As it should be worn...

Ingsoc

UNIONS have hatched a controversial plan to turn around dwindling membership - by targeting children as young as 14 in their classrooms.

The state's peak union body Unions NSW has hired two young activists to go into public schools and lecture students on "industrial relations" as part of its UnionStart program.

The Daily Telegraph reports the lectures on workers' rights and the role of unions will be built into the curriculum in subjects such as business studies, careers education, vocational work placements and the School to Work program.

Teens are also being lured to join UnionStart for a $10-a-month fee with incentives including discounted tickets to sports events and the prospect of better-paid jobs.

To me this is truly terrifying, to build union dogma into the cirriculum of 14 year olds smacks of the modern day brainwashing in North Korea or the excesses of the Soviet era.

Is the NSW government now so corrupt that it will allow its masters in the unions the power to indoctrinate and recruit impressionable youngsters in its supposedly apolitical education system?

Or is the issue of union power in NSW now apolitical along with that of global warming, multiculturalism and black armband history?

The muppets are at it again.

In my two most recent posts I've criticised the government for constantly talking the economy down. Well the negative nancy pants on the treasury benches are at it again. From the Australian: Unemployment will rise this year, Lindsay Tanner warns

Minister Lindsay Tanner said: "We're expecting unemployment to get worse during the course of this year." Mr Tanner's remarks were echoed by Treasurer Wayne Swan, who said: "There's still a very big employment challenge out there."

Enough all ready! God almighty, we all know what the forecasts say, but that doesn't make them a foregone conclusion. Indeed when the principal economic ministers of the country say things like this all it does is increase the chance that their utterances become self-fulfilling prophesy.

Building consumer confidence is the key to domestic recovery. Australia is in a very different position to other jurisdictions like Iceland, the US and Britain were their financial systems have essentially melted down. Australia's fundamental financial frameworks are sound. Our equities markets have taken a hit, but that was only to be expected given the global nature of equities markets. But essentially our domestic enconomy is only suffering from a lack of confidence, and much of that lack in confidence isn't helped by having the Prime Minister, Treasurer and Minister for Finance continuously coming out and telling us how terrible everything is.

7000 words the Monthly should have published instead of Kevin Rudd. Part 2

So what should the Government have done?

In my last instalment I discussed how the Muppets in the Rudd Government have mismanaged the Australian economy from the day they were elected. With the aid of some trusty ABS stats, a memory that lasts longer than a media cycle and some direct quotations straight from the Treasurer and Prime Minister’s mouths I outlined eighteen months of economic buffoonery.

To recap: When the economy was starting to sour, the Treasurer and Prime Minister went on an inflation busting crusade that drove up interest rates and hastened the economic slow down. Then when it finally dawned on them that there was something wrong they started their panic-merchant routine, frightening the already frightened punters which resulted in the most spectacular collapse in consumer confidence. And finally, to add insult to injury, I outlined some of the Government’s expensive and pointless debt fuelled binges, a binge that will undermine the recovery and indebt our children’s generation and probably their children’s generation as well.

But I have a saying that I constantly try to hold true to. “Don’t whinge unless you’ve got a better idea yourself”.

In the second instalment of my political-economic analysis I make some suggestions as to how the Government should have reacted, and what they should do now.

What the Government should have done.

We need to look at this problem from three different angles. Firstly, what did the Government say they were doing, and what should they have said instead? Secondly, what did the Government do, and what should it have done instead? And thirdly, why doesn’t this Government actually do what they say?

Let me deal with the last question first.

Why does this Government say one thing, then do another?

A recurring theme of this Government is its seemingly amazing ability to say one thing and then do something entirely different.

Example 1: 18 December 2007, the Treasurer:

Well there's no doubt that – as I've said yesterday – that we in this country in terms of government need a new era of fiscal discipline. Yesterday and last week I talked about the inflationary challenge. And certainly what we must do as a Government is put maximum downward pressure on inflation and maximum downwards pressure on interest rates in the long-term. That's why we need a new era of fiscal discipline.

