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Morrison heading down the wrong path

Watching Scott Morrison’s interview with Leigh Sales, on 7.30 Wednesday night I was hoping to hear something…anything that indicated that he possessed a better grasp of the economy than his predecessor. Sadly, all I heard was a lot of waffle, a collection of weasel words, the usual spin and a refusal to look at what is 50% of a balanced economy, i.e. revenues.

Raising taxes, he said, was code for increased spending. He did not agree that the economy has worsened despite Leigh Sales listing the comparison figures on unemployment, the exchange rate, GDP growth, the deficit and the debt, all of which clearly identified a worsening position since Labor left office.

He talked about getting people back to work, how good it was to see the participation rate rising. But there was nothing about job creation, where the jobs for 780,000 participants would come from or how the 156,000 job vacancies could be improved. There was no plan.

The Treasurer was already in denial about the comparative state of the economy and he was already looking away from where the real problems are, away from the point where he needs to begin his much anticipated restoration.

Prime Minister Malcolm Turnbull has made his first serious mistake. He has committed his government to continue with the failing austerity measures introduced by Joe Hockey in an attempt to bring the budget back to surplus.

If he is setting Morrison up for a gigantic fall and using that as a reason to change tack, to move away from this obsession for a budget surplus and embark upon a demand driven economic recovery via a stimulus, it isn’t going to happen soon.

Therein lies the problem.

The focus on government should not be on the deficits but on the prosperity and inclusion that full employment delivers. People are easily frightened by fairy tales of terrible consequences when new ideas are presented. That sense of fright is driven by a lack of education that leaves people unable to comprehend how the economy actually operates.

Deficit budgets will not bring about terrible consequences. Properly targeted, they will increase employment, tax revenue, drive demand for increases in production, higher wages and better living standards.

Neo-liberals magnify the fear of terrible consequences, by demonising what are otherwise sensible and viable explanations of economic matters. They know that by elevating these ideas into the domain of fear and taboo, they increase the probability that political acceptance of the ideas will not be forthcoming. That is what I suspect Morrison will do.

Morrison has demonstrated already he is no more up to the job than Joe Hockey. If he thinks we have a spending problem he is heading down the wrong path. We have a revenue problem clearly identified by excessive tax expenditures.

Morrison’s announced strategy advances the neo liberal ideological agenda: present simple “truths” guiding government fiscal policy and the public will accept it. Neo-liberals have vested interests in ensuring that the public does not understand the true options available to a government that issues its own currency.

neo They present these simple “truths” by advancing a sequence of myths and metaphors that they know will resonate with the public and become the ‘reality’. Myths such as, “the country will go broke,” or “we simply can’t afford it,” or “we must live within our means.”

That last myth is the most dishonest of them all because it projects the image of a household economy which, in the case of a currency issuing government, is simply false.

Morrison acknowledges the level of Government spending has not fallen during the Coalition’s term in Government. “Expenditure as a percentage of GDP is over 26 per cent, which is where it was at the height of the GFC,” he said. “This is not something that we believe is sustainable.”

Government spending is as high now as it was during the height of the GFC and increasing. And so it should. In the June quarter, government spending was the only reason we avoided a quarter of negative growth. That fact alone should be ringing bells, but it isn’t.

Ideally expenditure as a percentage of GDP should be around 25%. But there are two ways to tackle that. One is to raise revenues, the other is to restrict outflows, which doesn’t necessarily mean spending.

In the current economic climate it seems no government has the courage to increase taxes. However, restricting outflows without cutting direct government spending can be achieved quite easily.

Tax concessions on capital gains, negative gearing, superannuation and mining subsidies are at obscene levels. They blatantly favour the wealthy. This is where Morrison needs to concentrate his efforts. If he fails to recognise this obvious area of savings he will be of no better value to the country than Joe Hockey.

That is why, for the economy to climb out of the mire, Malcolm Turnbull needs to reverse government fiscal policy. He can no longer rely on the RBA to restrict aggregate spending. Interest rates are now so low, going lower won’t work anymore.

He needs to rebalance the scales. Current tax expenditures weigh too heavily against tax revenues. Superannuation is not an economic driver any more than capital gains. Negative gearing inflates both the property and rental markets which in turn reduces disposable income.

Raising taxes is not a code for spending? As a confidence builder, it was not a great start from the new Treasurer.


