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Dec 11, 2009

The Coalition's populism could have dangerous economic consequences

While Tony Abbott’s grave misjudgement in elevating Barnaby Joyce to a position of economic responsibility in the Opposition is already becoming apparent – along with its dangers fo

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While Tony Abbott’s grave misjudgement in elevating Barnaby Joyce to a position of economic responsibility in the Opposition is already becoming apparent – along with its dangers for Australia’s attractiveness to investors – the full extent of the Coalition’s policy shift is only now becoming apparent.

This is not a lurch to the Right in the sense understood in recent decades.  It is shift toward populism – and the crassest form of populism – that entails a marked step in directions more traditionally regarded as the Left.

Abbott’s own preference for regulation over the operations of the market is apparent, placing him firmly in the populist Left on economic policy.

But disturbingly, Kevin Andrews has signalled what would amount to a disastrous retreat from the high immigration policy pursued by both sides of politics for decades, one of the key drivers and props of Australia’s economic performance.

It also suggests that notional Immigration spokesman Scott Morrison will be the moderate but ineffectual face on a hardline, populist policy driven by more extreme figures.

Andrews wants immigration reduced to around 35,000 “as a starting point”.  In 2006, net migration was 182,000; the following year, 216,000 and in 2008, 253,000.

The economic ramifications of that were neatly demonstrated on the front page of the Liberal house organ today, when The Australian, as part of its efforts to sell a new round of industrial relations deregulation, reported employer warnings of skills shortages re-emerging as unemployment peaked and began falling.

The Coalition’s response to that appears to be not merely a return to individual contracts, but to slash immigration by 85%, depriving employers of much-needed labour.

The policy prescriptions being advanced by the Coalition wouldn’t look out of place on the far Left – opposition to foreign investment, resistance to high immigration levels, support for regulation and intervention in the economy.  Cuts to immigration would also attract support from the left of the Green movement, where high immigration is regarded as an environmental disaster.

Andrews’s proposal, and Barnaby Joyce’s lunatic claims, mark not merely a retreat from the policies pursued by the Howard Government – Andrews as Immigration Minister happily presided over an Immigration program of over 200,000 – but a break with the economic orthodoxy followed for the most part by both sides of politics since the 1980s.

The exception was Labor’s period of drift away from the reformist tradition of Hawke and Keating under Kim Beazley and Simon Crean.  The Coalition now appears to be undergoing a similar, but far more febrile, version of that episode.

It will also confirm the concern of senior Government ministers that the Coalition would become desperate enough to resort to a xenophobic immigration policy in an attempt to appeal to blue-collar voters who see immigrants purely as employment rivals.

The next step may well be protectionism, especially in Government procurement.

Where are the countervailing influences in the Liberal Party that will uphold the party’s recent reform tradition?  Joe Hockey, now the most powerful moderate, lacks the policy grunt to resist the populist urgings of Abbott, Joyce and Andrews.  Nick Minchin’s ministerial record was undistinguished, mainly because he was more focussed on factional warfare than on his policy responsibilities.  He certainly failed to play the traditional Finance Minister’s role of Dr No in the final Howard term.

It will be up to the party’s key business backers to explain just how disastrous the prescriptions of Andrews and Joyce will be. It might perhaps be too much to expect the commentariat to do the same.  But one can imagine how Julia Gillard in 2002 would have been pummelled by the right-wing media if she had called for an 85% cut in immigration, or if a Labor shadow Finance minister had attacked Chinese investment and suggested America was going to default.  They would have been called unfit to hold office, and correctly so.

Let’s see if there’s a double standard when Coalition figures peddle that nonsense.

In the unlikely event that this economically disastrous populism gets Abbott elected, there’s always the chance wiser heads will prevail in government.  If it doesn’t, the Coalition will have shredded its reputation for economic competence not merely with voters but with its business base.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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73 thoughts on “The Coalition’s populism could have dangerous economic consequences

  1. jenauthor

    @Podrick
    The Curious Snail has “wide ranging” interview with “Joh Junior” Joyce.

    http://www.news.com.au/couriermail/story/0,23739,26477377-953,00.html

    Yep — kinda says it all doesn’t it.

