13 ms·

Australia hasn't had a recession for over 25 years

139 points by astdb 10y ago

chrismealy 10y ago
Recessions are almost always deliberately caused by central banks to control inflation by increasing unemployment and decreasing wages. Occasionally they are caused by financial crises.
- cyberferret 10y ago
  Well, I am old enough to remember "The recession we had to have" back in the 80's here in Australia. And yes, that was triggered by the federal government and the reserve bank for what it was worth. I think interest rates have been too low for too long. Yes, it has encouraged spending, but methinks too much spending as I have seen friends and family totally overextend themselves on huge loans for huge houses just because they could. Even interest rates move up even 1%, they will be pushed against the wall to try and service those loans, and that in itself may trigger massive sell offs and bring housing prices crashing down. It's basically a tightrope walk across a windy gorge at the moment - everything is precariously balanced, but for how much longer??
  - TheSpiceIsLife 10y ago
    I can't understand what motivates people to borrow the highest amount the banks will lend them. What do they think is going to happen when interest rates go up two or three percent? What do the banks think is going to happen?
    - researcher11 10y ago
      The banks think they'll be bailed out. Maybe not in a US way with direct cash injection but maybe in an EU way with the government creating a Bad Bank and buying their mistakes at above market rates. Of course they'll lie about it and say it's a good investment to sell it to the public. Everyone who has money is beholden to the banks.
  - jacques_chester 10y ago
    The Reserve Bank's legal mandate is inflation-band targeting; though they do keep an eye on exports and employment. It's a tricky act because raising interest pushes down inflation, but it also hurts borrowers, strengthens the dollar and hurts exporters. The Australian rate is substantially higher than the Federal Reserve's. The Fed has a broader remit and is apparently perfectly happy to run nearly free money for years on end. Compared to the US, Australian monetary policy is quite conservative.
sametmax 10y ago
Australia has huge lands, few people, a lot of local resources and not as much immigration as the US or West Europe. It's not a surprise.
- jackvalentine 10y ago
  > not as much immigration as the US or West Europe. I'm pretty sure Australia has a higher immigration rate than the U.S (a quick google supports this) and our net immigration rate is papering over some of the structural issues in our economy in turn helping us avoid a recession.
  - Consultant32452 10y ago
    https://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_immigrant_population https://en.wikipedia.org/wiki/List_of_sovereign_states_and_d... In particular, read the Notes section next to the US. Our immigration rate, if you counted it the same way, is about the same as Australia. But comparing US immigration to Australia immigration is apples to oranges. Australia has quite strict regulations on who it accepts as immigrants, and doesn't even accept a single refugee. Meanwhile the US has an illegal immigration population that dwarfs the legal one, we basically don't have a Southern border.
    - unlikelymordant 10y ago
      Australia takes 0 refugees? "Australia’s humanitarian refugee intake will be set at 18,750 people per year, making it the third largest humanitarian programme in the world." https://www.businessinsider.com.au/australias-refugee-intake-will-rise-35-to-19000-a-year-2016-9 https://www.businessinsider.com.au/australias-refugee-intake...
    - deleted 10y ago
      [deleted]
    - jackvalentine 10y ago
      > and doesn't even accept a single refugee I assume you came to this misunderstanding because of our (legally and morally dubious) policy of not settling refugees that arrive by boat. I assure you we do accept refugees. Other posters have dealt with your other factual misconceptions than I can, but a personal appeal from me to resist posting with a sense of authority on a topic you apparently are so unqualified to make statements about.
phillc73 10y ago
> Australia’s last recession -- defined locally as two straight quarters of contraction -- occurred in 1991 Aah yes, the recession we had to have. [1] [1] https://en.wikipedia.org/wiki/Early_1990s_recession_in_Australia#.22The_recession_we_had_to_have.22 https://en.wikipedia.org/wiki/Early_1990s_recession_in_Austr...
- nailer 10y ago
  Comments like this are why I left Australia: many Australians believe Paul Keating caused the worldwide recession of the early 90s, or the hyperinflation of the 80s, based on Keating pointing out that the recession was a necessary correction. It is a very inward looking country.
  - jacques_chester 10y ago
    It's hard to be sanguine if you're beggared or bankrupted. Keating being right, and Keating phrasing it as he did, are different things.
- dmix 10y ago
  > The Hawke Labor Government initially responded to the crisis by asking the Conciliation and Arbitration Commission to defer its national wage case. Treasurer Paul Keating was advised to tighten monetary policy, but, with forthcoming by-elections and a state election in New South Wales, the Government opted to delay the potentially unpopular move, which would raise interest rates. Commodity prices dropped and the Australian dollar sharply declined. The Reserve Bank conducted a $2 billion intervention to hold the dollar at 68c but it crashed to 51c. So the government delayed what would have been a natural increase in interest rates and slowed the unhealthy consumption of capital. Instead the delay resulted in a sharp decline in prices rather than a more gradual one. All for political 'timing' as the tough medicine would have been unpopular. Lovely. Monetarist policy is supposed to ease the pain of recessions, not make it worse. > To court the green vote, environment minister Graham Richardson had placed restrictions on mining (notably uranium mining[5]) and logging which had a detrimental effect on already rising unemployment. David Barnett wrote in 1997 that Labor fiscal policy at this time "self-defeating as "with one hand it was imposing a monetary squeeze, while on the other it was encouraging spending with wage increases and tax cuts". A recurring trend here of politics trumping the economic livelihood of the people.
jakozaur 10y ago
The only other OECD developed country which has similar 20+ years period without recession is Poland. Even more impressive Australia population increases, while Poland population stays flat.
- haihaibye 10y ago
