- The Guardian
- Issue #1984
We hear it all the time, but we especially hear it during election season: “the Liberals are good economic managers! Labor just spends, spends, spends!” No conservative politician can do without this talking point in their arsenal, including our prime minister, who on announcing the 2019 federal election, stated: “Labor cannot manage money.” It is rhetoric founded on the notion that “penny-pinching” (i.e. austerity) is the sign of fiscal responsibility. Thus the saying is built on two premises: 1.) That government spending is bad, and 2.) That the ALP does a lot of it. Are either of these propositions true? Let’s start with the former.
The Liberals being painted as being economically sensible is one of Australia’s oldest political narratives, but it’s just that – a tale, a story, a myth. The Liberals are in no sense of the adjective, “good” economic managers. Perhaps the largest sign of hubris displayed in contemporary Australian politics was the campaigning in 2019 that the Australian budget was going to be “Back in Black.” Then the COVID-19 pandemic hit. As a result, the Morrison government now presides over the largest deficit in Australian history.
No one, however, can blame the Morrison government for spending money to keep the economy afloat. In fact, it’s what good economic managers do: but how did the Morrison government spend money? While JobKeeper was a much-needed response, as we have reported in several editorials (Guardian #1958, #1955) and in articles (Guardian #1973, #1975) the Liberals have mismanaged this program. How badly have they mismanaged it?
Earlier this month, the Morrison government noted that it had only paid $27 billion to recipients who didn’t experience a thirty per cent turnover decline. This, according to The Australian Financial Review, is a mistruth. This amount is in fact a portion of a “$47.6 billion sample of the $70.3 billion paid in the first phase of JobKeeper.” When taken in this context, the $27 billion accounts for 56.7 per cent of the sample size! “Extrapolated to the full $70.3 billion of JobKeeper paid in the first phase, $39.9 billion of JobKeeper” to recipients who didn’t experience a turnover decline – does this sound like good economic management?
Furthermore, Australia’s debt is expected to be $729 billion dollars. An argument one might expect to be mounted is that this has accumulated because of the pandemic – not so. As shadow treasurer Jim Chalmers has stated, two-thirds of this debt was accumulated before the beginning of the pandemic.
When the Coalition came to power, gross debt was approximately $280.3 billion. By January 2020, as Australia began to record its first COVID-19 cases, gross debt was $568.1 billion. “The increase in gross debt since the pandemic hit Australia – $155.3 billion – represents 35 per cent of the $443.1 billion of debt borrowed by the Coalition since it came to office” (ABC). If the Coalition is so fiscally responsible, why does it need to borrow all this money?
Labor had its own economic crisis to deal with when it was in government: the Global Financial Crisis (GFC). When recessions crippled other major Western countries economies, Australia came out relatively unscathed due to “cash handouts in 2008 and the schools building program that were widely credited with quarantining Australia from the economic woes of the GFC” (ABC). For his efforts, Wayne Swan was awarded the finance minister of the year award judged by leading European banking and finance magazine Euromoney. The only other Australian Treasurer to win? Paul Keating – also Labor.
This is not to say Labor is perfect (far from it) or without fault. They, much like the Liberals, perpetuate the system of capitalism and are therefore denying the working masses what is rightfully theirs. However, when it has come to getting Australia out of tough financial situations, Labor has performed better. Spending helps the economy. We need to destroy this myth so that the economy does not suffer even further under another Coalition term.
