There are two realities we in Canberra deal with: what we — the media and politicians — think should be the reality and what is actually going on in the lives of ordinary voters.
MPs return to their electorates regularly, talk to voters and thus have some understanding of the latter. But for journalists and economists and commentators, the former is the main game. The real world isn’t ignored, exactly, but it’s like a spirit realm or another star and it can only be experienced indirectly, via signals and scraps of information and bursts of data, rather than first-hand experience.
We got an interesting burst of information earlier in the week when Newspoll got around to asking punters what they thought of the way the government handled the economic crisis. The result was a ringing endorsement of the government. The majority of voters thought the government had spent about the right amount to stimulate the economy and the overwhelming majority thought they’d be better off as a consequence.
More than twice as many people rate Kevin Rudd as a better economic manager than Malcolm Turnbull, including, painfully, a quarter of Coalition voters.
And given how few Coalition voters there are left, that means a quarter of rusted-on, I’ll-vote-Labor-when-hell-freezes-over voters.
Amid all the media chatter today about whether the Opposition can exploit the rise in interest rates, and what this means for this ludicrous “stimulus debate”, that’s the news from the real world. The majority of Australians think the government is handling the economy very well.
A lot of rubbish has been said over the years about the “innate good sense” of Australians, who are no wiser than any other crowd, but there’s plenty of evidence Australians are aware of just how bad things were shaping up last year and how well and quickly the government responded. The Opposition now mocks Rudd when he uses phrases such as “on the edge of an abyss” but that’s what it felt like. Older voters will also remember how badly our policy makers and politicians botched the recession in the early ’90s.
They’re also aware of something that appears to elude plenty of commentators and economists: supporting employment is critical in terms of mitigating the human cost of an economic slowdown. Briefly, earlier in the year, Turnbull was intoning that the government’s focus should be “jobs, jobs and jobs”. That’s exactly what the government’s focus was on, and it is now being criticised for it, including by Joe Hockey who several weeks ago agreed that low interest rates were more important than supporting employment.
There are other reasons why the Opposition’s efforts to exploit the rate rise won’t work.
For a start, the number of Australian households affected will be minimal. The Commonwealth and Westpac banks dominate mortgage lending. According to the Commonwealth, more than 90% of its borrowers didn’t reduce their repayments during the financial crisis. All of those borrowers therefore will barely notice the rate rise. Westpac says the number of borrowers who are ahead in their repayments is more than 75%. They, too, will barely notice the rise.
Not to mention holders of fixed-rate mortgages. At the Commonwealth, that’s currently below 10%; at Westpac, a little higher, about 20%. They won’t be affected until their current fixed-rate period ends.
It will affect business lending, but the problem for businesses trying to finance expansion at the moment is getting credit at all, given the banks have used the collapse of the non-bank lending sector to move fully into the less-risky household mortgage sector.
In short, the market for Hockey’s pitch that Rudd’s profligacy is causing your mortgage repayments to rise is small indeed. And only a subset of those will buy his argument that interest rates should, somehow, remain at emergency lows forever.
There’s one more reason, too. Voters aren’t listening to the Opposition at the moment. All they hear is infighting and internal brawling. The only thing most voters know about the Opposition’s economic policy is that they opposed the stimulus package. That’s a legacy of the ostentatious way Turnbull — with the joyous support of his colleagues — argued against it in February. The Coalition wanted a smaller package, but voters were left with the impression they objected to stimulus full stop. I said it was suicidal at the time and I’ve seen nothing to change my mind since. Especially not when the polls haven’t moved except in the government’s favour since then.
That’s what is happening out in the real world. The rest is chatter.