Saturday, 31 December 2011

It's all about economics

There have been a few comments on me taking the likes of Joe Hockey, Andrew Robb, Peter Costello and Josh Frydenberg to task on their analysis of fiscal policy, the budget, gross debt, the government bond market and broad economic concepts.

Some suggest I am taking a clear partisan approach to the criticism of these people – admittedly they are all from the Liberal Party – but my wish is for an honest and factually sound debate on economic policy and economic management.

Recent contributions from these people has been dishonest and does nothing to add to the economic debate – a debate that is so important when Australians are among the richest people on the world, where the mining boom requires sensible economic management and where there is a list a kilometer long on economic policy proposals and alternatives.

I am not a member of any political party – but am a fan of getting facts right when discussing policy issues, be they the size of government, the tax impost confronting taxpayers, the future of the bond market, the importance of gross debt, among many others. In recent times, there has been a run of big bloopers from Hockey, Costello and Frydenberg in which they then twist and contort unsourced data to make some cheap political point.

In simple terms, the Liberal Party is not a party of low tax; Australia does not have a debt problem; Labor is not addicted to tax or spending and the Gillard government is not a a big spender. The facts show a mix of news on taxing and spending and debt over the last 40 years, but none of these statements is correct.

From the Liberal Party’s perspective, there are many, many economic issues where they can take the Gillard Government to task and where they can offer up a viable alternative to current economic policy settings, where they can force the Gillard Government to take some tough economic decisions to make sure Australia’s economic prosperity is enhanced over the long run.

I think it would be terrific to see Joe Hockey and Liberal Party to come out with an alternative economic agenda or set the foundations for a debate on a range of issues. A few off the top of my head might be:

  • The level of the GST;
  • The first home owners grant;
  • Public service levels/cuts/costs;
  • Drive the debate on bank funding costs;
  • Streamline middle-class welfare payments;
  • Recast the tax treatment of superannuation;
  • Specifics on Commonwealth/State overlap and cutting red tape;
  • Affordable housing;
  • Targets and support for the bond market;
  • Free trade;
  • Bilateral or multilateral free trade agreements;
  • A sovereign wealth fund;
  • Labour market reform/flexibility;
  • Infrastructure spending priorities.

There are many more economic issues that demand attention and a fulsome debate from the Liberals and indeed the Government – the above was a small sample.

So come on Mr Hockey – you can do. Set up a strong economic agenda on these and other issues. I would be the first to sing your praises if you and your team set out a credible and viable alternative approach which builds greater efficiency and productivity on these and a myriad of other items on the economic agenda.

Oh – and I should say that no one, including the authors, have confirmed the “mis-facts” in the articles that I have dissected and critiqued. I know there is nothing wrong with my analysis and those sniping from the sidelines are the ones being partisan.


  1. SK,
    I'm just interested in your response to the last commenter on the previous blog, who accused you of fudging figures in favour of Labor's economic performance:
    'I particularly question this reliance on %-of-GDP stats in light of the *retrospective*, "substantial increase" in the level of GDP over history made under the Rudd government, thanks to the ABS adoption of the new 'System of National Accounts'. By my amateur reckoning, a retrospective GDP increase of around 4.5% - most convenient indeed in context of the politics and economic reality at the time viz GFC and the pledge to restrict spending growth to 2% of GDP or less. More here '
    Not that I am saying they are correct, in fact, they are probably Right. :) However, I would be interested in your response to the accusation.

  2. Here is a flame I left on the Barnaby site.

    Only someone as deliberately uninformed as Barnaby Joyce would assume improved accuracy in statistics are partisan.

    The significant changes to the GDP numbers were caused by a change in the method of calculating GDP spearheaded by the UN, with developments in progress from 2003.

    This development were introduced by the Australian Statistician, and the ABS. There could be some political implications with that, but Brian Pink, the current australian statastician, was appointed in March 2007. I wonder who was in government then.

    So this is just another souffle beat up by those who’d rather dispute the toss than deal with realitiy.

  3. HillybillySkeleton: The only way to judge the size of govt spending and tax, the level of debt, is to look at it as a % of GDP - in dollar terms it matters little.

    I say a house in Brisbane is expensive at $200,000. Most would say that is crazy - it's cheap! But if I say that is a 1990 figure when average wages were for example were around $30,000, you will see what I mean. So too govt spending or debt. If incomes (or GDP) rise sharply for whatever reason, relative or comparative spending falls. Ratios to GDP are the most reliable guide. Cheers