Not since Whitlam has a government been so profligate. The latest, a massive $42 billion package with a $200 billion line of credit, is demonstrably the worst thing a government could do. It is elementary that it will do little to counter the recession, but every cent will have to be repaid – not by the Rudd government, but by the Australian people.
The governments’ attempt to ram its $42 billion package through with a $200 billion line of credit has breathed new life into the Opposition.
Those commentators who saw Malcolm Turnbull’s stand as electoral suicide must have a very low opinion of the electorate. With billions already shovelled into the car industry, the States, handouts, and “Ruddbank”, we are seeing profligacy at a level not seen since the Whitlam government.
Australians know from the bitter experience of the Whitlam, Keating and Kirner years that they will have to pay. Taxes, possibly including the GST, will go up. There’ll be new taxes, perhaps a revival of death duties. While most of our assets have been sold, the fear is they’ll also resort to the printing presses. That will unleash inflation, the thief who comes by night to steal your savings.
“If in the last election, Mr Rudd had been asked how he would address the economic tsunami that Peter Costello forecast was on its way, and if in reply he said well, he’d run up a cumulative budget debt of 118 billion dollars by the year 2011, well I venture to say he wouldn’t have won a seat,” declared Alan Jones. No wonder Rudd refuses to appear on that programme. We should not forget that Rudd scoffed at Costello and spent months talking about inflation.
It’s not as if Kevin Rudd – or Wayne Swan, Lindsay Tanner or Julia Gillard – have any demonstrated competence in financial matters. Nor on their record, do the Treasury or the Reserve Bank. The bank guarantee disaster and their myopic obsession with inflation demonstrate that.
The government and its barrackers in the media were chuffed when it was revealed that retail sales increased by 3.8% in December. This they say justified spending over one third of the surplus, an extraordinary $8.7 billion. Now retail sales did rise by about $700 million. But since when has it been the job of government to top up retail sales? Does this mean that every quarter or every month, the government should take money from those who produce it, so others can spend some of it on such things as imported TV sets and air conditioners?
A high school economics student would understand why this is bad policy. The government should aim to multiply every dollar spent through a resulting increase in the GDP. That will do more than just “support” jobs; it will create them. Michael Knox says the multiplier effect of the Rudd package will be only 0. 3 while some of Obama’s will reach 1.7, as no doubt the French plan will.
If instead of handouts and social infrastructure to bail out delinquent state governments, the money were spent on economic infrastructure the multiplier would rise remarkably. Common sense would tell you that building dams, harvesting water, expanding our ports, improving the railways, building coal fired and hydro electricity stations will encourage investment and therefore new jobs.
The role of government, state and federal, is not to panic and throw our hard earned money down the drain. It should do what business is doing – exercise restraint. They should for example get rid of bureaucratic monstrosities such as the useless area health services in New South Wales.
Above all it should demonstrate judgement and common sense. The Federal government must abandon its plan to impose the totally useless carbon tax, and to make changes to the industrial law which will only discourage employment. Taxes should be reduced and investment incentives increased. The law should encourage competition, not oligopoly as in the retail industry.
And above all, spending should be on economic infrastructure, not on handouts or on social infrastructure which the states have already been well funded to provide.