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PEFO is the Bible, John Howard is the Messiah, and Labor are the Devil

On Monday night, when Leigh Sales pressed Scott Morrison about his claims of having delivered a surplus when we are actually still in deficit, the PM told her that PEFO was an independent document from Treasury and Finance that had confirmed that the Liberal Party would produce a surplus in 2019-20.

It is worth remembering that, when Chris Bowen produced an economic statement before the 2013 election, the PEFO released 11 days later suggested he had underestimated the predicted surplus in 2016-17, increasing the projection from $4 billion to $4.2 billion.

That was, of course, before the Coalition gifted an unnecessary $8.8 billion to the RBA, got rid of the revenue from the carbon price and the mining tax, spent billions on Direct Action resulting in increased emissions, spent billions on offshore detention and Operation Sovereign Borders and failed resettlement deals, embarked on unprecedented spending on an arms race, and entered into free trade agreements which slashed revenue from tariffs and destroyed the car industry and made local producers compete with cheap imports.

Morrison said that the Coalition were paying down Labor’s debt, but Sales pointed out that the debt has more than doubled under their watch.  Once again, Morrison blamed Labor for spending it had supposedly locked in.

Yet in 2007, treasurer Peter Costello expressed concerns at the “sustainability” of the amount of money the Government was spending at Howard’s insistence.

“I have to foot the bill and that worries me,” Mr Costello said. “And then I start thinking about not just footing the bill today but if we keep building in all these things, footing the bill in five, and 10 and 15 years and you know I do worry about the sustainability of all these things.”

This is exactly the problem that Labor is attempting to address by winding back the overly generous tax concessions for investors and tax minimisation schemes for the wealthy introduced by the Howard government

John Howard has morphed in the memory of the Liberal Party into some kind of economic guru, purely because he happened to be PM when the country was experiencing a resources boom.

They seem to forget what happened when he was actually in charge of running the economy during the Fraser government.  At the end of Mr Howard’s treasurership, inflation was running at 11 per cent and bank interest rates for home loans were 12.5 per cent.

Much is made of the fact that there was no net debt at the end of the Howard government’s term in office, with claims they had paid down Labor’s debt – mainly by selling off our assets as it turns out.  But was it Labor’s debt?

When Malcolm Fraser became Prime Minister in November 1975, the Government sector had net financial assets – that is, there was negative net government debt equal to 2.7% of GDP.  The Fraser Government, with John Howard as Treasurer for the bulk of that time, ended its time in office with net government debt equal to 7.5% of GDP in 1983-84.

In reality, the government has limited influence on the economy with much of what happens beyond their control.

Chris Bowen has fallen into the trap of promising to deliver bigger surpluses than the Coalition in order to be better placed to face unexpected headwinds.

What he should be stressing is that Labor will address the structural problems in the budget, which they are doing with their taxation reform, whilst maintaining the flexibility for the government to react to unforeseen circumstances or societal need as required.

He should be stressing that by investing in education, skills training and health, and in a transition to a lower emissions economy, Labor are investing in our future.  The cost of the investment will be far outweighed by the return.

He should be explaining the need to diversify the economy away from a singular reliance on resource exports.

He should be decrying the failed trickle-down neoliberal approach and extolling the virtues of lifting people out of poverty which will increase demand, stimulate growth, and improve the lives and prospects of those most in need of a boost.

Labor has the right message – they just don’t know how to communicate it to an electorate too accustomed to individual wealth creation and protection.

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12 comments

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  1. New England Cocky

    “Labor has the right message – they just don’t know how to communicate it to an electorate too accustomed to individual wealth creation and protection.”

    Back to the future ….. When Maxine McKew (Labor) unseated Little Johnnie ‘Flakjacket’ Howard from Bennelong and the Treasury benches, Labor rewarded her by ignoring her professional journalism and screen presentation skills as the well known and respected media face of Labor, and lost one of their most successful assets in the next election.

  2. Alcibiades

    NEC,
    Alas, factional Machine Politics … same for faction unaligned Lisa Singh being dumped to an unwinnable Senate slot in Tasmania, after having last won on actual individual Senate votes, for a second time …

    (Image)

  3. pierre wilkinson

    “Labor has the right message – they just don’t know how to communicate it to an electorate too accustomed to individual wealth creation and protection.”
    and that is the problem… the MSM decries Labor as high taxing, massive debt but the facts state otherwise and Labor struggle to point this fundamental fact out to the main stream voter who listens to the ratbags on radio, reads the prejudice on paper and believe the lies from the liberals
    please keep up the good work Kaye Lee, I am in awe of your factual, concise and well written opinions

  4. Terence Mills

    Kaye, that’s incredible :

    Morrison said that the Coalition were paying down Labor’s debt, but Sales pointed out that the debt has more than doubled under their watch. Once again, Morrison blamed Labor for spending it had supposedly locked in.

    Labor made me double the national debt during the last six years !!!!

    By the way, Bill Shorten on Q&A last night pulled in 680,000 national viewers more than ten times the number who watched the debate on SKY and, interestingly the Leigh Sales’ interview with Scott Morrison garnered 933,000 national viewers.

    The third and final debate between the leaders will be held during prime time, 7.30 pm on the ABC at the National Press Club in Canberra on Wednesday and will be moderated by ABC journalist and National Press Club President Sabra Lane.

    This one will be decisive with none of the silly business of hiding on pay TV : you can’t hide from the ABC. It will also get good viewer numbers and if Shorten keeps up his performance Mrs Morrison can start packing up at the Lodge.

  5. Keitha Granville

    No-one listens to all this, they are too busy worrying about how much it will cost THEM, individually. Not enough people are caring about the future of our species. Anyone with half a brain cell knows that you need to put money in the hands of the bottom half to improve the economy, they spend it all as opposed to saving it for a rainy day. Part of me wants to be around in 50 years to watch all the people with squillions in the bank starving and desperate for water – just to prove the point.

    Every time anyone asks how much the move to address climate change will cost, they fudge and fumble.
    Instead they must simply have pictures of animals which will be extinct in the next 5 years, 10 years – and a dead planet.
    The cost is irrelevant when the cost of doing nothing is irreparable.

    We cannot afford another 3 years of LNP, we simply cannot.

  6. totaram

    Keitha: “..Anyone with half a brain cell knows that you need to put money in the hands of the bottom half to improve the economy, they spend it all as opposed to saving it for a rainy day.”

    Not true, not true. Therein lies your problem. Either most people don’t even have half a brain-cell, (which is unlikely) or they don’t know, which is most likely. By constantly pretending the government is like a household, the whole debate is shifted from macroeconomics to microeconomics which is totally different. It’s subtle, it’s easy, and it’s done so often you don’t even notice it. Even Chris Bowen has been taken in. He thinks government surpluses are wonderful, when they actually suck demand out of the economy, certainly in Australia. Until you can shift the language and the rhetoric (which you can’t do while Murdoch and the other oligarchs rule the MSM) you are stuck with this problem.

  7. Jagger

    Agree with your article Kaye, but when the vast majority of voters believe government budgets and household budgets are the same, it’s nigh on impossible not to mention surpluses as an indicator.

  8. Chris

    Kaye Lee I would like to elaborate on your observation that Labor has the right message but does not know how to communicate it.

    Take the policy of stopping dividend imputations for example. It is a complex taxation issue not understood by many people, understandably so. However, it would be easier to smash the Coalition fear campaign about a Retiree Tax (absolutely untrue as nobody is being asked to actually pay anything) if Labor spokespeople explained that;

    a single pensioner can own a home, not means tested, and up to $567,250 in other assets including shares, or a non homeowner can have up to $774,250 in other assets before being ineligible for a part aged pension,
    a couple can own a home, again not means tested, and up to $853,000 in assets or if they do not have a home can still qualify for the aged pension with $1,005,500 in assets.

    Pensioners are exempt from this policy and will still receive their tax imputations.

    Surely in today’s economy all people who own assets in excess of the above amounts do not need, and should not expect, a handout of free money, totalling $6 billion a year and rising, simply because they own shares. They do not actually earn this money, it is given or gifted to them thanks to John Howard buying the grey vote.

    It is greed at its very worst and cannot be sustained.

    (The figures quoted come from the Australian Government Department of Human Services dated 2/05/2019)

  9. wam

    Great words, kaye, labor has the credentials but not the image.
    To me the message is simple the rabbott won on the debt bullshit and then with the votes of the loonies doubled it.
    ‘Morrison doubled labor’s debt used to save Australia where has the money gone???? begin every interview with a question sink the bastards. make sure every member knows how much has been wasted $400000000 to a gang of 4 on the gold coast who pocket million from interest. Another $400000000 to a beach shack on kangaroo island $200000000 for a photo on xmas island think labor remember how the rabbott spread bullshit but the autocues loved it give them a chance to go for scummo.

  10. RomeoCharlie29

    Agreed all, another awesome piece by Kaye Lee, fact-ferret extraordinaire. The issue of spending vs taxing is definitely vexed and not helped by such as Fran Kelly on Insiders again conflating the ending of freebies and rorts with taxes, or the tweet on QandA that a tax by any other names is still a tax. Uh duh. I think Chris Bowen is doing an excellent job explaining the franking credits, and Labor’s taxing/spending policies generally, but agree with those who wish he wasn’t so enamoured of surpluses. However most people probably can’t see that a government’s finances are idifferent from a household’s and using their own experiences see a surplus as being the equivalent of being able to have a holiday at the end of the year while a deficit is what you still owe on your credit card.Misguided yes, but understandable.

  11. totaram

    Chris: what you correctly explain has indeed been explained many times, but just not given enough exposure by the usual MSM culprits who keep repeating the coalition lies about a “retiree tax”. I myself have explained this so often to people who refuse to give numbers but keep whinging how they will be ruined etc. But I know this is all lies as I am myself a retiree with a pension from my superannuation and have not paid tax for many years. Even though I have a small number of shares and I will lose a few hundred dollars of refunds every year, I can see how someone who is much wealthier than I am would lose thousands of dollars. The point is that this person has any number of options to change things, and finally, even if the loss is real, it is nothing compared to how much this person is making completely free of tax. That is why Joshie keeps talking about the “taxable income” of those who will lose out. This has nothing to do with their actual income or their wealth. As someone suggested, these people are free to vote against Labor because of their “loss”, because actually they would never vote for Labor in the first place.

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