The Fall of Australia - A Freedomain Radio Video Presentation

Link [/font]Australian home prices experienced a decade of strong growth that was not matched by the growth in underlying fundamentals: incomes, rents and construction costs. See graph #1

Link “Easy money fuels property bubble risks”

The Reserve Bank of Australia and banking regulators are being warned that low interest rates could re-inflate a property bubble, leaving the economy more vulnerable to a crash. Moody’s Investors Service, which recently conducted stress tests on Australian banks, said that while the banks were currently sound, “you can see issues arising”.

Link Housing is Becoming More Unaffordable Than Ever

See graph #2 and graph #3

Link Strong Evidence that they are in the Midsts of a Housing Bubble

Philip Soos, researcher at Deakin University's School of International and Political Studies:

“Lastly, a classic sign of a bubble is the price to rent ratio. The reason why this metric is often used in housing analysis is because debt speculation affects capital values, not rental incomes (the latter is determined by wages and population growth). Given that the denominator (rents) tends to remain stable over the long term, it is the numerator (housing prices) that comprises the deciding variable” See graph #4

Simply: This graph measures debt speculation.

Link The number of Youth Working, Training and Studying is Dropping

A recent report released by the Council of Australian Governments showed that the percentage of youth studying, working, or training fell from 76 percent in 2008 to 72.5 percent in 2011.

Link Stress is Increasing Among Young People

The Mission Australia survey indicated that financial uncertainty is heightening stress among young people. When asked about personal issues, more than 40 percent of respondents said they were either very concerned or extremely concerned about coping with stress, up from 20 percent in 2008, when the financial crisis began.

Link The Wealth of the Middle Class in diminishing

An Australian Institute of Health and Welfare report released on December 5 indicated that the number of households experiencing moderate housing stress—when 30 percent or more of gross household income is allocated to accommodation—rose from 900,000 in 1995 to over 1.4 million in 2010. Households in severe housing stress—when accommodation costs 50 percent or more of gross household income—increased from 300,000 in 1995 to 460,000 in 2010.

The waiting lists for public housing applicants expanded from 177,652 in June 2008 to 202,368 in June 2011.

Link People are Having to Disconnect from the Middle Class

Electricity disconnections increased 33 percent and gas disconnections by 50 percent in that state during 2012. David Heeps, the commission’s chief executive, commented in the Age that the majority of disconnections “are of customers who struggle to pay their bills—not ‘skippers’ or movers from a residence.”

B - Consumer Debt/Debt

C - Class polarization

Link [/font]The gap between the poor and the rich is increasing at an accelerating rate [/font]

(See graph #8)

“...there was a 2.2 per cent increase in inequality from 2009-10 to 2010-11.”

Link Inequality is Growing

Recent data released by Australian Bureau of Statistics (ABS) confirms the trend that Australia is becoming more unequal with bottom 20 percent losing out to the top 20 percent, though the changes are relatively modest.

The Gini coefficient confirms this; measurement of income inequality, has increased to 0.331 in 2007-08 from 0.303 in 1997-98 indicating that income inequality in Australia is increasing.

4 - Poverty rate

Link (Published October 15, 2012) [/font]ONE in eight Australians lives below the poverty line

Link (Published October 15, 2012) [/font]According to the international definition of poverty more than 2.2 million Australians live in poverty. In 2010 the poverty line for a single adult was a disposable income of less than $358 a week

Link Poverty Rate

A recent study, conducted by The University of New South Wales in collaboration with the Australian Council of Social Service (ACOSS) demonstrated that 20.9 per cent of Australian adults and 26.1 per cent of children lived below the poverty line.

Link Getting Poorer

Approximately 11.1 per cent of Australians lived in poverty in 2006 – the latest date for which statistics are available - compared with 9.9 per cent in 2004 and 7.6 per cent in 1994.

2.265 million in 2009 Link

5 - General Economy and Inflation

Link Manufacturing activity contracted for the ninth consecutive month in November 2012. So the contraction would be February 2012 - November 2012.

During the same period of time, only one of the 12 industries showed expansion which was Food and Beverages. The weakest sectors are fabricated metals, chemicals and petroleum, and construction materials.

Link (Published February 5, 2013) [/font]Australian retail sales unexpectedly fell for a third month in December, the longest stretch of declines in 13 years

Link [/font]Business Confidence Down[/font]

A Sensis survey, taken between 30 January and 21 February 2012, shows business confidence is still weaker than this time last year, with three in 10 businesses worried about their prospects for the year ahead, including one in 10 that are extremely worried.

Link [/font]Businesses are Collapsing [/font]

“While the fall in figures may appear to bode well for the year ahead, corporate failures for the month (January 2012) are 13.8% higher than at the same time last year and 10.9% higher than the five year average (467) for January,” it says.

