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November 9, 2006
The political debate about the economy is heating up with the latest increase in interest rates by the Reserve Bank of Australia ---the eighth such increase since 2002. Justifying the decision to put up rates, RBA governor Glenn Stevens said the risks of inflation exceeding the central bank's 2-3per cent target range "remained significant". Mortgage payments are now at a 10-year, the pace of credit growth is still strong , the shortages in skilled labour continue, increased foreign debt and the effects of increased interest rates are starting to bite on family budgets in Sydney and Melbourne.
This places the Howard government on the backfoot. It says that an election-year tax cut is off the agenda as it would "over-stimulate" the economy and trigger a further interest rate rise. The government's defence is looking ragged---it just harks back to the Hawke/Keating years in the early 1990s; or says that Australians never had it so good and can afford to carry debt. The Government is starting to sound shrill and unconvincing in its defence of its economic credibility because people are hurting now.
It gives the ALP another hook into the economic debate. And they have been plugging away in the Senate arguing that the real economic story of the past year or is the deteriorating fortunes of the working and middle classes.
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Great cartoon there.
It could well be that losing the last election was a blessing for the ALP. Inheriting a poison chalice.
As others have pointed out, Howard looks increasingly isolated, having nobbled the rest of his cabinet, and is indeed looking shrill.
His constant refusal to admit that things can go wrong on his watch must be wearing thin.
A positive ( I think) for the federal ALP is the NSW government. They will go to their election first, and will cop a belting. I don't think they'll lose but they will allow the voters to vent anti-ALP anger in NSW.
Beazley also seems to have found a second wind, is answering questions and making statements that don't put people to sleep.
Now Howard's best mate has been chopped off at the knees, and the circle of great and powerful friends he assiduously cultivated is turning into a coalition of lame ducks. How long until our PM starts choking on the feathers?