Corin McCarthy writing in The Australian recently, reminded us of the inflated Kevin 07 fervor that defined his role as opposition leader in the lead up to the last federal election but more strikingly, how promises made then that is to say, “in times of irrational exuberance”, run counter to the present day solutions required in times of receding economic activity.
It began when Kevin07 challenged John Howard with anti-market measures that grabbed attention on the nightly news and won him favour on Seven's Sunrise. This was sometimes referred to as "scab flicking" politics. An issue would be raised, hence the scab. It would bleed from the politicisation, hence the flicking. Then there would be a call for an inquiry to indicate some action. This was the Rudd office playbook 101 for opposition. The Rudd opposition mercilessly used the politics of scab flicking on areas as varied as demonising Australian Workplace Agreements, using the navy to protect whales, green power schemes and, most explicitly, the cost of living facing working families.McCarthy details some of labors new labour market policies that undermine Kevin 07 promises like increasing labour participation rates, productivity growth and capacity constraints”, referring to enterprise bargaining reform and AWA’s being cast aside for the more quaint ‘forward with fairness’ in addition to relaxing activity tests for those seeking to re-enter the workforce at the expense of ‘mutual obligation sticks and tax reform carrots’.
Yet the sentiment scab flicking stirred up and the market interventions it has created will increase unemployment. To understand what is at stake, we must know what deregulation has delivered. Treasury secretary Ken Henry has argued repeatedly that the miracle economy of recent years resulted from the policies of deregulation in the 1980s and 90s, the labour and product market liberalisation started by Paul Keating and extended by Howard and Peter Costello. As recently as May 2007, Henry called labour market reform Australia's "shock absorber", a pivotal policy for achieving full employment and low wage inflation together.
Reversing this re-regulation is the only way Rudd can tackle unemployment for the 2010 election … the effect of Rudd's policies through more regulation and picking industry winners will reduce Australia's growth prospects … The Productivity Commission has already found that for every job saved in the auto industry it costs the community about $300,000 and the Green Car Innovation Fund would be unlikely to yield significant innovation and greenhouse benefits.Read the rest here
The commission also found Kevin07's 20 per cent mandatory renewable energy target will not achieve any further carbon abatement above the emission-trading scheme but will impose further costs borne by consumers through higher electricity prices.
Perhaps revisiting some of the fundamental prescriptions normally associated with, or derived from the tenets of economic liberalism that is, banking in markets, and competitive forces to dictate strengths of an economy, may be a better remedy for our present economic challenges. Though it must be said, not something that Sunrise presenters and viewers alike, would necessarily comprehend.
See also: Rudd’s 24/7 spin cycle