Interest rates,
asylum seekers, the price of petrol. A nasty trifecta, and what should they
do?

Interest rates are
in the hands of the Reserve Bank. It will pursue its primary aim of keeping
“underlying inflation” in its target band of 2 to 3%. There is nothing
the government can do, but on the massive cost of buying a house (and thereby
assuming a massive debt servicing burden) it could work with the states to do
something about the spiralling price of land, as argued in recent days by the IPA. The
states, of course, will be reluctant to help out their political opponents, unless
of course they accept the realpolitik that Australians prefer their state
governments to be of an opposite political colour to the party or parties
governing in Canberra.

Asylum seekers are
a much harder issue. Those (like Henry) who are with the Liberal Party
dissidents believe it is essential that asylum seekers receive decent treatment
when they arrive. Sending them offshore, to be treated well or (more likely)
badly by a foreign government, is just not acceptable. Defer to the dissidents,
Mr Howard, and treat these people decently, in Australia.

Petrol prices
remain the hardest nut on the government’s plate at present. Cuts to petrol
taxes would be very costly and a mistake – we need to use less oil, not continue
with such a costly source of fuel, one that, if the environmentalists are correct,
is doing immense damage already. Technology has marched on, and offering a
subsidy to get people to convert their cars to run on LPG is one sensible idea.
Electric or hybrid cars are now or shortly will be competitive and the thought
of much less noisy, low polluting vehicles should be increasingly attractive. We
commend the editorialist from The Oz today – see “Breaking
free on oil
.”

The outcome of
spiralling debt repayments and petrol price hikes can be seen in the mass
international downturn in consumer confidence over the past month. As reported
in Crikey on Friday and in today’s Oz,
the Roy Morgan Consumer
Confidence Rating
plummeted by 14.4 points, the largest fall on record. Confidence is also down
sharply across the Tasman, with the New Zealand Roy Morgan
Consumer Confidence Rating
falling 6.6 points in early August, and in the US, with the ABC
News/Washington Post Consumer Index falling two points last week. To what
extent consumer confidence recovers from the latest hit will show how resilient
the world economy is at present, and by extension, how strong each country’s government is.

Read more at
Henry Thornton.

Peter Fray

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