EDITORIAL: by Peter WestmoreNews Weekly
Election auction ignores the real challenge
, October 9, 2004
As Australia's election approaches its climax, leaders of both the Coalition and Opposition are engaged in a frantic bid to win the votes of key constituencies through spending the multi-billion-dollar government surplus unveiled by Treasury before the election.
This comment had to be written before the Opposition leader, Mark Latham, delivered his election speech, but even before then, he had committed a future Labor Government to spending more than $20 billion over four years, with the largest single item being the "Tax and Better Family Payments Plan", followed by health and education.
Any measure to help families is welcome, but the Latham plan has several serious flaws.
The plan offers a form of family unit payments, but compared with the present system, gives far greater benefits to families in which both parents work than to single-income families. It largely benefits two-income families, but should have offered comparable treatment for single-income families, and those with many dependents.Families disadvantaged
Additionally, the removal of the $600 payment per child will seriously disadvantage many families with children.
The Latham plan does little for low and very low income households, including those who were identified by Dr Bob Birrell as living on the breadline. Mark Latham has responded to criticism of this by saying that it is better for people to have jobs than to be on welfare. True! But there must be jobs for people to fill.
At the moment, there are too few full-time jobs for the unskilled and semi-skilled, because Australia has no industry policy.
Labor's proposed reduction in the superannuation contribution tax will leave retirees with less at retirement. Looking at countries facing a similar demographic "black hole" as Australia (such as Singapore), it should be increased, not reduced. The Government's policy, unveiled by the Prime Minister, was focussed on a complex mix of increased benefits to homemakers, increased subsidies for child care, establishing 24 new technical colleges, additional capital funding of state schools, and a range of other measures. It has been costed at $6 billion over 4 years, in addition to the $8 billion in new spending promised since the May Budget.
The Prime Minister did refer to falling Government debt, but not the foreign debt. If Government debt was a problem, then logically, the nation's foreign debt is at least an equal problem, and was considered so in 1996, when the Coalition ran debt trucks through the cities to highlight Labor's large foreign debt.
One leading finance journalist, Terry McCrann, commented last March, "Any way you slice up the red ink in our foreign payments and debt, it is just awful." He added, "The foreign inflow has been one of the great global 'no-brainers'. Invest in Australia, and get 4 per cent more for your money than investing in the US; and you pick up a currency gain on the rising value of the Aussie dollar. Does this have the sense of not being quite the structure on which you would build a solid sustainable future?"
Mr McCrann warned that "when, and if, the game changes, the money will flood - even faster and in greater jumps - in exactly the opposite direction." (Herald Sun
, March 3, 2004).
Tim Colebatch, Economics Editor for the Melbourne Age
, in an article headed, "A mighty debt to the world", lamented that a once-frugal nation had become "an international financial junkie, dependent on ever-increasing doses of debt from the global markets". (Age
, September 29, 2004).
He said, "When the Howard Government took office, Australia's net foreign debt was $193 billion. It is now more than double that, $393 billion. In the past two years alone, export earnings shrank by $10 billion, as we borrowed almost $120 billion in new transactions on global markets to keep the big spending going."
Colebatch highlighted the fact that export growth had stalled because there is little attempt to develop manufactured exports, while imports have surged 31 per cent since 2001.
He said, "How has Australia kept spending so much when export earnings were plummeting? We used another avenue of globalisation: borrowing from global markets."
After examining the policies on offer, he concluded, "Neither growing export industries nor reining in the debt explosion would be central priorities for a Coalition or Labor Government."
In a country where the parties are largely governed by opinion polls, in which style is more important than substance, in which political "spin" is more important than policy substance, we should not be surprised that "there seems to be a conspiracy to ignore some of the hard issues," as former Labor senator, John Button, recently observed.
On this critical issue facing Australia, one is forced to concur with Tim Colebatch's assessment of the major parties: "The policy similarities are large, the differences small."
- Peter Westmore is president of the National Civic Council.