Ah, the time-honoured rituals of the Australian fiscal cycle.
In the first week of May, every year, as tension and excitement — well, OK, mild interest — mounts in Canberra over the last remaining unleaked details of the budget, economic consultants Access Economics (these days part of Deloitte) produces its own economic and fiscal forecasts, in accordance with its status as a sort of alternative, private sector Treasury. The media accords these forecasts the same status as if they were inscribed on stone tablets and hauled down from Black Mountain nearby, and Chris Richardson, with his finely honed instinct for the proximity of any live camera or microphone, is all over the media, speaking authoritatively about what will happen in the coming years.
Now, as the fiscal cycle has expanded to make MYEFO a landmark event, Access has responded by making a big event of its own mid-year forecasts. And didn’t they get a lot of bang for their buck today, with front pages on The Oz, The Age and The AFR and follow-up media coverage. Just shows what releasing a report on a lazy Sunday (an old Access approach) can do.
As Glenn Dyer and myself have lamented before, Access’s prediction record is none too flash (and I should know, given my own dreadful prediction record), but this doesn’t seem to perturb the media, which enthusiastically details the latest Access forecasts down to decimal places. Apart from the annual ritual throughout the 2000s of predicting that the mining boom was about to collapse, there was its 2008 prediction that unless Wayne Swan went Hannibal Lecter on spending, interest rate hikes would be needed to stop rampant inflation.
By that stage, the threat of the US financial crisis was already enough for Swan and Treasury to put the meat axe away for fear of dramatically cutting demand going into a slowdown, a judgment that subsequent events vindicated. Then there was Access’s early 2009 warning that it would be “impossible to avoid a recession”. The Rudd government promptly did exactly that.
Where this gets more serious than how prediction is a mug’s game and people forgetting the track record of consultants is what Access does with the remarkable free publicity it generates for itself. Access is an economic consultancy that hires itself out to anyone who wants an “independent” economic research report to strengthen their case. And Access isn’t shy about taking sides on major public debates. There was its intervention, paid for by the Distilled Spirits Council of Australia, in the alcopops debate, labelled “as dodgy as a three-day-old kebab” by Nicola Roxon. Then there was its pro-industry efforts to sway the debate over carbon pricing — for the Australian Industry Greenhouse Network and the states, and its work for the big miners over the RSPT (on both the industry’s current tax rate and the apocalyptic consequences of the RSPT), just to name a few.
Access was the groundbreaker of the economic consultancy industry that has emerged in Canberra in the past 20 years like a carbuncle on the public policy process, an industry that is shameless in offering anyone with enough money the imprimatur of “independent modelling” for their cause. It has been one of the key reasons economic reform has become harder for those politicians committed to it, because every industry affected by reform can now craft its own self-serving modelling to argue why it should receive favourable treatment. The media are the enablers of this process, willing to uncritically run such reports either as part of a partisan agenda, or simply because they lack the interest or resources to subject reports to some critical analysis before running them.
And when you’re in the position that Access is in, of having the media give you free front-page advertising, it’s a licence to print money.