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Response to the reactions to the Budget reply

By Alan Austin - posted Monday, 20 May 2013


The reaction of Australia's media to Opposition leader Tony Abbott' Budget reply speech last Thursday was a surprise to some.

Observers familiar with Australia's economy would have noticed in the presentation several stated or implied falsehoods and other curious claims. And might have expected some criticism from the commentariat.

Well, not only was media reaction completely devoid of fulmination against the fibs, but it seemed none had even been detected. Somewhat bizarre.

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So what were the problematic propositions? There were more than twenty. Here's a top 12.

1. "Our musicians, artists, actors and film-makers are making their mark all over the world."

Thanks to whom? Advancing the arts was a major focus of the Hawke-Keating years – resisted by the Coalition. Labor after 1983 boosted arts funding enormously with impressive results.

The Gillard Government has also revamped support for the arts. The Coalition opposes this also.

2. "The Coalition's Plan has two objectives: first, to take the budget pressure off Australian households."

This implies pressure has been put on. The opposite is true. Of course, many are struggling. But pressure on households has been reduced significantly.

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The Paris-based Organisation for Economic Cooperation and Development recently reported on taxation around the world.

It asserts that taxes on wages in Australia are now among the lowest in the developed world, with only five small countries taking less; households are paying less now than during the Howard years; and the biggest tax breaks have gone to the poorest.

Other pressures alleviated include interest rates and costs of imported products.

3. "Only by delivering a strong economy can government deliver a sustainable National Disability Insurance Scheme ..."

Implying Australia's economy is not strong now? In fact, Australia's economy was ranked 12th in the world in 2007. It is now clearly number one. Switzerland and Canada are jostling for second. But no economist disputes Australia's ascendancy – on virtually every measure.


4. "In the second line of this week's budget speech the Treasurer said that it was a budget for jobs and growth. In fact, unemployment increases and growth decreases."

The problem here – and an embedded difficulty throughout – is ignoring the global financial crisis. The GFC devastated economies worldwide. None was spared.

Average annual increase in Australia's gross domestic product was 3.65% during the 11 Howard years. Then down to 2.44% under Labor.

But here's the thing: Australia's average through the Howard years was about the same as equivalent countries. The USA averaged 3.04%. Canada 3.3%. Some European countries were higher. Luxembourg averaged 4.78%.

Then the GFC knocked the stuffing out of every economy – except one.

In the five years under Labor in Australia, growth has been 2.44%. But in the USA 0.54%, in Canada 0.94% and Luxembourg 0.52%. And the Euro Zone negative 2.3%!

Economists around the world regard this as a major pointer to the Australian Government being the world's best economic manager. Mr Abbott should not claim the opposite.

5. "That's why good governments are at least as careful spending the money they hold on trust from the people as you are when making decisions that affect your family's budget."

Only twice has there been careless spending in Australia's history, according to a January report by Harvard economist Dr Paolo Mauro and others, published by the International Monetary Fund.

They examined 200 years of finances in 55 countries and found two periods of "fiscal profligacy" in Australia – both during the Howard years. None since.

6. "This government has [made your life harder] with its … skyrocketing debt."

Australia's borrowings, according to many independent analysts, are at the right levels for the times.

New York-based Moody's international credit rating agency reassessed Australia's economy after last week's Budget.

"Consolidated government debt is still low compared to other Aaa-rated countries at well under 30% of GDP," Moody's stated. "Australia's relatively low level of government debt has been one of the factors supporting the Aaa rating."

Only ten wealthy nations reduced debt to GDP in the last year. Australia's reduction by 2.2% was only bettered by Iceland and Norway. That is not "skyrocketing".

7. Far from making "your life harder" it is precisely the low level of borrowings set by the Rudd Government to fund the optimum level of stimulus which saved Australia almost alone in the world [with Poland] from severe recession in 2008-09.

Had the Government taken any other course – followed Coalition policy, for example – Australia would likely still be ranked 12th and mired deeply in recession, unemployment and poverty.

8. "The government promised a surplus over the cycle but this isn't a cycle – it's a spiral, deeper and deeper into debt ..."

Not really. Paul Keating restructured Australia's economy and brought the accounts back into surplus. Keating delivered three. This allowed Peter Costello then to deliver another nine. But who delivered surpluses prior to Keating?

Answer: Arthur Fadden in the early Menzies years. Cycles can be 50 years or more. Australia is still in the low deficit/surplus phase.

9. "But thanks to Labor's poor management over five years, there is now a budget emergency."

No, there isn't. According to Moody's, "The size of the deficits is such that the gross debt of the Commonwealth government will rise only slightly from its currently estimated 19.3% of GDP to a peak of 20.6% in 2014-15. On a net basis, the peak will be 11.4% of GDP, and the government's long-term forecasts have this figure falling to zero early in the next decade."

10. "The Prime Minister guaranteed there would be no carbon tax – but there is."

A bit rich from the man who told the Greens and Independents he would have done precisely the same as the PM to negotiate an emissions reduction outcome through a hung parliament. Especially from one who has placed firmly on the record that the best strategy is "a simple carbon tax".


11. "So with a change of government, your weekly and fortnightly budgets will be under less pressure as electricity prices fall and gas prices fall and the carbon tax no longer cascades through our economy."

Inflation since the carbon tax was introduced has been lower than during the Rudd/Gillard period before the carbon tax was introduced and below the average rate for the Howard Government.

And finally:

12. Regarding "proper cabinet process", Mr Abbott suggests "That's how Bob Hawke and John Howard ran their governments but that's not how government is run now, as the four former ministers now sitting on the backbench have testified."

This was a barbed reference to ministers who departed after internal party ructions. [Kevin Rudd, Simon Crean, Chris Bowen and Martin Ferguson].

But here's the question: how many ex-ministers on the backbench did John Howard take to the 2007 election? Answer: 17.

And here's another question: how many former Howard ministers does Mr Abbott currently have on his backbench? Answer: five. [Judi Moylan, Phillip Ruddock, Bruce Scott, Alex Somlyay and Ian Macdonald.]

So what is happening with media scrutiny Downunder? Does no-one care about accuracy? That seems unlikely given the fury greeting broken promises by Labor.

And what's with the ABC's headline: "Abbott 'honest, competent' budget reply"?

Is there perhaps a double standard with regard to the political parties? Or women in politics?

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About the Author

Alan Austin is an Australian freelance journalist currently based in Nîmes in the South of France. His special interests are overseas development, Indigenous affairs and the interface between the religious communities and secular government. As a freelance writer, Alan has worked for many media outlets over the years and been published in most Australian newspapers. He worked for eight years with ABC Radio and Television’s religious broadcasts unit and seven years with World Vision. His most recent part-time appointment was with the Uniting Church magazine Crosslight.

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