
"Australian Exceptionalism": best performing and fairest developed nation - jdub
http://blogs.crikey.com.au/pollytics/2011/12/08/australian-exceptionalism/
======
jbarham
Having moved from California to Australia a year ago, the main thing we're
finding exceptional about Australia is the high cost of living. IMO the
Australian economy is currently being squeezed in a vice between the insane
property bubble and the resources boom and high Australian dollar making other
sectors of the economy uncompetitive. Western Australia and Queensland (i.e.,
the two minerals states) are the only two states showing any significant
growth.

Australian retail, especially e-commerce, is completely uncompetitive compared
to the U.S. Try picking a product at random from www.toysrus.com.au and
compare the price on Amazon and even after international shipping it will
almost always be much cheaper to just buy from Amazon.

E.g., Megatron Transformers toy: $70 in Australia
([http://www.toysrus.com.au/popular-boys-toys/kre-o-
transforme...](http://www.toysrus.com.au/popular-boys-toys/kre-o-transformers-
megatron/w1/i1197374_1193603/)) vs. $25 at Amazon
([http://www.amazon.com/KRE-O-30688-Transformers-MEGATRON-
SET/...](http://www.amazon.com/KRE-O-30688-Transformers-MEGATRON-
SET/dp/B004PHTXW0)). It's almost as if Australian e-commerce sites depend on
their customers not having heard of the internet...

~~~
brc
>It's almost as if Australian e-commerce sites depend on their customers not
having heard of the internet..

That's exactly what it is. They pretend they don't exist, or that somehow what
you get is inferior.

Historically, it's because the Australian dollar was weaker (after the last
minerals boom bust) and therefore imported goods were more expensive. The
retailers built their business models on higher margins, and now are
struggling to compete with the disruptive influence of international
e-commerce.

I'm not expert on retail but I suspect the problem is with too many middlemen
- importers, wholesalers, and the like. But instead of trying to work out
why/how to compete, they are starting to run to the government looking for
intervention.

One of the few retail chains doing well is Supercheap, which has BCF and
Goldcross bicycles (and probably some others). They seem to be able to be
cost-competitive with international prices on many things and are still
profitable.

To me, there is no reason why an Australian e-commerce site couldn't be more
successful. ebay is wildly successful in Australia, so it's not like people
are averse to purchasing online. It's more to do with woeful range and prices.

If Amazon ever decides to open up an Australian subsidiary with warehouses
located in Australia they will wipe out entire retail chains. As it is,
they're already knocking them about badly even with inflated international
shipping and long lead times.

~~~
jacques_chester
> If Amazon ever decides to open up an Australian subsidiary with warehouses
> located in Australia they will wipe out entire retail chains.

Amazon, IIRC, refuse to do so because of the ban on parallel importation of
books.

~~~
jbarham
And we all know how well that worked out for Borders Australia.

E-books obviously make import regulations of books irrelevant so I don't think
Amazon would bother setting up a retail operation in Australia.

But if _Amazon Web Services_ set up shop down under, well now, that would be
quite disruptive!

~~~
jacques_chester
> E-books obviously make import regulations of books irrelevant so I don't
> think Amazon would bother setting up a retail operation in Australia.

I have a Kindle for this exact reason.

> But if Amazon Web Services set up shop down under, well now, that would be
> quite disruptive!

I don't see why they would. In terms of global traffic, Australia is a minnow.
But in terms of cost-per-bit, we're one of the most expensive locations in the
world.

It makes more sense for Amazon to sit offshore and send bits in, where they'll
be paid for by the end user with an ISP account.

About as close as you'll get is Singapore, I think.

~~~
daemin
Even with a Kindle (or Kindle software) you still can't get the same books (in
ebook format) as you can overseas. There are several fiction books that I just
cannot get in Kindle e-book format because the local distributor hasn't
authorised it or some such.

~~~
lazyeye
This is very easy to get around. Amazon allows you to register multiple
addresses. Just register a US address against your Kindle. All your other
Amazon services can be registered against your AU address(es). This will give
you full access to the US ebook catalogues from AU. As you would expect Amazon
only puts up a minimal, token resistance to you buying their stuff.

~~~
nl
This is no longer the case.

Now they check the address on your credit card, and check you are coming from
a US IP address. I've heard you can work around this using pre-paid credit
cards (and possibly gift cards) and a US based proxy.

