Peter Costello confesses

There is a terrific piece of rhetoric from Peter Costello today at Fairfax. It is a must read in terms of historical revisionism and politicking:

Imagine an investment portfolio – say your superannuation fund – which has a whole bunch of assets that are going sideways and one prime asset that is growing strongly. Imagine it is growing so strongly that it lifts the whole portfolio year after year. You’d be pretty thankful for that.

The reason why fund managers diversify their investment is to find non-correlating assets that will do well when others do badly. They might even re-weight towards that area. They put a high value on such assets.

Australia’s mining industry is outperforming the rest of the economy. We are all very lucky that it is. The Reserve Bank estimates that had we been going through normal terms of trade – and missed out on the mining boom associated with it – our income would have been 15 per cent lower per annum.

I am sick of government spokesmen bleating on about the “two-speed economy” as if this is some negative for the country. What could be worse than a “two-speed economy”? I’ll tell you: a one-speed economy in which the mining sector is performing at normal levels. In those circumstances our economic growth would look like Europe or the US. It has not yet dawned on this government how much it owes Australia’s miners and how lucky it is that Australia’s terms of trade are at once-in-a-century highs.

So, we finally have a mea culpa from the Treasurer that oversaw the creation of the Australian credit bubble. Australia’s growth would absolutely be akin to other struggling Western nations without the mining boom. But Mr Costello neglects to recall why. Western nations are suffering balance sheet recessions. That is, following the GFC, the value of their assets fell, whilst the value of their liabilities increased. Thus, they find themselves in various forms of liquidity trap, deleveraging cycles and the rebuild of savings. This was the result of their decade long booms in credit, asset speculation and over consumption to drive growth.

As Treasurer, Peter Costello presided over and encouraged precisely the same model of economic growth. Let’s take a quick look at the credit aggregates under his watch (I’ve shaded his tenure):

Note especially the purple line, investor housing. It was, of course, Costello that halved the capital gains tax on property in the late nineties. And, in tandem with Labor state governments, introduced various first home buyer grants in 2000/01 to keep the boom running.

It is great surprise then to find that on savings the Costello period was also dire, note 1996 to 2007:

Nor that the current account got worse:

I’m not making a political point. I’m sure Labor governments would have done the same. Rather I’m pointing out that Costello is also incredibly fortunate to have had his reputation saved by the mining boom. Without it, yes, his credit bubble would have near killed the country in 2008. But he isn’t finished:

Prior to the turn of the 21st century, the US experienced the dotcom boom. Microchips and the internet were all the rage. Entrepreneurs were becoming billionaires overnight. Our terms of trade were flat. Our currency was in the doldrums. Many predicted that relying on traditional industries such as agriculture and mining would leave us behind in the new economy. Jumping on a bandwagon, the Labor Party said that Australia should forget about the old economy and become the Knowledge Nation. Every futurologist and business writer was advising the government to invest in microchips.

I am glad I did not listen to them. As we know, the dotcom bubble burst. A lot of those one-time dotcom billionaires are now living in Buddhist retreats in California where they meditate on the illusion of money and the spiritual value of poverty.

The US did little to rein in spending and pay off debt during the dotcom boom, which is why it went into the downturn so exposed. But one thing it did not do was introduce new taxes on e-commerce and the internet. The Congress looked at it. So did the White House. But in the end President Bill Clinton declared there would be no tax on the internet. Being Clinton, he dressed it up in grandiose terms about how this would be a gift to the world and especially the poor in developing countries. In fact the US knew it had a decisive national advantage in the field and was not going to handicap itself in an area of strength.

