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Number 2 for 2022: Worst debt blow-out in the developed world refutes Coalition claims of economic competence

We continue the countdown to our Top 5 most viewed articles in 2022. Number 2 goes to Alan Austin for this piece from April.

Worst debt blow-out in the developed world refutes Coalition claims of economic competence

Last Friday morning, just as Scott Morrison was spruiking his credentials on 3AW, Treasury updated Australia’s gross debt – a thumping $874.2 billion. The Coalition has now added a neat $600 billion to the nation’s debt.

Morrison told Melbourne voters “we know how to manage money” and “we will always manage better than Labor” and “Australia one of the strongest economies in the advanced world” and “you’ve got to keep control of your expenditure.”

Simultaneously, the debt data declared emphatically, “No, you don’t; no, you won’t; no, it isn’t; and yes, but you didn’t.”

There is no justification for adding $600 billion over the last eight and a half years, most of which has been global boom times. Over that period, all well-managed nations repaid much of the debt they needed during the global financial crisis (GFC). When the Coalition took over from Labor in 2013, Australia’s gross debt was just $271.7 billion. Labor had the misfortune to govern for only ten months of benign global conditions before the GFC whacked the world. Over that period, Labor reduced the debt by $4.7 billion.

Between the crisis hitting in late 2008 and the end of the GFC, which coincided with the end of Labor, the government borrowed an average of $43.5 billion per year. All of that was needed.

In the ensuing recovery, from the 2013 election until August 2018, when Morrison became PM and Josh Frydenberg Treasurer, debt increased by $53.4 billion per year to $538.6 billion. None of this was justifiable. During the Morrison years, which included the pandemic, debt blew out by $94.9 billion annually to today’s $872.4 billion. Some of this was warranted.

Why does debt matter?

There are two answers to this question – economic and political.

In economic terms, debt requires interest payments which in Australia today effectively replace spending elsewhere. Interest this year, according to last month’s budget, will be $17.5 billion, increasing to $26.3 billion by 2025-26. That’s money not available for health care, infrastructure or other priorities.

Interest payments also send wealth and income offshore. Last Friday’s Treasury data shows nearly half goes to non-residents. To the extent these are wealthy, foreign donors to the Coalition parties, this will be regarded by some as perfectly fine. To those troubled by the accelerating flow of wealth offshore, this is undesirable.

The debt does not pose any risk of Australia defaulting on repayments. Australia issues bonds in its own currency and can always print more Aussie dollars.

Coalition and media treachery

The real damage inflicted by debt in Australia is political. The Coalition and the mainstream media successfully persuaded millions of voters at the last four elections that debt under Labor was “spiraling out of control”, a “debt time bomb”, “skyrocketing”, “terrible economic mismanagement”, a “budget emergency” and “Gillard’s debt disaster.”

Of course, this was all malicious fabrication. The International Monetary Fund has published time series debt data for all 38 wealthy members of the Organisation for Economic Cooperation and Development (OECD). In Labor’s last full year, 2012, Australia’s general government gross debt was just 27.5 per cent of GDP, the OECD’s fourth-lowest. Only Estonia, Chile and Luxembourg had borrowed less.

It is now a thumping 77.0 per cent, ranking 23rd out of those 38 developed countries. That explosion of gross debt by 49.5 per cent of GDP is the worst in the OECD by far. Second worst is Costa Rica (41.2), then Greece (38.5) and Spain (30.4). Countries which reduced debt from 2012 to 2022 include Denmark, the Netherlands, Germany, Ireland, Iceland, Portugal and Hungary. See green chart, below:

 

 

So why no screaming headlines about disaster and destruction today? Because the purpose of economic data, according to the mainstream media, is not to provide information but to destroy Labor’s reputation by falsifying it.

The current campaign

If this is a general principle – that data is to be manipulated to condemn Labor – then is this occurring in other areas? The answer is yes.

Morrison said in Friday’s radio interview, “we need to keep going in the way we have, which has made Australia one of the strongest economies coming out of this pandemic in the advanced world.”

This has been a constant refrain since Morrison became Treasurer in 2015 and is the opposite of the truth. It has never been queried by any mainstream “journalist”. By any measure, Australia’s economic strength has slumped dreadfully since 2013.

