04 October 2011

Wait for the rest of your life

In this article, Amanda Vanstone is pretending to a wisdom she clearly lacks. She has somehow become less knowledgeable about how government works for the country and the economy than she did in Opposition.
Schools, research and health will have to wait till we pay off our debt.
We've been here before. When the debt gets paid off, people like Amanda Vanstone regard education and health as fripperies and call for tax cuts, which means that schools, research and health get cut no matter what.

In 1996, Amanda Vanstone became Education Minister in the newly elected Federal government. She came and spoke to a NSW Young Liberal thing which I attended. Moderate liberals of my generation regarded her as Good Old Mandy, whose Heart was in the Right Place and whose abrasiveness when riled was entertaining; she was one of the few moderates who'd get up on her hind legs and give as good as she got rather than smirk her way to irrelevance. Young Libs five, ten years younger than me who were at uni saw her as the psycho bitch who shredded the education budget and made it impossible for Liberal students to get elected to student organisations. The tension in that room was palpable and something of an ambush for the organisers, who started off sanguine and moved to alarm through the course of the night. It was like those eastern European leaders a few years earlier who had addressed crowds of sullen workers for years only to be suddenly confronted with boos and abuse.

Education and healthcare are major generators of internal demand and of our economic future, you dingbat! They are not optional extras.
When the global financial crisis hit, governments stepped into action to keep their economies turning over. That was a good thing.
It sure was. Strange that the Liberals opposed it though.
But the money did not come out of thin air. Governments went into more debt.
As opposed to what, higher taxes? If you don't support economic stimulus, have the guts to do what Turnbull and Abbott did and say that you oppose it no matter how it comes. The idea that economic stimulus should be "a good thing" but any measure to bring it about is 'bad' is a sorry attempt to box clever.
Many believe that our government spent far more than it needed to and spent it unwisely. We now pay $5 billion a year, or $20 billion in a four-year budget cycle, in interest alone. If we start to climb out of the problem and pay back the same each year in principal, it becomes $10 billion a year and $40 billion over the budget cycle. That's billions our economy is generating that we can't spend on medical research, schools and other things.
I doubt that every cent the Howard government spent could be accused of being carefully targeted, Amanda. The economy wouldn't have the ability to generate debt repayments if it had hit the wall, which it would have if it hadn't been fiscally stimulated in 2008.
But some governments still seem addicted to spending beyond their means ... In Europe, the problem with the PIGS (Portugal, Ireland, Greece and Spain) debt has been understood for some time.
Actually, that acronym is PIIGS - the other "I" stands for Italy, to which Vanstone was Australian Ambassador for some years. If she's going to give us some insight into the European financial crisis you'd think she'd be in a position to do so. Alternatively, if she's going to pull her punches - well, that would be a first for Amanda Vanstone, but basically the idea that she should be so strident about Greece or Portugal being "addicted to spending beyond their means" while skating around Italy - a much bigger economy and a much bigger problem, in both financial and regulatory terms.

The PIIGS countries had levied relatively low taxes. Each of those countries had established tax-avoidance mechanisms for people who had both great capacity to pay and much to be grateful to government for, gratitude for which was expressed not as tax but as political donations or bribes. To say that lower taxes are an answer to our current predicament is less valid than it was four years ago. When Vanstone does turn her attention to Italy, she fails to note that it has a populist conservative government with little in the way of core economic policy. Cheer up Australia, it could be worse.

Note a recurring theme of this article:
The problems facing the world economy are not new. They have just been getting more attention of late ... In Europe, the problem with the ... debt has been understood for some time ... I know firsthand how little Australians care for being told they are no longer getting something for nothing, or as cheaply as they did in the past.
This is designed to create the impression that Vanstone knows what she's talking about, which she doesn't. If they're so well understood, you'd hope that the responses would be smarter than they are. Vanstone might have copped some disappointment from those who'd done well, but what made people really angry was that she cut things that were important and productive. If you're going to make this narrative All About Amanda, however, then one angry person is the same as any other and they could all rack off.

Cuts are easier to take if there's a unifying narrative: from the PIIGS, and the Howard government, we learn that if there are just swingeing cuts then it just builds resentments which play out in all sorts of unexpected and unmanageable ways.
I was part of a government that did the hard yards of finding savings to put our budget back into the black after Labor last had its hand in the till. And then we paid off debt, and set up the Future Fund.
But you didn't restore funding to health or education, did you?
This is an idle exercise. It assumes that nobody who has never been a government minister is allowed to criticise the actions of government, or that any and all such examination of public issues must necessarily be vacuous (a wish list? Really?). I left out the "barbie and a good red" because it reinforces the idleness and indulgence Vanstone is trying to convey, and definitely not because Vanstone herself can pack away the red when she chose to do so.
... in the last budget, Treasurer Wayne Swan was asking to borrow another $50 billion. With that spending record, what will we do if GFC2 breaks out? What if Asia stumbles and we have a few years of lower commodity prices?
Luckily we had the stimulus in 2008 otherwise we'd be stuffed, eh Amanda?
We could all help by avoiding the indulgence shown by Europeans who keep demanding more.
In particular, billion-dollar bludges like this have to be knocked on the head. Education and health aren't bludges or indulgences, they're central to the present and future of the nation - in a way that, say, The Situation isn't.
The government should have the strength to restrict spending and the capacity to stop wasting money ... Swan recognises the need for tweaking.
To that end, the government must not be run by Tony Abbott, Andrew Robb, Barnaby Joyce and Joe Hockey, and must include Swan.
Also, it could get on with helping to boost productivity by recognising its industrial relations overkill.
Part of boosting productivity involves having the clowns who ran Foster's and Bluescope into the ground sent to Christmas Island, or somewhere other than in positions of power over Australian workplaces. If there are industrial relations changes to be made (see my article coming soon elsewhere on this), chances are Swan and his people will make a better fist of it than the clueless and risk-averse Liberals.

Vanstone started the article attempting to create a fug of certainty, and ends it with a shriek of a question. In between she wants to create a narrative of her own wisdom, and that of the Howard government, versus the stumblebum incumbents. It doesn't work and shows the government in a more favourable light than she might have intended. When you consider that there have been more developments in health and education in the past year (despite the budgetary position and the hung parliament) than there was in eleven years with Amanda looking on - it seems that Good Old Mandy's bark and bite are not what they were.

1 comment:

  1. I think what this demonstrates is what utter hacks the like of Vanstone were and are. Even now, years out of parliament, she still puts cheerleading for her party ahead of considered analysis.