~~~
lazyeye
If this is true then they must be only location testing new Kindle
subscribers. I purchased my first-gen Kindle a few years ago and have been
purchasing US books without a problem since registering a US address soon
afterwards. There is an option under "Manage your kindle" -> Country Settings
where you can select your country. Mine is currently set to US and I dont have
a US credit card or IP proxy etc.

~~~
nl
It is possible they use different forms. I think I had the most trouble when
trying to buy an MP3 via Amazon.

------
brc
Some sleight of hand there- 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. This is happening because
of a spending/taxes deficit that is at 2.5% and growing - all while in the
middle of a cyclical boom underpinned by a chinese credit bubble that has
skyrocketed demand for iron ore and metallurgical coal.

Not many people know this, but Australia is basically the Saudi Arabia of
high-grade coal and high grade Iron Ore.

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.

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

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.

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, mostly because of the high debt load servicing the unaffordable
property market and because of diffculty competing against international
imports (ie Amazon et al) caused by a strong currency and a very regulated
labor market which drives up the cost of keeping stores open.

Yes, the economy has been strong as a result of being underpinned by selling
resources to fast-growing nations like China and India.

So I agree with the central thesis that there is much to be proud of, but this
type of preening article is a warning that people might start to get
complacent and over-prescribe success to perfect management rather than being
at the right point in the cyclical trend. The truth is the country is starting
to behave like a 3rd generation family who inherets the hard work of the 1st
and 2nd generation but isn't prepared to make the sacrifices that made it so.

Crikey is a partisan website - not sure of the US equivalent but it's pretty
hard left. It's where you go to confirm your beliefs rather than to get a
balanced view.

~~~
tankenmate
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.

~~~
brc
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'.

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

------
tankenmate
One of the wisest moves I have seen by a bunch of politicians in the world was
the introduction of the superannuation system in Australia. I have lived in a
number of countries around the world and I don't understand why more countries
don't adopt a similar system.

~~~
ajtaylor
As a new resident of Australia, I love, love, love the idea of superannuation.
My employer contributes 9% (IIRC) to my retirement. I never see it, so I never
miss it or spend it. I can also choose to make extra contributions if I like,
which I most likely will once moving expenses are paid. It's a 401k, but
better.

~~~
brc
Well, it's good, but don't for a minute think that your employer is
contributing to your retirement. You're contributing to your retirement by
deducting 9% of your wages into a retirement fund.

In most salaried positions, they drop the charade of 'employer contributed
super' and talk about your 'total package' which includes your super payments.

I'm not arguing against the merits of forced investment, but you shouldn't
believe your employer is paying it for you. You are paying it.

~~~
nl
Yes and no.

It _is_ different to salary, because it is taxed differently, and when the
superannuation rate increased (which happens occasionally) you never see a
reduction in your take-home pay.

But it does reduce the amount they can afford to give you as your take-home
pay.

Actually, the really interesting discussion is about superannuation-as-forced-
savings vs a sovereign-wealth-fund. They aren't really equivalent, but they
have some similar outcomes (eg a large amount of capital available for
investment). I've gone back on forth on if we should have a sovereign wealth
fund - there are good arguments both ways.

------
shalmanese
What's danced around in this piece is what specific circumstances arose to
create the political class that managed to steer the economy so well. In fact,
one of the enduring paradoxes of the Australian miracle is how such a dismal
political process has managed to consistently produce competent leaders over a
30 year time span.

The Economist did a special report on Australia in May that goes into much
more detail: <http://www.economist.com/node/18719530?story_id=18719530>

~~~
twelvechairs
> how such a dismal political process has managed to consistently produce
> competent leaders

I find this a strange comment. I find the Australian electoral system (if
thats what you mean by political process) better than most of the other large
western countries (USA, UK, etc.). As for the 'competant leaders' part - I'm
not sure the leaders have much to do with Australia's success at all. Sure,
the politicians do some good things, but also some pretty terrible things,
just like most other western countries.... I think the economist article
misses the point too of the natural wealth (not just minerals), and perhaps
also a quite worldly attitude, being at the centre of Australia's economic
success, rather than specific politicians...

------
RockyMcNuts
Dutch disease!

Resource exports drive the currency up so much that the rest of the economy
suffers. But international comparisons using that exchange rate look pretty
good.

[http://www.reuters.com/article/2011/12/01/us-australia-
china...](http://www.reuters.com/article/2011/12/01/us-australia-china-
newspro-idUSTRE7B01UW20111201)

------
jacques_chester
I think this is one of the better reactions in the Australian blogosphere:

"As much as I am wary of discussions of national character, there’s another
aspect of cricket that I think relates to Australian character. This is the
fretting that comes from unfavourable comparison with the unattainable."

<http://clubtroppo.com.au/2011/12/09/australia-f-yeah/>

~~~
nl
That's a great post.

