No doubt because Malcolm Turnbull has demonstrated his stunning grasp of economics yet again by claiming that the Commonwealth budget going into deficit is some sort of yardstick of economic failure, there’s been an immense amount of commentary on Kevin Rudd and Wayne Swan’s willingness to utter the word “deficit”. The latest instalment in the saga is documented by Peter Martin here – Rudd’s conceded that Australia may have to sustain a “temporary deficit”.
Just as Turnbull is privileging politics over economics, so too the Rudd government’s tactics are – in part – about politics. I’m surprised, though, that there hasn’t been a lot of sensible discussion about what they are up to politically. Guy Beres provides a corrective:
In short, Kevin Rudd’s personal approach to the economic situation as Prime Minister seems to revolve around straight talking, with a cautiously pessimistic bent. If things could get worse, then the Prime Minister seems to want to make it clear to everyone that they should be prepared for things getting worse. Rather than trying to create an oasis of blissfully ignorant confidence at the head of government – something the Howard Government probably would have done in the same position.
Use of the qualifier – temporary – in describing the possibility of running into deficit was probably not a good idea. Now there is something quite existential about it as we have Swann (7.30 report) being quizzed on how long is temporary and allowing Turnbull a free kick on previous (temporary?) deficits under Labor. I think Rudd and Co should accept that the public aren’t dupes and can accept the reality of a red bottom line. Quite agree with the comparison of the Howard approach – “Deficit? Nobody told me about a deficit”.
If Howard was still PM he’d be blaming Paul Keating for the GFC.
The press gallery and the opposition are busting a gut to portray all this as rank cowardice in pronouncing the “D” word, based on one shonky Newspoll (if you ask anyone whether they like going into debt they are likely to say no, duh).
Once again, the ABC has allowed the ideologues at News Ltd to frame the “debate” and have thoughtlessly bashed on with this shallow schoolyard theme in every news report over the past couple of days. Ooooh, Rudd said “deficit”, oooh, so did Swan. Its the “D” word! Shock, horror!
Grow up, I say (to my ABC). The rest of the western world is moving in the same direction, some countries faster than us. Report that, you bastards, and put our government’s actions in some international context. Give us some intelligent analysis and some real history (how about 2001?), assume that we can follow a more complex debate than who said what word when, and stop farting around with the “D” word antics. And that means you, Kerry O’Brien, we expect better from you.
Another free ride for the opposition, talking garbage.
No, we are all Keynesians now (again).
Turnbull isn’t waving, he’s drowning. He’s attempting to swim against a floodtide of popular opinion that has conceded that deficits are unwelcome, but necessary, in the present context.
Save yourself Malcolm — go with the flow.
From what he might have said about George, to whether the handshake was firm enough.
Then the puerile game about when Kev will use the “D word”.
Boy, oh boy, we seem left with Dickheads masquerading as journalists….
…. and what Grace said.
Turnbull seems determined to base his criticism of the government on their guaranteeing that we won’t lose our bank deposits. Good luck with that line getting popular sympathy.
Swan on the other hand was terrible last night. Why TF can’t he just say, in answer to the endless requests for predictions about the future, “I don’t know. Nobody knows. But it’s going to get a whole lot worse before it starts to get better and if that means we have to run big deficits for a while then that’s what we’ll do. Now can we please stop playing semantic games?”
Because it would be the end of his career, Ken.
The morons would destroy him and nobody wants to know how bad economic situation is likely to be anyway. Actually, I thought Swan was looking pretty relaxed last night.
Like he was just going along, lightheartedly, with the big joke that is now our media.
The economically illiterate kindergarten kids of the press gallery strike again – always ready to spread ignorance and deceit in the interests of a silly “gotcha” headline.
For the record, here’s what those socialist economists in Citigroup’s global research division say this morning about Rudd’s admission that a deficit is likely:
We’ll know if deficits are “unwelcome, but necessary” when we have one. We haven’t got one yet.
I personally think there is a great undercurrent of latent poor opinion of budget deficits that very well could surface once we have a planned, announced-on-budget-night, budget deficit.
Howard C it is not “latent” but blatant. That comes from 11 years of brainwashing about the danger of a deficit “black hole” run by the Liberals. Despite the fact that punters readily run a personal deficit to buy a house or car.