And then on 21 January 2008:

Well, we've said that we will aim for a surplus of at least 1.5 per cent (of GDP) in 08/09.

The outcome: a budget deficit of $32.9 billion dollars and a new era of fiscal recklessness.

Example 2: 10 May 2009, the Treasurer:

that's why there will be in this Budget tough decisions, tough decisions which will be unpopular, but absolutely essential to return the budget to surplus over time.

I think its pretty safe to say that the 2009 Budget went down with barely a whimper. The “unpopular” decisions won’t take effect for a decade, the spending cuts were measley and focussed predominately on means testing medical benefits for high earners. On the other side of the ledger, massive new spending on poorly costed infrastructure with doubtful cost-benefits and cash handouts to all and sundry.

There are countless other examples of this Government saying one thing and doing another. 12 December 2007, The Prime Minister:

…we believe that climate change represents one of the greatest moral, economic and environmental challenges of our age.
Australia now stands ready to assume its responsibility in responding to this challenge – both at home and in the complex negotiations which lie ahead across the community of nations.

The proposed emissions trading scheme has been lambasted by all sides of politics for being meaningless. The “greatest moral, economic and environmental challenge of our age” gets a couple of press releases and some half baked legislation that won’t even scratch the carbon emissions targets that Australia has committed to internationally.

Buy why? Why is it that this Government fails to do what it says it will do. I think the answer lies, ultimately, in the office of the Prime Minister.

It is fairly well known that the Prime Minister is a micro manager. It’s also well known that he has a temper and he gets his own way or he chucks a tanty. It is also well known that he works ridiculously long hours and expects the same from his staff.

I’ve worked with, and for, people like this before, and I recognise the typology. These traits are all symptoms of “impostor syndrome”. This typology has been explored in countless psychological articles and books, so I won’t go into too much detail. In short, “impostors” are usually high performing individuals who, in their heart of hearts, believe they have achieved greatness through fraud, that they’d sufficiently “faked it” to make it and their greatest fear is that they will be exposed as the fraud that they feel themselves to be.

Impostors therefore do everything they can to reinforce and remind everyone of their status. They scream at people for making the smallest mistakes, say for example because a stewardess didn’t have a chicken sandwich on board an airplane, or because a hair dryer couldn’t be produced for a photo op. Impostors often work exceptionally long hours and demand the same from their staff, they do so for appearances to remind everyone around them that they are extremely important and busy. During these long hours they don’t necessarily achieve anything - remember its not about results, its about appearances. They’ll review and return drafts of documents time and time again making the smallest stylistic changes. They turn up to meetings late, often very late, or make people wait inordinate periods of time to keep an appointment (the Chief of the Defence Forces for example). Again this behaviour reminds everyone around them that the impostor is a very important person.

But most importantly, because they don’t trust their own judgement (remember they got their job by faking it) they will almost always avoid actually making a tough decision. Give an impostor a choice between making a tough decision, or focussing on minutiae, they’ll choose minutiae every time.

For example, the Prime Minister’s really good at reacting to issues, usually by announcing a review or a working group, or by referring a matter on to COAG. But when has he actually made a tough decision? Even his reaction to the GFC has involved a lot of talking, flying overseas, and handing out free money (which was never going to be unpopular), but when its come to difficult decisions necessary to ensure the medium to long term economic success of our Nation, the PM squibs.

Where were the billions of dollars in cuts to Australia’s much maligned “middle class welfare”?

Or taxation reform generally? It’s off in a “review”.

Our “ailing” public health system? Review pending.

Cutting “red-tape” for businesses? It’s been COAGed, to use the phrase that indicates an issue has been sent off to be discussed ad-nauseum for years before a small, watered-down, symbolic gesture is grudgingly made by the States.

Housing affordability, a huge issue during the election campaign: COAGed.

