Let’s get one thing clear from the start, attempting to rush a massive spending package through parliament with the minimum amount of scrutiny is not good economic management. It simply means that the people charged with managing our national economy have been caught unprepared and for that single fact alone, they should be held accountable.
There is a great myth that gets kicked around by both sides of politics and that is that the Australian public is smart enough to decide what is best for them. Of course what politicians are trying to do is get people on side by implying if you are smart, you will be able to see that their particular policy is best for you.
However the Australian public often make the most stupid mistakes when it comes to voting in and out governments. For example how could anyone unaffected by magic mushrooms have voted for Labor in the last NSW state election? But vote for Labor most people did; even with a mismanaged hospital system, a faltering economy and one government scandal after another, the “smart” electorate in NSW returned a group of people to power that would struggle to manage a fish and chip shop.
Let’s be honest with ourselves, the Australian voting public is generally no more wise than the mob were in the Colosseum in Ancient Rome. Put on a good show, toss around some free bread and most will love you. Most will not realise that they actually paid for the bread and the show via the money they paid in taxes but as they say, ignorance is bliss.
So here we are in “modern” Australia. Suddenly Kevin Rudd has woken up and realised that there is a national economic crisis. I am not sure if he realised this before he went on holidays or after, but in any case it seems to have caught him by surprise. Amazingly his close connections in China must not have told him what was being reported months ago: that the Chinese economy was slowing down in a big way.
By October last year commodity prices had collapsed as world demand fell and it was clear to most that 2009 was going to be a tough year. If you look at most commodities charts you will see how badly prices had fallen by October 2008 and so for a country like Australia that depends so much on commodities exports, this was nothing short of a disaster.
It was time for some big bold plans to be drawn up but what we eventually got was a round of Government pre-Xmas shopping handouts. Oh I hear some twits say: “didn’t you see retail sales figures were up because of the government handouts”? Yes of course they were up…so what? I bet I could stimulate the wine industry as well if I gave cash back to people to go out and buy a bottle of plonk.
Wow..what a big success, the country just blew billions of dollars over Christmas for absolutely no long term gain. And remember, much of this money will head offshore to pay for imported TV’s, PC’s and a vast of range of other consumer goods. Well done Rudd and Swan, our exports are falling but you stimulated the demand for imports! But China will not mind about that, it will tip our bilateral trade with them further in their favour.
Perhaps some readers may think I am being unfair on the Government. Well if so just ask yourself these very simple questions. Why weren’t detailed plans to support the Australian economy developed last year? Why weren’t these plans discussed, reviewed and debated in parliament last year so that a plan could be ready to implement now?
The simple and obvious answer to these questions is that the Government dropped the ball; they have been caught unprepared either because they are incompetent or were focused on other issues. Emissions trading? Workplace reforms? Catching the inflation genie perhaps? You be the judge.
The most worrying part about the $42 billion dollar economic stimulus package is that there will not be any clear key performance indicators. In other words what conditions need to be met for the plan to be judged a success? Rudd and Swan have no clear answers apart from saying that Australia will be worse off unless the money is spent.
So we could end up in massive debt, projects in chaos across the nation but Rudd and Swan will still say in 1-2 years time the package helped Australia. Some boffins from Treasury I imagine will also say in a couple of years time that they have data that shows the package helped, but nobody will be able to demonstrate in an meaningful way that the money was well spent.
In other words, does anyone care if we waste for example $10-$20 billion dollars or so over the next few years? We all should, but I suspect many people will just wait for their slice from the latest handouts and will not give a second thought to the burden this will put on working Australians for many years to come.
Then we get into some of the detail. The Rudd government is going to build some 21st century facilities for schools which is a good start since we are in the 21st century and have been for a while. Perhaps he was thinking of going retro and rolling out some 1970’s style classrooms ? In any case due to the mismanagement of the national broadband network the schools may end up with 21st century style facilities, but they will be wired into a 20th century information network.
Then we get to things like public housing and this sounds lovely, but have we fixed the management problems with public housing or are we going to end up with many of these assets trashed by delinquent tenants? You know the ones that take government handouts, sit at home all day and to thank taxpayers they trash the public housing they live in. (as an added bonus they might even let their children run amok at night and throw rocks at the police)
Is this a good use of taxpayers money? Will it create long term jobs? Maybe we should be getting people into work and out of public housing rather than just building more?
But Rudd is a clever political operator. By handing over large parts of the stimulus package to the States he has left himself a nice little escape clause in that he can blame the States in a few years if things do not go as planned. He can also blame the global economy, China, the neo-liberals, aliens and even his own party if he throws a “Latham”.
But one thing is for sure, no matter how the money is spent or wasted, the fact is that this proposed government spending is going to be a burden on the Australian economy for years ahead. Boom gates and painted schools are not going to help Australia compete in the global economy, and I fear we about to see a lot of money spent for little long term gain.
By the way, I wonder if we can ever find out how many times Rudd and Swan entered the term “economic plan to save Australia” into Google over the last few weeks? I also heard from a very unreliable and fictional source that the reason the Prime Minister missed the early vote in parliament the other day was because he was naked in the woods, covered in pig fat and trying to channel Peter Costello. It appears he was not successful.