Prime Minister Abbott is making an art form of the international gaffe. Last night it was Davos’ turn. From the SMH:
Prime Minister Tony Abbott has used his contribution to the World Economic Forum in Davos, Switzerland, to criticise Labor’s stimulus spending during the global financial crisis while also calling on the US to tread carefully as it tapers its own stimulus measures.
On Thursday night, he painted a generally bullish picture of the global economy but noted the recovery remained ”fragile”.
In comments set to inflame the argument over Labor’s financial record, Mr Abbott broke with the convention of avoiding domestic point-scoring while on the international stage by claiming Labor had erred during the financial crisis because it had ignored the immutable economic rules.
According to the Prime Minister, the Howard government had helped the economy but Labor had undone all the good work.
”In the decade prior to the crisis, consistent surpluses and a preference for business helped my country, Australia, to become one of the world’s best-performing economies,” he told the high level group containing many of the world’s top business and political leaders.
”Then a subsequent government decided that the crisis had changed the rules and that we should spend our way to prosperity.”
The comments seem to suggest Australia did not need to stimulate the economy through 2008-09 under Labor, despite the near-unanimous advice of economists and Treasury to do just that.
The stimulus program has been accused of waste, such as the pink batts scheme, elements of the school halls program, and cheques sent to the deceased or to people living permanently overseas.
However, the Australian government also received widespread praise and recognition from around the world for its aggressive response to the global challenge with swift policies credited with avoiding the recession from which virtually all comparable economies are yet to fully recover.
The only issue I had with the Australian stimulus was the use of the first home owner grant, which missed a chance to de-risk households. The package may have rolled on a bit long as well but otherwise it was textbook stimulus, very much needed and will be copied elsewhere when the next crisis strikes.
Meanwhile, Mr Abbott’s seemingly intractably political Coalition is busy gutting the ability to scrutinise its own stimulus measures. From the AFR:
The nation’s top infrastructure adviser has blasted the Abbott government for threatening the credibility of Infrastructure Australia by eroding its independence and muzzling its advice.
In a scathing attack, Infrastructure Australia head Michael Deegan says changes planned by Deputy Prime Minister Warren Truss will enable the government to dictate projects to be spared from the advisory body’s scrutiny.
Mr Deegan also hit out at changes that would give the government the right to intervene in how the body – established by the last Labor government in 2008 – prepares long-term infrastructure plans and block it from considering how climate change may affect needs in sectors such as energy and transport.
The proposed changes, which require legislative approval, would damage chances of winning bipartisan support for nation-building, including the expensive capital city road projects that the Abbott government hopes will cushion the economy from the end of the resources boom, he said.
The changes and were “diametrically opposed” to providing the government and public with fearless and transparent advice.
Pork barreling here we come. Nice work if you can get it.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.