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Apr 1, 2014

Fiscal fools: give us a break on the budget BS, Joe

Joe Hockey's pre-budget spinning has veered into outright falsehoods as he attempts to claim Labor has boobytrapped the budget. Bernard Keane and Glenn Dyer report.

We’ve now entered the traditional pre-budget softening-up period in which treasurers engage in expectations management ahead of the fiscal set-piece of the year in May. But even given that, Joe Hockey is treating us as complete idiots.

The line Hockey has been pushing for some days now, and which he gave a big push to yesterday in a flurry of media appearances, is that not merely did Labor hide the level of deficits in the current budget cycle, but that it left a series of hidden spending commitments in the unpublished years beyond forward estimates. Hockey has been circulating a document to journalists portrayed in the media as a “Treasury analysis” that shows how “the Coalition inherited an unsustainable budget position” and Labor “hid [expenditure] from the public”. Hockey would like us to see him as a budgetary innocent who has found himself in the middle of a fiscal minefield planted by Labor.

Well here’s the document, and it isn’t a “Treasury analysis” — it’s prepared by Hockey’s media adviser, former Australian Financial Review journalist Gemma Daley. And if Hockey seriously expects us to believe his latest argument, he must have nothing but contempt for us. This is Hockey yesterday:

“We didn’t anticipate that everything else would be of equal or larger scale as a tsunami coming across the water. The fact is Labor’s left us with a massive forecast increase in foreign aid, a massive increase in defence – for example in one year, there’s meant to be a real increase in defence spending of 13 per cent, a 66 per cent increase in foreign aid.”

At another media conference, he said:

“If no action was taken on the budget, what the fifth-year deficit would look like, contrary to what both Labor promised was a surplus, if no action was taken, based on the approximately 6% increase in expenditure between the fourth year and the fifth year, which Labor locked in on NDIS, on Gonski, on overseas aid, on hospitals, on defence …”

Well, um, tsunamis are actually tiny when they’re on the ocean — but never mind that, let’s look at the detail. Labor in fact revealed the funding for the National Disability Insurance Scheme — or DisabilityCare as it had been renamed — in the budget last May, with new spending broken down out to 2019:

In addition to the numbers in the budget papers, there was a specific “glossy” with funding graphs for DisabilityCare and one for education funding as well, which was still being finalised in deals with the states. The increase in foreign aid was also in both the budget papers and a ministerial statement by Bob Carr — not that the government got any credit for it, because it was actually a reduction, with the government’s Millennium Development Goal commitment to lifting foreign aid to 0.5% of gross national income put back another year to 2017. The government spelt out its planned increase in foreign aid up to and including 2017-18.

In fact in question time last week, Labor invited the Prime Minister to spell out the government’s MDG policy, which he duly did: aid is to reach 0.5% of GNI when the budget returns to surplus. Which raises the question of why, in Hockey’s Mid-Year Economic and Fiscal Outlook in December, Hockey left Labor’s MDG aid funding increase intact, in defiance of the government’s own policy. The answer, of course, was that it would inflate the budget deficit for 2017 and beyond.

As for defence, the Gillard government gave the portfolio a “guidance” that it would receive around $220 billion in the six years from 2017-18, which Hockey’s document proposes to mean funding would leap 13% in 2017, when in fact the “guidance” reflects a growth rate in defence spending from 2017 lower than the average between now and 2017 of nearly 7%. And remember that Labor was repeatedly criticised for decreasing defence spending — every armchair general and arms industry lobbyist in the joint was whinging about how we weren’t spending enough taxpayer money on buying gear from the US military-industrial complex. “Military spending slumps to 1930s level,” The Australian‘s Paul Kelly shrieked. The 1930s theme — hint, appeasement!­ — was picked up by the Coalition, including Tony Abbott and Barnaby Joyce. Abbott “aspired”, he said, to lift defence spending to 3% of GDP.

So, Labor were both neo-Chamberlain surrender monkeys for not spending enough on defence when in government and now, magically, reckless spendthrifts who committed too much to defence at the same time.

Hockey’s fiscal innocent act is a little hard to believe given we were told what an exhaustive, indeed exhausting, shadow ERC process Hockey was leading within the opposition at the time to establish its fiscal credibility.

