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Economics Analysis

Another week of Federal Budget deceptions and hypocrisies

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Treasurer Josh Frydenberg has made several questionable claims throughout his 2020 Federal Budget (Image by Dan Jensen)

The Coalition’s deficits are the deepest on record. But the duplicity is deeper still. Alan Austin fact checks the Treasurer’s recent pronouncements.

THE COVID-19 PANDEMIC has not caused widespread unemployment. This is frequently asserted and may seem plausible. So do a lot of false ideas. But like many things Australians are told to believe by the Coalition and their spruikers in the mainstream media, it is not true.

Jobs growth despite the virus

Several countries whacked by the coronavirus have seen no change to the jobless rate while the pandemic has raged. Others have actually experienced jobs growth this year.

Finland’s economy employed 2,524,000 people in February before the virus struck, infecting and killing Finns at almost double Australia’s rate. But jobs increased from February to July by an impressive 53,000. Same in New Zealand where monthly job numbers have increased over the last five months, despite a severe lockdown.

Other countries to have cut jobless rates in recent months include Serbia, Portugal, Austria, Turkey, South Korea and China. All have been impacted by the pandemic.

Frydenberg’s Budget furphies

Treasurer Josh Frydenberg has claimed while defending his disastrous Federal Budget that:

“...once you suppress the virus you can start to ease the restrictions and that helps create jobs.”

Although that is technically correct, the implication that Australia’s job losses are due to COVID-19 is not. The Coalition is using the pandemic as cover for economic mismanagement on an epic scale.

This is the first of at least nine of the Treasurer’s recent oft-repeated assertions which the evidence refutes.

JobKeeper is not Australia’s most successful program

Frydenberg wants voters to believe that JobKeeper:

“...is the most successful program any Australian government has ever undertaken in an environment such as this”.

Plainly false. The scheme’s purpose was to save jobs. It has failed comprehensively. Unlike the above countries, Australia lost more than 600,000 jobs in April and another 264,000 in May. With some now clawed back, total jobs lost since March remain above 400,000. Worse, nearly two million workers have too few hours to survive.

Australia’s most successful program was during the Global Financial Crisis in 2009 when Australia – alone in the developed world – averted recession and widespread job losses. This is readily proven by global comparisons. Australia has lost more jobs this year than New Zealand, the United Kingdom, the Netherlands, Italy, Denmark, Belgium, Norway, Poland and Japan. In 2009, Australia lost fewer than any of those nations.

Income tax cuts help only the rich

“These are very significant reforms. ...these tax cuts alone will help create 50,000 jobs.”

Income tax cuts do not create jobs. This can be proven in several ways.

Businesses take on extra staff only when their work generates revenue. In recessions like this, revenues collapse and profits disappear because customers have less to spend. So for all loss-making businesses, company tax is the least of their worries and tax cuts won’t help.

Second, we can look at the economies which have tried to boost jobs by cutting taxes. These include the USA, SpainItalyIsraelIndia and Sweden. They failed. Governments which maintained or increased the corporate tax take, in contrast, succeeded. These include Latvia, Germany, South Korea, Ecuador, Taiwan and Slovenia.

The purpose of the tax cuts, as illustrated by a neat ABC graphic, is to shift wealth and income from the poor and middle to the rich. This is the Coalition’s principal goal.

No photo description available.

Labor spending was not ‘baked in’

To the ABC’s credit, Leigh Sales pressed the Treasurer on his hypocrisy regarding Labor’s debt:

“In the 2008-2009 global financial crisis and the years after, the Coalition aggressively and persistently attacked the then Labor Government on the grounds that debt and deficit were signs of economic incompetence and mismanagement. Why shouldn't I apply that same argument to you now?”

Good question.

In response, Frydenberg falsely claimed:

“Well, the first thing is we haven't baked in spending as our political opponents did...”

He used that expression three times while trying to weasel his way out of the corner the Coalition has painted itself into on debt. But it is not true. Labor’s critical stimulus programs all ended promptly when their purposes were achieved. The insulation program ceased in February 2010. The community halls scheme and other stimulus programs ended in 2011 or 2012 as soon as the successful outcomes were locked in.

The Budget has not been balanced

“They baked in spending that we inherited and because of the diligence that we had with the finances we were able to deliver the first balanced Budget in 11 years.”

This government has not delivered a balanced Budget. Not one. This is a blatant lie and should be a sackable offence.

According to the Budget papers released last week, the deficit in the year just ended was $85.3 billion. That compares with a very modest $18.8 billion in Labor’s last year.

Debt blow-out among the world’s worst

“Our net debt to GDP, even after all the spending in this Budget, will peak at around 44 per cent. That’s less than half of what it is in other comparable countries.”

This is profoundly misleading and deeply hypocritical. Labor’s greatest net debt was 10.4% of GDP in 2012-13. That ranked third lowest in the OECD. This year, net debt is budgeted to reach 36.1% of GDP, and a whopping 43.8% in 2023-24.

Currently, Australia’s debt ranks 15th in the OECD. The debt increase since this administration took office has been the OECD’s worst.

A stronger economy

“There’s nearly $100 billion of new support in this Budget. All of those inputs are helping to create a stronger economy.”

There is no evidence Australia’s economy is getting stronger. The opposite is true. As readers of this and other reputable journals know, Australia had the best-performed economy in the world from 2009 to 2013. That’s according to more than 140 authorities on the record.

The Independent Australia Ranking on Economic Management (IAREM) has tracked the decline since then. It fell to third in the global rankings in 2014, to ninth in 2015, to 13th in 2016, to 18th in 2017, to 21st in 2018 and to a lowly 28th last year. We should have the 2020 rankings later this month.

Do Australian voters know all this and are happy with it? Or do they not realise this is happening? If the latter, then the solution must be to boycott the mainstream media and replace it with the alternative news and opinion outlets which report fully and truthfully. Like in Finland and New Zealand.

Alan Austin’s defamation matter is nearly over. You can read an update HERE and help out by contributing to the crowd-funding campaign HEREAlan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001

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