That lovable but silly old duffer, Alan Jones, caught Shadow Treasurer Chris Bowen out with a “GOTCHA” question about the level of the tax-free threshold. Mr Bowen probably should have known what the level was – after all, the Gillard government raised it from about $6,000 (I cant recall the exact level) to $18,200 as compensation for the price on carbon.
Now that got me thinking about some of the flim-flamery from Mr Jones (Alan that is) during his appearance of the ABC’s Q&A program 9 February. While I have to admit to dozing off during the show, I recall a number of factual errors from Jones as he blathered and blustered about the state of the Federal budget and government debt.
I had a look at the transcript and my memory was right, Mr Jones made some howlers on Q&A on what are easy to find and research facts.
Let’s have a look at some of those.
JONES: “that the debt is enormous: $110 million a day to pay the interest on the Labor debt and to keep the country running. This is borrowed money, $110 million.”
Sorry Alan, the daily net interest cost during the current financial year (2014-15) is $29,457,534, according to the data in Treasurer Joe Hockey’s Mid Year Economic and Fiscal Outlook document released in December. This is more than 70 per cent below the level you claim. Can I lend you a “Jones $110” please? The other point about government finances which Mr Jones seems all flustered and muddled about is their fungibility. This means that the interest payments made on the government bonds and T-Notes on issue could be funded by income tax collections, or GST revenue or company tax receipts and the money that is borrowed and the interest paid on those borrowings might fund border protection, defence or funding the Foreign Investment Review Board. Government finances work in a way, Alan, where Treasury, Finance and the Office of Financial Management collects one big pool of revenue, distribute it accord to policy settings and other requirements and then it borrows any shortfall.
JONES: “When the Reserve Bank says, the Governor says, $110 million a day interest plus running the country. That’s an awful lot of dough.”
Sorry Alan, the RBA Governor, Mr Glenn Stevens has never said and would never say that the government spends “$110 million a day interest plus running the country” because it is alarmist and he said, just last week that “there isn’t a debt problem, [but that] it is on a trend that needs to be changed in the medium term.” I will bet you a year of my salary against a year of yours you cannot find such a quote from the RBA Governor.
JONES: “… we have major, major problems. Wayne Swan said the deficit that he would hand over to Hockey was 18 billion. It came in at 47 billion.”
Sorry Alan, but the independently prepared Pre Election Fiscal and Economic Outlook, issued by the Secretaries of Treasury and Finance in August 2013, indicated that the budget deficit in 2013-14 would be $30.1 billion, not “$18 billion” as you claim. What is more, the 2013-14 deficit outcome was boosted by deliberate policy decisions of the Abbott government (which was in power for all by 2 and a half months of that financial year) highlighted by the $8.8 billion payment to the RBA. And as it was, the budget deficit was $48.456 billion, not $47 billion. You could argue that the “Swan deficit” was $30 billion but no more. Any number higher or lower than this would be plain wrong.
JONES: “the Keating Government and then the Rudd Government and then the Gillard Government and then the Rudd Government ran up aggregate deficits of $350 billion. Costello ran up aggregate surpluses of $300 billion”
Sorry Alan. Adding up all the budget balances from the Hawke/Keating/Rudd/Gillard governments, gets a deficit of $273 billion, with 2013-14 adding a further $30 billion as per PEFO as I mentioned above. So that is a grand total of $303 billion, some 13 per cent lower than the “$350 billion” you claim. For Costello, the cumulative surpluses were a puny $103 billion, a third of what you claim. Even if I add in the asset sales of Costello, and wow, there were a lot of them, the surpluses are still below $200 billion. What a dreadful school boy error to make your case appear stronger
Then Alan, you finish off:
JONES: “Governments have got an opportunity to borrow for infrastructure cheaper than they’ve ever got. We have to be saying, business, commentators, the community, families, to Government, we’ve got these ideas and we’ve got to give them some ideas.”
Well Alan, you have just tried to highlight the evils of government debt, albeit with made up numbers and a distortion of some easy to find facts. Then you suggest, and I will highlight it, “Governments have got an opportunity to borrow for infrastructure cheaper than they’ve ever got” is breathtaking hypocrisy. The Rudd and Gillard government did that yet you bag them for the budget position.
The budget, tax and government debt are all issues that must be debated and policies framed to deal with the issues embedded in government outlays and receipts. It is important to start that debate with a range of very basis facts without which, policy errors can be made and the task of reform is hampered. I am afraid part of the economy’s problems now are due to the government, like Jones, not understanding the dynamics of how fiscal policy impacts on the economy.