I was taken by surprise when Cameron Dick claimed on our last Friday morning meeting on Steve Austin’s ABC 612 morning program that Labor had produced surpluses for 7 of its last 10 budgets. Could this be true?
I disputed the claim, but without conviction. Cameron is a person of substance. I didn’t think he would have made the figure up. But it didn’t square with what I understood the case to be.
Further he asserted, as Labor has been asserting for some time, that the extra expenditure was a response to the global financial crisis.
So I’ve investigated both claims, and Cameron is wrong on the first count. On the second he might be right, but if so, it is one of the more inept and ineffective responses to the GFC.
What’s more, he’s guilty of trying to frame the debate to put a good spin on Labor’s record.
I won’t be backward in challenging next time.
The graph below is from the Costello Commission of Audit. It shows the operating surplus and the fiscal balance between 2000-01 and 2010-11. Note that there is no 10 year period that contains seven surpluses. Added to that, the deficit for the 2011-12 year was forecast at -$4,058,000,000 by the former government, followed by $1,293,000,000 the next year.
Note also that the fiscal balance is much less flattering to the previous government, and that it started deteriorating a year and a quarter before Anna Bligh became Premier of Queensland, but in a period when she was the Treasurer, and then accelerated markedly during her first years, and that her legacy is deficits into the foreseeable future.
Citing performance over the last ten years is like trying to drive forward using your rear view mirror – only reassuring if you don’t know what you are doing.
This graph also demonstrates that Cameron was wrong on his claims about the GFC. As far as most of us are concerned the GFC dates from the crisis at Lehman Brothers which saw it file for bankruptcy on 15 September 2008.
But the big deterioration in the budget occurred before that, and in fact government expenditure in the 2008-09 year was less than the previous year – some stimulus.
Expenditure was higher in 2009-10 and 2010-11, but by this stage the economy had recovered from the GFC.
If the increase in the deficit was meant to deal with the GFC it was incompetently applied.
Not only that, but if it had an effect on unemployment it may well have been negative. The graph below is compiled from ABS data in their series 6202.0.
Queensland entered the GFC with an unemployment rate second only to WA, and it is now vying with the basket case economy of Tasmania for the worst.
Maybe we needed to borrow more? Nope. The graph below shows that Queensland has out-borrowed, by a huge margin, all the other states. You know, the ones with a better performance on unemployment.
So please Cameron, can we stick to the facts next time?
Good work Graham.Pity none in the mainstream media could have done such simple work years ago. Bligh and Fraser were able to get away with such stimulus lies for years and the media swallowed it. Shame media shame.
Comment by Joe — July 30, 2012 @ 8:38 am
I too was listening when Cameron D claimed that labor had produced 7 out of 10 surplus’s. Especially when we had been reading for years that QLD had been falling massively into deficit. But he has said it and even if you are allowed to get onto the ABC at the same time again soon and refute, it will still remain as fact in most listeners minds.
Comment by Poppapete — July 30, 2012 @ 7:48 pm
The major driver for the economic mess, is in trying to provide infrastructure both built and services, for population growth.
We can’t do it, even after massive asset sales, borrowing and being in “boom” times.
Comment:
Taken as a whole, it is breathtaking that:
1. the demand side of the housing ( population growth) is not questioned
2 that the direct financial incentive of growth promotion by financial services and infrastructure providers, is not articulated
3. that the destruction of our unappreciated ancient forests (urban/hinterland bushland) is brushed aside as NIMBY’ism
4. that the paving over of our finest farmland on the outskirts of cities is also totally ignored as NIMBY’ism
5. a generous and caring Australia *** can have full, vibrant employment and stable housing costs without economic growth; if we stabilise our population numbers .
*** appropriate, culturally sensitive, foreign aid
What is missing is a discussion of the Opportunity Cost of population growth.
For example, it is a “no brainer” that it is better to spend $4 billion on universities, research and export manufacture, rather than spend $4 billion on a road upgrade caused by population growth.
It is also a “no brainer” to train our thousands of unemployed 15-25 year olds for the mining jobs, rather than bring in overseas workers. It doesn’t matter if mining projects are delayed 2-5 years.
They will still go ahead, but on terms set to benefit all Australians.
It is going to take some time to digest the reality, that endless growth is not possible.
Full employment is possible with stable economic output, if you don’t increase population numbers.
No, it is not the end of progress. New products will be developed within a stable population scenario.
