Spending more than you earn, living beyond your means – going into deficit can be a terrible thing.
Just ask Malcolm Turnbull, who thunders that it will be irresponsible, unforgivable, almost criminal if Kevin Rudd puts the Australian economy even marginally into the red. This from a man who made his fortune as a merchant banker by borrowing other people’s money. Is there just a touch of opportunism, even humbug, in his fulminations?
Certainly he is not getting much support from the professionals. Every respectable economist (that is, all those who aren’t out moonlighting as climate change deniers) agrees that in times of recession, deficit budgeting can be not only acceptable, but even wise and necessary. Rudd, in opening up the possibility, is simply showing his usual orthodoxy.
To be fair to Turnbull (a favour he seldom returns) his most stringent attacks are not on deficits per se; he will neither confirm nor deny that there could be hypothetical situations where they could be tolerated, if not actually applauded. But not Rudd’s deficits; not now, not next year, not ever. Rudd said he was an economic conservative, and that means surpluses forever. When he talks about deficit, what he really means is a licence to flush all your money down the toilet.
Again, this rather ignores the reality, which is that by far the most extravagant and reckless spending spree in recent history took place in the last two years of John Howard’s government, when Turnbull himself was a cabinet minister. This dwarfed Paul Keating’s bender in the wake of the 1990 recession, or even the profligacy of Gough Whitlam in the early 70s. But Howard still left a surplus. Well, yes, even he couldn’t squander the entire proceeds of a 12-year boom. It has taken a global financial meltdown to achieve that.
The political problem, of course, is that the boom lasted for so long that huge surpluses became taken for granted; deficit was simply not a word mentioned in polite company, or indeed anywhere else. Now it is again looming on the economic horizon, it has acquired the significance of a taboo. Turnbull has therefore been able to invoke it as some sort of populist test: if Rudd is forced to embrace it, it will be a sign that he has gone over to the dark side. And economic reality, like history, like Howard’s abandonment of petrol excise indexation, a decision that is already costing revenue $3.1 billion — that’s billion — a year is, as always, bunk.
Turnbull and his colleagues are, however, prepared to acknowledge one aspect of the great downturn, which is that it is making life tougher for small business and this means it is not a good time for Julia Gillard’s industrial relations legislation, which will allegedly make life tougher still. This may be marginally true, but it makes life considerably more bearable for the workers, and on balance must be accounted worthwhile reform — as it generally has been. Even the employer groups concede that their concerns have been listened to, if not always accepted.
There are exceptions: the Associated Chambers of Commerce and Industry are, as usual, predicting the collapse of society, but since ACCI’s preferred position has always been the reintroduction of slavery, it can be discounted. More pompously, Paul Kelly in The Australian, accuses Rudd of assuming “interterrestial immunity” from the world financial crisis. Coming from one who covered much of the last election from what appeared to be an extraterrestrial perspective, such criticism cannot be dismissed lightly.
It can, however, be dismissed heavily. For opponents of the government’s position the time for its reforms never will and never can be right. There will always be a reason to postpone or delay, to amend and obfuscate. They find it hard to argue that the legislation should be dumped altogether; after all, if ever a government could claim an electoral mandate for a policy, surely this is the case with the dismantling of WorkChoices. So the next best thing is an endless filibuster, interminable procrastination. The legislation has been a full year in preparation, but that’s not enough. And of course these are the same people who last week were lambasting Rudd for not getting enough done in his first twelve months.
They are also the ones complaining most loudly about the rush of legislation at the end of the parliamentary session, and here perhaps they have a point. It is a poor excuse to remind them that it was ever thus; every government since federation has been faced with the same backlog of bills as the silly season approaches and every opposition has made the same protests — “legislation by exhaustion” used to be the favourite cliché. The argument would have more force if the opposition didn’t waste so much parliamentary time during the earlier part of the session, but it is up to the government’s strategists to ensure that its program flows reasonably smoothly. Why this should be beyond the wit of long term parliamentarians who have seen the problem recur year after year it is impossible to say.
They are obviously capable of planning: they always manage to find plenty of time for Christmas parties, even when business is most hectic. Admittedly, Turnbull had to move his drinks for the press gallery affair back a day when it was found to clash with a last minute invitation to the hacks from Rudd. Still the festivities went ahead as usual, deficit or no deficit. Some things really are sacrosanct.