Talking through their hats
In April this year, Julie Bishop repeated the claim “We’ve never seen such record levels of debt and deficit as were bequeathed to us by the former Rudd-Gillard-Rudd Government.”
Fact Check had already found that claim to be wrong, but Ms Bishop has continued to repeat it.
At the end of 2015, she even received their coveted golden zombie, for the undead claim of the year.
Kevin Rudd left Tony Abbott a deficit of 1.2 per cent of GDP, net debt of 10 per cent of GDP and gross debt of 16.9 per cent of GDP.
In 1996, John Howard was left a deficit of 2.9 per cent of GDP, net debt of 16.8 per cent and gross debt of 21.3 per cent.
So despite Ms Bishop’s multiple repetitions of the claim, she was, and is still, wrong.
In August, Scott Morrison gave a speech painting a doomsday debt scenario for Australia’s economy.
“As a government, we inherited $240 billion in accumulated deficits and a debt of $317 billion projected to increase to $667 billion over the next 10 years. As a government to date, we have acted to reduce that projected debt by $55 billion.”
Ironically, his claim about $667 billion debt in ten years’ time won the golden zombie award the year before.
As there was a $300 billion debt ceiling in place when Labor were in power, he is also lying about the inherited debt. When the Abbott Government came to power in September 2013, there was $270 billion in Commonwealth securities on issue, not $317 billion as he claims..
It is also hard to understand how they can be reducing debt when they are running deficits.
For the record, PEFO (August 2013) contained a cumulative deficit over the forward estimates of $54.6 billion.
Joe Hockey’s MYEFO (December 2013) inflated this to $122.7 billion, partly due to his policy decisions ($13.7 billion) and partly due to a downgrade of assumptions ($54.3 billion).
Hockey projected a deficit of $47 billion in 2013-14. It ended up $48.5 billion. For 2014-15 his estimate was $33.9 billion. It was $37.9 billion. His 2015-16 estimate was a deficit of $24.1 billion, actual was $39.6 billion. His estimate for 2016-17 has now increased from $17.7 billion to $37.1 billion.
Coalition Ministers continue to deliberately repeat demonstrably false statements, presumably to obfuscate the true results of their stewardship and to create unjustified fear so they can force their agenda through parliament.
Morrison warned the crossbenchers that they must pass whatever legislation the Coalition throws at them or bear the consequences.
“Failure to do so, in the worst-case scenario, will see our gross debt rise to more than $1 trillion — one thousand billion dollars — in the next 10 years.”
Whoa….that’s a big number. We are in dire trouble.
Or are we?
Last week Scott Morrison was in New York giving speeches and talking to anyone who would listen.
“We have a remarkable economic record and we are determined to keep it that way,” Morrison said.
Say what?
“Australia has just completed twenty five years of uninterrupted annual economic growth.
An entire generation has now grown up in Australia without ever having known a recession. This is despite a GFC, an Asian financial crisis, global terrorism, SARS, one in a hundred year floods, droughts and a thirty per cent fall in our terms of trade.
It is one of Australia’s greatest national achievements and was no accident.”
Hmmmmm….ever feel had?
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mark -
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economicreform -
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Florence nee Fedup -
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townsvilleblog -
Jaquix
Return to home pagewe felt had right from the start
Scott’s maths gives me a headache. He said they inherited a debt that would grow to $667 billion in ten years’ time but that they have improved that projection by $55 billion. It is now projected to be $1 trillion in ten years time.’ Luckily there is an aeasy fix in sight because that is the same amount they are spending on defence over the next twenty years. Cancel Tony’s strike force!
“Defence spending boost will put $1 trillion price tag on next two decades, says expert”
http://www.smh.com.au/federal-politics/political-news/defence-spending-boost-will-put-1-trillion-price-tag-on-next-two-decades-says-expert-20160223-gn1jel.html
Obviously Morrison’s maths policy is deliberate – so by the end of any “announcement” everyone is totally confused. And I heard Ms Bishop just this week get all animated about “the mess Labor left us”. Trouble is, people believe these utterances. Especially if its all they hear, via the media.
