Baby steps for Scott Morrison: in his first serious outing as Treasurer last night on 7.30, Morrison at times looked all at sea as he struggled to convey a clear message about tax, overall fiscal settings or the economy generally. Still, he’s only just got his feet under the desk and we hope will improve — even Joe Hockey wouldn’t have responded to Leigh Sales reeling off a list of hard economic stats by saying “well, that’s your take” — no, mate, that’s the Australian Bureau of Statistics’ take. Tony Abbott was the bloke who liked to pick his own facts and reject those he didn’t like, and we all saw where that got him.
And alas, Morrison has already dreamed up a third-word slogan — the kind we were all hoping we’d moved on from under Turnbull, who promises a more verbose, explanatory era, one explicitly about advocacy, not slogans. “Work, save, invest” is the Morrison mantra (is he channeling that old Mars slogan, “a Mars a day helps you work, rest and play”?). Problem is — perhaps Morrison hasn’t got to this bit of his voluminous new minister brief from Treasury yet — Australians already work hard, save hard and invest hard.
For example, the June quarter national accounts show that our savings ratio was 8.8%. That’s down from more than 10% at the depths of the GFC, when we were all furiously saving and paying down our mortgages in a panic about the state of the economy, but it is also high historically in this country. According to the Reserve Bank, around half those holding mortgages are still repaying their loans at higher than required rates. And as the National Accounts data has shown in recent years, Australia’s labour productivity levels are back up to their historical average — it’s been only a couple of months since the Productivity Commission showed that labour productivity under the Fair Work Act was well above the level of the late Howard years (and WorkChoices). We also have, according to both the PC and the Reserve Bank, flexible workplaces, and Australians hardly ever go on strike — levels of industrial disputes are at historic lows, well below even the levels of disputation we saw in the Howard years.
And we invest. The superannuation system has now accumulated just on $2 trillion in assets. And many individuals have share portfolios outside that, either in self-managed super funds or in trusts or companies, or as retirement accounts, or investment accounts. Maybe Morrison thinks we should be investing more in equities and less in residential property. If so, that can be easily changed by ending negative gearing and the 50% capital gains tax discount. But they are revenue changes — and Morrison thinks we only have a spending problem.
To be fair, on that point, it was welcome that Morrison acknowledged current levels of spending, two years into a Coalition government, are actually above the levels of the Labor years and stuck there, at around 26% of GDP (or higher, he seemed to imply yesterday), confirming that for all the rhetoric of small government, the Coalition have been big spenders — bigger spenders than Labor — in their budgeting.
Unfortunately, Morrison seemed hell-bent on flogging the hell out of a straw man, responding to every effort on the part of his interviewer to talk about Australia’s shrunken tax revenue base as though it were advocacy for massive hikes in taxes. Now, understandably, Morrison wants to signal to colleagues that he’s going to be tough on spending in the Expenditure Review Committee. Fair enough. But the Hockeyesque “we have a spending problem, not a revenue problem” is sheer denialism — especially when there are good opportunities to both improve tax efficiency and accelerate the return to deficit by cutting back on superannuation tax concessions and ending fringe benefits tax rorts.