Robbed of common sense

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From BS comes more  surplus obsession from the opposition:

Claims the Labor federal government saved Australia from the negative effects of the global financial crisis (GFC) are a myth, according to the opposition.

Opposition finance spokesman Andrew Robb also disputes the government’s argument that the resulting levels of debt were due to its efforts to counter the 2008-2009 GFC, which lead many industrialised economies into recession.

“I would assert that both the government’s profligate and wasteful response to the GFC, and its failure to take seriously its rapidly accelerating public debt levels, are creating very real vulnerabilities,” Mr Robb is set to tell a business lunch.

…Mr Robb said for too long Labor had used the GFC to justify the debt increase.

It had “grossly overreacted” to the crisis when it unleashed $87 billion worth of economic stimulus.

“The size and growth of public debt is Labor’s Achilles heel and perhaps Australia’s greatest vulnerability,” Mr Robb said.

Yes, Labor overdid the stimulus. It should not have installed a first home buyers grant which in part caused a massive blow-off in private debt and house prices, which is what Robb should be talking about, private debt as a risk. Ruddbank was monstrosity and the RMBS purchases were also ridiculous.

You might argue that the school hall stuff was a bit over the top too but in the final analysis any waste in such a circumstance is hardly the issue. It’s the point. You could also argue the stimulus should have been wound down more quickly when the terms of trade rebounded, but growth throughout the period was lackluster so to me that’s splitting hairs.

Spend and spend quickly is what stimulus is about and and on the whole it was a text book program from Labor and the Treasury.

If Robb’s mindless adherence to accounting lines in the sand is what we can expect next year as we go over the mining investment cliff then recession is a genuinely rising risk.

44 Responses to “ “Robbed of common sense”

  1. Explorer says:

    Robb ought focus on the real debt problem which is private debt for a significant proportion of households. Private debt grew very fast and large during the Howard Costello years. Private debt absolutely swamps Federal Government debt, about 12 times the size from memory.

    I am not sure that the “massive blow off” was massive in the context of percentage terms compared to the growth during the Howard Costello years.

    Do you know the percentages per annum of the “blow off” period compared to the period of Howard’s Prime Ministership by any chance?

  2. Gunnamatta says:

    Well we are about 22 weeks from having this geezer in a Ministry…..

    and I wouldnt put it beyond the boys to respond to what they saw as a gross over reaction from the ALParatchiks with a gross over reaction of their own.

    ….Though one does hope that the ten watts comes on somewhere along the line and they opt for a side order of pragmatism with their ideology main course.

    • That’s the hope. It will be amusing in a dark way as business clamours for stimulus.

    • Ralph says:

      Abbott is all about pragmatism and blowing with the prevailing breeze. There ain’t much ideology there. I think we have (had) in Ted Baillieu an excellent prototype for what the Abbott government is likely to be like.

      • The Patrician says:

        The Qld regime-change experience has been instuctive. About a 10% cut in public service FTE’s and salaries budgets across the board, ideologically symbolic cuts in programs, a healthy dose of crony capitalism and a sprinkling of full blown corruption.

      • Ralph says:

        I still can’t see it. Campbell has an ideological streak about him. Abbott has none of that. He’s tied himself in all sorts of knots just trying to avoid saying the wrong thing to the wrong audience at the wrong time so as to not spook any horses.

        Abbott believes in middle class welfare for all, yet says he also believes in balanced budgets and low taxes. It’s all very contradictory and doesn’t make much sense. We’ll see soon enough how he intends to manage those contradictions.

      • The Patrician says:

        I agree in part. But what Tony lacks in libertarian and free market ideology he more than makes for with an odd mix of royalist catholicism and old-school DLP dogma.

      • 3d1k says:

        I think both are fair assessments of Abbott – he is far ‘softer’ than the Gillard Government attempts to portray. He may well surprise the current crop of critics when PM.

      • Pfh007 says:

        Yep – Mr Abbott could prove to be Labor’s worst nightmare – reasonable and preferring the popular rather than the ideological.

        A bit like Mr Howard but without the economic axes to grind.

        People forget that jesuits have a strong social justice streak and Abbott takes that stuff seriously.

