Now It’s Gerard Henderson getting facts wrong
The executive director of The Sydney Institute, Gerard Henderson, ventures into economics in today’s column in the SMH. Here is the link.
In writing about budget, Mr Henderson makes some howlers – he gets deficits and surpluses mixed up and percentage changes are wrong. And have a guess which direction those errors are? Do you think they make a Labor government look worse or better?
Yep – you got it! All of the errors make Labor look worse, not the other way around.
Below are a few things written by Mr Henderson and the facts are presented below that. Those facts are from the Statement 10 of the 2012-13 Budget papers, pages 10-6 and 10-7.
- “The statistics tell the story. In 1974-75 Commonwealth outlays increased by close to 50 per cent. This equated to an increase in spending of more than 5 per cent of gross domestic product in just one year. Taxes rose by close to 30 per cent and the budget deficit increased substantially.”
According to Treasury data:
In 1974-75, Commonwealth outlays increased by 39.6%, not “close to 50%”. In today’s dollar terms, a 10% change in government spending is around $36 billion – in a single year! What an error.
The increase in spending as a share of GDP in 1974-75 was 3.3%, from 18.4% in 1973-74 to 21.7% in 1974-75. Everyone knows, including Mr Henderson in his heart of hearts, that 3.3% is not “more than 5%”. In today’s dollar terms, the difference between 3.3% and 5.0% of GDP is around $26 billion. Whoa!
In 1974-75, tax collections rose by 30.5% – well done Gerard, you got one largely right.
But the howler of all howlers:
- “the budget deficit increased substantially” is wrong.
In 1974-75, the Government recorded a budget surplus of 0.3%, after the Whitlam Budget of 1973-74 recorded a surplus of 1.9% of GDP (the fourth highest on record) and in 1972-73 there was a surplus of 0.7% of GDP.