“Further, for the financial year to date, total company collapses are at 6068 compared with 5353 for the previous corresponding period, an increase of 13.4%.”

Link Businesses are Collapsing #2 and New Ones are Not Being Started[/font]

Dun & Bradstreet's survey, released today, shows that a disturbing trend of business failures over the past three years has accelerated in the past year. It shows a 48 per cent increase in the number of small businesses going bankrupt and a dramatic 95 per cent fall in the number of small businesses starting up.

Figures from Dun & Bradstreet show that small business failures grew 57 per cent over the year among companies with less than five employees and 40 per cent over the year among firms with six to 19 employees.

Not surprisingly, startups during the December quarter in the manufacturing, service and finance sectors fell by nearly 100 per cent.

6 - Government Finances

Link

Total debt: Greater than 4.7 Trillion U.S Dollars[/font]

National debt: Greater than 482 Billion U.S Dollars

National debt per person: Over 20 Thousand Per Aussie

Link [/font]

Public debt: $394,534,426,230

Public debt per person: $17,333.56

Population: 22,782,732

Link [/font]Massive Increase in Government Spending (2007 to 2012) [/font]

The federal government's employee costs surged from $18.69bn in 2007-08 - the year Howard government treasurer Peter Costello delivered his last budget - to $24.71bn in 2011-12, a rise of 32.23 per cent.

Link [/font]Increase in the Rate of Cannibalism of the Rich[/font]

Mr Shorten, Superannuation Minister, said Labor was implementing “targeted, commonsense and overdue reforms to ensure sustainability and fairness in the superannuation system”.

The total package is forecast to contribute about $900 million to the federal budget over the forward estimates.

The imposition of the new 15 per cent tax on earnings over $100,000 in the retirement phase will save $350 million over the forward estimates.

The $100,000 threshold for taxation of superannuation income will be indexed.

Treasury estimates that around 16,000 individuals will be affected by this measure in 2014-15, which represents around 0.4 per cent of Australia's projected 4.1 million retirees in that year.

The government had previously briefed journalists that its changes would target the top 1-2 per cent of earners.

Some Truth:

Tony Abbott said the government was raiding people's retirement savings to fund its own excessive spending.

“This is a $1 billion hit on people's retirement savings. It's a $1 billion hit on savings that belong to people, not the government,” he said.

Link Rising Government Debt to GDP

(See graph #9)

7 - Expert Predictions

Link [/font]Bloodbath in future housing market[/font]

“Australia’s love affair with property is about to be tested amid predictions prices will plummet by as much as 60 per cent, with capital cities hardest hit.”

That’s the warning from leading US real estate analyst Jordan Wirsz, who believes Australia is heading towards a property bloodbath as the global economic downturn spreads to China and eventually here. Mr Wirsz advises Fortune 500 CEOs and fund managers on investing in real estate.

The outlook is even grimmer for land investments, which Mr Wirsz said are more speculative and will plummet by as much as 80 and 90 per cent in value.

Commercial property will also take a hit in line with the residential sector shedding at least 50 per cent of its value.

Mr Wirsz joins others including visiting US economist Harry Dent who recently said Australian house prices were 50 per cent overvalued.

8 - Signs of accelerating collapse

Link [/font]Economic Concerns Survey[/font]

A survey of more than 15,000 teenagers aged 15-19, conducted by Mission Australia, a charity organisation, has provided a snapshot of the mounting economic concerns among young people. Around 31 percent of those surveyed listed the economy as the most important macro-issue, up from around 20 percent last year.

“Mission Australia’s National Manager of Research, Bronwen Dalton, commented: “In last year’s survey, concern around the economy wasn’t even in the top three... This year it’s easily the most pressing national issue on the minds of young people.”

Link [/font]Economic Concerns Survey #2[/font]

The number of Australians saying they are ‘very concerned’ about the economy sharply increased, nearly doubling from 11 per cent in 2011 to 20 per cent in 2012

Link Economic Concerns Survey #3[/font]

Australians living in Labor held electorates who are ‘very concerned’ about the economy doubled from 8 per cent in 2011 to 16 per cent in 2012. 13 per cent of people in those electorates are finding it ‘very difficult’ on their current income, up 4 per cent from 9 per cent in 2011.

9 - Historical similarities

Link [/font]Similarities with the U.S Housing Bubble and Subsequent Fall of Middle Class Wealth[/font]

The US Federal Reserve released a bulletin that nicely shows what happens when a housing bubble bursts. In short, US wealth has gone back to pre-1990 levels. What took 18 years to create was undone in three: See graph #10 top

The link between families net worth and housing prices is obvious. See graph #10 bottom two

10 - Cost of regulations

Link [/font]Effects of Carbon Tax[/font]

Last month, the Australian Retailers Association released results of a survey in which they found that 80 percent of Australian retailers say their business has been negatively affected by the new carbon taxes in place in that country since July of 2012.