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  1. Ricardo29

    Well said John. I think Morrison’s new monicker should be motor mouth. Talk about talk. On this occasion I thought Leigh Sales did a reasonable job but it seems clear he doesn’t understand that cutting expenditure won’t improve employment. Anyway, everything you said.

  2. Richard

    Several mistakes. The new PM appointing Morrison as Treasurer. Mistake number one. Second, the new PM leaving the new Treasurer to it. This is leaving the right wing of the party still in control to create havoc.

    Sadly don’t expect very much from Morrison, except the same hitting on and marginalization of people already doing it tough.

    What are Morrison’s economic credentials? Nothing. An ideologue with simplistic mantras in charge of the Treasury. To refuse to consider the revenue side of the equation means the corporates who are not paying any taxes continue to operate and the question of social and economic fairness is not addressed yet again.

  3. babyjewels10

    My thoughts exactly. Just the same ol’ same ol’. He’s a good Abbott man – just lie in your teeth, keep lying and denying and don’t back down and some fools will believe you.

  4. Kaye Lee

    Oh for a politician with the courage to say it’s not the amount we are spending that’s important, it’s what we are spending it on that matters. If our government is providing ‘free’ health and education as well as safety net welfare payments, affordable housing and public transport, then we need less disposable income. There are things that only governments can provide. Leaving individuals with a few dollars more will not lead to better services.

    Turnbull and Morrison want us all to invest but, for some reason, don’t see government spending as an investment that brings a return (probably because they waste so much of it on ‘national security’ and politicians’ entitlements and media monitoring). If you can borrow at around 2% and invest for a greater return, why wouldn’t you? The government has a guaranteed income stream so paying interest is not an issue – merely a cost of doing business.

    If the government employs people they firstly save on welfare payments and secondly collect both income tax and GST from increased spending, maybe even stamp duty if they can afford to buy a house….plus the government then provides the services of that employee to the public.

    Reducing spending is what you do when you have no capital, no options, and no imagination.

  5. fozzie747

    I can only agree. Morrison was full of more shit than a colostomy bag.

  6. Mary Mary Quite Contrary

    Yes I watched a total bully in flight on the 7.30 report last night that was Scott Morrison.What a disgrace.We know where you headed Scott. Demonize the unemployed, cut taxes of the rich,blame the poor. If the 7 Eleven debacle doesn’t educate us to what unfettered Capitalism using the THE GOVERNMENT RULES 457 etc is capable of achieving then we have lost the plot.The Conservatives are not interested in FAIR, They have an agenda. People! all it takes are Dumb Puppets in Parliament and yes even you; Malcolm. Powerful business lobbyist in pollies ears and you get this crap. Capitalism without egalitarianism is just the wild west. And its exactly what business and pigs in troughs politicians want .The time is right for anarchy. Oh! yes and GST raise to 15% is a certainty: watch how this manifest’s.

  7. David Stephens

    And remember that the ’25 per cent of GDP’ target was just a figure plucked out of the air 30 years ago at the start of the Hawke government. It may even have been appropriate then (though this is unlikely); it will not be appropriate for ever.

  8. John Kelly

    From Damien Lataan, on Facebook
    I listened to Morrison last night and all I heard him do was interrupt Leigh Sales asking him specifics and him simply repeating over and over again the same old tired worn out clichéd mantra’s about less tax and less spending means more jobs. The blokes delusional. A complete waste of space with nothing more to offer the Australian people than he had to offer boat people seeking asylum here in Oz.

  9. Kaye Lee

    Surely spending should be on the basis of need rather than percentages.

    I read an analysis of the defence budget that said aiming to make it 2% of GDP is silly. It leads to indiscriminate unnecessary spending to try and use up all that money. Do we really need strike force capability? Who are we planning on attacking?

    There’s a good place to start with cutting spending Scott. Cancel the fighter jets and submarines and hey presto we’ve got kazillions to spend. Increase foreign aid and we won’t need them.

  10. Carol Taylor

    I noted from Morrison a quite aggressive tone that it would be himself and Corman who would be in charge and that Turnbull would be expected to take a far more low key approach. It certainly gave the impression that Morrison was making it clear that it was he and not Turnbull who was in charge of proceedings. I wonder how Turnbull will work with that one?

