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Mathias Cormann, Minister for Financial Fudges

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Several assertions repeated regularly by Finance Minister Mathias Cormann do not stand up to scrutiny. Alan Austin scrutinises his claims and the evidence against them.

FINANCE MINISTER Mathias Cormann appears to have delivered many speeches, interviews and doorstops lately. In fact, he has delivered just the one but repeated it interminably. His central messages are false. Here is how we know.

Better economic outcomes

Cormann told the Sydney Institute on 27 August that the Coalition Government is delivering

“a better life for individuals, their families and the communities they live in — compared to the impact of the alternative on offer at the most recent election.”

Plainly false. Australia has seen the outcomes delivered by Labor between 2007 and 2013 – and those since – and can easily compare them.

Unemployment was 5.71% in September 2013, at the end of the global financial crisis. That ranked eighth in the OECD, the group of 36 developed democratic mixed economies. It is 5.23% now, ranking 20th. This is the worst ranking since records have been kept.

Australia’s share of the world’s wealth has fallen from 2.78% in 2013, the highest on record, to 2.4% now — the lowest. That’s according to the latest Credit Suisse report.

Other variables which have deteriorated since the Coalition replaced Labor include:

  • average weeks the jobless spend looking for work;
  • workers over 65 forced back to work;
  • underemployment;
  • productivity;
  • wage levels;
  • household disposable income;
  • value of the Aussie dollar;
  • retail trade growth;
  • stock market performance; and
  • the housing index.

Wage rises

Cormann claimed:

“Both public and private sector wages continue to grow above inflation. Public sector wages are growing at 2.6% and private sector wages at 2.3% — both above CPI of 1.6%.”

Cormann does not indicate his sources. The most accurate data is from the Australian Bureau of Statistics (ABS) file 6302.006, average weekly earnings. Column J shows the average rise in private sector total earnings for the last six years under the Coalition was 1.74%. Inflation averaged 1.84%. The average rise for the previous six years under Labor was 4.41%. Inflation averaged 2.75%.

Prioritising the poor

Cormann claimed that recent tax cuts “prioritised low and middle-income earners” and succeeded in “putting more money into their pockets immediately, helping them deal with cost of living pressures.”

The evidence is directly against this.

Cormann asserted that

“less than two weeks after the package passed through the Parliament, The Executive Connections quarterly confidence index rallied 16 points to return to positive territory.”

So what? A confidence index merely measures that which a chosen few are hoping will happen in the future. It does not measure anybody’s wealth.

The best indicator of money in the pockets of poor people is retail sales. Total retail trade in July declined from the June figure by $22.6 million. That is the first June to July drop since 2012. The July 2019 figure is just 2.36% above July 2018, which is a decline relative to inflation and population.

Budget repair

“We inherited a rapidly deteriorating budget position from our predecessors. Today, after more than a decade in deficit, we are finally in a position to return the budget to surplus.”

This is the opposite of the truth. Before the 2013 Election, Treasury Secretary Martin Parkinson and Finance Secretary David Tune reported that if Labor's settings had continued after the 2013 Election – on wages, revenue, spending, taxes and investment – the budget would have been in strong surplus in 2016-17.

Infrastructure

“Our government is delivering a record $100 billion, ten-year federal infrastructure pipeline.”

No, it isn’t. The Coalition has only promised to spend $100 billion on infrastructure in the future.

Australia’s last financial year saw a disastrous decline in total construction of 9.41%, the worst reversal since the 2001 global recession.

The 2018-19 setback is the fifth decline in the six years the Coalition has been in office. In fact, since records began in the mid-1980s, there have only been nine negative years of infrastructure investment. The Coalition has presided over five of them.

Productivity

“Sustained real wages growth for these workers comes from stronger economic growth, stronger productivity growth.”

Productivity is now in a serious hiatus. The index has risen steadily throughout the last 40 years. It hit 100.1 in the third quarter of 2016 but has barely budged since. It has been stuck at 100 for the last three quarters.

Capitalism and socialism

“Our policy agenda is based on supporting equality of opportunity ... Labor in more recent years explicitly committed itself to the flawed socialist pursuit of equality of outcomes — falsely asserting that Australia had a major and growing inequality problem.”

Two problems here. First, it is false to claim Labor is now a socialist party. It isn’t.

Second, Australia does have a “growing inequality problem”. This was confirmed by Credit Suisse’s latest annual global wealth databook.

The percentage of wealth held by the richest 10% has increased significantly since 2013. The average for Labor’s last three years — 2011 to 2013 — was 50% exactly. It has risen since then to an all-time high of 52.7%.

Economic growth

“Australia’s real GDP (gross domestic product) has grown faster than any G7 economy over the past 28 years.”

So what? Australia is not a G7 member. Cormann should compare Australia with the other 35 members of the OECD. When we do this, we see ranking on GDP growth through the Labor years was mostly top five. Australia reached top spot ten years ago, in 2009. The OECD ranking has now tumbled to a miserable 24th — the lowest on record. Australia is currently well behind G7 countries, Canada and the USA.

Lower energy prices

Cormann asserted there must be

“... access to more affordable, reliable and sustainable energy supplies for Australian households and businesses. That is what we are committed to help deliver.”

The opposite is happening. Energy costs have soared under the Coalition. Householders are now reliant on imported gas – at higher prices – while foreign corporations export virtually all Australia’s gas.

Global tailwinds

“When we put our last budget together we were absolutely aware of the global and domestic headwinds our economy was facing.”

Nonsense. The Coalition has enjoyed powerful global tailwinds throughout its tenure. The current U.S. trade wars benefit Australia. Commodity prices and export volumes are at or near record highs. Total exports and the trade surplus are both at all-time highs.

Major buyers are in strong annual GDP growth with China at 6.2% and India at 5%. No OECD country is in recession. The average OECD annual growth rate is positive 1.88%.

The fact that Australia is now well below this average – for the first time in history – is entirely the fault of the Coalition. Nothing to do with global conditions.

Media connivance

The Coalition gets away with this "headwinds" furphy because the mainstream media has no idea what is happening in the global economy.

When Fran Kelly interviewed Cormann on ABC’s Insiders on 8 September she actually said,

“Given the tepid rate of growth, given the headwinds we were just discussing, why won't the Government ...”

There are no headwinds. Australians are lied to routinely by their Government and their reporters.

Unfortunately, this is true.

You can follow Alan Austin on Twitter @AlanAustin001.

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