As Sunday’s Insiders showed, political commentary becomes soporific in the run up to the Budget at the best of times, but especially this year. Paul Kelly, having finished writing a book about the last twenty years of Australian politics, doesn’t seem to have worked out what has changed over it. His view that the Rudd government’s second Budget will define it, was not only what he said last year (it didn’t), but probably what he could have said for Hawke’s second Budget.

If the last Budget showed how the meaning of economic debate and the government’s role in it has hollowed out over the last two decades, the economic crisis since then has blown it away. In 2009, across the major capitals of the industrialised world, Treasury officials are laying out economic responses to a downturn that they had no idea was coming, have no idea what it was caused by, have no idea when it will end and no idea why. Predictions of some officials in Washington, London and Paris that the economy would begin to recover within a year, are based on no other reason than they wouldn’t know what to do if it didn’t.

Meanwhile over here, such policy dilemmas are not really a problem because the economic crisis has been internationalised away. Kelly thinks the government will be held “held politically responsible for the recession”. He has missed that since it first became clear the downturn would hit the Australian economy, the Rudd government has engaged in a relentless, and fairly successful, political campaign to make sure that everyone gets the message what caused it i.e. an international phenomenon for which no responsibility is held here (not even by the last government). From the occasional doorstop by Swan in front of the White House, to Rudd’s grander Summits, there has been generally a rule of being overseas for the bad news and in Canberra for the hand-outs.

There may have been a time in Paul Kelly’s memory when governments actually looked as though they were determining the fate of the economy, but not any more. It’s for this reason that the dilemma that the media thinks the government is supposed to have over what political ‘message’ this Budget will send for the government’s future direction, doesn’t really exist – or at least not in the way they think. The government response will be pretty straight forward, a bit of hand-outs here and trimming of the sails there to economic forces over which it has no control.

This does, however, raise a more difficult political problem with the Budget for which neither side is anywhere near finding the answer – the point of government at all if it has no control over something so basic as the economy. This is why there is some degree to which the coalition’s complaint about debt has some effect. Not as a way of establishing any alternative, the Liberals have nothing to say on how a coalition government would get out of debt, except probably like the last one did, wait for a mining boom and hope for the best. But it does have a corrosive effect by reinforcing the limited role of government and how in the face of there being nothing the government can do, maybe cash hand-outs will just make things worse. With no expectations of an economic strategy being laid out, because there hasn’t been one so far, we will probably get what we saw after the last Budget, a sense of drift.

Posted by The Piping Shrike on Monday, 11 May 2009.

Filed under Tactics

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7 responses to “The coming non-event – 2009 edition”

  1. Mr Denmore on 11th May 2009 2:35 pm

    Hear hear. Paul Kelly and his pompous prognostications on politics are emblematic of the irrelevance of much of the press gallery’s reporting of the global recession.

    They simply do not get that Canberra’s response is largely irrelevant in an economy which is now truly global. Governments everywhere are struggling with this.

    Claiming Rudd will be blamed for the recession is just ridiculous and shows once again what a redundant template Kelly and all the other talking heads are working from.

  2. Ad astra on 11th May 2009 3:17 pm

    Paul Kelly’s utterances on Insiders and his piece in The Weekend Australian simply reflect his belief as an experienced journalist that he has insight denied lesser beings. He shows no signs of understanding the complex dynamics that exist in the global financial world, the unpredictability of any moves made to reverse adverse trends, and the existence of the butterfly effect.

    Having just finished his book that examines the past, he seems anchored there unable to encompass the new politics and the contemporary reality of the GFC. So he profoundly trots out the usual clichés and tired old predictions. Others in the media, under the influence of groupthink, are mouthing similar sentiments. At least while the financial crisis unfolds unpredictably, we can depend on predictable comments from the media, no matter how inept they are.

  3. Scott on 12th May 2009 11:21 am

    Kelly needs a footnote at the end of his articles: “I’m a Liberal voter and I want them back in government”.

  4. Cavitation on 12th May 2009 11:44 am

    Perhaps you are being a little unfair to Paul Kelly. After all, the Labor party’s mismanagement of the economy has been regarded as the major cause of their defeats in the past. Chifley lost over nationalising banks and post-war rationing, Whitlam over the poor response to the Oil price rises in the early 70’s and various scandals, and Keating over his neglect of basic issues, and the high government deficit. With Keating, the contribution of economic issues to his defeat was exaggerated, but the following Howard government retrospectively pinned all sorts of economic sins on him, so that the electorate probably now “remember” various economic problems caused by Labor that were unremarked at the time – apart from the recession “we had to have” (has any other phrase uttered by a politician ever had more consequences at that one?). So Paul Kelly has a valid point that history may repeat itself. Certainly, this seems to be the view (and hope) of current Liberal party strategists. The 70’s oil price crisis that did so much damage to Whitlam’s government was also unexpected and outside of any Australian influence, but the public blamed the government for it at the time. The interesting thing is why the current government is missing out on this blame, and whether this will continue?

  5. Just Me on 12th May 2009 1:32 pm

    “(has any other phrase uttered by a politician ever had more consequences at that one?)”

    How about:

    “Hey, I know what we can do for fun this week, let’s annex the Sudetenland, and then invade Poland.” Mr A Hitler.


  6. Mr Denmore on 13th May 2009 3:42 pm

    If voters “remember” Labor economic mismanagement, as Cavitation suggests above, it is because of the unreliable historical record of people like Paul Kelly.

    I think the Australian public is a lot more sophisticated than pompous pedants like Kelly portrays them as. They understand that this recession is globally induced.

    And they recognise that Howard surfed on a wave of resource-generated company tax revenues that had nothing to do with his supposed superior economic management credentials.

    That the ibred talking heads of the press gallery keep saying otherwise doesn’t make it true.

  7. Ric on 13th May 2009 11:23 pm

    The only blame I would put on Whitlam for the mismanaging the oil shock was that the oil shock produced a lot of rich Arabs with money to lend, and he didn’t supervise his Ministers. I don’t find the way the economy itself was managed particularly remarkable.

    Fact: The Libs themselves had spent the previous ten years expanding the federal government, and many of the social policies were also similar. But the Libs didn’t have Dr Cairns as the hippy treasurer who didn’t care about money.

    Fact: Stagflation and other economic woes for Whitlam were world-wide, from 25% inflation in the UK to Nixon having to abandon the gold standard. And even the superficial causes such as Vietnam era debt were just superficial.

    The real problem was the western economies had matured, and the basic run up from poor to comfortable standard of living, such as China is now going through, had terminated abruptly at about 1973. Growth generators such as getting everyone into their own home, their own car, into education etc had been achieved but more recent potential to expand, for example, opening up the Eastern Bloc or China and India, were still a long way off.

    Nixon was forced from office for covering up but his previous indiscretions had not seen him punished. It was the coincidence of this and the economic problems that cost him but even then, he probably had less say over the economy than people thought. You wouldn’t credit Eisenhower with an economic boom, so why credit Nixon with its bust?

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