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Leading article Australia

In the red (again)

27 October 2012

9:00 AM

27 October 2012

9:00 AM

Your credit card is stretched to the max. Your bills are bigger than ever before. You’ve got some unexpected blow-outs. And this month’s earnings are way down. That’s when you start looking for spare cash in unlikely places and rifling through granny’s purse.

It’s a feeling many households and small businesses are familiar with, but this week it was the Treasurer’s turn. The so-called Mid-Year Economic and Fiscal Outlook saw Wayne Swan and Penny Wong digging around down the back of the sofa and resorting to tricks that would make a Gold Coast accountant blush in order to deliver a measly, much-diminished $1.1 billion ‘surplus’ to wave in front of the punters. Delivered appropriately enough via the superficial medium of Twitter, this mini-budget was labeled a political rather than economic exercise by the opposition and commentators.

‘What strikes me most of all is the dramatic decline in government revenue. It’s all income from business [that’s disappeared],’ said the Sydney Morning Herald’s Peter Martin. It’s a sentiment any tradie or small business can sympathise with in the current climate, and reflects what this magazine and others have been warning of for some time. Namely, that the government should be pulling out all the stops to help businesses grow. That includes cutting taxes, getting rid of red tape and removing hurdles to productivity. It shouldn’t mean imposing ideologically-motivated taxes nor frittering away billions on poorly-implemented immigration policies and millions on NBN ads.

The Treasurer’s panacea? A farcical new monthly tax collecting scam that magically conjures up $8.3 billion by denying big businesses the opportunity to invest their own profits in the short term, makes cashflow a costly nightmare and diverts precious time and resources from accounting departments who would otherwise be getting on with helping increase profitability. Oh, and nicking people’s unclaimed super. Soul Pattinson’s Rob Millner speaks for many executives when he claims this government is ‘without peer in terms of its hostility to business’.

As Peter Costello pointed out in his Fairfax column: ‘Swan originally announced the 2012-13 budget surplus on 11 May 2010. He has heralded it in each budget and mid-year review since, making [this week] the sixth time he’s announced it. It’s a forecast surplus of $1.1 billion. Never before in the history of budgeting has so little been promised so often.’ To get back to where net financial worth stood five years ago when Labor were elected, the former Treasurer calculates, would take accumulated surpluses of more than 15 per cent of GDP. That puts a surplus of 0.1 per cent in perspective.

So chances are next year we’ll still be in the red. Which won’t stop the government going to the polls claiming the opposite, like some sweating tradie telling his nervous suppliers everything is hunky dory. Political imperatives, naturally, will continue to trump economic ones. Meanwhile, Mr Swan’s colleagues carry on splurging our hard-earned money on what can largely be categorised under two columns: incompetence and ideology.

An apology

Readers have complained about our description last week of John McTernan, the Prime Minister’s communications director, as a ‘Scottish import’. For the record, Mr McTernan joined the Gillard team last year not long after a two-year stint as special adviser to Jim Murphy MP, Secretary of State for Scotland. Prior to that, in 2007, he ran the Scottish Labour party’s unsuccessful campaign at the Scottish Parliament general election.

Head of policy for First Minister of the Scottish Executive Henry McLeish from 2000 to 2001, he also worked for three months as a policy consultant to the Scottish Arts Council in 2002 and was special adviser to Des Browne, Secretary of State for Scotland from 2007 to 2008. He has written for the Scotsman and Scotland on Sunday, penning such perceptive lines as ‘There are a lot of myths about political campaigning. Top of these is the idea that negative campaigning never works’, and ‘fear beats hope.’

Whether these insights are the basis for his strategy of launching a UK-style class war on behalf of our Treasurer against productive, tax-paying Australians or indeed of launching an unprecedented gender war on behalf of our first female Prime Minister by citing false examples of misogyny is unclear. Baroness Liddell, former Labour Secretary of State for Scotland, claims McTernan is ‘very good at attack lines’. Indeed, as we pointed out last week, it was Mr McTernan who lauded Ms Gillard’s attack on Mr Abbott as a ‘sniveling grub’ as being a ‘towering performance’.

Despite holding numerous jobs in Scotland, most of which lasted at most a year or two, John McTernan was in fact born in London. We apologise to our Scottish Australian readers who took offence.

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