Malcolm Turnbull’s debt ad doesn’t add up
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Seen Malcolm Turnbull’s new ad on debt? (see here for the version with spaghetti western-level dubbing http://www.liberal.org.au/).
We thought we’d subject the claims of this advertisement to some scrutiny.
I prefer my economy not in the control of politicians, actually. Perhaps Turnbull means “lost control of the budget”, which might make more sense. Except, it was only the other week that Joe Hockey was saying at the Press Club that most of the Budget in fact isn’t within the Government’s control. “The reality that around 95% of expenditure in each budget is politically non-discretionary for the government. Funding for pensions, unemployment benefits, defence, Medicare, schools and so on, is effectively locked in unless – and this is very important - the government is prepared to accept the risk of substantial electoral pain. Governments would deliver radical change if they were to tinker with 95% of the Budget.” So presumably what he meant was “Kevin Rudd and Wayne Swan have lost control of the 5% of the Budget that is politically discretionary.” Anyway, we quibble. It’s a good opening line for an ad, reminiscent of those “I’ve lost…!” ads The Late Show used to mock.
Nice elision, although I’m not sure about “cash at the bank”. Sounds rather old-fashioned. Turnbull carefully avoids any reference to the global economic crisis of any kind, making our current fiscal position the result of a giant act of economic vandalism by Labor. It is, though, not strictly accurate. 18 months ago, as now, we had a structural budget deficit papered over with mining boom proceeds. Once the boom ended, it turned out there wasn’t any more cash at the bank.
The entire debate about at what point the Commonwealth will again be debt-free is nonsensical on several fronts, even without discussing the CPI in 2022. It demonises debt, which in the hands of most households and businesses is a critical tool for growth and prosperity – and they pay higher interest rates than governments. And it assumes a level of government control over its own revenue that is fanciful. A return to pre-GFC economic conditions, coupled with some basic fiscal discipline, will see a rapid return to sizable surpluses. A prolonged downturn or anaemic recovery will doom even the most disciplined government to years of deficits or marginal surpluses. You can’t conjure up money when it isn’t there. As for the Coalition’s effort in the 1990s, in 1996 government revenue was $132b. Next year, mid-recession, it will be $290b, so this Government has more than twice the revenue. The Coalition had two good budgets in 1996 and 1997, and then progressively succumbed to indiscipline, leaving the budget in poor structural shape when they left office.
Absolutely. Which makes this exchange last Thursday between Turnbull and a journalist a bit peculiar.
It just doesn’t add up, but it’s not a question of a number? How’s that work? Truth is, both the Government and the Opposition are lying to Australians. The Government was right to take us into debt the try to offset the impact of the economic crisis, quite apart from its impact on its revenues. But trying to seriously claim that it is capable of holding future expenditure growth to 2% when it struggles to make any tough decisions is asking too much. This is the Government that had added to the structural deficit with pension rises, with a piddling offset of increasing the retirement age by two years more than a decade hence, and committed to billions of extra protectionist support for industrial basket cases like the car industry out to 2020. This is the Government that refuses to really get stuck into superannuation concessions that cost the government tens of billions of dollars a year. 2% real growth? Are you kidding? The Opposition is even worse. It’s not even clear whether the Coalition still thinks a stimulus package of any size was necessary, although it supported the first one. The tone of Turnbull’s ad is that all government debt of any kind is bad. There are only three ways of getting “debt under control” – raising more revenue, reducing spending, or hoping economic growth is much higher and increases your tax take. Having criticised Treasury’s Budget recovery assumptions, presumably the third option is off the table for the Coalition. Which leaves higher taxes or lower spending. In a budget that is still stuffed with middle-class welfare and handouts to business and farmers, there are in fact loads of opportunities to significantly reduce spending. If the Coalition was genuinely committed to reducing the size of government, this ad could be taken seriously. They’re not. |
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13 Comments
Bernard you rightly criticise the pollies for their hyperbole but can do a fair job of it yourself. Just what are these super concessions that cost the government billions of dollars a year? That’s hyperbole on steroids.
