Let’s never forget, folks, Mr Howard is a clever politician. And unlike Mr Rudd, he’s experienced. His trump card is economic management. Let’s take a look at his proud history of economic competence.
18 Responses to “Mr Howard is a clever politician”
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Hmm. Does that make it proper and fair to find anything Rudd may have said and got wrong 20 years ago? I do not think that it would be necessary to go back even 10 years to find something really embarrassing.
In reality, Howard has never been much chop economically – and that should have been clear through the attempt to impose a wages and prices “freeze” in the last period of the Fraser government.
The results of this period of government, though, can be compared to the results of many other periods of government (Whitlam, anyone?) without too much in the way of shame.
Fortunately, Howard has not been running the economic policy of the government.
Well, the government have been trying.
There’s a big contrast though – remember, 25 years ago, say, Howard was Treasurer of this nation and Rudd was probably still at Uni. “Experience” cuts both ways.
In truth, there hasn’t been much of a macro-economic policy from this government at all (let alone a coherent micro-economic policy) – in effect it’s been sub-contracted to the Reserve Bank. Contra Costello, they really haven’t much to show for their time in office – as all the capacity constraints and under-investment where it counts demonstrate. Economic policy has been much much more of a blatantly political instrument than it ever was when Keating was in office.
Its seems topsy turvy…
Libs, Rio Tinto CEO: big resources sector wages due to IR legislation
Labor: big resources sector wages due to econmoic forces of supply and demand ie china etc.
Economic management.
Throughout the Howard administration Australia’s interest rates have been driven by US and Japanese interest rates which have been near zero for most of the time with the US desperately trying to avoid a recession. The fact that Australain interest rates were 2 to 3 times those world rates is the real issue. Furthermore the world has been flooded with money trying to find better returns throughout most of that time. It is the height of arrogance for Howard to claim that he created the low interest rates. It is distressing that Labour have never driven this point home in response to Howards claims. Trade deficits are regular. Howard has balanced the economy with massive mineral exploitation while allowing enterprise diversity to deteriorate dramatically. At a time when individual debt is at an all time high he has moved to pressure family incomes downwards to control inflation and to maintain apparent high employment.
Australia is involved in military interventions on 3 fronts and police interventions on 2 others. Australia is now a prime terrorist target. Australia’s environmental status has been diminished to paria state.
Australia’s farming heartland has been largely destroyed. Our scientific and tertiary educational resources are run down. Our communication infrastructure is substandard. Our energy producing infrastructure is rundown and stretched to breaking point. We are moving through a new era of racial disharmony.
I would not call any of this good management.
Clever? Maybe. But jeez you’d have to say he’s at least fortunate to have
Pravdathe Beluchistan Bugle barracking for him like there’s no tomorrow.Why just this morning we have news that Anthony Albanese has been accused of (quoting directly here) “executing” dissidents http://www.theaustralian.news.com.au/story/0,20867,21657224-601,00.html – to be fair, it was sourced to one of the Ferssun lads – so if Labor’s elected and you’re a kulak then look out.
And of course there’s that old perennial: Labor Split Looms!
To be more precise ‘Labor Team Turns on Gillard’: http://www.theaustralian.news.com.au/story/0,20867,21657212-601,00.html
There then follow a slab of quotes from that most inside of Labor insiders, Rio Tinto CEO Leigh Clifford.
So there you have it. On the basis of a single unsourced sentence comrades Shannahan and Lewis have manufactured something out of nothing.
Gillard did hand the government a free kick and maybe the unamed front bencher was sending a shot across her bows so to speak. As an isolated incident this does no damage to Labor but if it becomes a pattern with Julia then that is a different matter. I hope she has learned from it and keeps the colourful analogies to a minimum.
Quick pop quiz – under which treasurer did real wages rise by more – Keating or Costello?
A quick clue. Under one of them, real wages dropped by about 2% – under the other, they rose by 20%.
In reality, Mark, if the economic policy has been outsourced from the government to the Reserve Bank then it looks like a good arrangement from the point of view of the actual results. It is a simple fact that the great majority of the working people of this country have benefited greatly from the outcome – at least if you take the period in isolation. You may argue that, on a long term view, there have been problems stored up for the future. That may be a valid argument to make and one that needs to be dealt with. But to attack the current government that is the case you would (IMHO) need to make – as the actual amount of wealth generated in Australia over the last decade plus has been substantial.
