Ah, Christmas at last. A chance to forget the fantasies surrounding us in everyday life and sink comfortably into the solid reality of family and friends. And how better to escape from the reality of mortgages and worries about finances than, if only briefly, believing in the story of a bearded, fat man floating around in a sled, distributing presents to those who deserve them. What? Sounds far fetched? Oh well then, how about the tale of a little child being born in a manger with choirs of angels singing outside. What? Shouldn't take that literally either? You think we're living in a world where a thin tissue of hopeful fabrication knits us together rather than the harsh truth of reality?
Congratulations! You're ready for the latest, biggest and best fairy-tale of them all - the mid-year economic and fiscal outlook.
Treasury well understands our receptivity to narrative fantasy and dutifully panders to it twice a year. Last week the department again manufactured their own cracker of a fairy-tale, although there are carefully placed clues dotted throughout the 169-page document (with 180 pages of accompanying charts and sums) indicating that even the most straight-laced and unimaginative drone could actually treat it seriously.
The give-away that even the gnomes know it's a joke is right there up-front, the 13th word on page iii, straight after the publishing details. The word 'real' has inverted commas placed around it, as if to signify clearly that all the numbers to follow actually bear no connection to genuine reality at all. The department explains that it uses 'real' to mean adjusted for inflation.
But as anyone involved with the real estate market knows, Treasury's definition of 'inflation' is also completely divorced from current house prices. This means the hip-pocket reality of daily life for anyone who's just bought their house or is looking to rent is also neatly buried deep within the mass of numbers that follow. It effectively signals that while this document obviously means something it also comes with all the carefully embodied accuracy of a message from a fortune cookie.
The real kicker though, the laugh-out-loud line that makes MYEFO such a wonderfully giving bible against which to chart our lives, comes later. It's where Treasury admits that not all these forecasts may, in fact, come to pass and what actually occurs may even, indeed, be "substantially different" from the outlined and detailed predictions. In other words, although all the numbers might look and sound plausible we all instinctively know things won't work out that way.
Box 2.3 on page 29 does deal with "uncertainty about the economic outlook", which is a nice way of suggesting this entire oeuvre is probably only useful as a bin liner. Unfortunately, instead of mentioning issues such as the continued melting of the poles, or Peter Dutton's uninformed assertions that we are about to become embroiled in a war with China, these qualifications are confined to the ongoing impacts of the pandemic.
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What Treasury is saying, in other words, is that we all know these predictions are rubbish but we don't know what exactly will go wrong, so here's a mess of figures to make yourself feel good over Christmas.
It's as if every member of the Department is sitting at their desks, armed with pencils and rulers, attempting to join an intricate series of dots. Every time they're about to succeed a gust of wind suddenly blows straight through the building, shifting everyone's work dramatically up or down. Instead of recognising this will happen, the teachers at the front are simply urging everybody to ignore the draft and continue pretending everything is OK. The point is that while we might not be able to predict exactly when the sheet will go flying, what is obvious is that at some point the paper will move (and probably by a very long way). This reality isn't caught anywhere in a document bulging with notes and details that give it the appearance of solidity.
Frydenberg's become so busy plotting his route to leadership of the party that he's completely ignoring any responsibility to do his current job properly.
In many ways that's fine. Nobody really expects Treasury to exactly pick the future and so getting some reasonably informed guesses about where things might be headed is obviously a step forward. So what's the problem?
The real issues are two-fold - the first practical and immediate, the second conceptual and requiring deeper consideration.
The proximate issue is Treasurer Josh Frydenberg using this document to bankroll a spending spree to run up debt faster than you can ask "when's the next election?" This government is using the current crisis as an excuse to squander the future - just as it accused Labor of doing back in 2008/9 during the financial crisis. He's doing this by playing with modern monetary theory; using uncertainty about which restrictions actually count as a grease that allows him to slip out from the bonds of fiscal restraint and sensible policy.
Frydenberg's become so busy plotting his route to leadership of the party that he's completely ignoring any responsibility to do his current job properly. Instead of guarding expenditure he's become the good-time lad, welcoming others to 'help themselves' to the nation's purse.
In the long term, economic stabilisers will kick-in. This won't, however, avoid the medium (or short-term) pain that will accompany the inevitable crash as the economy slips off the rails. Just take the current housing bubble. Even if this does subside there's no indication why it will be a slow easing of the bubble rather than a sudden 'pop' but Frydenberg's not worrying about that. His spending plans show a determination to spread largess at a massive rate between now and the election without no serious attempt being made to return the budget to balance.
MYEFO makes all those stories about Santa look as if they're grounded in fact because at least the happy endings are believable.
Fairy tales are absolutely critical for the functioning of society, but that doesn't mean we have to live as if they're true.
Nicholas Stuart is a Canberra writer.
Nicholas Stuart is a Canberra writer.
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