Timing is Everything

Deficit

Previously published by The Australian Independent Media Network on 18th December 2013

at: http://theaimn.com

Many years ago, in the 1950s a reporter once asked the then British Prime Minister, Harold MacMillan what he most feared politically. MacMillan replied, “Events, dear boy. Events.” The same answer applies for what determines a government’s standing with the electorate. To both questions, however, I would add, “Timing.”

For a government that campaigned relentlessly on debt and deficit, the Coalition could not have picked a worse time to beat their drum. After just three months, the electorate is beginning to see through their shallow thinking, their thinly veiled deception and their all-at-sea management style.

Should we be surprised, therefore, that Abbott’s popularity is on the slide?

No, it was always going to be thus. Even his own people were split on his electability. The bottom line was always that the electorate never wanted him. But, such was the Liberal Party power brokers’ disdain for Malcolm Turnbull that Abbott was, by default, the only alternative to ousting Labor. Initially, it wasn’t much of a choice but then events changed things. Abbott’s god heard his prayers; Labor handed him so many free kicks and own goals that he seemed to blossom. Labor so self-destructed that even Christopher Pyne would have won had he been given the default job.

But, and here’s the thing, Labor wasn’t ousted for bad governance of the country, just bad governance of itself. So, once they were gone, public scrutiny of a more intense kind immediately focused on Abbott and, as was to be expected, he failed the test; he is not measuring up. His clumsy management style has been exposed. He is devoid of charisma, flair or natural appeal. He is embarrassing the nation with his stilted speech, his inept door-stop comments and general awkwardness. Worse, he has Malcolm Turnbull waiting left of centre. Worse still, a perfect storm of economic data is gathering offshore which will hit landfall over the next 18 months and spread across vast areas of the economy like a trough, like a depression. It is happening already and it is making a second term for the Coalition look increasingly shaky.

joe-hockeyWhich brings us to the Treasurer, Joe Hockey. Joe is on a hiding to nothing. No matter what he does over the next three years, the economy is going to be in worse shape in 2016 than it is now. By his own admission, rising unemployment, ongoing deficits that may continue until 2024, slow growth, possibly no growth, revenue write downs and a reduced output in the resources sector with no offsetting uptake in the non- resources sector, means his brow will be doing it tough for some time to come.  All this was evident in his Mid Year Economic Fiscal Outlook (MYEFO) speech delivered to the National Press Club on Tuesday 17th December. It won’t be all Joe’s fault, although he has already made a sizeable contribution with his 9 billion dollar grant to the Reserve Bank. But when the Press Club questions came thick and fast from journalists who knew their stuff, he wasn’t able to dodge much. He knew that to gloss over the real position would back him into a corner and as much as he tried to blame Labor, he knew that wouldn’t wash; not with the Press Club. What made it worse for Joe, as journalist after journalist tried to focus on the future not the past, neither he nor stablemate Mathais Cormann were up to showing any economic vision beyond the mantra, “We’re going to fix it.” 

So what advice could I give Joe right now?

“Time to stop the belly-aching and do something, Joe. You know the state of our finances. The forward estimates, in case you didn’t know, are just that. They reflect the direction we are heading if we allow the present budget estimates to go the course. But you are the Treasurer, Joe. You can change that. Goodness knows you made such a belly-ache about it before the election. So, do something! If you’re not happy about it, change it. Stop being such a wuss and take some action. You said you would get rid of the waste…okay, do it. For goodness sake, either shit, or get off the pot! But, for Christ’s sake, stop blaming Labor.”

But even a pep-talk of this nature won’t change anything. Joe is screwed on every level.

Mark Riley from Channel 7 reminded Joe of Tony Abbott’s previous references to the Rudd Government spending like drunken sailors and suggested if that were the case then the Howard government must have spent like paralytic pirates. Joe deferred to Finance Minister Mathias Cormann who gave a brief resume about the virtues of the Howard years, unaware that, in doing so, he was reminding the guests and the viewers of the vote buying, bucket load of money Peter Costello had to splash around and how well he wasted it. The main body of the MYEFO will be scrutinised thoroughly over the next few weeks and much of the devil in the detail will be sifted out for further questioning later. But the overall outlook is grim. Hockey defended forgoing 7.3 billion in revenue from the Carbon Tax stating that its abolition will increase economic growth. They wish! The prospect of continuing our 22 years of uninterrupted growth are looking decidedly shaky.

But, back to Tony. The buck will stop with him. In 2016 he will likely have to account for 6.5-7% unemployment, a lack-lustre private sector, a serious Terms of Trade deficit, a national debt of around $600 billion, no surplus in sight and a less than encouraging world economic outlook. The numbers will bury him. And in addition to all of this, we still don’t know what we don’t know. Both Hockey and Cormann made repeated references to the Contingency Reserve, a provision for expenditure not yet fully costed. How then could they budget for it? It doesn’t matter. Future events and their timing will take care of that. The only bright light: interest rates will still be low…but that IS something we can blame Labor for.

As much as all politicians will tell us that being in opposition sucks, some on the government side would be thinking that it would have been better for the Coalition to have lost the election in 2013 and watch Labor manage the economy to a point where a far more devastating electoral wipe-out would result in 2016 than occurred in 2013. But, that’s the thing about politics. It’s all about events and timing.

 John Kelly

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