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The Coalition can’t manage money

By Ad astra  

The Coalition can’t manage money. No, that’s not a misprint. The conventional wisdom, peddled by the Coalition, aided and abetted by opinion polls that always rate the Coalition ahead of Labor in managing the economy, is that ‘Labor can’t manage money’. During the election campaign, that was echoed endlessly by PM Morrison, Treasurer Frydenberg, and sundry other Coalition advocates in parliament, in the mainstream media, and on social media.

Of course, during the campaign truth was irrelevant to the Coalition. It followed the oft-quoted dictum attributed to Joseph Goebbels: ”If you tell a lie often enough the people will believe it, and the bigger the lie, the more it will be believed”. As the people already believed that ‘Labor can’t manage money’, it was a simple line for the Coalition to parrot day after day, knowing their supporters would, like kittens, lap it up like warm milk.

The Coalition constantly ignores the verifiable fact that Labor’s agenda of bank guarantees and a graduated fiscal stimulus rescued us from the dangerous depths of the Global Financial Crisis. It did this more efficiently than any other developed country. And it did so against the resistance of the Coalition, which vigorously opposed the second tranche of the stimulus that it labeled as ‘reckless’. So much for its claim of financial wisdom!

Let’s look at the Coalition’s economic record.

Writing in Crikey, Politics editor Bernard Keane neatly sums up the Coalition’s legacy in Australia’s lost decade beckons as productivity, investment and wages slump. I have drawn heavily on his article, which is well worth a thorough read.

He begins: ”Australia now has a real productivity crisis. So where’s the wailing and gnashing of teeth that accompanied the fake crisis claimed to have happened under Labor? In a damning report, the Productivity Commission’s latest examination of the economy reveals that Australia has endured six years of poor productivity growth and wage stagnation, and slumping investment augurs poorly for a recovery any time soon.”

The Commission’s 2019 Productivity Bulletin itemises an alarming policy failure since 2012. Productivity levels are falling in crucial industries with no end in sight to the chronic wage stagnation that has frustrated workers since 2013.

Keane spells this out in Wages are going nowhere. And the entire governing class is to blame. The Productivity Bulletin confirms that the labour productivity surge under the Rudd-Gillard governments has been replaced with an extended period of declining productivity under the current government, with it not merely well below long-run levels, but falling every year between 2015 and 2018.

Take a look at Table 3.1 of the Bulletin. (As it’s a long pdf file, search for ‘Table 3.1’.) You will see that every wage measure shows a decline over the six years that the Coalition has been in power.

Keane continues: “Accordingly, it offers no hope to workers that wage stagnation, predicted by Treasury and the government to vanish over the next two years, will end any time soon; the only comfort is that over the long-run, the Productivity Commission thinks that it’s ‘improbable’ that wage stagnation will get much worse over the course of the next decade. Australian workers must be weeping with gratitude.

What’s fascinating is that there was an alleged “productivity crisis” when Labor was in power, with acres of commentary in the media, economists and even the Productivity Commission, often on the purported failings of the Gillard government and the Fair Work Act and how to fix them.

Keane concludes: ”That ‘crisis’, it turned out, didn’t exist, as Treasury itself confessed years later. Not merely does it now appear that the Labor years saw a big lift in productivity from the depths created by WorkChoices (which Treasury famously warned Peter Costello would harm productivity) but that it has been replaced under the current government by a very real ‘productivity crisis’ of the kind business and the commentariat whipped itself into a frenzy over eight years ago – one with no end in sight.

Now we have the Reserve Bank cutting the official cash rate to 1.25%. RBA governor Philip Lowe commented that …“while the outlook for the global economy was ‘reasonable’, the risks stemming from the trade war between China and the US, and weak international trade growth, prompted the bank to cut.” He said the Australian economy was still expected to grow by about 2.75 per cent in 2019 and 2020, but there was still uncertainty about the prospects for household consumption, “affected as it is by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.”

The New Daily quoted BIS Oxford Economics’ head of Australia macroeconomics, Dr Sarah Hunter: The cut “confirms that in the RBA’s view the economy has slowed down over the past six months. Despite employment figures continuing to lift, weak income growth and the ‘negative wealth effect’, where people tighten their spending due to devaluation of their assets due to falling house prices, are both bad signs for the economy.”

Writing in Crikey on 5 June, Keane spells out the situation even more stridently: ”The need for stimulus for the so-called ‘strong economy’ was demonstrated three hours before the bank cut rates yesterday when the Australian Bureau of Statistics released April retail sales data. That showed a surprising fall of 0.1% (the market had been expecting a 0.3% rise). Worse was what is happening in NSW, where retail sales fell 0.4% in seasonally adjusted terms. And the decision was confirmed by today’s GDP numbers, showing the economy grew a miserable 0.4% in the March quarter, mainly because of government spending, bringing annual growth down below 2% to 1.8%, its lowest levels since the aftermath of the financial crisis. There was better news on the current account deficit: the March quarter deficit fell sharply, thanks to the highest trade surplus ever recorded in a quarter. That added 0.2 percentage points to the GDP data and pushed our terms of trade up 3.1%, on top of the same in the December quarter, thanks to higher iron ore prices and the slightly weaker dollar.”

