Apparently, the Australian economy has gone to sh*t.
The GFC has hit us hard and Kevin spent money like it was going out of fashion, leaving us in lots of debt. Lots and lots of debt. MOUNTAINS of debt. KILIMANJARO sized debt. And we still haven’t recovered.
Jobs are disappearing, businesses are going bankrupt, cost of living is spiraling out of control and soon we will all be living in mud huts and probably won’t even be able to afford buckets to put down our near-empty wells, let alone draw any actual water. (We will however, have very clean and well kept mud huts because we’ll ALL BE UNEMPLOYED and have lots of time on our hands….)
If you listen to talkback radio, politicians in Question Time, or eavesdrop in on the conversations of strangers on the bus – that’s the rhetoric. That’s the line. Everywhere you look, and everyone you listen to, seems to be forecasting doom and gloom. And saying that it’s only going to get worse from here.
But is the situation really so dire? As it turns out, probably not.
Here are five things you need to know before giving into the economy doomsday-ers.
1.What was going on before the GFC hit?
Going into the GFC Australia was in a pretty damn good position financially. Props to the Howard Government for delivering successive surplus budgets and keeping us in good shape, with low net debt.
The independent Reserve Bank had slashed interest rates in response to growing financial instability and successfully kept Australians investing at a time of instability.
And one of our biggest trading partners, China, was and remains home to an economy that is rapidly expanding – and they rely on our resources to do that. You get by with a little help from your friends.
2. What impact did Kevin’s stimulus package actually have?
When the Global Financial Crisis reared it’s Hydra-like, multiple-heads, attacking almost every country in the world, the situation looked grim. The Australian Prime Minister at the time, Kevin Rudd, stepped up, with his stimulus-spending scheme (remember those $900 hand outs? New big screen TV anyone?).
His aim was to stimulate consumer and business confidence and spending. He was trying to avoid that ‘put off buying it or building it now because the economy is in trouble’ mentality that we’re all pretty prone to…. except Mia when Sass and Bide is on sale.
A combination of this fast move to stimulate the economy when it otherwise might have failed, and the preceding conditions mean that comparatively Australia fared pretty well through the GFC. There were job losses, there were financial institutions that got into trouble and certainly there were problems with some stimulus programs that led to some pretty tragic outcomes.
But. Australia did despite the GFC pillaging economies globally, the Australian economy never actually entered into recession. And that was a pretty big achievement. Unemployment rose by less than 2 per cent during that period – whereas is doubled across Europe and in the United States.
3. What’s happened since? Are we still doing okay?
Since then, Australia has continued to see solid economic growth, low unemployment and inflation has remained contained. For the non-financial nerds amongst us that means we are producing more stuff, people are keeping their jobs and the cost of things isn’t rising much faster than our wages are – so buying things isn’t unreasonably difficult.