Day to Day Politics: Economics, Coalition style.
Saturday 8 July 2016
1 On Friday 30 September, on the eve of two football finals, the start of school holidays and a long weekend that would concentrate the attention of a large portion of the Australian population, an event took place relevant to the standard of living of all Australians.
The Treasurer, Scott Morrison, and the Finance Minister, Mathias Cormann, revealed on the Treasury website the final budget figures for 2015-16.
And in a close game they just made it before the final siren because the Charter of Budget Honesty requires the release of each budget outcome be released by 30 September each year.
Unlike the football codes who would be hungry for all the media coverage they could get, Morrison and Cormann didn’t require a press conference or media release. They made sure they would get little attention. The opposite of what one would expect from a major economic announcement.
In the past when talking about budget repair, a return to surplus, paying off the debt and dealing with a budget emergency they never shied away from publicity. After all it was those tasty bits of scare mongering that saw the Coalition elected in 2013 and16.
Why all the secrecy, you might ask. Haven’t they been kicking a few economic goals? Well not when you look at the outcomes.
The 2015-16 budget deficit was $39.6bn or 2.4% of gross domestic product.
In May 2014 when Joe Hockey delivered his budget the forecast deficit for 15/16 was $17.1bn. But it blew out. : reports that
“Much of the blowout was due to decisions of the Coalition government. Foregoing revenue from the carbon price, gifting $8.8bn to the RBA and ramping up spending on border protection without any offsets were vital”.
Now that’s a blowout that would make a professional ‘balloon blower upper’ proud.
And talk about spending like a drunken sailor. After hearing Scott Morrison say they didn’t have a revenue problem but one of spending too much. Spending has increased astronomically:
“In 2012-13, the last full year of the previous Labor government, the ratio of government spending to GDP was 24.1%. In 2014-15, this had risen to 25.6% and, in 2015-16, it rose to 25.7% of GDP. The 1.6% of GDP blowout in spending between 2012-13 and 2015-16 is about $26bn and accounts for more than the blowout in the deficit from the time of the 2014 budget”.
No wonder Morrison and Cormann didn’t want a press conference and preferred to hide in the top row of the MCG members stand.
At June 2016 net government debt rose to $296.4 billion which was up from $153 billion when the Coalition gained power on the basis that they were the better economic managers.
Hang on, I’m not finished yet. As a percentage of GDP, net government debt has risen from 10% to 18%, which is not far from the all-time high of post second world war.
At year’s end, there will be no football finals to give cover, although Carols by Candlelight might be attractive. They have to release MYEFO and net government debt will be screaming past the 60 year high.
And not since we were funding the Vietnam War in 1971/72 has net debt been near $420.4bn which is 25% of GDP in June 2016. The Credit Rating agencies will be looking down under with clear eyes.
For this mob to say they are superior to Labor in terms of economic management is akin to saying John Lord was a better player than Gary Ablett Snr. The deficit blowout is so bad they have had to borrow more to cover the difference.
Now if Labor were in power the Murdoch press would be after them with all the power that tabloid propaganda could muster.
What the Government needs is a miracle that provides a rapid growth spurt accompanied by massive revenue gains that might keep the Credit Rating agencies from the door, but I doubt it. Further increases in Government debt is the likely outcome.
Morrison did do some media appearances on the Friday mentioned but he was talking about sharks of the Cronulla kind. I was thinking about sharks of another kind.
“Luck is when enthusiasm meets opportunity”.
2 The Essential Poll again this week had Labor leading the Coalition 51/49. However there were some interesting results from their weekly survey.
Question. The Liberal/National Government has proposed holding a plebiscite on same-sex marriage. The Labor Party, the Greens and the Nick Xenophon Team are opposed to holding a plebiscite and want a vote in Parliament. Which of the following options would you favour to resolve this issue?
To resolve the issue of same-sex marriage, 53% think the Liberal National Government should agree to a vote in Parliament and 24% think Labor and the other parties should agree to a plebiscite.
Those most likely to think the Government should agree to a vote in Parliament were Greens voters (71%) and those who would vote in favour of same-sex marriage in a plebiscite (66%). 56% of Liberal National voters think their party should agree to a vote in Parliament.
Question. The Federal Government plans to hold a national vote on same-sex marriage in February next year. If the question was “Should the law be changed to allow same-sex couples to marry?” How would you vote?
58% would vote “yes” in a plebiscite on same-sex marriage and 28% would vote “no”. 14% did not know how they would vote.
This represents little change since this question was asked in August.
Those most likely to vote “yes” were Greens voters (89%), Labor voters (71%) and those aged 18-24 (71%).
48% of those aged 65+ would vote “no”.
Question. Do you agree or disagree that access to the Internet is becoming an essential service – like access to water and electricity?