I loved this: _Imposter syndrome has a far better payoff than the Dunning
Kruger effect._

(Edit: I submitted a link from the comments on that as a post here:
<http://news.ycombinator.com/item?id=3332497>)

------
D_Drake
The article begins by taking pot shots at Americans. Classy.

Following that, the article only presents statistics in the particular way
that shows Australia as leading, while leaving the other ways unsaid.

First it talks about GDP growth percentage without adjusting for population
growth differences.

Then it compares the average income growth per year while ignoring the hard
numbers of both where it started and where it ended, removing the ability to
compare income with other nations.

This is followed by more of the same, an odd obsession with comparing the
economic growth of Australia's poor to the rest of the world's rich, citing a
high minimum wage as if it were an accomplishment instead of a fiat law, a
claim that anyone who disagrees is in denial, and topped off with a shot at
the American government.

It seems Americans aren't the only ones who enjoy chart-fueled autofellatio.

~~~
vacri
It seems you're also not familiar with the usual self-depiction of Australia
in the media - that we're a shit country spiralling into disaster, and nothing
here is worthwhile (except those lovely miners and our sports teams)

------
adaml_623
There are a lot of interesting facts about the Australian economy in the
article but the most interesting thing about the article is the beginning and
the end. Australians are fed a huge amount of misinformation by the media and
politicians. Australians are very ignorant of the situation in other
countries. Understandable considering they don't have direct neighbours but
still a bit unfortunate.

~~~
xelfer
They need to change channel from Today Tonight to SBS World News :)

~~~
mahmud
Chaser's war on everything.

------
chunkyslink
As a Brit living in Perth this may all be true, but beware the cultural void.
Nothing can prepare you for the dullness and isolation of living here.

"Australia is like a library with a dozen or so books I've read, and re-read
and read again. In London and Europe, it feels like I'm in a library that I'll
never get to the bottom of" Justin Knock

Yes they've got money, but the blandness of life here wears you down.

~~~
motherwell
So true!

But dude, you are in PERTH - the most isolated city in the world. Sydney and
Melbourne are far less like that, especially now the dollar is high and we are
starting to get better cultural acts visiting.

And I think many Australians have seen as much of Europe as most Europeans -
if not more.

I hate that when I was in NYC, every night had a band or play or comedian that
I wanted to see, but I wonder if Sydney is worse than, say, Buttfuck Iowa.

~~~
usaar333
I'm pretty sure Honolulu takes the spot for most isolated large city. Perth is
a mere few days drive from some large cities (Adelaide). In Honolulu you are
stuck on an island 2300 miles from the mainland.

~~~
brc
Flight time from Honolulu to LA is less than the flight time from Melbourne to
Perth.

Perth is the most geographically isolated city in the world.

~~~
rdouble
It's an hour longer from Honolulu to LA (or vice versa) than from Melbourne to
Perth.

The flight from Perth to Melbourne is only 3 hours and 30 minutes, less than
flying from LA to Chicago.

~~~
brc
Melbourne-Perth flights are routinely > 4 hours Sydney-Perth flights are
routinely > 5 hours

Hawaii - LA flight times are routinely > 5 1/2 hours

I was wrong.

~~~
usaar333
Out of curiosity, why are you comparing Perth to Melbourne rather than the
closer Adelaide? Flights are 3 hours going east and 3:20 going west between
those cities.

------
zemaj
If anyone from hacker news is looking to spend some time in Australia & work
for a great startup, we're hiring: <http://89n.com/content/careers> We're all
setup to sponsor people and get you through the visa/immigration process :)

Just shoot an email to jobs@89n.com and mention you're from HN!

~~~
bartonfink
Hey, zemaj -

I'm looking to move from the US to Sydney, but now's not the best time for me
to pull the trigger. How frequently would you guess an offer like yours comes
around?

------
jorkos
Selling dirt to China really skews these numbers....and as a Canadian I should
know.

~~~
zmmmmm
Indeed - I think many Australians fail to recognize their good fortune because
by and large they had nothing to do with it. It just happened in a far off
part of the country without them noticing.

~~~
femto
And it's nothing new. In 1964 Donald Horne penned a book "The Lucky Country",
which caused many Australians to start referring to Australia as "The Lucky
Country". The bit they miss is that the full quote was.

"Australia is a lucky country, run by second-rate people who share its luck."

