Tuesday, July 06, 2004
It's the stupid economy...
In the same day that Mr Howard stepped up his attack on what he believes is a lack of economic management skills in the Opposition, Access economics released a report showing that the latest Coalition budget surplus may stretch the imagination somewhat.
The Howard government has made its mark on the economy, inheriting a budget deficit from Keating, and then putting up the sail of fiscal responsibility. This sail was duly blown along by the gale force winds of a booming world economy and abnormally high growth in China and the tiger economies of South East Asia, where we have a substantial trade relationships. The Howard government has continued to take credit for the economic results, and in part, they are entitled to do so.
On the other hand, with an increasingly global economy, economic prosperity has less to do with domestic policy and more to do with the overwhelming force of global economic climate. And essentially, this is the way that the free-market, Howard government likes it.
And because Australians are essentially naive or apathetic when it comes to economic matters, Howard promotes the free market economy (free from government intervention) but then takes credit for consequences over which he knows he has little control. When the market dips, the converse is true as governments then begin to explain the merits of an unpredictable business cycle. Don't blame us, we can only work on domestic levers, it's that damn economy thing...
So when you hear Howard saying things like, "We have brought record low interest rates," or "unemployment is at its lowest in years," bear in mind that the market has helped more than Howard's pulling on levers. In any case, both of the above consequences are directly related to the Reserve Bank's monetary policy, which is independent of the government. The Howard government should not be taking the credit for monetary policy or interest rates.
Claims that unemployment has fallen are untrue unless the movements in underemployment are noted. Underemployment has increased several hundred times over. In other words, more people have jobs, but lots more people aren't working full time, and are thus working below capacity. Often this leads to problems when workers fall into a gap between a welfare payment and a low paying job, and earn no more than welfare when working part time, thus remaining on the poverty line.
So whilst Prime Minister John Howard is saying things like, "in my view Mark Latham doesn't have the financial management record or skills to properly run the Australian economy." then we should be weighing that up with statements from Access economics like the following ones: "drastic action might be needed after the election to keep the budget in surplus... (as) estimates of taxes from company profits ha(ve) been overstated," or "The Howard Government's $52 billion spending spree in the May budget had left Treasury cupboards distressingly bare and would create pressure to push up interest rates."
Sometimes if you find the middle ground between commentators and the government, then move a little toward the commentators, you'll find truth lurking.
The Howard government has made its mark on the economy, inheriting a budget deficit from Keating, and then putting up the sail of fiscal responsibility. This sail was duly blown along by the gale force winds of a booming world economy and abnormally high growth in China and the tiger economies of South East Asia, where we have a substantial trade relationships. The Howard government has continued to take credit for the economic results, and in part, they are entitled to do so.
On the other hand, with an increasingly global economy, economic prosperity has less to do with domestic policy and more to do with the overwhelming force of global economic climate. And essentially, this is the way that the free-market, Howard government likes it.
And because Australians are essentially naive or apathetic when it comes to economic matters, Howard promotes the free market economy (free from government intervention) but then takes credit for consequences over which he knows he has little control. When the market dips, the converse is true as governments then begin to explain the merits of an unpredictable business cycle. Don't blame us, we can only work on domestic levers, it's that damn economy thing...
So when you hear Howard saying things like, "We have brought record low interest rates," or "unemployment is at its lowest in years," bear in mind that the market has helped more than Howard's pulling on levers. In any case, both of the above consequences are directly related to the Reserve Bank's monetary policy, which is independent of the government. The Howard government should not be taking the credit for monetary policy or interest rates.
Claims that unemployment has fallen are untrue unless the movements in underemployment are noted. Underemployment has increased several hundred times over. In other words, more people have jobs, but lots more people aren't working full time, and are thus working below capacity. Often this leads to problems when workers fall into a gap between a welfare payment and a low paying job, and earn no more than welfare when working part time, thus remaining on the poverty line.
So whilst Prime Minister John Howard is saying things like, "in my view Mark Latham doesn't have the financial management record or skills to properly run the Australian economy." then we should be weighing that up with statements from Access economics like the following ones: "drastic action might be needed after the election to keep the budget in surplus... (as) estimates of taxes from company profits ha(ve) been overstated," or "The Howard Government's $52 billion spending spree in the May budget had left Treasury cupboards distressingly bare and would create pressure to push up interest rates."
Sometimes if you find the middle ground between commentators and the government, then move a little toward the commentators, you'll find truth lurking.
Saturday, July 03, 2004
Polls, Pollies and Poll Dates
John Howard may be about to call an election tomorrow, and then again, he may not. In any case, do we really care? Regardless, today is the last day for any tips to be received in election tipping competitions, and I have to put pen to paper to make a prediction.
At the very least, Howard must call the election before his fellow American goes to the poll, which is November. He must also avoid calling an election too close to GWB's election date, 2 November 2001, to avoid being caught up in the Prez's bad Iraq PR. Others on various blog sites are saying that Howard will wait for any surprises that GWB might have up his sleeve, like a little bin laden with gifts to hand out.