I am not, and never have been, a great fan of Howard. He is a politician first and foremost and his conservative social policy and centralist tendencies I disagree with. I believe that the government could have done a lot better by removing regulation rather than tying even more red tape around us all. However, you are on a hiding to nothing if you are trying to say that this government has been economically incompetent – the evidence just does not (IMHO) support the argument.
Andrew, ever hear of the social wage? The whole purpose of the Accord was to further global competitiveness through productivity gains and restructuring through maintaining a lid on wages – which were compensated for by tax cuts (producing real effective gains in take home pay) and the social provision of healthcare and other public goods which are now treated as commodities which we can “choose” to purchase or rely on a residual public safety net.
I’m sceptical of the 20% figure btw – do you have a source?
I note you are not sceptical of the -2% figure.
I was relying on Keating for the 20% figure – but that was from 1993 to last year. My mistake. According to the Democrats it is only 14.7% from 1996 to date. Either way, good number. The point is that, under Labor, real wages declined or at best stagnated.
I am interested in your point on tax cuts. You seem to be implying that taxes represent a dead weight loss – in that cutting taxes to increase take home pay represents a net increase in real wealth. I would agree – but I am surprised to see you making that point.
I’m not sure why you’d be surprised, Andrew. The key idea was to take pressure off firms’ labour costs and ensure industrial peace to enable appropriate restructuring for a globalised economy. And Keating-era enterprise bargaining (and indeed the earlier phase of award restructuring from 89) explicitly placed productivity improvement across workplaces on the agenda (as opposed to the froth and bubble of individual agreements magically providing “incentive”). It’s by no means a heteredox position from the point of view of social democratic economic policy – see for example, the Rehn-Meidner model developed in Sweden as a foundation for labour market and innovation policy under full employment.
Howard’s claim that “real wages are higher under me” is a debating point, not an argument. It ignores, for a start, the distribution of wages and not just the average, and secondly, as I’m arguing, it ignores the fact that many goods which were previously the province of universal public provision are now subject to a two-tier model where those who want quality in health and education must “choose” to pay for it from their wages. So the other strand of the social wage, aside from income tax cuts, was social provision either through cash transfers or through public services.
You might want to go back and have a look at what health policy was like under the Fraser government to understand the impetus, and indeed why the rudiments of Medicare are no longer challenged overtly by Howard.
It’s precisely in the areas which genuinely do contribute to improved productivity – viz, investment in human capital and co-operative workplace relations as opposed to a model which privileges management control at all costs.
I’d also note the inconsistency between Howard’s claims and the purpose of WorkChoices – to act as a de facto wages policy and put downward pressure on labour costs – which is the reasoning behind all Costello’s claims of a “wages breakout”. It seems they want to have it both ways.
Heard McFarlane on ABC Radio this morning and took it from what he said that there will be no new money in the budget for mental Health services this year.
Since we are already in a situation where the Disability Agreeement has not been funded or signed by the Feds, it appears the wheels are falling off Costello and Howard’s economic Management mantra.
Wages up under Howard, but his number one promise was an increase in productivity.
Towards the end of Keating’s term 3.2% and rising, average 2.5%.
Since the introduction of AWAs, 2.3%.
Since WorkChoices, 1.2%.
Now, where have I heard that before?
Adriaan,
If that is the case, and wages are still going up, it means some or all of:
1. Increased working hours
2. Increased numbers in employment
3. Reallocation of returns from land, capital and /or enterprise to wages (the return to labour).
Any of those objectionable to you? I would think that any of these would normally be regarded as good things.
.
Mark,
The reason I was surprised is that it is not normal social democrat dogma that a reduction in taxes will lead to increased real wealth. I would be happy if you were a believer that lower taxes are an unambiguous good, but I suspect your view is not quite that.
I do remember the health system under both Fraser and (dimly) under Whitlam. I would argue, strongly, that our current one is better than either of those – but is still not optimal. Personally, I prefer not to socialise such expenditure as it normally leads (IMHO) to inefficiency. This can be seen in the UK where, despite massive increases in funding over the last few years there has been little improvement in actual health outcomes.
If that means lower government expropriation and improved ability to choose for myself, all the better.