This saga, and it is a saga, highlights the worst of both our media and our politicians. Bishop is utterly lying and she knows she is lying, but politicians lie routinely and repeat their lies routinely. The perversity of human nature is that a lie, repeated oft, is far more likely to be believed than the truth told less frequently and this despite knowing that politicians lie.
Fatso Goring commented over 70 years ago that if you are going to tell a lie, make it a big one and this remains a crucial part of the LNP political manifesto. This nauseating drivel has been spouted by the LNP drones for 3 years now – showing the true level of ability of nitwits like O’Dwyer (the absolute worst for including the phrase “Labor’s debt and deficit disaster” in her response to every question she was asked), Dutton, the gladly departed) Hockey, Joyce and Morrison to name only a few.
Unfortunately, while those reading this article are the “converted”, those who rely on the mainstream media get no sense of the stupidity and vacuity of the LNP argument because the LNP’s lies are never challenged – unlike the right-wing shrieking over the alleged “Mediscare” campaign – which could have been easily refuted or rebutted if the LNP was right that it was all lies.
Worse, the LNP appears now to be borrowing to fund recurrent spending.
Even worse again, its neo-liberal policies blindly career on to fiscal oblivion, although that is not so easy, in theory at least, when you are sitting on a fiat currency. The LNP has not come even close to dealing with the true source of the budget deficits – not that I think achieving a budget surplus should be the end-game – but much of this is a problem created by Howard and Costello’s blatant pork-barrelling. In addition, we know the areas of the tax system where revenues are effectively diverted from critical areas into middle and upper-class welfare entitlements (discounted capital gains, CGT exemption on homes regardless of their value; negative gearing; concessions for the mining sector, including that sector not paying a fair price for the right to pillage OUR natural resources; unaffordable super concessions enjoyed more by the wealthy than the poor; the wealth transfer to large corporates and medical specialists under Medicare; the ripping off of the taxpayer by players in the Jobsearch farce and the VET scheme farce to name a few). A better solution is within their grasp, but they persist with the delusion that the better approach is to penalise the poor.
Howard and costello created any problem (real or imagined) by spending surplusses on middle class welfare. Spending mopney from a mining boom which should have been saved and invested in infrastructure.
Hang the Liberal bastard’s high. What a disgraceful lot.
As of October 7, CGS on issue (gross debt) was over $443 billion ie in three years the Coalition has added about $163 billion, or over 58%, to the debt.
They have also not published the monthly accounts since May at which time the net debt was almost $285 billion. At the end of August 2013, the net debt was $161 billion so we have seen a 77% increase in net debt in less than three years.
I think the Liberal party are just Gangsters in suits.
my favourite quote from The Godfather movie……”politics and crime, it’s the same thing”. Pity we don’t have any organised crime laws which could be applied to public servants (what the politicians are supposed to be!)
Glenn,
I still blame Paul Keating for the current culture and general tone of politics.
Jane,
…as I said on John Ward’s blog: All Liberal roads seem to lead to Labor. The Liberals are obviously powerless, they can’t change or improve anything that Labor did…???
I can already hear Cormann ‘laibouring’ over Labor’s shortcomings, Liberals don’t have any of those ? 🙂
Liberals’ policy: never let the truth stand in the way of a good story, and make sure it denigrates the ALP. Unfortunate that the press / MSM repeat anything the politicians on the right put forward, thus magnifying it and also giving it an aura of fact.
Yep, debt will be $1 trillion in 10 years – unless ore prices skyrocket or they are hiding just how much will be earned from sales now the investment period is over and depreciation should gradually become less a deduction.
[An entire generation has now grown up in Australia without ever having known a recession.
It is one of Australia’s greatest national achievements and was no accident]
For me this is a huge negative as it teaches bad habits and allows the rich to do whatever they want. There is no achievement. Recessions if long and severe enough tend to be useful as cleaners of fat cat entitlement. I’d be happy if we had a 2 year recession – to blow away the housing investors and give the banks a shakeup – in which case the debt would certainly blow out to 1T.