In case Coalition members had missed the bad news, and still could not see how poorly it had managed the economy, in an article in ABC News, ominously titled Australia’s economy slows to levels last seen during the GFC, business reporters Stephen Letts and Michael Janda rammed home the message: “Australia’s economy has slowed further, with GDP growth tumbling under 2 per cent over the past year. The economy grew at 0.4 per cent in the first three months of the year, to be up 1.8 per cent over the year – the slowest growth since the September quarter in 2009.”

Although his neoliberal-minded colleagues were furious at the rate cut, Treasurer Frydenberg applauded it, and insisted that the government is augmenting the bank’s monetary stimulus by providing fiscal stimulus, namely tax cuts and building infrastructure. In contrast, Shadow Treasurer Jim Chalmers pointed out that “…if the Liberals were doing such a great job managing the economy, the Reserve Back would not have had to cut rates today to get the economy moving again.” Take your pick.

So there you have it. Only one-eyed Coalition supporters could construe the deteriorating state of our economy as somehow acceptable, as having nothing to do with the stewardship of the government. Instead, they will likely insist that the Coalition knows what it’s doing, has everything under control, and that we’re all doing fine. They will extract any morsel of ‘good news’ from the economic data to bolster their conclusions.

They will go on insisting that ‘The Coalition is the superior economic manager’, although the evidence inexorably leads to the conclusion: The Coalition can’t manage money.

This article was originally published on The Political Sword.

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17 comments

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  1. Leon Hassall

    I beg the differ they manage money extremely well for their own benefit including their lobbyist groups, donators and cronies. They just don’t manage it for the poor or the community especially the fools that believed the false advertising and voted them back in.

  2. Stephengb

    It never ceases to amaze me that the general public have no idea how money really works, or wheremoneycomesfrom.com

    It is an indictment on people that the truth is rejected.

  3. whatever

    Well, now we have the usual Federal Budget, then the Banarby bloc of electorates that appear to have conveyor-belts of money flowing in, and then the seperate outlay for Officer Dutton and the Republic of North QLD.

  4. Kaye Lee

    We heard so much about the “retirees’ tax” during the election campaign but no-one ever mentions the hit that retirees who had their savings in term deposits have taken due to tumbling interest rates.

    They also talked about double taxation in the franking credits discussion (which was a fib – tax offsets are ok but refunds result in zero taxation) but no-one talks about how taxing interest on savings is double taxation – taxed when you earn it and taxed again on the interest.

  5. totaram

    You may be completely correct about how these people “manage money” (for the benefit of themselves and donors).
    But that is not what most people believe. How do we change that?
    Writing it here is just preaching to the converted. We need a strategy for out-shouting the MSM, which keeps repeating this lie that the coalition are the best managers of money (whatever that means).

    We won’t even go into the criteria for judging the best managers of money, which the Labor party have never challenged, and thereby shot themselves in the foot.

  6. pierre wilkinson

    regrettably, the murdochracy will push this as fact and our truly gullible will fall for that spiel
    but as Leon points out…
    they are capable of managing money quite well, your money becomes theirs

  7. Zathras

    For me one of the biggest disappointments about the recent ALP campaign is they never bothered to challenge the myth that the coalition is a superior money manager.

    It was like ignoring a bully in the hope they will eventually stop but instead Morrison just doubled-down and added the bogus loss of utes and weekends and multiplying taxation scares. That’s all they had in their armory and the ALP just let it all go.

    It would have been relatively easy to dismiss their argument with simple facts and statistics but the ALP were too absorbed in their own policies.

    It was a lost opportunity and now probably too late to challenge their assertions before the next election unless they act quickly.

    As the economy continues to tank and we break through the trillion dollar debt barrier it’s time to take the fight up to them and keep the pressure on for the next three years, like the so-called Carbon Tax argument used during the Gillard years.

    No amount of opinion and media distortion will change simple facts and as voters start feeling the growing financial cost of poor management they may be inclined to listen.

  8. johnyperth

    The same has happen in WA.

    The last sate LNP government got us well in to debt, the worse debt in the states history!!

    When you think about it, who said the LNP is better handling the economy!!??

  9. New England Cocky

    At a 2019 action pre-poll booth the Nat$ volunteer claimed that “David Drummond did a very good job”.

    FACT: David Drummond retired in 1961. What did subsequent representatives of the Nat$ achieve for the electorate in the past 58 years? Almost nothing …

    Also, the claim that “the COALition were better money managers than Labor”.

