State of the Nation Report 20, Focus on Australian Politics

State of the NationAustralia

Spotlight on Australian Politics

29th April 2015

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Serious Economic Issues

State of the Nation 2015

Unemployment, Commodity prices, 2014 Federal Budget

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Three Intertwined Themes


Party Policies, Economic Pressures, International Context

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Political Context:

the Government in review


the Government in review at the half-way mark

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September 2013 Election Result

Base: Australian electors aged 18+

Source: Australian Electoral Commission, 7 September 2013

53.5% 46.5%vs.

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Australia’s House of Representatives (150 Seats)

Source: Australian Electoral Commission

90 (L-NP)

55 (ALP) 1 (GRN)

1 (KAP)

1 (PUP)

2 (IND)

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Key Commodities:

Iron Ore, Coal, Oil


End of the Commodities Boom tests the Abbott Government

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Australia’s Biggest Exports (Goods & Services) (2013-14)

Rank Product $AUD Billions1. Iron ore $74.7

2. Coal $40.0

3. Natural gas $16.3

4. Education $15.7

5. Tourism $13.9

6. Gold $13.3

7. Crude Oil $10.4

8. Beef $6.4

9. Wheat $6.1

10. Aluminium $6.1

Base: Goods and services exported during the 2013-2014 financial year.

Source: Department of Foreign Affairs and Trade

Discover your edgeSource: Index Mundi; Monthly data

Crude Oil Price (1985 – 2015)- $US per barrel

-$10

$10

$30

$50

$70

$90

$110

$130

$150

Cru

de O

il P

rice -

$U

SD

per

barr

el

1985-2002: Oil price averaged $20.90

July 2008: Oil price record high - $147.50

Discover your edge

-$10

$10

$30

$50

$70

$90

$110

$130

$150

Cru

de O

il P

rice -

$U

SD

per

barr

el

Source: Index Mundi; Monthly data

Crude Oil Price (2003 – 2015)- $US per barrel

Howard Government(1996-2007)

Rudd-Gillard-Rudd Government(2007-2013)

Abbott Government(2013-)

September 2013$106.31

November 2007$94.76

Oil Price Peak$147.50


Thermal Coal Price (1985 – 2015)- $US per metric ton

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Th

erm

al C

oal

Pri

ce -

$U

SD

per

metr

ic t

on

July 2008: Thermal coal record high - $192.86

Current Price$65

1985-2002: Thermal coal averaged $33.33


Thermal Coal Price (2003 – 2015)- $US per metric ton

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Iro

n O

re P

rice -

$U

SD

per

dry

metr

ic t

on




Current Price$65


November 2007$90.64

Thermal Coal Peak$192.86


Iron Ore Price (1985 – 2015)- $US per dry metric ton

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Iro

n O

re P

rice -

$U

SD

per

dry

metr

ic t

on

1985-2002: Iron ore averaged $12.54

Feb. 2011: Iron ore record high - $191.70

Current Price$55


Iron Ore Price (2003 – 2015)- $US per dry metric ton

Iron Ore PeakFebruary 2011 - $191.70

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Iro

n O

re P

rice -

$U

SD

per

dry

metr

ic t

on




Current Price$55


November 2007$36.63

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Collapse in the Iron Ore price leaves

huge revenue ‘hole’

- particularly in WA


End of the Commodities Boom tests the Abbott Government

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Senate


Dysfunctional Senate is a problem

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Australian Senate (76 Seats)


33 (L-NP)

25 (ALP) 10 (GRN)

1 (PUP)

1 (Xenophon)

1 (LDP)

1 (AMEP)

1 (Family First)

3 (IND)

8 (Other)

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States


It’s different State by State

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Coalition Seats by State


NSW30

QLD22

VIC16

WA12

SA6

TAS3

NT1

ACT0

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Politics in 2015


Leadership and Disunity

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L-NP

ALP

Greens

Palmer

Independents/

Others


Source: Roy Morgan Research Multi-Mode Morgan Poll, April 11/12 & 18/19, 2015

45.5%

38.5%

33.4%

38.0%

8.7%

12.0%

5.5%

1.0%

6.9%

10.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

September 2013

Election

April 2015

Voting Intention- Primary Vote

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Australians’ Voting Intention


Source: Roy Morgan Research Multi-Mode Survey, April 11/12 & 18/19, 2015

47% 53%

Government Confidence 88.5pts

vs.

