Opinion Pieces

Even Turnbull's good economic news is terrible

September 28, 2017

 

Time and again when it comes to economic management, the Turnbull government substantially lowers the bar and yet still manages to trip over it.

 

The latest example was Tuesday's release of the Final Budget Outcome for 2016-17, a dry but nonetheless illuminating insight into the government’s budget failures.

 

The marginal $4.4 billion improvement in the deficit for last year was expected, given the monthly financial statements were tracking ahead since May and had been broadly commented on.

 

Yet we still had a Treasurer and Finance Minister who expected a round of applause for a deficit that has blown out by $23 billion instead of the $27 billion they predicted four months ago.

 

Even factoring that in, the deficit has more than tripled from Joe Hockey’s first budget in 2014 to now, from $10.6 billion to $33.2 billion.

 

If we faced a "debt and deficit disaster" then, what do we call it now that net debt ($322 billion and 18.4% of GDP) and gross debt ($501 billion and 28.6% of GDP) are the highest they’ve ever been in Australia’s history, and both still rising?

 

In fact, on all the most important measures, the nation’s finances have deteriorated significantly from the Liberals’ first budget to soon after their fourth.

 

Blowouts as far as the eye can see.

 

And even underneath the headline facts in the Commonwealth budget, the claims Morrison and Cormann made Tuesday do not bear scrutiny.

 

For starters, they pointed to a recovery in receipts but neglected to mention they wrote them down $5.3 billion since the 2016 election and now wrote them up by $4.1 billion, all in the space of a year.

 

Hardly a triumph.

 

The improvements on the spending side were because of a slower rollout of the NDIS; delays in the infrastructure program and water reform payments; and lower outlays for housing and natural disaster relief.

 

Not exactly superior economic management.

 

Then they claimed the deficit as a share of the economy was under 2% for the first time in "some time". Well, only since 2012-13 under Labor, when it was well-under that at 1.2%.

 

Pause and think about that for a moment: the deficit is substantially bigger now than it was in the final full year of Labor, when we’d had a global financial crisis and its aftermath to deal with.

 

Then Morrison and Cormann patted themselves on the back for bringing spending down to 25%, almost to the long-run average of 24.9% as a proportion of GDP.

 

But the historical tables in their own document show they are spending more, on this measure, than Labor did in each of its final three years in office.

 

Spending more now in favourable global conditions than Labor did during and following the sharpest synchronized downturn in the global economy since the Great Depression tells you everything you need to know about the Turnbull government’s fiscal bellyflops.

 

Morrison and Cormann are failing the tests they set for themselves. The "debt and deficit" disaster has blown out considerably on their watch, in their own figures, on all the key measures.

 

Yet following the Final Budget Outcome for the last financial year, they were falling over themselves in giddy self-congratulation. If the mess we saw Tuesday counts as good news, you can see why the Turnbull government is floundering.

 

This piece was first published in Crikey on Thursday, 28 September 2017.

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