  11. Neil of Sydney

    He did not agree that the economy has worsened

    Hockeys first deficit is similar to Swans last deficit so there has been no worsening of the debt. Just similar deficit budgets to what Labor were running. And unemployment has only increased a little bit. Nothing like the massive increase under Labor.

    Deficit budgets will not bring about terrible consequences. Properly targeted, they will increase employment,

    History proves that wrong. Hawke/Keating and Rudd/Gillard ran deficit budgets and it had no effect on reducing unemployment. Under Rudd/Gillard unemployment always kept increasing.

    Costello ran surplus budgets and unemployment kept falling from 1996-2007 until it reached 4.3%.

  12. Carol Taylor

    With Morrison stating that anything achieved must come from “savings” rather than increasing revenue. Shades of Tony Abbott… So where are these savings going to be coming from? I would have thought that as far as pruning spending went that we’re already down to bare bones.

  13. fozzie747

    Morrison, like Abbott, seems to be unable or unwilling to control his Palilalia.

  14. John

    Conventional monetary policy has failed. Central banks have exhausted their existing toolboxes and need to explore some innovative alternatives.

    Willem Buiter, chief global economist at Citigroup, is recommending “helicopter money drops” to avoid an imminent global recession, stating:

    A global recession starting in 2016 led by China is now our Global Economics team’s main scenario. Uncertainty remains, but the likelihood of a timely and effective policy response seems to be diminishing…

    Helicopter money drops in China, the euro area, the UK, and the U.S. and debt restructuring … can mitigate and, if implemented immediately, prevent a recession during the next two years without raising the risk of a deeper and longer recession later.

    Adding money to the economy will not drive up prices until demand is saturated and production has hit full capacity; and we’re a long way from full capacity now. Before that, increasing “demand” will increase “supply.” Producers will create more goods and services. Supply and demand will rise together and prices will remain stable.

    M1 changed hands seven times during 2012 – from housewife to grocer to farmer, etc. Since each recipient owed taxes on this money, increasing M1 by one dollar increased the tax base by seven dollars. Even with some leakage in those figures and deductions for costs, all or most of the new money spent into the economy might be taxed back to the government. New money could be pumped out every year and the money supply would increase little if at all.

    Full post with links here;

    Raining Money on Main Street

  15. Shevill

    “Motor Mouth Morrison” (AKA M3) you cannot spend what you have not got, so income IS part of the equation. Making ALL the big companies operating businesses in Australia HAVE to be made to pay tax at the appropriate rate IN Australia, otherwise what is the point of them being here-other than ripping us off. Superannuation concessions for the wealthy and other income sidelines need critical overhaul. M3 is still taking the easy way out, jobs have to be available for people to apply for, whole new industries in RET should be a priority, as should a fibre to the premises NBN. Sadly, all we have done is remove an inadequate PM with a smooth self interested talker in MT, with a bully boy in M3, with little concept of what we need to fire up our economy. Leigh Sales revealed all this in her interview.

  16. kerri

    I watched that interview too John Kelly and apart from thinking “groundhog day” I also noted the usual spin that everyone on welfare is a lazy couch sitting no hoper and the assertion that our elderly are a burden to society!
    Morrison was never going to be any better than Hockey. He plays a punitive big stick game wherever he is put. Why on earth did the people of Cook vote for him and how on earth did he get away with slandering Michael Towke? I did some research on Morrison’s church of choice Shirelive and I find it very disturbing that he had no problem imprisoning and torturing asylum seekers whilst claiming to follow Jesus teachings of caring for the poor and downtrodden. In many interviews he has protested that the two beliefs do not conflict which makes him either a loon or a liar but either way an extremely dangerous man.
    Which of course reflects on Turnbull’s inability to see that or his deals with the faceless men of the extreme right

  17. Matters Not

    unable or unwilling to control his Palilalia

    While he does engage in ‘palilalia’, he also belongs to a sect that engages in ‘glossolalia’.

    Never sure which ‘lalia’ is on display at any particular time.

  18. John Kelly

    From Brendan Gilroy on Facebook
    Morrison into spin from day one. Pain for unemployed but not for tax avoiding and tax minimising small and large employers. Retail and security sectors pay cash wages. Against the law. ATO understaffed.

  19. Mary Mary Quite Contrary

    Great Dot connecting Brendon. All part of their final solution.

