General Economics

Dec 8, 2011

Australian Exceptionalism

Australian economic and social overview - wealth, income, distribution, growth and human development.

Possum Comitatus — Editor of Pollytics

Possum Comitatus

Editor of Pollytics

Australian Exceptionalism”.... let that phrase roll off your tongue. Now stop laughing for a moment if you can! There’s something about that phrase that just doesn’t sit right with us. We’re not only unaccustomed to thinking about ourselves that way, but for many it’s a concept that is one part distasteful to three parts utterly ridiculous – try mentioning it in polite company sometime. Bring a helmet. We’ll often laugh at the cognitive dissonance displayed by our American cousins when they start banging on about American Exceptionalism – waxing lyrical about  the assumed ascendancy of their national exploits while they’re forced to take out a second mortgage to pay for a run of the mill medical procedure. That talk of exceptionalism has become little more than an exceptional disregard for the truth of their own comparative circumstances. But in truth, we both share that common ignorance  - we share a common state of denial about the hard realities of our own accomplishments compared to those of the rest of the world. While the Americans so often manifest it as a belief that they and they alone are the global benchmark for all human achievement,  we simply refuse to acknowledge our own affluence and privilege – denialists of own hard won triumphs, often hysterically so. Never before has there been a nation so completely oblivious to not just their own successes, but the sheer enormity of them, than Australia today. In some respects, we have a long standing cultural disposition towards playing down any national accomplishment not achieved on a sporting field – one of the more bizarre national psychopathologies in the global pantheon of odd cultural behaviours – but to such an extreme have we taken this, we are no longer capable of seeing an honest reflection of ourselves in the mirror. We see instead a distorted, self absorbed cliché of ourselves bordering on parody - struggling victims of tough social and economic circumstances that are not just entirely fictional, but comically separated from the reality of the world around us. So preoccupied have we become with our own imagined hardships, so oblivious are we to the reality of our privileged circumstances, that when households earning  over $150,000 a year complain about having government welfare payments scaled back, many of us treat it as a legitimate grievance. Somewhere along the highway to prosperity – and an eight lane highway it has been - far too many of us somehow managed to confuse Cost Of Lifestyle with Cost Of Living. We managed to confuse government assistance as a means to enable the less well off to achieve a better standard of living and greater opportunity, with government assistance being a god given right to fund the self indulgences of an aspirational lifestyle choice beyond our income means. Too many of us have demanded our dreams be handed to us on a plate, and if our income couldn’t provide for them, we demanded that government should give us handouts to make up the difference. So let us take a hard look at our economic reality. Over the medium term, our broader economic performance has been nothing short of astonishing. Before the resources boom was even a twinkle in the eye of Chinese poverty alleviation, our performance was world beating – that is worth keeping in your thought orbit. Big Dirt has a bad habit of propagandising about their own contributions and the Australian public has a bad habit of believing them when it comes to our own national development of late. Imagine if, in 1985, all OECD economies had exactly 100 units of GDP each. If we then tracked the growth of that GDP (using OECD data) over time with the actual growth rates achieved during that period (creating a basic index) – this is how economies changed (click to expand the charts) Only Turkey, Israel, Ireland and Korea have experienced more growth – with Turkey and Korea pursuing the change from developing to developed status, Israel partially so as well and Ireland recovering from the economic lethargy of civil war, we are the highest growing country that can be remotely called a developed country with no unusual circumstances. Putting this into context, let’s trace that growth over the last 25 odd years with some of the countries we are often compared to. It’s kind of mind blowing – we grew faster, significantly faster, than all of the countries we are usually compared to, including over the period before the resources boom. But you ain’t seen nothing yet. “What about the distribution of that growth”, I hear you ask. “The poor missed out” you might also be tempted to add. Using data from the freshly minted OECD report on international comparisons of income distribution and inequality, where the average income growth per year was measured among countries between the mid 1980’s and the late 2000’s, what we find is that Australia left just about everyone else for dead. Not just at the average, or total household income level, but also with the size of the income growth among the poorest  10% of our households *and* the richest 10% of our households. First up, total population income growth in blue, bottom decile income growth (the poorest 10% of households) in red and the top decile income growth (the wealthiest 10%) in green for all OECD countries.


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135 thoughts on “Australian Exceptionalism

  1. fredex


    Good post, no actually better than that, its first rate, something the mass media should aim at if they could angle their heads up so steeply.

    As a response to the economic version of our infamous ‘cultural cringe’ it makes valuable points and from what I gather is a strong rebutal to the doom and gloom negativity that has pervaded our partisan media starting, oh roughly, November 2007.

    But several commenters here make equally valid points particularly with respect to the gross income and wealth inequalities [ ‘gross’ because its more extreme than many comparative countries and because it is unnecessary in a wealthy country like Oz and the gap is getting wider].
    Because social ills flow from that, as outlined above, and the commenter I noticed was Michael Crook with respect to domestic violence and child sexual abuse. Not that CSA and DV are a result of social inequality because both exist accross the social class spectrum as well as crossing ethnic and regional boundaries. But the damage they do is exacerbated by social inequality.

    Further down his [Michael’s] points are rejected by claims that because reporting of domestic violence is now compulsory then our figures are skewed to appear worse than other comparable countries.
    But its still a fact that the vast majority of domestic violence goes both unreported and unnoted. Without check I’d say about 80% plus [maybe a big plus] go unreported in any official way.

    We have a enormous way to go in this respect and it will require a major attitudal change across our entirre society which appears to be extremely improbable at present as denial of violence is still entrenched.
    Similary with mandatory reporting of child sexual abuse. Again reports constitute only a tiny fraction of the actual cases out there.

    The cliche ‘tip of the iceberg’ is appropriate.

  2. SoulmanZ

    zoom and stephan – you are wrong. flat out

    we have the highest rates compared to 1st world countries. You think people hold back from reporting child abuse in Sweden? In France?

    You think we have higher incarceration rates than most of the developed world because we catch more criminals than Japan?

    This is why I cringe at some of the article – yes there is a huge “everything sucks” contingent in Australia, but why is the response to polarise to “everything is rosy”?

    Australia has big social problems, in comparison to similar countries’. They are not ‘difficult and sophisticated’. They could be solved by simple, good policy. If you haven’t, please watch that TED talk I linked to @10. Eye opener.

  3. PatriciaWA

    Possum Comitatus – Oz Oracle

    As Possum Comitatus
    Fifteen months ago alerted us
    The Great Unhinging was begun.
    No surprises for anyone.

    We saw the embittered right
    With all their moneyed might
    And influence in the media
    Generating mass hysteria.

    The call for counter-revolution
    Against pricing of pollution
    Was one of many desperate means
    To discredit Labor, attack the Greens.

    Character assassinations,
    Civil unrest. demonstrations,
    Talk back radio jocks all jeering
    Egged on by Abbott’s sloganeering.

    Yet somehow common sense availed.
    Wise heads like Windsor have prevailed.
    The Greens and others on the the left
    Worked with Gillard, wise and deft.

    They saved the future of the nation;
    Yes, added to its reputation,
    With news that is indeed sensational.
    Oz well-being is tops, exceptional.

    With health and wealth now counted awesome,
    It’s time to heed the prophet, Possum,
    To put away our woes and whingeing,
    Time to end the great unhinging.

  4. Stefan Landherr

    Zoomster (post #90) is quite right that our high rates of REPORTED abuse/violence are mainly the result of us being (on average) near the top of Maslow’s hierarchy of needs, and thus having the motive and means to document, in detail, the remaining imperfections in our society.

  5. AJinDarwin

    I agree with those that hold the view that private debt has to be accounted for. Given the preponderance of property investors in Australia happily paying the mortgage off with someone elses rent while claiming a tax deduction from the rest of us, I guess some in Australia are extremely wealthy and this will drag the figures up, as for those still struggling to save for a deposit, paying a mortgage on a house not worth as much now as we borrowed, renting, boarding, sleeping rough or relying on government or corporate paid housing (lets hope they stay solvent), well lets just give $25 or more million to others and while we are at it blow a few taxpayers billions here and there on things we dont need. No wonder Australians are considered niave and foolish on the world stage.

  6. zoomster

    michael crook

    A lot of your negatives are actually results of positives.

    [Highest rates of domestic violence in the western world;]

    Incorrect. It might be highest REPORTED rates. There’s been a lot of work over the last few years to make sure that every incident of domestic violence is reported, to the extent now that even if a woman decides not to press charges, the incident is still noted.

    Not that long ago, police didn’t even bother themselves with ‘domestics’.

    [highest rates of child abuse (over 300,000 new notifications last year);]

    Again, the introduction of mandatory reporting means that incidents that wouldn’t have been reported once now HAVE to be – to the point where, if a child wrote a creative piece imagining what child abuse might be like, the teacher receiving it would (technically) be obliged to contact the police.

    The only way you say an unqualified ‘highest’ is if you know for absolute certainty that other comparable countries have as stringent measures.

    These examples are, of course, a sign of our healthy economy – a sort of Maslem’s heirachy of concerns. Once we know we’ve got secure jobs with good incomes, we can worry about social issues and agitate for these to be improved.

    On private debt:

    Private debt is significant when we’re talking about the whinging, because it is the inability to wrack up more private debt – compared to a couple of years ago – which drives a lot of the perception that things aren’t as good as they were.

    Before the GFC, for example, someone on a Centrelink pension could take out a personal loan based on the equity in their house, not on their income. Now, ticking the box for Centrelink income means no loan, regardless of the assets held by the person.

    These more stringent requirements applies to other loans, as well.

    So, not that long ago, you could rock up to the bank, borrow on your equity, and use that loan to fund your new car, overseas holiday, or indeed the purchase of a second home.

    People can’t do that now (or at least not as easily).

    When they’re surveying their personal position, they don’t, however, say “I really couldn’t afford that holiday a few years ago, so although I’m actually better off income-wise than I was then, I can understand why it is that I can’t do that again.”

    They say, “A few years ago, I could afford an overseas holiday. Now I can’t. I must be worse off.”

  7. BSA Bob

    As Prime Minister, Mr Abbott may soon come around to the idea that we’re not doing too badly, as he’ll be unable to improve anything. Any glitches will of course be Labor’s fault. His supportive press will find that things are not too bad as well. Only he will be able to maintain things to this high standard.

  8. dedalus

    Mortgage holders watch interest rates like hawks. When they go down they get a soft cosy feeling standing in their worn out slippers. When they go up they hear a blue humming tone coming out of the engines of their heavily financed second hand motor cars.

    Bragging about perceived wealth is a reverse form of cringeing. It’s also incredibly delusional.

  9. ianmax

    This article seems to proves that wealth can’t be measured in dollars alone, especially if, for example, all the dollars get sucked into real estate. We need to actively decentralise I reckon.

    Also maybe the mass hysteria here in Club Australia is based on the fear that someone will come and take it off us? Do we have this unstateed deep fear as a nation?

    There’s also stress driven by the very effective marketing industry. None of us measure up apparently so we need more dollars, indeed, to solve our personal issues. The wealthier we get, the more sophisticated they get, and the worse it’ll get.

    And government laws and regulations! I reckon we need 10 years where for every new law passed they have to repeal 5 old ones. Honestly though govt regs are required to distribute wealth. Take out the red tape and, whoops, there goes the money-go-round! (by the way if we factor in the cost of doing business and just living as a result of our ridiculously high level of govt regulations and I think you may find our effective tax rate much higher).

  10. c d

    While I know you’re desperate to ignore the private debt angle to frame this the way you want – shizzle is awesome under labor – it can hardly be ignored.

    At least add it and include the disclaimer, which we all know, the majority was run up under the old rodent.

  11. pc pc

    Affordable housing is so important to relative happiness and a sense of security.

    The Immigrating professionals that get high payed and temp visa students that get medium/low payed jobs (virtual slave labour in many cases) and live in shared rental housing have been the primary drivers of our realestate bubble.

    Hard to believe that Australia & New Zealand are less affordable than the UK. With the US and Canada being much better options for affordable housing.

    Link ref. below –

    Demographia International Housing Affordability Survey:2011
    Ratings for Metropolitan Markets
    Australia  Canada  Ireland  New Zealand
    United Kingdom  United States  China (Hong Kong)

    Migration numbers at record high
    Tim Colebatch
    December 4, 2009.

  12. dedalus

    Half agree only. The whingeing bit, yes. But P Walmsley at 73 makes a cogent counter case, to which I’ll add.

    ** Currency appreciation has combined with normal wage inflation to almost double incomes in $US terms over the past 5 years. This is artificial, since exchange rates can also reverse.

    ** House prices are very high, but you can’t “spend” a house unless you want to live in a tent or move to the country. That people move FROM the country proves that a house (ie its location) is more valuable than money. My point? money alone is overrated.

    ** There’s no accounting in your graphs for cultural, life-style and other non-economic factors: Australia is not exactly the centre of the universe. France for one has better art galleries. I hear the pizzas in Palermo are great.

    * Most of all, population. As Paul Keating says, we were lucky when they were handing out countries: we got a continent. Twenty three million is not a lot of competition when they’re divvying up the loot in the ground. If we WEREN’T rich there’d be a royal commission. Come back when we’re one hundred million. If your graphs hold up then you have a case.

  13. Dr Jane

    So we are, by and large, a rich nation. We have challenges relating to sharing the wealth, but it is certainly there. If we could all embrace that fact, it would be easier to explain the need for us to take the lead in matters of global responsibility.
    An outstanding issue which Australia can afford to tackle is dealing humanely with people from troubled parts of the world seeking help. We can and should be doing a lot more to help poor nations build equitable infrastructure and deal with poverty and other causes of violent uprisings.
    We should be raising our quota of humanitarian refugees and spending more to help them integrate into our society (eg language training) so they can become contributing citizens. Movement of people globally is going to increase exponentially with climate change and we can afford to plan how to cope, where many other nations are struggling.
    Yes we are a rich nation: we need to embrace that fact and behave as such on the world stage.

  14. michael crook

    What a good article and some excellent comments. Not all of which I agree with, but this article has started something. I spend a lot of time looking at the bottom rung of the ladder and while I agree that many of us have nothing to complain about and indeed live in some sort of consumerist fantasy world, nonetheless our bottom rung is not in a good place and some of this can be attributed to those very factors that have created our “wealth”. eg longest working hours in the OECD and the fatigue problems as a result of that. Proudly we can lay claim to the following; Highest rates of domestic violence in the western world; highest rates of child abuse (over 300,000 new notifications last year);most overweight country in the world, worlds largest gamblers, worlds least affordable housing, worlds highest per capita carbon footprint; etc, we really are worldbeaters. Be proud.

  15. Kristen Smith

    What does it say about you, that in this exceptional Australia, you had to bleat and bleat on this blog about how hard you found it to find a job ?????????

  16. nagarjuna

    @Charlton Neil I wholeheartedly agree. No use patting ourselves smugly on the back when we can be a bit of a dull suburban paradise, with it’s various peccadilloes and small mindedness. I’ve lived in the UK, and it was a very stimulating place, and would go back if the chance took me there.

    Don’t get me wrong – I do love Australia, but it can tend to lack – confidence? Does lots of money help remedy this? Is the cultural cringe still alive and well, or is it a case of now it is teetering on the edge of jingoistic abandon? Yay us! Look! We are as good as those other countries!

    Hmm – I’ll stop being so cynical. But as we all know, finances swing back and forth. Terrible one year, perfect the next.

  17. Paul Wallbank

    Interesting analysis, Possum, although I’d join the chorus pointing out that you can’t exclude private debt in the analysis as that has driven most of the wealth creation over the last twenty years.

    Paul Krugman in the NY Times this week makes a similar point to Peter Walmsley at comment 73, that Spain was running a surplus and had modest government debt until the crisis hit.

    It seems inconsistent that we’d claim the benefits of increased asset prices while not considering the underlying debt burden. It’s the same argument that was used in the US before the GFC as Art Laffer displayed in this clip.!

    Further, claiming Australia’s bank have been exemplary paragons of virtue who didn’t follow the US path of the “home ATM” is really not true.

