If you call a tail a leg, how many legs does a dog have?
The answer to the riddle, often attributed to US president Abraham Lincoln, is, of course, four.
Calling a tail a leg does not make it so.
It’s a lesson the Morrison government would be wise to heed with all its talk about surpluses and strong economic and fiscal management.
While Julia Banks was in the House of Representatives defecting from the Liberals last month, Scott Morrison was in front of the cameras claiming improvements in the budget were “the product of the years of hard work of our government”.
But the facts tell a very different story.
First of all, the budget improvement is being driven by huge increases in tax, not spending restraint.
Consider that of the $9 billion in unexpected improvements since the last budget, two-thirds have been further increases in tax. The last budget also showed taxes were almost $33bn higher than forecast at the previous update, and in 2018-19 alone the government expected to rake in more than $8bn in extra taxes, while spending blew out by an additional $3bn.
The government is collecting $100bn more in tax this year than in 2013 ($340bn as against $440bn), and the tax take will be almost $200bn more ($520bn) by the end of the forward estimates.
In fact, in the past 50 years, only the Howard government had collected more tax than this one as a proportion of the economy. Deloitte estimates that taxes are growing at 10 per cent nominal growth this year alone.
Spending has been higher under the Liberals than the previous Labor government, and is projected to be higher under this government across the forward estimates to 2021-22 as well.
Next, even with the budget being dragged into the black by a resurgent global economy, with billions of dollars rolling through the door, the Liberals have seen debt skyrocket.
Under the Liberals, net debt has more than doubled to record highs, and gross debt has crashed through a half-trillion dollars for the first time in the country’s history — almost double what they inherited.
Morrison and co can’t point to a suite of policies responsible for the improvement in the budget position — it’s all automatic on the back of improved global conditions.
The Liberals famously promised “we will deliver a surplus in our first year and every year after that”, and were elected on the back of a promise to pay down debt.
They are failing their own tests that they have set for themselves, and they are out of excuses.
Tony Abbott said of Labor in the lead-up to the 2013 election that “they’ve talked about a surplus as if it has actually happened when all it has ever been is a forecast”.
Now the Prime Minister is doing the same thing.
We won’t know if there is an actual surplus in 2018-19 until the final budget outcome in September next year, or a surplus in 2019-20 until September 2020 — almost two years away.
Even if a surplus is achieved, the underlying cash budget is improving despite the chaos and dysfunction of this government, not because of it.
The budget would be in a far stronger position were it not for the Liberals’ defence of unfair and unaffordable tax loopholes, which come at the expense of proper funding for schools, hospitals, TAFEs and all of the other things we value as a nation.
Unfortunately, the Liberals have given up on their budget repair strategy and they have no plan to pay down debt.
All of their talk about a strong economy doesn’t line up with people’s experiences of weak wages growth, weak saving and weak spending revealed in last week’s national accounts.
Now in the lead-up to next week’s mid-year economic and fiscal outlook, they’ve resorted to calling a tail a leg in the hopes that their fiscal fairytale goes unchallenged.
But when it comes to fiscal and economic credibility, Morrison doesn’t have a leg — or a tail — to stand on.
This opinion piece first appeared in The Australian on Friday, 14 December 2018.