Australia’s recovery is leading the world? Biggest economic shock since the Depression? There used to be a rule against misleading Parliament. No longer, it seems, writes Alan Austin.
This is almost certainly the most corrupt budget process Australia has endured in living memory. Its deceptions and contradictions are found throughout the budget documents and the Treasurer’s presentations.
The falsehoods
Treasurer Josh Frydenberg told the Parliament:
We have overcome the biggest economic shock since the Great Depression. Our recovery leads the world. Faster and stronger than the United States, the United Kingdom, Canada, France, Germany, Italy and Japan.
The economic shock caused by the pandemic was nowhere near the worst since the Depression. Few developed countries remained in recession for more than one quarter in 2020. Many stayed in recession during the early 1980s recession and the global financial crisis (GFC) for years.
The claim that Australia’s recovery “leads the world” is one of the two most easily disproven falsehoods in the history of budget fabrications. Australia is nowhere near the leaders.
There are 58 highly developed countries, listed by the United Nations Development Program, with populations above 300,000 for which we have current annual GDP growth figures. Australia’s modest 4.2% for the 2021 December quarter ranks 43rd among those 58 nations.
Et, en France?
France, the UK, the US, Sweden, Spain, Austria, Belgium, Norway, and Portugal all grew by more than 5%. The Netherlands, Italy, Hungary, Greece, Singapore, Saudi Arabia and Poland advanced by more than 6%. Ireland, Israel, Turkey, Argentina, Croatia, Georgia and Estonia expanded by more than 8%. Chile, Colombia, Malta, Panama and Slovenia grew by more than 10%.
Other measures also have Australia well down the global tables, and near the bottom on some. These include youth jobless rates, wages growth, retail sales, productivity, social housing and infrastructure investment.
There used to be a rule against misleading Parliament. No longer, it seems.
In another questionable claim, the budget papers assert:
Employment in Australia is now well above pre-pandemic levels, and has grown by more than any major advanced economy.
This is the second of the two most easily disproven falsehoods in Australian budget history.
Since December 2019, the last quarter or month before the pandemic, Australia’s employment has increased by 3.03%. Not bad. But below other wealthy, developed OECD members.
Norway and Israel increased their employed numbers by more than 3% over that period. New Zealand, Denmark and the Netherlands lifted them by more than 4%, while Ireland and Turkey are up more than 6%.
The budget papers claim, further, that:
These [employment] outcomes have been underpinned by the Government’s $314 billion in direct economic support, including JobKeeper, which assisted around 4 million individuals and 1 million businesses.
Again, clearly contradicted by the data. The headline jobless rate was 5.72% in February 2016. In February 2022 it had fallen to 4.04%. This improvement is not the result of businesses employing more workers. It is the result of state and federal governments expanding the public service at an unprecedented rate.
The private sector employed 83.2% of the workforce in February 2016. By February 2022, after hundreds of billions of borrowed dollars had been handed to corporations in the pretence that this is boosting jobs, the private sector now employs 82.2% of the workforce – a significant decline.
Meanwhile the percentage employed by governments soared from 11.5 to 14.2 over those six years. The number of “workers” on the public purse has ballooned by more than half a million from 1,451,700 to 1,981,200.
Core contradictions
Assertions of sound management are refuted by the need to boost temporarily pensioners’ incomes just before the election. A one-off handout of $250 goes to pensioners, carers, veterans, job seekers and concession card holders.
Claims of excellence are also refuted by the deep deficits forecast to continue indefinitely and gross debt which is set to peak at a staggering 44.9% of GDP in two years.
Tax cuts are precisely the wrong fix
More than in any previous pre-election budget, promised tax cuts are pure electoral bribes. They make no economic sense when household savings are near all-time highs, deficits are at record depths, debt is careening towards a trillion dollars and funds are needed urgently for infrastructure and other priorities.
If, as MWM reporter Callum Foote has reported, taxes will actually rise in the wake of this budget, that will actually be quite positive for the economy to the extent it impacts higher income earners.
Frydenberg hides $30 a week tax increase for most Australians
Tax cuts offered to businesses are counterproductive. They offer no assistance to family business or other enterprises struggling to break even – which therefore pay no tax. They simply hand extra cash to already-profitable businesses, including large foreign corporations which send much of that wealth straight offshore.
Mainstream media has nowhere to hide
In the 2010 election campaign and all polls since, the mainstream media have insisted the Coalition should gain or retain office on four critical economic issues: propensity to spend taxpayers’ money, tax levels, deficit budgets and the ballooning debt.
Compare outcomes over the five years and nine months of Labor’s term and the Coalition’s eight and a half years. Labor added an average of $37.0 billion to the gross debt each year. That’s despite the devastating global financial crisis – which actually was the worst since the 1930s.
The Coalition added an annual average of $53.4 billion to the debt. That was just in its first five years, before the pandemic, when all well-managed economies were rapidly repaying the debt needed during the GFC. Since 2018, the Coalition has added $93.6 billion annually.
Economic commentators and editorial writers now have not one argument in favour of their pro-Coalition narrative. As shown by MWM and elsewhere, the Morrison government has now recorded more than 60 all-time worst economic outcomes.
Will the ruses in this budget work? Will it win the Coalition another term? We shall soon see.
Alan Austin is a freelance journalist with interests in news media, religious affairs and economic and social issues.