With the federal election approaching, we set out to undertake a non-partisan analysis of trends in government finances, and were shocked by how superficial and misleading the debate has become with Scott Morrison, a former treasurer, and Josh Frydenberg, the current Treasurer, disregarding facts presented in their own, official publications.
An obscure Australian Bureau of Statistics publication, Cat. 5519 Government Finance Statistics, Australia, provides a reliable record of government finances.
The ABS doesn't take budget papers at face value, but analyses, adjusts and re-classifies historical data to provide a more reliable record of general government finances. Another virtue of GFS records is that they clean up any "creative accounting", and adjust the history by extensive back-casting.
Let's look at what they show in relation to a Liberal Party television advertisement that states: "In 2007 Australia had a $20 billion surplus. Then Labor got in. Six record deficits totalling $240 billion ... and we're still paying."
After winning the December 2007 election, Labor didn't record a deficit when "it got in", but oversaw a 2007-08 surplus of $25 billion. Of that, $17 billion was during Labor's first six months in office. Yet the Prime Minister claims the last time Labor recorded a surplus was in 1989.
Labor recorded a deficit in 2009, reflecting the global financial crisis. The Rudd government employed the Keynesian strategy of increasing spending to maintain employment and boost demand. True, that led to a series of deficits. It also saved Australia from recession - something the Liberal advertisements ignore.
Consider the reference to Labor's deficits "totalling $240 billion". The ABS data show that by the time it left office in 2013, Labor's accumulated budget deficits were $163.1 billion.
But what of the Coalition's record? It has not recorded a surplus in six years and its forecast of a surplus in 2020, if it is achieved, will likely be the product of rising tax revenue and lower spending on services such as the NDIS. Its cumulative deficits so far have been $139.2 billion. So the Coalition not only failed to "repair the budget" but recorded almost $140 billion of deficits - just $14 billion less than Labor over a similar period.
Finally, claims that Labor is high-taxing and the Coalition is low-taxing are not supported by ABS data. Under Labor, annual total tax revenue grew from $286.3 billion to $337.7 billion in 2013 - an increase of 17.8 per cent. With the Coalition, tax revenue increased from $337.7 billion to $427.2 billion in 2018, an increase of 26.7 per cent.
Turning to tax receipts from individuals, under Labor they increased from $127.8 billion to $162.6 billion in 2013, or 27.2 per cent. Under the Coalition these receipts grew from $162.6 billion to $212.8 billion in 2018, or 30.9 per cent.
These figures do not take account of inflation, or population increases. A schedule in the Coalition's 2019-20 budget papers shows tax receipts "on a real per capita basis". Under Labor, tax per capita between July 2008 and June 2013 reduced by 5.3 per cent. Under the Coalition, tax per capita increased by 7.5 per cent.
The Prime Minister claimed at his campaign launch the Coalition will "maintain the budget surpluses and pay down debt" and "deliver tax relief for families". But the official data shows the Coalition is high-spending, high-borrowing and high-taxing. If past performance is an indicator of future delivery, his claim must be viewed with scepticism.
- Dr Betty Con Walker is an economist and former Treasury official; Dr Bob Walker is Emeritus Professor of Accounting, University of Sydney.
- SMH/The Age