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Voting Intention- Federal Two Party Preferred Vote


Source: Roy Morgan Research; weekly interviews

44.5%

55.5%

30%

35%

40%

45%

50%

55%

60%

65%

70%

L-NP ALPJulia Gillard elected after first

Hung Parliament since 1940.

ALP (50.1%); L-NP (49.9%)

Abbott-led L-NP wins Government

after 6 years in Opposition.

L-NP (53.5%); ALP (46.5%)

Howard re-elected for 4th term at 2004

Election. Latham's stumbles and

Tasmanian Timber Union support help

Howard to win.

L-NP (52.5%); ALP (47.5%)

Rudd-led ALP wins Government after 11 years in

Opposition.

ALP (52.7%); L-NP (47.3%).

Brendan Nelson is the new Oppn. Leader

Beazley replaces

Latham as

Oppn. Leader

George Bush re-

elected as US

President

AWB Iraqi

bribery scandal

"Oil for Food"

Malcolm Turnbull

replaces Nelson as

Oppn. Leader

Tony Abbott replaces

Turnbull as Oppn.

Leader

Global Financial

Crisis begins as

Lehman Brothers

bankrupts

Rudd

Government

stimulus

packages

Barack Obama

elected US

President

Oil @ $150 a

barrel

RBA raises interest rates

to 12 year high of 7.25%

Julia Gillard proposes

to introduce a price on

carbon by 2012

Kevin Rudd wins ALP

leadership ballot

57-45 over Julia Gillard

Support for L-NP

plummets after

Hockey delivers his

first Budget.

47.0%

53.0%

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Disunity is death


Leadership issues have plagued the L-NP

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Government Confidence

88.5


More believe country going in the wrong direction

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80

90

100

110

120

130

140

150

1602013 Federal Election results in a comprehensive victory for the Coalition led by Tony Abbott

Labor led by Kevin Rudd wins the 2007 Federal Election


Source: Roy Morgan Research; weekly interviews

2010 Federal Election results in a ‘Hung Parliament’. Gillard is returned with the backing of 3 Independents & 1 Green

152.5 – Oct 2009

April 201588.5

Government Confidence Rating over time

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Leadership –

a story of Disapproval


Australians report low approval of both leaders

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PM Tony Abbott v Bill Shorten


Source: Roy Morgan Research Telephone Survey, April 21-23, 2015.

Better PM:

44% Abbott, 39% Shorten

Job Performance

Abbott: 53% Disapprove, 37% ApproveShorten: 48% Disapprove, 34% Approve

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Preferred Liberal Party Leader


Source: Roy Morgan Research Telephone Survey, April 21-23, 2015.

All electors: Malcolm Turnbull (38%);

Julie Bishop (27%) and Tony Abbott (12%).

L-NP supporters: Malcolm Turnbull (30%); Tony

Abbott (25%); and Julie Bishop (25%).

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Preferred Liberal Leader – All electors

0

10

20

30

40

50

60

Malcolm Turnbull

Julie Bishop

PM Tony Abbott

38%

6%

7%

24%

12%

27%

30%

51%

Joe Hockey 5%

31%

13%


Source: Roy Morgan Research Telephone Surveys (February 2008 – April 2015)

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Preferred Liberal Leader – L-NP supporters

0

10

20

30

40

50

60

Malcolm Turnbull

Julie Bishop

PM Tony Abbott30%

8%

5%

24% 25%

25%

49%

13%

4%Joe Hockey

6%

12%

35%


Source: Roy Morgan Research Telephone Surveys (February 2008 – April 2015)

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Preferred ALP Leader – All electors

0

5

10

15

20

25

30

Jun-14 Oct-14 Jan-15 Apr-15

Tanya Plibersek

Anthony Albanese

Bill Shorten

23%22%

15%

16%21%

13%

Wayne Swan10%9%


Source: Roy Morgan Research Telephone Surveys June 2014 – April 2015.

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Preferred ALP Leader – ALP supporters

0

5

10

15

20

25

30

35

40

Jun-14 Oct-14 Jan-15 Apr-15

Tanya Plibersek

Anthony Albanese

Bill Shorten

30%32%

13%

16%

26%

11%

Wayne Swan

9%10%


Source: Roy Morgan Research Telephone Surveys June 2014 – April 2015.