BTW,
could we please drop this ridiculous formulation “the ‘X’ word”?
“D word” for deficit, “R word” for recession, etc., etc.
It’s kindergarten language.
It’s as if the public is supposed to be scared of the BBW-W {“The Big Bad Wolf Word”}. Grow up, journalists!
Nothing wrong with a deficit per se, mort to the point – a year on year surplus is evidence of the government extracting more taxes than needed from the taxpayer. In other words, theft.
So long as, in the long term, the level of government debt does not skyrocket year on year deficits are fine by me.
“Poor opinion” covers much territory Howard C.
When something is “unwelcome but necessary” it can legitimately be said that suffers from a “poor opinion”.
I’d be interested in your argument that popular opinion holds that deficits in the current climate are both unwelcome AND unnecessary.
I’m not talking about the reality of what is good or bad policy. I was keeping my comments strictly to the area of public opinion.
Label it with a word like “brainwashing” if you want (communicating a sincerely held belief would be another way), but somehow the populace got it in their heads that a planned, announced, budget deficit is a bad thing, and reflective of bad economic management.
According to many on this site, Rudd is about “educating” (another word would be the one used above, but I digress) the Australian people about many issues, and this would be one of them. I would recommend in order to achieve this goal, he may want to start speaking in language that most people can understand. One of the reasons people read the Tele or the Hun is that they can read a sentence without scrunching up their foreheads afterwards thinking “what the f..k does that mean?”
I don’t think for one second the opposition will let the opportunity to criticise Rudd for a budget deficit pass. I’m glad Rudd and dear old Swannie are finally saying the word, but then I am the sort of guy to run around theatres screaming MacBeth at the top of my voice.
The ABC Breakfast News had a line very similar to what you’re highlighting, Grace P. Barry indeed raised the situation in 2001 and mentioned that most other countries around the world are in deficit, and there seemed to be a consensus among the commentators (this morning) that Turnbull and Bishop have had their heads up their arses… so to speak.
I hope this view spreads.
Swan, in particular, needs to get a smarter media advisor. As Ken says in a post above Swan, is digging himself a hole by playing semantic games with reporters angling for a “gotcha” moment.
He need only say that this is not a time for navel gazing. Governments around the world are having to fill a vacuum left by a private sector rapidly going into its shell. The risks of not going into deficit are much greater than the risks of doing so. Indeed, just about every private sector economist is urging the government on.
Swan can say that if Malcolm Turnbull wants to spread economic ignorance for the saking of scoring a political point, that’s up to him. But that’s no way to govern a country. And that’s why Turnbull’s mob is in opposition.
What Swan and Rudd are about are making decisions for the long-term interests of the country. We don’t know what’s going to happen next. Nobody does. But we have to balance up the risks between acting decisively and sitting on our hands.
Malcolm Turnbull thinks the world is going to applaud us for staying in the black amid the biggest threat to the global economy since the Great Depression. He is wrong.
Given its current performance, I’m not so sure that the much coming out of Citigroup has much credibility at the moment
I am pleased with the approach the Government is taking in talking about why a deficit may be necessary, though I think they need to be clearer to the general public about why it helps in bad times.
So am I.
I’m interested in your argument that Rudd may well lose more popular esteem than he gains were he to budget for a fiscal deficit.
My argument is that Australians look around the world and see that Rudd is doing what every other western leader is doing, except not as much as most.
I don’t believe that Australians view themselves as exceptional in relation to the good policy of deficits during recssions/depressions.
Anybody informed enough to understand the role of the government in the economy will already understand why a deficit is desirable. Most of the rest will ignore the whole argument and concentrate on what the government is actually doing that affects their lives. Guaranteeing Westpac won’t lose my bank deposits? About time. Giving my mum an extra $1400 for Christmas? Terrific. Running a WTF? Who cares?
These infantile games played about why won’t you say ‘deficit’ and please define ‘temporary’ are just the sort of bullshit that epitomised the worst of the relationship between pollies and the media in the Howard years. An endless series of in jokes about trivia where smirking Tip and smirking Michael would pretend to have a taut, tense interview and then go and have dinner together.
