Whitlam's fiscal legacy using facts.

[boris1gary]

Thought this deserved a thread of it's own as the facts are sometimes hard  to find in the swamp we call our msm.

http://thekouk.com/blog/gough-whitlam-s-fiscal-legacy-using-facts.html#.VEr2zvmUfqR

Gough Whitlam's fiscal legacy using facts

WED, 22 OCT 2014  |  STEPHEN KOUKOULAS

Within hours of the news that Gough Whitlam had died, age 98, the mantra of 'hopeless economic management' started to flow.

According to those who clearly loathe Whitlam and anything vaguely socially progressive, Fairfax and The Australian had stories where the Tea Party faithful in Australia wrote or were quoted saying, Whitlam was the worst Prime Minister Australia had seen, he was economically damaging, that he set up the culture of entitlement especially for health and university education, that he created the mentality of the dole bludger and so on.

I am sure you get the drift.

The criticisms were, as far as I can tell, nothing to do with managing the macroeconomy or the budget. They were focussed on the perception that he allocated too much government money to healthcare, education and the aged. That may or may not be the case, but no one has said why it matters or indeed, by how much the spending was excessive and exactly why it remains a problem.

No one has articulated and demonstrated why the clear and dramatic lift in government spending some four decades ago is so damaging today. Nor have they shown how those criticisms have manifest themselves into things Australia has not experienced such as prolonged sluggish economic growth, falling living standards, problems on the budget, chronic unemployment or whatever.

No substance, only high brow fact-free opinion and zealotry.

The scathing criticisms of Whitlam and his legacy need to be put in some context.

Since his sacking, some 39 years ago, the Coalition parties have been in power for about 20 years, so one would have thought that if the Whitlam legacy was so bad, so damaging, so horribly yukky, that Fraser's seven years, Howard's 11 and a half years and Abbott's 13 months in office would have, in at least one of their budgets, scaled back, reversed and once and for all ended, the Whitlam economic legacy.

On that score, it is interesting to note that in 1975-76, government spending to GDP was 24.3 per cent. The Fraser government saw this rise to 25.8 per cent of GDP by 1982-83. (Not those bleepy facts again!)

With Mr Hockey's budget less than six months ago, government spending to GDP, even allowing for the cuts that were announced, was estimated to be 25.3 per cent of GDP in 2014-15 and at or above 24.7 per cent of GDP in every year of the forward estimates. So Abbott and Hockey's small government budget had spending a bit lower that Fraser, but still above the 'big spending' Whitlam budgets. 

That's the first point to note.

Could it be the electorate like the government to have some role in health, education, aged and disability care?

My guess is 'yes'. Look at the public's reaction to the Abbott government's proposed Medicare co-payment, university fee hikes and cuts to unemployment benefit eligibility.

It is also interesting to note that in the early 1970s, government spending in the US rose sharply, by around 3 per cent of GDP in about half a decade. Surely Gough did not influence Nixon and Ford to spend, spend, spend? Maybe the social changes of the 1960s and 1970s in the western world saw the electorate demand, and get, a greater role from government.

And a few final fiscal facts:

Whitlam government left zero net government debt to Fraser – in June 1976, net debt was minus 0.4 per cent of GDP (that is, the government had financial assets). When The Fraser government lost in 1983, it had boosted net government debt to 7.5 per cent of GDP.

When Whitlam left office, the tax to GDP ratio was around 20 per cent. The Howard government got this up to an all time record tax take exceeding 24 per cent of GDP (in today's dollars, 4 per cent of GDP is a stonking $65 billion per year).

Even Mr Hockey's 'low tax' budget has the tax take at 23.2 per cent of GDP by 2017-18, some 3 per cent of GDP above anything Whitlam achieved.

Small government, big government?

It is funny how facts can smash perceptions.

Footnote: All the data on spending and tax are from Mr Hockey's budget papers.

[kilroy_is_here]

The man tried to borrow 4billion dollars through back channel deals , if he had managed it we would still be paying it off today hardly economic responsibility

[boris1gary]

Economist disarms Gough Whitlam's sneering detractors

For three years Gough Whitlam risked his life climbing into the sky where other men wanted to kill him. He fought against the Japanese as a navigator and bomb aimer with the RAAF's Number 13 Squadron, which flew slow, under-armed Bristol Beauforts and later the American-made Lockheed Venturas as long-range maritime strike aircraft.