Turnbull has been a disappointing coward as Liberal leader. He pretends that the deficit wouldn’t exist if he were PM. When pressed he says it would be a lot smaller than Labor’s but without giving any idea what “a lot” means.
He is trying to win by using old shibboleths about deficits without having any coherent economic policy. Howard corrupted Liberal party fiscal policy and he does not have the courage to stand up to that corruption.
I await, but not holding my breath, Turnbulls acknowlegement that growth in the economy as announced today actally went up, thats up as in not down. Retail growth was up over 14%, wonder why. Surely nothing to do with the Govts money injection by way of stimulance packages. By comparison the major world economies UK,US,CANADA,JAPAN, GERMANY went into minus. That news along with the utter shambles the Opposition is in over carbon trading and climate change, as exposed by the quickly sounding senile Tuckey on this mornings doorstop, advising 30 percent of the Libs dont want a bar of any policy, Turnbulls no policy on Insiders yesterday and the idiot member for Sturt Pyne on the ABC last week declaring, there are a lare number of Libs opposed to a climate change policy, but ae supporting Turnbull to allow him to look a strong leader. So be it, as always the rabble doesnt change. The leader of the Nats made yet another different pronouncement this morning, what the hell is it with this mob? They are like seeds thrown into the wind going in all directions.
Bernard (David Sanderson please refrain from commenting on a simple question I wish to ask Bernard).
Bernard. I was of the opinion the regrettable Malcolm Turnbull, backed up of course, by the Einsteinian brain power of his cohorts was always rabbiting on about their superior economic knowledge. So good that they didn’t have any debt, I thought. Yet ‘They can repay debt twice as much debt in about half the time that the coalition did when we were in government’. Is this an accurate statement he made?
I apologize for my ignorance.
http://www.google.com.sg/search?hl=en&rlz=1C1GGLS_enAU291&q=“they+can+repay+twice+as+much+debt+in”&btnG=Search&meta=&aq=f&oq=
3 hits, one of which is crikey.
The no-debt claim Turnbull makes is untrue. Or perhaps to make it clearer it is a lie. The government owed my self managed super fund, for the whole of the Howard term, $100,000 in indexed bonds. They still owe them to me. I was not the only one they owed such monies to. In fact I, believe that the total outstanding debt was circa $50 billion. As I have pointed out before, Dollar Sweetie did want to pay it all off, but it was pointed out that Government bonds provide some utility in the financial market and in fact provide considereable utility to the Government of the day. So government bonds remained in spite of his silly idea.
I also understand that under Malcom’s guidance the Liberal opposition has just voted for an legislative instrument that will enable the Government to get into bonds in an even bigger way. Perhaps as usual they are not being totally honest about the debt position or their view of it. Honesty does not seem to be a currency that they hold in great regard. I suppose that it is a great diversionay tactic such that they don’t have to have a real position on any of the real issues that matter like what to do about climate change or the dependency ratio.
What an absolute waste of money and an insult to the electorate trying to smother the elephant in the room namely a recession aka GFC or monetary meltdown. Malcolm is coming across as a sniping peddler of convenient untruths and it demeans him and his Party. The Coalition lurches from bad to worse as Brian Loughnane and co continue to underestimate the impact of the Howard era, the succession of Liberal leaders, Costello’s unconscionable conduct as well as the hackneyed use of simplistic fiscal analogies such as ‘money in the bank’. At a time when everyone has debts continually shoving the word in our face gives us the creeps. Worse are the persistent references to the good old days under Howard. They weren’t and we got rid of him and still this wretched Coalition keeps looking back and ignoring reality.
The Liberal/Nats, peddling FEAR about Labor with no policy in sight. Back to the future…maybe they could try attacking the ‘We’re Coming Back’ Evil Trade Unions too?
BTW, well said, Christine Johnson. Just like with the Republicans in the US, this message from Malcolm will only appeal to the hardcore support base.
