Have we escaped by the skin of our teeth?
Churchill said that that democracy is the worst form of government except for all the others.
It’s no accident he put it that way because democracy does some funny things. It nearly did a funny thing again. Courtesy of Victoria, it not only nearly returned a government which has been inept but, worse, one with an economic plan. The Melbourne electorate particularly lost the plot by electing a Green. Presumably in Melbourne they are sanguine about Australia becoming impoverished.
Of course we still don’t know which way the independents will fall. What we do know is that a Coalition victory, with the help of independents, would allow Australia to escape Gillard’s economic plan.
Whenever someone of the left talks about an economic plan, we should be afraid. Let’s remind ourselves of three of its components.
The first is the mining tax. It seemed clear that the three companies that ‘agreed’ with an extra $10.5 billion being extracted from the mining industry were not the companies paying the tax. I was so confident of this I hung onto my BHP shares. The mid-sized miners with large borrowing would be caught by the tax. Actually, when you think about it, this was a brilliant ploy by Gillard, Swan and Ferguson. They could have used use it as a model for imposing additional tax on any industry. Get some large companies in a room. Have them agree that others in their industry should pay more tax. Then announce with considerable fanfare that the industry in question has agreed, is even eager, to pay more tax.
The tax would erode Australia’s competitive advantage in attracting mining investment. Why contemplate doing that? Just listen to Bob Brown for a clue from the Left. He is always in the business of sharing wealth around never in the business of what can be done to help to make it.
The second is the carbon tax or carbon price; it comes to the same thing. Even with a citizens’ assembly slowing things down, it seems likely that the Labor and Greens coalition would introduce some kind of carbon emissions price or tax in the next two years.
This would increase the price of energy and make us poorer. It would result in substantial income redistribution from those who save to those who don’t (poorer households who would be protected from the effect of energy price rises) and lower our already low saving rate. It would be disruptive in penalising businesses that use relatively large amounts of energy compared with those that don’t. It would have absolutely no impact on saving the barrier reef or polar bears.
The third is the NBN. This would result in an enormous amount of public sector borrowing and debt, albeit disguised as debt of the NBN Co Ltd. Its cost would far exceed $43billion. What major public sector projects have ever been completed on budget? It would never pass a commercial test and attract private investment. It would increase interest rates and crowd out more productive private investment, including investment on more effective and efficient ways to deliver online information as technology advances.
It is a very bad idea; lauded throughout most of the internet-related industries and most of the media because they have a vested interest. Unfortunately it has been an easy sell to some voters. A friend of mine when I asked how he could support the government spending so much money without a cost benefit study, replied that the NBN’s benefits were obvious. What do you say to this? History is replete with foolhardy government investments that were popular at the time. The problem with government investment is that governments don’t go out of business, if the investment goes bad. That’s why rigorous processes have to be applied; but apparently not in this case because the benefits are obvious.
Abbott was accused of not having an economic plan. If only we had governments who promised to do nothing except undo foolhardy decisions of their predecessors we would all be better off. Hopefully Abbott, if he becomes prime minister, will give us competent government which allows the private sector maximum rein to make us prosperous.