Sunk already

Beazley ought to have a sinking feeling.

The May and June employment reports appear to have saved the Govt’s Workchoices bacon – certainly smirky pete was looking like the cat that got the cream when doing the post employment gloat on Thursday afternoon. In the previous two months, 99.7k jobs have been added: 72.5k full time jobs (+1%), and 27.2k part time jobs (+0.9%). The unemployment rate is 4.9%, on both trend and seasonally adjusted estimes, and vacancy data points to ongoing employment gains.

The Industrial relations laws had the potential to be the undoing of the government. Had the economy been headed into a downswing, freer ability to sack employees might’ve been a disaster. As it stands, I expect that the unemployment rate will be 4.5% before the 2007 election, and that real wages growth will be about 4%y/y. The Govt is not yet willing to attribute the gains to workchioces – for fear that the economy may turn, and that the downturn may be blamed on the policy, however we at merge-right need not be so coy.

Howard will beat Beazley in 2007. Unemployment will be at 30yr lows (prob below 4.5%), wages growth will be 4%y/y, and the Liberal campaign will be that unemployment is always higher under a labour govt – when the unions kick outsiders out of jobs, to the benefit of their members (who will be 15% of the private sector labour force by this time). By the 2010 election, it will be too late for a third round of roll-back.

Bye bye Beazley.

Milne miscalculates

One thing that the phoney war between Howard and Costello has proven was that Latham was right. From The Latham Diaries:

The Dwarf [Glenn Milne] is just a frustrated politician; fancies himself as a player, not just a commentator: Circa 1997, he told me how he backed Keating over Hawke and planned to do the same thing for Costello over Howard. He should stick to his day job. (p. 189)

Milne kicked off the whole story in an article in the Sunday Tele. However, if Milne is really trying to use Walletgate to get Costello into the Lodge then its been a spectacular disaster. What did he think was going to happen? Even if he could prove that Howard lied that hasn't stopped Honest John in the past. And since the whole story hinges on the interpretation of a private meeting that happened over ten years ago, who gives a stuff?

Costello's own confused words proves this. On Monday afternoon he said:

He told me that he intended to do one and a half terms as Prime Minister and then would hand over. I did not seek that undertaking ...

That doesn't sound like an undertaking to me. Howard oulined what he planned to do and those plans have changed. So what? Costello should ask Milne to stick to his day job indeed.

Update: Having just watched Milne on Lateline it is clear that the strategy is to set up a credible threat. That is, if Howard goes to the next election, Costello will challenge and bring them both down together, ruining Howard's legacy. Basically, Costello is saying that since I can't have the leadership on a platter I'll extort it out of you; anything but having to actually gain the support of my colleagues.

Is the threat credible, though? I still think Costello has greater payoffs from sticking around and waiting for Howard to leave. Howard may want to reevaluate how quickly he promotes Turnbull though.