I did not have a recession with that state, NSW.

The state of NSW is not in good health, and this is not good for the country. 

Access Economics is reporting in The Australian that the state is already in recession – which the NSW State Labor Party (aka the Ostrich Party) has denied.

ABS data released just over a month ago show that NSW has experienced growth both in June and September quarters and this does not indicate NSW is in recession,” Mr Campbell  (acting Treasurer) said on Macquarie Radio

Nothing like the use of selective statistics to back up your claim Mr Campbell.

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23 Responses

  1. Well, I suppose he is technically right. Growth statistics don’t indicate a recession.

    It’s just that those statistics don’t actually reflect reality at this time. 🙂

  2. So desperate are have we been for good news in NSW we’ll take anything we can get. Umm, we are set to recover ahead of the pack, however, a decent recovery could be years away.

    “This is not just a recession. It will be the sharpest deceleration Australia’s economy has ever seen,” said a director at Access Economics, Chris Richardson.

    NSW set to recover ahead of the pack
    http://www.smh.com.au/news/national/nsw-in-recession/2009/01/18/1232213448316.html
    NSW is already in recession, and the rest of Australia is hot on its heels, a new forecast to be published today says.

    But while collapsing commodity export income would cripple the sun-belt states of Western Australia and Queensland, the worse could soon be over for NSW, which stands to benefit the most from interest rate cuts and a lower dollar.

  3. And we will all go down together

    State ‘in reverse and sinking’
    http://www.theaustralian.news.com.au/story/0,25197,24929831-2702,00.html

    THE NSW economy is already in recession, shrinking at speeds seen during the US financial meltdown.

    Access Economics’ latest quarterly Business Outlook report has predicted a long and painful year for the country’s biggest state economy, and warned that NSW’s mini-budget had only made things worse.

    “NSW is drowning, not waving, with its economy contracting at US-style rates,” it says.

    The report predicts gross state product will shift into reverse this financial year, dramatically underperforming the nation by contracting 1.6 per cent.

    By comparison, the national economy is projected to grow by 0.8 per cent the same year.

  4. Why does the media set so much store by what Access Economics has to say (if it’s not them, it’s Saul Eastlake)? Aren’t there others in the field they could canvass for own guesses?

  5. for their own guesses

  6. Economists, blah , blah, blah. I wish they would throw all the crystal ball gazers out on their ears. Projections, Predictions we may as well throw in VooDoo and Witchcraft as well for all their advice is worth.

    Yes we are in trouble, but lets wait for real data and stop this rubbish from economic forecasters.

    They predicted petrol to be $200 a barrel now and Interest rates at 10.5% only 8 months ago.

    By the way when they were predicting rates to be 10.5% I was thinking they will start to drop by November and I was right and I dont have qualifications or earn millions of dollars.

    What on earth does forecasting do other than to either excite or depress people. Anyone predicting gloom will win now and then and anyone predicting boom will win now and then.

  7. “Nothing like the use of selective statistics to back up your claim Mr Campbell.”

    Got any statistics which backup the claim NSW is in recession?

    I think that we have an awful NSW Government and would like to see them turfed. However, does the opposition have any policies? Let’s hear from them what they would do differently. I don’t think people should in general give the NSW Liberals a free ride. To do so would allow them to go into government (probably) in 2011 and continue with mediocre governing of NSW.

  8. Good one Alastair.

    Campbell is right, the ABS figures show two quarters of growth for NSW. What the last quarter has done I don’t know and Access doesn’t elucidate either, just makes a spray, but does so in rather inflammatory language that shouldn’t be their take.

    The NSW opposition blames it all on the last mini budget but as you state Alastair doesn’t give anything concrete about what they would do, except to intimate they would go into unrestrained investment and spending to stimulate the State economy. How they are going to do this and keep with their promise they will deliver a healthy surplus has me perplexed. One thing that comes immediately to mind is taxes up, including the GST.