And above all, there’s this point: if Hockey seriously believes his own claims about the budget beyond forward estimates, why did he remove Labor savings measures that offset future spending? Why did he remove the 15% tax on superannuation income over $100,000 a year, costing the budget billions beyond forward estimates, for the benefit of high income earners? Why did he restore the Fringe Benefits Tax rort on novated leases — remember Joe being photographed in front of a sports car? And why have Hockey and his leader pushed for the abolition of the mining tax, which even in its crippled form, according to Hockey’s own MYEFO, is worth more than $3 billion over forward estimates? Eventually it will be the only way of recovering some of the profits offshore owners of LNG and iron ore projects will make and ship overseas (over 60% of these projects are foreign owned or controlled).

Then there’s the silly decision to hand $8.8 billion of borrowed money to the Reserve Bank in one hit, when it doesn’t need the capital. And the sale of Medibank Private — a $4-5 billion contribution to the budget — will be spent on roads because Abbott wants to be an “infrastructure prime minister”, when it could cut the budget deficit or the debt. That could be $13-14 billion off the deficit and debt right there — or an interest saving of more than half-a-billion dollars a year.

Hockey is talking about sharing the budget burden around, but that’s only after the government plans to increase its own spending for political purposes and sought to hand billions of dollars in tax revenue back to foreign mining companies, large carbon emitters and the well-off in the community — revenue that would have offset exactly the spending on education, disability and foreign aid that Hockey is now claiming to have only just discovered.


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50 thoughts on “Fiscal fools: give us a break on the budget BS, Joe

  1. barramundi

    Straight out of the costello playbook

  2. Tyger Tyger

    Asking Joe Hockey and this government not to lie, obfuscate and deceive is like asking the sun not to rise.

  3. ken shaw

    Liberal mumbo jumbo to get people to accept being screwed in the next budget

  4. Observation

    The Liberal party have become the experts at spinning a message without scrutiny from the public. They know how to get the average Joe to repeat their false message at the kitchen table and around the BBQ.

    Everything they are submitting to change is focused on the top down philosophy by feathering the nests of the rich so the plebs can fight over the scraps as we see in the examples in this report. One that is missed is the paid parental scheme. You will notice most of the reforms to help the underprivileged are being worn away and the Gonski report is being challenged …err sorry …reviewed at every step.

    They will push their unfair austerity measures and assist the rich until their political capital is exhausted.

  5. John Kotsopoulos

    Indeed, why Abbott being allowed to misrepresent the budget position when he has dismantled savings measures due to be implemented by Labor and has committed to rash spending measures of his own? These include his gold plated parental leave scheme and his costly and ineffective Soviet style central planning approach to dealing with climate change. Crying poor while using taxes to pay polluters to do things like carbon sequestration a process which scientists say is already being implemented is a joke, an expensive joke.

  6. Jamil Hanna

    Crikey is the only place brave enough to scrutinise the Liberals’ tactics of painting the picture of an economic armageddon.

    This is the only Western nation with a AAA credit rating after the GFC, right? The only nation not to go into recession?

    Please Joe, you’re a bad actor at worst.

  7. klewso

    “Where ya goin’ with the family cow, Joe?”
    “Someone told me there’s this place I can get a handful of magic beans for her!”

    [“Labor booby traps”? How much did Howard & Cosjello’s tax cuts and Iraq cost the deficit?
    Spot the booby?]

  8. mikeb

    The media will parrot this spin from Hockey and the tragedy is that most people will accept it as fact. Unfortunately only a small minority take time to read proper analysis pieces like that from Crikey.

  9. Steve777

    I find it easier to assume that any public statements by Abbott, Hockey, Pyne et al are half-truths, disinformation or outright lies unless corroborated by a reliable source (which excludes any News Corp outlet). I heard some of the interviews yesterday. It would seem that, inter alia, Joe Hockey is laying the ground for the Abbott Government’s backing out of more election commitments, including the NDIS. That plus, of course, blaming the Abbott Government’s ongoing failures on its predecessors.

  10. Mark Duffett

    “mining tax…only way of recovering some of the profits offshore owners of LNG and iron ore projects will make and ship overseas”

    So state royalties are going to be abolished?

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