May 10, 2008
What is the economic narrative of the Rudd Government? It used to be investing in new infrastructure, increased productivity and broad reform. Their argument was that the Howard Government had squandered the proceeds of the boom in mineral exports instead of investing in infrastructure and education and health to enhance and expand the capacity of the economy to generate economic growth. That is their big picture.
Yet that has been undercut by the alternative narrative of addressing inflation through big budget cuts and substantial surpluses so as to help the Reserve Bank's use of monetary policy to squeeze inflation. And yet this alternative narrative is undercut by the big personal income tax cuts that are in opposition to the use of interest rates to squeeze inflationary pressures in the economy and reduce economic growth.
So which is the economic narrative? Do these different narratives cohere in a broader big picture? If so, what is that big picture? It is not clear. Are the conflicting tendencies being thought through? It is not clear.
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In terms of economic expertise the Krudd government is a Keating redux. What you say you will do in opposition doesn't resemble what you actually do once you occupy the Treasury benches.