    While I agree we shouldn’t whinge, particularly about middle class welfare and in confusing our wants with our needs, we shouldn’t be oblivious of what exactly got us to where we are.

  18. Microseris

    Not far from my place we have lots of Aussie battlers struggling with their mortgage for their 300+ m2 McMansion in the burbs with the BMW/XR8/SS for him and Prado/Landcruiser for her. Kids go to private school.

    Herald Sun reading, climate change denying uber consumers. Living beyond their means and susceptible to variations in petrol prices and interest rate hikes. What they need is some more middle class welfare to ease the pain and political parties to pander to them come election time.

  19. SoulmanZ

    Oh, I totally agree with the motivation, but I think for such a no-nonsense article it paints a particularly one-sided picture, particularly the last few paragraphs

    Australia is not doing that well, except in raw wealth terms.

    Look at some of what poss said
    “that we’ve actually solved most of the big problems that other nations are still grappling with”
    “the drum bangers and their oxygen thieving ways”
    “The problems we have left in Australia are difficult and sophisticated”

    that is all opinion, and equally as poorly supported as the Oz in “Struggle St”. Well, not as bad, but it is not supported

    the data shows that the problems australia faces socially are related to income inequality, not wealth. To claim wealth is high = shut up lefties is bogus. Wealth is high = shut up Oz readers is even a bit thin. Wealth = contentment is never true

    But especially wealth is high = Occupy movement/inequality crusaders are just “stealing oxygen” is really pretty crap. It verges on trickle down economics.

    I know possum isnt like that. Just saying how the article read to me, and hopefully pointing out to some folks what I have trouble coming to terms with – Australia is not as great as I generally think. More so because we are so wealthy

  20. zoomster

    ‘suburbs’ not ‘studies’. Der.

  21. zoomster


    I don’t think anyone -particularly poss – is denying that certain sections of society have it tough.

    What there is out there, however, are vast numbers of people on very good incomes living very good lives – who have a house, a regular income, aren’t disabled or mentally ill – who believe that they’re being hard done by, and this mindset is being encouraged by the Opposition and the media.

    I think poss was finally spurred to write this by The Oz’s Struggle St article, which identified people living in Toorak and similar leafy burbs as hard done by.

    Well, yes. I know people who live in similar studies and are genuinely finding it difficult to make ends meet. Of course, if they stopped driving top of the range cars, ditched the holiday house, put off redoing the kitchen for another year, and moved their annual holiday from Europe to Asia, it might be a different story.

    I don’t mind the unemployed, single parents, pensioners and the disabled telling us they’re finding life hard (but will note that their circumstances mean that they always do). I do object to people who aspire to give their neighbours the impression that they’re on better incomes than they are whinging about being overtaxed and not getting their fair share back.

  22. SoulmanZ

    And just to put that in a snappy soundbite

    If the US government responded to the Occupy Wall Street movement by implementing a large policy program that Australia already has – they would leapfrog the UK and still be less well off socially than every single other developed country in the world

  23. SoulmanZ

    The more I think about this, while I wholeheartedly agree with the sentiment that everyone thinks we are doing it tough, I actually really disagree with the narrow focus, because it implies as socrates has just said “our (social problems) are less than most”

    That is just not true. Wealth and GDP have no bearing on societal wellbeing. Our social problems are in fact quite marked, in comparison to other rich countries, even though we are richer than them
    In the link I posted on page one (post 10 I think) there is the evidence that income inequality is a far better fit for wellbeing than GDP is. And among similar countries, Australian income inequality is about 3rd worst.

    And in turn, our child wellbeing index is 5th worst. We have the second most mental illness. Social mobility in bottom 5. And so on

    I cannot disagree with anything Possum has written, but the whole effect came across to me as a call to complacency. Maybe it was just the dig at the Occupy movement?

    Still the best economic journalism I have read in ages though!

  24. pc pc

    Good article. And yes, agree aussies generally have it very bloody good and those who disagree should wake up to themselves and be thankful they don’t live elsewhere on the globe. They could always explore that option, but many end up coming right back here.