    GST is a ticking alarm clock and it’s just a matter of which federal government is brave enough to take the barbs and arrows to raise it to 12.5% or even 15%.

  9. NSW is a basket case, and Victoria isn’t far behind.

    NSW has hopelessly decaying infrastructure, no investment in utilities, and no plan to rectify the problem.

    The only plan they had was stymied by the self interested affiliated unions. Power and public transport unions aren’t interested in solutions, they’re only interested in propping up their rorts and over manning.

    NSW politicians lack the political will/courage to do anything other than participate in short sighed deal making, and hope that something will emerge to get them off the hook of 13 years of policy neglect.

    And Victoria is about 3 years away from the same state of crumbling services. Victoria has a huge revenue stream from the all the gambling that Kennett allowed (against the public interest), but none seems to find its way to support the improvement of state based services and infrastructure.

    They’re hopeless governments.

  10. Is this Access Economics report more valid than one they released 8 months ago?
    http://www.theage.com.au/news/national/horror-budget-or-horror-interest-rates-report/2008/05/08/1210131168214.html
    May 9, 2008
    In a report to be released today, Access Economics also suggests that windfall company tax revenues over the past 5½ years will continue flowing into the Federal Government’s coffers, despite Mr Swan’s repeated attempts to play down expected revenues.

    The report suggests big increases in coal and iron ore prices will send Australia’s biggest commodity price boom in half a century “even further into the stratosphere”. “These days the budget comes with a made-in-China stamp,” it says.

    Access predicts a 2008-09 surplus of $20.2 billion, with total revenue a huge $10.1 billion above estimates.

    The report warns that commodity prices will “crash and burn” and when they do, the budget will be hit hard. But the impact on the budget probably would not happen until 2011-12.

    Economists – take with a HUGE grain of salt, very good at predicting the past – LOL. J Mc & TB seem to do a better job with predictions!

  11. The reason there is decaying infrastructure and nothing being built is imsply this.

    For the last 13 years there has been nothing but screaming about balanced budgets and no debt and bigger and bigger surpluses. For some ungodly reason governments were now expected to run like big business and make huge profits ( surpluses) and reward everyone with dividends ( tax cuts).

    Any type of borrowing was frowned upon and governments were expected to operate everything with what they earn.

    The thing is Big Business failed to remember they keep part of their profit as retained earnings and also borrow from financial institutions to grow and replace ageing infrastructure. They also raise capital by issuing more shares.

    Yet brrowing or raising funds to provide much needed infrasctrucutre for the future was shouted down as poor econimic management.

    Where on earth did our middle of the road governments and middle class population who had common sense disappear to.

  12. bacchus, on January 19th, 2009 at 1:03 pm

    Well thank you, bacchus… 😉

    Speaking for myself I take no pleasure in “predicting” and being right – I think you’ll find that while JMc obviously doeas an enormous amount of detailed research

    …I tend to flit about about a bit and talk to friends and family both here and overseas – (amazing how similar governments and society are in UK, Canada and Holland)…then mull over a WT 😀

    …hate to admit it but age and experience seem to count a lot when reading between the lines the BS from banks and pollies – I trust neither …

  13. Adrian,

    Well said. I am also wondering how the NSW Liberals think they’ll stimulate the economy with more investment whilst returning the budget to surplus. It’d be nice if they enlightened the public on their ideas.

  14. Adrian and Alistair, the opposition will simply apply the age old political tactic. Once in office we can expect the following statement –

    “The economic situation is far worse than we had anticipated, the previous government has concealed the full extent of budget deficit and the decline in the economy and state revenue. Hence it is necessary that we jettison all our election commitments”

    There will be no spending spree.

    Notwithstanding this, the State government is hopeless, directionless. They don’t deserve a further term of office, and there’s no way they are likely to get one.

    Finds some independents for the balance of power, at least then there might be a degree of accountability.

    Shane, governments (still) have a higher credit rating than any corporation. They can borrow at lower rates, yet they always prefer PPP.

