Wednesday, July 1, 2015
As is their wont, the media are enthusiastically indulging our desire to dwell on all the gruesome details of a spate of terrorist acts in faraway countries of which we know little.
But this seemingly innocent nosiness is leaving us with a quite exaggerated impression of the chances of our ever coming into contact with such an event.
Apparently, all you have to do to be in mortal danger is attend the making of an ABC current affairs program. It's a field day for any attention-seeking nut of Middle Eastern background.
Would you say our Prime Minister is seeking to calm our overblown fears or is playing them for all he's worth?
Precisely. And I'll tell you why. Because he's discovered he's not much chop at leadership - at inspiring us with a vision of a better future, at explaining and justifying necessary but unpopular measures - but he is good at running scare campaigns, to which the Aussie punter seems particularly susceptible.
But, above all, because he wants to divert our attention from the hash he's making of managing the economy.
In opposition, and facing a Labor government that lacked all confidence in its own ability as an economic manager, Abbott assured us the Liberals had good management in their DNA. I thought he had a point, but what we didn't discover until too late was that he and his chosen Treasurer just didn't have that gene in their bodies.
They started by telling us that, apart from the immense damage being done by Labor's carbon and mining taxes, the economy's big problem was the budget, something they, being Libs, could fix in a jiffy.
They had one go at fixing the budget, got themselves into terrible trouble in the polls, then gave up. Pretty much the sole purpose of this year's budget was to reverse their poor political standing by ditching or modifying many of their unpopular policies.
From that day to this, we've heard little more of the evils of debt and deficit. Almost all of what little improvement in the budget deficit is expected will come from bracket creep.
Fortunately, the budget deficit and the still-small level of public debt to which it has given rise was never the central, pressing problem for the economy the oppositional Abbott & Co made it out to be.
We will have to deal with the deficit eventually, but it's not pressing. And fortunately, thanks to the good offices of Peter Costello, primary responsibility for the day-to-day management of the economy was long ago shifted from the politicians to the econocrats of the Reserve Bank.
Trouble is, no matter how many more times the Reserve cuts interest rates, it's having little success in getting the economy moving at a satisfactory clip. And with more mining construction projects being completed as each day passes, the economy is in danger of drifting into recession.
It may not happen, but the possibility that it will is too high for comfort. The Reserve has been calling out for help from Canberra, but Abbott and Hockey have been turning a deaf ear, far too busy coping with the confected national security crisis.
Now we've received a very could-do-better annual report card from the International Monetary Fund. Far from urging Abbott and Hockey to redouble their efforts to reduce deficit and debt, it's telling them they have plenty of "fiscal space" relative to other advanced economies - room to increase debt - and should be doing more to encourage spending on infrastructure by the state governments.
The problem is that while the Reserve has been using too-low interest rates to get the "non-mining" private sector moving, the public sector has been doing nothing to help. Indeed, despite the incessant talk - federal and state - about the greater efforts being made to ensure the adequacy of our infrastructure, nationwide public capital expenditure actually fell by 8 per cent over the year to March.
The decline came from the state governments, not Canberra. But since it's the national government that's primarily responsible for the health of the national economy, this provides Abbott and Hockey with no excuse.
That covers the Abbott government's poor performance in the immediate management of the economy. But it's just as ineffectual in dealing with the less pressing, more structural need for us to lift our economic game if our continued material prosperity is to be assured.
Despite the ever-growing pile of reports it has commissioned on the financial system, competition, industrial relations, taxation and federalism, it's becoming increasingly clear that, having wounded itself so badly in last year's budget and still being behind a weak-led opposition in the polls, the government has no stomach for taking reform proposals to next year's election.
Economists, business people and even the government's own intergenerational report are warning that our productivity isn't likely to grow fast enough in coming years without further reform, but to no avail.
If the Liberals do have good economic management in their DNA you'd think by now they'd be turning to others among their number with greater leadership skills. But not, apparently, while they can hide behind the charade of concern about threats to national security.