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Is Cheryl Kernot right? Are Aussies unhappy?

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Some provocative reactions from readers of my story yesterday, where I was crowing that the GDP result was better than my beloved and much maligned Blues NRL team beating the all-too-good Queensland cane toads on Wednesday night, has forced me to evaluate my economic elation.

The ‘twitter-sphere’ can be a playground of twits. It can also lead to debate and controversy and, as the English poet William Blake taught us, there’s little progress without controversy.

On the same subject, George Bernard Shaw argued that if you want change, you need an unreasonable man. Of course, Shaw hadn’t heard of political correctness, so he put down the task to men. However it’s my observation that unreasonable women can also be agents of change. I’ve seen it in business and with my once wayward mates, who actually turned into decent husbands and dads via the influence of an unreasonable woman!

The former Democrat boss, Cheryl Kernot, is one such woman. It doesn't mean she’s always right so I decided to test her return fire tweet, which said “But the economy isn’t good for majority of households where casual or precarious work is dominant.” Kernot adds “more than half the workforce for the first time” is in this terrible situation.

A 2016 Parliamentary Library report told us that there were just under 2.5 million casual employees (those without access to leave entitle ments) in Australia in August of that year and around 7.4 million permanent employees (those with access to leave entitlements).

“The use of casual employees in Australia grew most strongly from the early 1980s to the mid-1990s. During this time, the casual share of all employees increased from around 13 per cent to 24 per cent,” the report said. “The rate of growth in employees with and without leave entitlements in the past two decades has been more balanced, with the casual employee share of total employees increasing marginally from 24 per cent in 1996 to 25 per cent in 2016.

“A significant feature of the labour market in the past two decades has been the strong growth in permanent part-time employment for both men and women, and strong growth in casual part-time employment for men.”

On these numbers, I can’t see permanent part-timers being in “precarious employment”. A big number of casuals would be but a lot actually want to be casual for lifestyle reasons. The younger generations are certainly different from Cheryl and me. (I have more than 50 staff so this isn’t all academic economist stuff.)

It would be interesting to do a happiness audit of Aussies to settle my debate with Cheryl. For now, let me run through the people who should be happy.

Here goes:

  • 12.5 million are in the workforce and 5.6% of these people are in work. At least they should be happy about that. Of course, they could be happier.
  • Youth unemployment is 12.6% and these people would be unhappy. But 87.4% of youth have less to be cheesed off about. Clearly, this is miles better than 1992, when it was 20.10%.
  • The 430,000 Aussies who found work last year should be more happy than unhappy.
  • Sydneysiders and Melburnians who saw their homes increase in value by 70% in the last five years have to be smiling, or they’re hopeless cases.
  • Right now, the NAB’s reading of business conditions is at 21.1, which is a record high. This actually tells you how business owners are feeling about their businesses right now.
  • Any home loan borrower complaining about interest rates never lived through the 17% rates of the late 1980s.
  • We’re told wage earners are annoyed about slow wage rises but, in real terms, pay is increasing faster than inflation. And we learnt on Monday that wages and salaries rose by 0.8% in the March quarter, to be up 5.1% over the year – the strongest growth in almost six years.
  • The Westpac consumer sentiment index has shown optimists have been beating pessimists virtually every month since October. That should be a sign that the majority of households are close to being happy.

The biggest mistake people like Cheryl and I can make is to believe we really know how happy or unhappy the majority of households are. A social economist (if one exists and they probably do) would have to get some measurable reference point for happiness, then check it out over time to smooth out the many reasons why we can or can’t be happy.

When Cheryl and I were making our way as politicians and economics commentators, we used to often hear about the Misery Index, which was the inflation rate plus the unemployment rate. Yep, this is what economist would call it! The Happiness Index wasn’t even considered!

In 1989, before “the recession we had to have”, the Misery Index was 14. If we calculated that today, it would be under 8.

In 1975, it was over 20! Australia was such an unhappy country that we voted to support the usurping of our Prime Minister by the Governor General!

I know lots of Australians could be happier and that’s a goal all governments should be working on. Having a happy country is a lot harder than getting growth up but at least this creates jobs. And I reckon someone in precarious casual work is happier than someone on the dole queue sitting home watching TV and playing video games.

We must always expect that our governments get better but we also have to be grateful for small mercies, such as an economy growing fast enough to create jobs.

Even if the Turnbull Government doesn’t deserve any credit, as many one-eyed commentators and tweeters might argue, the unbiased historian would note that the Senate has actually said “No” to many changes put forward. The company tax cuts are a case in point.

Business confidence is way over its long-term average. I don’t think it would be this high if a drover’s dog was the PM, despite what Simon Holmes a Court tweeted!  An argument based on balance rather than bias is always more insightful.

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Published: Friday, June 08, 2018


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