    FACT: The RAbbott Turdball Morris LNP neo-fascist misgovernment DOUBLED the national debt, froze wages and pensions, and destroyed the automotive manufacturing industry with about 30,000 job losses and subsequent loss of about $2 BILLION in taxation revenue.

    So, “I’m not going to talk to you, you think you know so much “… silence for the rest of the shift.

  10. Barry Thompson.

    Spot on Totaram and Zathras. I used to shout at the TV screen “refute that bullshit Labor, statistics prove you are the better managers of the economy”- to no avail.
    IMO one of the main reasons that Labor lost .

  11. Terence

    The problem with Labor is that they try and play nice in the sandbox when everyone one else are just being a bunch of Cs.

    As the old saying goes, Nice Guys Finish Last.

    As much as it probably goes against their grain, they have to get a bit of a-hole about them. There is no use playing by the rules if no one less is. Clearly they are capable of it. I’m sure all those senior Labor figures would have kicked a few people in the goollies on the way up the greasy pole. No one gets to the top without breaking a few nuts along the way.

  12. helvityni

    Barry Thompson, I too used to shout ‘who got Oz through the Global Financial Crisis…? Wasn’t it Wayne Swan …?

    I believe Jim Chalmers used to work for Wayne. my two favourite Queenslanders….. Mathias and Josh put me to sleep…

  13. RomeoCharlie29

    I agree with all of the above. I have said elsewhere that allowing Morrison’s claim of $387 million in new taxes to go unchallenged left it lying there as an acknowledged truth. Labor’s almost daily announcement of more billions in spending made it easy to reinforce the “irresponsibility” line.

    I worry that Albanese is going to pursue, all the wrong things —like supporting religious freedoms legislation and the tax cuts for the wealthy — while abandoning those reforms which really need to be pursued.

    But what really underlies my concern about this Parliament is the level of religious influence that exists. Too many parliamentarians proudly parade their religious beliefs as an essential element of their personas and their policy responses. The fact that for so many their actions and votes are at odds with the apparent ethos of their religions shows them to be hypocrites.

    Given what Australians say about their adherence to, and beliefs in, religion as per the census, it seems that religion, no matter its apparent diversity, plays too large a part in our government which is no doubt why churches remain untaxed, we have chaplains in state schools and no-one will tackle the issue of the funding of non-government schools.

    For example if a community wants to open a new religion-based school, be it Greek Orthodox, Lutheran, Islamic or Quaker to use just some examples, all they have to do is put out their hands and governments slap money into them. That some of these communities are less than transparent in their use of this money is well documented.

    I am happy for people to follow a religion but do not want to see those beliefs interfere with the rights of others and definitely don’t believe public money should be used to support any of them.

  14. Ad Astra

    Good Morning Folks
    May I thank you all for your enlightening contributions to this piece.

    I agree with the observation several of you have made, namely that the Coalition manages its own money very well. Perhaps the title of the piece should have been: ‘The Coalition can’t manage OUR money’.

    I agree too with the sentiment many of you have expressed: that Labor was far too feeble in asserting its financial accomplishments in government, particularly during the GFC, and also weak in refuting Coalition claims that ‘Labor can’t manage money’.

    I’m reminded of the schoolyard bully who gets away with outrageous slurs because nobody is prepared to call him out. Labor needs to engage some skilful communicators who can develop cutting slogans and sharp rebuttals that expose the Coalition’s mendaciousness. I have a piece on this subject in preparation.

    Labor has got three years to fashion strategies that will counter Coalition lies, distortions, and outright BS. Encouragingly, Albo is already showing signs that he will counter Coalition propaganda frontally, as he did during his Nine News encounter with Dutton today:
    https://www.msn.com/en-au/news/australia/albanese-dutton-in-heated-exchange-on-afp-media-raids/ar-AACv2Cb?

  15. Wayne Turner

    TRUE -They can ONLY manage to con the masses,from FEAR,LIES and SMEAR. Aided by their MSM (Who ironically have now been screwed over by the COALition’s AFP,after the election,geesh that’s the thanks they get.).

  16. totaram

    Wayne Turner: Thanks or not, you do what you are paid to do. Everyone needs to make a living. Some 55 of them just got sacked as well. So not a happy bunch of employees, but then what to do?

  17. terence mills

    There is going to be a barney over the government’s third tranche of income tax cuts due to take effect in 2024, after the next election, and largely designed to wedge Labor into supporting legislation for these cuts at a time when the national and global economic outlook is far from certain.

    My suggestion to Labor is that they only agree to these cuts if , at the time of implementation, the net government debt has been cut from its current level of $372 billion back to what it was in 2013 when Labor was last in office (i.e. $175 billion) AND that the economy has been in surplus as promised over the intervening years.

    If these criteria are not met then the legislation lapses.

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