Monday, May 15, 2006

Howard's steady hand


A very close friend has often said to me: ‘yeah, well Howard’s OK, but what’s he done? Nothing!’. To some extent it’s true, other than the GST, and staying in power, Howard has not taken the nation forward with the same sort of aggression as Keating. Then again, he’s not had the bipartisan support that Keating and Hawke enjoyed. In any case, the best answer I can muster is not to underestimate the value of a steady hand on the tiller.

Plenty of nations mess up. And the more prosperous the background factors, the more major the stuff-ups: so during a commodities boom, you get the biggest stuff ups of all. The risk from Labour, and the distinction between the Labour and Liberal was put to the fore in the liberal budget, and the Labour reply. Whereas the liberal party offered an uncapped subsidy of childcare places, the Labour party promised $200m for Govt owned childcare centers on school grounds, placed in locations of their choosing. The talk about not putting them in places where there were already sufficient places (in contrast to the liberal scheme, which might see ‘chaotic, and wasteful, competition’) was telling.

The contrast between the two parties is sharpest on this number. The liberal party, which simply promised to fund places, of whatever type, and in whatever location, that mums and dads prefer. Or the Labour party, which is going to build the centers it likes, in places it chooses: I bet a Labour Govt would deliver places to marginal electorates, give control to teacher’s unions, and use the threat of socialized competition to cajole political donations from Mac Bank (Childs Family Kindergartens) and ABC learning.

The pattern repeats itself with broadband, where the Labour party is making plans for a major Govt funded broadband investment: about $3bn, but you know how these publicly funded projects go over budget. While the Liberal Govt has a stupid one-time slush fund for the national party (from which Beazley is pinching $2bn), at least it is not using the proceeds of the Telstra sale to diversify back into the stinking telecommunications sector. Imagine Govt ownership: Telstra would still provide a shitty service, but it would employ triple the workforce, and be further overpriced service. Beazley has form on this, Keating won the fight to privatize Telstra over the top of Beazley’s protests in the 1990s.

Beazley made promises of an infrastructure taskforce – which is really a vehicle to spend government savings. From the previous budget, we know that the plan is to use the future fund to directly invest in infrastructure: yes, that means more Govt owned assets. Just when you thought we’d finally got rid of all that inefficiency, the Labour party is promising to invest the future fund in Govt controlled infrastructure. Given the choice, I’d sooner invest in Mac Bank or Babcock and Brown (in fact, I have) – and I think that the future fund should be given that choice. Instead, Beazley wants to spend the money on jobs for the CFMEU and associated unions.

And the Beazley formula for the skills crisis – banning foreign workers. We will, instead solve the current problem by training ‘our own’. Only problem with this is that 1. training takes time, and 2. the bulk of those not currently in training are beaten by the foreigners as the foreigners are considered to be a superior employees. Training the less able domestic dross will take more time, and banning the foreign supply will put more pressure on capacity.
The difference between the Beazley and Howard budgets testifies to the value of value of having a steady hand on the economic tiller. There may not be much really big reform left to do, but there is always the chance that a govt awash with cash will make some really big mistakes – like reinvesting in telecommunications, or socializing childcare. The difference between 10 liberal and 10 labour budgets is a vital, efficient, and productive economy – with only minor stuff ups.

Ok, to finish with, the confessions: I'm a card carrying member of the liberal party; I'm an economist; and I don't like Beazley. The first, I figure, disposes me to a certain amount of parochialism, and you’ll just have to live with that. The second, I hope, is the clear foundation for my argument. The third, well, that’s the place from which I draw the vitriol. Let’s face it, there’s not much to like about the big bellowing cow – he’s got only two settings, boring gas-bag, or wanna-be Churchill.

1 comment:

Tom said...

"The difference between 10 liberal and 10 labour budgets is a vital, efficient, and productive economy – with only minor stuff ups."


Actually, I think there were a few differences in the economic starting shape and the external factors affecting Australia's economic performance over the two periods too.