It made my heart sing last night to hear Emma Alberici tell Mathias Cormann a few home truths in one of the best interviews I have seen in recent times.
Alberici asked, if an $18 billion deficit was a “budget emergency”, what do you call a deficit of $35 billion?
Cormann launched into his “they lied” spiel which seems to miss the point entirely. Under pressure he went for the economic security blankie, “Labor was taking Australia to a debt of $667 billion within the decade.”
Here was my hallelujah moment when Alberici replied “They were your figures. With respect that is a nonsense figure that you continue to trot out that you made up yourselves. In the PEFO (Pre-Election Economic and Fiscal Outlook) figure, which is the one you really should be referring to, it was about $370 billion.”
Cormann’s flustered response was ‘was not…did not…you leftie Labor apologist you’, or words to that effect. He said that he didn’t “create the figure” and that “we absolutely stand by it.”
As has been pointed out countless times, not only was the figure of $667 billion debt a guesstimate for a decade hence, not only was it gross debt instead of the more often quoted net debt so it contained the $58 billion gross debt that Howard left, it also contained a whole lot of Coalition revenue and spending decisions and economic assumptions, so could hardly be attributed to Labor. It is such a spurious claim it won the Golden Zombie Award for the lie that just won’t die.
Cormann admitted that, since coming to office, taxation revenue has been written down by $90 billion. If revenue is that volatile in the space of less than two years, what validity can be given to a purposely inflated figure in ten years’ time?
In August 2013, the Labor Party published the updated Economic Outlook and shortly afterwards, the Secretaries of Treasury and Finance published the Pre-Election Fiscal Outlook which largely agreed with the state of current affairs and projections in Chris Bowen’s document.
Four months later, Joe Hockey produced his first fiscal document with his December 2013 MYEFO.
Both Bowen’s Economic Update and PEFO estimated nominal growth in GDP for 15-16 and 16-17 to be 5.25%. Hockey slammed this as unrealistic and revised the projections for these two years down to 4.75%, leading to a write-down of $37.8 billion in tax receipts over the forward estimates.
By the time of his first budget in May 2014, despite saying that nominal GDP growth remained weak (3% estimated for 2014-15), Hockey upgraded the 16-17 growth to 5%.
Moving along to yesterday’s budget, we are told that nominal GDP is now expected to grow by 3.25% in 2015‑16 before picking‑up to 5.5% in 2016‑17.
So despite results showing that both parties overestimated nominal GDP growth, and the unexpected rapid dive in commodity prices, Joe has now declared anticipated growth to be even higher than what he slammed Labor for and what Cormann described as “a lie”.
Write down future projections, write them up again, and all’s well.
Talk about “having a go”!
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