Here is a chart of the US budget deficit:

Please note that during the “dotcom” bubble is the ONLY time that the US has run budget surpluses in decades. It was the one achievement of Robert Rubin that is still given some regard. It was not the dot com period that hobbled the US Budget so that it went into the GFC “so exposed”. It was George W. Bush and his foreign wars that did that. Wars that Mr Costello enthusiastically endorsed. Which is, presumably why he’s making up an alternative history. There’s more:

Of course our government takes a different view. Australia has a decisive advantage in mining. It is carrying the Australian economy, but the old taxes such as company tax and royalties are not enough. The government thinks we need new taxes as well. I could almost understand this if the plan were to lock away money in our sovereign wealth fund for a time when trading conditions return to normal. But the plan is to spend all of the money raised by the new taxes and to spend a good part of it on industries in which we have no comparative advantage – such as ”green energy”. When a government diverts resources from efficient industries to inefficient ones it has one effect – it lowers productivity. And over the longer term that makes a country poorer.

Some of the dimmer lights in the government have suggested that putting the handbrake on mining will help other industries – such as manufacturing – by lowering the value of the dollar. I suppose if Australia really crunched its principal export industry and ballooned out its trade deficit and rocked confidence in the business climate, the exchange rate would fall. We could deliberately impoverish ourselves as a devious strategy to help ourselves.

But after you’ve done all that damage, how do you know there will be a manufacturing revival and how do you know it will be strong enough to compensate for the income lost? Most other countries would behave logically. If there is a proven world-class industry that is investing and earning income for the country then, for heaven’s sake, respect it. A bird in the hand is worth two in the bush. An industry in profit is worth 200 in the fevered imagination of those with an axe to grind against Australia’s premier export earners.

Well, bloody hell, I actually agree with Mr Costello in part. An SWF is great idea. But there is the small matter of Costello’s endless tax cuts, as opposed to saving the boom proceeds and his structural deficit (which Labor has happily continued). And, I’ll add, that one of the reasons you’d bother with an SWF is to help manage the currency so Mr Costello is kind of contradicting himself, something a of speciality in this piece of  ‘opinion’.

David Llewellyn-Smith

Comments

  1. Great article as per usual H&H.

    Disappointing to see there was no comments section for Costello’s clap trap on theage website. Especially as it’s pieces of Orwellian historical revisionism such as this that really require them.

    Does anyone know what the policy is regarding which Op Ed’s get a comments section and which don’t?

    • Nope, there’s 81 comments there already.

      They run the gamut of full Mining Bogan to “WTF?”

      All I can say is imagine this nation with an ASX full of Cochlears, CSL’s and IT/high tech companies, not the ASX8.

      Obviously, Costello can’t imagine that. More houses! More holes! More fragility!!

      • Yeah like he can’t imagine the infrastructure deficit this nation has, with little prospect now to turn investment around.
        Thanks for the tax cuts Pete but I did not ask for ’em.

      • He really did set the new standard for unimaginative and visionless Treasurers IMO. Whatever their faults the Hawke/Keating vision of the clever country relied on hard work and using the grey matter ran rings around Howard and Costello’s strategy of blowing credit bubbles and relying on good luck from abroad.

        • Keating can run intellectual ballet around Costello.
          Admittedly not written by him “Unfinished revolution” explained the genius of Superannuation at 15%, and the sheer force of will that went into creating it. It’s so simple, so elegant, and it protects Australia’s national interests as much as it serves the elderly.

          But Costello stopped it just shy of the touchdown. Snatching defeat from the jaws of victory, he created an enormous bubble that has COST us our standards of living and wealth far more than it has helped anyone.

          What happened with the mining boom’s wealth? We’re talking nearly 10 trillion dollars over 10 years shared by 20m people.
          Oh that’s about 500k each. 3-4 houses in 1996. 1 now.

          Woo! Wealth!

    • Deweyite, my sentiments exactly (Orwellian historical revisionism). I really wish Peter would go back to his veggie garden or whatever it is he’s doing in retirement and stay away from trying to write for Fairfax – he really sounds so very insincere in trying to defend his own record as treasurer (“Oh yes, we all knew that mining was going to save us”). Added to that is the fact that the Future Fund is NOT a sovereign wealth fund – it is a super fund for public servants (like Peter), they were very specific in how it was set up and how it was to be used in this regard.

    • Possibly the saddest legacy of the Howard/Costello era is the souless, poll driven labor party that is now running the show.

