As the economic crisis began impacting on the global financial system, a grim faced Prime Minister Rudd announced to the nation that although tough times lay ahead, Australia was well protected by its strong and well regulated banking system.
Short on detail, it was a stoic Churchillian performance, designed to demonstrate the Rudd Government's will and determination to fight the adversity of the global economic crisis with economic skill, but careful to warn that some pain lay ahead and unemployment could rise.
Following the lead of other nations, Rudd announced similar government backed guarantees. Determined to be seen as visionary and proactive, Rudd went further than his counterparts by announcing he would extend guarantees to cover all deposits, but again failed to provide the detail only to find soon after that the devil lay in that detail.
Rudd went further once again, responding to the plight of Australia's aged and carers with a massive pre Christmas cash windfall. Australia's massive surplus and its well performing "future fund" made such a generous gesture possible.
This was followed by further additional mega bucks expenditure on infrastructure projects, crucial to keep Australia competitive and remove the bottlenecks restricting the steady flow of our minerals, grains and product exports.
Rudd confidently explained that "his government had kept the huge surplus in reserve for times of need, and those times are now here".
So! Do these guarantees and acts of generosity reflect skilful economic management by our elected government?
In such serious times, surely it could not be just an act of political expediency or even inexperience!
Faced with such a crisis, and before making an address to the nation, it would be logical for any government to seek advice on key trade, financial and domestic issues as a priority. This would be especially so before committing to any major draw downs on the nation's strategic cash reserves.
It was not until after making these "bold initiatives" however, that Rudd sought a briefing with the captains of industry to seek their input. Details were kept secret, but there were a lot of grim faces leaving that room after that meeting. It was only later when the implications of the "deposit guarantee commitment" became evident, that Rudd eventually sought further advice from the financial sector and modifications were made.
All governments actively seek to dispel fears of a recession, and that can be reflected in a slowdown in the retail, housing and small business sectors. With that in mind, could it be argued that Mr Rudd's generous pre Christmas handouts may be construed as a cynical short term, or even panic strategy, to defer indications of any such slowdown until the end of the first quarter of 2009 when the impact of consumer spending on the economy over the Christmas holiday period, is revealed.
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