It’s perhaps a sign of the maturation of Australian political debate that a warning from ratings agency Moody’s about the need for tax rises to stave off a possible downgrade in Australia’s credit rating hasn’t caused much of a ripple in the media, even after two of the big banks and JP Morgan made similar observations earlier this week.
More likely, though, it reflects the traditional double standard when it comes to media coverage of economics: if Moody’s had issued such a warning while Labor was in government, News Corp outlets would have gone berserk and the Coalition would be warning that bailiffs were about to come around and repossess every Australian’s home. Instead, The Australian portrayed Morrison — presumably jut-jawed and steely-eyed — as “staring down” the ratings agency. Perhaps the editors at the Oz, in a Rogaine-induced haze, were confusing Morrison with Paul Keating, who responded to a Moody’s downgrade in the 1980s by mocking the agency with a rendition of I’ve Got The Moody Blues at a press conference.
Morrison, instead, used the occasion to lie repeatedly about the government’s fiscal policy:
“Australians will be relieved to know the government doesn’t take this as a licence to tax Australians more, that’s what the Labor party sees this as, they see it as a leave pass to tax Australians more, rather than deal with, as the report noted, the need also to deal with government expenditure. Now one of the points that they’ve raised is that the expenditure restraint that the government is showing hasn’t been supported in the Parliament. And it particularly hasn’t been supported by the Labor party. There’s some $13-billion of savings that would improve the bottom line of our Budget right now, and the Labor party continues to say no to that expenditure restraint. The other thing is this, the Labor party are not just increasingly the tax burden on the Australian economy by $100 billion over the next ten years, they’re not doing it to improve the budget bottom line, they’re going to spend it all, and more.”
Morrison has universally underwhelmed since he became treasurer. But he has shown a genuine capacity to repeatedly lie about the budget, so we at Crikey have decided to keep on fact-checking Morrison every time he does so.
Lie #1: the government isn’t taxing Australians more
Morrison’s own Mid Year Economic and Fiscal Outlook from December shows that the government is committed to significantly increasing the tax burden on Australians.
As a proportion of GDP, the tax burden on the economy has risen from 21.5% of GDP in the last full year of Labor to 22.3% this year and is planned to be over 23% in 2018-19 — putting the Commonwealth tax take at $113 billion more than the final year of Labor. Morrison plans to be the highest-taxing treasurer since Peter Costello sucked 24% of GDP out in taxes before the financial crisis.
Lie #2: the government is showing expenditure restraint
Again, Morrison’s own document reveals the lie. This year spending will be 25.9% of GDP — and that’s higher than it was in 2014-15 (25.6%) and significantly higher than Labor’s last full year — just 24.1%.
Morrison says that the government is going to reduce spending to 25.8% of GDP next year — big deal, that’s still 1.7 percentage points above Labor’s last year — but the problem is, we can’t believe him. The government promised in the 2014-15 budget that spending this year would reduce to 24.8% of GDP — but instead it’s gone up. And between last year’s budget and MYEFO, the government increased its forecast spending from 25.5% of GDP to 25.6%. Morrison is presiding over rising government spending as a proportion of GDP and so far the government’s promises to reduce that spending have not been fulfilled.
Lie #3: the fiscal challenge is because Labor won’t pass savings measures
It’s true that the government has failed to negotiate a number of savings measures through the Senate. But the Gillard government, which lacked a majority in both the Senate and the House of Representatives, managed to get sufficient savings measures through to get spending down to just above 24% (and got attacked by the Coalition for engaging in “class warfare” when it did so) — why haven’t the Abbott and Turnbull governments been able to get measures through just the Senate?
And more to the point, the numbers in the budget papers — the numbers above that show the truth about this high-taxing, high-spending government — are based on the assumption that all the government’s savings measures are passed. That is, even if Morrison had his way and got every savings measure through the Senate unamended, he’d still be trying to lift the tax burden and lift spending.
Given Morrison’s performance as Treasurer so far, perhaps it’s time for an alternative strategy — telling the truth. Couldn’t be worse than now, could it?