    I love the Ken Henry bit — shows how solid Joyce economic credentials are …. not!

  2. podrick

    The Curious Snail has “wide ranging” interview with “Joh Junior” Joyce.

    http://www.news.com.au/couriermail/story/0,23739,26477377-953,00.html

    The line that sums it up for me is this little gem.

    “”My goal in politics is to get my daughters through adolescence without body-piercings or tattoos, then fix the economy,” he said.”

  3. DaveOz

    Having taken an interest in U.S. politics for fifty years, and a keen interest in last year’s election, it seems clear to me that the Libs are taking a lead from U.S. (neo) conservative politics. We’re getting the rise of ‘think-tank’ opinion makers, media driven, dog-whistle, ‘confusion to the enemy’ political discourse. What happened to politicians just doing their job like everyone else? (and being honourable about it).

    So the Libs saw how successful the Repubs in the U.S. were at getting voted into office between 1980 and 2004. Is that all they care about? What about the end result of a $50 trillion hole in global financial markets, two wars, and broken health and education systems. Not to mention a lack of attention to public infrastructure. Doesn’t that count for something?

    Plus, the conservatives in the U.S. come from the former southern Democrats who were upset with civil rights, and then the evangelicals upset with Roe vs Wade. What’s that got to do with Australian politics?

    I heard Bronwyn Bishop rattle off Sean Hannity style talking points the other day – low taxes, small government, free markets. I don’t think that stuff suits Aussies. We’re just not that good at faking it, and others are too ready to say ‘pull your head in…get real’.

    Arianna Huffington (yes, I know, Huffington Post and all that), as a former Republican who got sick of it all, made a pertinent observation in her column today. It should give the Libs some pause about the path they are embarking on. We could either stick to the old OZ way of incremental advances on both sides of politics, or go with the failed experiment as played out in the U.S. Here’s what we might look like in thirty years:

    “The fight over health care reform has proven just how broken our system is — from the crippling influence of money on our politics to the misuse of the filibuster, which has taken away the power of the duly elected majority and given it to a handful of bought-and-paid-for senators. This disturbing and destructive state of affairs has created a country that is, in the words of Tom Friedman, ‘only able to produce ‘suboptimal’ responses to its biggest problems.'”

    http://www.huffingtonpost.com/arianna-huffington/health-care-reform-siftin_b_387997.html

  4. JamesK

    What did he say about ‘World’s Greatest Treasurer’, Paul Keating?
    http://www.abc.net.au/lateline/content/2008/s2480345.htm

    Personally I would give $5000 of my own hard earned for either Keating or Costello to be PM right now. Both Keating and Costello oversaw nonconservative reform that saw our economy grow at an unprecedentedly high rate.

    A treasure’s job wrt the economy is to get out of the way, ensure fairness, freedom and transparency and be fiscally prudent with the Federal coffers.

    Costello had stimulus spending during the Asian crisis. Like now there was one quarter of negative growth.

    I suggest: “The GFC did more for Rudd than Rudd ever did for the GFC”

  5. jenauthor

    @ James
    ‘That’s money we won’t have because of clowns like you and your infantile apologies for this crazy government.’

    Ahh James, delusions are sweet aren’t they? And hypocrisy is alive and well in the right-wing camp as well.

    We’re back to Rudd being responsible for the GFC are we? All that lost revenue is his personal fault? That premise is what is infantile.

    Our lower debt as a percentage of GDP means we can service that debt much easier.

    Our boat is in smoother waters than most other economies and we cannot thank Costello for it despite all the shrill cries from the right. Many of Paul Keating’s reforms are just as responsible — but then again, the coalits are responsible for the mining boom and China’s explosion of growth, aren’t they? Sleight-of-hand, which Costello did so well, does not cure the current problem.

    The current govt has had to address all the neglect of the previous govt. And by slow steps (and despite all the walls constantly being put up to thwart them) they are achieving those aims.