  Why isn't it easier with population growth? GDP isn't adjusted by population, so even if the amount per person goes down (as it has been recently), so long as the total amount doesn't - no recession!
  - jakozaur 10y ago
    Excuse me, but I meant what you said. With population growth it's easier to have GDP growth. If population is flat, you actually need to make ppl more productive: wages need to increase, company profits, etc. With newcomers, even if productivity per person decreases you still can have GDP growth.
- mamon 10y ago
  Poland had a recession very recently: Q4 2012 and Q1 2013 both had GDP falling down. Thing is, initially government published inaccurate data, showing no recession, but then, 3 years later they revised that data, showing we actually had recession.
perilunar 10y ago
We need one soon though. The housing market is a massive bubble that needs deflating.
- 2muchcoffeeman 10y ago
  What is the reasoning behind this sort of opinion? If the economy keeps doing well, wouldn't salaries increase? Couldn't the government invest more in less populated areas around the capital cities so that living in those areas becomes more feasible? Why have a recession?
  - bevax 10y ago
    In modern economy, when business is doing well, profits and top salaries grow, but that's it. Salaries never went proportional with productivity or profits and this is another sad example here: despite 25 years of ongoing growth, people are confronted with extreme household debts. Obviously political decision makers became too greedy and lobbyists too influential. You see it anywhere, not only in AUS.
  - flukus 10y ago
    Salaries and housing prices have become completely decoupled. Home ownership is now out of reach of most Australians. More urban sprawl isn't really a solution because traffic will never cope. Most people haven't seen the benefits of economic growth, so they don't really care if we have a recession, it's mostly going to hit the wealthy investing in housing. A housing market crash will be the biggest redistribution of wealth the countries ever seen.
    - 2muchcoffeeman 10y ago
      > More urban sprawl isn't really a solution because traffic will never cope. I'm suggesting that new business centres be created so that people can live in cheaper areas, and still be close to their jobs. This should reduce traffic since fewer people will need to commute. But I am not a City Planner. I have no idea what is feasible or not. But there must be lots of industries that don't need to be in the CDB.
cyphar 10y ago
Not surprising, given that our economy is effectively backed by China. Of course, that means the probability of us getting out of coal is not very high in the short-term (mining is still a huge employer here, and we export >50% of our coal to East Asia).
- XorNot 10y ago
  It's fine we'll be set for when they want uranium too.
  - cyphar 10y ago
    China is heavily investing in solar, not fission (at least from what I've heard). And I don't think that Australia has a strong edge on the iridium market (it's already super-rare) or the silicon market (we already have problems with beach erosion, so mining silicon = very bad for condos in Sydney).
rukuu001 10y ago
Hah, they said "property bubble." Would like to know if that was from their own reading of the numbers or just repeating one of the story's local sources.
- cyberferret 10y ago
  Just curious - you don't think housing prices are too high in Australia? At least when compared to local wages? To me it seems like a giant house of cards, waiting for the just little breeze to bring it toppling down. And I am not speaking from a point of chagrin here - I own my own home and am glad that it is valued at what it is now, but I also know that it is crazy, and really, should housing prices be going up at something like $100,000 per year?? Because that is what is happening here...
  - timcederman 10y ago
    In general, I agree, but I thought the same thing in the early 2000s.
  - tajen 10y ago
    Every city in the world believe they're in a housing bubble. People can't just fathom the fact that there are many, many people richer than them, and the fact they can't afford a house is just that they don't earn enough compared to their neighbors. It's especially good to say "housing bubble" because it sounds smart as a market analysis from someone who has a lot of data, and it can only be proven wrong years later (when the comment is long gone) when the bubble is not burst, proving the new housing prices just reflect your neighbors' average wealth. "but the bubble is around the corner", they'll still say. Every city in the world. Housing prices grow according to people's wealth; there are also more and more people in every city, that increases the pressure on prices and it's rarely a bubble.
    - falsedan 10y ago
      Downvoting for the massive sense of entitlement shown, which is high even for HN! Lots of global cities do have bubbles from foreign investment parking wealth in property, driving up prices and squeezing out locals looking to buy. Here's how it works: Foreign investors buy luxury properties Top-tier locals can't buy luxury properties, buy the next highest property class Second-tier etc. Lower-rung locals have no properties to buy. Not: they don't have enough money; but the property type they would traditionally occupy isn't available, and no alternatives have been built since it's always in a developer's best interest to aim at the top, in the abscesses of government incentives.
bootload 10y ago
"Australia’s banking regulator further tightened lending curbs Friday to try to cool investor demand for residential property that’s helped drive up prices. Data released hours later showed investor lending increased 6.7 percent in February from a year earlier, the fastest growth in 12 months." No mention of the ^Elephant in the room^ with respect to real-state and housing: transparency in financing property. [0] Reference [0] "Corruption and Property Laundering" https://www.prosper.org.au/2017/03/30/corruption-and-property-laundering/ https://www.prosper.org.au/2017/03/30/corruption-and-propert...
- mmerlin 10y ago
  Australia is the world's worst (best?) country for laundering money through property https://www.macrobusiness.com.au/2017/03/report-australia-worlds-worst-money-laundering-property-market/ https://www.macrobusiness.com.au/2017/03/report-australia-wo...
partiallypro 10y ago
Australia is a commodity driven economy with two neighbors that have had explosive growth and an insatiable lust for commodities over the past 25 years (India and China.)
- cylinder 10y ago
  India has hardly come online as a trade partner, only recently. Before China it was Japan. Before Japan it was the US and UK. Maybe next it's Outer Space?!! There's been some new story, who knows how many more.
flukus 10y ago
