Prime Minister Abbott has had to endure his first 100 days report card and the PM-haters out in media-land have delighted in explaining what lies behind his ordinary showing in the popularity polls, which say Labor is preferred over the Coalition.
Now this is strange, and the doyen of electoral analysis, Malcolm Mackerras, says it’s unusual for a PM not to get the so-called honeymoon effect after an election.
Those trying to explain these negative polls have focused on the handling of the Indonesian spying affair, the closure of Holden, and a refusal to give the boat people arrivals a daily show-and-tell press conference.
With the Australian business sector, and therefore economy, poised to get of out its laidback Christmas period when the offices and workshops of the country start powering up, let’s do an alternative assessment of the Tony Abbott effect over the 100 days since the election.
Now, what I’m looking for is positive or negative developments that will help or hinder the economy over 2014.
Going into the election, the outlook for the Oz economy was economic growth of around 2.5 per cent and that meant unemployment was expected to rise into the six per cent band.
We need growth of three per cent or more to bring the jobless rate down and so if the Abbott effect does this, then the electorate’s gamble on the Coalition might just prove to be a winner.
Let’s start with the negatives first, so here goes:
• Unemployment has gone to 5.8 per cent but it was 5.8 per cent in August anyway.
• June quarter economic growth was 0.7 per cent, or 2.8 per cent annualised, and the September quarter went down to 0.6 per cent, or 2.4 per cent annualised. We don’t have the December number, so it’s guesswork, and that quarter will be more Tony Abbott’s responsibility.
• The stock market has gone off its 2013 highs and has been locked into a negative sideways slide, but the S&P/ASX 200 was up around 15% for the year and around 20%, including dividends. Some of that rise would have been based on the expectation of a conservative government winning the election — stock markets trade on the future.
On the positive side, this is what we’ve seen:
• Economy-wide spending has continued to grow at a healthy, sustainable pace. The Commonwealth Bank Business Sales Indicator (BSI) – a measure of economy-wide spending – rose by 0.9% in trend terms in December. This was the 16th consecutive month of spending growth. At a sectoral level, 16 of the 19 industry sectors expanded in trend terms in December, up from 15 sectors in November. And seven of the eight states and territories recorded firmer sales in trend terms in December, a similar result to both October and November.
• Total lending finance rose by 5.5% in November to be up 23.1% over the year – the fastest pace in almost six years.
• New car sales rose by 1.7% in December. Over the calendar year 2013, 1,136,227 new vehicles were sold. Sales of SUVs hit a record high of 333,511 in calendar year 2013.
• The number of new owner-occupier housing loans rose by 1.1% in November, the tenth increase in the past 11 months. The value of all home loans rose by 1.7% to record highs.
• New home sales lifted by 7.5% in November – the fastest monthly growth rate in four years. New home sales are up 29.2% on a year ago.
• Retail sales rose for the seventh straight month, up by 0.7% in November. Annual spending growth lifted from 3.6% to 4.6%. Over the past four months, the lift in sales was the strongest for an equivalent period in 18 months.
• The RP Data – Rismark Home Value Index reported that capital city home prices rose by 1.4% in December to be up 9.8% over the year. Home prices are up 8.4% in the past seven months – marking the biggest gains for a similar period in over four years
• And to put December’s bad job numbers into perspective, employment rose by 10,500 in November.
• Both consumer and business confidence have remained positive and the important Sensis Business Index for SMEs is at the best levels in years!
What do you reckon? How has the economy done since September? You’d have to be a pretty fierce Abbott-hater to argue that the economic reaction of the economy has been a big negative.
I think we have a good base and when you throw an improving global economy, low local interest rates and a sinking Aussie dollar, you then have the makings of an economy, which can do 3%-plus over 2014.
And so the first 100 days of Abbott, economically speaking, has been OK.
I hope I can say this and more in another 100 days time!Peter Switzer is the founder of the Switzer Super Report, a newsletter and website for self-managed super funds. www.switzersuperreport.com.au