      • Agreed. Policy via focus groups and the 24 hour news cycle really has seemed to starve the life out of Australian politics.

        • +1. That was the first thing that came to mind when I was watching a recent 7:30PM Report interview with Paul Keating.
          .
          Paul Keating talked at length about building a narrative around tough reforms. Easy for him to say – he never had to deal with the 24/7 news cycle and build a narrative at the same time!

      • Yeah,but Peter kinda puts the gardening in the inefficient Bake under our Icing lost,every-time I picture him and his elf’s ..and now gnomes
        JR

  2. > Rather I’m pointing out that Costello
    > is also incredibly fortunate to have
    > had his reputation saved by the mining
    > boom. Without it, yes, his credit
    > bubble would have near killed the
    > country in 2008. But he isn’t finished:

    Our current world’s greatest treasurer is equally fortunate. Again, a second rate politician saved by first rate resources. The difference between Labor and Liberals is that they represent a different kind of economic ignorance.

      • Prince the EU did not have the assets available to sell to backstop that sort of stimulus. That is leaving aside the diversity of economies and societies they had to deal with.
        As to the US well you’d certainly have a better grip than such as I. My only comment would be that if you are going to print money for goodness sake don’t print it to back-stop the corrupt. We even did that!

  3. Microchips and the internet were all the rage.

    Lordy! The Smirk sounds like a right Luddite with this comment.

    If I’m not very much mistaken, microchips and the internet are still the rage. Apple? Google? Amazon? All still doing very well I believe, and the one sector of the US economy that’s still growing strongly.

    The fact that Australia has contributed so little to the global IT revolution is a national tragedy and not something to be applauded by smug ex-Treasurers.

    • Those comments are a joke. He obviously missed the memo about Apple being the worlds most valuable company.

      As an IT developer I can only look on in shame at the poor state of R&D and the level of govt. support it receives. We really are a one trick economy and appear destined to remain that way until we run out of dirt.

      • Totally agree. I read those derogatory comments in disbelief.

        Australia won’t run out of dirt any time soon but there may well be a rude awakening re the dangers of relying on one trick wonder policies.

        Both parties here have been happy to waste the prosperous period of the past 15-20 years to fuel a property bubble, allow bank deregulation and bet the whole house on exports to China despite surely having been aware of the prior financial crises, recessions and even depressions that have shattered countries around the globe at least once a decade. Are the politicians completely incapable of learning from the mistakes of others? The next elections should become rather entertaining when we get to hear each side explaining policies of the past.

    • Yes, this really is revealing. Having recently moved to Aus and working in the IT industry, I was pretty surprised how slow on the uptake the country has been on ecommerce in particular. Comments like this provide some explanation.

      • “Yes, this really is revealing. Having recently moved to Aus and working in the IT industry, I was pretty surprised how slow on the uptake the country has been on ecommerce in particular. Comments like this provide some explanation.”

        On the flipside, I was interested to find out recently that Australia has one of the highest levels of server virtualisation in the world, so it’s not an across-the-board thing.

        • We tend to be quite efficient. VmWare has been around for about a decade. Virtualisation saves space, energy and management efforts. Efficiency does not necessarily equates being at the cutting edge.

          • I was just making the point that Virtualisation is – even today – seen as a relatively radical technology shift by many IT management structures, and you wouldn’t expect to see a high uptake of it in an inherently conservative environment.

        • > On the flipside, I was interested to find out recently that
          > Australia has one of the highest levels of server virtualisation
          > in the world, so it’s not an across-the-board thing.

          I didn’t know that – maybe it can be partially explained by our high temperatures (and hence large cooling costs) combined with our relatively high electricity prices?

          • “I didn’t know that – maybe it can be partially explained by our high temperatures (and hence large cooling costs) combined with our relatively high electricity prices?”

            I suspect cost-saving is a significant factor. I was more making the point that Virtualisation is – even today – seen as a relatively radical technology shift by many IT management structures and you would not expect to see it in an inherently conservative environment.

