Illustration by Rachael Bolton

You wouldn’t know it from the way the government – and press – refer to the economy, but Australia is in a recession again. Technically…

Our government has been making a huge song and dance about having enjoyed 103 quarters of not-having-a-recession, which is the sort of record you celebrate when the rest of your economic records are a bit less impressive.

Like, for example, that Australia’s GDP growth hasn’t cracked three per cent since 2013, the year that the current government came into power, and that it only peeked over that less-than-stellar percentage four times in the last nine years. Although, to be fair, there was a global financial crisis in there too.

And now treasurer Scott Morrison can’t even trumpet that big shiny number since he’s presided over two quarters of negative growth, which officially means we’re in a recession – or at least a “technical recession”, because that modifier makes it somehow better, like “technical housefire” or “technical cancer”.

Similarly you’ll note that the term of choice is “negative growth”, because “shrinkage” is a term that makes most economists cross their legs and insist that it’s just been a long, tiring day and they’re under a lot of stress, OK?

The issue is that there it’s a bit pointless rejoicing in having avoided a recession if you still have all the same elements which make a recession such a negative experience.

Most notably this is seen in Australia’s wage growth – or, more accurately, the complete absence of any.

The gently flatlining wage growth happens to coincide with the thing that literally every observer of Australian economics or politics has pointed out: that housing in Australia is stupidly, insultingly unaffordable and the national zeal for investing in property (spurred by the incentives created by the conservative government of John Howard) means that’s where most of the nation’s capital has been locked away for the last 25 years.

The issue is that there it’s a bit pointless rejoicing in having avoided a recession if you still have all the same elements which make a recession such a negative experience.

The issue is partially that once upon a time the people that bought expensive housing were, well, rich. They were spending big on fancy houses because they could, and rises in house prices and the borrowing of money for more expensive properties was part of a wider pattern of increased consumption.

That’s not the case now. There’s no such thing as cheap housing in the big cities any more and the cost of housing is so wildly out of whack with the value of it, in historical terms, that when people are buying houses they’re effectively swapping one form of financial insecurity for another.

Instead of being terrified of missing out on getting into the property market before it becomes too expensive and curbing their other spending as they save for that steadily-rising deposit, Australians are now terrified of a property crash or of interest rates rising beyond their ability to service the home loan and curbing their other spending in order to put as much buffer into the mortgage as possible.

When you have every single report on interest rates using the phrase “historically low”, you are reminded that your debt could very easily balloon to excitingly unmanageable levels if they start behaving more like interest rates are typically expected to behave.

When people are buying houses they’re effectively swapping one form of financial insecurity for another.

Then again, the same lousy growth – well below the ambitious projections of Treasury, which assumed that we’d bounce back to that aforementioned and seemingly unachievable three per cent for some reason – means that the Reserve Bank will presumably keep interest rates down for another year at least. And that’ll take Australia up to around the next federal election, where the conservative government of Malcolm Turnbull is looking unlikely to retain power. So it must have crossed their minds that the financial time bomb is probably going to explode in the hands of the opposition Labor party instead, so… yay?

And Australians have good reason to feel like their debt burden is terrifying. Australia’s debt to GDP ratio is currently 189 per cent, which is… look, it’s not good. And again, it illustrates exactly why demand is no anaemic in the economy. When you owe almost double what you make, it does rather put a crimp in your spending.

And there’s a good reason why the government are putting as perky a spin on matters as possible, since there’s no obvious way to repair things without making them much worse in the immediate term.

If most of the nation’s cash and debt is in property, then the government doesn’t want to sneeze too loudly lest the bubble pop and the value of Australia’s wealth suddenly plummets. The problem is that this leaves the alternative of endlessly ascending house prices, which is also not remotely sustainable when people have less income, in real terms, than they did a decade ago – especially when there are political and diplomatic reasons why letting deep-pocketed foreign buyers take over where locals have been priced out of contention is no longer an easy fix.

And that’s why so many of the current policies on housing affordability, employment and industrial relations look less like strong, brave legislation designed to strengthen the economy and more like high-cost short-term fixes by a federal government that is simply running out the clock at this point and seeks to prop things up long enough to make it the opposition’s problem when the shit inevitably goes down.

Andrew P Street

Andrew P Street

Bio:

Andrew P Street is an Adelaide-built, Sydney-based author, columnist, podcaster and editor. He’s responsible for The Short and Excruciatingly Embarrassing Reign of Captain Abbott (2015) and The Curious Story of Malcolm Turnbull: the Incredible Shrinking Man in the Top Hat (2016), as well as the regular View from the Street column in the Sydney Morning Herald. His work has appeared internationally in the Guardian, Time Out, NME, Rolling Stone and anywhere else there are freelance dollars to absorb.