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Politicians rate poorly for

honesty and ethics


Image of professions – shows politicians below most

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Image of Professions- Federal Politicians cf. Nurses, Doctors, Dentists, Engineers, Police and Judges

Base: Australians aged 14+

Source: Roy Morgan Research; Image of Professions Survey

Nurses

Doctors

EngineersDentistsState Supreme Court JudgesPolice

Federal Politicians

86%

92%

62%

84%

53%

74%

62%71%

52%

69%61% 69%

19%

13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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Federal PoliticiansState MPs

Image of Professions- Federal Pollies cf. Pollsters, Journalists, State MPs & Union Leaders



Union LeadersTV Reporters

Newspaper Journalists

Public Opinion Pollsters

Talk-Back Radio Announcers

34%

29%

12%

18%18%

16%16%

15%

21%

14%

9%

14%

19%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

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Image of Professions- Federal Pollies cf. Stock Brokers, Real Estate Agents, Advertisers & Car Salesmen



Business Executives

Car Salesmen

Stock Brokers

Real Estate Agents

Advertisers

Federal Politicians

22%

18%

19%

13%

19%

12%11%

9%9%

5%4%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

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Economic Issues continue to worry

Australians.

Issues

49% say economic issues are the most important issues facing Australia – Economy, economic problems, interest rates, unemployment, the Federal Budget, cost of living, etc.

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Most Important Issues Facing Australia

Base: Australian population aged 14+

Source: Roy Morgan Research; Nation-wide telephone poll, February 4-6, 2014 (n = 664)

0%

10%

20%

30%

40%

50%

60%

No

v05

Ap

r-0

6

May

-08

No

v-0

8

May

-09

No

v-0

9

Feb

-10

Jun

-10

Sep

-10

Dec

-10

Feb

-11

Mar

-11

Jun

-11

Jul-

11

Oct

-11

Jan

-12

May

-12

Jul-

12

No

v-1

2

Jan

-13

Ap

r-1

3

Jul-

13

Au

g-1

3

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Jan

-15

Ap

r-1

5

Environmental Issues

Religion/ Immigration/

Human Rights

Politics & Leadership

Economic Issues

Social Issues

14%15%

9%4%4%

49%

6%

10%

9%

13%

3%War & Terrorism

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‘Bravery’ trumps ‘Popularity’


The lessons of history show the way….

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Political/Economic Pressures


Australian Financial Indicators: Aussie Dollar, Interest Rates, All Ordinaries

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Exchange Rates (1969 - 2015)- AUD cf. USD

Source: Reserve Bank of Australia

Parity

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

Commodities

Boom

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RBA Interest Rates- by Prime Minister’s first, 18th and last month in office

Source: Reserve Bank of Australia

Monthly figures for the first month as Prime Minister; the 18th month as Prime Minister; the last month as Prime Minister

2.75%

4.50%

6.75%7.50%

8.50%

16.73%

8.05%

4.45%

2.25%

4.25%3.00%

5.00%5.25%

11.07%

8.64%

18.80%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

TonyAbbott

JuliaGillard

KevinRudd

JohnHoward

PaulKeating

BobHawke

MalcolmFraser

GoughWhitlam

1st Month

18th Month

Last Month

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S&P/ASX 200

Source: Reserve Bank of Australia; value as at the last business day of each month

4,966

5,191

4,927

4,803

5,0525,135

5,219

5,425

5,320

5,352

5,190

5,405

5,395

5,489 5,493

5,396

5,633 5,626

5,293

5,527

5,313

5,411

5,588

5,929

5,892

3,500

4,000

4,500

5,000

5,500

6,000

6,500

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3.0%

4.0%3.9%

3.3%

2.4%2.1%

1.9%

3.0%

4.2%4.5%

5.0%

3.7%

2.5%

1.5%1.3%

2.1%

2.9%3.1%

2.8%2.7%

3.3%3.6%

3.5%3.1%

1.6%1.2%

1.4%

2.2%2.5%

2.4%2.2%

2.7%2.9%

3.0%

2.2%

1.6%1.3%

0%

2%

4%

6%

8%

10%

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec

Annual Inflation Rate- Percentage change from previous year*

*The figures provided represent the difference between the current quarterly inflation rate figure and the same quarter 12 months ago.