The motive to change.The suffering in a recession.mark
It makes absolutely no difference as to whether we are talking about debt and deficit disaster, climate change, the taxed and those who make a career out of avoiding such, Australian involvement in foreign wars, or anything else.
Depend and rely on it …this LieNp government will always lie about it.
Invariably. That’s why they are known as the LieNP.
We are all aware that they are compulsive liars and opportunists. The issue that really needs to be addressed is what to do about the corporate controlled media who are giving them generous air space and print space, and are willing to act as organs of propaganda – publishing political stories which present them in the best political light, completely free from any criticism or rational analysis.
economicreform, as I see it, there’s little we can do other than try to circulate the facts to people through social media and conversation. The mainstream media are completely out of our control. We can try to convince people not to buy their crap, but that’s not terribly effective. Even so, newspapers and radio are in crisis, with their audience falling. I suspect TV is losing audience rapidly too. Once upon a time it was extremely unusual to meet someone who doesn’t watch TV, but lately I have been encountering increasing numbers of people who only use their TV for watching DVDs or netflix, or don’t even own a TV. I wish the mainstream media would hurry up and go broke already.
I wish we had Canada’s law that makes lying in the mainstream media illegal. Wouldn’t that be nice.
“As a government, we inherited $240 billion in accumulated deficits..” is yet another nonsense statement from Morrison. ‘Adding up’ successive deficits to produce a large number is meaningless neolib crap – it is a ploy to make his predecessors look worse, and justify his own inept govts. failure to effectively counter domestic economic stagnation/recession.
“…It is also hard to understand how they can be reducing debt when they are running deficits…..”
This is how:-
Astutely spent, the govt. ‘deficit’ funds development/expansion of productive industry, reduced unemployment follows – idle productive capacity is harnessed to produce real national output,
The ‘automatic stabilisers’ of increased tax collection cut in as employment/economic activity increase, thus reducing the amount of deficit stimulus spending required to maintain that level of economic activity.
Deficit spending is a productivity catalyst – properly implemented it creates increased GDP output. It is the power of GDP output (limited only by available resources) that pays out foreign debt, increases employment, increases private savings, enables private debt reduction – thus increasing domestic living standards.
The peak WW2 debt (record 120% GDP) was paid down to approx 10% GDP by 1970, federal foreign currency debt was virtually eliminated by 1988 (page 9).
Note there was not one significant federal govt fiscal ‘surplus’ from 1940 to 1987 (page 2).
Deficit spending extracted Australia from the Great Depression, provided WW2 spending …. and paid out all foreign currency (real) debt…all while unemployment averaged 2.2% for over 30 years – all provided through national deficit investment.
On rough estimation, from 1942 to 1975 there was an apparent relationship of about 1:5 linking deficit investment to GDP output. The realised 5x ‘amplification’ factor paid out both the ‘foreign currency’ & war debts.
There were ~32 fiscal deficits from 1942 to 1975 at an average of around 2% of GDP – the GDP output in the corresponding period averaged around +10%, all while unemployment averaged ~2.2%.
A fiscal deficit is not synonymous with increased debt – though it can be (as LNP neocons so ably demonstrate) through wasteful unproductive spending; such as buying defence equipment manufactured offshore, or offshore detention, or an obsolete copper NBN system that will need to be torn out and replaced with efficient fibre technology before it is effective, or failing to invest in education/training, or future growth technologies like renewable energy development – the LNP list can go on & on.
Morrison keeps talking about projections, (guesses) many they manipulated. Doesn’t like to be reminded of the real figures his government have generated.
Very good points John B,
Adding up every deficit of a previous government and saying you inherited that is clearly rubbish. The money has been spent and you are inheriting the economic activity it generated.
If we want to play that game, this government’s first four years will have a cumulative deficit of over $163 billion. At that rate, their “cumulative deficit” will be far greater than what they “inherited” from Labor.
And I very much agree that it isn’t spending that is a problem – it’s what you spend it on that matters. Some spending brings a positive return – buying foreign military hardware ($400 billion over the next twenty years) most certainly doesn’t.
Another thing….
Have you ever noticed that Coalition MPs will talk about the past and the future but they will never take ownership of the current state of affairs. Responsibility and accountability aren’t their strong suits.