          • “I was more making the point that Virtualisation is – even today – seen as a relatively radical technology shift by many IT management structures and you would not expect to see it in an inherently conservative environment.”

            I would disagree, at least based on what I’ve seen in the industry where I work (non-bank financial sector). Our policy is virtualisation first and we target 90% of new servers for virtualisation.

            Our target is higher than many of our peers but every other comparable company I know of is also investing heavily in virtualisation.

            IT management may traditionally be conservative but the deployment and operational advantages are too great to ignore. (These are more important to us than the the cost savings.)

          • in response to AB, “IT management may traditionally be conservative but the deployment and operational advantages [of server virtualisation] are too great to ignore. (These are more important to us than the the cost savings.)”

            The cost is indirect — most of it is still associated with cost of operational staff; cost of recovery; potential loss due to lack of business continuity; and the cost of not being released to market faster than your competitors.

            1. Staff costs are higher here due to other cost of living pressures (so well documented on this blog!)

            2. There are fewer datacentres in Australia, and fewer clouds like EC2 / rackspace, so DR costs are higher, especially for data that needs to stay on-shore.

            3 & 4. But the flipside to #2 is that Aussie companies *are* competing with global companies, who *do* have access to better, cheaper and more resiliant DC infrastructure; cheaper BAU staff; and cheaper developers.

            There are a lot of good local companies, but often if they’re good, they’re bought by one of the big (predominantly US based) companies.

            Australia’s governments at all levels don’t have the gumption to offer the tax advantages and cheap resources required to host a Silicon Valley style area. We’ve been far more successful with publicly owned and / or funded R&D. Which can then be spun off… and bought by a NASDAQ-listed firm. Yay.

            If we’re serious about ICT infrastructure and following on from the NBN, when and where is Australia fedgov going to lay its next undersea fibre connection?

          • “The cost is indirect — most of it is still associated with cost of operational staff; cost of recovery; potential loss due to lack of business continuity; and the cost of not being released to market faster than your competitors.”

            You’re right – I should have said “These are more important to us than the DIRECT cost savings.”

            Our main drivers for virtualisation are reducing RPO and RTO in case of disaster and vastly reducing our deployment times.

            It’s only a matter of time until we move to something like Amazon’s AWS where you can deploy hundreds of servers in minutes…

      • I remember living in the USA in the 90s and how frustrating the supermarket queues were due to everyone writing cheques — frustrating because by that stage we had had EFTPOS for 10 years. So technology uptake has its swings and roundabouts.

    • On the topic of this blog it shows that politicians of all parties can’t be trusted with our money. They are pretty much all the same, and it’s self interest that drives them.

      I know what you’re saying on Technology, but Australians did/do contribute, but they mostly work/worked outside this country.

      There are many Aussies doing great work in Sorrento Valley in San Diego, Silicon Valley, the M4 corridor/Cambridge in the UK, all over the EU in places like Munich, Nuremberg, Paris, Villeneuve-Loubet, and the list goes on.

      There have been good contributions from within this country, but in general in my lifetime I’ve not seen any government promote R&D properly. We have had a range of policies, but how often does any government get the best from the chief scientist, or more generally, the excellent technically capable human resources we have. How many scientists/engineers leave to have a career…all that can do leave and from my experience technically capable Aussies I’ve worked with OS are as good, and in a lot of cases better than others. I don’t think Australians in general appreciate our technically capable workforce.

      I’ve seen signs of late that things might be changing, but it’s not due to government policy.

      • > I’ve seen signs of late that things might be changing, but it’s not due to government policy.

        It’s mainly due to some dribs and drabs of O/S VC.

      • why should governement be promoting this industry over the next? giving subisdies to one or tax breaks to the other?

        Why do you believe a bunch of career pubic servants have the foresight and knowledge (assuming theres no lobbying or self itnerested kick backs) to promote an industry for the next 25 years as a growth industry or place for new innovation/competitive advantage.