      • Gunnamatta says:

        Well Gents, I recall spending a fair bit of time in the US before George W Bush became President, and the UK in the lead up to David Cameron.

        In both instances there were lots of middle of the road types saying the men in question werent really hard conservatives.

        The other point I would make is that TestosterTone (like John Winston before him) has had a long period of widespread public ridicule before he ascends the throne. I dont think that bodes well for his sensitivity to public concern.

        Then there is the party behind him. They will come to power with a large majority and in circumstances where they know that the earlier they strike for some core ideological outcomes, the longer the public has to get used to the idea.

        Dont get me wrong. I am not saying punters should vote for the frauds in ALParatchik land. But expecting these Torynuffs to come to power and play softly while not posting ideological KPIs is optimistic. Particularly when they know there is a reasonable public till to play with and with Tatts HiVis (The contemporary Oz equal to Joe sixpack) on mainstreet in debt to his eyeballs.

        If I was a conservative strategist I would be thinking you could really make some conservative browny points on that field, and shape a generation, while holding tickets to the exit gate as the economic reality check this nation needs to have blows in.

      • The Patrician says:

        The real danger that lurks behind Abbott’s popularist façade is not borne of ideology but the crony capitalism and the debts owed to Murdoch and the mining industry that will have to be repaid.

      • Pfh007 says:

        Gunna – you could be right. The main thing is that an improvement in economic management with either mob appears unlikely.

      • Gunnamatta says:

        I agree with both of you on those scores Gents.

        Tone will want to keep some gargoyles onside

        and for sure it isnt likely to make for good economic management – although I would expect that Uncle Ruperts vomit sheets might tout it as such provided Uncle Rupert is one of the gargoyles kept onside.

      • The Patrician says:

        Is Rupert in the tent?

        Rupert owns the tent.

      • dumb_non_economist says:

        Abbott is a loner who desires popularity and he’ll do what’s necessary to gain it!

  3. Ralph says:

    I doubt we’ll see much cost-cutting from the Coalition. I suspect it will be much like Rudd’s early years. In early 2008, they were talkin up a pretty big razor gang, budget surpluses, tough budgets etc. But Treasury whispered ‘GFC’ in Kevvie’s ear and all that tough talk quickly became a whimper. The so-called tough budget was limited to an extension of the retirement age from 65 to 67 and Swanny was left to defend it as a very tough measure. The wild spending and stimulus only came in late 2008.

    In any case, Abbott will be no different. I can’t see any hard economic zeal in him at all. All the tough talk will result in a few superficial cuts that they try to defend as being ‘tough’ decisions. The big government gravy train will rumble on with only a few minor scratches. They want to get re-elected after all and the days of governments actually taking handouts away from people ended with the Hawke-Keating days.

    • 3d1k says:

      I tend to agree, we won’t see much austerity, possibly some pull back re Gonski, NDIS, NBN, various climate department etc. Apart from that, politics Oz-Style will continue on.

      With one obvious benefit – but Labor could provide that now…if they had the will ;)

      Thank goodness Glennie’s staying on to keep an eye on things.

      • GSM says:

        I will be VERY disappointed if Abbott does not make wholesale changes to Govt expenditure and prioritisation of same. A major overhaul is needed there.

      • dumb_non_economist says:

        GSM,

        Better get the tissues out, you’re going to need them.

      • GSM says:

        dne,

        I’m an optimist . Newman’s experience shows that with some decent communication even the hard decisions can be managed well.

      • Ralph says:

        Exactly. Abbott’s model is Howard’s “relaxed and comfortable”. That’s incompatible with budget-cutting austerity measures. Abbott’s pitch to the punters is the (eventual) dismantling of sensible means tests on all sorts of spending programs, such as family tax benfit payments, private health insurance rebates. Then there’s the generous maternity leave scheme that’s paid for by a ‘levy’ (!!) on big business. Then there’s the maintenance of carbon tax-funded compo and tax cuts without the carbon tax. And that’s before the get in to gov’t, receive their briefing from Treasury, and then emerge to shout “we’re all rooned” and cancel all but the most menial of spending cuts.

        There’s not much geniune expectation that Abbott will find much room for serious cuts amongst all of that. It’s all pretty much ‘non core’ for mine.