Most, if not all literate others can see that the Government’s approach to the GFC is currently having a positive impact, and anyone who is up-to-date will wonder why the Libs only left 20-odd billion in ‘The Bank’ when they were thrown from office in 2007.
Turnbull has been a disappointing coward as Liberal leader. He pretends that the deficit wouldn’t exist if he were PM. When pressed he says it would be a lot smaller than Labor’s but without giving any idea what “a lot” means.
He is trying to win by using old shibboleths about deficits without having any coherent economic policy. Howard corrupted Liberal party fiscal policy and he does not have the courage to stand up to that corruption.
http://www.digitaldirect.co.uk/customerservice
I like this commentary because it is looking at both sides of the equation instead of just ranting about the government. The writer understood that the government had to do what it did to get the economy going. Yet the comment on what the government claim is disputed and rightly so. So it is a very objective in the comments made.
Evelyn Guzman
http://www.debtchallenges.com (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)
This is one of Bernard Keane’s poorest offerings. Nothing wrong with criticising the ad but this attempt at parsing the advert and then countering with Labor Party propaganda is pretty pathetic.
It is completely ridiculous to demand a “figure” on what would have been their budget estimates going forward. This is true for whatever side of politics happens to be in opposition.
Malcolm Turnbull’s argument is that the debt and deficit would be considerably lower had the country than being under a Coalition Government. $20 billion less cash handouts, many billion dollars less for pink batts, school halls, public housing, GM and Ford to name but a few. Nothing in this poor article obviates that.
” Brendon Jarrett
Posted Monday, 1 June 2009 at 2:14 pm | Permalink
Bernard you rightly criticise the pollies for their hyperbole but can do a fair job of it yourself. Just what are these super concessions that cost the government billions of dollars a year? That’s hyperbole on steroids.”
In one go Howard & Costello removed the super surcharge for those whose income is over $100,000 per year - only 600,000 people - cost was $2.5 billion. When you add this to the other lerks and perks, the amount goes into the billions. The Howard govt spent only a few million to catch tax cheats(worth billions of dollars per year) but chase welfare ‘cheats’ who mostly only owe $1000 or slightly more(worth a few million) The Rudd govt has kept up the practice of spending far more catching welfare ‘cheats’ than going after those who owe US BILLIONS! Of course Turnbull and yourself don’t even mention those families with over $1 million income per year, still receiving family benefits, and the rich schools, with millions in the bank still hold out their hands for yet more funds. Then, there’s those in receipt of over $200,000 per year who receive Medicare pay back sums - for what? Essential health care or cosmetic surgery or ???Funny how Turnbull doesn’t mention these abusers of the system either?
I find it amusing and annoying, that in a country where every man, woman, child, cat and dog owes heaps of dollars on plastic cards and mortgages, these self righteous moralists whip up hysteria about the National Government borrowing money. I also feel angry, that Turnbull doesn’t blame his mates on Wall St or wherever, whose bloody greed led to this situation, and then they have the gall to take money from the ‘little people’ to socialize their debts, while they capitalize the assets by giving themselves huge payouts - and there’s 2 million mostly coloured people in jails in the US - while these crooks walk around in silk suits? Yeah, hyperbole at best; I call them criminals! While this is going on, some young person(in the US) steals an Ipod or ?? and as it’s their 3rd offence, into the slammer they go? Something is horribly wrong here! But rarely a word of castigation passes the lips of either major political party these days, and when Kevin Rudd did, he was castigated for it! The rich in this country don’t have a problem with the fact, that those who can least afford it help prop up their lavish lifestyles, while ordinary strugglers have to wait for months to get surgery for a painful knee or hip replacement, even surgery for cancer, or go cap in hand for a measley $15 per week wage increase! I’ve had a gutful of the hypocritical nonsense!
Brendon Jarrett would have had a cardiac arrest prior to the French Revolution. In those terrible days only the poor were taxed. True, the richer the person, the less tax they had to pay. No wonder Versailles could be built.