        • TSpencer … “subisdies” I don’t believe in subsides, but believe the policies should be there to promote industry rather than property, and mining. The government have a role as the banks won’t, unless forced to, loan to industry generally. To prove the point look at the RBA figures. That’s all I’m saying.

          If you want to talk subsides, then Ford/Holden/Toyota, and except for Toyota most of the cars sold are not even fuel efficient (general statement).

    • The fact that Australia has contributed so little to the global IT revolution is a national tragedy
      .
      I don’t think Hardly Normal’s Greg Harvey and other Brick&Mortar retailers Myer would share your view!
      .
      That national tragedy let these dinosaurs survive an additional two decades with their status-quo business model!! It is only now they are waking up to the challenge, failing badly at responding to it and then railing against the government and the little guys (their workforce) for being less flexible.

  4. Great piece.

    I thought I might add that Clinton never “really” brought the budget back to surplus. Rather the administration fiddled around with income from the Social Security to claim to have turned the budget to surplus. However the debts kept increasing (if you correctly include the intra-governmental debt).

  5. Tedblack44MEMBER

    You left out his mate Howards claims about hoe Costello had single-handedly fixed inflation. What BS – it was lower tarriffs and productivity bargaining and imports from China that sorted inflationary expectations.

    • Mainly the last bit. Lowering tariffs whilst reducing productivity here (higher land, labour, input prices, overburdened regulation etc) made little impact.

      China’s entry into WTO in early 2000’s and the subsequent cheap imports plus overseas funded credit bubble was the cause of the “successful economic management” of Howard/Costello era.

    • Agreed, the guy has to be pig ignorant of what consitutes inflation if he actually believes that.

      One only has to look at non-tradables and the CPI for them to see how ‘he fixed’ it.

      It is a horrible myth being peddled about the Howard/Costello credentials.

      If we get a major recession in the next couple of years, picture that, then a mild 2 year post-recession growth period.

      That will be the business cycle from 1996. In that time frame we will be the recipients of a once in a century, perhaps once in a millenium mining boom and the ToT that go along with it 9and not really due to enterprise, just dumb luck).

      Now picture where we were in 1996, and compare where we will likely be 2 years after a recession.

      Did we advance a great deal with that windfall?

  6. In your haste to knock Peter Costello you forgot to mention that he paid off the $9 6billion debt of the previous government and set up 4 Saving Funds with significant seed capital.
    1.The Future Fund which currently holds some $73 billion
    2. The Building Australia Fund – $20 billion seed capital.
    3. Health and Hospital Fund – $10 seed capital.
    4. Education Investment Fund -$11 seed capital.
    Surely these achievements are worthy of some small mention in your analysis?

    • Khol…

      “In your haste to knock Peter Costello you forgot to mention that he paid off the $9 6billion debt of the previous government”

      If you looked at the forward projections of the Keating government in 95/96, they were on path the eradicate that debt as well, probably around 4-5 years later, however without the repercussions of selling Telstra, neglecting infrastructure, cutting tertiary education funding in real terms of pernicious but ultimately ineffective welfare reforms.

      “and set up 4 Saving Funds with significant seed capital.
      1.The Future Fund which currently holds some $73 billion
      2. The Building Australia Fund – $20 billion seed capital.
      3. Health and Hospital Fund – $10 seed capital.
      4. Education Investment Fund -$11 seed capital.
      Surely these achievements are worthy of some small mention in your analysis?”

      I would say they are insufficnet, compare to the $300 billion of idelogical largese splashed out in tax cuts, to the point of tax revenues being in structural deficit.

      And what did we get out of that $300 billion? A property bubble, and not much more.

    • 1.The Future Fund which currently holds some $73 billion
      .
      Riiight, and how do the taxpayers/general public benefit out of that?

    • selling public assets.

      1. sell public asset A

      2. take cash from sale of A and tell everyone how good you are at running a budget.

      Apart from maybe Australia post, the Costello generation of federal and state politicians have pretty much sold off all public assets so the next time the ship hits the fan the next generation of pollies will have to fend for themselves without having “selling the farm” as the fall back position.

