The Fool on the Hill (part 3)

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So far in this series Fool on the Hill (aka Tony Abbott, the Fool on Capital Hill) I’ve had the pleasure to demonstrate how Abbott displays the intellect of a moron when it comes to the important political and environmental issue of climate change, and the social issue of gender roles. In both, it appears that he expects the whole country to warm to his outdated ideologies. Fortunately we are a bit more switched on to national and global issues, mainly because we move with the times and aren’t locked in a cocoon. We are willing to embrace change. Tony Abbott wants nothing changed. He wants us to journey in his time tunnel to the long gone era where profits were more important that people, the working class were the servants of the elite, women were the servants of men and the planet was the servant of ruthless industry.

Not everyone has an interest in climate change or gender issues so those people have been spared the indignity of sitting through an Abbott brain fart, however, the issue in this post affects everyone: economics. Here he is a fool too. For a person who has an economics degree Tony Abbott exhibits a fluency in economics akin to a gorilla trying to play a violin. He puts on a woeful performance. With a skill level of zero he can’t be trusted to take the helm of the nation’s economy.

Says who?

Just about anybody who knows how to add up, but more significantly, the nation’s leading economists and analysts.

Here’s a small sample of what they say about Abbott’s economic credibility:

Tony Abbott, Joe Hockey tempting economic Armageddon with petty politicking – Paul Syvret

Credible economic policy is not born of populist sound bites and uncosted opportunism.

Regrettably, as the level of political discourse in this country continues to deteriorate to one of sloganeering and extravagant half-truths, the federal Coalition risks trashing its credibility in the area of economic management – a policy suite where (at least in terms of public perception) it has tended historically to have the upper hand.

Late last week, the Opposition was vowing that as part of its pledge to rescind the mining tax, it would also scrap Labor’s phased increase in the compulsory superannuation contribution from 9 to 12 per cent.

By Sunday, they appeared to have backed away from killing the super increase, realising that the more Australians who can fund their own retirement the better, but were still vowing to abolish the mining tax.

The catch is the mining tax was (in part) going to be used to fund the retirement income reform which will cost an estimated $12 billion by 2020.

Black hole is an overly used term, but the funding gap here is looking damnably dark.

There is similarly questionable logic at work with the Opposition’s stance on the package of tax cuts and other assistance that form part of Labor’s carbon pricing scheme.

The Abbott-Hockey position at this point is to scrap the carbon pricing scheme (and thus forgo the associated revenue), but to press ahead with the tax cuts.

As with the superannuation position, there is no suggestion beyond a vague promise of spending cuts elsewhere as to how this will be funded.

A popular refrain from the Opposition benches is Labor’s alleged propensity to “tax and spend”, but the Coalition, with its string of what appear to be ad hoc responses, risks painting itself into a policy corner of “big spending, little taxing” – ironically just the sort of policy that got the likes of Greece into trouble.

This man shows no sign of dragging us from our discontent – Paddy Gourley

. . . he [Tony Abbott] repeatedly says the Gillard government has ”delivered the four biggest [budget] deficits in Australian history”. Nationals senator Barnaby Joyce, whose understanding of public finance does not appear to be extensive if his silly estimates committee questioning of the secretary of the Department of Regional Australia, etc. is anything to go by, repeats this assertion in The Canberra Times. This is blatantly dishonest. It’s based on an assumption that deficits today can be compared properly, on a nominal cash basis, with those 10, 50 and 100 years ago. It’s saying that $10 today is the same value as $10 in 1970. Duh! Only going back to 1970 and taking budget deficits as a proportion of gross domestic product, the biggest was in 2009-10 under the Rudd government, the next two were under Keating, with Gillard claiming the fourth in 2010-11. And if Abbott had been prime minister in 2008 and had not accepted Treasury advice about large deficits over 2009-11 to mitigate the effects of the financial crisis, he would have increased greatly the risk of recession and higher unemployment.

Tony Abbott: philosopher-prince of the assertion-based community – Bernard Keane

Abbott’s budget reply was, yes, entirely devoid of detail or policy, barring an uncosted, undated thought bubble about Asian literacy, but that was expected. Don’t linger on that. What was more interesting was Abbott’s long list of assertions about the government’s performance and that of the Coalition . . . although he missed my favourite, Abbott’s claim that “the Coalition identified $50 billion in savings before the last election and will do at least as much again before the next one”.

The Coalition’s $50 billion claim ($47.6 billion, but never mind) was a fiction, riddled with double-counting and asset sales, one of the reasons they were tripped up by Treasury and Finance during negotiations with independents in 2010.

But silliest was the claim that “there is no plan for economic growth; nothing whatsoever to promote investment or employment”.

Carbon price: Abbott at odds with economists – Michelle Grattan and Adam Morton

Opposition leader Tony Abbott has taken a swipe at the majority of economists who believe a carbon price is the best way to cut emissions.

Mr Abbott conceded yesterday most economists think a carbon tax or an emissions trading scheme the best way to go, but ”maybe that’s a comment on the quality of our economists rather than on the merits of the argument”.

Prominent economist Saul Eslake was quick to return fire, with the Grattan Institute director saying Mr Abbott only made his ”cheap shot” because he couldn’t find a single economist to support his direct action policy.

Abbott and the economy: best of enemies – Bernard Keane

What is in question, however, is Abbott’s temperament. This is a man who, by his own admissions, gets rattled under questioning and resorts to lying to get out of trouble. His reluctance to actually debate the economy seems to confirm his own fear that he may say something stupid under pressure in debate with the Prime Minister. And one of the key differences between being Opposition leader and Prime Minister is that everything you say as Prime Minister matters economically. Every statement is pored over and parsed by financial markets and foreign investors, and by commentators and analysts. You can’t stick an asterisk next to every statement as Prime Minister with a “to be confirmed” caveat.

And when Abbott says repeatedly — as he has done over the past 24 hours — that Australia is now less safe for investment than tinpot African dictatorships, it’s exactly the sort of statement that has economic ramifications, because markets know he is just a few thousand votes from being Prime Minister. There is little difference between such statements and Barnaby Joyce’s claims that Australia was in danger of defaulting on its borrowings. Both are nonsensical, and both damage Australia’s economic interests.

ABC economics correspondent looks at Tony Abbott’s arguments – Stephen Long

It sounds like magic pudding economics and it probably is – $30 billion in compensation for polluters to encourage them to move away from polluting industries, plus tax cuts.

Now they’re relying on this $50 billion figure that they came up with before the last election, which has had holes picked in it by Treasury and is not seen by many economists as credible. So no I don’t think that they can but it will be an effective line of political argument.

I could go on and on but I think the message is clear. He’s an economic fool who wants to fool around with our economy.

It is a sad reflection on the state of the Murdoch media that they couldn’t put forward any analysis of Abbott’s economic brain farts yet were quite happy to trumpet them at every opportunity. They willingly allow him to talk down the economy, which as Bernard King notes above, will damage Australia’s economic interests.

If he has the power to damage the economy as Opposition leader, just how damaging could he be as Prime Minister?