88% agree that access to the internet is becoming an essential service. Only 7% disagreed.
Documents released under freedom of information show that Malcolm and Lucy spent $198,500 for functions during his first six months as prime minister.
If anything the Bank CEO interviews are doing nothing more than confirming the need for a Royal Commission. A Poll taken by the think tank The Australian Institute found 68 per cent of respondents support the greater scrutiny of a royal commission. It invites the question as to why former Liberal Party federal director Brian Loughnane has been recruited by the Commonwealth Bank as an adviser. Is it to advise them of the best way to avoid a Royal Commission?
Just thought I would fill you in. This from the Guardian:
“The global temperature has increased to a level not seen for 115,000 years, requiring daunting technological advances that will cost the coming generations hundreds of trillions of dollars”.
According to the scientist widely credited with bringing climate change to the public’s attention.
Depressed? Yeah, so am I but I only have a few years left.
Oh, and did you know that Prime Minister Justin Trudeau decided that Canada should have a Carbon Tax?
Well we did set a wonderful example for a while.
My thought for the day
“A Death Certificate might show proof of death but the legacy you leave behind will demonstrate how you lived”.
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Great article, but lacking in the technicalities area……. “Balloon Blower upper”?? Now John, we know you are under pressure, but stone the crows mate, everyone knows knows the term is “Balloon Blower Upperer”……….
Bloody good article John, Thanks mate 🙂
The Libs must be getting desperate, they seem to have given up on trying to rein in their deficit by getting granny to pay $5.00 to visit the doctor but instead we are being treated to Simon Birmingham buttering up the public by letting us know about the excesses of private school funding. Desperate times indeed when they’re contemplating hitting Howard’s “aspirationals”. Next thing you know they might even think about doing something about “mums and dads investors” and negative gearing..or is that too optimistic. Given that Turnbull has caved in to everything else, I won’t get too hopeful.
I wonder if those who voted for IPA groomed James Patterson to take a seat in the Senate are now regretting this waste of a vote.
Patterson has the solution to our national debt and that is to sell off ‘Blue Poles’ and possibly the rest of our national treasures to follow.
This gives you a stark illustration of the conservative world view held by many in the coalition : just sell off everything that is publicly owned. Everything from our essential services infrastructure to our national arts heritage. Nothing is sacred and when it’s all been flogged off for a quick money hit they will turn to idiotic slogans, telling us all to be agile ans innovative and ‘jobs ‘n growth ‘ will follow.
This was not just a throw away line from the Senator, this is the essence of the IPA , a group who are laughingly known as a ‘think tank’.
I guess Gina or Rupert might have a ‘Blue Poles’ sized hole on their walls that needs to be filled.
Or maybe one of their 1% mates really,really needs it to make their art collection complete.
Suitable sweeteners will accepted by the Liarbril Party.
James Patterson just regurgitates his Young Liberals and IPA lines – he really doesn’t have a clue. He said that private schools are “better at conveying the values of a good work ethic, caring for your community and your neighbours and being raised in a way that is socially conservative.”
Countless studies have shown that just isn’t true but the elitists cling to their belief that their gated educational institutions are better just because they cost more. Sure the kids will have more “stuff” but things like birth weight, parent education and the time parents spend with their children have nothing to do with the school you go to but a lot to do with how well you will achieve.
Kaye, all my friends and my family had a proper public school education.
Great article from John Lord.
Great report, John. And who says you weren’t as good as Gary Ablett Sn.? Big Bob Johnson perhaps, or ‘Bluey’ Adams, but really, Ablett was a pussy.
I wouldn’t mind so much if the money was to be spent on some thing useful, but he wants to waste it paying off the rich man’s debt.
James Patterson thinks : “private schools are better at conveying the values of a good work ethic, caring for your community and your neighbours and being raised in a way that is socially conservative.”
Those private school boys certainly didn’t behave civilly in Malaysia. One of them asked arrogantly:” please respect our privacy.”
Yes we will when you start respecting other countries’ values and religions.
I remember Patterson writing most inane articles on The Drum online..
Heard someone say the boys are suffering from having their names broadcasted across the media. Sadly except for one name, the rest are nameless. Another, son leading diplomat was named once.
Why was this so. Who protected their names.
As an artist with a Dip Fine Arts I guess you know my opinion of James.
Perhaps cut it up and sell it one pole at a time 🙂
Yes. those young Liberals certainly showed the results of their private school upbringing recently in Malaysia. Morals, manners sadly lacking in their education. Spoilt rich brats.