We've had recessions, we've had a few in the last decade. It's been masked by immigration though, the economy has grown in absolute terms but that growth has been spread thinner.
- spangry 10y ago
  This is correct. Unfortunately neither of the two 'mainstream' political parties in Australia want to even say the word 'immigration'. Even though it's a perfectly legitimate concern that the electorate has. End result: Pauline Hanson [0]. [0] For our American friends, Pauline Hanson is a famous racist politician in Australia. She has recently made a political comeback.
  - flukus 10y ago
    It's greens (left wing ultra progressive) policy too, just way down their list of priorities.
    - spangry 10y ago
      Indeed. The great irony there is that their main constituents (i.e. inner-city young professionals) are the ones who are copping the worst effects of high, unending immigration (e.g. congestion, lower public transport availability, lowered housing affordability etc.) If they don't stop listening to the Sarah-Hanson Youngs in their party, and start listening to the more rational Scott Ludlams, then this issue will lead to their 'democrats' moment very soon. EDIT: I also can't understand why either Labor or the Greens don't take the very obvious political opportunity right in front of them. They should essentially pull a reverse John Howard by increasing our refugee intake, move processing on-shore (or even start a community release program), and drastically cut 'regular' immigration intake levels while they work with State governments to stabilise infrastructure, energy and education. Seems like a no-brainer to me. Good policy and good politics combined is a rare thing.
      - flukus 10y ago
        Agree completely, I've been saying this for a while now but the knee jerk reaction is to get labelled racist. I think Labor are just as beholden to the wealthy though. And can you imagine the Murdoch rags if it did cause a recession? The big question now is "does anyone, particularly those under 40, care if there's a recession?". I think a growing number of people are hoping for one.
droithomme 10y ago
Isn't most of the growth due to the mining industry there?
- cyberferret 10y ago
  There was a spike due to mining and offshore gas in the past decade or two, but the mining sector has pretty much stagnated now. Also, it was somewhat of a 'false spike' due to mining companies using FIFO (fly in fly out) workers from Asia etc. Those workers would come here, work hard, collect their pay packets and the leave to go back to their home countries and spend there rather than locally. Our tourism market, which WAS a huge part of our GDP and employment, has suffered. In my town, the FIFO workers book out entire streets of hotels for their work schedules, meaning tourists have no chance getting a room year round. Local shops and markets are shuttering at a fast clip because no tourists are around the spend money with them. Recent events with the cyclones in Queensland, and the general bleaching of our Great Barrier reef also will have a huge impact on our tourism market, with a reported 100,000 jobs likely to disappear over the coming years across the Eastern seaboard.
spangry 10y ago
There's a few reasons, and most of them don't bode well for the future: - Since the early 2000s, there has been an unprecedented spike in the price of natural resources like iron ore (http://www.macrobusiness.com.au/wp-content/uploads/2015/11/Capture185.png http://www.macrobusiness.com.au/wp-content/uploads/2015/11/C...). Australia is a resource rich country and so has enjoyed a significant, but temporary, increase in national income as a result. - The above has had a number of unfortunate (but avoidable) long-term effects on the Australian economy: high demand for Australian natural resources meant high demand for Australian dollars, so the dollar appreciated. This hollowed out the economy as most non-mining export facing businesses were ruined by this. Australia's car manufacturing industry is dead, for instance. This could have been managed by taxing rents from natural resources and placing that money in a sovereign wealth fund (i.e. a fund that invests in assets denominated in non-Aus currencies). But we didn't do this because we're idiots. - The government that presided over the majority of this 'mining boom' (i.e. John Howard and co) acted as if those historically unprecedented prices were the 'new normal'. Accordingly, they passed a number of budget measures that placed the Commonwealth budget into permanent structural deficit. The IMF conducted a cross-country study of fiscal spending for the last 200 years in 2013. In Australia's case it found that there have been 3 periods of 'fiscal profligacy': 1 during Whitlam (in the 70s) and 2 during Howard.[0][1] However many Australians continue to buy in to the myth that John Howard was a 'great economic manager'. - Howard's government also changed how residential real estate is taxed for property investors. Specifically, he made it more concessional for the rich, and created stronger incentives to 'flip' houses after 1 year to maximise the tax benefit.[2] - So Australians took all this new income, and sweet tax breaks, and poured it all into speculative investment in residential real-estate. [3][4][5] Out housing markets (especially in Sydney, Melbourne and Brisbane) are investment bubbles just waiting for some external shock to pop them. The mining boom is also winding down, so less national income to keep the ponzi going. In terms of private debt, we are now one of the most indebted nations in the world. - We've also kept the housing / nominal GDP ponzi by having insanely high immigration levels, unprecedented by historical standards. Of course, this had to be sold carefully because Australia is a fairly racist country. So, our previous Prime Minister John Howard made a big show of brutalising refugees, while at the same time quietly opening the immigration floodgates [6][7][8]. - With the mining boom ending and the continuation of high immigration, our major cities are reaching crush capacity. Infrastructure and education spending have not come even close to keeping up. This has kept house prices levitating for the moment, but this can't last forever. It has also reduced quality of life and employee wages and share of production surplus [9][10] So that's how Australia has managed to avoid a nominal recession for the past 25 years: by running the world's most successful ponzi scheme. But as windfall natural resource income dries up, international lenders stop lending to our banks, and high immigration becomes a mass exodus, our enormous property market bubble will explode leaving us with only a bunch of long dead industries (like manufacturing) and piles of debt. Basically a replay of the 1890s recession in Australia, which was one of the main drivers of federation. So I guess we'll be invading New Zealand soon. [0] https://www.imf.org/external/pubs/cat/longres.aspx?sk=40222.0 https://www.imf.org/external/pubs/cat/longres.aspx?sk=40222.... [1] http://www.smh.com.au/federal-politics/political-news/hey-big-spender-howard-the-king-of-the-loose-purse-strings-20130110-2cj32.html http://www.smh.com.au/federal-politics/political-news/hey-bi... [2] http://i.imgur.com/4VUGfPz.png http://i.imgur.com/4VUGfPz.png [3] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-house-values-to-Income-660x504.