What an annoying man Peter Strong is – annoying, that is, to monopolists, rent-seekers, special-interest lobbies, dictatorial public servants and politicians who talk the talk, but who walk away from real reform.
The chief of the Council of Small Business in Australia, in an article on Business Spectator yesterday, highlights what a monumental waste of time much of this parliament has been (Too many boots are kicking small business, May 13).
The litany of failures in Strong’s damning assessment of policy making in Australia will annoy and – one can only hope – shame a very large number of leaders in politics, business and the public sector.
He’s right to say that the dominant political argument of this parliament, the carbon tax, should be way down the list of priorities.
The nearly eight million people who own or work for small businesses have been done a grave disservice by this issue being inflated into a giant public-policy bogeyman, when in fact its financial impost, and inflationary pressures – the supposed ‘wrecking ball through the economy’ – have been considerably lower than Treasury’s forecasts.
While parliament was disrupted day after day by carbon-tax ‘suspension of standing orders’ motions from the opposition, the really big reforms – competition policy, reforming contract law, cutting red-tape, revising penalty rates (rather than letting businesses fail and jobs vanish altogether) – were pushed off the agenda.
The levels of fantasy obscuring the big issues are staggering – the economy is failing (it’s not); it’s mostly due to the carbon tax (it’s not); we’re on our way to a Greek-style debt crisis (wrong); the current slump in corporate tax, GST and mining tax revenues was entirely predictable (only the last was); and, emergency stimulus aside (because it did prevent a cascade of small business failures), the Rudd and Gillard governments have spent in more profligate style than the Howard goverment (wrong again).
The problem is that all these fallacies have been easy for the opposition to spin, particularly when the Canberra press gallery has spent so much time chasing Kevin Rudd’s supporters down rabbit holes – a fruitless pursuit that in the end has done as much as all those standing orders motions to take the public eye off real problems in the economy.
This all leads Australia to a very dangerous place.
To reprise the list above for the first-term of a Coalition government (should it be formed) ...
– The economy really will be failing if savage fiscal cuts accelerate a downturn;
– Repealing the carbon tax won’t fix much, particularly when an Abbott government has to find $3.3 billion from consolidated revenue to fund its own Direct Action policy;
– Given the sudden rapid deterioration in revenues, driven by global, not local factors, the shock-jocks should be giving Tony Abbott the rhetorical room to borrow and spend to shore up jobs, rather than sewing him into an incredibly tight fiscal straight-jacket;
– Tax revenues will likely keep falling in the short term if thousands of public servant jobs are vapourised, and thousands of sub-contractor contracts (delivering public service projects) torn up to balance the budget;
– And cutting well below Labor’s expenditure/GDP ratio will cause widespread industrial disruption, especially among the heavily unionised public services. How quickly we have forgotten the industrial relations marches and battles of the Howard years.
The problem, politically, is that many hard-working small business people do not spend all day studying Treasury figures or daily economic data releases. They rely on journalits to vet all the rhetoric and remind them what really needs reforming and what doesn’t.
All of this is not to suggest that Prime Minister Gillard, Treasurer Swan and their team shouldn’t receive a rhetorical thrashing for their mistakes – only that by focusing on the bogeymen the opposition has paraded before the cameras, voters will not know what the real mistakes were.
So what were they?
– It wasn’t having a mining tax that was Labor’s failing, it was having one too large and complicated then replacing it with one too small and complicated. Partisan commentators attacked Labor for taking too much money and then for taking too little. Where were the voices calling for a simplified policy inbetween?
– It’s not the blowing of the budget surplus this year that’s the error, it was failing to build one in at the 2011 budget due to the extending of generous middle-class welfare measures, to be funded by growth in corporate tax and mining tax. As I wrote at the time: "The big omission in Wayne Swan's budget speech was any acknowledgement of the structural deficit buried beneath his return-to-surplus numbers. When commodity prices show any prolonged weakening, as they inevitably will, a big hole will appear." (Swan’s big missed opportunity, May 2011.)
– It’s not the carbon tax design, which is intended to take less revenue in tough years, that is Labor’s mistake, it’s the linking of recurrent spending (tax cuts, pension increase, etc) to a cyclical source of revenue.
Almost daily we hear, from journalists, that “voters have stopped listening” to the Gillard government.
Rubbish. Too many journalists have stopped listening; to economists, public policy experts and, well, to ratbags like Peter Strong. There is a huge amount of reform needed, and most of it doesn’t get a mention.
And what will we get instead when Wayne Swan’s humiliation is complete?
Why, a Coalition government that has been too successful in controlling the debate, and which has won so many votes through its bogeyman issues that it will ride into power with only weak mandates to address the very real productivity restraints Strong complains about.
On top of that, Abbott and Hockey have made political hay from Europe’s austerity-driven economic collapse and the subsequent carbon price collapse. But these two will also have to fund their expensive Direct Action plans from revenue that’s expected to materialise while our economy cops the full force of a Coalition austerity program. Now there’s an irony.
Chuck out the Gillard government, by all means. But it would be lovely if we could replace it with something better.
That’s all Peter Strong’s asking for – an opposition campaigning to win on the real issues, rather than one planning to chase away the economic phantoms.