Why are Australians so gloomy about the future?

Are we downhearted? Apparently so, and there's certainly no good reason for it.

Snap out of it, Australia. Despite our wealth, health and good weather, an international survey has revealed consumers here are among the gloomiest in Asia. And it's been that way for most of this decade.

When citizens across 15 Asia-Pacific nations were asked about the outlook for their economy, employment prospects, income prospects and quality of life, only three countries – Taiwan, Sri Lanka and Malaysia – were more pessimistic than Australia.

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The poll, conducted twice a year by card payments company Mastercard, showed our confidence ranking was more than 30 per cent below the regional average. 

Movements in consumer sentiment don't always correlate with what actually happens in the economy. But the regional comparison is telling.

Illustration: John Spooner
Illustration: John Spooner 

It's hard to find a good reason why Australians are much gloomier about their economic circumstances than most of their Asian neighbours, including New Zealand. Over the past decade, Australia has been enriched by a once-in-a-century commodities boom and manouevred, relatively unscathed, through the biggest financial crisis since the Great Depression. Now the economy is making a better-than-expected post-boom transition. No Australian in their mid-40s or younger has ever experienced a recession in their working life.

Australia's economic institutions are recognised to be among the strongest in the world and we're one of a handful of countries with a triple-A credit rating from the three major ratings agencies – Standard & Poor's, Moody's and Fitch Ratings.


And yet the Asia-wide consumer survey found Australian consumers are even less buoyant than those in Japan – a nation with a rapidly ageing population and intractable economic problems. The Japanese economy shrank last quarter and its central bank recently resorted to negative interest rates in a desperate bid to  encourage growth.

We seem to have taken our considerable economic achievements for granted, along with our high incomes and enviable lifestyles.

Illustration: Kerrie Leishman
Illustration: Kerrie Leishman 

According to the United Nation's human development index – arguably the ultimate league table of nations – Australia has been ranked second in the world, just behind Norway, for more than five years. We'd probably be number one if our temperate weather was taken into account.

The way Australia has consistently rated near the top of that index – which takes account of health outcomes, educational attainment and income levels – shows we're at the vanguard of human progress. That's something to celebrate. And it's not just a one-off. Our major cities are consistently rated among the most liveable in the world. Australia was even ranked number one on the most recent Global Creativity Index, which rates 139 nations according to "talent, technology, and tolerance".

So why such gloom in an age of plenty?

Economist Saul Eslake, who analysed the results of the Mastercard survey, said an "extended period of below-trend growth" in the wake of the mining boom has sapped consumer sentiment. The confidence dip also coincides with the especially bitter and unstable phase in Australian politics since mid-2010.

When consumers are told repeatedly that the federal budget is a "disaster" and that the tax system is "broken", it takes a toll. Those grim messages  receive far more attention than the story of how resilient the Australian economy has been. Malcolm Turnbull has adopted a much more positive economic narrative since becoming Prime Minister but it still seems voters need convincing.

A striking feature of the Asia-wide consumer confidence poll is that people living in poor nations – such as Myanmar, Bangladesh and Vietnam – reported far higher levels of confidence than Australia. Myanmar, a country with GDP per capita of less than $US1300 (about $1700), had the region's most buoyant consumers.

Confidence levels were also high among consumers in the region's rising economic giants China, India and Indonesia. People in those nations are convinced things will get better. And that's a reason for Australians to be more upbeat about their own economic prospects.

American economist Deirdre McCloskey drew attention to the rapid economic expansion in Asia and Africa this month when she scolded some of her professional counterparts for their gloomy economic predictions – especially those who say advanced nations are facing stagnation because of a slowdown in new ideas.

"For reasons I don't understand, people simply love to be told that the sky is falling," she wrote in Prospect magazine. "Yet it seldom does."

McCloskey said average real income per person in the world is rising faster than ever before. She pointed out that even with growth at the "modest" 4 per cent a year per person that the World Bank reckons China will experience until 2030, the result will be a "populace almost twice as rich". There is "no cause for pessimism", McCloskey adamantly concluded.

Rapid growth in incomes in the emerging economies of Asia has already been very good for Australia and there will be more opportunities for our well-educated, flexible workforce as those nations become wealthier.

That's what makes the gloomy consumer mood in Australia so baffling.

There are some big challenges ahead, but it doesn't make sense for us to be a nation of downcast worriers as the Asian century takes hold.


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