Henry Thornton writes:

ABARE has predicted
that export earnings will grow by 7 percent to $134 billion in 2006 on the back
of the resources boom. While ABARE says the outlook is brighter, the latest CAD
shows imports are still high, well above exports and debt service rising
fast.

The current account
deficit has measured over 6 per cent of GDP for five consecutive quarters, the
longest run on record. As one journalist notes this is “around the size of
deficit when former Prime Minister Paul Keating made his famous ‘Banana
Republic’ comment”. And now we’ve had it for a record five quarters (not even
football games go that long).

As noted last
November
, the old-fashioned answer to a monster CAD is a recession that reduces
imports, frees resources for the export industries and makes Australian industry
more competitive. Yet with resources looking strong this year it looks even more
likely that the “head in the oven, feet in freezer” scenario will continue for
quite a while longer.
The
“she’ll be right mate” attitude on economic matters extends beyond the
Treasurer’s office too – John Howard doesn’t want to change the flawed
Tax system because (to paraphrase) “people want tax cuts not tax
reform” and despite the incredibly serious AWB/Government revelations,
an apathetic public shrugs and says, “Looks like there might be some tax
relief on the way and my house is still worth a fair bit, and I just got another
free credit card application form in the mail – life’s
good.”

Australia needs to wake up from their
apathetic state and, as Nick Gruen argues, the PM needs to stop improvising and
develop an economic vision.

Read the full article
at Henry Thornton

Peter Fray

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