Source: Australian Bureau of Statistics

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Consumer Confidence

111.8


ANZ-Roy Morgan Consumer Confidence


Source: Roy Morgan Research; April 2015

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Australia is nowhere near as

confident as Asian neighbours

Australasian Consumer Confidence

ANZ Roy Morgan Consumer Confidence shows Australia behind Indonesia 154.1,China 144.5 and even our neighbours in New Zealand 124.6

Source: Roy Morgan Research; March 2015

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ANZ-Roy Morgan Consumer Confidence- Monthly Asia-Pacific Consumer Confidence

Base: Asia-Pacific countries; March 2015

Base: Australians aged 14+ ; April 2015

Source: Roy Morgan Research

154.1

144.5

124.6

108.8

100.0

110.0

120.0

130.0

140.0

150.0

160.0

170.0

180.0

Indonesia China New Zealand Australia

Discover your edgeBase: Australian population aged 14+

Source: Roy Morgan Research;

Monthly figures for the first month as Prime Minister; the 18th month as Prime Minister; the last month as Prime Minister

124.1 123.6126.8

123.7

83.0

97.4

103.0

119.2

111.8

111.0113.5 112.4

96.2

118.2

103.8

95.6

80

90

100

110

120

130

140

TonyAbbott

JuliaGillard

KevinRudd

JohnHoward

PaulKeating

BobHawke

MalcolmFraser

GoughWhitlam

1st Month

18th Month

Last Month

ANZ-Roy Morgan Consumer Confidence- by Prime Minister’s first, 18th and last month in office

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ANZ-Roy Morgan Consumer Confidence (Monthly)- by State



113.0 112.7112.1

111.4

108.8

105.5

March 2015 Australia

111.3

100

102

104

106

108

110

112

114

SouthAustralia

Victoria WesternAustralia

NewSouthWales

Queensland Tasmania

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ANZ-Roy Morgan Consumer Confidence vs All Ords1986 - 2015



Source: Roy Morgan Research; Monthly data

0

20

40

60

80

100

120

140

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

All Ordinaries Share Index (LHS)

ANZ-Roy Morgan Consumer Confidence (RHS)

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80

90

100

110

120

130

140

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000



Discover your edge





100

105

110

115

120

125

5,000.0

5,100.0

5,200.0

5,300.0

5,400.0

5,500.0

5,600.0

5,700.0

5,800.0

5,900.0

6,000.0



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Business Confidence

112.4


Roy Morgan Business Confidence

Base: Australian Businesses


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Business Confidence



131.5

99.8

118.7

105.4

123.8

136.3

80

90

100

110

120

130

140

112.4

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Roy Morgan Business Confidence (March quarter)- by State

Note: ACT and NT have been excluded from chart due to low sample size.


Source: Roy Morgan Research; January 2015 to March 2015

117.9

115.5

112.4

108.4107.4

106.0

100

105

110

115

120

Tasmania Victoria New South Wales Queensland South Australia Western Australia

AustralianBusiness Confidence

111.0

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Roy Morgan Business Confidence- by Business Size


Source: Roy Morgan Research; 6 month moving averages

112.7111.3

124.6

120.5

80

90

100

110

120

130

140

150

160

Micro

Medium/Large

All Businesses

Small

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Unemployment at 10.8% is

far too high


2.3 million Australians unemployed or under-employed. Young people hit the hardest.


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Level of Workforce Unemployment


Source: Australian Bureau of Statistics; Monthly data

9.4%

6.9%

7.3%

0%

2%

4%

6%

8%

10%

12%

14%

% o

f w

ork

forc

e

ABS Seasonally Adjusted 6.1%ABS Original (Trend) 6.2%

Roy Morgan Research

10.8%

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Roy Morgan

Research

Australian

Bureau of

Statistics


Source: Roy Morgan Research; Telephone Polls – June 2013, June 2014 & April 2015.

58%55%

60%

21%

33%

29%

0%

10%

20%

30%

40%

50%

60%

70%

June 2013 June 2014 April 2015

Unemployment – 60% of Australians now believe Roy

Morgan 10.8% is closer to reality

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Unemployment by Age

Base: Australians in the workforce aged 14+

Source: Roy Morgan Research; 6 month moving average

7.9%

14.5%

5.7%

4.9%3.3%

0%

5%

10%

15%

20%

% w

ork

fo

rce u

nem

plo

ye

d

in e

ach

ag

e g

rou

p 14-29 16.4%

45-59 7.2%60 and over 7.6%

Australians 14+

30-44 10.3%8.6%

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Unemployment & Under-EmploymentAustralia vs. the United States of America


Source: Australian Bureau of Statistics; Monthly data

Source: Bureau of Labor Statistics; Monthly data

15.9%

18.5%

5.0%

5.5%

8.4%11.0%

5.1% 6.1%

0%

5%

10%

15%

20%

25%Australia:

Roy Morgan Unemployment & Under-employment

USA: U6 Unemployment

USA: U3 Unemployment

Australia:

ABS Unemployment

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US Unemployment – Policy Makers Aware

Source: The Wall Street Journal

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Roy Morgan Unemployment & Under-Employment- by Prime Minister’s first, 18th and last month in office

*Total Australian Unemployment & Under-employment rose above 2 million Australians in December 2011 – it has stayed above 2 million ever since

– 40 straight months.

