliness of critical political economy issues since 2014.
Last month, BlackRock, the world’s largest asset manager, made headlines as its support for shareholder proposals on environmental, social and governance (ESG) issues tanked at 4%, down from a peak of 47% in 2021.
This looks like an extraordinary pivot because in 2020 BlackRock became infamous as a posterchild for ESG investing. In his open letters to investors and companies that year, BlackRock CEO Larry Fink declared a ‘fundamental reshaping of finance’ whereby long term company profits would be dependent on ‘embracing purpose and considering the needs of a broad range of stakeholders’. He claimed this would involve putting sustainability at the heart of BlackRock’s investment strategy and integrating ESG factors into its investment decision making.
Chinese electric vehicles are transforming Australia’s car market. Are we getting a good deal? Sanjoy Paul and Priyabrata Chowdhury China’s electric vehicle (EV) manufacturers are…
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In a free market, drugs are cheap Government-granted patent monopolies make them expensive Dean Baker This simple point was left out of a Washington Post…
“Economics”, our master narrative manufacturing our demise Richard Parker If economists could manage to get themselves thought of as humble, competent people on a level…
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Peter Dutton and Donald Trump have a knack for political division. There’s no doubt that stoking fear and the politics of division can be brutally effective, but the last thing Australia needs is to import the damaging culture wars of the American far right, dominated by bonkers conspiracy theories adhered to by militant acolytes untroubled by reality.
Trump vowed to conduct ‘ideological screenings’ and to bar refugees from Gaza if he wins the Presidency and he’s also said he will bring back his controversial ‘Muslim ban’ on immigration. Similarly, Dutton has been echoing Trump’s call to ban refugees from Gaza, arguing that accepting people coming from Gaza is a national security risk. Zali Steggall described the policy as ‘inherently racist’ and this week Treasurer Jim Chalmers said: “[Dutton] divides deliberately, almost pathologically, and that sort of division in our leadership, in our society, right now is worse than disappointing — it’s dangerous.”
On this episode of Dollars & Sense, Greg and Elinor discuss the Greens’ ‘Robin Hood’ tax proposal, post-pandemic profits and the latest inflation data.
Greg Jericho is Chief Economist at the Australia Institute and the Centre for Future Work and popular columnist of Grogonomics with Guardian Australia. Each week on Dollars & Sense, Greg dives into the latest economic figures to explain what they can tell us about what’s happening in the economy, how it will impact you and where things are headed.
Host: Greg Jericho, Chief Economist, the Australia Institute and Centre for Future Work // @GrogsGamut
Host: Elinor Johnston-Leek, Senior Content Producer, the Australia Institute // @ElinorJ_L
This article was originally published, in slightly different form, on Southern Urbanism. It is shared here with permission. In-line images were provided by the writer.
The media industry has changed radically over the last three decades, transformed by the 24-hour news cycle, social media and the tech giants, and now artificial intelligence. On this special episode of Follow the Money, recorded live at Politics in the Pub in Canberra, Minister Ed Husic, Senator Sarah Hanson-Young and Karen Percy from the Media, Entertainment & Arts Alliance (MEAA) discuss technology, trust and the future of journalism.
This discussion was recorded live on Wednesday 21 August 2024 and things may have changed since recording.
Guest: The Hon Ed Husic MP, Minister for Industry and Science
Guest: Senator Sarah Hanson-Young, Greens Arts & Communications spokesperson // @sarahinthesen8
Guest: Karen Percy, Federal President (Media), Media, Entertainment & Arts Alliance (MEAA) // @PercyKaren
Host: Richard Denniss, Executive Director, the Australia Institute // @RDNS_TAI
Host: Ebony Bennett, Deputy Director, the Australia Institute // @ebony_bennett
Theme music: Pulse and Thrum; additional music by Blue Dot Sessions
“What do you need to solve the climate crisis? The answer is, everyone.” This quote from climate scientist Katherine Hayhoe highlights the importance of collective action, which is crucial in the travel industry, an industry which is at the heart of the global economy yet contributes substantially to climate change. The travel and tourism sector contributed 9.1% to global GDP in 2023, but it is responsible for 8% of global GHG emissions. Due to these environmental externalities, many key travel companies have shifted their focus so that they are no longer solely prioritising profit maximisation and are now trying to mitigate their environmental damage. To ensure that the global tourism industry doesn’t continue to compromise our planet, sustainable travel practices must be adopted by all. In this blog post we explore three ways in which travel for tourism can be conducted more sustainably: eco-tourism, carbon emissions offsetting, and global environmental projects. Additionally, we will discuss how governments can support and encourage sustainable tourism through regulations and subsidies.
The following opinion piece was written by Gareth Hutchens and published in the ABC on Sunday 31st March, 2024. It is reproduced here with permission. This piece of writing was part of a 3-part series, awarded the 2024 E.J. Craigie Writing Award.
