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FFS, mate!

They also don't mention we (I'm Australian) lost the Ashes. That's not the point - they are saying we talk about the bad things all the time, and fail to take a step back and look at how good we have it.

To address your points:

they try and play down the government debt because it's low, but omitted the fact that 4 years ago it used to be zero and now is growing faster than Ireland did before it went bust.

Well, no.. they specifically talk about government debt. They point out it is lower than almost any other developed country. I don't understand your point about "it growing faster than Ireland" - yes, there is currently a deficit budget (which means borrowing is occurring). I've never heard "it is growing faster than Ireland did when it went bust" argument before, but it doesn't make much sense to me. The Australian economy is much, much bigger than the Irish economy, and the Irish debt crisis was caused when the Irish government suddenly took over billions in private banks debt, not by government borrowing.

They also omitted the fact that personal debt - ie debt owed by people rather than the government is also one of the highest in the world.

This is true, but is misses the point that Australian savings are also at record levels [1]. People are choosing to keep debt while saving money.

Australian also homes usually take out the top spots in the 'most unaffordable' list.

This is true, but at the same time is one of the things that has driven household assets to the highest in the world. [2][3]

They also omitted the fact that the workforce has gone from being one of the most free back to a much higher regulated workforce, and as a result productivity has dropped precariously and strike action has exploded.

That's a very political statement that I disagree with, but I don't think the argument would be useful here.

There is no mention in the article of what is termed 'the two speed economy' where manufacturing firms are struggling and retail businesses are closing their doors

The "two-speed economy" and Dutch Disease is the biggest challenge facing the Australian economy over the next few years. But that wasn't the point of this article.

[1] http://www.theaustralian.com.au/business/opinion/household-t...

[2] http://www.smartcompany.com.au/wealth/20100429-average-wealt...

[3] http://www.beesnees.com.au/thebuzz/2011/11/landlords-in-a-gr...

@nl you couldn't have summarised better.

There are plenty of problems in Australia, including insane housing prices, negligible government support for the manufacturing industry and comparatively lower research & development spending (I don't have data to prove this, but I think this is obvious in comparison to other countries esp. the US).

BUT, on the other hand, we have what other citizens in other countries lack:

  * an excellent superannuation system
  * a social security system that provides some real security (centrelink)
  * a medicare system that provides for all Australians
  * a public university system (although since the Howard govt. universities have suffered)
  * an excellent public schooling system 
  * relatively low gun crime and,
  * a tolerant, multicultural workforce.

Negligible Government support for industries that are not sustainable is a good thing.

It's not worth losing a pool of skilled labour over temporary insustainability.

Where are we losing it to? And if we need it again won't there be an incentive for it to come back?

Australia doesn't have to be good at everything.

We're not losing it 'to' anywhere. If you don't use skills, they atrophy, and when you need them again it takes time to knock the rust off, and even then you can lose some of your original finer points.

One easy example is manufacturing management, particularly of electronics. People think it's easy, but it's really quite intricate. I've worked for two manufacturers of electronic goods, and if a production manager leaves, it's very hard to find a replacement that has a clue. And if you're not a company that can afford both the scope and salary to pull talent internationally, it scuppers your ability to make things efficiently. It takes years to train someone up to be an efficient self-directed production manager.

There's also similar things like this in the trades - tradesmen are so heavily paid right now because of exactly this issue, skills forgotten by society. We went through a period where trades were looked down on and the skill pool atrophied. With only so many tradesmen and too much work, it's really expensive to use that skillset.

Australians love to self-denigrate, it's the national pastime. But we won't stand for anyone else doing it!

I'm lost some potential new friends when I've took exception to their usual slogan "Australia has no culture", which either means that we don't have the thousand years of fine art history of Europe or that we don't have a coming-of-age ceremony like some tribe that live in grass huts do.

We waste so much hot air and our media talking about how crap we are and how poorly performing the country is, when we consistently score in the top 5 in any international measure involving quality of life (oh no, so Sweden or Denmark beat us out again... why is that so shameful that we're not always #1 of 200 countries?)

Not to say we don't have some serious problems, but we do tend to look at ourselves in a bubble and compare ourselves against some mythical 'home country', seen through rose-coloured glasses.

I don't particularly want to get into a point scoring match because clearly we are looking at things from different sides of the political aisle, as it were.

However, to clarify the point : the government debt is low by world standards, but growing fast, and that is while the economy is at a cyclical high. What I am trying to say here is that : current government debt spending is unsustainable and unwise. The comparison with Ireland is to show this : there is never a good time to start growing your government debt, particularly when your economy is being underpinned by excessively high property prices and diversion of resources into the property industry. What, precisely, would the Australian government do if the banks were all caught short because they are overexposed to the overleveraged and overvalued property market? Why, of course they would be considered 'too big to fail' and public funds would be used to bail them out. And Australians would suffer from the same transfer of private debt to public sector debt to shore up the balance sheets of the big four banks who have massive holdings of residential mortgages. If anyone thinks it can't happen here, I'd be very interested in why not.