Reforming Aged Care funding? COAGed.

Japanese whaling, again a feature of the campaign, we were promised the Government would pursue the Japanese through international law. Forgotten.

2020 Summit – does anyone remember anything concrete that’s come out of that?

Fuelwatch. Lying in the bottom drawer of the PM’s office.

Underlying all of these examples is one recurring theme. When given the choice between making a tough decision or focussing on minutiae, the PM focuses on minutiae. The only decision that is ever made in his office is the decision not to make a decision. Hence the number of important issues being “reviewed” or COAGed.

Despite the fact that the PM can’t make a decision to save his life, Minister’s still need to sound like their in control and doing something. And herein lies the reason for why this government says one thing and does another. Minister’s under pressure to respond to the media cobble together some action focussed rhetoric making it sound like they are doing their job.

When the media asked about the budget (either 08 or 09, the rhetoric and results were similar), Wayne Swan had no choice but to stick with the lines agreed to during the election campaign. “The ALP is economically conservative, economic conservatives are fiscally disciplined, fiscal discipline means spending cuts, spending cuts are unpopular, the budget will contain unpopular measures.”

Meanwhile the PM spends his time berating his staff for using green coloured briefing cover sheet instead of the pink ones that he distinctly remembered telling everyone to use, AND is that a staple in the left hand corner? It’s supposed to be on the RIGHT! The advisor in question daren’t mention that CBRC’s recommendations for swingeing budget cuts are underneath the guilty green cover sheet, which of course will now have to be replaced with a pink sheet and go back to the bottom of the four foot pile of briefs awaiting procrastination on the PM’s desk. Decision effectively avoided – well done Kevvie!

I must say that this is all pure supposition. Its based solely on my own personal knowledge of the man (and men like him) and the various rumours that do the rounds within the ranks of Labor and Coalition advisors. I may in fact be completely wrong and Rudd is actually a bloody genius with an inhuman work ethic. But I doubt it.

What should the Government have said, or be saying now?

I’ll do a compare and contrast.

Scenario 1: Due to dodgy deals and poor prudential regulation, Australia’s largest trading partners have undergone a financial meltdown of epic proportions. The Treasurer, Peter Costello, is asked about impacts on Australia, 16 April 1998:

Well, in Australia the growth at the moment is up around four, it’s a little under probably 3 and a half to 4, somewhere around there. In the next financial
year we think it’ll be probably closer down towards, 3, than 4. But these are still quite strong growth rates. It’s on a low inflation base. We’ve got a very strong fiscal position. We’ll be coming back into a surplus in the next financial year. And although trade with Asia will take a little bit off Australian growth, the fact of the matter is that these are strong prospects. They would have been better still, had it not been for the Asian downturn. But by world terms, very strong prospects in Australia with a lot of opportunities, I think, coming out of the Asian situation. Australia is now looking very much like a good place to do business as a regional headquarters. The financial system has stood up remarkably well. It’s strongly regulated, hasn’t skipped a beat on any of the financial or stock markets. And although we, of course, would prefer a stronger position in Asia, the outcome of all of this will have some positive as well as some downward effects on the Australian economy.

I started highlighting the positive comments and gave up because almost the entire quote was bolded.

Scenario 2: Due to dodgy deals and poor prudential regulation, one of Australia’s largest trading partners has undergone a financial meltdown of epic proportions. The Treasurer, Wayne Swan, is asked about its impacts on the Federal budget, 1 May 2009:

Well, certainly there's been a revenue write-down because of the global recession between the Budget last year and February of about $115 billion. That's an enormous amount of money. It's equivalent to about four years of family payments and childcare benefits, and because of slowing growth and because the global recession has got even worse, there will be further revenue write-downs in the Budget. They are very substantial, probably the largest in living memory. But we'll see those on Budget night.

