Scott Morrison lies about the economy all the time. He can’t help himself. He tells big lies about transitioning away from fossil fuels and small lies about the role of his office in the way grants are directed to marginal seats. He tells strategic lies about the union movement engaging in “a campaign of extortion” to prevent medical supplies making it to Australia and he tells dumb lies about electric vehicles ruining weekends and even dumber ones denying he said that.
What all his economic lies have in common is that they always serve the interests of his political friends and undermine the legitimacy of his foes. The lies aren’t random. They are carefully selected to help depict what he wants to do as being “good for the economy” and anything he opposes as “destroying jobs” and “burdening future generations”. The rhetorical power of economic language is far greater than the predictive power of any of its models. For a government still seen as the preferred economic manager, despite all the evidence to the contrary, the power of economic language borders on magic. Morrison has persuaded voters we’re broke and that expecting better services would send us over the edge.
Democracy is all about making choices. Should we spend more money on defence, climate change or aged care? Or should we spend more money on all three? And if we spend more money on all three, should we collect more tax or have a bigger budget deficit? There’s no right answer to such questions, which is why who we elect matters so much. Economies as diverse as China and Norway have thrived despite, or perhaps because, they have completely ignored the reform path Australians have been told they must walk down. The real power of economics in Australia is the way it is used to limit the policy options offered to voters.
The biggest lie told about the Australian economy is that “we have no choices”. How many times have you heard conservative politicians or business leaders insist that Australia “must” cut taxes and wages if we are to remain “competitive”, or that we “must” privatise government services if we want our economy to be “efficient”? Or that we “must” accept rising inequality if we want the “wealth creators” in our society to create jobs for our kids as well?
Ironically, while the academic version of economics sees itself as the science of making good choices, the public debate about economics in Australia is based on the insistence that the only “responsible” choice is less government spending on those with the least, more tax cuts for those with the most, more pollution, more inequality and more privatisations. Of course, none of that is true and none of it is based on sound economics.
While the Coalition likes to argue that “you can’t tax your way to prosperity”, countries such as Norway, Denmark, Finland and Sweden do just that and are among the wealthiest countries in the world. They are also among the happiest and healthiest countries. But be warned: it’s considered impolite to cite Nordic examples in Australian policy debates. Trust me, I’ve tried.
For years, Australians have been told that subsidies for private schools “take pressure” off the public school budget. But Finland, which is widely regarded as having the best schools in the world, has no private schools and spends less per person on education than we do. No one outside of Australia would believe for a minute that it is fair or efficient for taxpayers to subsidise private schools that already have equestrian arenas and indoor pools while other public schools are so crowded that kids aren’t allowed to run in the playground. But in Australia, such absurdity is actually conventional wisdom.
Imagine if every three years Australians were asked whether they would prefer more money to be spent on aged care and more tax collected from foreign oil companies, or if they wanted less money spent on aged care and less tax collected from foreign oil companies. Like the postal vote on same-sex marriage, the majority answer is so obvious it would be a waste of time and money to even ask the question.
And yet successive Coalition governments have not only cut the tax bill for the oil and gas industry but handed them billions in subsidies as well. Despite the Coalition spending $100 million to hold a royal commission into aged care, and despite that royal commission recommending a big increase in funding for aged care, the Morrison government chose to ignore the advice it commissioned and, as a result, far too many elderly Australians will be eating substandard meals for dinner tonight while waiting for their underpaid and overworked carers to respond to their buzzers. Despite all the official data showing Australia is one of the richest countries in the world, with one of the lowest levels of public debt, most Australians think we are broke because they’ve been lied to for so long. Such pessimism keeps their expectations low.
Lying about the economy plays a central role in keeping voters away from the biggest democratic decisions we face. Does Australia want to provide high-quality health and education to all, or do we want those who can pay the most to get the best care? Do we want to provide free childcare to help parents re-enter the workforce, or do we want to “incentivise” high-income earners to work a bit longer with tax cuts for those earning over $200,000? Imagine what Australia would look like if the public got asked such simple questions.
