Very little Scott Morrison says about Australia’s economy can be taken at face value to be true. Most speeches or media releases since he became treasurer have been riddled with half-truths, distortions and falsehoods.
Yesterday’s release on the 2017-18 MYEFO included this:
“Today’s Mid-Year Economic and Fiscal Outlook (MYEFO) confirms that the Budget remains on track to return to balance in 2020-21.”
Nonsense. The Coalition has never got a four-year projection anywhere near correct.
In his 2014 MYEFO, Hockey promised a 2017-18 deficit of $11.5 billion. That too has blown out until the current MYEFO forecasts a $23.6 billion deficit. Even that looks unlikely given the actual state of the economy. Just since this year’s May budget, growth in gross domestic product (GDP) has been revised down from 2.75% to 2.5%. Household consumption growth is now down from 2.75% to 2.25% (see table 2.2).
“The projected surplus of $10.2 billion in 2020-21, is an improvement of $2.7 billion compared to May’s Budget estimate.”
Yes. That’s for 2020-21, four years away. What about 2019-20? The opposite is the case. The projected deficit of $2.6 billion in 2019-20, is a deterioration of $168 million compared with May’s Budget estimate.
“The Turnbull Government has wrangled Labor’s reckless addiction to spending and is bringing the budget under control.”
Completely false. The MYEFO clearly shows (see table D1) that spending under Labor for its last three years, after the worst of the GFC, averaged 24.4% of GDP. Spending soared under the Coalition to 25.5% in 2013-14 and has stayed above 25.0% every year since. It is forecast to drop to 24.9% in 2020-21, in Morrison’s fantasy future.
“Reflecting the Government’s prudent fiscal management, net debt is expected to stabilise at decreased levels compared to the Budget over the forward estimates, peaking at 19.2 per cent of GDP in 2018-19 …”
Total nonsense. Expansion in net debt shows no signs of slowing. Throughout calendar 2017, net debt has increased by a monthly average of $3,678 million. That compares with the average monthly rise during Labor’s final ten months of just $583 million.
Yesterday’s MYEFO shows net debt rising from a record $343.8 billion this year to $363.2 billion next year and $365.2 billion the year after [Table D4]. Beyond that is fantasy land.
This outcome is in stark contrast to the forecast by the heads of Treasury and the Finance department in September 2013 that if Labor’s policies had continued, net debt would have peaked at $219 billion in 2015-16 and then declined. The MYEFO message is clear: under the Coalition, debt will continue to rise indefinitely.
“Our economy is strengthening. Growth and jobs are rising and the better days ahead the Government spoke about in the Budget are emerging.”
The Coalition has said this every year since the 2013 election, but each year Australia has fallen further down the global rankings. In September 2013, Australia’s jobless rate was 5.7% which ranked seventh among the 35 wealthy members of the OECD. After three years of surging global trade and corporate profits, Australia’s jobless rate has fallen to just 5.4%, which now ranks 17th in the OECD. That is the lowest since records have been kept.
GDP growth, similarly, has fallen spectacularly in global rankings. Australia was among the top three countries in the developed world through most of the Labor years. For some quarters, including Q1 and Q2 in 2009, it was the highest. Australia now ranks 20th today, the lowest ever.
“In addition to supporting a resurgence in private investment, the Government’s economic plan seeks to boost jobs and growth through investment in infrastructure projects that improve long-run productivity.”
The MYEFO shows this also is just not true. Total capital spending [Table 3.18] will fall from $47.2 billion in 2017-18 to $45.0 billion next year, then $38.7 billion the year after, and then $35.7 billion in 2020-21. As a percentage of total spending, this is steady decline from 11.4% down to 7.8%.
This reveals the Coalition’s real basis for its forlorn hope of eventual debt reduction – by refusing to replace and repair infrastructure.
Hence for Australia’s mainstream media to cheer Morrison’s MYEFO as though he has suddenly achieved something momentous is quite extraordinary to behold.