He’s a Rhodes Scholar with a monumental brain. Yet when Malcolm Turnbull rose to speak at the National Press Club this week he seemed to have a memory lapse – he forgot the GFC. Read what he said and see if you can spot where he acknowledged it and the massive loss of revenue resulting from the downturn, a loss whoever was in Government would have suffered.
He mentioned ‘global recession’ only once, in the sentence referring to Kevin Rudd: ”They’ve cut him a lot of slack because of the global recession.” He didn’t use the word ‘crisis’ at all. So that made it easy for him to lambaste everything, I do mean everything the Government has done to ameliorate the effect of the GFC on this nation. Every action was portrayed as simply debt accumulation, deficit building and fiscal disaster for decades to come. There was no acknowledgement of the need to borrow money to cover the shortfall in revenue resulting from the GFC which is well past $100 billion, without which regular Government services could not be sustained. It was as if the revenue loss did not exist. [more]
Amid a tedious recital of the Rudd Government shortcomings: ineptitude, lack of foresight, lack of planning, flawed schemes, and sheer incompetence and economic recklessness and inconsistency in running up a $300 billion debt (how he gets this figure he doesn’t explain), one would have hoped for the unveiling of a comprehensive Turnbull plan, one that he describes as “...a plan for recovery that is focused on jobs and is focused on delivering Australians the capacity to spring out of this downturn stronger than ever before.”
So here it is: “Now what are the building blocks of a strategy that is going to deliver that platform for growth that is focused on jobs, jobs, jobs? Well the first thing, the fundamental thing, is that there must be not a penny more of debt than is absolutely necessary – not one penny more.” Strong words, but there’s more: “Now it follows, therefore, that when governments spend borrowed money they have to make sure they maximise the return for the taxpayer.” Who would have thought that? Then in case the audience hadn’t got it: “We need to know that we have a Government that will incur no more debt than is absolutely necessary and will keep the deficits as low as possible and will have a plan to restore us to surplus. That is the challenge.”
Still waiting for the Turnbull solution – please be patient: “Now one of the key elements in this strategy has to be – the strategy the Government should undertake – is building confidence. Confidence is absolutely vital...Now by contrast we in the Coalition have set forward a positive agenda we have developed, following our work with the community through our Jobs for Australia program of forums...”
Here are some edited excerpts from the Coalition plan: “Let me run through some of the proposals we’ve made... We propose that instead of the April cash splash we bring forward, for less than half the cost, the July 2009 and July 2010 income tax cuts. ...In another proposal which has a very modest cost, arguably over time no cost to the budget at all, we propose that businesses be able to carry back losses. So if businesses make an operating loss this year or next, they should be permitted to ‘carryback’ up to $100,000 against taxes paid in the past three years...We propose that the employment costs for small business be reduced as an alternative to some of the measures in the $42 billion fiscal stimulus... We propose that the increased funding for high quality public infrastructure – at least 50 per cent of all stimulus outlays should be directed to that end and that is areas such as road, rail, ports and other economically productive assets...We propose – again a practical measure with a modest budgetary cost – green depreciation for buildings, doubling the depreciation that building owners can take advantage of for investments in green refits, increasing the water or energy efficiency of buildings...We propose an approach using the internet to dramatically streamline red tape...I’ve previously proposed that we should reform our business bankruptcy laws.“
Now they aren’t our whole plan of course – we’ll continue to develop that as we go forward towards the next election – but we have to remember that as a matter of our track record we have delivered solid, sound, responsible economic management.”
You judge their value; you judge whether the Turnbull plan is superior to the Rudd Government actions. You decide if the effects of the GFC would be less under the Turnbull plan. You work out whether Turnbull would have to borrow money, and how much. You decide whom you would prefer to be running the economy in the presence of the GFC and the revenue shortfall.
Turnbull finished with rousing words: “But I say this to you my friends, that when the time comes we in the Coalition, all of my colleagues here today and assembled together in Parliament, we will return to government with your support and we will put Australia’s finances back to right. We will return the budget to surplus. It won’t be easy and it won’t be quick. I fear we are going to be left an almost inconceivable level of debt by Labor but you know we have done it before and we will do it again because we will stand up for Australia. We will make the tough decisions, the strong decisions. We will lead where others have not and Australians know they can count on us to get it right, to get our finances right, to ensure that Australia rebounds from this downturn and realises its potential, its enterprise and its energy and the prosperity that that will deliver.”
He doesn’t say how he would return the budget to surplus, or how long it might take, but it must be a lot easier for someone who has forgotten the GFC, and the loss of revenue that accompanied it.
Kerry O’Brien, who attended the Press Club address, clearly infuriated at Turnbull’s lack of acknowledgement of the GFC-induced revenue loss, hammered him with several questions about this on the Wednesday edition of The 7.30 Report, all of which Turnbull deflected, leading to an exasperated: “But you didn't once acknowledge in your speech, as I read it, that the bulk of the deficit the Government faces in this Budget, the bulk of the debt will come from a massive drop in tax revenue due directly to the impact of the global crisis, while at the same time you put heavy emphasis on Mr Rudd running up massive debt. Now was that fair, was that really a balanced picture? If you want to read Turnbull’s contorted response, click here.
So Turnbull talks as if the GFC is a vague entity somewhere out there, with inconsequential revenue-loss implications. Every aspect of the budget, either revealed or rumoured, is viewed through the imaginary prism of a non-existent GFC and trivial loss of revenue from it. It’s bizarre, an almost unbelievable fantasy from a man of intelligence.
And the amnesia seems to be contagious. Joe Hockey, interviewed on Wednesday on ABC radio's The World Today began “Why is it that every time the Labor Party gets elected into government, people lose their jobs, we end up with deficit and debt? Why is it? It's because they don't know how to handle money.” No Joe, it’s because there’s a GFC. Note again, there’s no mention from Joe of a global financial crisis and consequent loss of revenue.
Today, on a budget rumour that it may impose a means test on the private health insurance rebate, Peter Dutton berated the Government for ‘breaking its promise’. Turnbull loudly echoed the criticism. After all, why should a shortfall of over $100 billion in revenue cause a Government to review its expenditure? Why should that small sum prevent it from keeping all its promises? Of course if you can’t see the GFC and won’t acknowledge the revenue shortfall, you can demand the Government keeps all its promises.
Turnbull, Hockey and indeed the whole Coalition seem to living in a parallel universe, or at least believe many Australians do. They are hoping they will swallow this disingenuous gibberish.
Most Australians have more common sense. What do you think?