Oz Blog News Commentary

Lies, damn lies and the flatlining economy

April 27, 2019 - 20:52 -- Admin

There are two main layers to the misinformation that dominates coverage of the economy during this election campaign.

The first is the Coalition relying on major media to report its economic narrative for the entire ‘policy’ component of its re-election strategy. Everything else is meat pies and footy, horserace ephemera, church on Sunday, pub on Anzac Day.

Secondly, there is a complacent and unhelpful view, which even well-regarded economists and journalists who know (or should know) better, are kicking down the road. This is the demonstrably false notion that the Liberals and Nationals lack a policy platform.

There is no truth to the Coalition economic narrative – which I refuse to reiterate, we have heard it often enough – nor to the idea that the Coalition has no agenda. Lets start with some medium-term context for Australian governments and economic management.

The Australian economy was successfully steered through the 2008 Global Financial Crisis (GFC) by the Rudd Labor government. At the time, Treasurer Wayne Swan explained its Keynesian philosophy, which boils down to counter-cyclical government borrowing and spending, to minimise the hardship and cost caused by steep economic downturns which cause mass unemployment.

Swan and Labor colleague Paul Keating (later Prime Minister, 1991-1996) are the only two Australian treasurers to be recognised internationally for their economic competency. A detailed Labor-Coalition comparative analysis by economist Stephen Koukoulas (disclosure: former Labor advisor) can be found here; and Tim Dunlop wrote a necessary debunking of the debt and deficit hysteria, after the disastrous Abbott-Hockey budget in 2015, here.

The GFC was itself caused by neoliberal policy settings that peaked during the Howard era (1996-2007).

Neoliberal policy settings, briefly

Neoliberalism transactionalises all human relations, commodifies identifiable sectors of the population, such as First Nations people, welfare recipients, single mums, disabled people and their carers, refugees – and many people belong to more than one of these groups.

Like its classical liberal parent, an ideology designed to rationalise the pervasive inequalities produced by the English class system and industrial capitalism, neoliberalism comes with multiple lies of convenience. ‘Trickle-down’, for example, is reverse rhetoric, describing the deliberate movement of wealth and assets up the economic scale as its opposite.

For example, the ‘job active’ network is made up of ‘small business’ whose only income is from the government; and who qualify for the $20,000 tax write down pitched to ‘Tony’s tradies’. This ‘business’ is paid for ‘case work’; and can authorise cutting an unemployed person off any income at all, for up to three months for a ‘breach’ of their ‘contract’. An unemployed person can receive no service at all, while the agency is paid public money for ‘managing’ the welfare recipient.

‘Parents Next’ is the same (see Luke Henrique-Gomes work on welfare recipients of many stripes here). A ‘provider’ can authorise cutting single mums off Centrelink for not attending an approved activity like playgroup or swimming lessons, thus impoverishing our children as well. This includes activities mum was already attending and the provider said oh tick the box so the ‘provider’ could claim public money for ‘case-management’ – of a single mum taking her child to swimming lessons, which she was already doing before the ‘provider’ got involved.

A parallel model operates for NDIS and aged care ‘packages’. The money is paid to a ‘provider’, which has no income other than from government, but as a ‘small business’ sets itself up with brand new cars and computers and smart phones, all tax deductible. Does the government check that its money is spent on the elderly, or disabled, people on the books? What do you think? Are there any consequences if not? Take a guess.

This is what I mean by commodification of people, of persons who belong to specific, identifiable sectors of the population. If this is not you, try listening to those affected.

Also central to neoliberalism is the transfer of public resources to private interests. In this context, financial markets were deregulated beyond any effective oversight. Public assets were sold off. In New South Wales, then-Premier Mike Baird sold all the information about all the land. A religious man and corporate banker, he handed womens refuges built by feminists to the corporate arms of organised religion like Mission Australia. Hundreds of women, and many children, have been killed by male relatives since then.

We were told ‘competition’ would drive prices down when in fact privatisation saw widespread price-gouging and electricity bills skyrocket at four times the rate of the general price increases. Political leaders allowed the vested predictions of credit ratings agencies to hold enormous, unwarranted and ultimately catastrophic sway over fiscal decisions. This is the real sovereign risk, a term bandied about by economic illiterates who never point to the austerity imposed by the IMF on developing countries, for example, or by the EU on Greece.

Anyway, that is neo/liberalism. Both are essentially the same thing.

Back to the campaign.

The twin failure by legacy media, of uncritically broadcasting the Coalition ‘going negative’ while pretending that same Coalition has no policy platform, is partly a self-fulfilling dynamic. The prime minister offers endlessly repetitive and dishonest criticism of Opposition policy, and refuses to campaign on his own record.

Reporting whatever lies the Liberals tell about Labor is a reversal of the public interest responsibility of the fourth estate. It is supposed to report what the government is doing, and what the opposition offers in the alternative, so that people have a meaningful choice at the ballot box.

What is the government doing? How can we glean a Coalition policy platform from all this carnival barking, you ask? Easy! Just canvas what it has done over the past five years; and check whether any Liberal or National Party representative, whether officially or by the traditionally worst political gaffe of all (accidentally telling the truth), has repudiated or deferred or suspended or cancelled the policy position.