Perhaps, like Keith Miller, the test cricketer and fellow air force veteran who famously scoffed at the idea of there being any real pressure in sport – "pressure is a Messerschmitt up your bleep" – Whitlam took some perspective from those years.

A vast right-wing conspiracy might have wanted to destroy him and his government, but at least they weren't actively trying to kill him.

In this nasty, brutish but ultimately small and squalid era of politics, when image consultants are forever tucking prime ministers and would-be prime minsters into flack jackets and fighter bombers to gird their image in martial armour, we are well served by remembrance of a man who, like the Liberal's John Gorton, volunteered and fought his good fight and then moved on; a creator at heart, not a destroyer.

We of the Herald were part of the anti-Whitlam crusade, editorialising after he embraced China, "If Mr Whitlam thinks that this wholesale selling out of friends to gain a despot's smile is diplomacy, then Heaven protect this country if he ever directs its foreign policy."

We were wrong, as so many continue to be wrong about one of the grandest characters ever to stride through the pages of Australian history. Edward Gough Whitlam protected his country from the predations of Imperial Japan. He did not climb into those flying coffins for a sound grab and a photo-op. But having played his small, individual role in that great struggle, he went on to protect us from the creeping threats which come upon a nation without the great alarums of war.

Poverty, ignorance, bigotry, inequality, the closing of minds, the entrenching of privilege and power, all of these he fought against. He fought for us. And not only for those of us who were there and remember, even if only through the eyes of children. But for all for Australians who would ever be.

The same punishers and straighteners and champions of the overdog who raked at Whitlam from the very first morning of his administration, will rake now at his memory and legacy. Even as Tony Abbott ground his teeth and flexed his jaws in tortured imitation of condolences, his myrmidons redoubled their attacks on both the idea and the reality of the fairer country Whitlam envisioned. Pyne closing the doors of learning to all but the privileged. Hockey taking from the poor and delivering straight to the offshore tax havens of the rich. Morrison, forever tinkering with the dark machinery of the Australian gulag system.

Gough Whitlam, with his Shakespearean greatness and Shakespearean flaws, will rise above them all, perhaps even growing larger as he recedes from us in time, and perspective wins out over passion.

Responding to the inevitable carping and sneering at the economic vandalism and irresponsibility of the Whitlam government, economist Stephen Koukoulas this week pointed out two inconvenient truths. The Whitlam government "left zero net government debt to Fraser" who then boosted net government debt to 7.5 per cent of GDP by the time Hawke ran him out of office. And when Whitlam was removed by Fraser's bloodless coup, "the tax to GDP ratio was around 20 per cent". Fraser's treasurer, honest John Howard, "got this up to an all-time record tax take exceeding 24 per cent of GDP".

But you won't read about that in Rupert Murdoch's papers this weekend. Rupe's probably still smarting about Gough telling him he couldn't be High Commissioner to London. It's interesting to speculate how the past few decades might have played out if Whitlam had just given him that one little thing.

The Greens should be ashamed of themselves, plastering their brand livery all over Gough's face in a weird mash up of grave robbing and ambush marketing, but they won't be. After all, the image went viral, and that's what counts. That and maybe tricking a few gullible younger voters into thinking that the old dead guy everyone seems to love was some sort of once-upon-a-time Green Santa, bringing social justice and renewable energy targets for all.

It's a tempting what-if, though, wondering how Whitlam in his prime might have responded to climate change. He would doubtless have given great credence to the science and paid due deference to the advice of those more learned than himself. He would also have known that when you take action, things happen, and shutting down industries means taking away the jobs of the working people to whom he devoted his life.

He would not have rushed in, but he would not have delayed and obfuscated and lied. He would not have been a spear carrier for the coal barons and petrol companies. But that's OK. They have their champion in the Lodge these days, and Tony Abbott has his spear carriers posted to guard against any potential threats to the share price of BHP Billiton, Rio Tinto or Xstrata.

Is it likely that a Whitlam government would have plunged Australia to the bottom of the world's green economy rankings? Would he have appointed scientifically illiterate deniers to some of his most important climate policy advisory roles? Would he have hosted a meeting for the leaders of the world's 20 biggest economies and flat out refused to even talk about the nexus between climate change and economic growth? Would he have set out to destroy the solar industry as a matter of policy, and with it thousands of jobs in businesses small and large?

Probably not.

Read more: http://www.smh.com.au/comment/economist-disarms-gough-whitlams-sneering-detractors-20141023-11alm7.h...