The latest report to Parliament on the state of the economy by Coalition ministers is riddled with contradictions, hypocrisies and falsehoods, writes Alan Austin.
THERE IS A disturbing incongruity at the heart of the Government’s end-of-year economic assessment released last Thursday. It proclaims that its economic management is magnificent and Australia’s economy is set to boom.
Yet, the current run of the deepest budget deficits on record will continue until 2025. Gross debt will more than quadruple Labor’s level and reach $1.2 trillion.
How is this possible? How can the budget still be in deficit with booming growth, high productivity, bounteous jobs, rising wages and companies raking in record profits, which surely must mean record tax receipts and government revenue overflowing?
Glowing government forecasts
The mid-year economic and fiscal outlook 2021-22 (MYEFO) from Treasurer Josh Frydenberg and Finance Minister Simon Birmingham asserts that:
Having performed more strongly than any major advanced economy throughout the pandemic, the Australian economy is poised for a strong expansion that is forecast to see the unemployment rate fall to 4.25%by the June quarter of 2023. This would represent the first time since before the Global Financial Crisis that Australia has sustained an unemployment rate of below 5%and only the second time since the early 1970s.
Resolving the contradictions
The answer to the question above, of course, is that the words in this document are not credible. The economy is currently being managed in an inept manner.
We can demonstrate this by examining the actual data presented in the body of the MYEFO and in the historic tables in appendix E, which show outcomes from 1970 to 2021 and projections until 2025. These prove Australia’s worst period of economic management has arguably occurred since 2014.
The fallacy of economic growth
It is blatantly false to assert Australia’s growth has been stronger 'than any major advanced economy throughout the pandemic'.
We now have final Gross Domestic Product (GDP) growth figures for the September quarter for all OECD countries except Costa Rica (whose growth we can estimate based on past levels).
All countries except New Zealand have positive annual growth, averaging a solid 5.4%. The United Kingdom, Hungary, Iceland, and Estonia are above 6%. Ireland, Greece, Chile and Colombia are above 11%. Australia’s lowly 3.85% growth ranks a miserable 30th out of the 38 developed countries, close to the lowest ranking on record.
If we compare this with the same period during the recovery from the global financial crisis under Labor, we see where Australia should rank: first or second.
Australia's ever-increasing debt
The MYEFO confirms that the Coalition has no pathway towards reducing the debt it will leave to future generations.
The Abbott Government increased gross debt from Labor’s very modest 16.8% of GDP to 22.7%, despite having solemnly promised to fix “Labor’s debt disaster”.
The Turnbull Government deepened the debt to 28.4% of GDP, even with booming exports and record company profits.
The Coalition with Morrison as Prime Minister and Frydenberg as Treasurer then increased it to 34.5% in 2019-20, before the pandemic impacted the economy. It then deepened to 39.5% by the end of the last financial year.
It gets worse. The MYEFO forecasts gross debt blowing out to 45.6% of GDP by 2023 and a staggering 48.6% by 2025. In dollars, that is $1,189,000,000,000. Yes, almost 1.2 trillion dollars.
How is this possible?
The MYEFO reveals the Coalition has no intention of collecting taxes at the statutory rate from the large corporations currently generating all-time high profits.
Company tax collections this year will be $100.3 billion. That is projected to decline next year to just $79.9 billion, more than 20% lower.
Yet, company profits generated next year by exporting Australia’s ironf ore, gas, coal, beef, live cattle and other products at near record prices are set to soar.
The MYEFO asserts:
‘The outlook for business investment remains strong. New business investment... is forecast to grow by 7.25% in 2021-22 and by a further 8% in 2022-23, which would be the strongest outcomes since the mining investment boom in 2011-12.’
The role of the mainstream media
Leading the malicious corporations committed to keeping the corrupt Coalition in office are the big television, radio and newspaper operators.
Since 2007, they have systematically lied about federal government debt. Under Labor and the Greens, headlines appeared continually shrieking about “debt spiralling out of control", "Labor's debt timebomb”, "skyrocketing debt" and “the budget in freefall”. Very little such reportage has appeared since 2013.
Mediacloud.org helps us unpack this debt scare campaign.
In the following graph, the red line shows gross debt in billions of dollars, using the scale at right. The blue line reflects how frequently “government debt blowout” was published, using the scale at left. Clearly, there is no relationship.
The task falls therefore to differnt forms of media and all citizens of good will to inform families and friends of the realities; for the sake of Australia’s economic future, and for the survival of integrity and truth.
Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.
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