If Swan breaks the shackles it won’t be the end of his career at all. The media emperor’s new clothes were exposed for all to see in News Limited’s spectacular descent into clowndom last year. A new generation of political plain talkers might even attract a new breed of journalists who actually want to be reporters instead of members of the cosy incestuous little Canberra inner circle. God they might even be outside the tent pissing in! Maybe that’s why Swan doesn’t want to risk it.
I think many Australians remember the last time there were budget deficits, that is the late Keating years, without much fondness. They also remember various ALP State Governments racking up huge deficits and having to sell the family china. Another era not remembered with fondness.
I’m not sure people will see it as unnecessary, but they’ll still have negative feelings about it. The unwelcome part will probably be the dominant factor, and people will look for someone to hold responsible, especially if people start losing their jobs.
I know it’s funny and trite to say “we’re all keynesians now”, but most people wouldn’t have the first clue what that meant. They don’t understand the theoretical differences between deficit spending and slashing spending during a recession. What they do realise is that on a personal level, when money becomes tight, it’s time to reduce expenses. Governments have to deliver vital services, so this is not as much of a luxury, but people will equate it with their own personal experiences. Maybe the huge rise in personal borrowing over the course of the Howard Government will have had an effect on people’s opinions on deficit spending, but most people don’t err on the side of reasonableness when thinking about politicians and government.
Why do you assume that folks have to understand the theoretical underpinnings of Keynsianism before they’ll support deficit fiscal policy?
That wasn’t the last time. The budget went into deficit twice under Howard and Costello.
“That wasn’t the last time. The budget went into deficit twice under Howard and Costello.”
And you might have added, Mark, “many Australians remember” that time, as well, “without much fondness”.
The deficit has nothing to do with it. What Australians with long enough memories don’t have a fondness for is the recession that caused the deficit.
This is the whole point of the argument that a politically cynical opposition is exploiting and a wilfully ignorant media is playing along with. There built up a misapprehension in the Howard years that the budget position CAUSED the good economy, rather than the budget position being a RESULT of the state of a favourable cycle.
I don’t think people are that stupid to continue buying this story and Turnbull and Bishop will end up looking very silly for pursuing it.
The bigger story here (and you can always rely on an inward looking Canberra press gallery to miss the real story) is that electorates are finally waking up to the relative impotence of governments in a globally driven economy.
A parochial media has a vested interested in playing along with the pretence that governments are still important actors and that the ideological gap between Labor and Liberal is remotely significant. And this is why we are bored to tears with these trivial point-scoring debates about whether Swan will mention the “d” word. Turnbull and his media cheerleaders simply have nowhere else left to go.
It is painfully obvious that the press gallery has got it wrong about Rudd all along. (I remember Peter Hartcher’s pompous article back in early 2007 that Howard had the ground cornered on the economy and national security.) They continue to misread the electorate today, trying to whip up outrage over Rudd’s frequent overseas absences.
The fact is the public implicitly understands that the major issues facing Australia are GLOBAL issues; that those issues will not be resolved within the confines of cowtown Canberra and that they will not be understood by a hopelessly unsophisticated press gallery still reading the political radar back to front.
A few things to go on with…
I’ve been using “planned, announced, budget deficits” everywhere except in my last post. I know Costello’s first couple of budgets were in deficit, but there was a direction in which they were going, and a couple more deficts that occurred after budget night because the Howard Government paid attention to Shane Stone. All I’m saying is that it’s been a while since a Treasurer got up on Budget Night and said “we plan to have a budget deficit, and there’s nothing wrong with that”.
Yes, many Australians do not remember the Howard years with fondness. Fortunately, almost all of them are here on this blog.
The (entirely missed) point of my last post was that people compare it to their own personal experiences. How big is the federal budget? Wait a second, I’ll look it up.
It’s $319,500,000,000. Now, people will think to themselves when they see the Australian Government plan to spend more than it earns “They have $319.5 bilion, and they still need more money? That’s a lot of money to spend, and still it’s not enough! If only I could do that!”
It’s not a well educated argument, but it’s a difficult one to counter, and it has been the entire point of my posts. People aren’t going to say “Great, a budget deficit that will rescue the country! Hey, Ruddy, can I lend you some more money?” At best opinion will stay steady, which it may, because of the (already conceded by me on this blog many times) poor performance of the Opposition. But, in the crudest terms, I would expect 55-45 to become 52-48 within a month.
