Bernard Keane at Crikey has done some fact-checking (paywalled) on Scott Morrison’s the statements on the government’s fiscal policy and has found the Treasurer telling a few porkies.
First, Morrison said:
- “Australians will be relieved to know the government doesn’t take this as a licence to tax Australians more, that’s what the Labor party sees this as…”
“This” was ratings agency Moody’s warning about the need for tax rises to stave off a possible downgrade in Australia’s credit rating.
The truth is in Table D4 of Morrison’s own Mid Year Economic and Fiscal Outlook. Keane says:
- As a proportion of GDP, the tax burden on the economy has risen from 21.5% of GDP in the last full year of Labor to 22.3% this year and is planned to be over 23% in 2018-19 — putting the Commonwealth tax take at $113 billion more than the final year of Labor.
Morrison will be the highest taxing treasurer since Peter Costello.
Second, Morrison says the government is showing expenditure restraint.
See Table D2 of MYEFO. This year spending will be 25.9% of GDP, significantly higher than Labor’s last full year of just 24.1%, and approaching Labor’s GFC spending of 26% of GDP in 2009-10. Morrison says spending will be limited to 25.8% of GDP next year. Basically he’s presiding over a boost to government spending.
Third, the fiscal challenge is because Labor won’t pass savings measures.
Labor under Gillard got spending down by negotiating in both houses. But Keane says that:
- even if Morrison had his way and got every savings measure through the Senate unamended, he’d still be trying to lift the tax burden and lift spending.
Some of the unlegislatable nasties will stay on the books. Simon Birmingham has said the the policy on university funding will remain. That is, a cut of 20% will be included as ‘savings’ even though they know there is no hope of implementing them.
Unless they get control of the Senate.
On related matters, modelling by Janine Dixon of the Centre of Policy Studies at Victoria University shows that company tax cuts, favoured by the LNP, are ‘not in national interest’:
- Cutting company tax boosts the economy as a whole but not national income, the best measure of living standards, new economic modelling shows.
Cutting company tax would “lead to a fall in real incomes in the range of $800 to $2000 per person”.
Using different reasoning Bernie Fraser and Nobel prize winner Peter Doherty head up 50 academics and community leaders who have penned an open letter to Malcolm Turnbull urging him not to cut company tax and to prioritise fairness in his tax reform package. Fraser said:.
- “History shows it doesn’t work that way,” he told ABC radio on Wednesday, adding that it did not lead to more jobs and cuts would come at the expense of necessary spending programs.
“That would be the unkindest cut of all.”