Well, at least, Fairfax is trying to soften the blow:
Julia Gillard’s political troubles went from bad to worse on Thursday as her chief economic salesman first fluffed his lines on possible income tax rises and then quoted the wrong jobless number in Parliament.
For a government with a solid story to tell on the economy, Wayne Swan’s refusal to rule out income tax rises in the budget (since ruled out), and his ”mistake” in quoting the unemployment rate as 5.1 per cent instead of 5.4, sent government morale further south.
How good is that “solid story”? Heh. Tony Makin talks about the Commonwealth Balance Sheet in The Australian:
Curiously, unlike the standard budget deficit measure that is so often in the news, the government’s balance sheet has been all but ignored, even though estimates of its key elements were published in October’s mid-year economic and fiscal outlook.
…
According to the mid-year economic and fiscal outlook figures, net financial worth representing the difference between government financial assets and liabilities is expected to be minus $257.9bn or negative 16.9 per cent of GDP in 2012-13. This compares with minus $18.1bn, or only negative 1.5 per cent of GDP in 2007-08.
…
The rise in net debt liabilities driven by budget deficits, not falling asset values, overwhelmingly explains the transformation of the federal balance sheet during this time.
That is a very solid story – the government has been borrowing to finance consumption and not infrastructure as they keep saying.
The extent of Swan’s mismanagement can be seen in David Uren’s comment about the budget and MYEFO numbers (emphasis added):
Even on the most recent and now obsolete published budget numbers, Swan relied much more on revenue growth than on spending restraint than did the consolidations of his predecessors.
Uren has not been a consistent critic of the Rudd-Gillard government.
We’re also told:
WAYNE Swan’s proudest boast until last December was that his government had put in place “the fastest fiscal consolidation since at least the 1960s”.
Actually I’ve heard Craig Emerson repeating that lie in the last week. Our very own Judith Sloan deals with that argument:
I GUESS it’s a boy thing. Mine’s bigger than yours.
This was Wayne Swan’s claim about the government’s fiscal consolidation record. Sadly, it does not stand up to scrutiny – Keating’s and Costello’s were bigger.
…
If size is not everything, Swan boasted for a while about the speed of his government’s fiscal consolidation. He has had to drop this bit of bragging too, as it is not true.
Here is the fundamental problem:
The budgetary pickle in which the government is stuck is entirely of its own making. It failed to realise that the underlying tax base is unlikely to recover for years. It continued to spend when the economic imperatives had subsided. It irresponsibly shuffled spending and receipts between years, bringing some forward and deferring others, in order to keep the pretence of a surplus in 2012-13 alive.
And embedded in this creative accounting are some appalling decisions, such as moving company tax payments to a monthly basis.
As Judith says, we now need an informed debate about the actual state of the budget. That informed debate cannot involve Wayne Swan at all. Maybe it should not involve anyone in the current government. Unfortunately there is no institutional mechanism to force that discussion until the Pre-election Economic and Fiscal Outlook is released a couple of weeks before the election (mind you the Gillard government managed to contaminate that process before the last election).
As I’ve noted previously – we will not have any inkling of the actual state of the budget until well after labor and the greenfilth are punted.
Treasury needs a high pressure hose put through it as well.
Rabz
15 Feb 13 at 9:53 am
So we’re broke but the government is still spending like a drunken sailor – what’s there to debate?
Plato Sandilands
15 Feb 13 at 9:54 am
The problem is that Labor thinks that all goods and service that people need should be provided by the Government, not the free market. Or alternatively, anything that is necessary should be paid for by the Government (ie the Government now hands-out money to buy pens and exercise books for school children on the assumption that parents cannot save over an entire year to fund these once off hits to the family budget).
No possible way to constrain spending when the Government opposes the free market and private consumption.
Econocrat
15 Feb 13 at 10:00 am
Great paragraph
“That pales against the budget turnarounds achieved by the Hawke and Howard governments. Swan can still claim the biggest and quickest budget blowout in the past 60 years, with the turnaround from the last surplus achieved by his predecessor Peter Costello to the 2009-10 deficit representing a downturn equivalent to 5.8 per cent of GDP in two years.”
Pedro
15 Feb 13 at 10:08 am
True – it would be akin to involving a wombat in an informed debate about quantum physics…
Rabz
15 Feb 13 at 10:10 am
Or involving Helen Keller in an informed debate on naming colours on a pantone chart.
Splatacrobat
15 Feb 13 at 10:18 am
By your logic, that debate can’t include Joe Hockey either.
m0nty
15 Feb 13 at 10:23 am
…or on getting an amoeba to judge….
sigh.
Sorry guys, my heart isn’t in it today.
Winston SMITH
15 Feb 13 at 10:24 am
Fair enough Winston – it is Friday after all, the weekend beckons!
Rabz
15 Feb 13 at 10:28 am
m0nty – I may come to that view when Hockey has been in office. But until he has actually been there no one can really tell.