    This is a feature of Aussie politics … the Coalition runs things down (often during times of prosperity), the electorate finally gets jack of it and votes in Labor. When Labor gains power it is usually a time of looming not-so-much-prosperity. The coalits seem to have this crystal ball that allows them to escape office when the pendulum begins to swing. Funny that.

    Despite that lack of prosperity, Labor, being more egalitarian and fair-minded than the coalits try to fix all the leaks (i.e. education/health/infrastructure/pensions and so on) which obviously means spending money and then after a few years the electorate gets complacent and brings back the coalits because they continually blame Labor for the stuff beyond their control claiming they (the coalits) are the only ones with economic credibility.

    Sound familiar?

    The coalits would say that a high tide floats all ships … but if you let them get rusty and filled with holes they tend to sink. The coalits are masters at allowing the boat get rusty while they hoard riches like Croesus. In the current situation, saved money would be meaningless because it is inactive. Money that circulates — even borrowed money — will have a domino effect that keeps everyone’s hea above water. So in this case, debt is necessary!!!!

  6. Thomas Paine

    So we have come two years and the Liberal and Nationals have not learned on single thing about being in opposition. And it is due to their inability to consider that Rudd won on his merits and has been governing quite well.

    So off they initially went in the belief that if they scream and shout loud enough the public will at last realise that Rudd is some fake and thus run back to the Liberal Party.

    Then the right wing MSM began to see that Rudd’s honeymoon wasn’t a honeymoon, the public actually thought he was performing to their expectations. So it has been a continual campaign from them in concert with the Liberal Party to try and sully Rudd and the government. But the Liberals keep acting like teenagers and shooting themselves in the foot.

    Having failed that campaign it was the grand Grech conspiracy they hoped to run. And there we had in the Parliament the opposition asking question which obviously foreshadowed knowledge of an email that was supposed to appear from the Senate hearing. It was a set up to run the misleading parliament deal, which was pretty weak intself anyway, except the MSM had arranged to blow it up in to something massive. But bad luck the right wing media hacks and the Liberals as the fake was soon outed and they with egged faces.

    The Opposition have behaved liked spoiled and sulking children all along and lazy to boot.

    The only thing they have not tried and which blind freddy could have told them they should do from day one, is make themselves look like a responsible, credible and intelligent opposition, instead of all the screaming and shouting and contrariness.

    Well they have hit rock bottom with Goebbels type thinking. Now they think if they put out enough propaganda to appeal to base emotions they can scare up enough public division to bring people to their side. Joyce in Finance is the obvious confirmation of this ploy as nobody could imagine he had any credibility or ability on the issue.

    Instead they will start to sound scary, and cooky.

  7. Rollo

    It has to be said: Barnaby is sounding like a Communist.

    The Coalition have gone feral. Really. If I was a dinky-di Libs supporter, I would seriously be worried about what Abbott, Andrews, and Joyce are saying each day; total fluctuations in their message and Abbott has basically gone rogue. Someone said in another thread that Joe Hockey just didn`t seem like he wanted to be there when being interviewed because he knew he couldn`t sound convincing while the Carnival swirled around him.

    Do any of the Coalition supporters in this thread really think a coherent message is being made? Or that the ALP aren`t meekly batting these statements of profound lunacy away at the moment on purpose? Do you not think the ALP machine isn`t drooling at every soundbite they can make into an ad?

    There is no coherency to the Coalition at the mo. They are just blurting out the first thing that comes to mind that sounds oppositional. They are taking every opportunity in the media to be heard rather than bunkering down and having at least a semblance of strategy and cogency of thought.

    The only thing they have going for them is if Copenhagen breaks down. That is the only thing they have. You don`t build a house on a rolling mudslide and you don`t build a cogent thought-plateau on what you can not control. You don`t rule out mechanisms for futurity just so you can so you are different.

    I would really like to know from the Coalitionists who reside here in the Crikeysphere if they think the Coalition is being convincing.

  8. george

    @jenauthor,

    “Anybody who knows their ancient history will realise the government simply used the Periclean principle when fighting the GFC. Pericles took Athens from poverty into riches in a few short years by putting everyone to work on public construction etc.”

    Absolutely correct!

