It is doubly annoying having to listen to yet another Liberal party ad about how interest rates will be higher under Labor because of "union fanatics" "environmental extremists" and learner leaders, when we have now had yet another interest rise (the sixth since 2004) and the prediction is that the rates will keep on going up. Howard's solution is to boast about strong economy and bleat about his economic management credentials. Given that both the interest rates and prices for essential goods are growing at an alarming rate, those of us not earning $300K a year may think that an overheating economy is not so great.
And what is Howard's great plan to stop interest rates hitting 10% or more? Give people more tax cuts. That's right, create more inflationary pressures so the interest rates go up even further and for each dollar we get by virtue of tax cuts we have to shell out ten dollars to cover the additional mortgage repayments.
In the interests of fairness - Labor is not necessarily better. Rudd adopted Howard's plan for tax cuts. If they are elected and implement it, they would be just as much to blame for the subsequent rise in interest rates as Howard. The fact that Rudd keeps on reminding us about Howard's broken promise that he'll keep interest rates low is all good and well - we need a little dose of reality to counteract the blatantly misleading election campaign strategies of the Libs - but pointing the finger at Howard is not good enough. Rudd must be able to show why his party would be an improvement. Admitting that the planned $32 billion in tax-cut would put further pressure on interest rates would be a start. Ditching the plan would be even better, but I wouldn't bank on it in an election year.
November 7th, 2007
Posted by
Unsilenced |
Howard government, Australian election, Economics |
no comments
Howard loves to take credit when things go his way - be it a slight dip in unemployment rates, a strong economy at a time when economies prosper around the world or the interest rates, when they are low. While most of us may think that taking credit for something means you need to accept responsibility for that very thing when there is a problem, such responsibility is clearly not to Howard's liking. The PM wants to be praised for successes, but not blamed for failures.
Therefore, while the PM advertised low interest rates as one of his crowning achievements (too bad they didn't lead to an improvement in housing affordability), he has consistently refused to take responsibility for interest rate rises (4 rises since the last election, eight during the period of Howard rule), claiming that he had no control over the decisions of the Reserve Bank. This might beg the question of how he can claim credit for something he says he can't control, but let's not worry about that right now.
This is an election year and pointing the finger at the Labor party governed States is obviously far more attractive than bleating about not controlling the Reserve Bank. So the Howard government is now blaming State debt for putting pressure on interest rates. Commonwealth and States pointing fingers at each other is nothing new, but it is curious that Howard chose to attack States for spending too much at the same time as blaming Tasmania for not funding certain services at the Mersey hospital, intervening with a $45 million "rescue" package (and advertising his plan on no less than four full newspaper pages).
Well, its good to know that the expected fifth interest rate rise since the last election can be blamed on the Labor governments of the States and has nothing to do with the shameless government pork barrelling, that even has Costello concerned. And here I was getting worried too.
Thanks for reading and have a good weekend :-)
August 4th, 2007
Posted by
Unsilenced |
Australian politics, Howard government, Economics, States |
one comment
A yet another embarrassing leak about big business plans to advertise in support of Howard's WorkChoices revealed that the business groups commissioned economic models to speculate on what economic benefits WorkChoices brings to Australia. The models are likely to be used as basis for advertisements to tell the voters about the inflation, unemployment levels and economic growth "penalty" that would result from employees having any rights in the workplace.
Of course you can get an economic model to give you any answer you want, depending on the assumptions and methodology you chose to adopt. Pick the outcome and there will be an economic model out there to justify it. Pick an opposite outcome and there will still be an economic model that will give you that outcome. Both of those models can sound feasible and yet be complete nonsense.
Interestingly, this economic modeling by the business groups seems to be inspired by government commissioned models, which ensured favourable results by assuming the outcomes that they desired to achieve. The business groups model was constructed according to (undisclosed) "terms of reference" (ie assumptions) given to the forecasters by ACCI. Apparently there were three scenarios to examine: "no change to Work Choices, an abolition of the industrial relations laws, and a return to the pre-1993 era before the Keating government made enterprise bargaining the main mechanism for wage negotiations." Needless to say that "a return to the pre-1993 era" is not on the agenda of either party. The only possible rationale for examining this scenario is to push the "Labor will ruin the economy and cause Australia to collapse into the Pacific ocean" type of scare campaign. Very much like the sort of campaign that the Howard government likes…
And coincidently, the firm retained by the ACCI - Econtech - has done quite a bit of work for the Howard government, on issues from effect of tax reform on boarding houses, sale of Telstra (where their analysis was used by the government to attack Labor), the tax system (note that the Econtech report was criticised by a Senate committee for very selective use of assumptions) and other work (just google the name). See any similarities with the big business advertising consultants' connections to the Liberal party?
But even without the lack of transparency in assumptions and the flawed scenarios, economic forecasting is a bit like weather forecasting - it is occasionally right, but only by accident. As Laurence J. Peter so wonderfully put it - "an economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." Economic models are not crystal balls that show the future, they are just guesses, based on a whole lot of (politicised) assumptions. And they make an excellent basis for misleading advertising.
June 23rd, 2007
Posted by
Unsilenced |
Australian politics, Howard government, Industrial relations, Australian election, Business groups, Economics |
no comments
RSS
