Turnbull and the Coalition are crass economic vandals who wreck everything they touch, from climate policy to housing affordability — and then lie about it, writes Ingrid Matthews.
AS TEDIOUS AS IT IS to keep compiling the failures, the incompetencies, the irrelevancies and the routine corruption of the Federal Government, it is also necessary.
One of the most persistent lies of liberal democracy is that conservatives are inherently "better" economic managers.
This one is never laid to rest and is disproven again and again — by continuing low interest rates (meant to stimulate economic activity, because nothing else will) and by sluggish Australian Bureau of Statistics (ABS) quarterly National Accounts figures to be released today.
Conservative fiscal management
When I was growing up, the prestigious position of Saturday opinion above the fold was held by Alan Ramsey. His signature style was to dissect a development in the corridors of power with extensive references and quotes from previous iterations or steps in this development — a bill here, a policy there, a leadership change looming. Ramsey constantly reminded readers that some things never change, that political egos are vast and uncontainable, and that politicians work as much or more on their own party positioning as in the national interest.
As a student of economics and politics at the time – even in the 1990s one professor still called it political economy – this long lens approach was a profound influence. I was thinking about the Ramsey style as I listened to economist vox pops on the pending National Accounts figures and what we coyly call "negative economic growth". Like they always do on social issues, the conservative Coalition Government is taking the economy backwards.
Most of us outside Capital Circuit remember that legacy media hailed Tony Abbott as a roaring success for mobilising the blunt tactics of xenophobia (Stop the Boats!), lies (No cuts to the ABC!) and scare-mongering (Debt! Deficit!). His bigoted backwardness and politics of destructionism were endorsed by every mainstream media outlet, barring The Age and The Guardian.
Abbott won easily against a fractured government. Few called out the lasting effect of three years of viciously sexist attacks on our first woman prime minister (although she did); or conceded his strategy was nothing but aggressive racism and misogyny. Gaining traction in the Australian electorate for bigotry is not tactical brilliance. Anyone but the Gallery could have predicted that Abbott would lead his party to the brink of one-term disaster. Once the Liberal Party gathered its wits and installed the vacuous Malcolm Turnbull, he, in turn, squandered the political capital of almost three million voters’ approval. He snuck back into office by the skin of one seat and a $1.75 million donation from his own back pocket.
Market optimism, like the opinion polls, was short-lived. Economists have been pointing to declines in investor and consumer confidence since very shortly after the 2013 Federal Election.
As analyst Dr Shane Oliver wrote:
'Indeed business confidence followed consumer confidence back down after an election-related boost in 2013.'
The same jump-'n'-slump followed Turnbull’s elevation because markets are driven not by rationality or expertise, but by expectations and confidence. He has limped along ineffectively for the year or so since.
The long lens
The looming recession can hardly be blamed on external factors, although the Government will no doubt seek to do so. The global economy has recovered from the 2008 Global Financial Crisis (GFC). Australia was largely quarantined anyway, by sustained Chinese demand for our resources and a prompt Keynesian response by the Labor Government.
Counter-cyclical government spending (such as on education infrastructure and welfare payments) props up consumer spending and thus demand, and thus employment, and thus tax receipts. Despite being routinely demonised as poor economic managers, the Whitlam Government rode out the collapse of the Bretton-Woods global currency system, the formation of the OPEC cartel and the previously unknown phenomenon of stagflation in the early 1970s — when America fell into its worst downturn since the Great Depression.
In such conditions, it is sound fiscal policy to borrow and spend. It is an investment in social stability and well-being; and fends off unemployment and associated spikes in welfare costs. This has been known since the 1930s, but if the Liberal Party understands Keynesianism, they lie about and deny it for the purpose of obtaining political office.
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The lies the Liberals tell are matched by the lazy willingness of old media to reproduce their tropes. Torchbearers like the most profligate prime minister in living memory, John Howard, eulogise a master of inertia like Robert Menzies, while telling us that Whitlam’s spending was terrible. Yet country town residents still celebrate the revitalisation that came with Whitlam Government spending on the arts in their previously neglected rural districts.