Sinclair Davidson
15 Feb 13 at 10:29 am
As a one-off, fluffing the unemployment rate is nothing of note, until you factor in all his other errors and mangling of the budget and taxes that cost more than revenue returned, spending rate consistently above income for the last five years etc etc etc
Gab
15 Feb 13 at 10:35 am
Ahahahahaha.
They are just shameless.
C.L.
15 Feb 13 at 10:49 am
“For a government with a solid story to tell on the economy”
I flushed something solid round the s-bend this morning, it could tell a better, more credible and more palatable story than what came from Swans mouth.
thefrollickingmole
15 Feb 13 at 11:05 am
Richard D
15 Feb 13 at 11:17 am
The tide has well and truly gone out on The Goose. He is just standing there nude while everyone else is snickering. Courtesy of the soft media from everyone except Newscorp, it has probably taken about four years longer than it should have but he is now a laughing stock – and dragging Treasury down with him.
H B Bear
15 Feb 13 at 11:26 am
Dead right Bear.
For Christ’s sake, Labor, get rid of him. He is a fool to himself and an (expensive) burden to others.
I am the Walrus, koo koo k'choo
15 Feb 13 at 12:29 pm
In many organisations, be they government, industry or community, there is often someone who is incompetent to the point of damage, but who has support from a key figure, and so they remain.
One day that support vanishes or the benefactor goes, and the troublemaker is removed.
Even though those who remain will have an increased workload to pick up the pieces and catch up to where things should have been, the news of a troublesome person being removed is always greeted with glee and a sense of happiness.
This will apply more than ever when Swan closes the door on the treasury office for the last time.
brc
15 Feb 13 at 1:47 pm
This is exactly what happened in Queensland. ALPs legacy is nothing but an unholy mess.
Streetcred
15 Feb 13 at 2:31 pm
I’ll bet that a lot of the money has gone to illegitimate funding of ALP mates’ schemes and that it has been knowingly ripped off by its acolytes … just like how they learnt their tricks with the union money. TA must follow the money and confiscate whatever is recoverable.
Streetcred
15 Feb 13 at 2:35 pm
Assume the current Labor Government collected the same average amount of tax as the Howard Government – no more, no less. That is, just to reiterate, an amount equal to 23.4% of GDP for each year from 2008-09 to 2012-13.
What would be the level of net government debt in this scenario?
Well, in 2012-13, net government debt would be – wait for it – negative 1.6% of GDP. That is, there would be no government debt. Fact.
And if the tax to GDP ratio held at the Howard Government average out to the end of the forward estimates (2015-16), then net government debt would be negative 3.3% of GDP in June 2016. Fact.
Which just goes to show, if the government taxes the tripe out of the private sector, it is easy to run large budget surpluses and have no government debt.
Fact.
bennyg
15 Feb 13 at 2:49 pm
To be fair, borrowing to pay for consumption is a ploy quite familiar to the Australian public. “Equity mate” and all that.
Mother Hubbard's Dog
15 Feb 13 at 3:09 pm
Benny g: but that’s just it, isn’t it? If you make the private sector unprofitable and expand government endlessly, you don’t end up with those figures. Tax revenues have gone up, GDP has gone up, spending has exploded. Your example tries to change one variable as though that is the only dial the treasurer has.
Brc
15 Feb 13 at 3:44 pm
Despite Swan’s claims of moving to a surplus, the reality is that Swan has done more to damage the prospects of a surplus than anyone else. He is the Treasurer-destroyer-in-chief. He should be locked up for crimes against the economy.
Samuel J
15 Feb 13 at 4:51 pm
Facts? More like misinformation. This government averaged spending of 25.83% of GDP. With a revenue of 23.4% of GDP they would never have run a balanced budget much less a surplus. The cumulative deficit would be 9.72% of GDP. The issue isn’t a fall in revenue, which is close to where it was in 2006/07, but a permanent rise in spending as a proportion of GDP around 21 to 22% to approximately 25% today. I don’t think Costello was a financial wizard in any way but Swan is definately a goose, and misleading.
PT
15 Feb 13 at 6:26 pm
Tax to GDP also falls when people lose their jobs, businesses close down and mines never go beyond the proposal phase.
Being a fuckwit ALP stooge, you’d know that, wouldn’t you?
.
15 Feb 13 at 6:31 pm
HAHAHAHA
Look where this fuckwit is recycling his disinformation from:
http://www.marketeconomics.com.au/2213-how-howard-taxed-the-tripe-out-of-the-public-to-eliminate-government-debt
Note the date. 28 Aug 2012. He’s running Swan’s BS numbers so it’s dishonest and fallacious from the outset.
.
15 Feb 13 at 6:32 pm
Spot on, I doubt labor luvvies could show what taxes they have cut (because they haven’t cut many). The tax to GDP argument used by them is such a con.
Andrew
15 Feb 13 at 6:40 pm