  20. allanr44

    Is Prime Minister FopJacket smart enough, and devious enough to delegate the management of the treasury to morrison and cormann, and stay out of their way? Not forever, of course. Just until they’ve trashed it enough for him to come in as the white knight and save us all from ruin.

  21. Mary Mary Quite Contrary

    Hey Neil if people had sustainable housing. They may put their money back into the economy.

  22. John Kelly

    From Annette Thain on Facebook
    Morrison made a fool of himself last night on 7.30 saying Australia didn’t have a revenue problem, only a spending problem. Only the night before Ken Henry told Leigh Sales that Australia’s revenue is down and our spending is up. Nobody believes that we can address the deficit and the increasing costs of an aging population without increasing in revenue. Morrison knows that too, it’s just a cover story to justify spending cuts.

  23. Kaye Lee

    Watching Turnbull, Morrison and Brough trying to work together will be interesting. All very self-assured, all ambitious, but all with very different views. We then have people like Christensen and Bernardi and who knows how Andrews and Abetz will react. Malcolm’s methodical “cabinet process” will be a bloody affair.

  24. David

    Hockey and now Morrisonscum in charge of a 4 trillion dollar economy, with economic credentials any similar lame brain can get Googling and reading the internet. It’s not a joke it is insanity. Whoever gave Turnbull marks for putting the country in the hands of a happy clapping scumbag, is living in the wrong country., cuckoo land,

  25. kizhmet

    Morrison and Hockey – the hard right Dumb and Dumber comedy act. Only the joke is on Australians duped into believing Morrison is an improvement. Morrison makes Hockey look like a favourite Uncle.

    The momentary flare of hope extinguished Sunday when the announcement was made. How much worse can it get? We are about to find out.

  26. Neil of Sydney

    Only the night before Ken Henry told Leigh Sales that Australia’s revenue is down and our spending is up

    OK revenue is down but how much is it down? Hockey just produced a $40B deficit for his first budget. Is revenue down $40B compared to what it used to be? Henry also said our spending is up. By how much is it up?

    And we all know who increased the spending. The Rudd/Gillard govt. Once spending is up it is almost impossible to reduce because all people want money spent on themselves. Almost nobody would vote for an decrease in spending.

  27. Roswell

    Neil, according to the OECD, Rudd/Swan saved 230,000 jobs during the GFC due to their austerity measures. You know that. You’ve been told a thousand times.

  28. Michael Sanderson

    Great article particularly the statement “Neo-liberals have vested interests in ensuring that the public does not understand the true options available to a government that issues its own currency.” For this to take place would require reform of the banking sector.

    To ensure reform in the banking sector we need to repeal the reserve bank act 1959 and the currency act 1965

    All deposit-taking institutions must conform to traditional legal rules and principles, meaning:

    • Repeal the 1959 related financial legislation such as the APRA act 1998

    • The maintenance at all times by deposits taking institutions of a 100% reserve.

    • Punish FRB (Fractional Reserve Banking) as a constructive fraud.

    We need a wide ranging royal commission now.

  29. John Kelly

    From Andrea Ross on Facebook
    Yeah, I wondered when “the age of entitlement is over’ Mark II would resurface. Given his cold calculating way of treating the Asylum Seekers issue – I would expect Morrison to deliver an even more austere version than Joe Hockey could…. We can look to Morrison British Tory Government’s counterpart – Iain Duncan Smith to see how well it’s working for the poor over there ….

  30. my say

    this sweet talking PM,is no better than Abbott,It doesn’t matter which way you polish a turd
    it is still a turd,
    Where did Morrison get his credentials from to be a treasurer,He is no better than Joe Joe,I don’t know how much more the poor can give ,they have already given their pound of flesh and more,
    We have around 800.000 people out of work ,and no plan to create new jobs ,It is way past time their rich mates were told to pay their fair share of tax ,it would be a start .
    We thought Abbott /Hockey were bad , we ain’t seen nothing yet,

  31. lawrencewinder

    It is interesting to see how these “fellow-travellers” of “The Coots-With-Queer-Ideas-from-a-Parallel-Universe” (aka, IPA) are sounding increasingly desperate in resorting to “truths” as their fiscal theories bomb and their ineptitude becomes more obvious. They are incompetent; have always been and will get no better. Their desperation is a result of the fact that they know an increasing number of the public are aware of their inability to govern, only rule.
    The wheels on the re-badged “lemon” are wobbling already!