Howard’s point, as you correctly note (if IMHO for the wrong reasons), is a debating point as, like the one on interest rates, it is a hypothetical comparative – wages/interest rates are higher/lower under me than they would otherwise have been. This has the genius of sounding plausible while being unprovable.
I would also argue that the changes to IR have greatly improved workplace relations – the amount of time wasted in strikes, go slows and other forms of strife is at historic lows despite record low unemployment, in contrast to the situation that occurred when unemployment got under 10% under the old systems. I remember my childhood and early adulthood being filled with strikes, disruption and other time wasting. Wages are going up at record rates without (and probably because of the lack of) this activity. Sorry, but if you imagine that “co-operative workplace[s]” existed under any of the old regimes you will need to supply some compelling evidence.
No, not quite that!
Two problems with your other points – first, the US health system is inefficient and also fails to provide choice despite being private. Pointing out one instance of public inefficiency doesn’t necessarily prove that public provision is always more inefficient. There’s a respectable argument that Brown’s model stuffed it up, and there are quite enough examples around of organisational dysfunction in large private sector organisations which go to the broader point – such organisations in any case often being effectively exempt from any real market discipline.
Secondly, the rate of strikes fell by a much larger percentage under the Hawke and Keating governments and the trend is constant across the OECD. It’s a big stretch to ascribe it to WorkChoices.
Mark on 2 May 2007 at 12:54 am
Contra Costello, they really haven’t much to show for their time in office – as all the capacity constraints and under-investment where it counts demonstrate. Economic policy has been much much more of a blatantly political instrument than it ever was when Keating was in office.
I tend to agree with the thrust of marks remarks.
But his chronic Howard-hatred leaves gaping holes in his argument.
Howard-Costello have been less than inspiring on economic policy, trusting in the private sector to do most of the industrial running. As Mill pointed out 150 years ago is usually prudent for routine operations. The past decade has been anything but routine.
The CGT cut encouraged investment into residential rather than intellectual capital, which will not pay dividends in the long run. Especially in the era of Emerging Key Technologies. Also we are saddled with extravagant levels of private sector debt.
On the plus side the Commonwealth has been running contractionary fiscal policy during the boom, using surpluses to amortise federal debt. This is correct from the Keynsian pov and it has probably taken some pressure off interest rates.
The Reserve Bank has done a good job of reconciling a stable price level with strong rates of economic growth. So it was a good policy move to make macro-economic policy a matter for the pros. This is also contrary to marks suggestion that under Costello economic policy has been used as a “blatantly political instrument”.
It is also false of mark to say that Howard has been absent on micro-economic policy reform. Has mark forgotten the GST? This is the biggest tax reform in a generation.
Howards great achievement in economics has been the sleeper: economic immigration. Ultimately good citizens are the best investment.
Instead of letting ethnic lobbies run the immigration dept as a political racket he has encouraged skilled NESB immigrantion. We also dodged the socio-pathological bullets that ratbag multiculturalists have riddled the USA and USE body politic with.
Of course Howard gets no credit for this. The multicultural road less travelled is a counterfactual that cultural ideologists have spent a generation designing blinkers for.
Which is why I have not ascribed it to Workchoices – for a start the data series is still too short. The simple fact remains that as union membership has dropped so have strikes and, importantly, real wages have climbed. I would maintain this is no co-incidence.
.
The US health system is not fully, as you seem to be implying, private – a large proportion of the spending is, in fact, taxpayer funded. In 2004, this was nearly half (44.4%) – check this document out (page 98) for corroboration – and some of the rest, particularly emergency care, is dealt with using unfunded mandates on private hospitals, which is another form of taxation.
The stupidities and inefficiencies that at least in part result from this are staggering – which I think you would concede. For a start, building a private hospital in a poor area is probably a no-go.
A system that provides universal health care need not be publicly owned. A possible alternative would be to subsidise private insurance for those not able to afford it. I fail to see why the dream of universal health care means that the government(s) need to own hospitals.
Mark
You are now letting blind ideology lead you up the garden path of illogic.
If you do not regard the establishment of an independent central bank for the creation and excercise of monetary policy as macroeconomic policy, I would dearly love to see what macro textbooks you have studied.
What do you call the GST? The first government to govern with budget surpluses?
And if you really do think Costello has been twidling his thumbs for twelve years, how do you arrive at this?
If Costello/Howard have not had any economic policy, then Keating must have had even less by your reasoning.