The phoney war over deficits and debt. John Menadue

Aug 30, 2013

For almost five years, Tony Abbott, Joe Hockey, Andrew Robb and Barnaby Joyce, have been giving us dire warnings about deficits and debt. You would think the Australian economy was a smoking ruin.

But the politicking over deficits and debt has changed remarkably in the last few weeks. Early this year Tony Abbott told us that he would provide a budget surplus in ‘year 1’ of an Abbott Government. Earlier this month, he said that his government would return the budget to surplus within his first three year term. Then he said that he would return the budget to surplus ‘some time over the next four years’.

He has now pushed it back even further by telling us at the Liberal Party launch in Brisbane on Sunday  that ‘we will deliver a surplus as soon as soon as we humanly can’ but he refused to give a  guarantee. But there is even more. .Joe Hockey has now told us that he will not commit to any deadline on delivering a surplus.

All the signs are that a Coalition Government will not deliver a budget surplus any earlier than the Labor Government promised for 2016-17. If anything, it is likely, on the basis of Tony Abbott’s and Joe Hockey’s comments, that the coalition would return the budget to surplus later than the Labor Government has promised. That is because we must take into account the increased expenditures that he has recently announced.

  • A $5.5 billion a year parental leave scheme to be introduced in July 2015.
  • An increase in defence spending from $24 billion p.a. currently, to $50 billion p.a. within ten years.
  • Abolish the means test on private health insurance which would cost about $1 billion p.a.
  • Additional funding for self-funded retirees via the Commonwealth Senior Health Card and more and more on roads on bridges for the National Party.

The consequences of all this is that he will not only be pushing back the time to realise his budget surplus pledge but he will be increasing public debt in the meantime which he told us was ruining the country.

The Coalition has been telling us for years that there is a deficit and debt crisis. The attacks never stopped. The language was reckless, inflammatory and fraudulent There was a budget “emergency” that had to be urgently addressed. Barnaby Joyce, who may be our next Deputy Prime Minister, suggested that the gnomes of Zurich would soon be arriving in Australia to take over our financial management because of the debt that we could not repay. The Coalition effectively frightened the community about the state of the economy. If we listened to the Coalition and the Murdoch media, one would think that the Australian economy was a basket case. Yet it is one of the best performing economies in the world and admired by well-informed commentators across the globe, including the International Monetary Fund. We have had steady growth even through the global financial crisis, low unemployment, low inflation, rising productivity, very low debt and an AAA credit rating.

Yet despite the quite remarkable performance by the Australian economy, the coalition has succeeded in persuading many that the economy is in a mess. The reverse is true.

The government facilitated this absurd focus on deficit and debt.  The government has been unable to successfully make the case that the economy is sound.

The Government has performed well on the economy. But it has two glaring problems .The first is its failure to project a compelling narrative grounded in values such as equity and fairness, freedom, citizenship and stewardship. Second it has shown political incompetence and division

All this about the phoney war on deficits and debts is not to say that we don’t need to address our long-term structural t problems. This should be addressed by taking action on middle-class welfare like the subsidies to the wealthy in superannuation and private health insurance and increasing some taxes.

But it is very clear that the coalition’s phoney war over deficits and debts was political nonsense. It is now asking us to forget that nonsense. By pushing back resolution of the deficit/ debt problem the Coalition is telling us that it was never regarded as a serious problem in the first place.

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