There’s been plenty of rubbish commentary on last week’s budget but we had to wait until today to crown the winner of the trashiest piece of “analysis”. Step up Terry McCrann, the Herald Sun’s part-time climate scientist and full-time right-wing economist, for this extended piece of vitriol at Labor’s expense.

Like Terry’s efforts on climate change (which extended to accusing Julia Gillard of trying to impoverish Australia and Kevin Rudd of ensuring he’d “destroy” the Australian economy when he signed the Kyoto Protocol), this had a smattering of numbers to give the appearance of analysis, but was in fact just an hysterical spray at a preferred target — in this case Labor.

Terry’s hook was the $75 billion in additional revenue over the next two years that he says every commentator failed to spot — although he fails to mention he missed it as well.

We haven’t seen that sort of revenue spurt since the early (Paul) Keating budgets of the mid-1980s. And before that, the even more amazing revenue increases of the Whitlam years in the mid-1970s. Funny about that: they’ve all been Labor governments. They’ve proved extremely adept at scooping up money from you, the taxpayer.

This is (Terry) McCrann’s shtick, that Labor are incorrigible taxers. Later, McCrann refers to the “huge tax rises to haul the deficit in”, although without managing to identify any of the increased taxes (because there aren’t any except the temporary flood levy).

It’s hard to know where to begin with such obtuse claims.  This government’s record on taxation receipts is that it is actually woeful at “scooping up money from you, the taxpayer”. Government revenue fell nearly 2% of GDP between 2007-08 and 2008-09, and then fell a further 1% of GDP in 2009-10. This year it’s forecast to fall again, to 22.4% of GDP. Three falls in a row.

On his record, Wayne Swan is rubbish at “scooping up money”.

Of course, that’s because of the GFC. But like many another conservative commentator, (Terry) McCrann would like us to think the GFC was some minor inconvenience. A “temporary and very shallow slowdown” is what he calls it.

It was indeed that, but because of the government’s response, not separate from the government’s response.

And this is the really offensive aspect of McCrann’s hysterical rant. McCrann’s accusation that Labor has permanently increased spending is wrong. Spending has indeed gone up under Labor — it surged to 25.9% in 2008-09 and 26.4% of GDP last financial year. But it is forecast to fall back to 25.3% of GDP this year, and is forecast to be 24.8% in 2011-12. When was the last time spending was this high? You have to go all the way back to … 2003-04, when spending was 24.9% of GDP.

Some “much higher permanent spending base”, Terry.

Where it gets offensive is McCrann’s suggestion that the spending was purely because Labor just likes to spend.

McCrann, other conservative economists such as Henry Ergas, News Ltd and the Coalition want to rewrite history about the GFC, and pretend that Labor’s decisions to ramp up spending in 2008-09 and 2009-10 were somehow unrelated to how Australia weathered that storm. In fact, they were fundamental to Australia withstanding the global shocks. And they are the reasons tens of thousands of Australians, maybe hundreds of thousands of Australians, kept their jobs. This may seem obvious to a lot of people, but there is a persistent campaign to mislead people into thinking they had nothing to do with it.

This is all a parlour game for highly paid newspaper commentators and economists who need never fear losing their incomes. They have the skills and resume to pick up a highly remunerative job no matter what the economic conditions. For them, the GFC was an interesting global economic experiment. For ordinary Australians working in construction, in mining, and retail, and manufacturing, the GFC was a real threat to their jobs, to their mortgages, to their families. It could have been a gateway to the sort of large-scale misery we saw in the aftermath of the 1990s recession — lives ruined, skills wasted, careers wasted. The sort of scourge the United States is now enduring.

Those are the stakes Wayne Swan and Kevin Rudd were playing for in 2008 and 2009. And now (Terry) wants to wish it away as some sort of genetic predisposition to waste money by Labor politicians.

In April, Swan’s former chief-of-staff, Chris Barrett, gave a long address in Washington on the government’s response to the GFC. It received little attention in Australia apart from Shane Wright at The West Australian, but should be compulsory reading for anyone interested not merely in economics but government policy making, because Barrett provides an insight into exactly how the government’s response to the GFC unfolded. Apart from building a detailed case for exactly how big a role the stimulus packages played in supporting growth, Barrett notes, almost in passing, that the government shelved several planned spending cuts in the 2008-09 budget when it became clear to Swan in his meetings with foreign counterparts that there was something catastrophic going on overseas.

Those with long enough memories will recall that the 2008 budget was attended by great clamouring (include my own) for savage spending cuts, and general disappointment from economists when the promised bloodbath didn’t materialise — because, I recall Swan saying in the budget lock-up press conference that year, because it would have smashed the economy into a wall.

In retrospect, Swan and the government made exactly the right call, and made it in the most difficult possible environment. It’s easy to manage a budget when a mining boom is raining revenue on you, as Peter Costello found. It’s a damn sight tougher when tens of thousands of jobs rest on your judgment about how hard you restrict spending when a major crisis is enveloping the rest of the world.

Again this year there’s been clamouring (and again from me too) about the lack of hard spending cuts in the budget. But as several commentators have pointed out, the budget settings are already strongly contractionary. Spending will actually fall in real terms in 2011-12. Yes, Labor should have hopped into spending much more than it did, not out of any race back to surplus, but to cut poor spending from the budget and ensure it is set up for the fiscal challenge of an ageing population, rather than simply relying on the minerals boom to fund it.

But for all McCrann’s complaints about too much spending, what has he had to say about Labor’s actual proposals to cut spending? Did he rail against his News Ltd colleagues for their defence of middle-class welfare? Has he ever written in support of a single Labor savings measure over the past three years? How about the private health insurance means test Labor proposed in 2009? Or cutting super contribution caps? Or rather is he one of the commentators nailed by Ross Gittins yesterday for demanding big cuts but then going missing in action in supporting the cuts Labor was proposing?

Then again, it’s all a game for Terry and friends, so why should we expect any consistency?

Peter Fray

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