The splendid Know Your Meme website could really do with an Australian politics page, dedicated to cataloguing the asinine catchphrases and themes that clog up our political debate.
For example, there’d be considerable benefit, and not a few laughs, in collecting the entire GFC-era debate about whether tax cuts are better economic stimulus than handouts. That was the Turnbull-era Coalition’s sole line of economic argumentation while the world fell apart in 2009, complete with authoritative American economists being cited as evidence that the Rudd government’s handouts would just go straight in the bank whereas “permanent tax cuts” would be splurged.
That meme was retired a couple of months after the 2009 budget — which the Coalition insisted was initially too optimistic — when it changed tacks and began saying the government had been too successful at stimulating the economy and needed to cut back on expenditure or it would drive up interest rates. That’s been a staple of Coalition economic rhetoric well into this year, at least until the May budget, when they started getting their wires crossed about whether some minor nips and tucks to middle-class welfare constituted sensible reining in of spending, or a savage assault on our aspirational classes. Eventually they settled for the former and didn’t block the measures.
But the real death of “Labor spending is driving up interest rates” was yesterday, when Joe Hockey issued a media release on the CPI figures without blaming Labor’s fiscal policy once. That might be because Hockey has finally taken notice of Glenn Stevens, who has repeatedly indicated there was no link between the government’s fiscal policies and pressure on interest rates, or just because Hockey wanted clean air for his line that the inflation outcome showed now was not the time to introduce a carbon price.
The more recent meme has been sovereign risk.
This first appeared in relation to the federal government’s mining tax. Sovereign risk originally referred to the risk of default, a serious and economically catastrophic outcome. But in the hands of the mining companies and their media cheerleaders, it morphed into a more general meaning of governments doing anything that a business doesn’t like, no matter how much it might be in the national interest.
Note of course that such a definition was highly selective — the term never applies to conservative governments. Thus, Colin Barnett’s decision to jack up mining royalties out of the blue in this year’s WA budget wasn’t “sovereign risk” — it is apparently something only non-conservative governments are capable of.
Tony Abbott picked up the theme, and during the election campaign claimed Australia was a poorer destination for foreign investors than African countries such as Zambia, and he’s ramped it up further since then, telling miners in Perth that “for the first time in generations there is now a sovereign risk, a question mark over our country”. Joe Hockey has echoed the theme, insisting the government is creating “sovereign risk” via the carbon pricing scheme. The clown prince of climate deniers, Chris Monckton, got in on the act last week with a similar line.
So, how’s all this sovereign risk stuff playing out then?
Well, yesterday’s Deloitte Access Investment Monitor showed investment “both in terms of the value of projects under way and the value of those in the pipeline has rarely ever looked better. The value of projects in the Investment Monitor database has lifted by 8.4% over the past three months to $831.7 billion”. And investment in our mostly foreign-owned mining sector dominates. Plainly, neither the mining tax nor the carbon pricing package — remember it was announced in February that the government intended to establish a carbon price from July 1 next year — have done anything to slow the flood of investment, domestic and foreign-sourced, into a sector that claimed the mining tax would drive it offshore.
And then there’s the dollar. Our manufacturing sector is on its knees praying for a bit of sovereign risk to switch off the jets underneath the Aussie, but nothing doing. Certainly not while the Republican Right appears hell-bent on smashing the US economy for the sake of spiting Barack Obama. Between the sclerotic Europeans and their state of denial about PIIGS and right-wing nut jobs in the US, the Australian dollar is now a “safe haven”, according to screen jockeys as reported in the interior pages of the financial press.
It’s important to labour this point. The data has comprehensively demolished the claim about sovereign risk. It was absurd last year when the share prices of Australian miners were outperforming those of foreign-based miners amid claims the RSPT would destroy the industry. It’s even more demonstrably absurd now. And there are a lot of guilty parties who bought into the “sovereign risk” line. Business Spectator, and particularly Robert Gottliebsen, was among the most enthusiastic in its own war on the mining tax. And a host of corporate leaders have trotted out the “sovereign risk” line on the carbon pricing package.
It’s time to call bullshit on “sovereign risk”.
What the incessant repetition of the theme does, however, is give a good insight into the mentality of those reciting it. It’s the same mentality that is being manifested in a more extreme form in the US: once you regard your opponent as illegitimate, no tactic is unjustified in trying to destroy them. That’s why the Republicans are happy to smash the US economy into a wall, even at the cost of millions of unemployed — because removing Barack Obama justifies it. And it’s why Tony Abbott, speaking as the alternative, and likely next, prime minister, is happy to suggest foreign investors are better off taking their money to Africa rather than investing it in Australia.
Fortunately, so far investors are ignoring him. In droves.