And if you’re pinning your hopes on Rudd being able to explain the merits of planned budget deficits to the great majority of Australians, then don’t hold your breath. Most will think he is speaking Mandarin.
52-48 TPP at Christmas? Sure. We’ll keep watching the polls.
“Yes, many Australians do not remember the Howard years with fondness. Fortunately, almost all of them are here on this blog”
Congratulations Mark, it appears you have, wait a second, I’ll look it up, anywhere up to 6,545,814 voting Australians at this blog.
Wow, that has gotta be able to generate some advertising revenue!
I wish, hannah’s dad!
It’s pointless to argue about the future. I imagine that there are some bookies who are prepared to give you odds on that outcome.
I imagine that there are many retirees out there who’d be happy enough with the admittedly modest returns that they may make on Australian government paper, especially in comparison with how their nest eggs have been faring in the las year or so.
If that deficit is spent on job creation, the unemployed may be another constituency that may overcome whatever principled or prejudiced objections they may have to government deficits.
Much depends on how bad the coming recession/depression may get and on how well the government is seen to spend the money they may borrow.
I agree with what Katz just said.
Now to clear up a few errors…
One in interpretation: the last time I checked, the budget was handed down in May, not in November. There won’t be a planned, announced, budget deficit until there is a budget handed down. So my 52-48 prophesy was with next May/June in mind.
The other in fact: according to a poll recently done by Essential Research, 68% of those polled did not have a unfavourable opinion of Howard as a Prime Minister. So, not everyone who voted for Rudd thought badly of Howard, and therefore by no great drawing of the bow, the Howard years. Many thought that the previous government had just run its race.
And no one has tackled my argument about people relating it to their own personal experiences, which has been my experience upon speaking to people.
Yes Howard C, the Essential Report result you cite of only 32% [I used that word 'only' carefully] being unhappy whatever with Howard does go part of the way to substantiating your statement re ” not everyone who voted for Rudd thought badly of Howard, …. the Howard years.” Although there is somewhat of a disconnect between ‘Howard’ and the ‘Howard years’. People could be unhappy with AWB, children overboard, workNOchoices etc and so on, without necesarily precisely relating those policies to Howard himself [which is what,apparently ER was trying to measure]. Who, after all, we were constantly told by the media was a wonderful leader, man of steel, principled politician, beloved by the world ‘s heroes [GWB et al], loved soccer, cared about kidlets blah blah.
But time will judge a little more harshly I suspect.
The personal experience people will relate it to is the question of whether they believe the global problems impacting on economy are being addressed, and consequently whether their job security, finances and living standards are better than they would have been in the absence of government action. I don’t believe anyone will give a toss about a deficit in the abstract or some sort of Turnbull invented yardstick for “economic management” if that turns out ok.
Turnbull’s rapidly becoming a cross between Robert Boyle and Brendan Nelson.
Noisy, ugly and ultimately irrelevant. And just when we needed an opposition to oppose Nanny statism, government Uber alles and ‘ The thoughts of Chairman Rudd’.
Socialism-with Australian characteristics being the worst of communism and the worst of capitalism. ‘ Conroyism’.
In short, Kevin Rudd’s personal approach to the economic situation as Prime Minister seems to revolve around straight talking, with a cautiously pessimistic bent.
.
And of course stuffing public cash in the pockets of the Mates. Maaaate!!!!
Surely we are mature enough to understand that sometimes you have to draw on the overdraft facility.
Deficit schmeficit. That idiot cow aint even sacred enough to kill – pat the silly on dear on its rump as it goes out to pasture. Thanks for wasting our grass, beefy. We should have always been more concerned about monstrous private debt, the productivity (or otherwise) of that debt, and its % relativity to GDP.
Once we focus correctly on that, we’ll start to see what a future shock disaster area the Howard government was on ‘economic management’. They left us lumbered and teetering on the brink with monstrous private debt, concentrated in the wholly unproductive housing sector.
Responsible borrowing for future growth should concern no-one.
The Howard era was government by real estate agents. People will be waking up to that for years to come.