Federal parliament will soon be debating how to rebuild the damage done to Australia by this summer’s cyclone, floods and fires. All Australians will have seen either first-hand or on their television screens the damage that has been done not only to homes, but also to essential infrastructure such as bridges and roads. State and federal governments must now get the rebuilding process underway quickly, so the economic and social impact of these floods ends up being as small as possible.
At the same time, we need to recognise that the economic environment is strong. The latest labour force figures show that 62 percent of the adult population have a job (by contrast, the US employment to population ratio has fallen from 63 to 58 percent). A few months ago, when I asked Reserve Bank Governor Glenn Stevens about the Australian economy, he replied: ‘I sit around the table with my counterparts from 40 or 50 countries a number of times a year, and I have not yet found one whom I would want to swap places with.’
Yet despite the powerful performance of the Australian economy and the fact that our public debt share is less than one-tenth the average for most other developed economies, the Coalition seem unable to acknowledge that fiscal stimulus worked.
As though that wasn’t enough, the Coalition have now decided to oppose a progressive flood levy that would cost less than $1 a week for most taxpayers. Instead, they have offered up a series of budget cuts that would damage to Australia’s economic wellbeing and national standing. These include:
- Scrapping aid to Indonesian schools, a policy that boosts the life chances of thousands of Indonesian children, as well as helping to combat extremism.
- Delaying water buybacks in the Murray Darling basin – a fundamental microeconomic reform that will help move employment in the basin onto a more sustainable footing.
- Scrapping the ‘Helping Our Kids Understand Finance’ program. (You have to wonder whether any Liberal Party advisor thought to mention the irony of cutting financial literacy program just months after their election costings had been shown to be out by $11 billion.)
I guess there must be people in the Coalition who believe in generous engagement with Asia, microeconomic reform, and financial literacy. It’s just a pity that they don’t appear to be the ones in charge.
Always saying no may be good short-term politics for Mr Abbott, but surely he also recognises the risk that it poses to his credibility over the long-run. The more often Tony Abbott reaches for the glib one-liner instead of a sound policy choice, the less likely the Australian people are to believe that he has the skills and temperament to govern the country.