“Kevin Rudd left Tony Abbott a deficit of 1.2 per cent of GDP, net debt of 10 per cent of GDP and gross debt of 16.9 per cent of GDP.”
In Morrison’s Final Budget Outcome for 2015-16, released late on a Friday (Sept 30 which was the last day he could legally release it) with no press conference, on the eve on the football grand finals, Morrison had to make some admissions that make for interesting comparisons to the figures they inherited.
The Final Budget Outcome for the 2015-16 financial year recorded an underlying cash deficit of $39.6 billion, which represents 2.4 per cent of gross domestic product.
Australian Government general government sector net debt was $296.4 billion (18.0 per cent of GDP).
http://sjm.ministers.treasury.gov.au/media-release/107-2016/
Kaye we need these comparative figures set out in a table, so they can be compared easily. Do you have one?
It’s all gobbledegook! None of this talk of debt and deficit is in any way true. Australia is a ‘fiat economy’. It prints its own money. It cannot be in debt. It is impossible. If you print your own currency you cannot be in debt in your own currency. Australia’s economy cannot in any way be compared to a household economy! When will the people wake up to ‘The Great Con’? I have written to esteemed ‘economists’ about this and they do not reply to my letters. Are they in on the con as well?
Paolo Soprani
All fiat currencies fail.
TANSTAAFL.
Harquebus, you made an error there. What you should have said is that all currencies fail.
The fiat aspect actually makes the currency more resilient and less liable to be cornered by greedy individuals.
Jaquix,
No table, sorry. This is a useful site though they are behind in their reporting.
https://www.finance.gov.au/publications/commonwealth-monthly-financial-statements/
Interestingly the May report shows net debt of $284.7 billion but Scott has just told us that by the end of June, one month later, it was $296.4 billion – an $11.7 billion deterioration in one month. No wonder they haven’t updated things. They must have spent up big time in June presumably to inflate growth figures.
Thanks Kaye, will check it out. No wonder they havent been crowing about their economic management lately.
PEFO 2016 shows a cumulative deficit over the forward estimates of $84.6 billion,and we all know that is going to blow out because it is relying on nominal GDP growth of 4.25% this financial year and 5% for the three years after that. In 2016-17, net debt for the Australian Government general government sector is expected to be $326.1 billion (18.9 per cent of GDP).
http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2016/PEFO%202016/Downloads/PDF/PEFO_2016_consolidated.ashx
rudd and gillard just rolled over when the rabbott’s slogan screamed debt crisis. They chose not to embarrass the libs by getting karl baby or kochie to ask the rabbott that if we have a crisis with 20%debt what does the uk with 100% or japan with 200% have? a disastrous economy?? The morning shows would have loved to hear his answers???
Instead we have the 44 year old belief that labor spends and ruins the liberal’s economy. With this ‘truth’ the libs can borrow spend waste and pork barrel all day because they are seen as managers.
They are crap ansd they manage to do little but in the tradition their lies are taken as truths.
How can that be changed???? Slogans and breakfast show seeding???? By billy?? Don’t think he has the intestinal fortitude and, like beazley is a ‘waiter’ hoping the libs mistakes are remembered.
ps Imagine the return if we still owned telstra??
pps heard a prime greedy tax avoider masquerading as a philanthropist.
he talked about money but failed to mention that a tiny proportion of Aboriginal money gets past state governments and white people like him to reach the Aborigines. What smug prick he is. At least gina wants $2 openly WTF does twiggy want??
When I last worked 20 years ago, there were two sides to a ledger income/expenditure, if the same still applies, and Hillsong reckons we would have a $600 Billion debt over the next 10 years, why have they not moved to make the corporations pay their responsible and fair share of taxation to the government to help to balance the books?
Surely just because some of these corporations pay absolutely nothing in income tax and make donations to the Liberal Party that should not affect their responsibility to pay tax, it doesn’t affect small business or working people that way so why should it affect billion dollar corporations that way?
Actually Australia is in such a state, I think nothing less than a Royal Commission will do, to drill down, find out whats wrong, and recommend solutions …..