How should fact checkers check facts?

Fri, 14 Mar 2014  |  

Here's a simple question.

The Treasurer Mr Hockey makes a claim that "Of the 17 top surveyed IMF countries, Labor left us with the fastest growth in spending of anyone in the world... and they left us with the third highest growth in debt of anyone in the top 17".

You are asked to check this for its factual basis, not an easy job, but it is important to see whether the Treasurer is telling porkies or if he is correct.

A fair enough strating point is to go to the Treasurer's office and ask, what is the source of this claim?

When the source is provided, any reasonable fact checker should query the veracity of the information in that document to see whether the Treasurer is right or not or whether he is being a little bit cheeky and used a flawed report for his claims.

It would be wrong to blindly take the source as given, without question or consideration. To take that as the correct source might be making in error in the same way it would be wrong to use The Australian as a source for any impartial facts on Australia's industrial relations system.

A fact checker should, of course, also be a little more forensic and judge whether the information in the source document fits with the claim being made.

In the case of the ABC fact check on Mr Hockey's claim on debt and deficit, the ABC FCU took the Treasurer's Office reference to the IMF document as the definitive source of the claim that Labor left the Coalition with the fastest growth in spending and third highest growth in government debt among the countries compared. The ABC FCU said Mr Hockey's claim was "correct'.

What they didn't do was make a judgment call on the IMF document.

Importantly, the claim from Mr Hockey which the ABC FCU said was "correct" was based on a start date of 2012. The starting point ignores the fact that Labor delivered a Federal Budget and countless other policy changes between 1 January 2013 and when the writs were issued for the election in August 2013.

Even the drover's dog would see the starting point is wrong when judging what Labor left the Coalition.

There are no doubt similar concerns for the other 16 countries in the comparison – in the US for example, the fiscal cliff, debt ceiling debates and even Fed policy actions from 1 January 2013 would have impacted on the scenario for fiscal policy in what should have been the base year 2013. What was its growth in spending and debt from 2013 to 2018?

As I also pointed out, , the comparison that the ABC FCU and the IMF based its data on was the MYEFO document which included a fiscally explosive cocktail of policy decisions taken by the Abbott government in its first three months and parameter changes from Treasury – hardly the stuff anyone reasonable could serious sheet home to Labor.

I don't know whether Mr Hockey's claims are true or not and neither does the ABC FCU, at least based on their work on this issue.

Some smart person with a lot of time and a robust data base could no doubt work it out, but to say Mr Hockey is correct based on a document he gave the ABC FCU, it is a bit too cheap and easy.

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Change of view on interest rates

Fri, 24 May 2019

Having been the only economist to correctly anticipate an interest rate cut from the RBA when close to 50bps of interest rate hikes were priced in to the market last year (See Bloomberg 17 August 2018), I have agonised over the exact months the cuts would be delivered and then how many rate cuts would be needed to reflate the economy.

Recently, I was of the view that the RBA would need to cut 100bps from now, to a level of 0.5%, but I did so with relatively low confidence. This is why I recommended all clients to close their long interest rate positions on 17 April 2019 (when the implied yields were 1.10% for the mid 2020 OIS; 1.35% on 3 year yields and the Aussie dollar was just over 0.7000 at the time).

Like in most good trades that were massively in the money, I left a little money on the table while I reassessed the outlook.

Since calling for interest rate cuts from the RBA, a lot of water has passed under the bridge, especially in the last few weeks.

Events mean I am changing my view on interest rates and have been placing / will be looking to implement new trades.

Watch out Australia: There's a flood of dismal economic news on the horizon

Wed, 01 May 2019

This article first appeared on the Yahoo Finance website at this link:


Watch out Australia: There's a flood of dismal economic news on the horizon

The Australian economy is in trouble and Scott Morrison and the Liberal Party government need to come clean and acknowledge this and outline a framework how this period of economic funk is to be addressed if they win the 18 May election.

The Liberal Party is campaigning in the election on a “strong economy” and being “good economic managers”, bold claims that fly in the face of the latest score card for the economy.

That scorecard shows a flood of what is, frankly, disappointing or even dismal economic news. Australia is going through a very rare recession in per capita GDP terms and last week saw data showing zero inflation in the March quarter. Contribution to these indictors of economic funk is the fact that well over half a trillion dollars of householder wealth has been destroyed as house prices have tumbled.

Add to that the fact reported by the Australian Office of Financial management last week that gross government debt is $543 billion, almost double the level that the Coalition government inherited in September 2013, and the scorecard is looking very ratty indeed.

As the ad man used to say, “but wait, there’s more”.