I just want to make sure that the economic vandals do not get back into power and our children and grandchildren are not left to pay Labor's bill.So, are the Labor Party 'economic vandals'? Well clearly the answers you get to that question are going to be divided on party lines. LNP voters will give you an emphatic yes, and ALP voters will tell you, no not at all and probably point to Keating and Swan both being named 'World's Best Treasurer'.
Rather than engage in partisan posturing, I thought it might be interesting to examine the data objectively - at least, as objectively as possible in the circumstances. So I turned to that font of all wisdom, the OECD historical GDP statistics.
For those wanting to play along at home, the data is at http://stats.oecd.org/ under the Tabs National Accounts > Annual National Accounts > Main Aggregates > GDP > GDP Volume - Annual Growth Rates in percentage.
Tracing back to the year before Gough Whitlam won office -1972 - I got the data for Australia's GDP growth, and compared it with the OECD average growth figures. I then tried to make sense of that data through the lens of which party was in power. The figures were - to my stats obsessed mind - extremely interesting.
In the 42 years I examined (we only have OECD confirmed data up to 2013), Labor had been in power for 22 of those years, The LNP for 20, give or take a few months.
On average, over the entire period, Australia averaged GDP growth of 3.12% per annum. The OECD average of GDP growth for the same period was 2.69%. So over the whole period, Australia did much better than the OECD average. Yay us!
Looking at only the period during which the LNP were in power, Australia grew at a rate greater than the OECD average in 12 of the 20 years of LNP government, or 60% of the time. By contrast, when the ALP were in power, Australian growth outstripped the OECD average in 15 of the 22 years, or about 68% of the time. So on the raw numbers, an ALP government was more likely to oversee a period of trend growth higher than the OECD average.
How much higher? This is where the numbers get really interesting. During the period the LNP were in government, the average OECD growth rate was 3.01%. Compare that number with the average OECD growth rate overall - 2.69% - and it becomes apparent that during periods of LNP government in this country the OECD group of countries, overall were doing better. This probably points to sunnier economic periods if not globally, then certainly for comparable economies to Australia. Australian growth during the period the LNP were in power was, on average 3.14% This means that, on average the LNP governments beat the OECD trend data by .13% Not a bad effort, on any analysis.
Now let's consider the periods during which the ALP were in power. During those years the OECD average growth was 2.39% - again, that's down on the average over the entire period, which was 2.69%. Australia's average growth rate while the ALP were in power was 3.1% - a whopping .71 points higher - nearly 3/4 of one percent more - than the OECD average.
This - I think - gives us one of the most interesting insights into the 'better economic managers' narrative that has persisted for decades in Australian politics. Since the Whitlam years we see that the growth rate difference between the two parties is pretty negligable: 3.1% under Labor, 3.14% under the LNP. But when you compare them to the OECD averages, you find that while the LNP outperforms the average by a respectable .13%, the ALP outperforms it by a seriously impressive .71%.
The difficulty, of course, is that the same basic growth rate - 3.1 ish% - is being achieved in very different circumstances. So, on average, Labor governments have had to contend with poorer economic conditions in comparable countries, on average, than Liberal governments have. This perhaps explains why the public sentiment is that the LNP are 'better' economic managers; they've had the good fortune to govern during periods of strong growth among the OECD nations. And yet when we compare the difference between the OECD average and Australia's growth it's very clear that Labor governments consistently beat the trend more often, and by a larger margin.
(Of course, the other potential answer is that Australia is going to grow at about 3.1% regardless of who's in power - certainly that seems a fair interpretation of the numbers. But if this is the case, accusations of 'economic vandalism' must still ring hollow.)
