Thursday, 12 February 2009 

The government brushed close to a serious mistake this week when it looked to be linking relief funds for the Victoria tragedy with the stimulus package. This came from Rudd’s speech in Parliament on Tuesday when he set out measures to help the victims. He finished them up by saying that the Victorian government could also draw on the housing and school funds to be included in the stimulus package.

The government has since stated that it was only in addition to emergency relief measures already announced and that it was not linking bushfire relief to the stimulus package. But it sounded like it. Certainly Macklin wasn’t that convincing on AM yesterday trying to make the stimulus package not sound necessary for re-building the fire damaged towns:

LYNDAL CURTIS: So Victoria does not need to use any money that may come to it from the stimulus package to rebuild these communities?

JENNY MACKLIN: No – but they can. It makes absolute sense that if they want to that they should be able to and all we’re saying to these communities, is our commitment to you is to work with you to rebuild your communities.

LYNDAL CURTIS: So Victoria can use, but will not have to use it, if it wants to get the money from somewhere else?

JENNY MACKLIN: That’s right.

Swan quickly wrote to Turnbull to defuse the issue. But such a slip up from the government is a sign of how hard it is operating to push through the stimulus package.

Tactically it is in a strong position to do so. While the independents and opposition may think they are taking advantage of the ‘perception gap’, as Shanahan calls it, between the size of the stimulus package and a downturn that is just starting to bite, they are demanding changes to the package without an alternative. This is especially clear for the independents and the Greens who are approaching the package, as usual, with their own special interests providing no real challenge to the package as a whole.

The government is refusing to budge. The histrionics from Fielding yesterday comes from someone who is just finding out, after being indulged for so long, just what it means to have no platform. His call to do more for the unemployed is fair enough, but he is in no position to reject the package as a whole. The Greens and the Xenophon may be a little more composed, but are in a similar position.

But then at least they never pretended to have an economic alternative. The coalition is finding the hard way that the prowess in economic management that they have been hanging onto is valueless. If the coalition’s opposition to the stimulus meant it took a hit in popularity, at least it was supposed to salvage their credentials in economic management. The latest Newspoll shows that for the first time since 1990, when Labor’s reform program ran its course, the coalition has now lost its precious lead in economic management.

But this is not because Labor has a reform program now. The government keeps on saying the stimulus is doing what the IMF says. However, as Keating said the other night, the IMF represents a US-led financial system that has now collapsed. It is unlikely to have any more clue than the US whose interests it reflects. The institution is redundant. Rather than suggesting Labor has the solution, the coalition’s double hit on popularity and economic management probably mean that the ‘perception gap’ doesn’t really exist. More likely that the coalition is seen as just getting in the way of relief against a downturn that is already working its way through the electorate.

Posted by The Piping Shrike on Thursday, 12 February 2009.

Filed under Tactics

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