In the same vein and despite the fact that low interest rates are used to stimulate demand, Howard as PM constantly reminded us of high interest rates under Keating. This was the same Keating who made the Reserve Bank, which sets interest rates, independent of Government. The same Reserve Bank that raised interest rates as a brake on accelerating growth during the Keating Prime Ministership. The same prime minister who, as treasurer, established the fiscal renewal of the economy that ushered in a record 25 years of growth.
Until now
Like Howard and his deliberate misinformation on interest rates and growth, Abbott took the unquestionably successful Labor GFC response and turned it into a dumbed-down "debt-and-deficit" screech. Because expectations and confidence drive capital churn, actual economic growth requires policy skill and vision — or we get economic stasis.
The political focus this week is on crisis management because the economy shrank 0.5 per cent in the September quarter — and the definition of recession is two consecutive quarters of negative GDP growth. Recession has been narrowly avoided by public infrastructure spending but the general malaise is "effectively here". The definition of recession is ultimately arbitrary – two consecutive quarters, or three? – and the political messaging is spin. Neither changes the fact that the Liberal and National Parties are crass economic vandals who wreck everything they touch, from climate policy to housing affordability.
And Turnbull et al just stripped our revenue by giving away $50bn to the wealthiest amongst us. How is this good economic management? https://t.co/7V6ILviWGt
— Ros (@roshart) April 2, 2017
Meanwhile, the politics of destructionism continues, unabated. The Coalition has blown the deficit out to $355 billion in the 2017-18 Budget Estimates. "Budget repair" is the new catchcry — but this government always has a new catchcry. It just never has a new idea. The National Broadband Network (NBN) has doubled in cost for half the speed, while the Government spent an eye-watering $28 million on an advertising campaign that achieved nothing other than lining advertising company pockets. Why cling to the trope that Turnbull is a moderate climate guy when he floats a $900 million loan to the proposed Adani coal mine? Not even the big banks, which we underwrite, will touch it.
Rudd established the NBN fiscal and policy foundation. Gillard brought down emissions via the price on carbon. Shorten designed the National Disability Insurance Scheme (NDIS), which the Coalition is busy butchering, while increasing the Medicare Levy to pay for its company tax cut and trolling people with disabilities.
And what do we get for this high-spending, high-deficit, high-taxing government? What policy vision? What national interest?
Nothing. We get the same dreary broken record: blaming Labor, four years on; spruiking coal, a stranded asset; terror-mongering off the back of events targeting former imperial powers in the northern hemisphere, which Australia is not.
Even the staunchest Liberal Party allies – chambers of commerce, councils of business – know that investor confidence is being driven into the ground by climate policy stasis (they call this "uncertainty"). Then there is consumer confidence. When people are not spending the economy is not growing. The 3.3 per cent minimum wage increase decided this week sounds substantial, but must be seen in context.
That context includes wage cuts to hospitality workers – which will now get lost in the policy noise – and falling wages alongside surging profits overall. And wages decisions do not correct the radical social inequalities perpetuated by this government and its poverty-demonisation operation, Centrelink. Despite causing severe hardship and literally killing people, the "robodebt" program is being expanded to pensioners. Despite causing social and economic harm, the Basics Card is being rolled out to more unwilling communities. Now, 5,000 unemployed people are being targeted for drug testing.
This is what passes for Coalition policy. The Aussie "fair go" is a myth — and has been since the day the English brought their rigid class hierarchies at gunpoint to where genuinely egalitarian societies had been flourishing for 60,000 years. But the mythology is as fondly held as the prosperity born of the dispossession of First Peoples. Australians want to believe in a fair go and nothing about the current socio-economic policy settings bear out that belief.
The current Coalition Government will not last beyond the next election, but the price, as always, is too high.
Ingrid Matthews lectures in law at Western Sydney University. You can follow Ingrid on Twitter @iMusing or her blog oecomuse.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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