Link [/font]Analysis of the Australian Carbon Tax and its Resulting Effects [/font]

The government‟s official carbon target is for a 5% reduction in emissions below 2000 levels by the year 2020. Around 500 of the biggest polluters will be taxed for every tonne of carbon pollution they produce. Carbon tax will cover around 60 percent of Australia’s carbon pollution, including pollution from electricity generation, stationary energy, some business transport, waste, industrial processes, and fugitive emissions. The carbon price will be fixed like a tax for the first three years, before moving to an emissions trading scheme in 2015. On 1 July 2012, the price will be A$23 per tonne and will rise at 2.5 per cent per annum in real terms.

An estimated A$71 billion will be collected by the government in the first 6-and-half years of Australian carbon tax.

A carbon price will increase the cost of living. The government has estimated that the increase of the cost for average household will be A$9.90 per week, $514.8 a year.

To minimise the effect on cost of living, the government has announced the assistance package for the households, at about the same rate.

The carbon tax will increase income inequality:

The estimated results show that the poorest 20% and the richest 20% of the population would have to pay an increased tax of 2.4% and 0.8% of total spending, respectively, and the average household would have to pay an additional tax of 1.4% of total spending. Hence it is clear that the more burden of a carbon tax falls on the poorest section of population, and the richest bear the lower burden (Zhang and Baranzini, 2004)

The carbon tax would destroy coal production:

ACIL Tasman modelling, The Australian of 14 June, 2011 reports that in the first three years (by 2014-15), the carbon tax could force eight black coalmines to close, and coal production could have declined by 18.7 percent and employment reduction of 4085 jobs. The impact on the overall economy will be 12, 255 jobs. ACIL Tasman also notes that these estimates include only losses from premature mine closures; there will be more employment losses from operating economies made within surviving mines.

With the Carbon tax, GDP is reduced and inflation is increased:

According to the treasury model and Reserve Bank of Australia (RBA) estimate, the total impact would be to reduce GDP by more than 0.4 percent points, and to boost inflation by around 1 percent in 2012/13.

Example of the effects the carbon tax will have on a family:

A dual income family with two children aged 5 to 12, earning $120,000 a year, will be almost A$400 a year worse off (The Sunday Telegraph, July 10, 2011).

11 - Miscellaneous

Link [/font]Population Statistics[/font]

Link [/font]Employment Statistics[/font]

Link [/font]Poverty Statistics[/font]

Link [/font]1950s price controls[/font]

Link [/font]Employment Numbers of a Survey Outmatch those from Government Statistics[/font]

Almost 39 percent of those surveyed were working part time. In an indication of growing youth unemployment, over 34 percent were not in paid employment, but were looking for work.

Figures released by the Australian Bureau of Statistics indicated that the youth unemployment rate, as of September 2012, was 25.1 percent.

Link Scumbag or Upside Down Thinking; Covering, Enabling and Intensifying the Problem.

Cassandra Goldie, head of the Australian Council of Social Service, told the Australian that the lack of affordable housing was the major cause of poverty in Australia. “It is well understood that we have a chronic lack of supply of low-cost and affordable housing for people on low and modest incomes, and we have predicted that this problem will continue to increase if we don’t try … to increase the supply of affordable housing,” she explained.

Link More Nonsense from “the Australian Council of Social Service” or ACOSS:

ACOSS demanded that the federal government immediately increase dole payments - currently $492.60 per fortnight for a single unemployed person - and index them to inflation.

Ms Goldie said boosting Newstart rates, which she says have not increased in real terms for 20 years, would help to lift thousands out of poverty.

ACOSS also urged the nation’s billionaires, including mining magnates Gina Rinehart and Clive Palmer, to pay more tax and called on federal and state governments to address expensive housing costs.

Link As Wealth is Destroyed so are Higher Order Concerns like the Environment

The environment, listed last year by over 37 percent as most important national issue, fell to 17.5 percent this year.

12 - Public Vs Private

Link [/font]Rapid Recent Public Growth[/font]

Since the election of Labor in 2007, the Australian public service has grown by just over 13,000 or 8.4% according to the latest official figures published in November 2012 (168,580, up from 155,424).

Link [/font]Public Sector Paid Enormously More[/font]

Average weekly total cash earnings for all employees were higher for employees in the public sector ($1,321.90) than in the private sector ($1,074.20).

The Public Sector gets paid, on average, 23% more.

Private sector employees comprised 80.4% of all employees and public sector employees comprised 19.6% of all employees.

