The National Accounts confirm that the Australian economy shrank in the first three months of this year, even before the worst impacts of the Coronavirus were felt.
Given we already know the economy deteriorated further in the June quarter, this means Australia is in recession for the first time in nearly three decades.
It’s clear that Australia’s remarkable run of almost three decades of growth has ended on Scott Morrison and Josh Frydenberg’s watch, with hundreds of thousands more Australians already unemployed.
It is absolutely disgraceful that in serious times like these the Treasurer has again delayed the Budget update, keeping Australians in the dark and trying to avoid scrutiny.
Today’s data shows the fires and initial impacts of the virus have accelerated longstanding economic challenges under the Liberals:
- Quarterly growth is negative for the first time since the Queensland floods in 2011, following the slowdown in growth last quarter.
- Annual growth has declined to 1.4 per cent, the weakest annual growth rate since 2000, and has been well below trend every quarter under Morrison and Frydenberg.
- The domestic private economy contracted 1.1 per cent in the quarter, experienced the biggest annual fall in nearly 20 years and has flatlined or declined in every quarter under Morrison and Frydenberg.
- Consumption growth went backwards by 1.1 per cent in the quarter and is down 0.2 per cent over the year – the biggest annual fall in nearly 60 years.
- Business investment continues to go backwards and is down 2.9 per cent over the year. As a percentage of nominal GDP it remains around its lowest level since the early 1990s recession.
- Wages growth declined in the quarter, with quarterly growth in average compensation per employee contracting by 0.4 per cent.
Nearly three decades of continuous growth was set up by Labor, defended by Labor when it was most at risk, and now ends under the Liberals as a consequence of this pandemic.
Too many Australians won’t “snap back” to work as we emerge from this crisis, with the Reserve Bank, IMF and private forecasters expecting unemployment to be higher for longer.
For seven years, the Liberals have not done enough to safeguard our economy from external shocks or make our economy strong, inclusive or sustainable enough.
The pandemic might have arrived without warning but longstanding weakness in the economy did not.
Even before the devastating fires and virus outbreak, annual growth was already well-below trend, consumption was weak, business investment had fallen, underemployment and household debt hit record highs, wages growth hit record lows, and debt had more than doubled.
The Liberals now preside over the biggest budget blunder in Australia’s history, the first recession in three decades, record debt, and hundreds of thousands more Australians unemployed or left behind.
Their failures to implement key programs properly will make the downturn worse than it needs to be, the unemployment queues longer, and the recovery more difficult.
Australians desperately need an effective, well-executed response to this crisis, and a plan that bolsters the recovery and sets Australia up for the future.
WEDNESDAY, 3 JUNE 2020