    The only thing that concerns me a bit is the ‘cost of living’ in our capital cities as compared to other first world global cities. Aussie cities seem to be getting very expensive places to live in for the average family when we start to add up all the basics like food, rent, mort interest rates, lpg gas (why is lpg so pricey, we have sooo much of the stuff here!). Energy utilities, telephone communications, etc..

    So it would be nice to see an article, of the quality you have produced here, on why city living aussies seem to get shafted on product and service costs. I suspect it’s a case of – ‘If they can pay inflated prices for it, then make them pay inflated prices for it’…”The market dictates’. The snowball cost effect that gentrification has on large cities. And – the recent years fact that temp visa student/workers live at a residence in numbers in order to comfortably afford rent, whilst a low income family of Australian citizens, say composed of 2 adults and 2 children, can not hope to compete with them in paying increasing rent. I think these factors are pressuring people who live in a city, like Melbourne, to move further and further out to the fringes if they can’t compete. And this I believe is where a lot of anger, resentment and hate is coming from. Dis-enfranchised people don’t feel so exceptional. It’s all relative. So really your article will appeal a lot more to the the winners of society…until they may one day become losers.

    list of most expensive cities –

  25. Socrates

    A few more comments on this. I don’t fully agree that private debt is irrelevant, and also it is affected by public policy. For example, changes to capital gains taxes around 2000 partly contributed to Australia’s inflated house prices. Still, as Poss says, government isn’t responsible for private debt. Australia isn’t Greece; we won’t go bankrupt next month.

    In terms of the left/right thing, I think the main point is still what Poss has shown in the income graphs: Australia has gotten wealthier while still making the poor richer, and while still raising their average incomes in real terms. This is a good achievement. It shows that there is no point driving down wages of the low paid – the country stays richer as a whole if everyone’s income is maximised (including the poorest). Every country has social problems, but I think Poss’s graphs validly show that ours are less than most. The left and John Howard are both being disingenuous when they complain about battlers going backwards. Some may be, but most aren’t.

  26. zoomster


    highly amused to see you being attacked from teh Left (LP, I’m looking at you).

    I suppose the reason is that we really don’t have a “Right’ in Australia at the moment – we have ‘Conservatives’, which is different to being evidence based, pro free market, and economically rationalist.

    So you get bucketted on the basis that you’ve only looked at economics, rather than the whole broad spectrum of human experience, and included on that one indicator (surprisingly) that economically, we’re doing OK.

    It would appear that teh Left has as much ‘vested interest’ in believing that Australia is composed of poor, oppressed, struggling masses yearning for freedom as Conservatives have…and interestingly, both sides have come to that conclusion whilst avoiding actual contact with the struggling masses themselves (the Cons because that’s not really their constituency, teh Left because, well, the struggling masses are SO uncultured and ignorant…)

    Which, of course, explains why Australia is on the cusp of revolution.

  27. nami

    Just subscribed to Crikey after years of pestering by my friend. After reading that article I’m glad I did so thanks Possum.

    I think you need to explain in more detail while private debt isn’t an issue? Maybe analysis of private debt vs private income?

  28. Peter Walmsley

    If you are to do this properly, you must compare GDP growth per capita, not GDP in total. Thus Japan will look much better because its population is falling; we will look worse as ours is growing. High immigration exaggerates our performance. If you wish to compare wealth, you must eliminate exchange rate effects which exaggerate our position. Purchasing price parity would greatly lower our performance. Credit Suisse includes residences in wealth: do you not think our high mean and median might be evidence of an asset price bubble in housing? You are wrong to say that levels of private debt are not a matter of public policy: surely you know that is precisely what went wrong in Spain? If there is a bubble and it bursts, that debt will be converted into public debt, as it was in Spain. Central banks now try to target asset bubbles for just this reason. And with respect, private credit expansion or its opposite is the whole point of monetary policy. The improvement in the position of the poor, if largely a result of increased welfare, will be due in the first instance to the now vanished increase in tax collections and indirectly to the terms of trade boom. Will it survive a decline in either? Unlikely, but a decline in both is not unlikely. Australia is the beneficiary of global imbalances that have nothing to do with us, and that benefit will reverse when the imbalances reverse, as eventually they must. You would make your point better if you looked at our performance before the terms of trade boom (excellent) and then afterwards, stripping out its effects (much less impressive).

