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Turnbull's economic politics « Previous | |Next »
May 7, 2009

In his Press Club address Malcolm Turnbull argued that debt levels were soaring and that we should all be worried. He argues that when governments spend borrowed money they have to make sure they maximise the return for the taxpayer. Instead the debt burden on the taxpayer is increasing. He's creating fear about debt levels:

pettyrecession.jpg Bruce Petty

Turnbull argues thus:

At the end, after the vacation – the family that’s done that, they’re left with a debt and some snaps in the family album and some nice memories. The family, on the other hand, that borrowed the money to renovate their house is left with an improved asset and something of real value. And it’s exactly the same with nations, exactly the same with Australia. Debt which is incurred to fund investment in infrastructure that increases the productivity of Australia will, in time, pay for itself because it produces a stronger economy, it generates more jobs, more income and, therefore, more revenues to the Government.

The argument is designed to support Turnbull's position that main that implies the Rudd Government does not have are the building blocks of a strategy that is going to deliver that platform for growth that is focused on jobs, jobs, jobs .

Those building blocks are no more debt than is absolutely necessary, keeping the deficits as low as possible, having a plan to restore us to surplus and spending on infrastructure. The Rudd Government, he claims, is maxing the credit card to the tune of $300 billion, splashing the cash, and not spending on infrastructure.

One part of this is disingenuous. The so-called "cash splash"----ie., the stimulus package--- is working its way into the economy in terms of retail sales and pushing forward housing activity. It has softened the impact of the decline (ie., by propping up employment) until the "shovel-ready" infrastructure spending kicks in after next weeks budget. Turnbull is in effect claiming that stimulus package money is ill-spent --hence the phrase "cash splash"--because it is not invested in infrastructure.

Then we have the fear part about the burden of debt:

And this $300 billion means $15,000 of debt for every man, woman and child in Australia. So a family of four, it means $60,000 of debt. That’s what our children are going to be left with by the Rudd Government. It is a frightening prospect for them and it underlines the way in which this Government with its classically Labor addiction to debt has undermined our confidence as a nation, our economic confidence, and above all and worst of all impeded our capacity to recover from this downturn.

As Turnbull said on the ABC's 7.30 Report:
the problem with socialists is that at some point, as Margaret Thatcher said, you run out of other people's money. And that's the problem with the socialists running Australia at the moment: they've run out of the money that was left to them by John Howard and Peter Costello and now they've decided to max out the credit card. And if you think that that level of debt will not be a brake on our recovery, will not result in higher interest rates and higher taxes in the future, then I have to say to you that you're kidding yourself. This level of debt is a heavy burden.

Labor is reckless with money, Always has been. They are bad economic managers. Always have been. That's the Liberal Party's politics. Always has been. That is the subtext of Turnbull's message.

| Posted by Gary Sauer-Thompson at 3:38 PM | | Comments (10)
Comments

Comments

Mal and his mad Murdoch media mafia mates are looking a bit sick today after the news of a fall in unemployment.

fred,
the unemployment figures could be a monthly blip. One would expect them to rise during 2009 to around 9%.

The sooner Turnbull realises that John Howard is not the author of Spycatcher, that it isn't Turnbull's job to defend his record and that good parliamentary tactics are rather different from those that work in the High Court, the better.

If he expects to continue as Opposition Leader, he should learn to act like one.

Mal and his mad Murdoch media mafia mates are looking a bit sick today after the news of a fall in unemployment.

Not necessarily. There's a reasonable margin of error in the monthly figures. Unemployment may have gone up less than the figures indicated last month and still be down this month. If unemployment falls again next month, that may be tentative indication of an improving economy.

MikeM--
maybe Turnbull has been reading too much of the financial press.

If you've been reading the financial press then you could be forgiven for thinking we are in the midst of a full blown economic recovery. Similarly, listening to the likes of the governor of the Federal Reserve, Ben Bernanke, there appear to be green shoots appearing everywhere in the brown surface land of the global economy.The rains have come----ie., the problems been fixed.

This is the crowd who never saw the problems in the first place, then more or less downplayed its significance, until they were smacked in the face by economic reality of Wall street collapsing.

Well given that the only tangible evidence the vast majority of Australians have seen to date of a recession is vanishing notional asset values, all we need to do is have these hypothetical values go up again and everything will be sweet.

Somehow I don't think it will be that easy.

Turnbull is a puzzle. He's not a stupid man but he persists in saying stupid things. Maybe his advisers have convinced him that he has to talk stupid to communicate with the masses.

He should brush up on the economic concept of discounting for the future. Offer someone the choice between avoiding a definite 5% cut in income now and getting a likely 10% increase in future and they'll grab the first option nine times out of 10. Trying to persuade people they should suffer now to help the faceless kiddies of the next generation is idiotic.

Ken,
Turnbull probably has an better understanding of economics than Swan or Rudd, He does say silly things. Maybe he is trying to shore up the conservative base that is dispersed, fractured and aimless.

"There's a reasonable margin of error in the monthly figures"
True.
But that has always been so and its strange that some media only seem to have become aware of the doubtful methodology with this batch of results.
Nevertheless my point stands. For Mal and mates to be faced with a nominal [at least] fall in unemployment within only a day or so of spruiking doom and gloom, is, shall we say, 'unfortunate in its timing'?

I pay little attention to writing which is evidently hurried or incompetent. "Disingenious" is not a word.

Shane,
many thanks for pointing out the typo---disengenious, of course, should be disingenuous. That still leaves the argument of the post about the politics of fear and the business of fearmongering re debt by the LIberals, and I would add, the conservative Murdoch tabloid media the tabloid media, who are quite happy to demonise debt and Labor's use of it.

Not all debt is bad and most governments borrow to finance infrastructure. Even Turnbull would.