If the only mistake the Gillard government had made was creating a deficit out of yet another set of bad Treasury numbers then the likely next prime minister, Tony Abbott, and his looming treasurer Joe Hockey would face a straightforward task.
But the current government’s mistakes go much deeper and will require an entirely different approach. This morning I will list my seven deadly Gillard economic sins and invite readers to comment and add to them via conversation. Tomorrow I will list the actions Tony Abbott must consider with the same invitation to readers.
– Sin number one is rarely mentioned in mainstream commentary: A dedicated and vicious campaign against small business, which is the main private employment creating sector of the economy. This was done via the Australian tax office which attacked small operators and refused to give many ABN numbers. Thousands of complex but useless regulations were introduced at the same time as the Gillard government promoted union dominated industrial relations laws that were designed for large business and made staff flexibility in small business much tougher. Independent contracting was actively discouraged (See: The cost of Labor’s contractor carnage, April 24; Paralysed in a tax office trap, April 24; and Call off the small business attack dogs, April 19).
– Sin number two: Actively fan the greatest government employment binge in Australia’s history. As the above link pointed out, the Institute of Public Affairs estimates that since the global financial crisis public sector industries have lifted their employment by 406,000. In fairness, not all the 406,000 people are employed by Canberra by increasing regulation, red tape, state government requirements and duplication, but the Gillard government was the main driver.
– Sin number three: Allowed the export of gas from Queensland, which under present extraction rules we did not have. Some of the export gas will now come from gas that was earmarked for Sydney and will help send NSW and later Victorian and Queensland domestic gas prices sky-high. The higher gas prices will be further boosted by actions of the NSW government. It’s a total mess (Leaky gas progress could lead to a NSW exodus, April 16).
– Sin number four: Encourage the return of cartel-style agreements between big builders and building unions in the commercial building sector sending the cost of building the new mines and government projects up substantially (Lend Lease and Leighton need a new toolkit, April 8).
– Sin number five: Pay no need heed to productivity in health. It’s all about handing out money. Rising heath expenditure is a key underlining reason for the deficits.
– Sin number six: Decide to be completely remote from business. Treasury took the same view. As a result Canberra had no idea what was happening in the business arena (particularly in mining) and most of the treasury business forecasts were wrong. Worse still, they spent the money that they incorrectly anticipated receiving. The strategy was modelled on the Keystone Kops.
– Sin number seven: Carbon was another Keystone Kops style fiasco. The Gillard government saddled Australia with an uncompetitive carbon price at the same time as a high dollar and rising electricity prices. They used much of the carbon money for social welfare and then later effectively slashed future carbon revenue, but did not cut back the spending. The carbon mess had little effect on emissions.
One of the reasons why so many big mistakes were made was that Julia Gillard turned out to be another Kevin Rudd. Rudd could not run a cabinet and Gillard’s supporters thought this would be her greatest asset. Instead she followed the Rudd decision making process on too many occasions.