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Australia’s fiscal health under Labor is reaffirmed in the latest IMF rankings

Vaseline 2 months ago

Latest International Monetary Fund (IMF) research shows Australia is rapidly recovering from nine disastrous coalition years, Alan Austin reveals.

The IMF’s semi-annual report on fiscal policy, published last Wednesday, contained strong support from the Albanian government and Treasurer Jim Chalmers. Every file on Australia confirmed that economic performance had suffered year on year under the Conservative coalition, but was now rapidly improving under Labour.

This was hard, cold, objective evidence showing what is actually happening in the economy. So of course most Australian media ignored it.

The report opened with I’s commenta early February that more voters will go to the polls in 2024 than in any previous year.

It then warned of electoral bribes:

Even as the global economic outlook stabilizes, fiscal policy continues to grapple with the legacy of high debt and deficits while facing new challenges. Risks to public finances are acute this year as elections are held in more than 80 economies and economic areas, while support for high government spending is increasing.”

The remnants of the Coalition's horrific economic damage still remain

Improving budget balances

The IMF provided data on various fiscal measures for 116 countries. This includes all members of the G20 and all members of the Organization for Economic Co-operation and Development (OECD), except Costa Rica.

Treasurer Chalmers highlighted the finding that among the powerful, populous G20 countries, Australia ranked second in terms of its strong fiscal position, just behind Canada.

He stated that:

‘Australia had the second strongest budget balance as a percentage of GDP among G20 countries last year, up from an equal 14th position in 2021, the IMF Fiscal Monitor published overnight. This dramatic increase is a testament to the Albanian government’s responsible approach to budget management.”

Only a few news outlets reported this feat, including The guard And ABCs 7.30 Report.

As with virtually all their ‘stories’ about economics and politics, Sky News was wrong. This time, however, their untruths were unintentionally to Labour’s advantage. A beaming presenter claimed Australia’s “Fiscal position is the second best in the world” and got guest economist Ross Greenwood to excitedly agree that this was correct.

Manufacturing and construction jobs are being created as Australia defies global trends

Of course that’s not true. Australia ranks second among the G20 countries, as the treasurer carefully specified – and as Sky’s printed text was correct.

For the record, Australia’s ranking was 42nd out of all 116 countries surveyed, up from 107th in 2019 under the Coalition.

Zoom in on the global rankings

This column has always favored comparisons between the 38 wealthy democracies that make up the OECD, so that’s where it will stop.

According to the IMF, Australia ranked ninth among OECD members last year in terms of total budget balance for federal and state governments:

(Source: IMF Fiscal Monitor | data.imf.org)

The IMF tracked the results from 2015 to the present, allowing rankings to be created over time to see how governments were dealing with the prevailing conditions.

Last year’s ninth-place finish is not as good as a top-four finish that Australia enjoyed in the late Howard era and the Rudd/Gillard years. But much better than 29th in 2016 after Tony Abbott’s two years as Prime Minister and much better than abysmal 35th – third last! – in 2019, when Scott Morrison was in charge. See ghostly pale columns in the chart above, inserted for comparison.

Only six countries had stronger budgets in 2023 than in 2019, before COVID-19. Of these, Norway achieved the best gain with 7.66% of gross domestic product (GDP). Australia was next best with a satisfying gain of 3.46%.

Please note that this graph, which places Australia in ninth place with a small gap, is different from Graph Ia published last month and shows fifth place with a surplus. The previous chart only reflected federal budgets, which are now in large surplus.

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Despite the media frenzy, Labor remains the global economic leader

Debts are falling – finally

The IMF’s net debt data shows that only a few OECD economies have significantly reduced their debt levels over the past two years. Australia was one of them, with GDP shrinking from 35.6% in 2021 to just 28.3% in 2023.

It confirms that the years between the global financial crisis and the COVID-19 crisis were ripe for debt repayment. Under the coalition, Australia was one of only six loser countries that increased net debt every year between 2016 and 2020. The others were Chile, Finland, Japan, Turkiye and Donald Trump’s United States.

From third in the OECD during the Gillard years, the debt ranking has fallen to twelfth in 2015 – and to fifteenth in 2020 and 2021. The change in trajectory has been underway since the May 2022 elections, with Australia now back in twelfth place.

Government incompetence and waste

The IMF also confirms the coalition’s wasteful spending. In 2015, Australia ranked 11th in government spending to GDP, down from seventh at the end of the Gillard government in 2013. By 2017 the ranking had fallen to 13th and then to a dismal 15th in 2019.

Under Labor, spending now ranks eighth at just 37.1% of GDP last year. That compares to 38.9% in 2019, before COVID-19. The only countries with lower expenditure relative to GDP are Ireland, South Korea, Chile, Mexico, Switzerland, Turkiye and Colombia.

IMF advice and warnings

Officially, the IMF offered this sound advice to the world’s finance ministers:

‘Countries should boost long-term growth with a well-designed fiscal policy mix to promote broader innovation, including basic research, and facilitate technology diffusion. Sustainable fiscal consolidation efforts are needed to secure sustainable public finances and rebuild buffers.’

The embedded warning to Australians is this: never vote for the Coalition again. If you do, you can expect wasteful spending, budget deficits, rising debt, lower economic growth, lower incomes, and lower personal wealth.

Unfortunately, Australia’s budget is not the second best in the world, as Murdoch’s minions claim. But it is certainly on track.

Alan Austin is a columnist and freelance journalist for Independent Australia. You can follow him on Twitter @alanaustin001.

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