Ouch! It's a bit harsh, in that Australia does punch above its weight in some
areas (eg. excellent radio astronomy program and some very good medicos). It's
spot on for other areas though, such as the majority of business and political
leadership. One gets the feeling that the things that succeed in Australia do
so in spite of the leadership, not because of it.

~~~
brc
Exactly! One of the less-discussed effects of 'Dutch Disease' is that it
creates a political class who are determined to capture the inflow of new
money and distribute it for their own needs.

The thing I get frustrated about is that people continuously say 'look we're
better than Japan or the USA or the UK'. But what I want to say is 'well, why
aren't we the richest country on the planet with the highest standard of
living for all?'. Comparing yourself to mediocre performance just leads to
reversion to the mean because people -as you say - become second rate and
share in the luck, convincing themselves it was their wise stewardship that
made the luck happen.

------
vorg
Resources and demographics drive the economic fate of nations. There's a large
land area (i.e. easily accessed minerals) divided by a small population (less
than 25 million). Because the minerals are in the deserts, there's little
public resistance to digging them up. Similar situation as Canada. With a
similar cost: ceding effective political and economic control to the US, and
accepting high numbers of immigrants from developing countries.

The Europeans came 220 years ago, took the land off the indigenous people over
the following century, then created a centrally-controlled federal border 110
years ago to keep out others. Australia became known as "White Australia". But
they couldn't hold back nearby Asia's population for long. 70 years ago,
Australia gave up control of their foreign policy and defence to the US to
keep out Asia, and has been giving up economic control ever since. Many call
Australia "the 52nd state".

In the 1960's the immigration began: first from southern Europe, then from
Asia. International students and immigrants lease the apartments and houses,
keeping the rent high, eventually buying the houses, keeping the prices high.
Like Canada and Northern California, most come from Asia. Australia/NZ and
Canada are an economic, political, military, and cultural extension of the
western USA, with the same immigration patterns.

Immigration is the price of remaining politically part of the English-speaking
empire instead of a Japanese, Chinese, or Indonesian-speaking one.

~~~
corporalagumbo
Some questions.

1) How does the USA have political and economic control of Australia?

2) If Australia had not ceded political and economic control to the USA, what
would have happened re: Asia? Are you talking invasion?

3) Why is immigration the price of remaining politically part of the English-
speaking empire?

Furthermore:

4) Do you think that immigration is altering the status quo of
Australia/NZ/Canada as English-speaking imperial extensions/nations, resulting
in new "mongrelised" nations, or is it shifting these countries to become more
Asian, or is it tacitly maintaining the status quo?

------
derrida
And 50% of over 65s live below the UN poverty line.
[http://www.canberratimes.com.au/news/local/news/general/elde...](http://www.canberratimes.com.au/news/local/news/general/elderly-
poverty-rate-hits-50-per-cent/1340276.aspx)

------
JamisonM
Australian economic performance is a testament to the power of protectionism.
Nobody likes to admit it but Australia's relative isolation in the world as a
developed nation it the best trade tariff the world has ever seen and helped
them develop local industries that are more labour intensive and thus provide
better income distribution than most other nations. The relatively recent
revolution in container shipping is eroding the effects of the high cost of
importing goods into their market, but that has dovetailed perfectly with
China's hunger for their natural resources. It is exactly the kind of perfect
storm that every politician loves to crow about their policies being
responsible for when the reality is that geography and external forces have
more to do with it than anything else.

~~~
femto
Nothing could be further from the truth. Australia has been at the forefront
of trade liberalisation [1,2], unilaterally cutting tariffs for about 20
years. If anything, our current growth is a product of this liberalisation.

Income inequity is increasing, but the relative equality of income results
from a unionised history (less so now), with the concept of "a fair go for
all".

[1] <http://www.wto.org/english/tratop_e/tpr_e/tp279_e.htm>

[2] [http://www.theaustralian.com.au/national-affairs/push-on-
doh...](http://www.theaustralian.com.au/national-affairs/push-on-doha-gets-
nod-from-leaders/story-fnapmixa-1226180923588)

~~~
JamisonM
I suppose I should better state my premise: Trade liberalization is very much
in Australia's interests because its geographic isolation has provided a
degree of natural protection for domestic industries (not so now since
shipping has improved) while liberalization also provides the market access
that Australia needs anyway since it is a large exporter of raw materials.

The growth is absolutely a product of liberalization, accidents of geography
and timing have made it so.

------
smackfu
Now if only they could get rid of the terrible video poker parlors that are
replacing all the pubs.

------
dlitz
Fairest... except for the censorship.

~~~
keen
What censorship?

~~~
getsat
Pick your poison, mate.

<http://en.wikipedia.org/wiki/Censorship_in_Australia>

~~~
vacri
Happily:

<http://en.rsf.org/press-freedom-index-2010,1034.html>

We're freer by a point or so over the UK and the US (home of 'free speech'),
as rated by Reporters Without Borders. Of Anglo culture nations in particular,
NZ is way in the lead, Aus is #2.

