Tuesday, October 14, 2008

On the QT: Buddy can you spare $10 billion?

This morning on AM Malcolm Turnbull tried to trump the Government by suggesting the expected financial stimulus package should be around $5 billion. This had been the figure bandied about in the media, so it was a good guess by Turnbull trying to sound like he got in first.

And then Kevin Rudd came out with the figure of $10.4 billion.

Turnbull had suggested the package should bring forward the tax cuts planned to be delivered in next year's budget.

Rudd didn't do that, instead he gave out big one off payments to pensioners, low-income families, and carers. And most surprising of all is that he increased the first-home buyers grant to $14,000 and to $21,000 for new home buyers.

As a Labor supporter the package is a tad hard to swallow - it smacks of Howard economics. Howard loved "one-off" payments, and loved the first-home buyer's grant. He hated spending money on infrastructure. The big problem with his strategy was these one-off payments became expected, and were essentially used as electoral bribes. The first home buyers grant I believe helped fuel the housing bubble, and thus increased housing prices well beyond inflation.

Any Labor Government worth its salt must spend money on infrastructure. If it doesn't it might as well give the keys to the Lodge back to the other mob.

When Rudd won office, one of the things that was most heartening was the accent the Government placed on infrastructure spending; I hoped the budget surplus would go towards the building of roads, railways and ports etc etc etc (and NOT be flitted away in one-off payments).

But times are different now. This $10.4b is no election bribe - there is no political need to do it (in today's Newspoll the ALP remains ahead 55-45; ie no change since Turnbull took over); and unlike Howard's spending there is an economic need for it.

A few episodes ago in The Hollowmen, the PM's office was trying to come up with a big ticket item for the budget - one that would make people go "wow!". Well $10.4b does that - especially when it is outside the budget process and not in the run up to an election. It seems pretty clear that Treasury was getting some pretty bad forecasts for the year ahead.

So while, I don't particularly like it, it seems to be the right thing to do. My only hope is that Rudd does not get addicted to these "one-off" payments, and instead keeps his focus on the long term.

I believe this will be the case because of what was announced today with the package (but neglected in most of the reporting):

Nation Building
The Rudd Government will fast track its nation-building agenda to help shield Australians from the global financial crisis.
The Government will accelerate the implementation of the Government’s three nation building funds. Government Ministers will bring forward their interim Infrastructure Report so that work can commence in 2009 on projects in the key areas of:
* Education and Research;
* Health and Hospitals;
* Transport and Communications.
To fast-track these projects, the Government will be seeking referral of the legislation for the Nation Building Funds into a Senate Committee this week.

All I can say is, let's hope the $10b keeps the economy going, but what I'll be keeping an eye on is the above. If Rudd carries through on that commitment, he'll be a PM worthy of voting for again.
After yesterday's boredom of MPs going through a pretense of trying to pretend to act as though things were too serious for petty politics, today was all about petty politics. It was great!

Rudd is a bit like Shane Warne - who performed best on the pitch when things outside the game were going to hell - Rudd performs best in QT when things in the real world are in crisis. He loves a crisis. He is typical of workaholics - too little to do leads to boredom - he wants to have to call every leader on the planet; he wants to have to stay up working all night. And when he is doing that he also comes into QT upbeat and eager to answer every question.

After some by-the-numbers questions from Turnbull on pensions and growth figures, he turned to what would be their theme for the day - namely the Liberals trying with all their might to say the only reason the Government was able to spend $10b was because of the fine work done by the Howard Government. Hockey went off his nut with "hear hears" as Turnbull asked Rudd whether it was true that the Budget surplus was due to the Coalition government establishing the future fund, paying off government debt etc etc.

Rudd got up and asked, what about the extra $390b the Howard Government got due to the resources boom that it didn't spend on infrastructure? "And", he said to Turnbull "Not everything on planet earth is the product of his [Turnbull's] personal wisdom and initiative".

Rudd in a burst of pique then also said that if Turnbull wanted to be economically responsible, to go next door to the Senate "where the Greens are acting responsibly, Senator Xenaphon is acting responsibly, where Senator Fielding is acting responsibly, and where the Liberal Party of Australia is acting less responsibly than the Government of Cuba". It was a somewhat bizarre analogy, and it certainly caused a good deal of hubbub. It also signalled the end of Act 1 of today's QT.

