I reckon the media’s political coverage in Australia is terrific. The ABC and Sky 24 news TV channels are filled with smart, direct, blunt and usually insightful journalists who turn the heat on when required. News and comment from The Guardian and Fairfax is almost always worth a read. ABC radio is full of great material and hard hitting journos. They give both sides the tough treatment when required.
There is one bugbear, however, I have with the media and that is the lack of follow up when the politicians they question deliver made up and misleading ‘facts’ about the budget and labour market. I despair when politicians lie and those mistruths are left unchecked by the journalist asking the questions. I have never heard any politician called to account for their claim about government debt, the deficit and jobs.
For the journalists out there, here are a few facts that are worth having the next time you quiz a politician on matters to do with the budget and labour market.
Government debt and finances:
There is a difference between gross and net debt. It matters when the politicians talk of debt and deficit.
When Howard lost the 2007 election, gross government debt was $50 billion, it rose to $273 billion when Rudd lost in 2013 and on the latest figures from the AOFM, gross debt is now $353 billion. In 6 years, the Labor government saw gross debt rise $223 billion (up $3.2 billion a month, on average), in the 17 months of the Abbott government, gross debt has risen a further $82 billion (up $4.8 billion a month, on average).
In terms of net government debt, when the Howard government lost the 2007 election, net debt was in fact negative – that is, the government had financial assets. There was $49 billion in such assets. When Rudd lost, net government debt had, according to Department of Finance data, risen to $161 billion, an increase of $210 billion (this is $3.0 billion a month, on average). As at the end of December 2014 (latest data), net government debt had increased to $239 billion, a rise of $78 billion (an increase of $5.2 billion a month, on average).
In terms of government spending, the MYEFO from December 2014 confirmed that the Abbott government will have spending at 25.9 per cent of GDP in 2014-15. In the final full year of Labor (2012-13), this ratio was 24.1 per cent and the average for the Labor government as a whole was 24.9 per cent of GDP. This included the stimulus measures associated with the GFC. According to Treasurer Hockey’s MYEFO, in no year including into the forward estimates to 2017-18 will government spending be below the average of the previous Labor government. The Abbott government is a big spending government. Fact.
In terms of tax, the average tax to GDP ratio of the previous Labor government was 20.8 per cent, having reached 19.9 per cent of GDP in 2010-11, which was the lowest level since the 1970s. It was a low tax government. Mr Hockey’s MYEFO document confirms that the tax to GDP ratio under the Abbott government will, in every year, be above the average of the previous Labor government and average 22.3 per cent of GDP over the forward estimates, hitting a peak of 23.1 per cent of GDP in 2017-18. Only the Howard government has averaged a higher tax to GDP ratio.
Jobs and the Labour force
When Mr Abbott won the election, using September 2013 labour force data as a base, total employment was 11.4751 million people. The latest data for December 2014 has employment at 11.6794 million. Level of employment is up 204,300. Looks good at face value. But during this time, the working age population has increased from 18.7801 million to 19.2099 million people, a rise of 439,800. Here immigration and natural population increase are the drivers of this increase.
Of the rise in the working age population, only 46.5 per cent have gotten a job. This is a shortfall of approximately 15 per cent or 65,000 people had the usual pace of job creation been maintained. Not so good when you think about that fact.
The number of people unemployed when Mr Abbott won office was 695,700. In December 2014, it was 759,200, a rise of 63,500 people. This has meant the unemployment rate has gone from 5.7 per cent to 6.1 per cent while Mr Abbott has been Prime Minister. This is not quite as good as the line about the pace of job creation that is often bandied about by both side of politics.
These are the facts. Use them and don’t let politicians get away with making things up.