And then:

…Well, we have a very savage global recession which is having a brutal impact on growth globally and domestically. It certainly is going to impact on employment and it is certainly going to impact on government revenues. There's no doubt, sadly, that there will be an impact on unemployment as a result of the global recession but those forecasts will be there on Budget night.

That’s the difference right there. One treasurer saw the silver lining, he talked the economy up, and by doing so he ameliorated the worst effects of the Asian Financial Crisis by bolstering domestic consumer confidence.

He didn’t preach doom, he saw the opportunities for Australia to become a regional headquarters for Asian Business (and in following months and years firms like Virgin and Boeing all relocated their Asian Headquarters to Australia), but he didn’t do so recklessly. He identified the challenges and did so constructively and positively.

Wayne Swan just makes excuses. Nothing’s his fault, its all the fault of the GFC, his reckless inflation pogrom had nothing to do with the accelerated slow down. His luxury car tax had nothing to do with plummeting car sales. His bank guarantee had nothing to do with the drying up of non-bank liquidity in this country. He’s just a victim.

What the Government should have done from the very beginning was to talk the Australian economy up. You’re starting to hear some of that from the PM, and a little from the Treasurer, thank goodness. I hope they keep it up.

What should the Government have done and be doing now?

A temporary one-off cut in income tax would have provided more “stimulus” than Rudd’s spend-a-thon and it would have cost less to administer resulting in lower borrowings over the forward estimates.

Similarly a cut in company tax would have bolstered corporate bottom lines, leading to lesser pressure for executives to find cost savings throughout their organisations. Fewer cost savings means fewer job losses. Higher profits mean higher returns for shareholders and would assist in restoring confidence on equities markets (and thus credit liquidity).

A payroll tax holiday. It would have taken a bit of work to get the States to come to the table, but a pay roll tax holiday would not only shore up existing jobs, but also encourage employers who have as yet avoided the recession to put on more staff. Higher employment means more money floating through the economy, means higher demand, means higher output, means higher growth, means higher consumer confidence and the cycle goes around and around.

Start talking up the economy. I’ve mentioned this above, but it bears repeating because it is simply so important. Rudd and Swan have managed to do everything wrong and at the wrong time. When they should have been speeding the economy up, they were talking it down. When they should be out there trying to bolster consumer confidence, they were warning of catastrophe and economic holocaust. When they talked up their economic credentials and ability to run a surplus budget they came in $32.9 billion in the hole (it’s useful to note that this government has never run a surplus budget, they talked about one at budget time but when the number crunchers closed off the books they fell $40 billion short of their budgeted figures). When they warned of a “horror budget” they played around at the edges with changes to the age pension that won’t take effect until the next term of Government.

Dump the bank guarantee. Ultimately the global financial crisis, with its roots in the sub-prime crisis in the United States can be sheeted home to the fact that Freddie Mac and Fanny Mae were both government backed and guaranteed. That’s why all these “dodgy derivatives” were able to be rated as investment grade securities, because ultimately the U.S. Government had said it would bail out any default. And now they are to the tune of trillions of tax payers dollars.

So one wonders why you try to fix a problem caused by government intervention in the securities market by further intervening in the financial sector?

Wind up the guarantee, got it alone if necessary. We’ve all been told repeatedly that Australia’s financial sector is stronger than elsewhere in the world, so I am sure our banking sector could cope with an orderly withdrawal of the bank guarantee.

Alternatively what will happen is what happens everywhere that government’s intervene in markets. Distortion will occur and eventually collapse. For the same reason RuddBank should be consigned to the dust bin of history.

Create incentives for fleeing global capital to find a home in Australia. The world’s biggest banks and financial institutions have been rocked to the foundations. Except in Australia. Partly this is due to our robust prudential regulation, partly because our finance sector has always been a little more conservative than other countries. Nevertheless there is a lot of scared global capital out there looking for a safe home.

Build it and they will come.


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And that ladies and gentlemen concludes my rant until next time I hear or see those two buffoons on the Television again.