One after another, the opinion polls tell us that the Liberal and National parties are much better economic managers than the ALP. This is despite Australia having one of the best performing economies in the world by almost any measure; debt, economic growth, employment and inflation.
Unfortunately for the Liberal and National parties and John Howard and Peter Costello in particular their records as economic managers have recently been taking a beating.
First the International Monetary Fund.
In January this year, as reported by the SMH on January 11, 2013, the IMF
“identifies only two periods of Australian ‘fiscal profligacy’ in recent years, both during Mr Howard’s term in office – in 2003 at the start of the mining boom and during his final years in office between 2005 and 2007. The stimulus spending of the Rudd Government during the financial crisis does not rate as profligate because the measure makes allowance for spending needed to stabilise the economy. … The key finding is that Australia has few examples of economic recklessness compared to other developed states like Canada and Japan.”
Joe Hockey attempted to rebut the IMF report. Perhaps he misunderstood what a ‘structural deficit’ is.
Second, the Parliamentary Budget Office.
In its just-released ‘Estimates of the structural budget balance of the Australian Government 2001-02 to 2016-17’ it outlines first what a structural budget balance is. It says
“The structural budget balance (SBB) is a partial measure of the sustainability of the budget. It shows the underlying position of the budget after adjusting the actual budget balance for the impacts of major cyclical and temporary factors. The SBB reflects the impacts of underlying budgetary trends and discretionary fiscal policy decisions.”
It then goes on to crunch the Howard Government’s economic performance. It says
“Over two thirds of the five percentage points of GDP decline in structural receipts over the period 2002-03 to 2011-12 was due to the cumulative effect of the successive personal income tax cuts granted between 2003-04 and 2008-09. A further quarter was the result of a decline in excise and customs duties as a proportion of GDP. Significant factors driving this trend included the abolition of petroleum fuels excise indexation in the 2001-02 budget and the decline in the consumption of cigarettes and tobacco over the period.”
Treasury reported very much the same on the structural deficit but Joe Hockey suggests that Treasury has become political and it cannot be relied upon for the figures it presents. So I have highlighted independent reports by the International Monetary Fund and the Parliamentary Budget Office.
As Laura Tingle put it in the AFR on 23 May this year
“All up, these reviews put the blame for much of the budget deterioration on the Coalition in government and credit at least some of the forecast improvement on savings Labor has implemented in office. As such, they don’t sit comfortably with many of the critiques of Labor’s budget management, nor does the Parliamentary Budget Office endorse the view that Australia’s debt position is of major concern.”
Despite the evidence, the partisan business commentators and the opinion polls continue to tell us that the coalition is a better economic manager. The evidence is just not there to back up that view.
The myths continue.