    And what public construction did the Rudd gov. spend it on? Schools. As Dr. Gruen points out from Treasury (and as reported by Poss recently), there was a distinct reason why the Government sent loads of cash to Schools (footnote #2 in the online report):

    “The largest component of the investment spending, the school-based infrastructure spending, has a number of elements to enable speedy construction. School land is available immediately without the need for planning approval; hence no planning delays. Further, schools chose from standard designs rather than developing their own, to speed up construction. School-based infrastructure spending has the advantage of providing stimulus to almost every population area of the country; useful because the economic slowdown was expected to be geographically widespread. Finally, school infrastructure projects have low import content, which raises the domestic stimulatory impact. Kennedy (2009) provides more detail on features of the stimulus package designed to ensure that it translated into spending in the economy as rapidly as possible”

    The full speech is well worth the read:

    http://www.treasury.gov.au/documents/1686/HTML/docshell.asp?URL=Australian_Business_Economists_Annual_Forecasting_Conf_2009.htm

  9. Most Peculiar Mama

    Your increasingly shrill and myopic partisanship is getting boring.

    Today marks the arrival of the 54th asylum seeker boat laden with wealthy Sri-Lankans in Australian waters this year.

    Laughably, and with no small degree of irony, you seem fixated on seeing this issue as a Coalition problem.

    “…But one can imagine how Julia Gillard in 2002 would have been pummelled by the right-wing media if she had called for an 85% cut in immigration…They would have been called unfit to hold office, and correctly so…”

    Overlooking your fervent desperation to believe in “right-wing media” exists (or existed) in Australia, I believe Ms Gillard can hoist herself on her own petard without your assistance:

    …transcript from the Sunday program, Sunday October 18, 2009

    Laurie Oakes: I’ve got here a shadow minister’s press release headed, “Another boat on the way. Another policy failure.” Do you agree that every boat of asylum seekers that arrives represents a policy failure by the Government?

    Julia Gillard: Well, what I believe, Laurie, and what I think we can see from the conduct of the Opposition, is they’re all about playing politics with this issue. They say a lot of inconsistent things. Some days they’re in favour of temporary protection visas. Some days they’re against them. Some days they’re in favour of the Howard Pacific solution. Some days they’re against it. Each and every day they’re playing politics –

    LO: But what about you? What about you? “Another boat on the way. Another policy failure.” Is that right?

    JG: Oh well Laurie, I think what Australians know and what the Government knows is that we live in a world where people get displaced from their home countries for a variety of reasons. We’re seeing the aftermath of a civil war in Sri Lanka, for example, so people move because of that kind of violence. What, obviously, the world wants is for people, if they have to flee their homes, to then stop when they can get in contact with responsible authorities, like the United Nations High Commissioner for refugees, and have their claims processed. What we don’t want is we don’t want people risking long and dangerous journeys overseas where they might get into distress and get into real difficulty.

    LO: You see, that press statement is dated April 23, 2003, and it’s issued by then shadow minister Julia Gillard. So why is one boat arrival then a failure of government policy, but 30-plus arrivals this year is not a failure of government policy.

    Julia Gillard.

    Pwned.

  10. Andrew Bartlett

    For those who thought Kevin Andrews’ performance regarding Mohamad Haneef demonstrated how poorly he understood migration matters, this latest outburst confirms it in spades.

    Mr Andrews has been reported as saying immigration numbers are “pretty much plucked out of thin air” – a truly astonishing piece of ignorance from someone who only recently actually had the responsibility for setting the numbers for our migration intake.

    I thought those advocating zero-net migration (approx some number of permanenet arrivals as permanent departures each year) had a poor enough idea of reality. But Andrews is suggesting we aim for negative migration, while at the same maintaining the extraordinarily expensive and inefficient baby bonus to encourage people to have more children.

    I am curious what happened to the idea of shadow ministers speaking within their portfolio. It seems under Tony Abbott’s lead, every shadow minister has got free reign to give voice to every thought bubble on any topic.

    I’ve seen some comments wondering why Tony Abbott didn’t find a shadow position for Pauline Hanson, but it looks like she’s advising them on economic and immigration policy.

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