Australia Is in an Economic Crisis
Inflation, supply chain issues, a housing bubble, interest rate rises, and a host of other factors are creating the perfect storm. And Australia is a ship caught in the middle.
Australia is isolated from war and resource rich, with an abundance of “golden soil and wealth for toil.” Compared to the rest of the war-torn world, Australia has enjoyed smooth sailing. It is a blessed nation. So how could it be that the land down under now finds itself in such tumult? And is there a solution for the nation? Or for individuals?
Consider three major storms now engulfing the “lucky country.”
Australian Prime Minister Anthony Albanese met with his energy minister on June 23 in emergency talks with union leaders amid a catastrophic energy crisis. Many are likening the scenario to that of “third world countries.”
Australia is witnessing the coldest start to winter in decades. The cold snap has produced a sudden and unexpected spike in power usage. Australia’s aging energy infrastructure is unable to cope, with millions of Australians facing potential blackouts. Everyday Aussies are also facing self-imposed blackouts, as low-income earners and pensioners must choose between soaring energy bills, or shutting off the heater.
Even the middle-income earners are being told to reduce their standard of living. What is the government’s solution to skyrocketing prices and shortages? Queenslanders were advised to “consider the number of rooms being heated by air conditioners. Turn off computers, tvs and other household appliances in standby mode and turn off pool pumps and second fridges.”
On Monday night, Sydney’s northern beaches went dark, and Queensland narrowly avoided a similar fate. Many in the northern beaches region, however, voted for politicians who promoted green energy while reducing coal power.
But Australia has mishandled the energy sector for a long time. Years of pursuing green net-zero policies have finally caught up with the nation.
The problem is not a lack of supply. Australia is one of the most resource rich nations in the world. To deal with Russian oil sanctions, European nations are looking to nuclear plants. Yet despite having some of the largest uranium deposits in the world, the Australian government has made nuclear power illegal.
But what about the massive stockpiles of coal and gas? Approximately 90 percent of Australia’s energy comes from burning these two commodities. But coal and gas plants have been lambasted by the nation’s increasingly leftist politicians as polar-bear-killing, ice-cap-melting institutions of capitalist tyranny. Without proper funding, an increasing number have fallen to disuse and disrepair. The early onset of winter shows how vulnerable these systems are at peak periods of usage.
In Queensland, 1,800 megawatts of coal-fired power is not being utilized. In New South Wales, Victoria, South Australia and Tasmania, 1,200 megawatt worth of capacity is now offline. Some are down for maintenance. Some simply cannot keep up with the cost of production. The government is refusing to increase spending and update the national system. The end result is consumers being told they now live in a nation that operates a third world electrical grid. Enjoy living in the dark.
In unprecedented scenes, New South Wales Treasurer Matt Kean pleaded with Sydney residents to not run their dishwashers until late at night. Hospitals have been told to conserve power in non-clinical settings and set their thermostats to 68 degrees Fahrenheit. According to the Daily Mail, staff were even told to turn off printers.
Thanks to Australia’s disastrous net-zero carbon emissions schemes, selling off our resources to multinationals, and failing to tap into the resources ourselves, prices are going through the roof.
That is, if you’re under a roof.
The great Australian dream of owning a home is quickly turning into a nightmare. It is, in part, because the housing market is doing so well. Housing prices have continued to rise for decades. Meanwhile, the interest rate has been low—allowing people to borrow money easily from the bank. At the start of the covid crisis, economists warned that house prices would fall. Instead, they leapt by 24 percent in 2021. The average homeowner found themselves au$131,236 richer on paper. Houses have been selling at break-neck speeds. Most sell within 32 days.
At a glance, this may seem like a good thing. But as “Housing: Taming the Elephant in the Economy” showed, this is bad news for the young families of Australia.
For those looking to buy, it just got au$131,236 harder. Since 1995, homeownership under the age of 35 has halved. Most properties are owned by those 65 and above. The rising prices boost the wealth of owners, while shutting out those who do not.
But the signs aren’t so good for those stuck with variable mortgages either. As the report sites, “The housing system elephant is not only a beast now poorly grasped by policy makers, it is also one that is rampaging through the economy.”
The average house in Sydney is now well over au$1.3 million. Most everyday Australians don’t have that sort of money in their back pocket. But driven by that dream of homeownership, many have taken out staggering loans to get a foot in the door. Cheap loans to offset the covid slowdown only made that easier.
And then the interest rates went up.
Twice in as many months, the Reserve Bank of Australia (rba) has raised cash rates. It has gone from 0.1 percent to 0.85 percent. The rba sets the rate at which banks loan to each other. Most banks take that rate rise and pass it along to their customers. rba Governor Philip Lowe has announced the rate is likely to reach 2.5 percent by the end of the year. Customers with a few hundred thousand dollars in variable loans will most certainly feel such a rise. Anyone with a au$600,000 mortgage would be paying an increase of au$725 per month.
Considering also the fact that in 1990 the interest rate was 17.5 percent, it is easy to imagine the rate increasing further.