Cheers,
Ralph
Comment by Ralph Bennett — July 30, 2012 @ 7:59 pm
[…] What is the truth on Qld Labor’s record of deficit and the GFC? « Ambit Gambit. Share this:DiggStumbleUponEmailFacebookPrintRedditTwitterLike this:LikeBe the first to like this. This entry was posted in Uncategorized by rajcairns. Bookmark the permalink. […]
Pingback by Brilliant–What is the truth on Qld Labor’s record of deficit and the GFC? « Ambit Gambit.——–Member of Mulgrave will again claim this is made up and a LNP plot—————Note also that the fiscal balance i — July 31, 2012 @ 2:29 pm
I notice neither you nor Costello makes any reference to the $6.5Billion cost of the floods. Surely any government would be in deficit after that?
Comment by BillR — July 31, 2012 @ 2:39 pm
Excellent comment, Ralph. Unfortunately, rationality and facing reality don’t win vote; that’s the price of democracy and political stability.
Comment by Saki — July 31, 2012 @ 5:10 pm
Good reason for not referencing the cost of the floods BillR. As you can see http://www.abc.net.au/news/2011-01-28/floods-to-cost-queensland-15b/1921568 the Commonwealth took up most of the cost of the floods, and the state funded the remainder by selling off the lease on the Abbot Point Coal Terminal. So no effect on the bottom line.
A state in a good financial position of course wouldn’t have had to have sold the lease off, although they might have sold it off for other reasons.
Saki, I think you’re right out of line.
Comment by Graham — August 1, 2012 @ 2:12 pm
Oh Dear, really?
http://cairnsbiz.blogspot.com.au/2012/08/liars-damned-liars-and-gavin-king.html
Comment by Mark Beath — August 1, 2012 @ 2:36 pm
You know you’ve hit a nerve Mark, when you attract partisan trolls.
Comment by Graham — August 1, 2012 @ 8:04 pm
Hi Saki,
“Peasants….myself included” are bright, hardworking……and act stupidly when they are told and believe lies.
When did you open-up the newspaper and read the headline, “Australia’s birthrate is double our deathrate !”.
In fact Costello when he introduced the Baby Bonus, said the exact opposite. ” If it wasn’t for immigration, Australias’ population would be in decline. ”
This a straight lie and is contrary to the ABS data.
Rationality and facing reality do win votes; that’s the ultimate price of democracy and sustainable political stability.
At present the facts are being buried by a hopeless Government and slick, corrupting PR machines.
Saki.the positive is that we are having this conversation at all !
Cheers,
Ralph
Comment by Ralph Bennett — August 2, 2012 @ 9:55 am
Yes, Ralph. We still have freedom of communication and beliefs, but for how long? If the proposals before parliament regarding the storage of internet usage are passed, then we will have finally entered the land of all-seeing, all-knowing Big Brother. I’ve just re-read Clive Hamilton’s ‘Affluenza.’ It is even more alarming than when it was written, as, despite the rationality and reality it embraces, nothing has changed; we are still frittering away our wealth on unnecessary luxuries and spending little on infrastructure. Even the Mining tax, which I applaud, is going to support consumption rather than future infrastructure needs. We still waste more food than the country spends on the entire tertiary education sector. Perhaps, as you suggest, facing reality will win votes, but we’ll never know, will we? Our politicians are too busy pandering to the fears of voters who’s values and ideas have been successfully manipulated by big banks and big business to spend, spend, spend on items they don’t need and that will not last. But all this has little to do with Labor’s debt. Apologies.
Comment by Saki — August 2, 2012 @ 12:46 pm
Hi Saki,
The Mining Tax is a prime example of “amateur hour” poor design .
The major issue will be total non-compliance, as companies use transfer pricing between related parties and other tricks, to evaporate profits . Royalty on tonnage is the only way and this could have been arranged with the States. Rudd was a shocker.
As a grassroots movement join and support the Stable Population Party(registered for the next Fed.Senate election ) and Sustainable Population Australia(google both).
You will feel very positive that at least you can preference the major party of your choice 2nd and send a message !
Very best,
Ralph
Comment by Ralph Bennett — August 3, 2012 @ 6:39 pm
You are of course correct, Ralph. I should have said the principal of the mining tax. Royalties are the way to go.
As for the SPP, I’m already a subscriber.
Cheers, Saki.
Comment by Saki — August 4, 2012 @ 7:36 am
[…] […]
Pingback by Any Queensland Labor voters here? - Page 2 - Patrol 4x4 - Nissan Patrol Forum — August 8, 2012 @ 9:55 am