Using the usual metric, annual GDP growth, Australia ranked in the OECD’s top nine through most of Labor’s tenure. In 2009, Australia was first. Ranking has tumbled steadily since then and is currently 27th.

Employment furphies

Morrison claimed, “We’ve actually got unemployment down in the middle of an economic crisis. Under Labor it went up.”

That is a barefaced lie – which the media should expose but won’t. Unemployment did not decline during the Covid crisis. It soared from 5.1 per cent in February 2020 to 7.4 per cent in June 2020. That was one of the world’s worst blow-outs, pushing Australia down the OECD table to 22nd placing. It has come down since then to 4.0 per cent. That currently ranks a modest 14th.

In contrast, Labor’s jobless rate increased during the GFC from 4.6 per cent to peak at 5.9 per cent. That ranked ninth, close to Australia’s best OECD placing ever. By December 2010, Labor’s jobless had recovered to 4.9 percent, which ranked fourth in the developed world, a new all-time high.

Deterioration across the board

Outcomes on wages growth, productivity, retail sales, median income, interest rates, the tax burden, budget deficits, spending, infrastructure investment and housing have all been demonstrably worse under the Coalition. The main variables to have improved since 2013 are export volumes and values, corporate profits and personal wealth.

So, are Australia’s mainstream economics writers just incompetent hacks? Or are they also deliberate malicious liars?

 

Alan Austin writes regularly for Crikey, Independent Australia and Michael West Media.

 

 

 

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8 comments

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  1. Phil Pryor

    Lying filth, defective idiot, repulsive propagandist, fantasising effwit, human blackholed blot, Morrison just stains and smears us in reputation and sense, as he is and always was, incapable of adequate, accurate, intellectual honesty. This ultradisgrace comes after a run including Howard, Abbott, Turnbull, and on into complete fictional mental masturbatory self adulation and even worship. I used calculations of net debt, and under Howard we had a run of c. Sixty billions p a for several years, stabilised by selling off and a mining boom. Rudd copped the GFC and so net debt went up, to 2013 when it got to c. 167 Bill. $ Then the Great Imcompetent Bullshit Government Farce began, leading to horribly high debt now, and a very high run of receipts and taxes in ratio to GDP. Every major indicator for a decade has exposed this conservative run of shithead, shyster, shonko showpony shouting scabbery as the WORST we have had, worst in the world of comparative nations. CRIMINALITY!!!

  2. New England Cocky

    Do I sense a trend here?
    .
    1) Worst Prim Monster since Federation in 1901.
    .
    2) Least competent Treasurer since at least WWII.
    .
    3) Main stream Media-ocrity political and financial comment anything EXCEPT objective and certainly pro COALition regardless of the facts.
    .
    4) Inflation rising, wages stagnating, corporate profits increasing, casualisation of work-force increasing.

    On this evidence Australian voters should be very very incensed and prepared to man the barricades against the COALition pollies ever being permitted to nominate for candidacy at any government election.

  3. Vivienne Jean Mendham

    Ah, the lovely Alan Austin telling it like it really is. Pity the rest of the media are not keen on facts.

  4. wam

    Whilst it may be a too simple explanation the baby boomers and children and grandchildren believe that labor are unable to manage the economy and they invariably cite Gough, Gillard and Swan with a rudd on the side. The papers and morning shows ran with this bullshit daily from 2010 till labor’s implosion and loss in 2013. The people here give no credence to the effect on voters of the rabbott’s influence over the media and give no blame to little billy and torpid tanya for spending their 6 years not revealing lnp economic controversies on the same outlets. The biggest excuses, over my lifetime, for not voting labor, are the economy, debt and taxes. This trilogy should be the reasons for voting labor. Mr Austin’s post should form the basis for destroying the myth of liberal being economic managers. Sadly who in labor has the backbone to challenge, the ABC boyds and girls, rupert’s minions, koch or karl and their gigglers.