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [4] http://www.macrobusiness.com.au/wp-content/uploads/2016/12/ScreenHunter_16592-Dec.-09-11.46-660x463.jpg http://www.macrobusiness.com.au/wp-content/uploads/2016/12/S... [5] http://www.macrobusiness.com.au/wp-content/uploads/2016/11/ScreenHunter_16297-Nov.-23-17.16-660x427.jpg http://www.macrobusiness.com.au/wp-content/uploads/2016/11/S... [6] http://www.macrobusiness.com.au/wp-content/uploads/2017/02/ScreenHunter_17403-Feb.-13-11.51-660x465.jpg http://www.macrobusiness.com.au/wp-content/uploads/2017/02/S... [7] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-population-change.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [8] http://www.macrobusiness.com.au/wp-content/uploads/2017/02/ScreenHunter_17401-Feb.-13-11.51-660x489.jpg http://www.macrobusiness.com.au/wp-content/uploads/2017/02/S... [9] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-workers-falling-share.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [10] https://www.macrobusiness.com.au/wp-content/uploads/2016/11/ScreenHunter_16336-Nov.-25-10.57.jpg https://www.macrobusiness.com.au/wp-content/uploads/2016/11/...
rusk 10y ago
Mining.
chvid 10y ago
Australia benefits enormously from migration from China (and nearby Asian countries) which happens via investment, the job market and the higher education system. These immigrants are in general well-educated and wealthy. This is unlike migration to Europe which happens thru the asylum system and for most parts sends the immigrants directly into the welfare system.
nrki 10y ago
Ah, but it's former powerhouse natural resources state - Western Australia - is now in a recession.
joelthelion 10y ago
Unfortunately that growth is unsustainable as it is based on very high emissions.
- catmanjan 10y ago
  Yep, international money in the housing market is forgivable, but there is no way they should have allowed such massive investments in the new coal mines.
- deleted 10y ago
  [deleted]
jaimex2 10y ago
Were the lucky country, "She'll be right" is the mentality of everyone here.
deleted 10y ago
[deleted]
researcher11 10y ago
I escaped that ponzi scheme 10 years ago and moved to way more affordable San Francisco. It was cheaper then and still is.
- ionwake 10y ago
  How are you finding living in sf compared to Sydney ?
  - researcher11 10y ago
    If I had $10M I'd move back to Sydney. It's a nicer city. I do data science / machine learning and for work there is no comparison, SF is where it is at. I had to leave SF because I wanted to be a contractor and none of the visa options would allow it. I have recently moved on to a cheap tax haven (Boquete Panama) where I work remotely and get paid the same. My margins are so good here that I only have to work 1-2 days a month. I'm quazi retired at 31 and could never go back to normal working. I get to be very picky about what I work on and spend a lot of my time studying things that I'm interested in. I highly recommend this lifestyle to others.
    - deleted 10y ago
      [deleted]
    - ionwake 10y ago
      What site do you use to find your remote contracts? Have you got a portfolio I can look at?
      - researcher11 10y ago
        It's via friends I made in SF. If you want to do something similar I'd recommend doing a long stint in SF first. Get any job you can and then switch once you know some people. I try to keep anonomous in general so no portfolio.
        10y ago
retrogradeorbit 10y ago
Some are calling it a "population ponzi".
panglott 10y ago
The simplest reason is that Australia has a higher inflation target and is willing to average that target over the business cycle. Whereas the US has a lower inflation target and treats that target as an upper bound. So in the 2007 recession for example, the Fed was trying to figure out how to push against the zero lower bound, and then despite a period of very low inflation, has refused to allow any catch-up growth that might take the inflation rate temporarily over 2%. "So what is it that has kept Australia's economy from shrinking? ...It's that Australia has been able to cut interest rates when it has needed to. Other countries haven't, you see, because their interest rates are already as low as they can go at zero or even slightly negative territory. ...[Australia] doesn't have a 2 percent inflation target. It has a 2 to 3 percent inflation target averaged over the business cycle. ...The result is that interest rates have been much higher in Australia than in almost any other rich country." https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-australia-has-avoided-a-recession-for-25-years/?utm_term=.969c5d023931 https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-a...
paulpauper 10y ago
Surprised no one has noticed this: Australia' "boom" has less to do with mining and organic growth and more to do with its falling currency . When growth is converted back into US dollars, it shows contraction beginning in 2013 and again in 2009 http://www.tradingeconomics.com/australia/gdp http://www.tradingeconomics.com/australia/gdp
manojlds 10y ago
What about recession of the coral reef?
ed_balls 10y ago
>Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. It's the same true for Poland and a few other countries.
dmix 10y ago
The documentary they linked to about the Australian recession during the Hawke-Keating years is very interesting: https://www.youtube.com/watch?v=iM35CXyPh7M https://www.youtube.com/watch?v=iM35CXyPh7M I don't know much about Aussie politics but I found it interesting as someone who reads a lot about economics. The 80s/90s were a very interesting time for capitalism as globalism was just beginning and the large role of the state in the economy was being solidified.
brilliantcode 10y ago
how would you short Australia? Is there an index ETF?
bobbington 10y ago
The article mentions that a growing population has helped the Australian economy. Funny thing is Japan is been in a recession for a long time now, and it's obvious what the cause is - A declining population. And yet the central bankers there think they can fix the fundamental issue by printing more money. People are the foundation of any economy.

