Political Corrections

with Mungo MacCallum

The good times roll

Labor is a little disappointed in the small swing it received in the Werriwa by-election; even in the absence of an official Liberal candidate the troops had hoped for a bigger boost from the return of their pre-loved leader Kim Beazley and the disintegration of John Howard's election promises.

But then, it is early days for both. Beazley has yet to prove that he can cast aside Howard's poisonous charge about lacking ticker, and the true awfulness of Howard's deception will take a bit longer to sink in. It is a bit much to expect the voters to admit that they have been conned blind quite so soon after the event.

But sooner or later they will have to face up to the terrible truth: under the great economic manager, interest rates are up and will rise further, and the growth powered by the reforms of the Hawke-Keating years is finally coming to an end. It was just Howard's blind luck that the good times lasted just long enough to get him re-elected; now it is time to count the cost, and we're not just talking about the $70 billion odd (that's $70,000,000,000) scattered in election bribes last year.

The hard fact is that Howard and his colleagues have spent the last three years coasting; with the GST in place and the battle with the trade unions pushed as far as the Senate would allow, Howard's obsessions were more or less satisfied. The more important but less politically sexy aspects of improving productivity, involving long term changes to the country's withering infrastructure, were all considered just too difficult and in any case, there weren't a lot of votes in them.

Now finally the Business Council of Australia, having tamely backed the Howard agenda for four elections except for the odd ritual whinge about the need for lower taxes, has taken it upon itself to blow the whistle: suddenly the system is broke after all. And of course, the realisation has come far too late.

The BCA estimates, conservatively, that even after the removal of a heap of outdated regulations and hefty increases in the cost of water, power and freight, an investment of about $100 billion is needed to get things moving. The pity of it is that a year ago the money was there from the windfall the taxation gains thug government made from income tax, company tax and the GST; but now, as noted, Howard has spent more than two thirds of it in his vote buying spree, none of which will lead to any improvements down the track. Indeed some of the bribes, like the cheap diesel for big trucks policy, will be positively counter productive.

And it is now clear that there will be no more bonanzas; on the contrary, the hapless Peter Costello will be very hard pressed to fund the existing list of promises given the massive decline in growth over the last quarter. The only useful side effect of the abrupt end to the boom is that it might mean that interest rates will not have to rise quite as far as they would otherwise; but that would also involve the end of the consumer spending splurge the government has done so much to encourage over the last few years, especially in the property market. Suddenly the years ahead look pretty bleak.

Howard, of course, is protesting that he never actually promised that interest rates wouldn't rise: oh golly no, cross my heart and hope to die. That sign on his lectern "Keeping Interest Rates Low" just meant that he would try. And although the line about interest rates always being higher under Labor wasn't exactly true (actually they averaged marginally higher when he was treasurer than they did under Paul Keating, who also delivered three budget surpluses to Howard's none) it just might have been in this case if Labor had won, whatever the economists said. And in any case it's the Reserve Bank that sets the rates, so you can't blame Honest John, can you?

Once again the rodent can find a loophole to scramble through; but the punters know bloody well what they thought he meant, and they are going to be mightily pissed off when the reality sinks in. The swing to Labor in the high-mortgage section of Werriwa was around 15 per cent. Six months too late, the times may suit Labor.

After a month in the awesomeness of Antarctica, it was a nice to return home to a spot of low comedy. The Excellent Adventures of Lightfoot of Arabia and Howard's gibbering justifications for taking no action were great fun, but they paled before The Cautionary Tale of Tony Abbott, which the protagonist first tried to spin as a Shakespearean tragedy but which finally degenerated into a French farce.

If ever there was an example of schadenfreude in Australian politics, it was surely in the spectacle of our pious health minister, who so ruthlessly exploited the sexual peccadilloes of Cheryl Kernot, who so piously inveighed against the tragedy of abortion, who so eagerly went to court to profit from slurs against his own purity, being confronted first with the child he deserted and then to find that he was not after all a father, but merely another cuckold. The story has an old and venerable moral: those who live by the sword will die by the sword. And this applies especially if the sword is a pork one.