As polling and focus groups indicated, the electorate credited the Coalition for the recent good economic performance. This identified economic management as a negative for the ALP. Given this, Labor decided that any attack on the Coalition’s economic credentials would nevertheless direct debate into an area of agreed Coalition strength. ALP memories went back to the last election when it ended the campaign on the front foot over “children overboard”, wondering all the time whether winning the battle might nevertheless contribute to losing the war, given the widespread belief that security was the Coalition’s issue.
As a result, neither side really debated economic policy, but the Coalition gained great traction with its subliminal appeal to its own reputation as a good manager. In a curious detail, this was the first election in which we were repeatedly reminded how big the economy was - $800 billion dollars - the implication being that you needed someone pretty experienced to keep track of quite so many dollars. I know he has help, but to this day I am still amazed that John Howard can do it. I guess we just have to hope that he can still keep track of things when we pass the trillion-dollar mark.
In the meantime, the warning signs went unremarked, 6 per cent current account deficits, stalling export volumes, research and development now rising at least but still a lower share of the economy than it was 10 years ago, inflation of over 4 per cent in our non-traded sector, and a scary level of private debt. It is certainly possible to tell a benign story of how we will manage the transition from the consumption driven growth, which made sense at least while export demand was low, to export led growth. Perhaps it can be managed smoothly, but I have my doubts.
Six economists (including myself), tried to draw attention to some of these problems and set out a suitably bipartisan outline of the major issues. We tried all the tricks, our choice of headings - prudence, participation and productivity, allowed the unalloyed allure of alliteration. The statement made quite a splash being published, quite fortuitously, on the morning of the debate between Treasurer Costello and Shadow Treasurer Crean. But neither man mentioned it and when eventually prompted by media questions, both returned to their more familiar bickering about tax winners and losers.
Both men had good reasons for not dwelling on the potential weaknesses of our economy. Acknowledging them would obviously take the gloss of the Government’s claims to good management. And both were bidders in an auction of giveaways. Greater fiscal prudence, and where that was not possible or desirable, a greater expenditure of outlays on investment in reform rather than current consumption, would have cramped their style.
There was another reason. Both parties were playing “you show me yours and I’ll show you mine”. Each wanted to steal the other’s thunder, and both were manoeuvring for the title of most fiscally responsible by being least fiscally irresponsible. This acquires an additional degree of difficulty when one is looking in the rear vision mirror trying to spot how much cash your opponent has littered in his wake. Consideration of the fundamentals of fiscal responsibility and the wise expenditure of outlays that were committed, was thus displaced by campaign tactics. Although those on the 20/20 hindsight bandwagon all agree that the ALP’s policies were released too late to be effective, this is ultimately driven by the news values of the media. The media will run dead on policies that are not “new” and so a campaign must consist of a steady stream of new policies however desirable it would have been to release them much earlier. This is a continuing problem for our democracy.
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