    Governments should seek to retain ownership of public utilities and infrastructure, but enter into service contracts. The private sector is usually more efficient in delivery.

    This isn’t simply related to the political mantra of requiring a surplus.

  15. Exactly Tom, something they (all sides) have always done and one of the things I really hate about politics as it makes for lazy and incompetent oppositions. Just as a government is made to account for their reckless and broken promises then oppositions should put up credible accountable alternatives, not just spruik negatives and make pie in the sky commitments that they have already rehearsed their failure speeches for.

    You are also right on our State government. Unless the current opposition becomes an extreme religious organisation overnight then they have my vote. Not that I expect a great improvement when they get into power (note I said when not if) at least you know they will try to keep their noses clean for the first term. And you never know they might surprise everyone.

  16. Adrian, I think that I will do what I did at the last state election and vote for the candidate rather than the party. And so last election (Ballina electorate) I voted for Don Page, Nat.

    But we are now in the Tweed electorate and the sitting member (Nats) Geoff Provest’s claim to fame according to his website is that he is the General Manager of the Tweed Heads Bowls Club (aka the pokies). I may have to vote Labor!

  17. Min, I’m also a candidate voter which is why a lot of the wingnuts have a problem believing who I vote for.

    The only decent candidate in our electorate (and who bats for the other side) is Joanna Gash. Fact is she is one of the best local MPs I have ever come across. So ever since moving to the South Coast of NSW from Vic I have been voting Liberal. I never saw it as voting for Howard or against Labor, just voting for the person I believed would do the best for my area.

  18. Tom,

    “the opposition will simply apply the age old political tactic…”

    We the public deserve much better than that. We need a new government that will improve the running of NSW. The opposition needs to demonstrate that it has got policies which will do that. I agree with you on the NSW Government. They are very poor and deserve to be given the boot. All the same, I want the next government to do a better job.

    Adrian nails it when he says: “Just as a government is made to account for their reckless and broken promises then oppositions should put up credible accountable alternatives, not just spruik negatives and make pie in the sky commitments”

    Tom said “Finds some independents for the balance of power”

    NSW has plenty of independents. A minority government would be a good result, in my opinion, and is plausible if Labor’s vote doesn’t completely meltdown.

  19. Alistair, the first Carr government was very good. Capable independents held the balance of power. In the ALP this assists to keep the factional warlords and union power brokers in check.

    The current government is probably beyond redemption, even with independents holding the balance. They’re shot. They’re run their course, nothing left to offer.

    More of the same never gives people any hope of change, public sentiment remains gloomy, this infects economic confidence.

    Reform is necessary in NSW (and Victoria), and the people that have been in charge for almost 14 years are incapable of delivering it.

  20. bacchus

    ‘Economists – take with a HUGE grain of salt, very good at predicting the past – LOL. J Mc & TB seem to do a better job with predictions!’

    I’ll take that as a compliment so will TB, I think? Lol We’ve been way, way ahead of the pack for some time (wink)

  21. Alert

    The Daily Reckoning Australia

    Paris, France – Melbourne, Australia

    Monday, 19 January 2009

    ———————————-

    From Dan Denning at the Old Hat Factory:

    –Sound the alarm bells! A collision with reality is dead ahead!

    –The elephant in the room blasted out a mighty honk this weekend in a report by Access Economics, as reported in today’s Australian. “Batten the hatches,” Access says. “This is not just a recession. This is the sharpest deceleration Australia’s economy has ever seen.” Access adds that the federal budget is “buggered.”

    –“Leading economic forecaster Access Economics warns in its quarterly Business Outlook, released today, that the nation’s economic boom will ‘unwind scarily fast’, halving corporate profits, costing more than 300,000 people their jobs and blowing out the current account deficit to more than $100 billion.”

    –Dire stuff indeed. But the question from last week remains, is this massive dose of negative news already priced into Australian stocks? Or is it a further hammer blow that will drive them to new lows?

