If ad nauseam repetition is a trademark of truth, then Kevin Rudd saved us from the ravages of economic recession in 2009. He told us so again at the National Press Club last week; and not for the last time, we can be absolutely sure about that.
“As you know, here in Australia, we deployed a national economic stimulus strategy, timely targeted and temporary, which helped keep Australia out of recession, kept the economy growing, and kept unemployment with a five in front of it – one of the lowest levels in the world. And we did so with lower levels of debt and deficit than practically all the major advanced economies in the world.”
Unfortunately for the United States and Europe, their stimulus strategies were so ill-conceived that they failed to forestall recessions or keep deficits and debt in check. If only they’d had Rudd at the reins.
The key was obviously the clever dispersion of money. Cash handouts, pink batts, school halls, public housing, and road building and repair. If only the rest of the world at the time had been let in on this novel way of stimulating economies all would have been well. In fact, I have been reliably informed through my economics network that just after the recent conga line of diplomats paid homage to Mr Rudd, the world’s top economic advisers lined up in supplicatory fashion to beg for his secret economic recipe lest another GFC-type event befall their economies.
But enough of this thinly-veiled sarcasm. When, just when, is the Opposition going to get its act together and (repeatedly) demolish this piece of Rudd arrant economic nonsense whenever it pokes up its deceitful and deceptive head? Let me help with some brief talking points, which could be further simplified for Mr Abbott’s one-liners and for Mr Hockey’s, for that matter, if their retinue of advisers have the wit.
First our stimulus was no different in size or character (pink batts aside) from those implemented overseas. This makes it inexplicable, and most unlikely, that ours worked and theirs didn’t. Has everybody got that, even Keynesian economic dimwits?
Second, our continued relative economic health in the face of the GFC was attributable to three factors. One was the beneficial effect of Chinese growth on our exports and terms of trade. Another was the much greater scope the Reserve Bank had to reduce interest rates than did its counterparts overseas – where interest rates were already much lower than ours. A third was the resilience of our banks compared with the parlous condition of banks in the US and in Europe. A banking system in trouble adversely affects the whole economy as lending contracts.
As an aside, our banks were in good shape not because of wiser-than-average regulators or because they employed more skilful and prudent managers. Rather, they were lucky. They were in the right place at the right time. Their focus was on supporting the resources boom by borrowing from overseas, not in deploying surplus assets in dodgy triple-A rated US mortgage-backed securities. In other circumstances, they would have broken their legs to get a piece of that action. Attributing their resilience to regulation and sensible banking is a prime example of mythology becoming folklore when repeated often enough.
Third, the easy one, our deficits and debt are relatively low because Howard and Costello left Australia with a budget in surplus and no debt. What an amazing result in this era of unrestrained demands on governments to solve all social ills. It is all very well to say that revenue had been growing strongly, so it has under Rudd/Gillard/Rudd. The trick is not to spend it all and then some more. The fact that the government claims credit for Australia’s still relatively small indebtedness, having presided over deficit after deficit, and with nary a surplus in sight, is beyond shameless audacity.
In making this claim over and over again, Rudd – and Gillard and Swan before him – must effectively be inured to any kind of critical self-reflection, to pangs of conscience, or to the intrusion of intelligent inquiry. They are quite simply prepared to say anything, however patently absurd, to anyone with a vote. This should be easy meat for an Opposition which has its act together.
When you have the same absurd economic claims being repeatedly made by your opponents you need to counter them each and every time with a considered and standard and well-practised response. That is not too hard to do in this case. Yet often the response is variable, is missing or tepid, or consists of generic rather than focussed and informed disparagement. It is not too late.
Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics