Always a wondrous moment for economics nerds and a damn boring moment for the media – unless the figure does something good (ie bad). It actually did not much (and not much is never going to lead the news). It stayed level at 4.9 (or if you want to really break it down it went from 4.9193716% seasonally adjusted to 4.850852%).
Employed persons however went down in seasonal terms
Employment decreased 22,100 (0.2%) to 11,436,500. Full-time employment decreased 49,100 to 8,056,800 and part-time employment increased 26,900 to 3,379,700.Also the participation rate fell from 65.8% to to 65.6%. The trend was steady, but while “the trend is your friend” I like looking at seasonal terms.
This fall in the participation rate is the main reason unemployment stayed steady:
Unemployment decreased 9,800 (-1.7%) to 583,000. The number of persons looking for full-time work decreased 1,700 to 413,000 and the number of persons looking for part-time work decreased 8,100 to 170,000.So all in all not the rosiest of pictures, but not a horror state of affairs.
What does it mean? (Which we all know is code for what does it mean for interest rates?)
Well here is a shot of the exchange rate market:
The red line dropping on the far right hand side of the graph is the dollar dropping in value against the US dollar by one cent on the announcement of the figures.
The reason for the drop is the market believes the figures make it less like rates will go up in June, and as rates won’t go up, less investors, speculators and other assorted currency exchange buyers and sellers, didn’t want their money in Aussie dollars and thus the price of the dollar went down.
This is all clear in the market’s expectation of an interest rate rise:
|Trading Day||No Change||Increase to 5.00%|
But as I say there was not much interest in the labour figures today because the focus was all on the class war breaking out around Australia due to the Government doing evil things to people who earn more than $150,000.
Before we get to the coverage let’s have a look at what is being done courtesy of Peter Martin:
Income freeze is nothing new, but the reaction is
The budget documents themselves say that for the next two years the cutoff for getting family tax benefit B, paid parental leave and dependency tax rebates will be frozen at $150,000. That's $150,000 of personal, rather than family income - anything but typical.As I wrote yesterday, there was bugger all in the budget for households earning over $150,000 that we didn’t already know about. And yet we have had this type of coverage:
The cutoff for receiving the baby bonus will be frozen at $150,000 of family income and the cutoff for family tax benefit A will be frozen at $94,316 of family income, increased by $3796 for each additional child after the first.
What the budget doesn't make clear - but should - is that these cutoffs are already frozen.
Labor introduced the $150,000 ceilings in 2008. Before that, family tax benefit B and other payments could go to the families of millionaires.
Really? He said that? Wow what an idiotic thing to say. Oh wait let’s read the story:
You're rich enough on $150,000 a year, says Treasurer Wayne Swan
FAMILIES in Sydney on $150,000 a year aren't rich, Treasurer Wayne Swan admitted yesterday - but they're rich enough.So he said they aren’t rich, and then referred to families on $60,000-$70,000. He didn’t say they’re rich enough, or anything like such a thing. But hey, who needs a quote when you can write whatever the hell you want. Makes journalism a lot easier I must say.
Mr Swan, who has been accused of triggering a new class war with his decision to freeze the indexing of family payments to 40,000 families, said: "I don't think a couple on $150,000 a year is rich, I don't think that at all. Families come in different shapes and sizes and with different incomes. There are plenty of families on incomes of $60,000 or $70,000 a year."
How about this typical family from the SMH:
THE Hadfields earn a combined income of about $153,000, tipping them over the threshold for what the government has deemed a ''modest'', not ''rich'', income.So the quotation “rich” is actually from Swan saying they are not rich. Oh good. That’s not distorting at all.
You know last night I beat myself up over getting part of the Budget wrong. I don’t know why, when I read crap like this being reported – stuff which let’s be frank has a very limited connection with reality and truth.
Over in the Herald Sun the class war was heating up
With Labor well behind the Coalition in opinion polls, the verdict on the Budget is grim news for the Government as it faces claims it has sparked a "class war".I see. Tony Abbott said it. Yes, you should put that in a headline, because why on earth would you want to convey objectivity in a newspaper?
Almost 28,000 people responded to the poll at heraldsun.com.au, 92 per cent saying the Budget will make them worse off. Just under 8 per cent say it will leave them better off.
Opposition Leader Tony Abbott said the Government was punishing aspiration and hard work by families earning $150,000 a year.
"These are class-war cuts that the Government is inflicting on people," Mr Abbott said.
But look it wasn’t all bad. The Oz actually ran a decent editorial:
Mr Swan gets full marks, however, for starting to scale back middle-class welfare, a cause The Australian has been fighting since the 1980s. It is a measure of the prosperity we now enjoy that some newspapers yesterday portrayed families on incomes of $150,000 a year as the new poor mired in "mortgage poverty" in Sydney's western suburbs. While cost of living pressures are real, and are felt disproportionately in the outer suburbs, there is no justification for doling out welfare to those on this level of income.Now I don’t agree with half of it (taxes are not especially high), at least the editorial made a coherent case. Unlike the editorial for the Herald Sun:
Even in Sydney, this is an income most families only aspire towards. If the government wishes to support families, it should do so by lowering taxes. It is far preferable for income taxes to be kept low and for thresholds to be regularly adjusted upwards so that individuals can keep more of their own wages and make their own decisions about how to spend their hard-earned money.
