It’s a good time, declared one influential lobbyist yesterday, to buy shares in Harvey Norman and Aristocrat. Much of the Government’s economic stimulus will go into new plasmas TVs for low and middle-income earners, and poker machines played by pensioners down at the club.
Let’s call it the plasma and pokies package, and be damned for our cynicism.
Cynicism has been thin on the ground, actually. We’re all too stunned — or would be stunned if we had time to think between press conferences that casually announce revolutionary policies and dramatic interventions. Everything we’ve read, written, pondered and discussed since November last year is now moot.
All that stuff about narratives, about Rudd’s focus on nation-building, and empowering consumers, and taking his time to nut out the best policy options — all gone. I jokingly speculated a while back that we needed a new version of the neocon phrase “September 10 thinking” to describe the world before the financial crisis.
Well, the world really has changed and we need to reset our brains to how we thought before the long boom carried Australia into the “miracle economy” league. Henceforth, we’ll just be an ordinary economy, with all the budget and employment problems of an ordinary economy.
Which is OK because there’ll be plenty of others for whom being an ordinary economy will for a long time be the stuff of dreams.
Now the speculation is of budget deficits. Several reasons to be a bit cautious about that. Until we see definitive evidence that Chinese growth is slowing significantly — like, you know, from over 10% to below 5% — it’s hard to see the commodities boom turning into a bust that would seriously slash mining profits.
We’re also likely to see a significant increase in winter crop harvests this year, even if they’re below initial estimates. And unemployment is coming off a very low base. Lindsay Tanner’s latest round of savings measures are also yet to be deployed, even if they won’t come close to making up for the billions in revenue lost from the economic slowdown.
Still, at best there won’t be much if anything left after the pokies and plasmas. But we don’t know.
Presumably Treasury, and Wayne Swan on the phone from Ground Zero at Wall St, told the Government’s assembled leadership on the weekend how seriously bad things were likely to become — sufficient to prompt Rudd, the economic conservative, to undertake two radical and unprecedented interventions, despite our relative economic strength.
The Opposition is right to ask the Government — as Turnbull did in Question Time yesterday — for detail on the current forecasts for growth and employment. Everyone other than the senior leadership of the Government are operating in the dark. We know things will be bad, but not how bad, or for how long, and where it will be particularly bad.
As a consequence, we’re looking to any indicator that might help. The insane lurches of the stockmarket have been taken as some sort of proxy for the crisis. Last week we were heading into a depression, and never-ending falls in equity prices. This week — until this morning at least — everything was going brilliantly. It’s like asking a jabbering lunatic to tell you what the weather’s like.
“It is my job to level with the Australian people,” Rudd said last night, adding — for the umpteenth time — “I don’t intend to gild the lily.” If there’s one thing absolutely crystal clear about the Government’s response to the crisis, it’s that it has been decisive — we know because “decisive” was pretty much every second word Rudd said in announcing the stimulus package — and that no lilies are in danger of being gilded. Indeed, the chances of the lily-gilding industry getting any assistance from this government any time soon are pretty much zero.
But Rudd hasn’t levelled with us — not on what the Government expects will happen over the remainder of this financial year and the next. It might have been OK in years gone by for us to wait to see what MYEFO told us. But everything has now been accelerated. That’s one the fascinating ways the world has changed lately — everything seems to have been sped up as we watch Wall St and European banks fall over, rescue packages hastily assembled, markets react instantly.
The Prime Minister should use today’s National Press Club address to release Treasury’s preliminary estimates — and that’s all they’ll be and all we could reasonably expect — of the impact on growth and employment, and the consequences for budget revenue and expenditure. It would reinforce the Government’s commitment to transparency, and allow a more mature and realistic debate about the efficacy of the Government’s response.
Read Bernard Keane’s report on the Prime Minister’s Press Club address this afternoon on the Crikey website.
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