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Election: Gunning Costello « Previous | |Next »
August 31, 2004

Since we live in a new apartment in the city of Adelaide we are very sensitive about happens to interest rates. We keep a close on them since slight rises have a big impact on the budget. We are fearful they will rise and rise and we will have no spare cash to meant the increased payments.

What I've noticed is that the theme of fear is everywhere these days. It is not just the fear created by the national security state continually raising the possibility of terrorists associated with Al Qaeda blowing up a bit of Australia.

It is also a fear created by interest rates going through the roof with an ALP government. The alarm is raised by the conservative side of politics as part of their attempt to paint the ALP as bad economic managers.


The message is that you can only trust the Coalition if you feel want to feel secure. The fear of interest rates rising strikes a chord in the marginal seat of Adelaide, given the boom in apartment living in the inner city. You only need some of these to panic and the ALP has no hope of winning the seat of Adelaide.

Are we spooked? I thought that the economy was running better than it had in 30 years. You know there is low unemployment, good economic growth, company profits are surging and there is high productivity. Has not the economy had been a star turn, and in good shape? So why would interest rates go through the roof?

Do not the economists say that whoever wins government in October will have little impact on the long term trajectory of interest rates? Doesn't the Reserve Bank now control interest rates?

Does not the Government's spendthrift ways contribute to the pressure on interest rates? Does not the ALP outrank the Coalition in growth-spurring structural reform over the past two decades? Does not Australia have the highest interest rates of all the major developed economies?

Don't we have a trade deficit blowout. Why isn't the ALP talking about that deficit? Why is there no criticism of Costello's bad economic management? Are we not living beyond our means etc etc?

Why is the ALP so defensive around the economy? Where is its courage?

August 2nd

There is plenty of room for the ALP to attack Costello on economic management around Australia having higher interest rates than the other major developed economies. As Kenneth Davidson in The Age points out:

"Australians must pay more for their money than the people of most other countries because the Australian dollar is rightly seen as carrying a bigger exchange risk than most other countries, not only because of the huge current account deficit and foreign debt, but because the dollar is rightly seen as a commodity currency dependent on the fluctuating world demand for agricultural produce and raw materials, rather than the sophisticated products and processes associated with the knowledge-intensive post-industrial era."

The Howard government not only runs massive trade deficits. It also does little to transform the Australian economy into a knowledge-intensive one.

But we have silence from the ALP. Does that signify that the light on the hill is barely flickering these days?

| Posted by Gary Sauer-Thompson at 11:56 PM | | Comments (0)