Election 2010: Day 15 (or Let’s Keep Working!)

4:57 AM | Labels: Australian politics, Economy, Election

Today over in Perth Julia Gillard held a press conference to talk about jobs.

About bloody time.

I’m not sure if you know it, but Australia got through this thing called the Global Financial Crisis without going into a recession. I’m not sure if you’re aware but interest rates at the moment are lower than in 2004 when John Howard bragged about keeping them at record lows. I’m not sure if you’re aware but at the moment inflation is well within the Reserve Bank’s 2-3% band.

If you’re not aware of those, send a message to those advising Julia Gillard and those running the ALP campaign and say “Oi!!! Talk about the bloody economy!!!”.

The problem with the ALP’s campaign is not the leaks. I mean yes they are a bloody problem, but if the best they can now get is the one on the front page of The Oz, I think they’ll be ok. It screamed “beat-up” as soon as Alexander Downer was brought in for a quote. However Julia still had to deal with it in her press conference, and then of course had to deal with being asked if it was frustrating to deal with such questions (sigh). But still that’s life, she hit the issue out of the park (though I doubt that’s how it’ll be reported) . The problem with the ALP campaign is not the removal of Rudd. I mean yes that is a bloody problem and at the time I thought it a terrible mistake.

No to discover the problem to the ALP’s campaign you have to go back to November 2008. The ALP just seen the abyss on the horizon and had thrown out a stimulus package. In hindsight it was shown to be a brilliant move. At the time most economists were saying the same thing. Some wanted tax rate cuts, but most thought the cash bonuses were the way to go. Except Kevin Rudd and Wayne Swann were actually embarrassed about them.

They wanted to talk about stimulus but not the reality of stimulus. Remember this stupidity on the 7:30 Report:

KERRY O'BRIEN: So let me hear in plain English, that the Budget is within a hair's breadth of going into deficit. It seems silly to me that anybody would bother to argue that proposition. Will you accept going into deficit, if you have to, to maintain appropriate stimulus of the economy under the threat of recession and high unemployment?

WAYNE SWAN: Kerry, it would be silly to speculate along the lines of your question?

KERRY O'BRIEN: Why?

WAYNE SWAN: Because I've made it clear. We are projecting modest growth and modest surpluses but if the situation were to deteriorate significantly it would have an impact on our surpluses and it may well be the case that we could end up in the area that you're speculating about.

KERRY O'BRIEN: Well, say it. In deficit.

WAYNE SWAN: I am not going to say it because we're projecting modest surpluses Kerry.

And then remember Wayne Swan in the 2009 Budget not even saying “deficit”?

Madness. And it is costing them now.

The reason is back then they should not have been scared about the deficit, they should instead have been proud. They weren’t going into deficit because they couldn't manage the economy; they were going into recession to save it! They got so spooked by what the Libs might do if the budget went into deficit that they ensured the Libs would be able to attack them on the deficit – because the action and words of Rudd and Swan made it seem like deficit was this horrible economic condition which must dare not speak its name.

And so we have the Libs convincing everyone that deficits are bad. They’re not.

The Libs have everyone convinced that a deficit means the Government is living beyond its means. It does not.

The Libs are also trying to convince everyone that just because you’re in deficit it means you can’t spend money on certain things. It does not.

Now I’m not sure who was advising Rudd and Swan, I’m sure they were all smart folk – after all Rudd’s economic whizz Andrew Charlton was a Rhode’s Scholar and I am nought but the lone Keynesian in the Flinders-Adelaide Uni Economic Honours Class of 93 – but how is it none of them could explain a deficit so people who do not study economics could understand?

Did anyone compare it to a house mortgage? Did anyone try and say going into deficit to stimulate the economy and save jobs during the GFC essentially was like a parent whose son has lost his job and who needs a roof for his family to stay under for a while. So the parents build an extra room for his son’s family and to do so takes out a small loan against their house. The parents wish they didn’t have to do it, but do you think they are going to stand by and let their son and grandkids be out on the street just because they didn’t want to have mortgage repayments? Of course not.

The stimulus wasn’t done just for larks; it was an emergency. Arguing against it should be like arguing against emptying a pool to help put out a fire because you don’t want to use the water. Madness.

And as for the total figure? Who cares, really. Sure you don’t want it too big but even at the greatest it was predicted to be about 14% of GDP. Pfft. Did anyone say to the Australian people that the average home loan is around $400,000. Do you think people with that loan go around worried because they are $400,000 in debt? Of course not. What they worry about is whether or not they can make the mortgage payments. And Australia can afford to make its repayments. How do we know? Well the debt was forecast to be $315b. Now it is forecast to be $57b. If we couldn't afford it, it would be growing not shrinking.

We may have a structural deficit but that’s another debate for another time – and Howard and Costello have much to blame for that…

You see a deficit is just a home loan. You may own a home but if you want to build on, or maybe put up a pergola to make the house better – ie increase its value – then you’ll take a loan against the house to do so, and that’s ok – so long as you can afford the repayments. The Libs would have you believe the current budget situation is like someone paying off their MasterCard with their Visa Card.

The only problem with a deficit is if you are doing so when the economy is ticking along nicely. Do that and it’ll be inflationary. However even being in deficit is not a mortal sin in such cases IF the things you are spending money on that puts the budget into deficit are not inflationary – ie infrastructure (you know that thing the Howard Govt thought states should worry about). Things that are inflationary are middle class welfare policies – you know things like giving people who earn $150,000 a year or more $75,000 when they have a baby…

If the Rudd Govt had been more proud about the deficit and actually explained it to people – in terms we could all understand – then all this bull about paying off the debt would be gone. Hockey for example wants to sell Medibank Private. Why does he? Not for efficiency reasons. No he just wants to sell it to pay off the debt. Why?? If you can afford your mortgage repayments do you sell your car so that your overall mortgage is less? No of course you don’t – unless you are stupid enough to employ Joe Hockey as you financial advisor.

All these things should be the focus of the Government. They need to embrace their stimulus, embrace the GFC and what they did.

Were I in charge (yeah yeah, I know) Moving Forward would not have been the slogan it would have been

Let’s Keep Working

There would be adverts like:

During the Global Financial Crisis the following countries went into recession:

United Kingdom
Japan
New Zealand
Germany
Russia
Italy
Hong Kong
Singapore
Ireland
Greece
Spain
Sweden
Ukraine
Iceland
Estonia
The United States of America

The countries that didn’t:

Australia

VOTE LABOR and LET’S KEEP WORKING

Who cares that France, China and Canada didn’t go into recession, if the Libs want to point that out, go for it. Or how about:

The unemployment rate in

New Zealand is 6 percent
Germany is 7 percent
Brazil is 7.3 percent
Czech Republic is 7.5 percent
United Kingdom is 7.8 percent
Canada is 7.9 percent
Italy is 8.9 percent
Russia is 9.2 percent
Sweden is 9.5 percent
The United States of America is is 9.5 percent
France is 10.1 percent
Spain is 20.1 percent

The unemployment rate in

Australia is 5.1 percent

VOTE LABOR and LET’S KEEP WORKING

Or then there’s:

In November 2007 the official interest rate was 6.75%
In August 2010 the official interest rate is 4.5%
That will save you $568* a month

VOTE LABOR and LET’S KEEP WORKING

Then there’s the NBN:

Labor wants to build a National Broadband Network that will
Provide super fast broadband coverage to 93 percent of Australia
That will improve small businesses
Improve the provision of health for all Australians
Improve education possibilities
And create 25,000 jobs

Tony Abbott wants to scrap it

Sorry Tony

LET’S KEEP WORKING
VOTE LABOR

Or how about: