“Who do you trust to manage the economy?” Not you lot.

by | Apr 26, 2022 | Economy & Markets, Featured, Latest Posts

Scott Morrison and Josh Frydenberg will ramp up their “superior economic managers” rhetoric now that their credentials are so badly damaged on national security by China’s pact with the Solomon Islands. Michael West looks at their track record. 

Over in Yarralumla, at 15 Coronation Drive to be precise, they must be in delighted, perhaps slapping their legs in laughter over a brandy or two. That’s the Embassy of the People’s Republic of China.

For the Coalition government has been needling the Chinese for a few years now over human rights abuses and military expansionism. Now however, while Prime Minister Scott Morrison and his jaded regime have been engrossed in what they do best, electioneering, the Chinese have struck a security pact with the Solomon Islands, a precursor to a hostile military base in Australia’s Pacific region. Military expansionism straight between the eyes.

This soaring incompetence alone ought to cost them the election. They had slashed spending to the Solomons for nine years and ignored the pleas of Pacific Island nations on climate change and aid.

Even with their cheerleaders in the press valiantly defending the indefensible, even endeavouring to blame the Labor Opposition for all this, the Coalition is surely losing the confidence of voters on national security; for being fast asleep at the wheel.

NatSec and “superior economic management”

Natsec is traditionally one of the Coalition’s two key electoral boasts. “Superior economic management” is the other.

“Strong on national security, strong on the economy” is the refrain. The evidence shows otherwise but people believe it. It’s “The Big Lie” theory; if you repeat the lie enough, etc.

So it is, that with severely damaged credibility on foreign affairs and defence, and with voters tired on personal attack politics, the Coalition is now likely to resort even more avidly to their claim to be superior economic managers.

We have been debunking this claim in these pages for years now and will do so here, with links to the evidence, as the corporate media has proven chronically ineffective in holding this government to account for its lies and deceptions.

The track record 

Pre-pandemic:

Pandemic and post pandemic:

  • Treasurer again ignores RBA warnings, buys back bonds when stimulus is needed,
  • Economy shrinks,
  • Recession (albeit global recession),
  • JobKeeper announced, no clawback mechanism, ergo $40bn wasted,
  • Billions wasted on defence (subs, frigates Strike Fighter jets),
  • Budget ’22, when inflation is rising, they stimulate the economy to get re-elected.

On a broad range of economic metrics, Australia has fallen against its global peers during the past ten years.

Just to be clear, this government has done exactly the opposite of what it ought to have done. It has steadfastly ignored expert advice. And now they are lying about it.

How the Reserve Bank rescued Australia from Scott and Josh

The Lucky Country much

It is fair to say that Australia is a very lucky country. The gargantuan demand from China for our commodities, chiefly iron ore and coal, has boosted the fortunes of both parties in government since the turn of the century. Labor too has been lucky, breezing through the Global Financial Crisis until 2013, almost alone in the world in avoiding a recession, thanks to exports demand from China.

The difference is that the Coalition’s management has been incompetent. Labor’s stimulus was showered on ordinary Australians, on consumers not investors, people who went out and spent the money. This stimulated the economy.

The Coalition, via JobKeeper and other measures, gave the money to companies, not people. Far more money too. To companies which did not need the money. So a lot of it simply went to shareholders and executives, pushing up asset prices on the ASX and in the property market.

In short, it was an unprecedented transfer of wealth from the public to private corporations.

Buying growth with debt

Now, with record government spending, record bond issues and therefore record government debt, the Coalition is crowing about its performance on economic growth. Though it has simply bought this growth with debt; and now they are busy cherry-picking numbers and timeframes to suit their political agenda.

Economic growth figures for instance. Of course the economy is growing, it’s due to the inevitable rebound from a deep recession, and massive government borrowing and spending. They’ve merely put it on the national credit card.

Even if they cancel the $300bn and more in new money printed for the pandemic (which they are now quietly doing  although never once admitting to MMT), they still pay the interest bill (and fortuitously get it back via the RBA dividends). 

The Printer and the Shredder: Reserve Bank has neat trick to tackle rising interest rates

Jobs, jobs, jobs

Naturally they don’t boast about wage growth – or “debt and deficit” as they used to; the outcomes here are horrendous. Rather, it is jobs, jobs, jobs. What they never tell you though, is that the low unemployment rate is due to two years of zero migration thanks to Covid. And that underemployment is the problem, as people are counted as employed for working one hour per week.

Sadly, gutted of journalists who either understand these things or are prepared to swim against the raging tides of Coalition propaganda, the media rarely test Scott Morrison and Josh Frydenberg on these basic truths.

As with the protest by scientists over climate action, as with the protests by medical experts over the handling of the pandemic, as with the protests of aged care experts, this government has steadfastly ignored the advice of experts on the economy.

Reserve bankers don’t deploy the same language as the rest of us. There is a vernacular where what appears to be a gentle nudge is really meant as a sledgehammer.

Ignoring the experts, again

Frydenberg was warned by RBA governor Philip Lowe before the pandemic that he needed to stop shrinking the economy. In pursuit of the completely useless political trophy at the time, a budget surplus, the Treasurer simply ignored him.

Worse, as the pandemic suddenly gripped the world and central bankers shifted quickly into overdrive, Frydenberg was admonished again. He was secretly buying back bonds, shrinking the economy at a time when it needed stimulating.

The RBA, people who actually know about the economy, had tapped the government on the shoulder with the central bankers’ equivalent of “Oi, what are you doing you idiots?” 

Now the gross national debt is 42.5% of GDP, way up on the peak debt under Gough Whitlam of 24.5%, Hawke and Keating at 24% and Rudd-Gillard at 20%.

Yet they claim, despite the arrant waste and mismanagement that Labor “can’t manage money”, Luckily for them, they can certainly manage the media, which is yet to cotton on to another fact, that this year, taxes for millions of Australians will actually rise.

Big Budget Bluff: how the Coalition conned its media allies and left 10m Australians in the lurch

 

This despite their claims that taxes will fall. They will fall however for top income earners who, under Stage 3 tax cuts, will get thousands of dollars back in their kit.

 These are the sad facts of the Coalition performance. But what of vision for the future? There is none. All is based on a spurious, spun line, “trust us, we are superior economic managers”. 

The transfer of public wealth from poor and middle income earners to wealthy Australians continues apace, as does the $12bn in subsidies for fossil fuel companies, mostly foreign multinationals which pay little or no tax.

 

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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