139 points by astdb 10y ago

Recessions are almost always deliberately caused by central banks to control inflation by increasing unemployment and decreasing wages. Occasionally they are caused by financial crises.

cyberferret 10y ago
Well, I am old enough to remember "The recession we had to have" back in the 80's here in Australia. And yes, that was triggered by the federal government and the reserve bank for what it was worth. I think interest rates have been too low for too long. Yes, it has encouraged spending, but methinks too much spending as I have seen friends and family totally overextend themselves on huge loans for huge houses just because they could. Even interest rates move up even 1%, they will be pushed against the wall to try and service those loans, and that in itself may trigger massive sell offs and bring housing prices crashing down. It's basically a tightrope walk across a windy gorge at the moment - everything is precariously balanced, but for how much longer??
- TheSpiceIsLife 10y ago
  I can't understand what motivates people to borrow the highest amount the banks will lend them. What do they think is going to happen when interest rates go up two or three percent? What do the banks think is going to happen?
  - researcher11 10y ago
    The banks think they'll be bailed out. Maybe not in a US way with direct cash injection but maybe in an EU way with the government creating a Bad Bank and buying their mistakes at above market rates. Of course they'll lie about it and say it's a good investment to sell it to the public. Everyone who has money is beholden to the banks.
- jacques_chester 10y ago
  The Reserve Bank's legal mandate is inflation-band targeting; though they do keep an eye on exports and employment. It's a tricky act because raising interest pushes down inflation, but it also hurts borrowers, strengthens the dollar and hurts exporters. The Australian rate is substantially higher than the Federal Reserve's. The Fed has a broader remit and is apparently perfectly happy to run nearly free money for years on end. Compared to the US, Australian monetary policy is quite conservative.

sametmax 10y ago

Australia has huge lands, few people, a lot of local resources and not as much immigration as the US or West Europe. It's not a surprise.

jackvalentine 10y ago
> not as much immigration as the US or West Europe. I'm pretty sure Australia has a higher immigration rate than the U.S (a quick google supports this) and our net immigration rate is papering over some of the structural issues in our economy in turn helping us avoid a recession.
- Consultant32452 10y ago
  https://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_immigrant_population https://en.wikipedia.org/wiki/List_of_sovereign_states_and_d... In particular, read the Notes section next to the US. Our immigration rate, if you counted it the same way, is about the same as Australia. But comparing US immigration to Australia immigration is apples to oranges. Australia has quite strict regulations on who it accepts as immigrants, and doesn't even accept a single refugee. Meanwhile the US has an illegal immigration population that dwarfs the legal one, we basically don't have a Southern border.
  - unlikelymordant 10y ago
    Australia takes 0 refugees? "Australia’s humanitarian refugee intake will be set at 18,750 people per year, making it the third largest humanitarian programme in the world." https://www.businessinsider.com.au/australias-refugee-intake-will-rise-35-to-19000-a-year-2016-9 https://www.businessinsider.com.au/australias-refugee-intake...
  - deleted 10y ago
    [deleted]
  - jackvalentine 10y ago
    > and doesn't even accept a single refugee I assume you came to this misunderstanding because of our (legally and morally dubious) policy of not settling refugees that arrive by boat. I assure you we do accept refugees. Other posters have dealt with your other factual misconceptions than I can, but a personal appeal from me to resist posting with a sense of authority on a topic you apparently are so unqualified to make statements about.

phillc73 10y ago

> Australia’s last recession -- defined locally as two straight quarters of contraction -- occurred in 1991 Aah yes, the recession we had to have. [1] [1] https://en.wikipedia.org/wiki/Early_1990s_recession_in_Australia#.22The_recession_we_had_to_have.22 https://en.wikipedia.org/wiki/Early_1990s_recession_in_Austr...

nailer 10y ago
Comments like this are why I left Australia: many Australians believe Paul Keating caused the worldwide recession of the early 90s, or the hyperinflation of the 80s, based on Keating pointing out that the recession was a necessary correction. It is a very inward looking country.
- jacques_chester 10y ago
  It's hard to be sanguine if you're beggared or bankrupted. Keating being right, and Keating phrasing it as he did, are different things.
dmix 10y ago
> The Hawke Labor Government initially responded to the crisis by asking the Conciliation and Arbitration Commission to defer its national wage case. Treasurer Paul Keating was advised to tighten monetary policy, but, with forthcoming by-elections and a state election in New South Wales, the Government opted to delay the potentially unpopular move, which would raise interest rates. Commodity prices dropped and the Australian dollar sharply declined. The Reserve Bank conducted a $2 billion intervention to hold the dollar at 68c but it crashed to 51c. So the government delayed what would have been a natural increase in interest rates and slowed the unhealthy consumption of capital. Instead the delay resulted in a sharp decline in prices rather than a more gradual one. All for political 'timing' as the tough medicine would have been unpopular. Lovely. Monetarist policy is supposed to ease the pain of recessions, not make it worse. > To court the green vote, environment minister Graham Richardson had placed restrictions on mining (notably uranium mining[5]) and logging which had a detrimental effect on already rising unemployment. David Barnett wrote in 1997 that Labor fiscal policy at this time "self-defeating as "with one hand it was imposing a monetary squeeze, while on the other it was encouraging spending with wage increases and tax cuts". A recurring trend here of politics trumping the economic livelihood of the people.

jakozaur 10y ago

The only other OECD developed country which has similar 20+ years period without recession is Poland. Even more impressive Australia population increases, while Poland population stays flat.

haihaibye 10y ago
Why isn't it easier with population growth? GDP isn't adjusted by population, so even if the amount per person goes down (as it has been recently), so long as the total amount doesn't - no recession!
- jakozaur 10y ago
  Excuse me, but I meant what you said. With population growth it's easier to have GDP growth. If population is flat, you actually need to make ppl more productive: wages need to increase, company profits, etc. With newcomers, even if productivity per person decreases you still can have GDP growth.
mamon 10y ago
Poland had a recession very recently: Q4 2012 and Q1 2013 both had GDP falling down. Thing is, initially government published inaccurate data, showing no recession, but then, 3 years later they revised that data, showing we actually had recession.

perilunar 10y ago

We need one soon though. The housing market is a massive bubble that needs deflating.

