(Image: AAP Image/Mick Tsikas)

Scott Morrison should remember the 2007 election. That was the one when he entered Parliament, having secured preselection for the seat of Cook after the preselected candidate, Michael Towke, was the subject of an internal party and News Ltd smear campaign. Towke had thrashed Morrison 82-8 in the preselection ballot but got turfed. All’s fair, etc.

And it was the election when a prime minister with a reputation for mendacity tried to campaign on a booming economy against a small-target opponent. It didn’t end well.

But Anthony Albanese is no Kevin Rudd. For that matter, time would reveal Kevin Rudd was no Kevin Rudd. But there are a couple of similarities. John Howard declared he was the “underdog” six months out from the election, as Morrison did yesterday. (Rudd parried with his own metaphor, that he had the political equivalent of Mt Everest to climb.)

And of course there was the matter of interest rates, which went up through 2007, including during the campaign, despite Howard insisting in 2004 that interest rates would always be lower under the Coalition.

The prime minister and his brains trust clearly think interest rates are a scare campaign worth revisiting against Labor, suggesting yesterday that interest rates would go up if Labor won — although he carefully added “more than they would need to”, to avoid Howard’s fate — and, in a rather rambling address to business at Penrith, claimed the government was “keeping downward pressure on the interest rates“.

Except it’s the Reserve Bank that’s keeping downward pressure on interest rates, not the government.

Traditionally — and this was the argument Howard was making — governments keep downward pressure on interest rates by cutting spending. By removing stimulus and inflationary pressure from the economy through fiscal policy, monetary policy can become looser. That’s why the RBA cut rates in 2019 — because the government refused to increase spending to support stronger growth.

At the moment the government is spending more than 26% of GDP and has a budget deficit of more than $100 billion, which is stimulating the economy and adding to inflationary pressure, so the government is hardly “keeping downward pressure on interest rates”. Except inflating the economy is actually the goal of both fiscal and monetary policy at the moment. The government’s fiscal strategy, as Treasurer Josh Frydenberg outlined in April ahead of the budget, was to recognise that the RBA couldn’t reduce interest rates any further, so it was up to fiscal policy to drive down unemployment and increase wages growth — in turn pushing inflation higher and allowing the RBA to lift rates back to more traditional levels.

That’s opposed by the neoliberals and monetarists at The Australian Financial Review, who hate the idea of wages growth for workers and want punitive interest rate increases immediately to curb growth. But it’s the right call.

So it’s unclear exactly what Morrison means when he says the government will keep downward pressure on rates — they literally can’t go down any further. But does that mean he’s going to drastically tighten fiscal policy so there’s no risk that rates rise at all — not just by the end of 2023, as the RBA suggests, but beyond 2024?

Or was this just campaign-mode Morrison, who’ll say any nonsense, any lie, if it sounds good? The problem with opining about interest rates and how you can affect them is that voters tend to believe you — so when they go up, you get the blame, not the RBA, something else Howard learnt to his cost.

Howard chucked in the fiscal discipline thing and ended up trying to spend his way to victory in 2007, before Rudd cannily jujitsued that tactic by making a virtue of fiscal discipline.

Again, that doesn’t look a likely recurrence this time around — not so much because Labor already tried the fiscal discipline thing in 2019 and failed, but because Morrison is already throwing money at everything he possibly can.

This is the weird thing that the press gallery doesn’t mention when it relays Morrison’s claim that he’s an underdog. The economy is surging, the world is reopening, he has more than $100 billion in deficit spending as part of the biggest government since World War II — and he’s still trailing significantly in the polls.

Why on earth is he an underdog rather than poised for a McGowan-style wipe-out, or at least cruise to a Palaszczuk-style easy win?