My overall thesis is that, yes, Australia is doing well, but that is precisely the time to tighten up and do better, rather than give a collective pat on the back and say, 'well the hard work has been done, let's all borrow a heap of money and give ourselves a reward'.

In other words, yes, on a Friday afternoon, crack a coldie and enjoy a quick survey of things. Back on Monday morning continue the hard work of difficult economic reforms and tightening the fiscal belt and getting productivity higher. Those difficult economic reforms are more deregulation of the labor market, removal of red tape surrounding industry, find out how more international investment can be attracted. Work out how productivity and foreign investment can be increased. The hard work never stops and it's never time to get complacent.

What I find surprising though is that the government is putting pressure on the big bangs to decrease interest rates in line with the reserve bank. I would think the last thing you would want it for the banks to start operating unsustainably lending wise. Sure the banks make crazy profits but I think it's preferable than for them to be a disaster waiting to happen if there is any downturn.

Yes - and the majority of the bank lending is done in the international market which has nothing to do with the RB interest rate. Banks should be allowed to charge whatever interest rate they like. It's bad enough that there is a centrally fixed interest rate, but that's workable as long as there aren't rules that say everyone has to borrow at that rate.

However, to clarify the point : the government debt is low by world standards, but growing fast, and that is while the economy is at a cyclical high

Oh, right. I think that's where we mostly disagree.

I think current government spending is what is propping-up the "slow" part of the two-speed economy. The government needs to find ways to support the bad parts of the economy while stopping the high-growth areas (ie, mining) from becoming "too hot".

If anyone thinks it can't happen here, I'd be very interested in why not.

I'm not saying "it can't happen here", but it is much less likely than it was in other markets. See http://www.businessspectator.com.au/bs.nsf/Article/A-capital... for why.

When it comes to personal debt Credit Suisse would beg to differ with you, their latest wealth figures have Australians handily richer per capita than every other country in the world bar Switzerland.

As far as shop fronts are concerned; I live in the UK at the moment, the average town centre here has 25% of shop fonts boarded up, in some towns that figure exceeds 55%. In Australia you might get isolated areas where you get lots of boarded up shops due to local economic factors but you don't get a complete country wide phenomenon like the UK.

Property prices in Australia are due to people wanting to live in big properties. Again in some places in Europe I have seen the equivalent of two up two down terrace houses of less than 100m2 in size converted into 4 separate flats.

I think you could easily argue that Australians are spending their wealth on a better lifestyle. A fairly wise decision when you remember that you can't take it with you.

Property prices in Australia are a result of Aussies selling each other properties to generate wealth, financed by loans they can't afford. Private debt in Oz has been insane since the mid 2000s and has only gotten worse.

The economy is fine at the moment, but as soon as China steps back in any real way things are going to get ugly.

Having moved from California to Australia a year ago, I'm amazed that Australians deny that there is a property bubble. Anecdotally, in the neighborhood I'm living in, it costs at least twice as much to buy a house as to rent.

I live in a lower middle-class suburb in Melbourne, and a couple of weeks ago a two-bedroom, one-bathroom house up the block sold for $600,000. Keep in mind too that mortgage interest rates in Australia are higher than they are in the U.S. (7% vs. 5%) and they don't have long-term fixed interest mortgages. The amount of debt home buyers are taking on is insane.

Needless to say I'm renting and waiting for the bubble to pop.

A good % of me and my friends are all sitting on our hands and waiting as well. We're all about the same age as our parents were when they got their first house (late 20s early 30s).

The prices are nuts, at least the market has flattened out of late, but with the population growth rates we are seeing around the country the pressure for housing isn't likely to lift any time soon.

Yeah I don't see an end to it, if you want to be around and work in the inner city there only a reasonable distance away you can buy before it becomes prohibitive. The majority of that land is either already in use or running up $300,000+ just for a regular block of land.

Half an hour out from Sydney, you're lucky to get a two-bedroom unit for $400,000. Actually getting land seems like a dream.

I'm not convinced that waiting is the best strategy. In my case I'm a 26 year old developer in Perth. I bought my first 2x1 apartment 13 months ago in a nice area 7km from the city and have now paid it off to the point where if I were to rent it out, it would pay for itself.

Now all my savings still go into the loan (offset account), but they are essentially a deposit for my next property which I will be able to buy around 28-29 (2-3 years).