2muchcoffeeman 10y ago
What is the reasoning behind this sort of opinion? If the economy keeps doing well, wouldn't salaries increase? Couldn't the government invest more in less populated areas around the capital cities so that living in those areas becomes more feasible? Why have a recession?
- bevax 10y ago
  In modern economy, when business is doing well, profits and top salaries grow, but that's it. Salaries never went proportional with productivity or profits and this is another sad example here: despite 25 years of ongoing growth, people are confronted with extreme household debts. Obviously political decision makers became too greedy and lobbyists too influential. You see it anywhere, not only in AUS.
- flukus 10y ago
  Salaries and housing prices have become completely decoupled. Home ownership is now out of reach of most Australians. More urban sprawl isn't really a solution because traffic will never cope. Most people haven't seen the benefits of economic growth, so they don't really care if we have a recession, it's mostly going to hit the wealthy investing in housing. A housing market crash will be the biggest redistribution of wealth the countries ever seen.
  - 2muchcoffeeman 10y ago
    > More urban sprawl isn't really a solution because traffic will never cope. I'm suggesting that new business centres be created so that people can live in cheaper areas, and still be close to their jobs. This should reduce traffic since fewer people will need to commute. But I am not a City Planner. I have no idea what is feasible or not. But there must be lots of industries that don't need to be in the CDB.

cyphar 10y ago

Not surprising, given that our economy is effectively backed by China. Of course, that means the probability of us getting out of coal is not very high in the short-term (mining is still a huge employer here, and we export >50% of our coal to East Asia).

XorNot 10y ago
It's fine we'll be set for when they want uranium too.
- cyphar 10y ago
  China is heavily investing in solar, not fission (at least from what I've heard). And I don't think that Australia has a strong edge on the iridium market (it's already super-rare) or the silicon market (we already have problems with beach erosion, so mining silicon = very bad for condos in Sydney).

rukuu001 10y ago

Hah, they said "property bubble." Would like to know if that was from their own reading of the numbers or just repeating one of the story's local sources.

cyberferret 10y ago
Just curious - you don't think housing prices are too high in Australia? At least when compared to local wages? To me it seems like a giant house of cards, waiting for the just little breeze to bring it toppling down. And I am not speaking from a point of chagrin here - I own my own home and am glad that it is valued at what it is now, but I also know that it is crazy, and really, should housing prices be going up at something like $100,000 per year?? Because that is what is happening here...
- timcederman 10y ago
  In general, I agree, but I thought the same thing in the early 2000s.
- tajen 10y ago
  Every city in the world believe they're in a housing bubble. People can't just fathom the fact that there are many, many people richer than them, and the fact they can't afford a house is just that they don't earn enough compared to their neighbors. It's especially good to say "housing bubble" because it sounds smart as a market analysis from someone who has a lot of data, and it can only be proven wrong years later (when the comment is long gone) when the bubble is not burst, proving the new housing prices just reflect your neighbors' average wealth. "but the bubble is around the corner", they'll still say. Every city in the world. Housing prices grow according to people's wealth; there are also more and more people in every city, that increases the pressure on prices and it's rarely a bubble.
  - falsedan 10y ago
    Downvoting for the massive sense of entitlement shown, which is high even for HN! Lots of global cities do have bubbles from foreign investment parking wealth in property, driving up prices and squeezing out locals looking to buy. Here's how it works: Foreign investors buy luxury properties Top-tier locals can't buy luxury properties, buy the next highest property class Second-tier etc. Lower-rung locals have no properties to buy. Not: they don't have enough money; but the property type they would traditionally occupy isn't available, and no alternatives have been built since it's always in a developer's best interest to aim at the top, in the abscesses of government incentives.

bootload 10y ago

"Australia’s banking regulator further tightened lending curbs Friday to try to cool investor demand for residential property that’s helped drive up prices. Data released hours later showed investor lending increased 6.7 percent in February from a year earlier, the fastest growth in 12 months." No mention of the ^Elephant in the room^ with respect to real-state and housing: transparency in financing property. [0] Reference [0] "Corruption and Property Laundering" https://www.prosper.org.au/2017/03/30/corruption-and-property-laundering/ https://www.prosper.org.au/2017/03/30/corruption-and-propert...

mmerlin 10y ago
Australia is the world's worst (best?) country for laundering money through property https://www.macrobusiness.com.au/2017/03/report-australia-worlds-worst-money-laundering-property-market/ https://www.macrobusiness.com.au/2017/03/report-australia-wo...

partiallypro 10y ago

Australia is a commodity driven economy with two neighbors that have had explosive growth and an insatiable lust for commodities over the past 25 years (India and China.)

cylinder 10y ago
India has hardly come online as a trade partner, only recently. Before China it was Japan. Before Japan it was the US and UK. Maybe next it's Outer Space?!! There's been some new story, who knows how many more.

flukus 10y ago

We've had recessions, we've had a few in the last decade. It's been masked by immigration though, the economy has grown in absolute terms but that growth has been spread thinner.

