Politics Analysis

‘Labor big spenders’ myth can finally be laid to rest

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(Cartoon by Mark David / @MDavidCartoons)

Substantial evidence from independent agencies last week has affirmed the Albanese Government’s economic credentials, as Alan Austin reports.

THREE AUGUST AUTHORITIES have recently commended Australia’s economic progress. Sadly, the mainstream newsrooms have kept these accolades and the impressive outcomes they laud well hidden.

The International Monetary Fund (IMF) has shown that among the 31 most advanced OECD members, Australia now ranks fifth on low government spending. The other four frugal administrations, all with expenditure below 39% of gross domestic product (GDP), are South Korea, Ireland, Switzerland and the USA.

The same table – on page 51 of the biennial Fiscal Monitor released last Wednesday – shows Australia ranked a dismal 12th in 2019 under the Coalition.

This reinforces the Final Budget Outcome earlier this month which showed spending by the Albanese Government declined to 25.2% of GDP in the last financial year, down from 31.3% in 2020-21 under the Coalition.

One of the most frequent falsehoods from the Coalition and the pro-Tory newsrooms is that Labor spends more in government than the Coalition. This has never been true, even in periods of global recession. This IMF data proves this is a lie. But will it stop?

Rapidly climbing all global rankings

On net debt to GDP, the IMF now ranks Australia tenth out of those 31 wealthiest nations, up from 13th in 2020 and 2021. On overall budget outcomes, Australia ranks 12th, a great improvement on 24th in 2021.

Outcomes on pension allocations, health care, interest payments and net financial worth show Australia is mid-range among developed economies and heading in the right direction.

The one area where Australia appears to be lagging is inflation, although Treasurer Jim Chalmers insists that “Australia peaked lower and later than most countries that we compare ourselves with” and hence this is no cause for alarm. Next Wednesday’s monthly CPI will be instructive.

The IMF numbers overall confirm Australia is steadily emerging from its eight years and eight months of incompetence and corruption. The pace of this recovery confirms the view that it will take more than a decade for the damage finally to be undone.

Dubious IMF projections

Twice a year the IMFs Fiscal Monitor updates key indicators and issues five-year forecasts. Supplementary data is published in its World Economic Outlook.

The problem with projections for Australia is that economists know from history that Australia always zooms up the global rankings under Labor, then tumbles immediately after the Coalition takes charge.

For example, Australia was first among the 38 OECD economies on GDP annual growth in 2009 under Labor, then fell to 12th in 2015 after the 2013 change of government, then to 18th in 2018, 20th in 2020 and 31st in 2022 before that year’s election. Ranking was back up to 9th by the end of 2023.

Hence what happens to the economy going forward depends entirely on who wins the next election.

Global GDP growth forecasts for 2025 seem overly optimistic. They predict positive growth for all advanced economies. That hasn’t happened for several years. So we shall see.

Australians getting richer again

Sadly, the annual Credit Suisse wealth report and its voluminous companion the global wealth databook are gone. They have been replaced by a modest 38-page UBS global wealth report since Swiss bank UBS swallowed Credit Suisse.

This year’s abridged report confirms Australia’s wealth is increasing steadily again, after the slump through the Coalition years. The page 9 graph showing rates of wealth growth ranks Australia ninth among the 40 leading economies and an impressive fifth among OECD members. That’s behind only Japan, the United Kingdom, Israel and Turkiye.

This contrasts starkly with 2019 when Australia was highlighted as having had the greatest decline in wealth of all nations surveyed and with 2022 when Australia was among the three biggest global losers.

Australians also becoming more equal

At the end of 2023, Australia’s average wealth per adult was US$546,184 (AU$826,990), which ranked fifth behind Switzerland, Luxembourg, Hong Kong and the USA.

Median wealth per adult, which reflects equality of wealth distribution as well as quantum, was back up to second in the world at US$261,805 (AU$396,390), behind only Luxembourg.

Arguably, Australia’s most impressive outcome in the UBS report was ranking third globally on equality as measured by the Gini coefficient, behind only Qatar and Belgium. This places Australia second in the OECD on equality, up from sixth in 2021.

Media mendacity remains at historic highs

The mainstream newsrooms refused steadfastly to report anything positive last week, despite the abundance of welcome news. 

Dismal stories from the Financial Review included:

The Nine dailies also deployed a doom-and-gloom headline: You thought 2024 was tough. IMF warns of more troubles ahead.

ABC News published a neutral print piece titled, Stop the presses! The IMF's forecasts for Australia's inflation now match the Reserve Bank's, but broadcast a pessimistic audio package, IMF forecasts high Australian inflation rate.

The Australian was all negative: IMF inflation warning: World goes low as we stay high.

The King’s speech

The third authority to commend Australia’s economic advances last week was King Charles and who could be more august than the reigning monarch? His brief but affirming speech in Canberra last Monday included this:

“Today, with all due recognition of the impacts of the global cost of living crisis, Australia’s economic growth has been remarkable. And this is a country which, for all its size and diversity, never omits to look outward. Australia has offered – and continues to offer – so much to the world.” 

At least someone has a good word for Albo and Jim.

Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.

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