The economic wreckage of Tony Abbott

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The Federal Liberal party needs to get rid of Dead Duck Tony as soon as possible. If he stays he will not only sink the Party and contestable policy with it, but weigh heavily upon the economy.

A quick inventory of Abbottnomics explains. In yesterday’s much anticipated speech, Dead Duck claimed his government had delivered an economic boost to the nation. He listed a number of reasons why including:

  1. record housing approvals
  2. lower petrol prices
  3. higher infrastructure spend (on roads)
  4. new FTA’s
  5. scrapping the carbon and mining taxes
  6. stronger jobs growth and better GDP

Let’s go through each of these.

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  1. On the first he’s on shaky ground. Housing approvals are being driven by very low RBA interest rates. One could argue that the Budget debacle that froze consumer spending contributed to keeping interest rates low but not really. They were going to be low anyway on the terms of trade crash. Shocking households into belt-tightening by mistake does not really qualify as good management.
  2. Lower petrol prices are not Dead Duck’s doing.
  3. National infrastructure spend is falling under Dead Duck until now though is planned to rise. But it is overly roads focused and operating on a dubious lack of process that questions its economic benefits. As well, the Abbott effect on Liberal state governments – contributing to unthinkable losses in SA, VIC and QLD – means the assets “recycling program” that was going to pay for the many new roads is collapsing.
  4. The FTA’s are Dead Duck’s to claim but have been in negotiation for many years before his arrival.
  5. Scrapping the two taxes is right but both punched huge holes in the Budget, necessitating cuts elsewhere for a questionable net benefit. As well, it crowned the rentier campaigns of both mining and high-carbon industries over household welfare and denuded Australia of any credible carbon mitigation policy just as the rest of the world has accelerated into it. Hardly policy to be proud of, definitely harmful long term and very probably short term as well.
  6. Growth did rebound, largely on the removal of uncertainty around Labor’s political leadership unleashing pent up demand. Jobs growth is marginally better than in 2014 for much the same reason (though still poor).

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.