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December 2, 2004
Have you noticed the way Peter Costello, the Federal Treasurer, is media managing the Australian economy these days?
The economic horizon is darkening. Australia's growth rates are declining. The last quarter was the lowest rate of growth (0.3%) since the introduction of GST. That does question Treasury's prediction that the economy will expand by 3.5 per cent for the next four years.That forecast rests heavily on the assumption that exports will fill the void left by the end of the housing boom.
Is it likely that exports will take over as the economy's next growth engine as domestic demand growth slows?
Costello's response to the darkening horizon, as it was reported in the Australian Financial Review, is evasive:
"... the economy is cooling ...however, the economy's prospects were bright thanks to the government's pre-election stimulus....the slowdown is on track....the economy is growing in a consistent and sustainable way..."
And so on. Costello is talking things up. He is saying that he has things under control, despite the fall in exports and a growing current account deficit.
If exports are falling, then they will not fill the void left by the end of the housing boom will they? That means declining economic growth.
Though Costello is talking about the slowdown in domestic spending, he is saying little about the dangers to Australia flowing from America's twin deficits. What he did say about the international economy was that China needed to revalue its currency to help our exporters.
Why not the option of Australia becoming a more high value-adding knowledge economy? Is that not a better long-term option for Australia, than repeating the old Fraser trick of pulling another resource boom out of the hat to plug the gap opened up by the end of the housing boom and the failure of exports to take off?
Costello is all smoke and mirrors.
Where is the ALP? Did not the dazzling glimmer twins say that they would be working extra hard to establish the ALP's economic creditionals? So where is Wayne Swan, the new Treasury spokesperson? Do we bloggers have to do the critical job whilst the ALP continues to lick its wounds.
Those who are more critical are dismissed as mere economic Cassandra's, opines the Australian Financial Review. We cannot have any criticism of the economic managers or their economic governance can we? That is talking things down.
The editorial in the AFR then offers some advice to Costello:
"Despite talking matters mildly up yesterday, he can now tell cabinet that things are really crook, insist on spending cuts and accelerate reforms. In the long run that is the only guarantee of prosperity."
The 'only' guarantee? There is no other option?
Do you get the impression that a lot of neo-liberal economics is really politics and media spin? You pay $2.50 to the AFR for that advice. And it is saying very little about what is happening in the US economy. The AFR does across as the ascetic priests whose straightened conception of utilitarian morality is to make us suffer.
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Yeah, but he still likes to dish out advice on managing our household budgets.
Costello
*Consumers* are spending big?
*rolls eyes*