Australia’s prime minister may have resolved a bitter leadership crisis, but the rancor over her government’s performance highlights a deeper sense of dissatisfaction that belies the so-called “Lucky Country’s” economic strength.
Australian Prime Minister Julia Gillard, who on Monday fought off a challenge to lead the ruling Labor Party, despite a string of policy successes, has largely failed to convince voters that their position and prospects compare favorably to much of the rest of the world.
The discontent puzzles policymakers, who have tried to ensure businesses and consumers do not turn their glumness into a reality.
“Perhaps we as a society tend to not give sufficient weight to the fact that we are in a long upswing,” Reserve Bank of Australia Governor Glenn Stevens told lawmakers last week, highlighting the country’s low unemployment rate, subdued inflation, strength in government finances and attractiveness to foreign investment.
“We’ve got issues, but it’s actually a pretty reasonable performance compared both with our historical experience and with the vast bulk of other countries you might choose with which to draw a comparison,” he said.
The resource-rich country of just 22.8 million people has grown almost without pause for more than two decades. Indeed, it was the only developed nation to dodge recession during the global financial crisis.
Its jobless rate of 5.1 percent is half that of the EU and comfortably below the US’ 8.3 percent.
The country’s banks are sound, government debt is small and the budget is well on the way to surplus. Sydney, Melbourne, Adelaide and Perth recently made The Economist magazine’s top 10 list of the world’s most liveable cities.
Yet you cannot turn on a TV or pick up a newspaper without being bombarded by negative headlines, focusing on the political crisis, job losses and the rising cost of living.
The top official in the Australian Treasury Department also described an “overwhelming negative” tone in much of the current debate on the economy, and told businesses and consumers to lighten up.
“It is almost as if most Australians seem to think we live in Greece. We don’t,” Australian Treasury Secretary Martin Parkinson told an Australian Senate hearing earlier this month. “We actually have an incredibly bright future ahead of us.”
Much has been made of the patchy, two-speed nature of Australia’s economic growth.
The country’s vast mining sector is enjoying a once-in-a-century, China-fueled boom, but manufacturers are being gutted by the strong Australian dollar and retailers are struggling.
“The economy is very strong in general, but it’s really strong for high income-earners and people around the mining industry. It’s not enormously strong for an ordinary man in the street,” Australia National University economics professor Bob Gregory said. “There are some scare stories out there, like the banks are laying off people, the carmakers are laying off people … that just makes people a little edgy.”
Bernard Salt, a partner at KPMG and a consultant on cultural and demographic trends, said global economic uncertainty, combined with local political uncertainty, was weighing on Australians.
“We are waiting for something to happen with the hung parliament, we are waiting for something to happen with Greece and that means we just don’t have the confidence in the future,” he said.