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September 3, 2004
The debate about the economy, interest rates and good economic management bubbles along. It currently circulates around interest rates, even though interest rates are primarily determined by world events, events largely outside of the control of the federal government.
Inflation and unemployment sit in the background. Interest rates will go up after the election no matter which political party wins the election. Isn't that what the Reserve Bank is saying?
Rowe
The political reality is that most economic policy is determined by Treasury not the Minister. The Minister--whoever that is--mostly follows the standard Treasury line. They rarely direct the Treasury.
The election campaign is about fear of rising interest rates (the Coalition) and hope offered by the ladder of opportunuity (the ALP).
If you recall the fear message is that the ALP is fiscally irresponsible, will run up large budget deficits and push up interest rates soon after the election. Hence a vote for Mark Latham is a vote for a crippling increase in your mortgage repayment. What's more interest rates were always higher under Labor than under the Coalition. The figure bandied about was an additional $960 a month to the average mortgage of the average Australian family.
Latham's response to fear campaign was lame and flatfooted. He signed a pledge. That was political theatre ---a stunt? Note that there was no attack on Costello. It was all defense, defense, defense.
Why isn't the ALP saying that the budget will go into deficit because of the Coalition's pre-budget spending spree? Why not attack the current account being in deficit under the Coalition's economic management?
I do not understand the defensiveness. The ALP is a actually a party of punishers and straightners not enlargers. As Hatcher points out Latham's trilogy involves: Labor running a surplus budget for each of the three years of its parliamentary term and cutting net Commonwealth debt; Labor cutting federal tax collections as a proportion of the total economy as conventionally measured, by GDP; and Labor cutting public spending as a proportion of GDP.
That is a neo-liberal policy agenda is it not? So why not argue along the lines that grwoth is unbalanced in that it is being fuelled by strong debt-funded domestic spending that is sucking in imports whilst exports are faltering?
Why not argue that our current account deficit is at historically record levels?
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Why not indeed. Too much for poor politically ignorant punters like me to handle I guess. Plus it makes lousy television.