November 19, 2012
Has anyone noticed how the Australian Financial Review has certainly gone downhill in the quality of its commentary on public policy as it increasingly becomes just a mouthpiece for big business in Australia? The tone is increasingly one of resentment and open hostility to Gillard Labor's economic agenda, including investments in skills, innovation and clean energy, infrastructure and digital technology, tax reform and regulatory reforms.
The AFR's weekend editorial ---Gillard and her wasted opportunities--- states that the central tenet of Gillard’s speech annual Business Council of Australia dinner was that the government is the driving force of the economy. It comments that:
This betrays how Labor has its priorities all mixed up. There is no recognition of the centrality of business in the economy or of the role of the profit motive and investment in driving job and wealth creation. John Howard is right to say the Gillard government is tone deaf to the legitimate concerns of business. It does not acknowledge that its industrial relations, tax and regulatory policies have added to costs and risk, all of which discourage business investment.
That's fair enough as far as it goes since there is a legitimate debate about the roles, and size of, the government and the market in fostering economic growth and what kind of economic growth is best.
So how does the AFR argue its case for the market and smaller government? The editorial goes on to cast doubt on whether Gillard Labor will deliver its projected $1.1 billion surplus, without saying why such a budget surplus is significant; and it adds that the Gillard government rarely, if ever, acknowledges the extent to which China’s demand for our resources has aided our economy under their watch and helped us through the GFC.
I would have thought that the Gillard Government places too great an emphasis on the resource boom at the expense of facilitating the shift to a high skilled digital/ knowledge economy. The sniping at Keynesian economics ---government investment to prevent a deep recession--- is developed along the following lines
If there are grave doubts about the government’s short-term fiscal outlook, the medium term outlook is murky.The Gillard government has made marginal progress in tackling the culture of entitlement that is stoking the structural deficit, but at the same time it has made a number of worthy, expensive and unfunded promises, for example, in its disability insurance scheme. If Ms Gillard wants to avoid the complacency that she talked about in her BCA speech, her government has some obvious targets. She should make it clear it will not fund any new initiatives until it has devised a serious medium-term plan to deliver substantial budget savings to get it out of structural deficit. It should conduct a full blooded review of the role of government, especially in health and education where more private sector involvement should be encouraged.
The reference here is to government handouts and to big-spending government programs. There is no acknowledgment that the Liberal Party, the party of individual initiative, freedom and responsibility, deregulated markets and small government is opposed to reducing middle class welfare, and that it consistently blocks any attempt to reduce the subsidies for private health insurance. There is no mention that Big Business could not find ways to cut its subsidies to reduce company tax.
What we get instead is the line that Gillard is relying on superficial attacks on the Opposition Leader (political spin) to raise Labor’s electoral standing, rather than engaging in reform---tax, infrastructure, and workforce deregulation. The inference? Gillard Labor fails to construct a credible policy agenda to deal with the opportunities and disciplines of the next phase of Australia’s resources boom.
The real neo-liberal agenda --wind back the welfare state and start to privatize health and education--- is then just slipped in. No argument is offered why this is good policy.