Aug 10, 2012

This week’s phoney reasons to attack Labor’s economic management

Desperate to find problems with Labor's economic management, the government's critics find themselves in some strange places.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

One of the ongoing problems for the government's critics in the media and business is the annoyingly strong performance of the Australian economy. When economic growth, employment, inflation and interest rates are all simultaneously at the sort of levels that most other countries, and for that matter Australians of the 1980s and 1990s, would be delighted to have, it's a challenge to find reasons to attack the government. While the response of some has been the sort of resignation encapsulated in Joe Hockey's urging that we think of how things would be even better if there was a Coalition government, others haven't given up, but have instead tried to find other, more convenient economic issues that reflect a failing of the government. Like ...
  • Productivity: the government's Fair Work Act is a burden on productivity because it reduces workplace flexibility, was the argument. Then, inconveniently, labour productivity was shown to have increased over the last year, while an independent review found no evidence of a link between productivity and the legislative framework for IR.
  • Sovereign risk: the mining tax, IR laws and the carbon price would send foreign investors fleeing Australia to safer destinations like Zambia and Ghana. Strangely, this failed to prevent the build-up of a record quarter-trillion dollars in committed investment.
  • Government debt crowding out the private sector: if sovereign risk wasn't going to do the trick, the budget deficit would drive up the cost of borrowing and send investors fleeing. Never mind the massive investment pipeline that promptly appeared or the lack of correlation between interest rates and the budget surplus under the Howard government. But Australian government bonds subsequently hit record lows as foreign investors and central banks rushed to the safe haven of our super triple A-rated economy. The RBA studies bank funding costs and concludes "the increase in spreads on banks' wholesale funding reflects global investors demanding more compensation for taking on bank credit risk, although the rise for Australian banks has been less marked than it has been for other banks globally". And while we're on our super triple A-rated economy, remember Barnaby Joyce warning we were in danger of defaulting?
  • High cost of doing business: the government is making it too expensive to operate in Australia, warn business figures, who (yet again) say investors will flee the country. Quarter-trillion dollar pipeline, etc. Budget figures show the overall tax take from business has fallen as a proportion of gross operating surplus to the lowest level since at least the mid-1990s. And an independent review finds that if there's a problem with wages growth, it's been there since the start of last decade and unrelated to the Fair Work Act.
  • Militant unions emboldened by the Fair Work Act are driving up the rate of industrial disputes. After a spike in the September 2011 quarter, the level of disputes promptly slumps in the December quarter. An independent review points out that up to a third of the disputes in 2011 are under state awards that have nothing to do with the Fair Work Act.
Recently there have been a couple more efforts to find a reason to bag the government. One was a claim by The Australian and business sources -- who refused to be named -- that the government had so mishandled the relationship with China that it was affecting business confidence and Chinese investment was falling. So, how has our economic relationship with China fared under Labor? Well, KPMG recently looked at the level of Chinese investment in Australia.

So, Chinese investment surged under Labor, fell back during the financial crisis and is now rebuilding back to record levels. Indeed, the level of Chinese investment in Australia is so high that the Coalition is dogwhistling about it and suggesting there's not enough scrutiny being applied to it. How about Australian investment in China? According to DFAT figures, it has gone from $6.9 billion in 2008 to $17 billion in 2011. And in March, The RBA signed a rare bilateral local currency swap agreement with the People's Bank of China for swaps of up to $30 billion. Another criticism was around the government's record on income inequality. News Limited's George Megalogenis attacked Wayne Swan last week and claimed that inequality had worsened under Swan. Tim Colebatch took Megalogenis apart on Tuesday, pointing out that the very figures that Megalogenis cited in his piece actually contradicted his own claims about growing inequality. Henry Ergas -- that's Henry "an inability to express an objective expert opinion upon which reliance can be placed" Ergas -- pursued the attack on Wednesday, ignoring Colebatch's demolition of Megalogenis and insisting any fall in inequality since 2007 was "statistically insignificant". Rest assured you won't see The Oz showing too much interest in income inequality any other time. But the search for reasons to attack the government sometimes take its critics into unfamiliar territory.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

13 thoughts on “This week’s phoney reasons to attack Labor’s economic management

  1. Mike Smith

    The attack dogs here usually claim you’ve got it all wrong, it isn’t good, and that statistics to the contrary are all part of a illuminati inspired conspiracy. ( its friday, I’m adlibbing)

  2. exasperated77

    I’m so glad for crikey being out there to counter the dominance of news limited and all the other myopic vested interests which dominate public discourse in this country. Keep up the good work!

  3. John Bennetts

    Unfortunately, what this article demonstrates is not that facts are capable of changing opinions, but that the converse is true.

    I have had a running battle with a friend, a solid big C Conservative, that the size of the national debt is irrelevant – it is the net debt after allowing for the other side of the ledger which matters. There is no chance of logic intruding on his normally sane views on this matter.

    So, attitudes beat facts, hands down. If I want to be sad and delusional in a time when good news abounds, that is my God-given right.

  4. michael r james

    “Another criticism was around the government’s record on income inequality. News Limited’s George Megalogenis attacked Wayne Swan last week and claimed that inequality had worsened under Swan. Tim Colebatch took Megalogenis apart on Tuesday, pointing out that the very figures that Megalogenis cited in his piece actually contradicted his own claims about growing inequality.”

    I think both BK and Tim Colebatch have been a bit too influenced by the headline of the Mega story. The placement of one of his stories on the front page and at the top across the entire page, was exceptional. Mostly his stories are buried elsewhere, for the obvious reason that his articles are impeccably politically neutral and as he describes himself, the view of the resident numbers nerd.

    I too was a bit shocked by the headline (which of course was not written by the journalist) but read the article and Mega quickly reveals the increase in inequality was a gigantic, enormous, society-destroying …. 0.5%.

    I recall Mega also explained why the mining riches will inevitably distort the measures of inequality. Of course any increase is to be viewed nervously because if it happens year after year, relentlessly we are building towards a grotesque society of the 1% owning everything.

  5. Bill Hilliger

    When the belly is full, there is just one thing left, now people can as a last reort start complaining about the quality of food.

  6. Bill Hilliger

    as a last resort start


    Another article that justifies a subscription. Crikey, I like your substance over partisan opinion type of journalism.

  8. MJPC

    “the government’s Fair Work Act is a burden on productivity because it reduces workplace flexibility, was the argument.”
    read “give us a chance and we’ll shaft the workers like we did with work choices. I am afraid, or happy, that Mr Abbott and co have a milstone around their neck which will cause them to flounder when the hard questions, and answers, are asked and sought. Abbott has been exceedingly sneaky in getting his big end of town fellow travellers carrying the lies and inuendo to this point.
    Hopefully with the Governments latest shange of tactics we will see some policies questions ans come embarrassment within the LNP camp.
    Alas, articles such as this never appear in the mainstream.

  9. David Hand

    With pro ALP cheer squad articles like this, I hope you all tone down the anti-News Ltd campaign about their bias. I accept News has a right wing bias and now you prove a Crikey left wing bias. That’s great. I subscribe to both.

  10. izatso?

    The right has a lot more deviousness up its pipe than it lets on. this FWA charm offensive is nothing in comparison, a minor distraction. You won’t believe what is to be privatised if they’re given half a sniff.What pissed you way off last time will generate a Stroke this. take any notice of what was done behind the ‘Limpics ? and the speed of it ? where was tony three weeks ago ? and why should ol’ Handy Boy here be so complacent ?

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details