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September 14, 2012
The current political fight between centre-left and centre-right is between two different visions of a post-mining boom Australia, and between two sharply discrepant views on the role of government. The writing is on the wall: Australians can no longer rely on mining alone to sustain economic prosperity.
David Rowe
So were to now? More technocratic progressivism? A greater emphasis on tyhe means of achieving a more equal society from the ALP? More debates over the market versus state? More in the way an individualistic and entrepreneurial interpretation of freedom for Abbott's particular brand of Conservatism?
One issue is stark. Australia's failure to improve productivity sufficiently in recent years can be attributed in large measure to a lack of skills that would enable it to make the shift to high tech manufacturing. Instead we have calls to take the tough decisions required to deal with our high costs.
The AFR editorial says:
The Gillard government mouths this message with talk of productivity gains, but its heart and its headspace remain trapped in the politics of redistribution....Rather than making our industrial relations system more flexible and our tax system less complex, Labor is re-regulating workplaces and has imposed on business a poorly designed mining tax and an ill-conceived carbon tax. And rather than reining in spending to address the budget’s gaping structural deficit, Labor has committed itself to new spending that this newspaper estimates will cost about $120 billion over the rest of the decade.
The AFR's proposal to overcome the slowdown in productivity growth is the federal government needing to get its fiscal house in order; dumping the pricing of carbon; improving Australia's competitiveness by reducing the costs of doing business; rejecting the politics of redistribution; and for the federal government to fall in line with the what the big miners want. After all, this is an industry that has the potential to be globally competitive and wealth-creating for decades to come.
There is nothing here about Australia currently experiencing a classic case of ‘Dutch Disease' in that the mining boom results in the value of the currency going up, manufacturing becomes less competitive, the country losing quite a few industries to lower wage countries, people became more concerned and spend less. With the inevitable downturn after the mining boom there is here was a lot of political pressure on the need for massive spending cuts.
It is fascinating that the AFR makes no mention of using the wealth from the mining boom to ensure that significant part of the NBN is in place to create a sufficient mass to start building new business models on top of this infrastructure. This would create new economic opportunities in the emerging digital economy. Maybe the AFR is in the dark about the benefits of the NBN?
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Isobel Redman, the leader of the SA Liberal opposition, has let the cat out of the bag---the cuts to the Public Service are in the order of 25,000---one quarter of the public service.