spangry 10y ago
This is correct. Unfortunately neither of the two 'mainstream' political parties in Australia want to even say the word 'immigration'. Even though it's a perfectly legitimate concern that the electorate has. End result: Pauline Hanson [0]. [0] For our American friends, Pauline Hanson is a famous racist politician in Australia. She has recently made a political comeback.
- flukus 10y ago
  It's greens (left wing ultra progressive) policy too, just way down their list of priorities.
  - spangry 10y ago
    Indeed. The great irony there is that their main constituents (i.e. inner-city young professionals) are the ones who are copping the worst effects of high, unending immigration (e.g. congestion, lower public transport availability, lowered housing affordability etc.) If they don't stop listening to the Sarah-Hanson Youngs in their party, and start listening to the more rational Scott Ludlams, then this issue will lead to their 'democrats' moment very soon. EDIT: I also can't understand why either Labor or the Greens don't take the very obvious political opportunity right in front of them. They should essentially pull a reverse John Howard by increasing our refugee intake, move processing on-shore (or even start a community release program), and drastically cut 'regular' immigration intake levels while they work with State governments to stabilise infrastructure, energy and education. Seems like a no-brainer to me. Good policy and good politics combined is a rare thing.
    - flukus 10y ago
      Agree completely, I've been saying this for a while now but the knee jerk reaction is to get labelled racist. I think Labor are just as beholden to the wealthy though. And can you imagine the Murdoch rags if it did cause a recession? The big question now is "does anyone, particularly those under 40, care if there's a recession?". I think a growing number of people are hoping for one.

droithomme 10y ago

Isn't most of the growth due to the mining industry there?

cyberferret 10y ago
There was a spike due to mining and offshore gas in the past decade or two, but the mining sector has pretty much stagnated now. Also, it was somewhat of a 'false spike' due to mining companies using FIFO (fly in fly out) workers from Asia etc. Those workers would come here, work hard, collect their pay packets and the leave to go back to their home countries and spend there rather than locally. Our tourism market, which WAS a huge part of our GDP and employment, has suffered. In my town, the FIFO workers book out entire streets of hotels for their work schedules, meaning tourists have no chance getting a room year round. Local shops and markets are shuttering at a fast clip because no tourists are around the spend money with them. Recent events with the cyclones in Queensland, and the general bleaching of our Great Barrier reef also will have a huge impact on our tourism market, with a reported 100,000 jobs likely to disappear over the coming years across the Eastern seaboard.

spangry 10y ago

There's a few reasons, and most of them don't bode well for the future: - Since the early 2000s, there has been an unprecedented spike in the price of natural resources like iron ore (http://www.macrobusiness.com.au/wp-content/uploads/2015/11/Capture185.png http://www.macrobusiness.com.au/wp-content/uploads/2015/11/C...). Australia is a resource rich country and so has enjoyed a significant, but temporary, increase in national income as a result. - The above has had a number of unfortunate (but avoidable) long-term effects on the Australian economy: high demand for Australian natural resources meant high demand for Australian dollars, so the dollar appreciated. This hollowed out the economy as most non-mining export facing businesses were ruined by this. Australia's car manufacturing industry is dead, for instance. This could have been managed by taxing rents from natural resources and placing that money in a sovereign wealth fund (i.e. a fund that invests in assets denominated in non-Aus currencies). But we didn't do this because we're idiots. - The government that presided over the majority of this 'mining boom' (i.e. John Howard and co) acted as if those historically unprecedented prices were the 'new normal'. Accordingly, they passed a number of budget measures that placed the Commonwealth budget into permanent structural deficit. The IMF conducted a cross-country study of fiscal spending for the last 200 years in 2013. In Australia's case it found that there have been 3 periods of 'fiscal profligacy': 1 during Whitlam (in the 70s) and 2 during Howard.[0][1] However many Australians continue to buy in to the myth that John Howard was a 'great economic manager'. - Howard's government also changed how residential real estate is taxed for property investors. Specifically, he made it more concessional for the rich, and created stronger incentives to 'flip' houses after 1 year to maximise the tax benefit.[2] - So Australians took all this new income, and sweet tax breaks, and poured it all into speculative investment in residential real-estate. [3][4][5] Out housing markets (especially in Sydney, Melbourne and Brisbane) are investment bubbles just waiting for some external shock to pop them. The mining boom is also winding down, so less national income to keep the ponzi going. In terms of private debt, we are now one of the most indebted nations in the world. - We've also kept the housing / nominal GDP ponzi by having insanely high immigration levels, unprecedented by historical standards. Of course, this had to be sold carefully because Australia is a fairly racist country. So, our previous Prime Minister John Howard made a big show of brutalising refugees, while at the same time quietly opening the immigration floodgates [6][7][8]. - With the mining boom ending and the continuation of high immigration, our major cities are reaching crush capacity. Infrastructure and education spending have not come even close to keeping up. This has kept house prices levitating for the moment, but this can't last forever. It has also reduced quality of life and employee wages and share of production surplus [9][10] So that's how Australia has managed to avoid a nominal recession for the past 25 years: by running the world's most successful ponzi scheme. But as windfall natural resource income dries up, international lenders stop lending to our banks, and high immigration becomes a mass exodus, our enormous property market bubble will explode leaving us with only a bunch of long dead industries (like manufacturing) and piles of debt. Basically a replay of the 1890s recession in Australia, which was one of the main drivers of federation. So I guess we'll be invading New Zealand soon. [0] https://www.imf.org/external/pubs/cat/longres.aspx?sk=40222.0 https://www.imf.org/external/pubs/cat/longres.aspx?sk=40222.... [1] http://www.smh.com.au/federal-politics/political-news/hey-big-spender-howard-the-king-of-the-loose-purse-strings-20130110-2cj32.html http://www.smh.com.au/federal-politics/political-news/hey-bi... [2] http://i.imgur.com/4VUGfPz.png http://i.imgur.com/4VUGfPz.png [3] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-house-values-to-Income-660x504.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [4] http://www.macrobusiness.com.au/wp-content/uploads/2016/12/ScreenHunter_16592-Dec.-09-11.46-660x463.jpg http://www.macrobusiness.com.au/wp-content/uploads/2016/12/S... [5] http://www.macrobusiness.com.au/wp-content/uploads/2016/11/ScreenHunter_16297-Nov.-23-17.16-660x427.jpg http://www.macrobusiness.com.au/wp-content/uploads/2016/11/S... [6] http://www.macrobusiness.com.au/wp-content/uploads/2017/02/ScreenHunter_17403-Feb.-13-11.51-660x465.jpg http://www.macrobusiness.com.au/wp-content/uploads/2017/02/S... [7] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-population-change.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [8] http://www.macrobusiness.com.au/wp-content/uploads/2017/02/ScreenHunter_17401-Feb.-13-11.51-660x489.jpg http://www.macrobusiness.com.au/wp-content/uploads/2017/02/S... [9] https://www.macrobusiness.com.au/wp-content/uploads/2017/03/Australian-workers-falling-share.jpg https://www.macrobusiness.com.au/wp-content/uploads/2017/03/... [10] https://www.macrobusiness.com.au/wp-content/uploads/2016/11/ScreenHunter_16336-Nov.-25-10.57.jpg https://www.macrobusiness.com.au/wp-content/uploads/2016/11/...