Labor crushes rewards for work
THE Gillard Government's first Budget has ridden roughshod over the aspirations of the very people it needs to stay in power.Crushes rewards? Seriously? How? Is the reward for work now government welfare. Oddly I thought the reward for having a job that paid over $150,000 was the $150,000. Guess I was wrong.
In what smacks of old-style Labor class divisions, Treasurer Wayne Swan, with the enthusiastic approval of his Prime Minister, has redefined the meaning of "rich".
They are the families bringing in $150,000 a year and it has stung people Ms Gillard and Mr Swan should be protecting, while stamping on the ambitions of others.
The Oz as well in many respects following on from the outstanding work by Matt Cowgill yesterday, produced a report that again featured a family, but this time didn’t play the sob story line, and also brought in some facts:
We're not rich, but wealthier than most: Sydney family
HOUSING costs, utilities, petrol, groceries. It feels as if there's never anything left at the end of the week, even for families on the Gillard government's wealth litmus test of $150,000 a year.
Certainly, that's how it feels for Sydney couple Mark Fowler and Tegan Hardcastle-Fowler, who worry they're "one disaster from being stuffed" while trying to bring up baby Logan on their combined $150,000 income.Ok, nice portrait and also lack of use of “rich” but nothing over the top. Then the facts:
HILDA project director Mark Wooden says 13.5 per cent of households earned more than $150,000 in its most recent survey in 2009. Wages growth since then would have pushed the proportion up to about 15 per cent. "They don't feel rich because they are comparing themselves to the people around them, at work, in their neighbourhood, people probably in the same earnings ballpark," Professor Wooden says.
"And because people are aspirational, they look to the person with the best house or the best car in the street, and compare themselves unfavourably. But if they looked beyond, they would see many, many suburbs across the country where people earn nowhere near that amount."So households on over $150,000 are roughly in the top 15 per cent. Geez.
So there was a lot of hopeless reporting that focuses on the who is rich angle – a damn easy one that, because hardly anyone thinks of themselves rich – rich is a millionaire. Anyone less than that likes to automatically think themselves middle class.
But there was also within there some decent coverage. And while the idiotic stuff – the “you’re rich enough” crud is straight out of Lindsay Tanner’s book, that doesn't mean the Government has a right to sit back and think why is everyone so unkind, and expect the media to play nice. They have to give them something to report.
The Government has actually done bugger all to eat into middle class welfare and yet from that nothing this debate has sprung. When in Government you have to be fleet footed and see the opportunities and seize them. For over a decade during the Howard years and into the Rudd term, middle class welfare was just what you got with the rations: another budget, another election, another bribe.
Suddenly there is a debate on the whole issue. It is here in a way it never was such as when the Govt tried to means test the Medicare rebate – that issue always gets mixed up with health policy and private health insurance and etc etc.
This debate right now is about middle class welfare. And at its most pure it is about Howard’s Australia versus another kind. Sure it has a dumb element, but the opportunity to grasp it by its throat and lead it to a conclusion that has the community thinking differently about the issue is there to be taken. The Government has to articulate that different kind of Australia to the public.
Thus far I have not seen any evidence of a desire to do this from either Julia Gillard or Wayne Swan.
This morning for example Julia Gillard gave a press conference. The first question came from The Oz’s Matthew Franklin. As soon as I heard it my ears pricked up, because it was in my opinion, a bloody good one. It was in essence a “why” question. I love “why “ questions.
JOURNALIST: Prime Minister, Tony Abbott and Joe Hockey say that you are, in the Budget, trying to attack aspiration. Should we really think that people are going to not make the best they possibly can for themselves and their children for the fear of losing a small, relatively, Government benefit that’s actually really targeted at battlers?
At first I thought he was going to go into the old “Is $150k rich” line, or perhaps the “when was the budget last in surplus?” or (God help us) “Wayne Swan dropped a glass, what do you think about it?” But this was much, much better than that. He started with the politics – the Abbott and Hockey bit, but he actually asked her the policy. Franklin was actually asking her to tell us her vision. This wasn’t some “sideshow” question; it was going to the guts of the whole thing.
I mean this in no disrespect to Franklin, but in the hands of a Keating, a Howard or a Hawke this question would have been a Dorothy Dixer chance for them to reframe the debate. A chance to give the media a “this is how I see things” message.
Here was Gillard’s response:
PM: Well, first and foremost, let’s deal with the facts, and then deal with what this Budget is about.Did your eyes glaze over? She responded with the pat talking point response on the issue. If you have seen a few press conference or ever watched Question Time, you’ve heard it all before. There was the why the Govt is doing it economically – the keeping the economy strong etc, but there was no policy philosophy. That was what Franklin was after – and it was why my ears pricked up, because I really wanted to know the answer.