  5. Harry Lime

    Morrisonii Skidmarkus Asininus Prodigiosum…..The lying rodent must be pleased with his student.The complete decimation of what used to be just a bunch of third rate chancers.Rumours of a Fraudenberg resurrection…really drives home just how fucked they are,if they see him as a ‘leader’

  6. Andy56

    i have to disagree here. Lets not blame the stone age on the libs. The debt did blow out over the covid period but i accept that was part of keeping australia afloat to a certain degree.
    The debt i rage about was blown out way before covid and the covid debt could have been better handled, ie those that didnt need it shouldnt have had access.
    But lets not forget “debt ” was their clarion call way since the whitlam gov. So you take the praise , so you shall also take the blame.
    Small government means a debt blow out and a service reduction. This should be written into the Harvard text books in big writing.
    Since howards time, the libs have been strangling government receipts and spending big. So in effect, the debt blow out is by choice not by some stupid capitalist assertion. drop the nuclear subs and there is no debt.

  7. Clakka

    Excellent straightforward article of facts, highlighting the lies and deceptions of the LNP, and the collaborative lies and deception by the deliberate omissions of the mainstream media.

    Andy56, whilst you may, of course “disagree here”, for me, there is no mitigation of the guile and incompetence of the LNP. And I did recognise your referrals to the causations of “covid”, “small government” and “nuclear subs”, yet to me these are mere by-lines of cover and designer gravitas in their quest for grandiosity in the face of their incompetence. Those in the know were onto them, and like everyone around the filthy Morrison, maintained a distance, until when the accumulation of affects of their insidiousness burst, and rightly they were wiped at the polls.

    To me, all the “clarion calls” of the LNP have been divisive arrogant signals to the elite, whilst wilfully beguiling the feckless wannabes and the head-down hard toilers. They are either 40 second grabs deliberately bereft of detail or ramblings full of platitudes aimed at the strivers and strugglers. Since their inception, their singular target has not been the education or collaborative bringing along of common wealth for all, but solely a campaign against Labor and labour (‘socialists’ & ‘unionists’).

    Luck has been their fortune over the years as they rode the gravy train spoils of world-wide growth. Yet every time things got tough and required attention to the complexities of sound management, they either sold-up the farm or were supplanted by Labor, who had to make the hard yards of reform.

    And of course any ‘Liberal’ who had a potentially functional and properly considered ideological difference to the Labor approach, would not last long in the LNP, being mocked and brow-beaten out by its grasping chancers.

    Since Howard, the LNP has slithered to the depths of deception and incompetence, becoming increasingly divisive, shrill and brutal in the face of the exigencies of the new and rapidly changing world. Rather than face the complexities, and seek counsel, it disembowelled the public service of years of skill and experience, ignored our world’s best academics and scientists and implanted its toadying political apparatchiks and retirees to polish its hubris.

    Over the past decade, everything it has given attention to has been purely for its self-aggrandisement; pork-barrelling, privatisation (jobs for ‘the boys’ & free alignment for foreign investors), clerical ingratiation, abdication to lawyers and consultants, targeted political marketing and etc. These obsessions along with with the omissions and depletions wrought by their overarching cover of small government ideology wreaked havoc.

    Through the era of the despot Morrison, the list of their failures and omissions became so vast, a to defy even abridging here. Not a structural reform in sight, our economic survival was only underwritten by their sale of national assets, defunding of social programmes, governance & services, and burgeoning debt. The LNP’s minuscule administrative abilities were irrevocably now drawn to plotting, scheming and out-flanking as they digested themselves from within. Good riddance.

    It will take years for Labor (& or others) to institute the reforms needed, and further years for those reforms to show economic and societal affect. And I’m sure the horrors of the LNP processes will be unfolded along the way.

    In the meantime we have a lot to get on with, and the Alan’s above is sufficient as a ready-reckoner.

  8. Kathryn

    Hmmm, after the people of Australia resoundingly voted against the LNP in order to kick that repugnant little war mongering garden gnome, John Howard to the gutter, did the LNP learn a single thing about humility, compassion and NOT to use war, hate and xenophobic racism as a distraction against their inherent corruption, arrogance, self-entitlement and appalling misogyny?

    Answer: Nope!

    After it became as clear as the long honker on that LNP-supporting fool, John Elliott’s face that the swaggering, inarticulate, totally inept, unspeakably misogynistic intellectual midget, Tony Abbott, was about as popular as a pork chop in a Jewish Synagogue with about as much chance of winning a federal election in Australia as Clive Palmer has in winning the Sydney to Surf Marathon, did the LNP learn a single thing about respecting women, egalitarianism, equality and compassion for ANYONE or ANYTHING except enriching themselves and their obscenely rich donors in the Top 1%?