  29. Dossa

    Well, gee, why is it that I am always reading in the Murdoch Media that we are all so badly off? You know, costs of water, gas and electricity all through the roof (mainly due to the carbon tax), costs of mortgages even higher (strangely, interest rates do seem to be lower than at any time in the past 16 years), food prices higher then ever (except for the last 200 years), everything else up by zillions (or worse), and yet those politically correct people at the ABS keep on telling us that prices have only gone up by 3% at most! Can’t be right. As the lovely and honest Mr Abbott keeps telling us, this is the worst government ever, not only in Australia, but the world, the universe, the parallel universe, the …

  30. Louise Ingram

    great blog, but more importantly a brilliant bit of writing. I actually laughed out loud on the bus several times at your turn of phrase. I wish other commentators could be as articulate.

  31. Chokyi Nyingpo

    FMD – this is an extraordinary post – i would love to see and be a fly on the wall when TA, AB, AJ, JF, RH, and the rest of them read it.

    Thank you so much Possum.

    P.S. Is there a nomination page for Australian of the Year we could subscribe to?

  32. Possum Comitatus

    Just BTW, folks that have haven’t commented in the last 6 months of so on the blog get put into moderation holding until I let them out. Was because of a spambot orgy, but I’ll try to be quick on letting them through.

    So if you don’t see your stuff appear straight away, it’s me, not you! 😛

  33. declan o'gallagher

    Ahh… The banality of finance.

  34. Archer

    Big Dirt?

    Is there such a thing as a small Mining project or Oil rig?

  35. Andrew McIntosh

    I suppose this confirms something I’ve pretty much known already – on a world-wide scale, we’re rich bastards. It doesn’t tax the imagination too much to compare what we’ve got materially with what a too great many in the world have.

    Of course, it will not last. Then the real whinging will begin.

  36. Gavin R. Putland

    Lending into a bursting bubble at 95% or 97% LVRs in an attempt to arrest the burst is not my idea of “high lending standards”. Australia’s private debt is a grenade with the pin pulled. What makes Australia exceptional, as shown in the 2nd graph, is that the shrapnel hasn’t hit us yet.

    The reason why we have the highest per-capita “wealth” is that we have the most overpriced housing. And the reason why that “wealth” isn’t wiped out by the associated mortgage debt is that only a few percent of the housing stock changes hands each year. Thus the article celebrates unaffordable housing by calling it wealth.

    What makes the situation all the more scandalous is the role of (private) foreign debt in pumping up the housing bubble. Charging each other more for the existing stock of housing doesn’t make us richer; it only makes us more unequal. But paying interest to foreign bond holders certainly makes us poorer.

  37. Dogs breakfast

    It’s all true poss, we have it good, the vast vast majority of us.

    And here’s news, because of the policies of the Rudd government responding to the GFC, most of us with a tax return and a functioning brain cell got a couple of $900 cheques, free home insulation and a new school hall that works.

    Oh but don’t let that news get out.

    It’s a pity all this ‘poor me’ mentality at the moment, otherwise we would recognise how good it is and a strong and intelligent government would take advantage and completely re-align the tax system in these good times, modifying neg gearing to income earned on the investment only (so no real neg gearing, just break-even gearing at best), removing the barriers to move from welfare to work, and getting rid of the middle class and the highly remunerated welfare joke, plus other largesse (baby bonus)

    Comparing inequality of outcomes in wealth is less important, but useful to know. The whole distribution issue needs to be part of the great tax overhaul that we need. Companies earning mega-profits (miners and banks), both of whom sponge off the existing assets of society, need to pay more tax, as do the highly remunerated especially over the $1m per annum mark.

    But no, nothing will change because neither side of government has any idea, plus, we are all just holding on by our fingertips.

    The remarks re debt are apposite, if not relevant to Poss’ article, but it should be noted that the unsustainable debt binge has turned into a savings rate as high as it has ever been.

