We haven’t heard much from Wayne Swan for a while, and while I wasn’t ever persuaded by him (you’d never employ Wayne to sell used cars) he was at least predictable. When things were going well that showed the resilience of the economy and the virtue of Labor’s economic strategy. When things were going badly, he would point to countries that were doing worse, which also showed the resilience of the Australian economy, and of course the virtues of Labor’s economic strategy.
With Kevin Rudd appearing to spray money around as though the Government has bags of it to spare, I suddenly miss Wayne and his sober talk. The new Treasurer has yet to be tested as a big-picture painter, and I have some interest in what he’ll want to say. There are some themes that are likely, and I’ve been thinking about them, and wondering if the electorate has a memory of any quality.
For example, a likely theme is that it was Labor’s prudent economic management that kept Australia out of the recession that so many other developed countries endured after the GFC. Why do I expect it? Because Wayne kept on telling us it was so. I didn’t think it was the case at the time, and am unlikely to agree just because there’s a new Treasurer.
If you think back, you might recall that at the end of the Howard Government period Australia at the Commonwealth level was free of debt. I don’t think everything that the Howard Government did was good, and I wanted many more of the windfall gains invested in the future more productively than just lodged in a purposeless Futures Fund. But the point is that Australia was free of debt, and the Commonwealth Government could borrow for its stimulus plan without having to think of the immediately evil consequences of its doing so, unlike the government of the UK, let alone those of Spain, Greece and Italy.
Because our economy was strong our interest rates were high, and in consequence the Reserve Bank was able to lower them when it saw a need to do so. And we had in place prudential regulations governing our financial institutions that were stronger and more effective than those operating elsewhere.
Put all that together, and we enjoyed a mood of optimism that came from ten years of good conditions and sound money, so companies, small businesses and the general populace did not go into panic mode, as was commonly the case elsewhere.
Above all, China and India were not caught up in the GFC to a significant extent, and they kept buying our minerals. Yes, our high dollar and the weight of the mineral boom distorted our economy, and that was not the Labor Government’s fault. I don’t know that the Howard Government or Peter Costello could have done anything to prevent the real shrinking of the manufacturing sector. But unemployment remained low, wages high, and real estate prices generally buoyant.
If you put it all together, the Rudd and Gillard Governments have a great deal to thank Peter Costello for, and it would be nice if we sometimes heard a little praise going that way. There are arguments that Australia didn’t need the stimulus, especially the second one, but at the time it seemed a prudent move. I wouldn’t blame either Kevin Rudd or Wayne Swan for the pink batts deaths, but those deaths and the school building spree point to speedy activities that were not well thought through — a characteristic, it seems to me, of Labor in power over the last six years. As I said only yesterday, the reborn Prime Minister has a penchant for making quick decisions on the run whose main virtue is that they give him prime time on the evening news.
There are some other examples of economic management (though they’re not usually seen as such) that don’t impress me at all. I speak of the carbon tax, which is a form of money churn, rewarding the more poorly paid in the community for having to put up with a completely unnecessary, ineffective and silly tax on the production of a gas which all living things depend on for their existence. The only benefit I could see in it is that it is version of the old increase in the basic wage, but administered at the government’s pleasure, which is hardly good management.
If that were not bad enough, the Labor Government brought in a series of measures designed to get us to move from a reliable and relatively cheap form of energy — electricity produced by burning coal — to an expensive and unreliable one produced by building windmills and covering rooftops with photo-voltaic cells.
All of us in consequence pay much more not only for electricity (and gas, and petrol) but for everything produced that requires energy, which is, of course, virtually everything. At least no one has been talking for a while about all the ‘green jobs’ that have been created thereby. As is clear from what has happened in Spain and in the USA, creating ‘green’ jobs through forcing people to pay more for energy is very quickly a giant subsidy, paid by us all, and at the expense of old jobs, and the people who used to have them.
For my part, the story of Labor s economic management over the past six years is a really mixed one, though I don’t expect Chris Bowen to tell us so.