In recent days, Scott Morrison has been talking about so-called “Rudd economics”. But what does he actually mean?

Mr Morrison’s own budget papers show the Rudd Government consistently delivered lower taxes, lower spending, lower debt, lower waste and higher wage growth than under his government.

In his budget, Mr Morrison has announced taxes will continue to rise and spending will remain at levels much higher than during the worst of the Global Financial Crisis. According to budget papers, Mr Morrison expects this to continue into the 2030s.

The truth is: Mr Morrison would be lucky to have an economic record anything like my government.

If Mr Morrison wants to campaign on his record of higher taxes, higher spending, falling wages, higher debt and record waste, then I say ‘come in spinner’.

Taxation

Between 2007 and 2010, taxes accounted for an average 21.8 per cent of the economy. At the height of the Global Financial Crisis, taxes dipped as low as 19.9 per cent of GDP as we encouraged Australians to keep the economy turning.

Before the pandemic, Mr Morrison was already collecting 23.1 per cent of GDP of the economy in taxes. Taxes declined slightly to 22.4 per cent this financial year as he flushed the economy full of wasteful debt-fuelled spending.

Mr Morrison’s budget predicts taxes will climb to 22.9 per cent of GDP in four years, and 23.9 per cent in 10 years’ time.

Spending

Between 2007 and 2010, federal spending accounted for only 24.7 per cent of GDP. This peaked at 25.9 per cent during the Global Financial Crisis as we rolled out emergency stimulus that saved more than 200,000 Australian jobs and averted recession. Spending returned to 23.9 per cent of GDP during Labor’s final year of government. The Coalition has not recorded spending that low since the Howard years.

Two years after the pandemic started, Mr Morrison’s spending still accounts for 27.8 per cent of GDP. Mr Morrison is spending more on short-term election bribes this year than the Rudd government’s entire first fiscal stimulus package for households during the Global Financial Crisis.0F[i]

His budget predicts that, ten years from now, spending will still be 26.5 per cent – substantially higher than at any point during the Global Financial Crisis.

Debt

In Labor’s last year of government, Australian government net debt was $159.5 billion – equivalent to 10.4 per cent of GDP (about where it was during John Howard’s second term, prior the resources boom).

In the years before the pandemic, the Coalition doubled the debt to a level not seen in decades[ii]; Mr Morrison then compounded the debt with wasteful spending throughout the pandemic. The budget optimistically forecasts net debt will “stabilise” at 33.1 per cent of GDP around the middle of this decade.

In gross terms, the government will be saddled with more than $1.1 trillion of debt by mid-decade, equivalent to 44.9 per cent of GDP, and it will remain at 40.3 per cent in a decade’s time.

Waste

The Rudd government’s stimulus strategy was independently reviewed by Professor Joseph Stiglitz – a former World Bank chief economist and Nobel Economics Prize laureate – as “one of the best-designed Keynesian stimulus packages of any country”.1F[iii]

The inefficiencies, which the Liberal Party termed “waste”, included:

About $14.4 million in tax refunds to individuals who had recently died.2F[iv] In most of these 16,000 cases, the $900 payments were given to their grieving families, including the surviving families of those killed during the Black Saturday bushfires.
An estimated $850 million cost premium to fast-track 23,675 construction projects across every community in the country – regardless of how they voted – including 3000 libraries, 3000 classrooms and 3000 multipurpose halls.3F[v]
Approximately $450 million on programs associated with the early shutdown of the home insulation program. Installation companies were prosecuted for breaches of workplace safety laws following four tragic deaths. Almost 1.2 million homes were fitted with insulation. Allegations of increased fire risk were dismissed by a royal commission.

By comparison, Mr Morrison’s waste includes:

At least $38 billion in JobKeeper payments to businesses whose revenue did not fall below threshold limits during the quarter they claimed financial support – about 42 per cent of businesses under the scheme.4F[vi]
The $2.5 billion HomeBuilder scheme that subsidised thousands of projects that would have happened anyway, helping to overheat the industry and drive-up inflation.5F[vii]
More than $9 million on the CovidSafe app – equivalent to hundreds of thousands of dollars for each contact successfully identified by it.6F[viii]

Wages

During the Rudd Government, wages grew on average 3.6 per cent each year underpinned by a renewed focus on fairness in the industrial relations system.

By contrast, under the Morrison Government, wages have grown by less than 2 per cent each year. Last year, the average worker’s real pay went backwards by $800, the steepest wage cut in real terms for more than 20 years7F[ix].

Suppressing workers’ wages has been a deliberate feature of the Coalition’s economic policy8F[x].

Infrastructure

The Rudd Government’s stimulus spending contained a legacy of nation-building economic infrastructure9F[xi]. We announced:

The biggest investment in social housing in history – $5.6 billion to build or repair 100,000 homes for vulnerable Australians.
Major road infrastructure – $3.4 billion to build the Hunter Expressway in NSW and other upgrades, including the major highways connecting Melbourne to Cairns.
Major health initiatives – $3.2 billion including upgrades to medical facilities around Australia and $1.3 billion to improve cancer screening and treatment.
Major education upgrades – $16.2 billion for upgrades to physical infrastructure, including classrooms, libraries and multipurpose facilities across the nation.
Major port infrastructure – including upgrades to the Port of Darwin which the Liberals subsequently sold to China for 99 years.

Put together, these projects were funded at a fraction of the cost of the $38 billion waste associated with JobKeeper payments alone. The defining feature of the Morrison Government’s stimulus spending is the failure to focus on building productive infrastructure for the future.

[i] https://www.afr.com/policy/economy/why-frydenberg-s-budget-is-such-an-economic-failure-20220330-p5a9hz

[ii] https://www.abc.net.au/news/2020-08-13/fact-check-budget-debt-coronavirus-pandemic/12545628

[iii] https://www.smh.com.au/business/in-praise-of-stimulus-20100808-11q8e.html

[iv] https://parlinfo.aph.gov.au/parlInfo/download/media/pressrel/2888176/upload_binary/2888176.pdf

[v] https://catalogue.nla.gov.au/Record/5779849

[vi] https://www.theaustralian.com.au/nation/jobkeeper-forked-out-38bn-to-thriving-firms/news-story/6cd6177ce6b041e71a7915b789462b79

[vii] https://www.abc.net.au/news/2021-05-27/reserve-bank-grappling-with-house-price-surge-questions/100167946; https://www.afr.com/policy/economy/the-shopping-basket-items-that-determine-inflation-20220215-p59wm2

[viii] https://www.abc.net.au/news/2021-12-16/covidsafe-app-scrapped-poor-performance-contact-tracing/100703736

[ix] https://www.theguardian.com/australia-news/2022/mar/15/average-australian-worker-went-backwards-by-800-in-2021-says-actu-chief-michele-oneil; https://www.news.com.au/finance/economy/federal-budget/workers-600-worse-off-as-inflation-soars/news-story/1da89e56f08e939dbced9638ec2c1e7d

[x] https://abetz.com.au/news/employers-union-bosses-must-accept-responsibility-for-toyota-jobs; https://www.sbs.com.au/news/article/low-wage-growth-not-all-bad-minister/jy8jdzcga; https://www.smh.com.au/politics/federal/turnbull-government-backs-penaltyrate-cuts-for-low-paid-workers-20170324-gv5rzr.html

[xi] https://www.aph.gov.au/~/media/wopapub/senate/committee/economics_ctte/completed_inquiries/2008_10/eco_stimulus_09/report/e03_pdf.ashx