rusk 10y ago

Mining.

chvid 10y ago

Australia benefits enormously from migration from China (and nearby Asian countries) which happens via investment, the job market and the higher education system. These immigrants are in general well-educated and wealthy. This is unlike migration to Europe which happens thru the asylum system and for most parts sends the immigrants directly into the welfare system.

nrki 10y ago

Ah, but it's former powerhouse natural resources state - Western Australia - is now in a recession.

joelthelion 10y ago

Unfortunately that growth is unsustainable as it is based on very high emissions.

catmanjan 10y ago
Yep, international money in the housing market is forgivable, but there is no way they should have allowed such massive investments in the new coal mines.
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jaimex2 10y ago

Were the lucky country, "She'll be right" is the mentality of everyone here.

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researcher11 10y ago

I escaped that ponzi scheme 10 years ago and moved to way more affordable San Francisco. It was cheaper then and still is.

ionwake 10y ago
How are you finding living in sf compared to Sydney ?
- researcher11 10y ago
  If I had $10M I'd move back to Sydney. It's a nicer city. I do data science / machine learning and for work there is no comparison, SF is where it is at. I had to leave SF because I wanted to be a contractor and none of the visa options would allow it. I have recently moved on to a cheap tax haven (Boquete Panama) where I work remotely and get paid the same. My margins are so good here that I only have to work 1-2 days a month. I'm quazi retired at 31 and could never go back to normal working. I get to be very picky about what I work on and spend a lot of my time studying things that I'm interested in. I highly recommend this lifestyle to others.
  - deleted 10y ago
    [deleted]
  - ionwake 10y ago
    What site do you use to find your remote contracts? Have you got a portfolio I can look at?
    - researcher11 10y ago
      It's via friends I made in SF. If you want to do something similar I'd recommend doing a long stint in SF first. Get any job you can and then switch once you know some people. I try to keep anonomous in general so no portfolio.
      - 10y ago

retrogradeorbit 10y ago

Some are calling it a "population ponzi".

panglott 10y ago

The simplest reason is that Australia has a higher inflation target and is willing to average that target over the business cycle. Whereas the US has a lower inflation target and treats that target as an upper bound. So in the 2007 recession for example, the Fed was trying to figure out how to push against the zero lower bound, and then despite a period of very low inflation, has refused to allow any catch-up growth that might take the inflation rate temporarily over 2%. "So what is it that has kept Australia's economy from shrinking? ...It's that Australia has been able to cut interest rates when it has needed to. Other countries haven't, you see, because their interest rates are already as low as they can go at zero or even slightly negative territory. ...[Australia] doesn't have a 2 percent inflation target. It has a 2 to 3 percent inflation target averaged over the business cycle. ...The result is that interest rates have been much higher in Australia than in almost any other rich country." https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-australia-has-avoided-a-recession-for-25-years/?utm_term=.969c5d023931 https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-a...

paulpauper 10y ago

Surprised no one has noticed this: Australia' "boom" has less to do with mining and organic growth and more to do with its falling currency . When growth is converted back into US dollars, it shows contraction beginning in 2013 and again in 2009 http://www.tradingeconomics.com/australia/gdp http://www.tradingeconomics.com/australia/gdp

manojlds 10y ago

What about recession of the coral reef?

ed_balls 10y ago

>Australia is close to seizing the global crown for the longest streak of economic growth thanks to a mixture of policy guile and outrageous fortune. It's the same true for Poland and a few other countries.

dmix 10y ago

The documentary they linked to about the Australian recession during the Hawke-Keating years is very interesting: https://www.youtube.com/watch?v=iM35CXyPh7M https://www.youtube.com/watch?v=iM35CXyPh7M I don't know much about Aussie politics but I found it interesting as someone who reads a lot about economics. The 80s/90s were a very interesting time for capitalism as globalism was just beginning and the large role of the state in the economy was being solidified.

brilliantcode 10y ago

how would you short Australia? Is there an index ETF?

bobbington 10y ago

The article mentions that a growing population has helped the Australian economy. Funny thing is Japan is been in a recession for a long time now, and it's obvious what the cause is - A declining population. And yet the central bankers there think they can fix the fundamental issue by printing more money. People are the foundation of any economy.