• How do you spend your days?

In a haze of disorganisation and barely contained panic.

• Why is writing important to you?

This is going to sound impossibly pretentious, but I’ve always been obsessed with language in general and writing in particular. It’s the closest thing to time travel and mind reading we’ve got.

• What drove you to focus on journalism & writing?

Was there a particular moment you can remember that led you to this field?

Pure accident. My band had dropped a demo into dB Magazine, a music’n’culture street press mag in Adelaide and I ended up getting to know their music editor; he ran into me at a Robyn Hitchcock gig held​ ​at a record store​ ​in which​ ​I occasionally worked and said the immortal sentence “you didn’t pay to get in, so write me a review.” I started contributing pieces and a few years later I was music editor.

Eventually it dawned on me that this writing lark wasn’t a sideline I was doing while waiting for my band to take of but was what I laughingly refer to as my career.

• What drives you professionally?


Caffeine, panic and deadlines. And the admittedly optimistic hope that what I write will help solidify a reader’s own thoughts, and that I’m not just screaming impotently into an endless black void.

• In your opinion what are the three biggest problems facing the developed and developing world?

That corporations have moved faster than governments in determining the parameters of policy; That poverty has been reframed in the west as being a moral failing, not a consequence of economic systems, and that the developing world are somehow responsible for their own situation.
That the larger industrialised countries are using poor regions as a proxy war for their own geopolitical ambitions.

• If you hadn’t become a journalist what would you have done?

I fell into journalism while I was trying and failing at other things, so I assume I’d still be trying to be an astrophysicist indie rock star. In Adelaide, which is not a town notoriously rich in indie rock/astrophysics opportunities.

• What led us to this moment in history?

I’d love to put a pithy answer like “unfettered greed”, but I think it’s probably something more messy like the growing realisation that staggeringly enormous global problems - climate change, displacement of populations, global inequality - are far too complex to be solved by individual governments with terms of three to five years, but are definitely able to be used as wedges for local political gain. The hardening of “left” and “right” into weird, inconsistent dogmas hasn’t helped either.

Seriously, how do right wing governments reconcile the idea that poverty is an individual’s problem, but their sexuality or fertility is something in which the state has a right to intervene?

• What are the lessons we failed to learn during and since the 2008 crisis?

Don’t let a single section of the economy get so powerful that it can act with impunity, secure in the certainty that they’ll never be held responsible for their predatory, irresponsible actions.

• Can you list some ‘Baby Steps’ out of the current economic mess?

In Australia we obviously need to roll back the use of housing as a legal tax haven. It’s political kryptonite because there’ll be losers from that, but there are losers from doing nothing - and at the moment those losers are less electorally valuable.

• If you were a global President what would your first three pieces of policy be?

Universal education, universal healthcare including access to safe abortion, rapid reduction in use of fossil fuels. That’s after getting Guided By Voices to play my inauguration, obviously.

• Tell us something you have been wrong about?

See my earlier answer about being an astrophysicist indie rock star.

• You are stuck in a ski lift for twenty four hours - you can have one person (living or dead) with you who will it be?

My late father. He would be amazed with the way things have turned out in the last three decades, it’d be nice to let him know what I’ve been up to since last we spoke. Also, he was a tall, strong man with an engineering background so he’d quite possibly be able to rig something up with the ski lift, or at the very least be a marvellously warm man to hug.

• Name the book that changed you….

You know my earlier answer about hoping that my writing helps galvanise reader’s own thoughts? I had a lot of ideas about politics and economics which hadn’t really coalesced into a proper worldview until I read Kurt Vonnegut’s ‘God Bless You Mr Rosewater’, which articulated them so elegantly and clearly. The entire thing is basically a humanist manifesto, but his proposed speech to newborns still kills me. I recited it to my son when he turned up: “There’s only one rule I know of, babies: God damn it, you’ve got to be kind”.

• What would you do differently if you were to start all over again?

Oh god, pretty much everything. I like where I am now, but I took a stupidly inefficient path to get here. Then again, I’d not have met my wife or had my son without travelling this way, so I take that all back.

• Give our readers, members and subscribers a piece of advice that has served you well…

God damn it, you’ve got to be kind.

• Anything you would like to plug? Now is your chance.

I write a lot, which I push shamelessly on Facebook and Twitter. And hey, why not subscribe to The Double Disillusionists podcast with myself and Dom Knight? Who’s it going to hurt?

https://www.facebook.com/theandrewpstreet/

https://twitter.com/AndrewPStreet

https://itunes.apple.com/au/podcast/the-double-disillusionists/id1113159799?mt=2
Andrew P Street

Latest posts by Andrew P Street (see all)

One thought on “The recession we had to have… Again

Leave a Reply

Your email address will not be published. Required fields are marked *