    Answer: Nope! Nope! Nope! (to quote the RAbbott himself)

    After Abbott was quickly rolled out of view like an embarrassing old uncle with a major flatulence problem, the LNP then decided to go “all out” and push the supercilious Malcolm Turnbull in Abbott’s place. To be fair, in hindsight, Turnbull, an arrogant, non-achieving and extremely wealthy elitist seemed to be the “best” of a very, very bad bunch but his spot in the limelight was rapidly short thanks to the backstabbing maneuvering and power play by the next up-and-coming political psychopath, Scott Morrison! Did the LNP learn ANYTHING about loyalty, support, respect and diplomacy?

    Answer: Nope! Nope! Nope!

    Once the worst of the very worst, Sloth Morrison, rose to the top like faecal matter in a polluted pond, he quickly revealed himself to be SO DAMN BAD, so megalomaniacal and such a smirking, uncultured, two-thumbs-up BOGAN, he actually managed to make Abbott – aka the WRECKING BALL – look like a frigging genius! Morrison, the internationally condemned pathological liar, had such an appalling lack of discernment he became a signed-up member of the notorious CULT OF HILLSONG, once led by the unconscionable predator, Frank Houston, a convicted, recidivist paedophile! After all the dirt came out about hanky panky Frankie, it didn’t take long for MorriSCUM to shun any friendship he maintained with Frank’s son, Brian Houston, and switch over to yet another obscure, prosperity-driven CULT known as Horizon. Morrison and his Stepford Wife, Jenny, are consistent in their pathetic endeavours to hide their disingenuous, self-serving corruption, malignant treacherous backstabbing disloyalty, stratospheric arrogance and remorseless self-entitlement behind a phony, transparent cloak of nauseating bible-thumping hypocrisy! What Morrison FAILED to realise is that he was akin to the Hans Christian Anderson tale, “The Emperor Without Clothes” in that everyone but Morrison – and the like-minded gormless, Murdoch-manipulated, misogynistic and racist fools who voted for him – could clearly see how depraved, deceitful and corrupt he was and still IS to this day!

    After the abysmal narcissistic bully Morrison eventually destroyed the vision the pompous, late but not great, cigar-chomping, classist UK-worshipping tragic, Robert Menzies, once had in relation to the LNP in rapid time, Morrison quickly turned himself into an international laughing stock and became the most despised, relentlessly depraved and inhumane PM in our history and known throughout the world as a reprehensible pathological liar. Morrison was notorious for being an unimaginative bogan, a non-achieving long-term political parasite who failed to hold down any job out in the REAL world that required hard-work, imagination or commitment! The only dubious talent this mediocre malingerer had was his ability to take credit for OTHER people’s achievements or ideas and managing to select the absolute WORST group of cruel, self-serving miscreants he could find to be part of the WORST, most despised political cabinet in living memory! Did the LNP learn a bloody thing from our nation’s vile experience with their unenlightened f*ck up, Morrison?

    Answer: Not bloody likely because the LNP are INCAPABLE of change!

    How do we know this? Because the LNP have now gone ahead and pushed out one of the worst, most dangerously undemocratic and callously inhumane sociopaths from Morrison’s diabolical cabinet = Peter Dutton! If there is ANYONE who could share the podium with Howard, Abbott and MorriSCAMMER as the WORST PMs in our history, the deeply unpopular, sadistic, multi-millionaire, ex-Qld cop, Peter Dutton is it! There he is, a monstrous, remorseless sociopth waiting in the wings like some salivating Behemoth, ready to turn heartlessness, corruption and political malfeasance into some type of warped virtue!

    Does Australia really want a repeat performance by these lying, conniving parasites who’s ONLY legacies are massive chaos, dysfunction, a rising level of inequality, American-style entitlement, greed and a MASSIVE $1 TRILLION in debt whilst the appalling lying sociopaths that line the cabinet of the LNP go on and on thumping their chests and cynically bragging that they are the “best economic managers” !!!!

    Bloody hell! For the sake of everything we value and our children’s future and the protection and prevention of our taxpayer-owned assets INCLUDING Medicare, our public hospitals and, indeed, State-owned public schools (with most universities already privatised), the resounding answer has GOT TO BE:

    NO! NO! DEFINITELY NOT!

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