It’s a big call, I know, but I suggest that economic debate in Australia reached its lowest point in 30 years yesterday when Joe Hockey addressed the Press Club.

Some of Labor’s efforts in opposition were miserable, too, yes indeed, but Hockey’s address came just a week after Wayne Swan had defended handouts to middle-class bludgers, indicating they’d be locked into the budget for the life of this government. Yesterday Hockey followed that by making electoral bribery the centre of the Coalition’s response to the mining boom.

The only positive I could find in Hockey’s address was his recognition that we have a serious problem with our housing stock. Since the election, that issue appears to have vanished without trace from the political agenda even as dwelling construction and approvals data got worse and worse. Hockey might have asked what exactly COAG was doing with its promised housing reform agenda and why we hadn’t heard anything about it despite various deadlines passing. Instead, he settled for talking about incentive payments to states to reform construction industry planning and regulation.

Well, it might work — bribing the states to not screw things up as badly as they usually do is the standard method of federal reform in this country.

Unlike many occupants of the Treasurer and shadow Treasurer positions, Hockey has an open mind and a willingness to consider new policy ideas. I hope he sticks with housing like he stuck with banks last year. There are good policy and political rewards for the politician that does.

The rest of yesterday, however, was an abomination.

Hockey’s central take on the challenge of the mining boom —  his assessment of what the Howard government did, and his suggestion for what the Coalition will do on return to government — is that the main role for government is to “grease the wheels of structural change” by aiming handouts and tax cuts to people resentful that they’re not getting the benefits of the mining boom.

This suggests a new threshold for a welfare means test — anyone not benefiting from the resources boom is in line for a handout.

It’s been traditional for conservatives to accuse the Left of promoting the politics of envy. But how else does one describe a policy based explicitly on bribing people who are angry they’re not earning $150,000 driving a truck in the Pilbara or $20 million running a mining services company? Is this what economic policy in Australia has come to?

What Hockey failed to say — and one can only pray it’s because he found it inconvenient, not because he doesn’t realise it — is that “greasing the wheels” (and judging by the whingeing from high-income earners in the News Limited press last week, we’re talking squeaky wheels indeed) is self-defeating. The more you bribe voters with tax cuts and handouts, the more the Reserve Bank will jack up interest rates to curb the demand that you’re frantically stimulating to assuage the resentment of the electorate.

Which is exactly what happened in the final, desperate term of the Howard government, which died vomiting money at anyone who looked remotely like they would vote for it, while the Reserve Bank remorselessly cranked rates up.

And what do you do then? Hand out yet more money because voters are suffering from mortgage stress? It’s the economic equivalent of a dog chasing its tail.

Labor’s policy of trying to address capacity constraints to minimise the inflationary impact of the boom at least seeks to address the causes of the problem, rather than treat the symptoms. It used to have an even better policy — a mining super-profits tax that would have funded a 2% cut in the tax rate for every company in the country, instantly making them all more competitive even outside the mining sector. It would have also funded a rise in superannuation to further increase Australia’s pool of national savings, and funded infrastructure in regional communities.

That, of course, got ditched in favour of a half-baked version crafted in the panic of June 2010.

So Labor’s Treasurer says he supports “family payments”. The Liberal Shadow Treasurer says they’re important to bribe resentful voters. Both pander to the “cost of living pressure” self-delusion that has taken hold in the community. And so it goes.

The real nadir for Hockey came in the Q&A following his address, when first Andrew Probyn and then Peter Martin tried to pin him down on last year’s dodgy Coalition costings, which are the basis for Hockey’s risible claim that he could have brought budget back to surplus faster. Probyn reeled off a series of problems with the Coalition’s costings. Hockey’s response was to accuse him of using a question provided by Labor. It was a pathetic and shameful response. “We stand by those numbers at a point of time,” he insisted.

As Hockey well knows — he has more experience in the Treasury portfolio than any other Liberal MP — it’s not the Treasurer and his staff that do the budget numbers. It’s Treasury and Finance officials. It doesn’t matter how much Hockey “stands by his numbers” whether “at a point in time” or now, that’s not going to change the budget even if he was in office. Well, not unless he wants to insist on imposing his own numbers on Treasury, and keeps sacking bureaucrats until he finds some that are willing to put up with it.

Peter Martin, who has assiduously tracked and exposed the Coalition’s lie about having “audited” pre-election costings, followed up Probyn’s question, extracting more bluster from Hockey. Hockey also ducked two questions, from Mark Riley and then Karen Middleton, about how the Coalition would end the NBN rollout and what it would cost to break contracts.

At least in last year’s budget reply debacle, Hockey (and Andrew Robb) actually offered some substance in their proposed cuts, even if they were wildly overstated. This year Hockey gave nothing except an apparent commitment that electoral bribery was now the centre of Coalition policy on how to respond to the challenges of the mining boom. Between this and Wayne Swan’s defence of middle-class welfare, if there’s been a lower point in economic debate in recent years, I’m struggling to recall it.

Peter Fray

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