It’s the economy, Stupid: an August 2008 adaptation

Tuesday 5 August 2008 - Filed under Life Outside Work

Samantha: Wayne Swan, is the slowing economy now out of your control? Is your government in control of the economy?

Wayne: Well, the government has built a very strong surplus, to take pressure off inflation and off interest rates. We’ve put in place a very big relief package for families, a $55b working families’ relief package. We have tax cuts in the system for people who are impacted on by rising prices and on top of that there are positives in the Australian economy [that] should keep things in perspective.

Samantha: The Australian Chamber of Commerce and Industry has found business confidence is now at its lowest level since 1994, there are warnings of a decline in sales, profits, and job growth, interest rates are up, housing prices are falling, retail sales have plunged. Can you honestly say that your May Budget had nothing to do with this?

Wayne: I can certainly say that our May Budget has struck the right balance between fighting inflation on the one hand and investing in the future on the other.

Samantha: But did it slow the economy too much?

Wayne: [We are] building a very strong surplus to act as a buffer against the international uncertainty. But Sam, we have perhaps the most difficult global conditions in over 25 years. You can see that on stock markets around the world, business and consumer confidence around the world have taken a hit on the back of the global financial market turbulence, and the oil shock. All of those factors are impacting Australia, and we are not immune from that.

Samantha: Are we heading for a recession?

Wayne: I think that sort of talk is absolutely unhelpful.

Samantha: Well, is it a possibility?

Wayne: I think it is utterly irresponsible to speculate about that. And I certainly won’t be doing that.

Samantha: Does the thought keep you awake at night?

Wayne: [Chuckles] Sam, I’m not speculating in that way. I’ve said I’d regard it as particularly unhelpful.

Samantha: Given the stark economic reality the government is facing in just 8 months into the job, does Peter Costello, the former Treasurer, pose a political risk to you and your government if he was potentially to take over as the nation’s opposition leader?

Wayne: Sam, let me assure you the last person I’m thinking about at the moment in these circumstances is Peter Costello.

This morning’s ABC radio interview with the Federal Treasurer Wayne Swan nicely sums up what we all need to know.

Government-bashing is taking place all around the world. What’s particularly notable is that the current global “conditions” transcend all political beliefs. Regardless of left wing (as in Australia) or right wing (as in Korea), governments around the world, especially the ones that have freshly come into power, are in bad shape. Ones who are facing an election in the coming months are also losing popularity and confidence.

Let me continue on with my gross generalisation for a minute: I don’t think it’s a case of the new governments miserably failing to deliver on their rosy election promises. I don’t think it’s a case of the incumbent governments lacking policy and strategy, either. Political stances aside, these global “conditions” are just too mighty powerful and relentless for any democratic government to act upon. When Prime Minister Kevin Rudd said that the government can do nothing more to help, he was entirely open and boldly honest.

It’s nothing short of naive to simply blame whomever is in power right now or to believe that the opposition when they take over will somehow shoot the silver bullet to turn things around and halve petrol and grocery prices. Look, everybody around the world is screwing up whether or not they’ve said the R-word.

It’s not politics. It’s the “global” economy, Stupid.

… I am sure that’s what the two leaders will wholeheartedly agree upon when the Australian Prime Minister meets the South Korean President this weekend after they attend the Olympics.

As for the Australian federal opposition wanting Peter Costello to come back to the top job so he can fix things up and re-create the 12 years of economic glory, I’d say that’s probably a good idea, partly because I’m personally a fan of Mr Costello. On one condition though: give him a 12-year term to work on it.

2008-08-05  »  JK