    Good to see you back PC

  38. george

    Download a wall poster of the re-worked charts above here:

  39. B Tim

    I don’t think you can ignore private debt levels in any analysis that involves economic growth, since aggregate demand in an economy is driven by income plus the change in debt. Furthermore, if private balance sheets are laden with debt then serious problems will arise when these private entities decide to de-leverage.

  40. Down and Out of Sài Gòn

    Utterly superb article, Possum. I knew we were doing better than the rest of the OECD, but I didn’t know we were doing THAT well.

    Mind you, I kinda prefer the sort of Australian Exceptionalism where we’re modest about our exceptionalism. I have no problem forwarding this URL to the corporate whingers and political baggers, but get stroppy and shouty about our “top” place in the world? That’s Un-Australian. Anyway, we still have lots to do. The NT Intervention is FUBAR, for example, and we need better mechanisms to help out Indigenous Australians. A bit of Luke 6:41 would serve us well at this point.

  41. John Bennetts

    @ Charlton Neil:

    What’s up, mate? Trapped in Australia by another statistic which Poss didn’t show this time around. Aussie social services are so much better than British. Perth ain’t so bad after all.

    But don’t let me keep you – you are welcome to piss off any time you like.

  42. Tom Conley

    Private debt IS a major issue of public policy. Most of Australia’s private (household) debt is debt for houses (close to 90%). There is one major policy change that would restrict the bidding up of house prices during an upswing and that is getting rid of negative gearing. As you suggest yourself, changing regulations (i.e. public policy) made a big difference to the availability of credit. We suffered greatly from this initially in the late 1980s, which caused regulators to tighten up regulations. We also had a series of insurance and equity scandals in the 2000s that also focused the minds of regulators. If we took the equity argument too far, we would end up likethe US with NINJA loans. It is also public policy that stipulates the regulation of lending standards. While it is excellent that more people have access to credit, the flip side of credit is, of course, debt. For analysis of negative gearing see Leith van Onselen

  43. mikeb

    What! – & I thought TA told us we were such a basket case that the whole country was in danger of defaulting. Maybe I misheard???

  44. Possum Comitatus

    I’m just waiting for the Newspoll quarterly release, and I’ll run the trends and a new simulation with it

  45. Mad Dog

    Hi Poss, When can we expect the post-November Pollytrend update, please?



  46. Steven Warren

    @ Charlton Neil

    You could just do what everyone else in Perth does and travel to Asia regularly. The plane costs a similar amount as flying to the Eastern States and prices there are much lower so it’s very easy to go on holidays multiple times a year and see different cultures.

    Probably as easy as traveling through Europe while living in England really considering the price disparity here.

  47. Possum Comitatus

    The reason why I didn’t mention private debt as I’m talking about public policy. Apart from regulating for high lending standards (which we already do in many ways – giving us some of the highest lending standards in the world), the only way the government can stop people borrowing is to regulate some “this person can’t borrow – regardless if they have the ability to pay for the loan”. That sort of credit rationing leads to the ridiculous situations we’ve had in Australia before – where women found it impossible to get bank loans, people without the right social connections were refused credit for a car or business…. that sort of thing.

    So private debt is a bit of a giant non-sequitur as far as public policy and governance goes.

  48. Christopher Armstrong

    When the skeptics talk about debt, some also talk about private debt, which you didn’t show here (not government debt, which is very low). Australia’s private debt is incredibly high as a percentage of GDP.

    Whether or not you consider that an excellent thing or a disastrous thing depends on your economic and/or political persuasion. I hope you didn’t ignore because it doesn’t fit your argument.

    (That all said, I agree with your main premise – we have become very wealthy and fail to admit it)

  49. Phen

    Good article. Though “Big Dirt” does deserve a huge proportion of the credit for this phenomenon (even though many people are very reluctant to admit it).

  50. Andrew Crook

    Interesting. Although the top 20% of Australian households still have 70 times as much net wealth as those in the bottom 20%. Something like $2 million versus $30,000, according to the ABS with the gap getting ever wider. I’m also pretty sure the top 20% earn about 10 times more than the bottom 20% — $4000 a week versus $300. I also remember reading somewhere that our income inequality is much more severe than some other Western countries.

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