Op-Ed: Is the Australian jobs surge great news or just talkfest?

Australia’s somewhat unexpected position as paragon of economic virtues has received another boost with the release of excellent employment figures. Over 40,000 new jobs were created in September, with the national unemployment rate at 5.7%.

It is very good news. Compare that 5.7% to the 20% rates in the US, and Australia has barely caught a cold out of the recession. Our banks haven’t been falling over like dominoes. Some of our big export customers are sniffling a bit, notably Japan, but on the whole, for the worst recession since 1929, we’ve done pretty well. We’re even expecting good baseline economic growth, unlike most Western nations. So what’s gone wrong? Isn’t all this a bit too cute? Nobody, rightly, wants to talk down the employment figures, and they are exceptionally good news in an area which was expected to be real trouble. We were at one stage seriously looking at 9-10% unemployment as a realistic scenario for 2010, so this is Christmas. Some Australian major corporations like Woolworths are hiring, based on structured planning, which is good management, and a nice change from the usual sheep like layoffs. Either you run a situation or it runs you, and in the past getting run straight into the ground was the default response. Nice to see someone’s woken up to that. Nor do we want to downplay all the good things about which we can be insufferable on the subject of Australia to foreigners. It’s an Australian tradition which we’re intending to make law, the minute someone coughs up the money for the biro. The problem is that this is a new bike for us, and we’re not used to riding it. This is great, but now isn’t the time to get delusional. There are issues, too, that need to be looked at with less rosy glasses: 1. Construction is holding up mainly to the big economic stimulus. Somebody saw that coming, and did the right things about it, so the industry as a whole is still capital-ready and functional. Even so, new housing starts are at 30 year lows in the commercial sector. There’s a housing shortage. 2. Inflation is a possibility. The recent 0.25 rise in Reserve Bank rates may not look like much, but it’s one of only two central bank rate rises since the recession started. 3. The high dollar is as much based on the low US dollar and our much higher central rates as our relatively better performance. Monetarists think everything’s based on interest rates, and not real business. That’s an idea we’d do well to avoid. 4. Trade deficits are also becoming a habit. For a nation of exporters, it’s not necessarily a good sign. The dollar may take some sting out of that, but it’s also a potential stubbed toe or several for export prices. 5. We’ve also developed a sudden lack of cynicism which could be worse than any of these issues. Everything able to locate birdseed and stick its face into a news article has now been talking about the recession being over. For those who remember the fact that the world has just had several trillion dollars bodily removed from its capital base, that’s way too starry-eyed. 6. The world’s real financial powerhouse, the US, is still staggering along like a recent roadkill in comparison to past times. The apparent outbreak of competence which followed the meltdown and credit crunch has done quite a lot to undo some of the damage, but the fundamentals are still lousy. 7. Our former biggest customer, Japan, another big capital source, is looking like a severe trauma case. Deflation is hitting hard, and the social situation is showing further signs of implosion. 8. Our new biggest customer also has its issues. China’s being China, and its own capital moves are very interesting, but it’s not quite the boom times, is it? 9. The aging population scenario is being seriously mishandled, a problem in waiting. Australia, which has trillions in superannuation, is wondering how to pay for age pensions? Get out from under the rock and have a look. If super wasn't taxed into oblivion, it'd pay for that. I say we enjoy the ride, but make damn sure we know where we’re going in this brooding economic environment. Better to make our own choices than have them made for us, as so often, by global situations. Now might be the time to start going to work on cranking up the domestic economy, building a bigger framework on principle. We’re taking in a lot of people, boosting GDP, etc, but that has to mean something in terms of putting real grunt into a domestic situation which still looks unwholesomely like Little Australia of the 1950s, when we had a third the population and a tenth of the GDP. While we’re riding this bike we might also want to remember to bring along a patch kit and a pump, in case a wheel deflates in a hurry. By all means, let’s hope the smiling idiots in the markets are right, for once, but let’s also remember that if they are, it’d be the first time in history those slimy spruiking bastards have got anything right. Believe when seen, and not a second earlier.