In February 2024, Taylor Swift’s The Eras Tour ignited a diplomatic dispute among ASEAN countries, after the Singaporean government subsidised the tour at a cost of US$2-3m per show, in exchange for Swift to perform her Asian shows exclusively in Singapore. In response Singapore’s neighbours complained of ‘betrayal’, arguing they could have also subsidised Swift’s concerts. This competition among ASEAN countries to host such ‘mega-concerts’ stems from the economic boost such can provide, a phenomenon dubbed ‘Swiftonomics’. It is reported that after The Eras Tour, Singapore’s GDP increased by 0.2%. This case demonstrates how concerts can have substantial economic implications, as Southeast Asia’s ‘competition states’ jostle to attract the investment and growth opportunities that come with them.
This article was originally published, in slightly different form, on Southern Urbanism. It is shared here with permission. In-line images were provided by the writer.
This week the Pacific Islands Forum meeting in Tonga will see leaders from the region address the dramatic impact of climate change and the urgent need to reduce emissions. It is an important moment for the Australian government to reject the lies of the gas industry and acknowledge that approving more gas will ruin the livelihood of the millions living in the Pacific Islands.
Gas is a massive contributor to greenhouse gas emissions (the clue is in the name!) that cause climate change. And given the world has just experienced 13 straight months of record setting temperatures, it is brutally clear that we need to reduce emissions quickly and with much greater urgency than has been the case over the past decade. But reducing emissions is not compatible with gas company profits, so gas companies and their boosters in the media routinely bring out a scare of gas shortages and with it calls for more gas.
Australians have gone through another winter without running out of gas despite being told earlier this year that a gas shortage was very much on the cards. And so of course now the gas industry is warning that a gas shortage could still occur because… well… because the gas industry knows that the only way it can justify demanding the government approve new gas mines is if people think we are about to run out.
ABC journalist and podcaster Matthew Bevan joins Dr Emma Shortis on this After America to discuss the Democratic National Convention and Trump’s to set the agenda.
This discussion was recorded on Monday 26 August 2024 and things may have changed since recording.
Guest: Matthew Bevan, host and writer of If You’re Listening, the ABC // @MatthewBevan
Host: Emma Shortis, Senior Research for International & Security Affairs, the Australia Institute // @EmmaShortis
Whether lazing by the seaside during the summer, or escaping to exotic beaches during the winter, coastal regions have always been a space for relaxing. This form of travel is called ‘Coastal Tourism’, which is defined as the temporary movement of people to aquatic environments or ‘blue spaces’. Overtime, as recreation has become more valued to human wellbeing, coastal tourism has gained popularity through offering engaging scenery and a relaxing break from the day to day grind. With gaining popularity however, our natural spaces have been captured by the tourism industry, with large resorts dominating coastlines. Through sustainability scares and aggressive capitalism, our beaches are starting to lose their sex appeal.
Tourism and climate change; environmental impacts
Blue spaces are more than just natural resources. With island states, tropical beaches and surf coasts appealing to holiday goers, the profitability and subsequent privatisation of the tourism industry has shifted focus from the ecosystem and the cultural significance of the landscape. This is capitalist tourism, which favours economic benefits to the detriment of environmental sustainability.
This process, in conjunction with the threat of climate change, has global and local consequences.
For over two years now it has been clear that profits have been the main culprit of inflation, and that wages have not driven prices despite repeated warnings from the Reserve Bank and business groups that a wages breakout could be about to come and start a mythical “wage-price spiral”
The latest data on wage growth in Enterprise Agreements from the Fair Work Commission (FWC) is just the latest evidence that reveals how wrong those spreading a fear campaign about wages have been.
In the 3 months to 26 July this year, the 3 month weighted average of annual wage growth in enterprise agreements lodged with the FWC was 3.7% – down from a peak of 4.3% in October 2023. The last time the average was this low was in August last year. Importantly the 3.7% growth is lower than the most recent annual inflation figure of 3.8%.
While business groups and conservative media outlets continue to argue that wage growth is keeping inflation high, in reality – as has been the case for the past 2 years – wages are not driving inflation, indeed they are lowering it.
One of the most regular and biggest scare campaigns Australians are subjected to is that Australia is about to run out of gas – that households will not be able to run heaters in winter or the light will go out in summer and the air conditioners will stop working because there will be no gas to power the electricity.
These warnings are increasingly shrill. In March for example The Australian newspaper warned that “Urgent action needed if Australia is to avoid catastrophic gas shortfall”. Despite getting through winter without a catastrophe this morning The Australian newspaper is now warning, that a “Perfect storm’ warning” has been issued to Australia’s east coast energy market.
It is all balderdash.
Australia digs up and exports a lot of gas. A really, really large amount. How much? Try 82,000,000 tonnes of the stuff each year. That is the 2nd largest amount of LNG production in the world, suggesting we are pretty good at it. But all that gas ends up as global greenhouse gas emissions and we’re meant to be reducing emissions.