Link [/font]The Bureaucratic Sector is Top Heavy. (This article is only accessed through subscription) [/font]

The Australian public service is increasingly top-heavy, with 45,000 officials, or 29 per cent of all permanent employees, now classified as executives.

Analysis by The Australian has found there is now one manager for every 2.5 ordinary workers in the federal bureaucracy.

Recent Increase in the Number of Executives: “Since 1998, the number of middle managers in the federal bureaucracy, known as EL1s and EL2s, has jumped 132 per cent, while the elite, three-grade Senior Executive Service has expanded 78 per cent.”

The Cancer is Overtaking the Host: “The total number of so-called "ongoing" employees in the Australian Public Service increased by 42 per cent over that period (since 1998), compared with a 22 per cent rise in the nation's population.”

“In the final five years of the Howard administration (2002-2007), the size of the public service jumped 28 percent, with the executive ranks up 49 per cent.”

Double Growth; The Tumor is not only becoming larger but also becoming more powerful. Within the Overall Growth of the Public Sector there is also a growth in how much the people within are making: “In the past five years under Labor, the number of permanent public servants has grown by 10,440, including a 10,358 rise in the executive ranks, to 154,307.”

Result: Had the number of senior executives and middle managers remained at 2007 levels, the annual salary bill would be $1.343bn less than it is today.

Link Queensland; Afflicted with a Bad Case of Government Health Care

A few weeks ago, I was tuned in to the evening news to be told that the LNP government was planning to cut 1500 jobs in health.

Gosh, I thought, 1500 jobs sounds quite a lot. So I decided to find out how many people are employed in Queensland Health. The answer is more than 80,000. Annual natural attrition would account for more than double the proposed job cuts of 1500, which represent a mere 1.9 per cent of total employment.

But here's the rub. A decade ago, employment in Queensland Health stood at 49,000. So in 10 years there has been an increase of more than 32,000 employees - an increase of two-thirds.

But here's a further rub. Whereas the number of nurses in effective full-time terms increased by 65 per cent over the decade, the number of managerial and clerical staff rose by 103 per cent during the same period. There are now nearly 15,000 managers and clerical staff in Queensland Health.

The observant reader might make the point that Queensland's population has grown over that time; indeed, population growth has been higher in Queensland than in Australia as a whole. However, the average annual growth in the number of Queensland Health staff has been well over two times higher than the growth in the population.

Best part; this is why you can’t cut government spending: “The media, particularly in Queensland, has been making much of the supposedly "savage" job cuts.being implemented by the LNP government...”

Same Phenomena as above; as the Public Sector Grows so do the wages of the people within: “As Ken Wiltshire, an expert in public administration, and a Queenslander, pointed out on this page last week, there "was a blowout in the amount spent on public servants across the past decade, at 8.7 per cent a year. Of that, 3.5 per cent was attributed to the number of employees and 5.2 per cent to growth of wages.”

Link Ridiculous Annual Public Sector Wage Growths and Even more Ridiculous Projected Cuts in Growth

Federal, state and territory governments expect the combined bill for employing their workers will grow by 10 per cent over the four years to 2015-16, in stark contrast to the runaway growth of the previous four years of 31.2 per cent. (See graph #5)

Link Public Sector Blowout

(See graph #6)

Link Absolute Sickening Growth in Public Wages

Budget figures reveal that since Labor came to power in late 2007, the cost of public-sector salaries has risen by an average of 7.7 per cent a year. The bill will jump 8 per cent this financial year alone.

Link Overall Public Employment Rising

(See Graph #7)

PatrickC · April 18, 2013

The beard is super fine Mr Stef..Think it might be time to update your profile pic.. []

ribuck · April 18, 2013

Thanks for this video! I'm sure the property price crash will come, but not quite yet. The Reserve Bank of Australia (the central bank) currently has interest rates at 3%. No doubt they will continue to drop them, as the US and UK did, to perpetuate the illusion that property prices are stable. There will come a time, of course, when the illusion can no longer be sustained.

Mike Fleming · April 18, 2013

How do Australia and Canada compare?

I live in Australia and I've understood this and more for awhile now, but most people, like in any country I guess, seem to have a rose-tinted glass view of "their" country.

Canada and Australia seem to be similar in many ways, commodity currencies, similar population size, English speaking etc, big and mostly empty, basically one is hot and one is cold.

Sometimes I wonder if Stef has rose-tinted glasses about Canada or whether it isn't really that bad there...

zg7666 · April 18, 2013

Great work.

zg7666 · October 25, 2013

Australia - You Should Be Outraged! - Mike Maloney On Raised Debt Ceiling

GoldSilver.com & Mike Maloney

http://www.youtube.com/watch?v=IZTyhItHo1A

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The Fall of Australia - A Freedomain Radio Video Presentation

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