The outlook is bad for renters as well, as people with investment properties will likely push the interest rate rise on to their tenants.
Some of the big banks are predicting house prices will slow through the remainder of the year, then drop in 2023. If house values drop below their purchase price, Australia will be facing the great financial collapse of 2008, only much, much worse.
Mr. Lowe has predicted inflation will hit 7 percent by the end of the year. It is currently at a 5.1 percent. Many are blaming the increase on the Russia-Ukraine war. Worldwide disruptions to wheat and oil supply is certainly a factor. But for Australia, the United States shutting down oil production is also significant. Handed a monopoly once again, the remaining oil producers of the world have raised costs.
Australia quickly felt the pinch. The government temporarily halted the 30 cent fuel tax, but diesel and unleaded costs leapt to over au$2 per liter. Depending on the fuel cycle, prices reach as high as au$2.20 per liter. When the government tax comes back in September, the price will rise further.
The effect on everyday consumers is obvious: Paying more for fuel. But it doesn’t stop there.
Farmers need trucks to take produce to market. This means higher costs in the trucking and shipping industries. This in turn leaves shelves empty, or stocked with outlandishly expensive items.
The steep cost of groceries—particularly meat, fruit and vegetables—has also been exacerbated by flooding throughout Queensland and northern New South Wales in the early parts of this year. A photo went viral of a single head of iceberg lettuce selling for an astounding au$11.99.
The Reserve Bank of Australia’s response to the rampaging inflation is to raise interest rates. With more money being paid on mortgages and loans, the government is hoping to curtail spending, and bring prices back to normal. But it’s just a theory.
And it won’t work. But there is a solution to Australia’s current crises. But it won’t be brought about by the rba or the government. It was the ideas, principles and decisions of these institutions that got us to this point. Pursuing illogical net-zero emissions and other green energy plans has left Australia in this current mess.
But blaming the government or the previous administration is also not honest. After all, they were voted in. It is we, the people, who must also shoulder responsibility because ultimately Australia’s various crises are not physical. They are spiritual.
‘Consider Your Ways’
Australia certainly isn’t alone. As all the West feels the sting of similar economic pain, we should take to heart the admonition given long ago through the Prophet Haggai. At the time, the Jews had returned to Jerusalem from captivity in Babylon (Ezra 5:1). They were sent to rebuild the temple—to re-establish God at the center of their nation. Yet rather than work on that relationship, they focussed their energies and resources to build their own homes. They looked to their own wants and desires. And it led to failure.
It wasn’t as though the people didn’t produce—they did. But it was getting them nowhere. As Haggai charged the people, “Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes” (Haggai 1:6) The people had some wealth coming in, but they were not prospering. They had lost their focus. Their lives and endeavors were fruitless.
“Thus saith the Lord of hosts; Consider your ways” (verse 7). The minds of the people had to be reoriented. They weren’t focussing on God. They had become caught up in chasing material wealth.
“‘You went for much, and found little; you brought that home, but I blew it away!—Why?’—the Lord of hosts asks, ‘Why?—Because My House is a heap of ashes, while you all run to your own homes! Therefore the skies withhold dew from you, and the earth withholds her produce. So I proclaimed a drought upon the land, and upon the hills, and on the corn, and on the wine, and on the oil and on whatever grows from the ground, and upon man, and upon beast, and on the works of your hands’” (verses 9-11; Ferrar-Fenton translation).
God cursed the land, the weather, the produce, and everything the people were doing because they neglected Him.
Now look at Australia today: floods, fire, drought, crops rotting in the fields for lack of pickers, empty shelves, skyrocketing prices. These are not issues that will be solved by lifting minimum wage. That is just wages to be put “into a bag with holes.”
The solution for the nation and for individuals is in re-establishing a relationship with God. That is what the Jews had to do. “Then Zerubbabel the son of Shealtiel, and Joshua the son of Josedech, the high priest, with all the remnant of the people, obeyed the voice of the Lord their God, and the words of Haggai the prophet, as the Lord their God had sent him, and the people did fear before the Lord” (verse 12). That fear is respect. Do we respect our Creator, who gave us all these blessings in the first place? For far too long Australia has been engrossed in its own material blessings. Now our loving God is removing them and forcing us to think more on what really matters.
As the material blessings evaporate, and Australia continues to flounder in these stormy waters, take time to appreciate what we have, and more importantly, who gave it to us. Through the long history of the British Empire, Australia had a connection to God. (You can read more about that in our free book The United States and Britain in Prophecy.)
God does not punish arbitrarily. He will do what He must to wake us up and get our focus back on Him. Prophecy indicates such a change in focus is too late for our nations as a whole—they will need to turn under much greater duress in the coming days. But what about you, the reader? Are you startled by the state of the world around us? Do you want to avoid the curses of national disobedience and receive the blessings of obedience? There is a great future ahead if you do. Read The United States and Britain in Prophecy, and hone in on what really matters—a relationship with our Creator.
As the storms batter our nations, take time to remember God’s admonition, “Consider your ways!”