    –So far this morning, the market seems to be taking the prospect of a prolonged earnings recession fairly well. Or maybe it’s just in denial. The Access report correctly points out that the fall in commodity prices will dry up government royalties and corporate taxes. This will lead to higher budget deficits, more unemployment, and a contraction in the mining industry after four years of break-neck expansion.

    –Australia’s government is now in the same pickle that Gordon Brown and Barrack Obama find themselves in: how do you distribute enough borrowed loot to keep your economy from shrinking without igniting inflation and a weakening of your currency? And if you accept that the government really can step in and spend money while households and businesses are not, where does it spend it? Roads? Bridges? Booze? Pokies?

    –Those are mostly political questions. Economically, it’s hard to see how corporate earnings will recover this year. Demand is falling. Miners are winding up projects. All this being the case, don’t look for earnings to lead to a big bear-market rally.

    –In fact, as we mentioned last week, we think it’s likely that you’ll see a large exodus of institutional money out of common stocks and into corporate bonds. Corporate bond yields are now much higher than what you’ll find in U.S. government bonds. And it is the habitual thing to do, changing asset classes rather than liquidating altogether.

    –The big sleeper so far this year is oil. Oil prices have fallen 25% since rallying to just over $50 last week. The leverage is out of the oil market. And with a global recession, the IEA now predicts oil demand will fall for the second year in a row. It’s the first time that’s happened since 1983.

    –But the real story is how the falling oil price is hammering oil producers. Multinational oil companies are cutting back exploration programs. They’re not looking for oil. And you can’t produce what you can’t find.

    –As for the national oil companies in Mexico, Venezuela, and Russia, well they too are being hit hard by the falling oil price. During the big run up to $150, national oil companies were cash cows. But it now appears that little of the oil bounty was reinvested in new production or even maintenance of existing production.

    –So what do we have now? We have a situation here. A situation where the falling oil price is leading a big reduction in oil production. This will match, for a while reduced demand for oil. But we also think it’s baiting the trap for a huge blowback in oil prices. And the spark for that could be geopolitical. More on that tomorrow.

    –It didn’t seem possible, but things are getting worse for Americas largest commercial banks, Citibank and the Bank of Amerika. “The U.S. government, recognizing that the banking crisis is far larger than originally thought, is laying the groundwork for a second phase of its rescue attempt, with plans to purge bad assets that are paralyzing the financial system,” reports the Wall Street Journal.

    –Aha! Remember that phrase from last week, “incorporating the public debt?” This was the alchemical process by which a huge slab of outstanding debt was transferred to a new entity and converted into, ahem, “capital” in 17th century Britain. It now looks like you’ll see a new large national financial institution in America this year. It may even resemble a giant vacuum, or a garbage dump.

    –No matter what it looks like, it will be the receptacle for the metastasizing debt that is killing the financial sector. The Journal says that the discussions for the new “Bad Bank” between the Fed, the Treasury, and the FDIC, “show how the rapid deterioration of bank assets is outpacing the government’s rescue efforts. Banks are now struggling not only with the real-estate investments that sparked the crisis, but also with the car loans, credit-card debt and other consumer debt that have taken a hit with the faltering economy.”

    –We may as well get on with full nationalisation of the financial system. Thus far, it’s been incremental. But the end game is increasingly obvious now. Governments will either begin guaranteeing all mortgage lending and corporate debt (as plans in the UK suggest) and/or assume responsibility for the toxic assets impairing financial balance sheets (in exchange for equity).

    –What this means for stocks, paper currencies and gold bears more discussion. More on that tomorrow

  22. Tom,

    I agree with what you say there. Another one of the biggest problems in the NSW parliament is the balance of power parties in the Upper House. Currently Labor gets through much of its legislation with support from the Christian Democrats and the Shooters Party. It be hard to find worse minor parties to hold the balance of power, in my opinion. That’s another reason why it’d be good to have a minority government – so that it’s hard to get dodgy deals with the CDP and Shooters through parliament.

  23. Mr Campbell didn’t mention what year he’s referring to, by any chance?

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