September 25, 2012
The AFR's weekend editorial ---Federal election: finally, a fight is on----opens with the remark that the next federal election now appears to be contestable for the first time in quite some time. Many would disagree, but lets put that to one side for another time and use the editorial to examine what the AFR thinks the political context should be about.
The AFR consistently refers back to the clear rationalist policies Australia adopted after the mid-1980s currency and debt crisis and the bipartisan support for policy reform that helped open up the Australian economy in the 1980s and 1990s. It's advice, with respect to the present, is that:
This political struggle must hinge on a genuine contest of ideas and policies for managing the economy through a period of challenging structural change. But with strategists on both sides saying the economy will decide the next election, Labor and the Coalition need to do more to recognise and articulate the risks and opportunities ahead.Genuine policy debate has been eroded in recent years by what Business Council of Australia chief executive Jennifer Westacott this week described as political “short-termism” driven by ministerial staffers riding roughshod over the public service and the tactics of the 24-hour media cycle.
These are good substantive points. Policy matters because when then the mining boom ends, it leaves a weak, hollowed out economy. Hence the importance of how to address the Dutch disease.
However, the editorial immediately contradicts this policy position when it says that Abbott has been justified in calling Gillard out for breaking her promise not to introduce a carbon tax. That is politics not policy. The policy is about pricing carbon pollution, an emissions trading scheme, and shifting the economy from fossil fuel to renewable energy. The AFR simply ignores the policy.
The editorial says that the Australian Financial Review has been at the forefront of public debate about what needs to be done to make the economy more competitive and innovative as the mining boom moves into its next and more challenging stage. But there is no mention of the failures of energy market reform to incorporate the consideration of social and environmental policy issues, even though this has its roots in the 1990s framework of competition policy. Or the gold plating of electricity networks. Or the "Dutch disease" which occurs when a resource boom pushes the dollar up, hurting other industries which can’t compete internationally.
What then are the policies that the AFR reckons need to be in place to ensure economic growth post the mining boom? The AFR editorial says:
Our nation’s first priority should be to tackle the chronic underlying problems afflicting the federal budget, caused by governments on both sides squandering the wealth created by the biggest resources boom in more than a century. Labor seems to see just about everything through an equity prism framed by a redistributive ideology and its political opportunism. But now is not the time to kick off unfunded welfare schemes such as the costly National Disability Insurance Scheme and national dental care program, unless we have a clear handle on how to pay for them over the next decade.
Nothing about shifting to renewable energy, investing in digital infrastructure, or the information economy there. It's all about the politics of austerity.
There is a growing disquiet about disquiet about the growing gap between revenue and spending pledges. There is a structural problem in the commonwealth's revenue base in that that tax revenue isn't going to bounce back as they once did. So why highlight welfare reform and ignore the subsidies to the fossil fuel industry and the big miners?
The AFR's concern is with the high cost and low productivity economy:
The other key issue raised by the companies trying to generate wealth for Australia is our nation’s lacklustre productivity. Tackling this challenge means we have to recognise our industrial relations system is imposing high labour costs at a time when lower-cost mining competitors are increasing output to meet Chinese demand.
So we need lower wages and working conditions. There is nothing about investing in skills and education to improve productivity in a high tech economy.
The AFR reckons that it is focusing squarely on the quality of debate, analysis and advice that informs decision-making about public policy issues that are of vital importance to Australia’s prosperity, competitiveness and the living standards of its citizens. However, the issues it highlights are simply those of big business opposed to reform. It is about budget deficits, increasing and broadening the GST and reducing the power of unions whilst ignoring the other issues.