Our Prime Minister is spruiking up the notion that there is nothing to worry about with respect to debt, with what I can only call a disingenuous TV ad. As I wrote a week or so ago, any status that Australia has in the current global economic world comes in large measure from the healthy economy Labor inherited in 2007, and the continuing demand for our mining exports, notably from China and India. The economic savvy and management of the Labor governments have been much less than impressive.
And all this will become our daily bread when the election campaign begins officially. Peter Lang, a frequent commenter on this site (and on that of Judith Curry) has pointed out to me that cost figures of the Government’s various ventures are large; to my mind they never seem to be picked up by the mainstream media. And to understand what he is on about we need some benchmarks. The 2012 measure of Australia’s GDP is $1,379 billion, while the last Labor budget had a $376.3 billion figure for estimated expenditure — a bit more than one quarter of the total value of all goods and services produced in our country.
Now the late US Senator Everett Dirksen earned some of his fame with the gentle remark — ‘a billion here and a billion there, and pretty soon you’re talking real money’. If you don’t get the irony, he said this in about 1965 (if he said it at all — there is no confirmed record), when a billion was indeed real money. I think billions still are heavy amounts of money, especially when I’m contributing to them.
In my essay on why are we doing all this climate change stuff, if there will be no measurable result, I alluded to the costs without specifying them. Peter points out that Treasury’s own analysis reveals that the ETS will amount over the years to 2050 to $1,345 billion in foregone GDP — that’s one entire year’s GDP! What return will our nation get from this reduction in wealth? Will global temperature have declined? Not in any measurable way.
Then there is the Renewable Energy Target (RET), whose purpose is set out for us on the government’s website: ‘The RET scheme is designed to deliver on the Australian Government’s commitment to ensure that the equivalent of at least 20 per cent of Australia’s electricity comes from renewable sources by 2020. As an important complement to a carbon price, the RET will speed up the adoption of renewable energy technologies and help smooth the transition to a clean energy future.’
Great stuff, you’ll agree, and like me, you always respond positively to phrases like ‘clean energy future’. Well, the investment the Government is talking about comes from you and me, and by 2020 the estimate is that we will have invested about $30 billion. How will we have done that? By paying that much more for our electricity. And why are we doing it, again? To reduce global temperatures.
Let’s leave ‘climate change’ for a moment and look at the National Broadband Network. One recent estimate is that the costs are expected to rise above $60 billion. Yes, the NBN is expected to to continue as a project until 2020, but one keeps reading doubts about almost every aspect of it. There are apparently only 70,000 connections so far, while 12,200,000 people already have Internet connections. Four of the eleven years of the project are already past, and plainly it is way behind schedule. Given the worries about asbestos and the slow speed of it all, it is highly likely that the final cost (if indeed it is ever completed) will be much higher than the $60 billion estimated, which is much higher than the $45 billion we were told it would cost at the beginning.
The boat people are expensive. I know that putting people into prison costs us the equivalent of accommodation at a 5-star hotel every day for every prisoner. On the face of it, Mr Rudd’s policies are going to cost us something like that for several thousand boat people, perhaps for a very long time. Heaven knows how many more there are going to be. In economic terms, they’d be much more useful at work in Australia. Yes, I know that’s not a popular alternative.
We don’t talk about ‘Gonski’ any more; it’s now the ‘Better Schools’ program. Once again, I don’t know how many States are going to sign up, or how it would be managed in budget terms, but there’s several billion there. And there are several more billion in the Disability Care program, and we know that we are going to pay for that through a levy (which, personally, I can live with).
But, in Senator Everett Dirksen’s terms, there are lots of billions in all of this, and we truly are talking about real money. I’ve said this before: Labor’s capacity to manage all these wonderful new ideas has never seemed obvious. In the case of the ‘climate change’ initiatives the expensive schemes do not even seem necessary — that is, if the aim is to reduce global temperature. In the case of the other projects, they seem to me to have been poorly thought out and indifferently managed from the beginning.
They may not be as exciting as meeting the troops in Afghanistan, but they are waiting for our leader in the coming election campaign.