Of course, what you’re referring to is some of the decisions the Government has taken on family payments. Let’s just be clear about the decision the Government has taken. We have decided to pause indexation of the thresholds. What that means is that in the next year around two per cent – two per cent – of families who would have got family benefit will not get family benefit.
What it also means is well over 90 per cent of Australian families will get more family payments than they have in the past, because the rate of payment will continue to increase.
Now, the Government took this decision because we want our family payment system to be sustainable today; sustainable in 4 years’ time; sustainable in 40 years’ time. So, it’s the right thing to do for us to make sure our family payments are sustainable. It’s also the right thing to do to make sure that more than 90 per cent of families get increased payments.
And I would also note this on Mr Abbott’s response – I mean, Mr Abbott, two years ago, when the Government took comparable measures, criticised the Government for being too soft. Now he’s out there criticising the Government for being too hard.
Now, the reality the Budget the Government delivered on Tuesday night is all about keeping our economy strong, getting the budget back into black, extending opportunities to Australians: the opportunity to get a job; the opportunity to get training; as well as extending to Australians the kind of services that they want and need today, including an historic investment in mental health.
The challenge for Mr Abbott today and tonight isn’t to carp about the Government’s Budget – it’s to explain to the Australian people what he stands for on budgeting. We know one of the reasons Mr Abbott is not Prime Minister is because Treasury concluded he was an $11 billion risk to the budget surplus.
So, tonight he’s got to explain to the Australian people if he doesn’t back our savings, what are the credible alternate savings measures he’s proposing.
After someone else asked a pointless question on Swan as a salesman (I don’t think he’s any good, but why waste a question asking the PM that when she is never going to do anything but praise him?), Franklin jumped in and tried again:
JOURNALIST: Just on the question on aspiration, do you think that, what do you say on Tony Abbott’s claim that you are somehow attacking aspiration?It was perhaps a bit more politically pointed, but the opportunity was there for the PM to outline some vision – to in effect change the way people should think on the issue:
PM: Well, of course the claim is completely untrue and absurd.Nothing. Standard lines, stuck to the script. Stuck in the script.
The Budget is all about jobs and opportunity: jobs and opportunity to enable people to aspire to a better future and a better life; to enable people to get a better future for their children. So, I understand Mr Abbott is wandering round desperate to distract from his inability to make the figures add up.
Tony Abbott will deliver his Budget reply tonight. Well, that’s got to be about the Budget, and it’s got to explain what he would do as Prime Minister.
I mean, three times he’s gone out to the Australian people with a set of figures. Last Budget reply night, complete shambles; during the election campaign, an $11 billion black hole, such a risk to the Budget surplus; and here, here earlier this year, in Parliament House in Canberra, they were unable to explain an alternate flood funding package.
Well, tonight, if Mr Abbott’s got criticisms of the Budget savings that the Government has made to get the budget to surplus in 2012-13 as promised, then he has to outline alternate, credible savings or back the Government’s Budget in.
Tanner made some excellent points in his book, but the media is defiantly not solely to blame – a Government needs to lead. And that means sometimes seeing a debate spark up and taking it by the throat and saying this is how I see it – and be buggered if it means someone might be “worse off” or opposed . In this case it means making the debate into – this is how I see Australia.
For mine, I think Gillard and Swan should be taking Howard’s language – the talk of un-Australian, the talk of hard work, honest day’s pay for an honest day’s work, the talk of wanting to stand on your own two feet, the talk of Government being there to help those who need help, but that Australians – true Australians, real Australians, everyday hard-working Australians know that when you are in the top 15 per cent of the income bracket you no longer need a hand out. In fact she knows that those people would much rather people in need be given the help, that people with disabilities be given help, that kids struggling with education be given help with better education, better hospitals and that the Government instead do all it could to reduce interest rates and improve unemployment.
And on and on. It won’t change things over night – it is a message that needs to be repeated (but not repetitiously). It needs to be something that Gillard takes the country with her. It needs to be her saying this is the type of country we’re going to be, come with me. The aspiration needs to come from the leader – forget “the aspirational classes”, we need to know and understand and feel what it is this Government aspires Australia to be.
She did do this somewhat yesterday when asked:
JOURNALIST: Prime Minister would you consider a household with a combined income of $150,000 to be rich?
PM: I’d consider them to be a household that probably wants to have their child go to a great school, which is why we’ve more than doubled the amount of funding going into school education – so their child can go to a great school.That is good. But it needs more. It needs to be framed as a belief rather than a we did this so we could pay for that.
I consider them a household that probably really wants the public hospital system to respond to their needs. If they had an emergency health situation then they would want the public hospital to meet their needs in a timely way. That’s why we’ve invested billions of dollars more in health, and we’ve engaged in health reform.
She did do it as well in her speech to the Sydney Institute, but it got lost in the (in retrospect) very dopey reporting about bashing people on welfare. It also got lost because the “alarm clock” “dignity of work” phrases etc are just eye glazing spin.
Perhaps in the end the people won’t go with her. But doing nothing will see them just leave for Abbott (or someone else) anyway.
Oh and Question Time? Dire. Very dire.