Running a ruler over the ‘Budget Battle’

Tomorrow we will see the Queensland ALP Government release their 2019-20 Budget and ahead of that the Courier Mail today has published a ‘Budget Battle’ piece with competing statements from Treasurer Jackie Trad and former LNP Treasurer Tim Nicholls (why we aren’t hearing from the current LNP Shadow Treasurer Tim Mander is a bit of a mystery). We thought we’d take a look at some of the claims made by each side to see if they’re being fair dinkum.

Starting with Treasurer Trad, she claims that under the Labor Govt ‘almost 200,000 jobs have been created’. Putting aside the common mistake that ’employment’ is not the same thing as ‘jobs’, since the ALP Government came to power in March 2015 employment is up by 199,900 (seasonally adjusted) or 190,500 (Trend)…that’s almost 200,000 in anyone’s books. Trad then goes on to say that there have been an average of ‘more than 2,100 full-time jobs per month‘. Given the latest data is to April 2019 then since March 2015 we have 49 months of the ALP Government. Full-time employment (again, not jobs) is up 94,100 (sa) or 96,500 (Trend) in that time; that’s an average of 1,900/m (sa) or 2,000/m (Trend). Even if you allow for just 48 months we still don’t get to ‘more than 2,100‘. Close but no cigar.

Trad talks about the Government’s infrastructure spend and how this is ‘paying economic dividends‘ because Queensland’s State Final Demand (this is only the domestic component of the economy and ignores the external, international and inter-state, component) figures released last week show ‘Queensland outpacing the rest of the nation‘. SFD for the first quarter 2019 rose 0.5% q/q (sa) or 0.4% q/q (Trend) in Queensland. On a quarterly basis this did indeed outpace the nation (est +0.1% q/q sa) but, as the chart below makes clear, if we consider over the year then Queensland is certainly not performing well relative to the other States; indeed only Western Australia is doing worse. Using just one quarter of data is disingenuous at best.

Trad finishes up by stating that ‘whichever way you look at it – debt is lower today‘ under the ALP Government. The 2018-19 MYFER forecasts total Government borrowings from the non-financial public sector at $71.6 bn in this financial year. The last LNP Budget for the 2014-15 year has the same metric at $80.0 bn. The same LNP 2014-15 Budget projected borrowings as far forward as 2017-18 at $82.1 bn; the actual result (as per the 2018-19 MYFER) was $69.5 bn. Trad’s statement is factually accurate.

Nicholl’s argument focuses exclusively on borrowing and argues that borrowing money just because its cheap doens’t always make sense (certainly true). He also argues that there are limits to how much a Government should borrow given constraints around credit ratings and the ability of a potentially volatile economy to meet interest payments (also true). He notes that current Treasury projections have borrowings increasing (true; the MYFER sees borrowings increase to $83.5 bn by 2021-22) faster than economic growth or revenues (also true). Nicholls ends by stating that a Government should only be ‘borrowing for worthwhile projects where benefits exceed costs‘….if only Governments of all colours and at all levels stuck to such a prescription!

Tomorrow’s Budget will be closely wtached to see how these metrics around revenue, expenditure and debt are projected to move in coming years. For an excellent run-down of specifics to watch out for please take a look at Nick Behrens excellent preview of the Budget.

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