A Fistful of Donuts

Which party is best at cutting the red tape that stifles Aussie entrepreneurship, promotes small business initiative, checks lazy government waste and puts downward pressure on interest rates for working people? Me sir! Me sir! Just bend me over the desk for a moment and flash me your fiscal rectitude.

Isn’t the state of economic journalism clear by now? After the earnest and profound economic policy debates of the 1980s, we seem have devolved into  a pale imitation of that in our modern political discourse – one in which one side and then the other stage a predictable pantomime that bears little resemblance to our lived reality. Continue reading

A Show About Nothing

Where else but Australia would the media work itself  into a frenzy over a ‘MYEFO’? Perhaps if you told the Brits it stood for My Youthful Exotic French Odyssey, they might bite. But Mid-Year Fiscal and Economic Outlook? Hold the front page.

In Australia, journos scribble millions of words every year about data that has little or no bearing on the lives of most of us – like monthly forecasts of volatile unemployment data (a throw of the dice by the statistical gods) or, worst of all, whether the federal budget ends the financial year in a small surplus or a tiny deficit. Continue reading

The Forecast Deficit

A few years back an economic forecaster was asked to explain why his predictions of a 10 per cent return on the Australian equity market that year hadn’t come to pass. (The market ended down nearly 40 per cent in 2008). “It’s not my fault,” he complained. “No-one predicted Lehman.”

To which the response is well, isn’t that the point? Forecasts are subject to considerable error, due to the tendency for events to screw around with one’s cherished assumptions. A plane flies into a building, an investment bank goes belly up, a country defaults, a government changes etc;
Continue reading

The Money Go Round

Hi, I’m Ricky Retire-Safe and welcome to Your Money or Your Life – the program where we reveal what today’s market movements mean for you, your children and your children’s children. And if we scare the shit out of you in the process even better. Continue reading

Fair is Foul and Foul is Fair

As the US and European economies slowly sink into a quicksand of indebtedness, the world is watching with increasing incredulity the doom-laden discourse of lucky Australia . Here is an economy enjoying fundamentals that other developed nations would donate their first born for, yet our parochial media has decided to slavishly sing along with Tony Abbott’s one-note death march of the saints. Continue reading

Locked Up

The Federal Budget is ‘The Big Day Out’ for the political and financial media in Australia. Busloads of hacks (only the lucky ones go by plane these days) make the long journey to late autumn Canberra to join their full-time press gallery brethren in what is a media and political ritual – a six-hour lock-up, a frenzy of writing and then off to The Holy Grail (these days the Kennedy Room, I’m told) to get stonkered till 3am. Continue reading

Noise Vs Signal

First it was the nightly weather, then the finance report and now it’s politics. There is a creeping conspiracy in television news of people standing in front of charts, taking the daily temperature – of meteorology, of markets and of members of parliament – and trying to persuade us that it all means something. Continue reading

Here’s that Rainy Day

What is it with the Australian parliamentary press gallery and its obsession with budget deficits? It seems every government initiative is met with questions about what it means for the Labor government’s election campaign pledge (extracted under pressure) to restore the budget to surplus within three years – as if this means anything.

To be fair, successive governments have brought this on themselves by making a fetish of having the budget in surplus and instilling an irrational fear among the population of the ‘D’ word to the point that individual political leaders do anything to avoid mentioning that very possibility.

Nevertheless, there is no reason for informed journalists to play along with the myth. Indeed, the nadir of this book-keeping mentality among the nation’s elite political reporters came when the first question at a prime ministerial press conference to announce initiatives on one of the worst natural disasters in the country’s modern history was what it meant for the surplus promise; this at a time when scores of people were either dead or missing and when the disaster was still unfolding.

If any further proof were needed of the lazy pack mentality of the press gallery, here it was. While the normally astute Bernard Keane of Crikey moved to defend his colleagues’ questioning as legitimate, the general response on Twitter was that the deficit-related questioning was inappropriate at this time.

Of course, media scrutiny of government finances is entirely appropriate. But this would be easier to take seriously if it were not suspected that the questioning was purely a tactical ruse aimed at extracting a “gotcha” quote from Gillard – in effect getting her to admit, even in the slightest way, that the surplus goal might be compromised by the size of the demand on government from a disaster of this magnitude. The headlines at The Australian – ‘Deficit Looms as PM Loses Grip on Budget’ – will be ready to roll for the slightest trip, which is why Gillard chose her words carefully.

As to complaints from Keane that this criticism is unfair on the press gallery, one wonders whether journalists would have the temerity to ask Gillard, during a press conference to announce the death of another Australian soldier in Afghanistan, as to what the escalating financial cost of this war meant for her surplus projections.

The big lie about Australian government finances, as informed journalists like Ross Gittins have repeatedly shown, is that the public sector is drowning in debt or that we are running an unsustainable deficit. That is simply not true. Yet not matter how many times this is pointed out, the press gallery continue to play the ‘debt and deficit’ card – simply because it suits their purposes to play word games with politicians to keep themselves entertained and to avoid having to ask themselves tougher questions; like how political journalism became a type of ersatz accounting (except in this case the practitioners can’t add up).

Here is a chart from the OECD. It shows that Australia is extremely well positioned relative to most developed economies in terms of net government liabilities (how much the government owes after assets are taken into account).  Japan has net liabilities of more than 100 per cent of GDP, the US nearly 70 per cent, the Euro area 59 per cent and the total OECD 58 per cent. Australia has net liabilities of 0.4 per cent of GDP – negligible.

 

 

 

 

 

 

 

 

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Is it too much to ask the press gallery to get a sense of proportion over this and point it out to the Australian public that we are not up to our eyeballs in debt and that our public finances are the envy of the rest of the developed world? And is it too much to ask political journos to consider for just a moment that the very reason governments run surpluses in good times is so the budget can play its role as a shock absorber in  bad?  Remember the rainy day we’re saving for? It’s here.

One final observation: Notice from the chart above that oil-rich Norway has the best public finances in the world? Psst. They run a resource rent tax.

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