EDITORIAL: by Peter WestmoreNews Weekly
IMF or UN intervention - what's the difference?
, April 7, 2001
It was a remarkable conjunction of events that at the moment when the International Monetary Fund (IMF) was praising the Federal Government's economic performance, the value of the Australian dollar plunged through the US49 cents barrier, on its way to a historic low!
The IMF's comments appeared in its annual report on Australia, its Australia 2000 Consultation, released late in March, which were immediately welcomed by the Treasurer, Peter Costello.
At almost the same time, the Prime Minister was trumpeting the "merger" of BHP and Billiton, a move which will eventually see BHP shifting to the UK; the $20 billion sell-off of Australia's second largest telecommunication company, C&W Optus, to the Singapore government-owned SingTel; and the unresolved $10 billion takeover bid by the Dutch transnational, Shell, for Woodside Petroleum.
In other words, as Australian icons are being sold off to international corporations, the Government is welcoming IMF policies which will ensure that this process is accelerated.Reform continues
Despite the Government's recent setbacks in Queensland, WA and the Ryan by-election, both the Prime Minister Howard and Treasurer Costello emphatically declared that the process of economic reform must continue.
Recent changes on petrol prices, first home grants, imports of NZ apples, taxing of family trusts, and a softening of National Competition Policy, represent a moderation of policy, but not a change of direction.
The IMF report applauded National Competition Policy, despite the experience in country communities that it has has caused widespread job losses in local government, driven doctors from rural areas, favoured large retailers against family businesses, and in other ways disadvantaged people living outside the large cities.
The IMF also called for the Australian government "to eliminate the remaining low tariffs, and make more concrete the timetable for eliminating tariffs in other items by 2010".
It is ironic that at a time when subsidies and support schemes for most Australian industries have been virtually eliminated since the 1980s, those in the European Union, the United States and Japan remain alarmingly high.
The United States, for example, has a vast array of direct and indirect subsidies for industry, through multi-billion dollar defence contracts, research and development grants, and support programs for agriculture, a range of other industries, including steel, aviation, telecommunications, and shipping.
A typical case involved the US steel industry in 1999. A.S. Firoz, of India's Steel Exporters' Forum, wrote in the Indian Express:
"A record 41.5 million tonnes of foreign steel that hit the US shores in 1998 at extraordinarily low prices at a time when the US steel market was booming, left the domestic producers scurrying for support.
"In a united effort, steel producers and steel workers rallied under one banner: Stand up for steel. They wanted strong action against imports of steel which they said were 'unfairly traded', 'dumped' or 'illegal' in most cases. The government agencies lent them support.
"Quick action was taken to put anti-dumping and countervailing duties on imports of several critical products from some of the major exporting countries ... The Government had made it abundantly clear that it would go all out to protect the steel industry" (August 11, 1999).
The IMF also called for further deregulation of Australia's labor market, and the weakening of award conditions.
It called for limited government spending on health, and recommended that governments rely on such measures as tax incentives for additional voluntary saving to provide a "suitable framework for retirement income support over the longer term".
All these policies represent a clear attempt to keep the IMF's agenda afloat, whoever wins the next Federal election. It also attempts to maintain the IMF's credibility, damaged by the fact that New Zealand and Australia are the two economies that have most eagerly embraced the IMF's policies, but are now basket cases.Real world
One might well wonder whether the IMF lives in the real world. It said the decline in the dollar had "occurred despite strong economic fundamentals [that] had made possible a marked reduction in the current account deficit".
Since 1996-97, the year in which this government came to office, the Current Account Deficit has risen from $17.8 billion to $33.9 billion in 1999-2000. In the same period, Australia's net foreign debt has risen by about a third, to over $300 billion.
This alarming fact, which has clearly contributed to the collapse in the value of the Australian dollar, was almost completely ignored.
The spate of foreign takeovers of large Australian corporations is also a direct consequence of the agenda which the IMF is imposing on Australia.
It is ironic that while the Federal Government has rightly condemned the United Nations' gratuitous advice over human rights issues, it has welcomed the IMF's equally gratuitous advice - and promised to implement it.