John, you’re criticising the Coalition for increasing the deficit but please bare in mind that this is actually a good thing. The deficit should be enlarged from Morrison’s 2.4% of GDP to whatever is necessary, perhaps 5%, 10% or 15% of GDP so that the economy is stimulated sufficiently to get unemployment and underemployment down to zero. As a currency issuer the federal government is able to literally ‘create’ Australian dollars without any borrowing required. The issuance of treasury bonds is an unconnected parallel activity that carried on from an earlier era and this issuance does not fund the federal deficit.
You also make an alarming statement about the federal governments debt.
“At June 2016 net government debt rose to $296.4 billion which was up from $153 billion when the Coalition gained power on the basis that they were the better economic managers. Hang on, I’m not finished yet. As a percentage of GDP, net government debt has risen from 10% to 18%, which is not far from the all-time high of post second world war.”
Well quite frankly by running larger deficits than they initially promised they are better economic managers than they otherwise would have been. Bare in mind most of Abbott’s proposed cuts were blocked by Labor and the Greens and some independents, again a good thing, and that this has enlarged the deficit.
For a nation with a sovereign currency like Australia the federal government can issue the currency at will, without borrowing, and the ‘debt’ is not actually debt as we commonly understand it but is just a record of additional money issued into the economy. In other words as an economy grows the money supply must grow by a proportionate amount by running federal deficits, and the Australian dollar is really just a token like monopoly money. The deficit however cannot go beyond the capacity for productive economic growth (when unemployment reaches zero and all profitable business opportunities are met) as inflation will then result as in this case too many Australian dollars would then be chasing the quantity of goods and services available in the economy.
Progressives should not fall into the trap of also calling for balanced federal government budgets or even worse surpluses or worry about the federal governments ‘debt’ as this is the destructive mantra of the Monetarists and neoliberals that took control of both sides of politics in the mid 1970’s. This ideology was designed to shift wealth to the already rich elites primarily in the now bloated financial services sector and has little to do with productivity and creating jobs – in fact the opposite has resulted, with the biggest rorts being in that sector. WHAT SHEEP WE HAVE BEEN.
Many progressives have become fiscally more conservative than Menzies – who was a Keynesian by default because the ALP then were then Keynesians and if unemployment got too high he would have lost the next election. You cannot call yourself progressives if effectively you are co-conspirators in keeping millions of Australians unemployed for no valid reason.
Other points about the Coalition not facing up to the appalling revenue side deficiencies such as allowing excessive concessions such as superannuation contributions (~$30 billion p.a.), negative gearing for property investments and the 50% CGT concession, chronic tax evasion and big subsidies for the mining/resources industry and the subsidy of government backing for the major banks could have been discussed. What about the negligible royalties and taxation revenue from the mining/resources industry for exploiting the nations natural resources?
How about hitting the government for the rort of superannuation fund management fees that cost mostly ‘mums and dads’ about $25 billion per annum. What about the recklessness of the real estate speculation bubble and the dangerous levels of private debt that is waiting to collapse leaving possibly hundreds of thousands of ‘mums and dads’ bankrupt? What about the approx. $40 billion per annum mortgage repayment windfall for owner occupied and investment properties received by the major banks arising from the real estate bubble (estimated as about half of all mortgage payments).
At Terry2, you missed the important part NO tax payer money for sport,and heccs type repay system for top 1% of top earning sport people.The fantasies of these self deluded IPA and LNP drop kicks is mind boggling [for those of us here at AIM ]. To those forementioned would not recognise one of us TAXPAYERS if they ever emerge from their secluded hideouts.MF.
Andreas, while what you say is correct, we are unfortunately living in a parallel universe here. John Lord is commenting on the failure of the Coalition to deliver what they promised. They promised a surplus and on that they have failed miserably. They have failed in all the neoliberal economic indicators that they believe in. Yes, we need much bigger deficits and ones that are specifically targeted to reduce unemployment and create growth, but the Coalition don’t believe that. They think reduced spending is the way to go. As wrong as they are on that score, they have failed miserably to achieve even what they believe in. John Lord was using their own indicators to highlight that.
As Abbott blocked many of Labor’s, especially Gillard’s, saving measures whilst accusing them of being big and wasteful spenders. Also isn’t what the deficit money is spent on important? If that’s the case then this government’s blowout is wasteful.
The point here that you missed is that the Coalition and especially the right wing MSM have made huge dramas over government debts. Because of that it’s what this government should be judged on disregarding the economic reality of it, yet it’s what they are attempting to bury. This is especially important because they won elections on their attacks on debt so should be held to account on that unless they come out and state they were wrong, highly unlikely.
Oh the irony.
The SA statewide blackout probably wouldn’t have happened if there was a carbon tax. Part of the tax’s purpose was secure power supply and gas was in the mix.
So the L-NP to supposedly save Whyalla from being wiped out have wiped out the entire State for a day.