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May 20, 2010
I couldn't bring myself to watch Shadow Treasurer Joe Hockey's budget reply speech at the National Press Club in Canberra to see how the Coalition would deliver on its promise to reduce the deficit.
I knew that deficit reduction was the primary focus of the Liberal's economic policy (through raising taxes and cutting spending), given their classic debt hawk position, all their clichés about fiscal responsibility, and their concern to push policies that keep the financial industry happy.
So I worked on some photos instead of listening to Hockey stuck repeating himself.
I guess that I should have watched Hockey to see whether he would have addressed how government needs to govern in the context of the global financial crisis. This crisis has resulted in the ending of the neo-liberal mode of governance that came into being in the 1970s.
Instead I've scanned the text of Hockey's Press Club address, and it is about about values, policy and an alternate Budget strategy. It is an affirmation of small government, competitive markets, and self-regulating markets with no recognition that the financial crash has brought the era of neo-liberalism to an end. It is as if nothing has changed despite the paranoia and suspicion about the present.
The Coalition's combination of economic liberalism with social conservatism is a return to Thatcherism in the form of the grip of John Howard's wider political culture over Australian politics: a one nation conservatism; backing globalization and finance capital; a belligerence about going to war, xenophobia, racism and class warfare. Though this zealous right-wing mentality, which sees threats and enemies everywhere, from immigration to Islam and China, is a toxic brew, there has been little to no attempt to "detoxify" the Liberal Party.
What is astonishing is not the cuts to recurrent expenditure, as that was expected, given that efficiency and competitiveness is the only game in town. It is the way the Liberals, for all their talk about higher productivity, will slash public investment in infrastructure designed to facilitate the ongoing modernization of the Australian economy. What Hockey offered was substantial disinvestment. The assumptions are that economic expansion will come from the mining and that private capital will build the necessary infrastructure.
For example, there is no need for a national broadband network NBN). It's a white elephant. This ignores that the increased role for government in infrastructure building has been because of the sluggishness of investment in productive activity. We are taking about Telstra here. They got us into the situation of poor broadband (slow speeds, low quotas high costs) in the first place. They want to return to a situation where Telstra is free to hold back the market and build at its own pace, for its own profits.
The Liberals are not only going to take the axe to the NBN. The party will also axe Labor's e-health investment and discontinue Labor's Digital Education Revolution computers for schools program. They are returning us to the past, turning their back on the information/knowledge economy, and ensuring that Australia remains a digital backwater in a dynamic South East Asian region. A digital backwater with an entrenched digital divide.
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Australia was suffering from the emergence of inadequate demand in 2009. The Treasury strategy was that if governments run deficits, and thereby expand demand, the economy has the capacity to fill this demand. The aim was to avoid Australia spiraling into depression.
That is what happened.The Rudd Government ran deficits to prevent unemployment rising by keeping people in work--eg., the construction industry.
The Liberals call this Keynesian economics government waste and incompetence. The government is the problem. They just accept that markets go up and down just like the rains come and go.