Waiting To Exhale – Joe Hockey’s Delicate Condition
All political parties have their heroes.
Figures who tower over other former leaders.
For the ALP it’s Gough Whitlam. For the modern version of the LNP, it’s John Howard and Howard’s own hero – Bob Menzies.
Menzies still casts a long shadow over the LNP, and over post-war Australian history.
As the longest serving Australian Prime Minister, both critics and
admirers single out Menzies political accumen and foresight as the
reason for his unparalleled term of office.
Admired by many and reviled by just as many, his name is still
mentioned in Parliamentary debate, most recently by Christopher Pyne in
his attempts to renege on his party’s pledge to uphold the Gonski
reforms.
Which is somewhat ironic. While Pyne wheedled over the need to
privatize education in order to clean up “Labor’s debt and deficit
mess”, Menzies wholeheartedly endorsed the funding of public education.
Under Howard and Costello, and now under Abbott and Hockey, Liberal
governments constantly expound the need for budget surplus and
‘austerity measures’ through drastic cuts to government spending in
order to stimulate the economy and keep inflation and unemployment under
control.
Yet unemployment is steadily rising, and the Reserve Bank is also
forecasting inflation to increase in the next financial quarter. Why?
Why is it that under Costello and Hockey who gnash their teeth and
wail over the need for Budget surplus to fix the ‘national debt and
deficit’ through privatization and austerity measures, that these
strategies constantly fall short of achieving their goals?
How is it that a party which presided over a period of unparalleled
prosperity and political dominance, created the reputation as ‘better
money managers’ than the ALP, succeed so spectacularly where its modern
day equivalent has failed so dismally?
How was it that during the late 1940s when the economies of Britain
and the US slumped, Australia was able to boost its own economy and
create full employment?
The answer is simple – deficit.
Both Chifley and Menzies ran deficits, as did their successors, Holt, Gorton and McMahon.
When Menzies came to power in 1949, he capitalized on the National
Works Council set up by Chifley earlier that year to counteract both the
effects of the recession in the US and the threat of widespread
unemployment as a result of the National Coal Strike.
Chifley allocated £743, 357,061 (equivalent to approximately 14
billion dollars in today’s currency – an almost incomprehensible amount
in 1949) for a national works program to build infrastructure, which
included the Snowy Mountains Scheme.
When the ALP was swept from power as a result of the political
backlash from the Coal Strike, Menzies did not scream loud and long
about ‘the debt and deficit left through Labor’s mess’.
Rather, the Menzies government and its Treasurers Arthur Fadden and
later Harold Holt, utilized Chifley’s initiatives to create a burgeoning
middle class underpinned by a solid public service which fulfilled
Chifley’s promise that;
“Governments should not add to the tragic waste of our greatest,
national assets – the daily work of our citizens. If private employers
cannot offer sufficient jobs, the the government will – but not make
useless work.”
Menzies success rested in part on his political acumen, and in part
on his willingness to fulfill the Social Contract – that government’s
responsibility was to make decisions and formulate policy to benefit the
many – not just the few.
Menzies recognized the need to improve the education of lower
socioeconomic groups and set-up the Commonwealth Scholarship scheme
which enabled both secondary and tertiary study to completed at the
government’s expense while at the same time provided funding to maintain
the independence of the universities.
Menzies also established the Pharmaceutical Benefits Scheme,
dismantled much of the ‘Immigration Act of 1901′ (White Australia
Policy), encouraged scientific research through the CSIRO, established
the Australian Atomic Energy Commission, and funded today’s equivalent
of the NBN – a coaxial cable which linked the Eastern Seaboard and
enabled international dialling.
It should be noted that all these measures were undertaken at a time
when the Australian Pound was linked to the British Sterling at an
agreed figure of 25% less than the British Pound which in turn was
linked to the Gold Bullion Standard.
In other words, unlike the Howard and Abbott governments, Menzies and his treasurers were constrained by revenue.
Nonetheless, Fadden and Holt continued to use Keynesian economic
theory – demand creates supply – to drive the economy through judicious
use of government deficit.
Menzies and his successors were committed to creating the demand
through government funding to the public sector which served as the
buffer against private sector downturn, thereby allowing the private
sector greater opportunity to create supply.
The strategy worked exceedingly well for three decades and witnessed a
society that led the world in social and economic benefit.
In stark contrast, the Howard-Costello-Abbott-Hockey application of
Chicago School (supply side) economic theory has witnessed a steady
erosion of social benefit and a sharp divide between lower and upper
socioeconomic groups exacerbated by a steadily rising unemployment rate
and a faltering economy.
It was the Howard-Costello regime that eagerly propagated the myth of
government deficit as debt in the same manner as private or business
debt which is an outright lie.
Government deficits are simply a record of ‘outflow’ of expenditure in order to allow the private sector to accumulate assets.
As Australia is the sole issuer of its currency (sovereignty or fiat currency) and can create more ex nihlo (out of nothing) this debt never needs to be repaid, nor is it inheritable by successive governments or successive generations.
Deficits, as Menzies and Fadden quickly realized, are necessary to
create aggregate demand (the demand for goods and services) and fuel a
healthy economy, especially so in a country with a small population such
as Australia.
When the bulk of the electorate can easily perceive that government
policy and economic management is directed toward improving their living
and working conditions through access to education, medical benefits
and the prosperity of society as a whole, then they are willing to
reciprocate through the ballot box.
This is evidenced by Menzies holding the record as Australia’s
longest serving prime minister and the party he founded, able to hold
government for nearly a quarter of a century.
The Abbott-Hockey combination on the other hand, display a willful
determination to ignore not only the Social Contract, but the
foundations of political acumen.
In the ten months of his government, Abbott has managed to destroy
almost all of his credibility not only through broken promises but also
through a budget that has been roundly condemned by the electorate and
by leading economists as well.
When faced with a less than cooperative Senate to pass his budget
measures, Hockey resorted to a petulant outburst more suited to a
truculent child than a government treasurer.
From his wildly exaggerated forward estimates of budget deficit when
in opposition, to the refutation by BusinessDay’s panel of eminent
economists, who called the ‘budget emergency’ an ‘abuse of the English
language’, coupled with his statement in New Zealand that there was no
crisis in the Australian economy, nor were there drastic cuts planned
for the health, education, and taxes for ideological reasons, one cannot
but wonder if Hockey suffers from Pathologica fantasia (the compulsion to tell lies).
While Hockey has attempted to convey himself to the electorate as a
self made man who rose to his position through hard work and
determination reflected by the title of his biography More Than Your Average Joe,
what comes across is in fact a portrait of a conceited man determined
to have his way in all things and one who is unwilling to listen to, or
accept advice from others.
From his churlish responses to Howard’s offer of Minister for Tourism
and Small Business rather than Finance and the failure by the media
especially News Ltd to endorse his ‘End of the age of Entitlement’
speech, to his reaction in having to fill out his own claim for the
‘baby bonus’, Hockey potrays himself a man who is not as much ‘delicate’
as he is precious of his own abilities and the sense of his own
importance.
In his biography Hockey reveals how he ‘inadvertently’ smoked a joint while on the Kokoda Track.
Bill Clinton claimed that while he smoked pot at college, he never inhaled.
Perhaps Joe’s delicate condition and his sense of self importance arises from not having exhaled.
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