Australians aren’t stupid, but they have been lied to by a lot of people for a very long time. For instance, Australia is not a high-taxing country. In fact, it is one of the lowest-taxing countries in the developed world. The fossil fuel industry isn’t a big employer and it doesn’t pay much tax, although many Australians believe the opposite. Despite the fact Australia is now the world’s biggest exporter of liquefied natural gas, Qatar, the second-biggest exporter, collects 20 times more tax on their oil than we do.
Australia never had, and was never going to have, the “gas-led recovery” Scott Morrison promised. Anyone in the prime minister’s office with access to the internet could have easily figured out that the gas industry is tiny, employing only 20,000 people when Covid-19 hit. If the gas industry had doubled in size since then, it would still employ fewer people than McDonald’s. And the gas industry didn’t double during the crisis, it shrank from employing 20,000 people to 18,000. While employment shrank, gas exports and greenhouse gas emissions rose, making a mockery of the prime minister’s lie that Australia is doing everything it can to transition to net zero.
The fossil fuel industries aren’t the backbone of the Australian economy. While exporting oil and gas and coal is enormously profitable for the foreign companies that dominate those industries, between them they employ only 65,000 of the 13.2 million people who work in Australia. And while it’s true that the 0.5 per cent of people employed in mining and drilling for fossil fuels spend their wages in the local shops, so do the other 99.5 per cent of workers who go shopping as well. It is a lie to talk about the “indirect jobs” associated with the fossil fuel industry and remain strategically silent about the “indirect jobs” that flow from teachers, nurses and aged-care workers spending their pay packets.
Few Australians realise that the biggest employer in Australia is the health sector. It doesn’t just employ more people than the fossil fuel industry by a country mile, it employs more people in every regional electorate as well. But while Scott Morrison loves to front the cameras in high-vis and a hard hat, he’s yet to slip into a nurse’s uniform. While it’s true that employment in the health industry is dominated by women, the sector is so big that even though only 24 per cent of its workforce is male, it still employs far more men than our coalmines and gas wells. The inconvenient truth is that investing in the care sector – be it in childcare, aged care, disability care or health care – creates far more jobs per million dollars spent than subsidising the fossil fuel industry.
No matter how hard you look you won’t find any evidence that spending $15 billion a year on the Morrison government’s stage 3 tax cuts will create more jobs than spending the same amount making childcare free, implementing the recommendations of the aged-care royal commission and increasing an unemployment benefit that is so low even the Business Council of Australia supports it going up. You won’t find such evidence because it doesn’t exist. And it doesn’t exist because it simply isn’t needed.
One of the biggest lies told in Australia is that you need economic modelling to win big policy debates. Of course, when powerful people want to do things that benefit other powerful people no such analysis is needed. There was no cost-benefit analysis done to justify the biggest income tax cuts in Australian history. No economic modelling was commissioned to justify our “gas-led recovery” and, when it comes to the cost of buying a fleet of nuclear submarines, Scott Morrison didn’t even get a quote before he said yes to the United States and Britain.
To be clear, I like economics. I studied it, taught it and use it every day. I think it can sometimes help solve some problems. Done well, economics can help present people with a menu of good options and provide some sense of the cost of each choice. That should be a useful tool in a democracy. But in Morrison’s Australia the role of economics is to make the simple seem complicated, the reasonable seem radical and to dismiss popular support for a good idea as “mere populism”. Sadly, the dominant role of economics in Australia today is not to help voters make big choices but to tell them they have none.
And here’s the brutal truth. Whenever you hear Scott Morrison, or any politician, say that we can’t afford something, what you have actually heard them say is that they would rather not do it. When you hear them say we “must” do something, what they really mean is that they just want to do it. Australia is one of the richest countries in the world and while we can afford to do anything we want, we can’t afford to do everything we want. It’s the role of our parliaments to make big choices on our behalf.
Unfortunately, economics has helped undermine the public’s faith in democracy itself. The belief that we have no choice in whether we cut taxes, cut spending or privatise our public assets means that many people believe the choice of who they vote for makes no difference. Of course, in reality, whether we choose to cut income taxes by $15 billion a year or choose to ignore the recommendations of the aged-care royal commission makes a huge difference to the shape of our economy and our society. The biggest lie of all is that our votes don’t matter because there are no big choices left for governments to make. Don’t believe it for a second.