There are plenty of Australians who shout about the property bubble. The problem is that there is so much middle-class wealth tied up in it, that any political party that steps forward and eliminates negative gearing is basically signing their own death warrant - they won't be a player for 10-15 years.

Ever considered moving back to the states now that you're established? I'm the opposite, having moved from .au to California and now using australian bank accounts and investments as my savings vehicles, 6.3% on aud savings + 3% currency is a lovely offset vs a US mortgage.

> Ever considered moving back to the states now that you're established?

Not without a Green Card. I'm Canadian, not American, and the constraints that you have to live under on an H-1B visa whilst in the multi-year wait for a GC are IMO intolerable.

I may complain about the high cost of living in Australia compared to the US, but I am thankful for much greater personal freedom I have--although that's mostly thanks to my Aussie wife. :)

Australian personal debt and debt/disposable income ratios are now one of the highest in the world.

http://www.bis.org/publ/bppdf/bispap46e.pdf

From the linked paper: "During the 1980s, the ratio of debt to disposable income for Australian households was fairly stable at around 45% (Graph 1). But since 1990, this ratio has risen rapidly, reaching 157% in December 2007. Housing debt accounts for the bulk of the increase, with the ratio of housing debt to disposable income rising from 31% to 134% over the period. By comparison, the ratio of personal debt to disposable income increased from 13% to 22% over the same period. The ratio of debt to assets has also risen sharply over the past two decades, from 8% in December 1989 to 17% in December 2007. Many advanced economies have witnessed a large rise in household indebtedness over the past two decades. However, the increase in Australia has been particularly pronounced. The ratio of household debt to income in Australia went from being one of the lowest in the advanced economies in the late 1980s to one of the highest in December 2007 (Graph 2). "

It's an older article (frustratingly newer is harder to find) but since 2007 many of the countries in comparison have suffered badly in property value write-downs.

Basically, my point is this : household debt/income ratios are one of the highest in the world. This is mainly because of the most unaffordable property market in the world.

As has been seen in the USA, Spain, Ireland and elsewhere, a breakdown in the property market has very wide implications for the wider economy as much of the current spending has been due to debt spending. As things are the excess income is being channeled towards debt reduction, which in effect is a negative savings rate, which has major implications for things like consumer spending.

Australia cannot remain at the top of the 'most unaffordable housing' and 'highest debt/income' ratios forever. What goes up must come down.

Even a 10-15% drop in housing prices will not only severely undercut consumer and business confidence, it will also undermine the banking sector stability because most of the major banks are heavily weighted towards residential property lending, meaning their capital bases are underpinned by the values of property.

A fall in housing values would wipe out many of the statistics in the parent linked article. Yet people continue to say what happend in Europe and the USA cannot happen in Australia - but I'm yet to hear a convincing economic argument as to why not.

Right now low unemployment and a strong dollar are underpinning teh property market (to some extent) but also so are (quiet) changes to government policy which include allowing banks to package up more residential backed mortgage securities (yes, those very things that brought the USA undone) and sell them to both pension funds and treasury as AAA investments. They have also changed the rules to allow superannuation funds to now borrow and fund purchase of property, something that was strictly prohibited before. Some mortgage brokers have estimated that super-backed borrowing makes up 20% of their business now.

Even a slight fall in house prices and/or income levels will have major ripple effects. Yet this is not being discussed at all, as it is continually hand-waved away with 'oh that's not a problem, this time it is different'.

Australia cannot remain at the top of the 'most unaffordable housing' and 'highest debt/income' ratios forever.

Is there a reason for this, or it is just a "something bad must happen" feeling? The Swiss have topped the highest debt/income for years, and it hasn't been a problem[1].

Even a slight fall in house prices and/or income levels will have major ripple effects.

Australian house prices have dropped around 4% over the last 12 months, and have been largely static since 2008/9.

Yet this is not being discussed at all, as it is continually hand-waved away with 'oh that's not a problem, this time it is different'.

That's not true. Most commentators forecast little-to-no increase in property prices over the next few years, and there are plenty of people who think the property market will fall.

[1] http://www.economist.com/blogs/dailychart/2011/07/world-debt... (and switch to the "household" tab)

  Again in some places in Europe I have seen the equivalent 
  of two up two down terrace houses of less than 100m2 in 
  size converted into 4 separate flats.

Around here we call that "Newtown", or "Ultimo".

Ahh memories of the Duck and Swan in Chippendale...

Australia is not the Saudia Arabia of high grade (Anthracite) coal. The United States has triple the amount of proven high grade coal reserves and is also a larger coal producer than Australia. Don't get me wrong, Australia has a lot of coal, but the USA, Russia and China all have much larger reserves of all but the lowest grade brown (lignite) coal.