      It could get ugly in 5-10 years.

  7. I love reading MB. I just wonder why Costello suggested 1 speed economy with mining at the level of other industries. Why we as a developed country don’t think of a 1 speed economy at the level of mining, not otherwise? Is that because lowering the wages or having a specific monopoly (rich ore resources) is the only way of making any business more profitable? Why the Germans can export high tech to China, but Australia can export only ore? Those are questions for our politicians. Isn’t it offensive to argue that China and Asia is more efficient than USA or Australia or Europe? What happened to the Western world advantage and intelligence and knowledge and ….

  8. Please note that during the “dotcom” bubble is the ONLY time that the US has run budget surpluses in decades. It was the one achievement of Robert Rubin that is still given some regard.
    .
    One could argue that Costello and Rubin are cut from the same cloth – both of them instituted policies that encouraged a private credit binge and then skimmed revenue off the top to deliver a Budget surplus!!
    .
    Of course, it is just coincidence that the bubble blew up/is about to blow up, when their opposite numbers are in office and Rubin/Costello didn’t have to face the music.
    .
    I am yet to see a Treasurer who can deliver a budget surplus at a time when private credit bubble isn’t growing. Maybe Swanny will be the first, but I won’t bet on that.

    • Good point. Too many comments on this post that imply Costello was a one man band.

      Not that I’m particularly impressed by his attempts to defend his record.

  9. But the plan is to spend all of the money raised by the new taxes and to spend a good part of it on industries in which we have no comparative advantage – such as ”green energy”

    Apart from the fact that the green energy incentives are financed from the Carbon tax rather than the MRRT, and the fact that there’s no way to have a “natural” competitive advantage in any non-primary industry… yeah, not sure why this guy gets any credit for delivering what is likely through the advice of his bureaucrats.

  10. Mr SquiggleMEMBER

    Amazing article from Cozzie.

    The next thing he needs to confess to is the ramping up of migration in 2003; jaming the foot on the population accelerator so hard that living standards are eroding;

    That’s what I really want to hear from him.

  11. Peter Costello had a lot of help from Ian Macfarlane (RBA Governor)in booming the credit numbers. Ironically the RBA presumably with Treasury support sold the gold at about US$280 which was the hedge against a credit extravaganza. The tax cuts were mostly a fiction as there was massive bracket creep some of which was given back as “tax cuts”. John Edwards who is now on the RBA board continually railed against these fictional tax cuts irrationally in my view. More correctly, Costello held such high marginal tax rates for such a long time before some relief was handed back, and the subsequent flight to tax relief of negative gearing coupled with the credit growth, halving of CGT and the low $A at the time sowed the seeds of the overleverage and property boom which now has to be wound back at an inopportune time.

  12. it shows the intellectual poverty of your politicians and their irrationality. to get his facts wrong is galling when he uses them to slap his slop indiscriminately. Mr Rudd should have not slipped into hubris when he appointed such an il-liberal over more sound choices sympathetic to the public interest, not necessarily from the laboured party. He too got his comeuppance like the other grandee Gough who was stabbed by his own drunken bunyip aristocrat.
    Farrell of course will slash and burn laboured appointees in time.

  13. Of course Costello does not even need to try and defend his role in the era when Australian housing bubbled – the mainstream media is not informing people sufficiently about this, even now, even after Rudd et al have inflated this bubble some MORE.

  14. I always find it funny how anti people are against tax cuts, maby they would prefer tax increases? It does wonders for job growth..

  15. Some of he Commentors on this site seem to be the shannon knoll’s of this world (What about me, it isn’t fair….) wondering who they can point fingers at then tax and redistribute.

    I enjoy your articles but it seems they lean left then the commentators push the pendulum all the way left.

    Is it worse to cut taxes too much not keep enough for a rainy day or spend too much inefficiently.

    In Joe publics mind liberal = good for govt finances and labor = bad for govt finances regardless of economic cycle.

    No amount of spin will change that rhetoric.

