Andrew Leigh

ECONOMIC FALSEHOODS, FANTASIES AND FICTION, Canberra Times, 17 March

In recent years, falsehoods, fantasies and fabrications seem to be playing an increasing role in the Coalition’s political strategy. Sure, John Howard occasionally told an economic whopper – saying he’d deliver lower interest rates while increasing spending and stoking inflation, for example. But these days it seems we can’t go a month without the conservatives peddling complete economic fiction.

Before the 2013 election, voters were told that the government would make no cuts to health or education, but would reduce taxes and produce a surplus budget every year. It was mathematically impossible, yet neither Tony Abbott nor Malcolm Turnbull have ever admitted the falsehood to the Australian people. Instead of ‘an instantaneous adrenaline charge in our economy’, we’ve got unemployment up, growth downgraded, investment languishing, consumer confidence flagging, and debt rising.

When it came to porkies, Team Abbott had a special gift. Do you remember when Joe Hockey told us that poor people don’t drive cars? Or that the secret to affording a home was to get a high-paying job? Or that Australia was a high-tax country despite having one of the leanest governments in the advanced world? Do you remember when Eric Abetz warned of a ‘wage explosion’ while Treasury warned in the Budget of slowing wage growth?

The latest special seems to be ‘tall tales on taxation’. Lately, Coalition members have been saying that changes to negative gearing will lower housing prices (and raise them), decrease inequality (and increase it). Having begun by complaining that Labor’s policy didn’t raise much revenue in its first few years, Prime Minister Turnbull then feverishly claimed it would ‘smash’ the market. He even claimed that changes to capital gains tax will hurt foreign investment, despite the fact that non-residents aren’t even eligible for these exemptions in the first place.

Treasurer Scott Morrison has continued this trend. He argued the GST is a fair and efficient tax, despite Treasury’s own Discussion Paper saying it’s regressive and no more efficient than the income tax. He claims ‘average Australians’ are the ones who benefit most from negative gearing, despite the data showing that the typical surgeon gets ten times as much from negative gearing as the typical teacher.

It’s not surprising, then, the fact-checking websites created by The Conversation and the ABC have had a field day in recent years with this Government. When the Coalition promised to create a million jobs, who knew so many would be among fact-checkers?

Tallying up those fact-checks that came to a clear conclusion, I found that The Conversation assessed the Coalition to be wrong 39 percent of the time. A similar analysis on ABC Factcheck found the Coalition to be wrong 62 percent of the time. Both numbers are significantly higher than Labor’s.

Admittedly, those claims which are assessed by fact-checking websites aren’t a random sample of everything that politicians say. Such sites wait until they smell smoke before going to check whether a politician’s pants are on fire. But the fact that both major Australian fact-checking websites find more mistruths on the conservative side of politics fits with a pattern that has been seen elsewhere.

In the United States, a recent Politifact analysis found 78 per cent of Donald Trump’s statements are ‘mostly false’, ‘false’ or ‘pants on fire’. For Marco Rubio, it is 42 per cent. Both Democratic candidates have a significantly better hit rate.

As economist Paul Krugman observes, ‘The Republican antiestablishment candidates now dominating the field, aside from being deeply ignorant about policy, have a habit of making false claims, then refusing to acknowledge error. The Republican party taught them not to care. Bluster and belligerence as substitutes for analysis, disdain for any kind of measured response, dismissal of inconvenient facts’. Using the term ‘liberal’ to mean ‘progressive’, US comedian Rob Corddry once quipped ‘The facts have a well-known liberal bias’.

Everyone loves a bit of comedy – it’s just when it starts driving policy that we start to worry. Scott Morrison’s claim that the Government doesn’t have a revenue problem is a good example. To watch the Treasurer dismiss the revenue side while simultaneously announcing a $52 billion write-down in tax receipts to 2017-18 is to be transported into Bizarro World.

Malcolm Turnbull’s rhetoric on ensuring ‘Australia remains a high wage, generous social safety net economy’ is similarly fragile. Many of his government’s policies are geared towards lower wages and a weaker safety net, not the other way around. Cutting penalty rates and weakening trade unions are proven ways to reduce wages rather than increase them. Reducing welfare payments, removing vital procedures from the Medical Benefits Schedule and cutting health and education weaken our safety net.

The Australian economy challenges from inequality, rapid technological change and global uncertainty. We need an honest conversation with the Australian public on the nature of these economic challenges and the different policy options for overcoming them.

But all too often we see the Government doing the opposite. Rather than increasing public awareness of economic issues, they too often choose to mislead rather than engage and inform. As the saying goes, you can have your own arguments, but not your own facts.

This piece originally appeared in The Canberra Times on Thursday, 17 March, 2016.