  32. kerri

    Morrison’s Treasurer credentials seem to have come from the popular press? Outside of AIMN, IA, and other online independant media they have all been saying he should be Treasurer for months! Frying pan to fire I say! Joe was, is an idiot but more easily argued with than the second messiah!

  33. Kaye Lee

    John Roskam, Shorten’s mate from the IPA, is on Q&A next week I think.

  34. win jeavons

    I am waiting to see our politicians and their wealthy backers live within the means they would condemn their elders and their future taxpayers live within. If you can’t lead by example have the goodness to shut up!

  35. Florence nee Fedup

    Couldn’t be possible we are going down wrong path now. The PM said Abbott had to go, because he was leading us down the wrong path. Must be in right one now.

  36. Carol Taylor

    I am wondering if the Libs are attempting a “kinder, gentler” face such as when Howard put Jovial Joe in charge of selling WorkChoices because at the moment it seems that Morrison and Turnbull are walking in different directions.

    A current example is Turnbull making all the right noises on the domestic violence issue, but nobody saw him put his hand up when…

    Thursday, Feb 12th, 2015

    The federal Senate today passed a Greens’ motion calling on the Abbott Government to reverse its funding cuts to domestic violence services.

    Or is Turnbull going to bypass Morrison and Morrison’s signals that we are about to enter a new austerity era by reinstating this funding?

  37. Pingback: Morrison heading down the wrong path. | THE VIEW FROM MY GARDEN

  38. Royce Arriso

    I take it everybody here understands that engaging with Neil of Sydney is a discourse of the ‘brick wall’ variety? Sorry if I have insulted your intelligence by asking, but needed to check. Post on, kindred spirits!

  39. Kate M

    Morrison is making the sort of noises you would expect from a conservative non-economist who has been in the job of Treasurer for three days. He didn’t earn the job due to his economic credentials – given he has none.

    This suggests to me that he earned the job to be the face of the Turnbull’s dirty-work. Because if there’s one thing Morrison has shown himself capable of in the last two years, it’s the ruthlessly delivery of unpopular news. So it’s no surprise that Morrison’s first words are about cuts. Turnbull is playing a political game here. The question is – can our economy survive it?

  40. RosemaryJ36

    I am not an economist, just a mathematician, but it seems to me that if GDP goes down and spending remains constant, it will nevertheless form a higher percentage of GDP than formerly. So is it lies, damned lies or statistics that our Treasurer is spouting?

  41. Jason H

    We need to break this destructive Neo-liberal fantasy we are told of governments that issue their own currency are like households and actually have government work in our interests. We need to do that by educating ourselves and spreading the word to everyone we know.

    The real limits to government spending are the real resources in the economy. If we don’t educate people, build infrastructure we need and look after our environment then we won’t have much of an economy in the future. It’s as simple as that. Unfortunately the Neo-liberal narrative tricks everyone, voters and politicians into a groupthink that is simply wrong. The governments budget is not the same as a household. The Australian government issues our currency so it doesn’t need to tax to be able to spend. Tax is simply a lever for controlling inflation and a lever for guiding the type of society we want.

    The government can always invest in the economy and we really can’t afford it not to. The key is that it doesn’t overspend and cause inflation but we are far from our inflation targets and we have close to 15% under and unemployed people who want to work. Let’s put the people to work who want to and build the things we need!

    Please llike the Australian progressive political party Facebook page and support change!

  42. lawrencesroberts

    Clever putting Scott Morrison as Treasurer. The political competitor is doomed to fail. Just like the old health ministry.

  43. jane

    All ‘scum has is rat cunning and the cruel pleasure of an Inquisitor as he rolls out the rack to torture yet another victim, as long as they’re poor or disadvantaged in some way.

    He and the Liars government have absolutely no interest in job creation, the welfare of anybody who isn’t obscenely wealthy, nor the country itself or the planet for that matter and that makes them extremely dangerous.

    Anybody who thinks Turnbull is the Liars Messiah is very sadly mistaken. He is leading the country down Liesalot’s twisted path laid down by the IPA and the wizened foreigner, Turdoch.

    The sooner they are chucked out the better and they shouldn’t have another crack until the crackpots have been completely removed.

  44. Michael Taylor

    Can’t argue with a word of that, jane.

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