Fiscal policy is the obvious place to start, because the only actual argument the prime minister will put – other than the stunts and piecemeal announcements designed to dominate the news cycle – is that he, Scott Morrison, has a better one. Yet a growing list of eye-wateringly expensive allocations – the preferred unit of cash wastage seems to be a half-billion dollars – is sufficient evidence that this is untrue.

Back in 2014, the Abbott government announced it would slash over half a billion dollars from Indigenous Affairs, and it did. In 2017, the Turnbull government outright rejected the Uluru Statement from the Heart, and referendum proposal for an Indigenous Voice to Parliament, by press release. In 2018, former nationals deputy leader and Minister for Indigenous Affairs Nigel Scullion, approved ‘Indigenous’ funding to mates in the cattle and fishing industries and, when questioned, appeared unable to grasp what could possibly be wrong with that.

Then there was the $443 million to the Great Barrier Reef Foundation, run by a board peppered with mining industry executives; the $499 million to the Australian War Memorial run by an ex-Liberal Party leader who courts donations from, and sits on the board of, weapons manufacturers; the $423 million to beach-shack registered ‘security firm’ Paladin.

Add to that the $8.2 billion spent, with nothing to show for river health, under the Murray-Darling Basin Plan announced by Howard in 2007 when Malcolm Turnbull was Environment Minister. Include that $80 million spent on non-existent water that may or may not have flown downstream to Cubbie Station if there was a flood: see Anne Davies’ extensive body of work on water buy-backs here.

It is important not to overlook the ten billion+ dollars spent on off-shore detention, including $187 million to re-open and then close the cages on Christmas Island for no reason other than pre-election scare campaigning. And the estimated $400-600 million that Morrison and Abbott spent militarising our refugee policy, based on the ludicrous idea that asylum seekers who arrive by boat are a national security threat. There is not one skerrick of evidence. None.

The mortal injury that is Robodebt costs as much to administer as it recovers from welfare recipients, if you only count the dollars. Over 2,000 people have died after receiving these notices of fabricated debts, according to the department that administers the program. The debt notices only go to working people of working age. In other words, they are probably not dying of natural causes, and certainly not of old age. Is it irony that, other than for aged pensioners and veterans, the social safety net has been wholly dismantled? No, it is travesty.

Despite consistently dishonest claims by Liberal and National MPs, most notably the loudest carnival barker Scott Morrison himself, negative gearing almost exclusively benefits well-off households. You may have heard of opportunity cost, which I explain to students with the simple adage you can not spend the same dollar twice. The public cost of property owners, via negative gearing and rent assistance, pension asset tests and CGT exemptions, was estimated at $36 billion a year in 2013.

All that foregone revenue is a lot of public housing not built.

Then there is what passes for climate policy. Sigh. I have written so much about this, including as a social researcher examining the entrails of the 2010 election, and also during this campaign. It is desperately disheartening. I am so exhausted by the sheer bloody-mindedness of it all. In brief:

The Abbott government repealed the price on carbon and replaced it with ‘Direct Action’, or paying big polluters to modify their plant and equipment. Emissions have increased ever since. Turnbull left this demonstrably ineffective nonsense in situ while his hapless environment minister, the now-Treasurer Josh Frydenberg, fiddled around with a ‘national energy guarantee’, which took out the Turnbull prime ministership but was never legislated. It is now Labor policy. Morrison re-branded the demonstrably ineffective free money approach as a ‘climate solutions’.

So I guess my question is: Does taking billions of dollars from welfare recipients and First Nations people and PAYE earners and single mums buying school shoes, and giving it to mining companies and landlords and private off-shore prisons… does that sound like a government with no agenda? A party with no policy platform?

One last thing

In February 2017, the Orwellian-named Fair Work Commission – which the Coalition, as with other federal statutory bodies, has stacked with political appointees – cut penalty rates (the top-up pay for working on Sundays and public holidays) to some of the most insecure, underemployed, and casualised workers in the country. A recent McKell Institute report found that if the Coalition are re-elected, some $2.87 billion will be transferred from these workers to business owners and shareholders.

As any economist can tell you, the multiplier effect of $2.87 billion spent by low-paid workers on essentials in their local communities is vastly more beneficial to the Australian economy than $2.87 billion in the pockets of people who have enough disposable income to spend money on shares and overseas holidays and luxury imports.

In addition, PAYE waged workers pay tax before we see it. There are little or no tax deductions available to casualised workers in the retail and hospitality sectors. Business owners and shareholders, on the other hand, enjoy access to a huge array of tax minimisation schemes. This means is that government revenue will also decline as a result of this transfer of wealth upwards, from low-income to the well-off; because low-income workers meet our tax liabilities in full. Meanwhile, business owners and shareholders are invited, by fiscal policy settings to evade and avoid minimise at every opportunity.

To conclude

The 2019 budget, with its fabricated future bottom line, has sunk without a trace. And that is with Treasurer Frydenberg, as part of his budget sell, releasing a picture of the young Josh half-naked on a bed. I am not joking. I wish I was. But it serves as a handy metaphor for this election. The public are poorly served by a campaign where the emperors are fully clothed and legacy media pretend they are naked.