While the intention to reduce the influence of corporate political donations is welcome, the proposed legislation would disproportionately advantage incumbent parties, including enormous increases in public funding, much of which could be spent on election campaigning.
The Australia Institute’s submission to the government consultation into the Bill finds that:
On this episode of Dollars & Sense, Greg and Elinor get out the world’s tiniest violin for Australia’s big banks, who are finally having to compete to offer better mortgage rates, and discuss why three of the ‘big four’ are now offering less for term deposits.
Greg Jericho is Chief Economist at the Australia Institute and the Centre for Future Work and popular columnist of Grogonomics with Guardian Australia. Each week on Dollars & Sense, Greg dives into the latest economic figures to explain what they can tell us about what’s happening in the economy, how it will impact you and where things are headed.
Host: Greg Jericho, Chief Economist, the Australia Institute // @GrogsGamut
Host: Elinor Johnston-Leek, Senior Content Producer, the Australia Institute // @ElinorJ_L
We’re told it’s a cost-of-living crisis, but not everyone is feeling the pinch. New Australia Institute research shows that the ultra-rich are getting richer, thanks in part to Australia’s distorted tax system. On this episode of Follow the Money, Dr Richard Denniss and Dave Richardson join Dr Alice Grundy to discuss the growing problem of inequality and what we can do to fix it.
This discussion was recorded on Tuesday 20 August 2024 and things may have changed since recording.
Guest: Richard Denniss, Executive Director, the Australia Institute // @RDNS_TAI
Guest: David Richardson, Senior Research Fellow, the Australia Institute // @daverr01
Host: Alice Grundy, Anne Kantor Research Manager, the Australia Institute // @alicektg
Are alternative milks a suitable replacement for dairy milk? A paradigm shift is occurring in milk consumption, with plant-based alternatives gaining traction due to perceptions of their positive environmental impacts. Production requires less energy, water, and land, while demonstrably reducing greenhouse gas emissions. While concerns regarding nutritional parity with dairy milk exist, consumer preference for plant-based options is multi-faceted, encompassing health, ethical, and environmental considerations. This growing demand is reflected in a significant shift within agribusiness commodities. Marketing strategies now position plant-based milks as premium products, leveraging sustainability and health claims to fuel their remarkable industry rise.
From Farm to Future: Reducing Environmental Footprint with Plants
Making the switch to plant-based milks presents both advantages and disadvantages for the environment in the fight against climate change. When compared to dairy milk, plant-based substitutes often have a smaller environmental impact since they require less energy, water, and land and emit fewer greenhouse gases. In contrast to methane-intensive dairy farming, soy and oat milks are recognised for their efficient use of resources and reduced carbon emissions.
The billboards explain that major gas companies in the NT pay no royalties or petroleum resources tax, and that NT drivers contribute 30 times more in vehicle registration to NT Government revenue than the gas industry.
Key Points:
Australia Institute research has found over the last four years, multinational companies made $149 billion exporting gas they got for free, including $37 billion from the NT. If royalties had been charged on this gas, at least $13.3 billion ($3.4 billion from NT) in revenue could have been raised.
Reasons provided by Darwin Airport to not run the advertisements include that they were:
Negative in nature.
Political in nature.
Directed at other clients of Darwin Airport advertising services.
Similar billboards in other jurisdictions, such as Western Australia, have been accepted as legitimate advertising.
“Democracies function best when the public is well-informed, and this becomes a challenge when private companies are deciding what information people can see,” said Richard Denniss, Executive Director of the Australia Institute.
“I think most people would be surprised to learn that vehicle registrations contribute far more to Northern Territory Government revenue than the gas industry, but the reason they’re surprised to hear it is because, as we’ve seen, there are barriers to sharing this type of information in public places like airports.
Degrowth scholarship calls for reducing less-necessary production in rich countries to enable faster decarbonization and reverse other ecological pressures. But how can this be achieved? What is the mechanism? For many years ecological economists advocated setting “caps” on resource use, declining to levels that are compatible with ecological goals. This is a nice idea in the abstract, but it would be extremely difficult to implement. How do you impose the cap? How do you distribute resources within it? Who gets how much?
There is a simpler and more effective approach: credit guidance. The idea here is to impose rules that limit the quantity of finance that commercial banks can invest in problem sectors. For example, credit guidance can be used to scale down commercial investment in fossil fuel production on a binding, annual schedule. But it can also be used to reduce other destructive and unnecessary industries: SUVs, mansions, cruise ships, private jets, industrial beef, dangerous plastics, fast fashion, weapons, advertising, etc.
Donating clothes is a common practice for many. When people no longer have use for their clothes, when they no longer fit, or when they simply no longer like them, donating seems like a much better option than throwing them out. We think that by donating our clothes, we are contributing to both an environmental, and a social good. However, this seemingly altruistic practice may in fact be doing more harm than we realise.
