In September 2018, soon after the overthrow of Malcolm Turnbull, Scott Morrison gathered his Ministerial troops and set course for Albury on the NSW/Victorian border. His objective was to pay homage to the founder of the Liberal Party, Robert Menzies. Morrison’s ‘heartland’ speech, entitled ‘
Until the bell rings’ was presented under the auspices of the Menzies Research Centre. The Centre is (according to
its website)
dedicated to defending the principles of freedom and enterprise espoused in Australia by Sir Robert Menzies and his successors John Howard, Tony Abbott and Scott Morrison, among others.
As well as the usual ‘reports’ that think tanks produce, the Menzies Research Centre has been identified as an associated entity of the Liberal Party and organises an annual John Howard Lecture by an
international figure.
At the time of making the speech, Morrison was attempting to heal the rifts in the Coalition Government due to the recent leadership bloodletting. He claims he was a bystander in the stoush between Malcolm Turnbull and Peter Dutton, only coming in (with sufficient apparently pre-organised numbers) on his ‘white charger’ where he saw the future of the Coalition Government was at risk.
Morrison’s speech eulogised Menzies and attempted to draw favourable comparisons between the current Coalition Government and the Coalition Government of the Menzies era. It is a pity the reality doesn’t match the mythology.
In the 1962 Federal Election campaign, then Leader of the Opposition, the ALP’s Arthur Calwell promised to ‘eliminate unemployment’ and on the way to doing that, create a deficit of £100 million. Prime Minister Menzies, declared that the proposed ALP deficit wasn’t enough to expand the economy, promising a deficit of
£120 million.
Mr Menzies' second stint as prime minister lasted from 1949 to 1966.
For his last nine budgets he delivered deficits, and the size of his last deficit, at 3.3 per cent of gross domestic product (GDP), was 0.3 per cent larger than the deficit in Wayne Swan's last budget in 2013.
So why wasn't the public angry?
Because Australia's economy, like economies in other western nations, grew strongly in the post-war period.
In the 1940s, its average growth rate was 3.8 per cent.
In the 1950s, it was 4.2 per cent.
In the 1960s, it was 5.3 per cent.
And that constant growth meant the size of Australia's government debt relative to the size of the economy (the ratio of debt-to-GDP) shrank dramatically, too.
All while the government was handing down budget deficits.
Ironically, in the light of the recent discussion about the difficulties of importing essential equipment in the middle of a pandemic, and Morrison’s recent epiphany to supporting government subsidies to keep manufacturing on shore, Menzies claimed in the same 1962 speech:
We look at the works programmes of the states and we think they are very good programmes. They are very good indeed," he said.
"Without them and without our works programme, private industry could not grow. It could not employ people. It could not see them housed and provided with transport, schools and all the amenities of a civilised society."
He said his next great objective was to oversee a "steady and strong growth" of manufacturing.
The Australian Government’s budgets for the past 20 years teach us that unlike a household budget, there can be a considerable period of time where the government spends more than it receives and there is still money available. As Calwell and Menzies were arguing over who had the larger deficit in 1962, the last 20 years of deficits are not unusual, despite the now constant demands from both sides of politics that we should ‘live within our means’ as well as cutting or limiting essential services and desirable programs to operate with reduced funding so the ‘budget can return to surplus’.
While the term is new, the concept of ‘
Modern Monetary Theory’ was obviously understood half a century ago.
ABC online has a far better explanation than we have space for to discuss why the Australian Government budget doesn’t need to ‘balance’ — unlike our
household budgets.
If Morrison wants to bask in the reflected glory or make comparisons between the Menzies era and the Abbott/Turnbull/Morrison governments, it is his right to do so. However there are some large ideological differences between them. Menzies understood that the need for provision of services to a ‘civilised society’ was of greater importance than running a budget surplus and ‘paying down debt’. You could wonder if Menzies would disagree, as some more recent Liberal Party Parliamentary Leaders have publicly done, with the current government’s claimed adherence to Liberal Party traditional ideology. Tax cuts and business deregulation have a place, however as Menzies suggested, provision of infrastructure and services required by the population of a civilised society are far more important.
What do you think?
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