    • Is it left leaning to suggest a bigger part of tax revenues would be directed to enhance business, R&D & science and education at the expense of directing excessive support for non-productive sectors?
      Or maybe even hike income taxes (political suicide I now) during heavy growth periods in order to have room to lower them or at least not needing to hike them much during a tough time to keep up purchasing power?

      If that’s the case I’ve got some soul searching to do.
      I think MB and readers are very analytical and can’t be labelled left leaning. American style right leaning level of inequality doesn’t really appeal any better to me personally

      In the end one does have to look after the society as a whole. If there is a serious down turn, those dreaming of a small group of “wealthy investors buying houses while the rest rent for life etc” will find that the city they live in is no longer a pleasant place to be.

      Greed is not good. Not in the US, not in Europe, not in Russia, not in China and not in Australia either. And greed is the cause of the booms and busts, IMNSHO.

      • I agree with most of your points… just in practice what happens is that the stated goals and what changes are implemented and the outcome are all mutually exclusive.

        A large govt can create larger mistakes than a small govt. I say let the private sector decide.

        I’ll admit I do enjoy most of the writers on this site particulary UE.

        I feel a little safer 3d1k is around to keep you lefties on your toes. Haha

        Keep up the good work guys.

    • There are times I know where you are coming from! This is a good blog with a curious tendency – on occasion develops a hybrid form, sort of Green Left Weekly meets Traders meets Business. With less emphasis on the latter two.

      Fortunately editorial comment such as this keeps matters on solid footing:

      “Arbitrary intrusion of government into private business only encourages the ongoing erosion of national interest economic policy and productivity will continue to suffer.” From HnH’s Qantas Grilling.

      If you seek political/economic dialogue of a mid-right slant for balance perhjaps try Catallaxy Files.

      I enjoy the ‘contrarian’ (non GLW) comment – keeps things interesting.

      Cheers.

      • Mid right? Balance? Catallaxy?

        Try missile tip right wing 3d – I would know, I used to be one of them (no not a Catallaxy blogger, but a missile tip right winger).

        I’m now more of a fuselage type guy. Submarine aerodynamically actually.

        And you’d be surprised about where we really fit in the latter two categories 3d – every blogger here has a business or trading background.

  16. Costello’s opinion pieces are always so self serving, but they are starting to sound downright shrill.

    He’s starting to suspect – as the credit and housing bubble either continues to unwind, or high rents/realestate remains a constant drag on productivity and capital – that his history will be written differently to what he might have imagined 3 years ago.

    I agreed with this bit he said though 🙂

    “When a government diverts resources from efficient industries to inefficient ones (LIKE HOUSING HEY PETE) it has one effect – it lowers productivity. And over the longer term that makes a country poorer.”

  17. From the perspective of NZ, where our minerals sector is mired in a hopeless political swamp, and we had a Labour govt in power during the dotcom boom who saw fit to shift investment away from primary industry into the so-called knowledge economy (epic fail), Costello was not such a bad fellow!

  18. Perhaps I can shed some light on the reason why Peter Costello is so positive about the mining industry: he very modestly fails to disclose his fine work as Managing Director of BKK Partners for:
    ERM (coal seam gas) http://www.ermpower.com.au/gas
    PNG Sustainable Development (Ok Tedi mine, PNG)http://www.oktedi.com/sustainable-development/png-sustainable-development-program-ltd
    Aston Resources (Maues Creek coal mine, etc) http://astonresources.com/

    Peter Costello also sits on the advisory board and is also part-owner of ECG Advisory Solutions, as listed on the Australian Government Lobbyists Register http://lobbyists.pmc.gov.au/register/view_agency.cfm?id=420

    ECG has listed as clients: Wesfarmers, Fortescue Metals Group, Association of Mining and Exploration Companies

    Apparently Peter Costello is just providing “equity capital”for ECG so it’s OK — he’s not really a lobbyist. http://www.ecgadvisory.com.au/wp-content/uploads/2011/09/AFR-Investor-Costello-backs-lobbyists.pdf

    Invictus