Tuesday, 16 April 2013

The economy is the main game

The polls could tighten before the September election but Labor is still destined to be severely punished for incompetence and woeful economic management.

It has been a bad week for Labor but at least policies have been centre stage. The economy will be the main issue and Labor's behaviour has not helped.

It seems the public refused to fall for the phoney fast train idea. The origin of this latest proposal came in the deal with the Greens in 2010. You would think that Labor had worked out by now that cuddling up to the Greens is politically disastrous.

A fast rail track down Australia's east coast would cost $114 billion. The project would not generate a return until 2060 or thereabouts and so taxpayers would be paying more taxes for 40 years for a service that most people would never use. It would stop at every marginal seat from Brisbane to Melbourne and, at best, would be no quicker than flying. And that assumes that all the estimates of traffic and cost are realistic which is highly unlikely. If someone really thinks it is a good idea, let them waste their own money, not the wages of the average Aussie.

No wonder the Nielsen poll was so emphatic; this style of politics is especially galling from a government that has just abandoned its promise to reach a surplus in 2013 and now has abandoned the objective altogether for the foreseeable future. The government likes to claim that the economy is in good shape, so how is it that the government can't reach a surplus?

The fact is that Labor has abandoned any pretensions about economic management - Labor will lose the next election having not produced a surplus at any time since federal MP Wyatt Roy was born.

The second phoney ploy was better disguised. Presumably John "457" McTernan thought up the idea to send John Howard to Thatcher's funeral even though Howard was going anyway. McTernan must have been smiling because the announcement worked a treat.

I reckon there were two real reasons Gillard would not go. Firstly, in her younger days Gillard would have preferred to be with the radicals in Trafalgar Square celebrating Thatcher's death and secondly, to the extent she would be noticed, comparisons between Thatcher and Gillard would be odious. In particular, unlike Gillard's train, when the French/British channel project was devised, Thatcher made sure the investors would be more responsible for the losses than the taxpayers. Thatcher was committed to private enterprise not massive government expenditures on white elephants like government trains and a government telco with costs already skyrocketing towards twice what was forecast and well behind on schedule.

The cancellation of the massive Browse project in WA was yet another straw in the wind even though an offshore platform might be a better, more commercial plan. But all the same, at one time, the investors wanted to proceed with a plant on the coast and it would have been especially beneficial to the local Indigenous community. Unquestionably, the blowout in costs, in part due to Gillard's industrial relations changes in 2008, are now wreaking their impact on the resources sector.

The loss of 500 jobs at Holden was yet another reminder that governments, state and federal, have been throwing away good money after bad. Jac Nasser, respected chairman of BHP and formerly head of Ford in Australia, made it very clear that car manufacturing in Australia is inevitably going to come to an end.

Prime Minister Gillard can't admit the blindingly obvious because she can't afford to disappoint the unions that have propped up her government in return for taxpayer monies propping up the car companies.

Labor's policy puts up the price of cars that are an input for many businesses. There is a fundamental disconnect between saying you support jobs and then burdening business with costs of car transport or taxes like the carbon tax. Additional costs undermine jobs.

Then along came the unemployment numbers showing that trend unemployment is rising. This was not news. Nor is it surprising that more and more people are now dropping out of the workforce and more women are going into part time work. These are the very outcomes railed against by Labor and the unions but which have been the consequence of the Labor/union alliance.

Maybe the one thing that Labor might get right is the weekend announcement of cuts to university students. It certainly makes a mockery of Labor's complaints about Victorian cuts to TAFE funding.

Labor's plan exposes how government funding changes behaviour. The Australian yesterday had a front page story of students stating that they will no longer be given $2,050 cash p.a. under the Student Start-Up Scholarship and instead will have to repay the substitute loan. Apparently students defer starting university just to become eligible for the $2,050.

A policy that rewards students for deferring their education must surely deny the workforce of qualified workers, thereby reducing productivity and the revenue to government that follows. So it might be justified although it will be interesting to see the details.

The savings are to go Gonski but what is a Gonski? I know it is more money the government does not have but surely education reform should be about the quality of teaching, not the money per se? Until Labor can explain what will be done by the states, who run the schools, to improve education, the whole scheme seems to start from the wrong premise.

It has been an action packed week for Labor. If they are to do better in the elections than suggested by the latest poll, then Labor certainly would not want another week like last week.

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