So Howard must call the election in early October, or August. Calling the election tomorrow will ensure that the August 7 date may capitalize on the waning Latham polling, and avoid being confused by any Grand Final fever. Crikey.com.au is also pointing towards August 7 because the RBA may be pushing rates upwards if demand for houses continues to increase. Personally, I think demand has plateaued in the housing market, and the likelihood of an RBA rates movement is unlikely in the next six months, as the risk of a unwanted slowdown being triggered are reasonable. Monetary policy is a blunt instrument at the best of times.
August 7 is the second Bledisloe Cup night, so some are banking on the Old Man's Sydneycentrism to save us from an early poll. I don't think this is enough. I think he has made his mind up. Speculation of an election is at fever pitch, and even thought the Old Man knows the electorate doesn't like early or fickle elections, this one doesn't fit into either category.
Will an early election catch Lathamites out? I don't think so. The ALP has printed its HTV cards, and they will be ready when John W. makes his move. If they are serious about winning government, they have to be ready for anything. The ALP have a bagful of policies, including the much talked about tax policy, and as soon as Johnny pulls the trigger, Latham will be launching a counterattack with his ministers letting go of the ballast of policies. Latham will be hoping for a bounce out of the policy ballast, and Howard knows this. Against an August poll is the likelihood of this policy-release polling boost.
On the case for the October poll, Latham is losing the publicity wars, and he's copping a bit of flack at long last. The Libs have been serving up the mud thick and fast ever since he gave Crean the hip and shoulder, and finally the media are starting to get hold of some grubby facts. It's a shame that personal muck makes such a big splash when blatant public dishonesty barely rates a raised eyebrow. Spying on a polly making a chip butty sandwich is so much more enlightening and meaningful than investigating any public dereliction by a lazy defence minister. Finding the dirty facts from a polly's personal life - now that's some journalism with integrity! (but it's what we have come to expect from the lightweights at Channel Nine.)
I think that Howard is enjoying watching his ministers roast Latham on Fat Kids, Centenary House, and the Iraq withdrawal, so combined with his conservatism, Howard may hold on to get a few more hits in on Latham before hurting him on the scoreboard in October.
However, the policy-passing frenzy, combined with the mass of political advertising and Moneybags Costello's family budget, combined with some Howard opportunism on the advent of Latham muck will lead to an early poll.
Here's my tip: The Old Man will squeeze back into Kirribilli House in a tight one in August. To add insult to injury, he could lease The Lodge to Latham at Centenary House rates. At least then it will be used.
At the very least, Howard must call the election before his fellow American goes to the poll, which is November. He must also avoid calling an election too close to GWB's election date, 2 November 2001, to avoid being caught up in the Prez's bad Iraq PR. Others on various blog sites are saying that Howard will wait for any surprises that GWB might have up his sleeve, like a little bin laden with gifts to hand out.
So Howard must call the election in early October, or August. Calling the election tomorrow will ensure that the August 7 date may capitalize on the waning Latham polling, and avoid being confused by any Grand Final fever. Crikey.com.au is also pointing towards August 7 because the RBA may be pushing rates upwards if demand for houses continues to increase. Personally, I think demand has plateaued in the housing market, and the likelihood of an RBA rates movement is unlikely in the next six months, as the risk of a unwanted slowdown being triggered are reasonable. Monetary policy is a blunt instrument at the best of times.
August 7 is the second Bledisloe Cup night, so some are banking on the Old Man's Sydneycentrism to save us from an early poll. I don't think this is enough. I think he has made his mind up. Speculation of an election is at fever pitch, and even thought the Old Man knows the electorate doesn't like early or fickle elections, this one doesn't fit into either category.
Will an early election catch Lathamites out? I don't think so. The ALP has printed its HTV cards, and they will be ready when John W. makes his move. If they are serious about winning government, they have to be ready for anything. The ALP have a bagful of policies, including the much talked about tax policy, and as soon as Johnny pulls the trigger, Latham will be launching a counterattack with his ministers letting go of the ballast of policies. Latham will be hoping for a bounce out of the policy ballast, and Howard knows this. Against an August poll is the likelihood of this policy-release polling boost.
On the case for the October poll, Latham is losing the publicity wars, and he's copping a bit of flack at long last. The Libs have been serving up the mud thick and fast ever since he gave Crean the hip and shoulder, and finally the media are starting to get hold of some grubby facts. It's a shame that personal muck makes such a big splash when blatant public dishonesty barely rates a raised eyebrow. Spying on a polly making a chip butty sandwich is so much more enlightening and meaningful than investigating any public dereliction by a lazy defence minister. Finding the dirty facts from a polly's personal life - now that's some journalism with integrity! (but it's what we have come to expect from the lightweights at Channel Nine.)
I think that Howard is enjoying watching his ministers roast Latham on Fat Kids, Centenary House, and the Iraq withdrawal, so combined with his conservatism, Howard may hold on to get a few more hits in on Latham before hurting him on the scoreboard in October.
However, the policy-passing frenzy, combined with the mass of political advertising and Moneybags Costello's family budget, combined with some Howard opportunism on the advent of Latham muck will lead to an early poll.
Here's my tip: The Old Man will squeeze back into Kirribilli House in a tight one in August. To add insult to injury, he could lease The Lodge to Latham at Centenary House rates. At least then it will be used.