After a good Dorothy by Tanner on the budget surplus, up came Julie Bishop to have a go at Swan.

Sounding like she had swallowed an Economics Theory text book (or at least someone who had done a bit of searching on wikipedia) she first asked Swan about reforms to the Basel II process. It was most likely an attempt to try and catch him out like he was earlier this year on NAIRU. But that was then, this is now. And Swan actually laughed to himself in wonder at what was Bishop on about, whereupon he gave a quick lecture on the whole process and came across knowing more about it than Bishop ever could.

Bishop's next question was about the cutting of funds to APRA in the budget (actually a good question). Swan dodged it pretty well, but I'll give Bishop credit for at least pitching one at a good length. The only problem with the delivery was that it allowed Swan to bring up the HIH Royal Commission of which Swan will always delight in bringing up due to the Turnbull connection.

Bishop's final one was on the "commercial paper market". It was dumb. Swam slapped it away with contempt. Lindsay Tanner walking past the dispatch box muttered, "why don't you get her to say what the "commercial paper market is" - which makes you think the Government doesn't hold Bishop's economic knowledge in a great deal of awe. Indeed most of her questions today sounded scripted by Malcolm Turnbull.

Act 3 then began after a Dorothy by Tanya Plibersek on housing (lots of waffle about how good was the raising of the home buyers grant). Turnbull asked Rudd if banks should now pass on the full amount of the interest rate cut.

Rudd, obviously refreshed from his rest in Act 2, speculated that as a former merchant banker he should know better. At which point Turnbull called out that he does know better. Rudd scornfully drew attention to it saying of Turnbull that "Oh, he knows better than the RBA, he knows better than APRA, he knows better the Secretary of the Treasury, and he knows better by his own admission than anyone on God's earth on this question".

Anthony Albanese then had a Dorothy which allowed him to bring up the new Leader of the National Party in the Senate, one Barnaby Joyce who went on radio and said of the $10.4b package (yes the one that Turnbull had announced the opposition fully supported) and said "I do have a concern that if you pay people in lump sums it can end up against the wall", which demonstrates that he is a fool given the focus of the package on pensioners and carers (not really good politics to suggest those groups will just blow it all on booze), and secondly, the whole bloody point of the package is to get people spending money. He is a dill. But then he's the best the National Party has.

For Turnbull's final question (which followed a useless one from Abbott on pensions - but then Abbott is getting progressively more useless as the year goes on) he asked Rudd essentially a repeat of his earlier question on the surplus asking if the money was wasted on tax cuts... defending Australia in the war on terror etc. It got more hear hears from Hockey, and a lot more derision from Rudd.

It allowed Rudd to bring up any wastage of the Howard Government. First up he talked about the advertising on Work Choices.

His next bit makes me think someone in his office is a reader of the PollBludger Blog. Over the past few days a number of the bloggers on that site have taken to referring to Turnbull as "The Rainmaker" which sprung out of his claims that he was the one responsible for causing the banks to drop interest rates by 0.8%.

One of the bloggers (Bushfire Bill) pointed out that his claim was much like a "Rain Maker" scam wherein: The con artist (a "rain maker") convinces the mark to pay him to make something happen. If it happens, then the mark is convinced it is because he paid the rainmaker; if not, then the rain maker says he needs more money to do it.

This mention quickly led to the bringing up of Turnbull's pumping $10m into a "rainmaking scheme" last year, and a mention of the the nickname Rain Maker by blogger Possum Comitatus.

And then what happened today? Rudd with Gillard's and Albanese's prompting - signalling that they had probably discussed it before QT - says of the vastness of the Howard Government's waste, "and that's before we get onto the Rain Maker... how much was it? $10 million?"

The PM's Office taking tips from blogs? I knew there was something good about all those 29 year olds working for him.

1 comment:

Anonymous said...

Unfortunately I think Barnaby will be right I would reserve your judgement on the package for a little while yet