Base: Australians in the workforce aged 14+

Source: Roy Morgan Research; Monthly figures for the first month; the 18th month; the last month as Prime Minister

1st

Month

18th

Month Change

Last

Month

PM Tony Abbott 18.3% 18.5% +0.2 pts (incumbent)

PM Julia Gillard 12.4% 16.8% +4.4 pts 18.9%

PM Kevin Rudd 11.8% 16.6% +4.8 pts 12.4%

1st

Month

18th

Month Change

Last

Month

PM Tony Abbott 2.286 million 2.344 million +58,000 (incumbent)

PM Julia Gillard 1.435 million 2.012 million* +577,000 2.346 million

PM Kevin Rudd 1.263 million 1.829 million +566,000 1.435 million

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Unemployment’s economic

consequences


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International Context


Global unrest; Asian engagement; trade deals

Discover your edgeBase: Goods and services exported during the 2013-2014 financial year.

Source: Department of Foreign Affairs and Trade

Rank Country $AUD Billions % Share of Total

1. China $159.6 23.9%

2. Japan $72.2 10.8%

3. United States $58.2 8.7%

4. South Korea $34.6 5.2%

5. Singapore $29.5 4.4%

6. New Zealand $22.7 3.4%

7. United Kingdom $20.3 3.0%

8. Malaysia $19.9 3.0%

9. Thailand $18.8 2.8%

10. Germany $16.8 2.5%

Australia’s Biggest Trading Partners (2013-14)

Discover your edgeSource: Australian Bureau of Statistics

-5%

0%

5%

10%

15%

20%

China GDP growth

Australian GDP growth

Australian average GDP growth

(1980-2014) - 3.2%

China average GDP growth

(1980-2014) - 9.7%

China vs. Australia - GDP Growth1980 - 2015

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Unemployment and Trade =

tension


Winners and Losers

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Terrorism and War


Increased concern means terrorism and war is as big a concern globally as the economy

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Indonesian – Australian

relations


The biggest sleeper of all

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Asylum Seekers – a sleeper


The complex set of issues surrounding asylum seeker has not been resolved

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In Summary


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Both Consumer Confidence & Business

Confidence are down from the 2013 Federal

Election.

In Summary:


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Economic Issues still dominate for

Australians.

In Summary:


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The end of the ‘Commodities Boom’ is an

economic ‘shock’ but provides opportunities.

In Summary:


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Despite falling behind, the Abbott

Government has every chance to win the

next Election.

In Summary:


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Implementing necessary but unpopular

reforms can often be the best way to

regain support.

In Summary:


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Unemployment and Under-employment

remain a huge problem in Australia – now

well above USA.

In Summary:

Australia’s real level of unemployment (10.8% - 1.37 million) and under-employment (7.7% - 970,000) is far higher than the official ABS unemployment estimate (6.1% - 760,000). More than 2.34 million Australians are looking for work or looking

for more work. Youth unemployment is particularly bad (16.4%).

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A prediction for the next election:

In Summary:


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It’s going to be an interesting 18 months…


The Key Areas of Change

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Real Unemployment – too high

Interest Rates – too high

Iron Ore Prices – too low

The Chinese Economy – in decline!

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Day of reckoning: why our economy needs a recessionSTIRLING LARKIN, APRIL 25, 2015

Wrong, Federal Government needs to tackle the issues now:

• Increase workplace productivity – (Abbott should step down or break naive promise of no IR reform)

• Eliminate the cash economy• Tackle corruption at every level of the economy – corporate, unions & government. • Real competition in the private sector• Open Government tenders – too many ‘tenders’ now awarded to ‘mates’• Accurate Government data – increase government efficiency by tendering services.

eg. ABS surveys

News & Politics

State of the Nation Report 20, Focus on Australian Politics