  4. aj. says:

    Pure pragmatic party politics based on the fact the punters haven’t really got their heads around private debt. Robb knows this and this makes the comments all the more disgusting.

    The other parties and independents stop telling pork pies and start talking private debt otherwise that worm on the right will start eating their foundations.

  5. Bubbley says:

    On a slightly different topic, a view point was raised that all the anti NBN rhetoric on BS is because Rupert Murdoch owns the cable TV stations and the NBN is a major threat to it.

    Any thoughts on that?

    • Ralph says:

      Wouldn’t surprise me. Vested interests are everything these days. And you can never be sure just who is lobbying on behalf of whom anymore.

    • Junkyard says:

      High speed broadband is a very serious threat to many, long established business models. We are already witnessing the destruction of the traditional distributional networks for music and film. Tv content is closely following. Once you’ve got a high bandwidth connection with good population density, streaming multiple tv channels over the net becomes very attractive.

    • The Patrician says:

      Rupert’s evidence to the Leveson Inquiry on “disruptive technologies” gives an insight.

    • Jake Gittes says:

      BS has never liked NBN because of the principle of gvt infrastructure investment and, to be fair, the Gvt made a mess of selling the idea.

      While NBN is a threat to current TV models the vested interests are good at lobbying on content and other provisions to ensure status quo is held. Turnbull as probable incoming Comms minister will make sure of that as his comments recently demonstrate.

      • 3d1k says:

        …”Gvt made a mess of selling the idea…”

        and NBN Co appear to be making a mess of implementing the idea. What was the latest – at current pace full rollout complete in two decades? I forget the projected cost…

      • Junkyard says:

        It costs a lot to find people who can dig holes in the ground in Australia these days ;)

      • Pfh007 says:

        Very good!

      • Jason says:

        Good thing its not funded by the Govt then, only guaranteed by them.

  6. Jake Gittes says:

    Robb, like Hockey, talks drivel. But that is not the point. It’s political and the electorate likes/understands the idea of wasteful gvt (my money) as a reason to throw out that gvt. Private debt is fine – its not social or shared.

    • mehere says:

      I don’t think so. It is shared through the banks and everyone will be screaming for the government to save them when they go down.

  7. 3d1k says:

    Forgot to say, nice headline.

  8. The Lorax says:

    in the final analysis any waste in such a circumstance is hardly the issue. It’s the point.

    Precisely. Go early. Go hard. Go households.

  9. Rusty Penny says:

    I’ve been calling him and peter Reith out for just about longer than anyone.

    Australia REALLY deserves this guy in charge of the purse strings.

    We won’t have to worry about an overpriced dollar or overpriced property for very long.

  10. Alex Heyworth says:

    What politicians say in opposition rarely matches what they do once in office. This mob will be no different. I expect them to tread carefully in most things.

    Their main advantage in the eyes of the electorate is that they are not the ALP. If ever their was a brand that is on the nose ….

    • dumpling says:

      +1

      It looks to me that the opposition is simply testing the water (intelligence of the electorate); how far they can bullshit and then get away with it.

      Perhaps next time the opposition can blame the government for causing the climate change and see if the electorate is going to buy it.

  11. flawse says:

    Bloody hell!!!!! What planet do you blokes live on?

    The Labor stimulus was ONLY possible because we massive resources we were willing to flog off to cover the resultant increase in our CAD that comes from the sort of spending indulged in by Labor at that time.
    There was no magic wand! You can’t print higher living standards without increased debt somewhere in the system.

    Sure we enjoyed a higher living standard as a result of the profligacy but what was the cost? Nobody has dared calculate that. Why should not Treasury have put the real facts on the table?
    At least give the cost SOME consideration and ask how the increased debt is going to be repaid other than by selling assets that will mean our kids have to pay the cost by not having the income flows those assets would have generated for them.

  12. willy_nilly says:

    IMO the ‘thing’ that got us through the GFC was our high casualisation of our workforce. Millions of people, lost millions of hours and as a nation, we ‘flexed’ through it, just as the Swiss did…

  13. willy_nilly says:

    Mmmm… anyone know if this is for real?
    http://polliter.com/2013/03/15/exclusive-aust-govt-bans-political-comment-on-twitter/

    May be MB is the only place where free speech may be actually real!