After weeks of political scandal, National is understandably keen to seize on Budget week as its big chance to refocus election year entirely, around issues of economic management. Yesterday’s post-Cabinet press conference was a case in point. From John Key’s opening comments to the Press Gallery journalists that “I’m sure you’ll agree” Finance Minister Bill English has done a great job since 2008, and a related suggestion that the Helen Clark government was somehow responsible for the Global Financial Crisis and recession, the Prime Minister was in fullblown Budget week over-drive. Looking across the Tasman to tonight’s Australian Budget, Key depicted Tony Abbott as a victim of the kind of spendup – “a 50 billion deficit!” – that we would allegedly have here, if a Labour/Greens government got elected.
Pure spin and bullshit, of course. Even the right wing media in Australia aren’t buying that “Gillard made me do it” line. As the Sydney Morning Herald editorialised yesterday:
The other dishonesty from the Coalition was to pretend the increase in budget deficits was caused by profligate spending – and not [in reality] by a combination of stimulus spending and a fall in receipts from the resources boom and a hit to confidence caused by the global financial crisis in 2008-09.
The stimulus spending by the Gillard/Rudd government was neither extravagant or unwise. It was what responsible governments do to protect their citizens during a global crisis. As a result, Australia evaded a recession during the GFC, alone among developed economies. It also has the resources to pay its way out of what it currently owes, without conjuring up the Apocalypse. Let’s be straight about this. The Tony Abbott/Joe Hockey Budget tonight is a horror show that has been generated by (a) ideological fanaticism and (b) the need to pay for the electoral bribes that Abbott and his Coalition mates peddled on the hustings last year. The SMH got that sorry tale dead to rights yesterday:
Few leaders in modern Australian politics have more effectively refined and repeated the drum-beat of a simple message, hammered home, than Abbott as leader and Mark Textor as pollster. Their message: Julia Gillard misled the nation. Her carbon tax was a big new tax. It would damage the economy. Abbott, in contrast, would introduce no new taxes and no surprises (other than a tax imposed on large companies to pay for paid parental leave). There would be a return to steady, prudent, predictable government. The latitude for hypocrisy contained in this simple moral message was zero.
OK, and those messages won the election for Abbott. But now what?
Now, nine months after the 2013 federal election campaign, the Abbott government, based on multiple clues, will introduce a tax increase on fuel, a new tax on every visit to the doctor, higher costs for university, an increase in the income tax for the 650,000 people earning in excess of $150,000 – or perhaps the threshold will be higher (the agony over this broken promise ebbed and flowed and wobbled, right to the end). So there goes the no new taxes. There goes no unpleasant surprises…Add, to broken promises, a big dash of political bravado: increasing the eligibility age for the pension to 70, phased in by 2035, plus increasing the cost of university, and the cost of health care, plus increasing the eligibility threshold for family benefits and disability support payments and the age pension. Plenty of potential for electoral blowback in all that.
To compound the broken promises, the regressive tax hits, the false economy on doctors visits (early detection being the cheapest form of health care), and the plethora of cuts to government agencies, the biggest luxury of all, Abbott’s paid parental leave scheme, is not sacrificed even as the prime minister calls for sacrifice…Little wonder the opinion polls are showing a sharp deterioration in support for the Coalition.
True, the SMH thinks there could be an escape route for Abbott, via his “spread-the-pain” approach. We shall see. In the meantime, the Abbott Budget gives Key some useful points of difference to work with. As mentioned, Abbott is already being cited as a warning bell to the New Zealand voting public: see, elect a centre-left government and these are the harsh measures that Tony and his team have found necessary to pull Australia out of its tailspin. Simultaneously, Abbott is a useful cautionary tale for Key’s own centre-right colleagues. Look at Australia, Key can validly tell his own caucus hardliners and corporate cronies, and see how politically suicidal the policies of ideological extremism would be here too, in practice.
For this entire term in office, Key has been positioning National to deliver this message of success via alleged moderation. (Tell it to the customers of WINZ and ACC. Tell it to the underpaid workers in the nation’s rest homes.) Key has sought to position National as the steady-as-we-go alternative to the scary austerity of the extreme right; and also to the scary extravagances of David Cunliffe (the Lenin of the Labour left) and of Russel Norman, the Stalin of home insulation. As an election year strategy, it is all a bit reminiscent of the old Hillaire Belloc cautionary tale about Jim, who slipped away from his Nurse at the zoo and got eaten by a lion:
Father, who was self-controlled,
Bade all the children round attend
To James’s miserable end.
And always keep a-hold of Nurse
For fear of finding something worse.
Indeed. Hold on tight to the hand of Uncle John, children. In reality of course, the contrasts are bogus. As mentioned, the Gillard/Rudd era of stimulus spending successfully kept Australia afloat – ably assisted by a Chinese economy that kept things ticking over in New Zealand as well, thanks entirely to China’s willing use of deficit spending and an engineered low exchange rate to help out its exporters. (You know, all of the stuff that we’re supposed to abhor as economic heresy.) Given the padding provided by Australia and China over the past five years, there was little reason for New Zealand to resort to cutbacks and to the economically disastrous partial privatisations that Key and English chose to pursue, mainly to satisfy their donors.
Here’s the thing: Key hardly inherited a mess. Far from being reckless, Michael Cullen had used much of the economic boom conditions of the 2000s to pay down government debt. That breathing room enabled New Zealand – and the Key administration – to ride out the worst of the GFC. In similar vein, the Bloomberg News business columnist William Pesek reported only a few days ago about economic conditions in Australia – and by extension, in New Zealand as well. As Pesek indicates, Australasia survived the Global Financial Crisis in better shape than any other developed region on the planet. New Zealand’s government debt was just 35.9 % of GDP in 2013 – in Australia it was only 28.8 percent – which puts us among the least indebted governments of the world’s advanced economies, and certainly in far better shape than the 105% figure for the US and the 243% for Japan.
Why, therefore, has there been a drive for austerity here, and callas for belt tightening – although noticeably not among the country’s highest earners, who enjoyed the bulk of the $5 billion tax windfall dished out by the Key government during the GFC recession. Policies of moderation and sound economic management? Hardly. Ultimately, a drover’s dog could have produced the current economic recovery, which has been almost entirely the product of global commodity prices and the Christchurch rebuild.
As Pesek says, the Abbott government has concocted a fake budgetary crisis in order “to attack programmes that it dislikes on partisan grounds, including unemployment benefits, assistance for poor and single mothers, and healthcare programs for the elderly and disabled.” Not only are such actions mean and unnecessary, Pesek told his business readers, but the emphasis on austerity and on shrinking the role of government is likely “to starve Australia of the vital investments in education, training and infrastructure the country needs if it is to diversify its economy and thrive in the decades ahead.”
Such concerns strike a chord here, as well. A balanced budget is only a tool, not an end in itself. Cutting spending and juggling the figures to create a surplus will neither make New Zealand prosperous, nor globally competitive. To promote prosperity beyond the Cabinet Club, a future New Zealand government has to spend judiciously on technology and skills training to back innovation and boost productivity. It also needs to fund new transport infrastructure in Auckland and elsewhere, and expand Internet freedoms and connectivity. Furthermore, a competent government needs to identify and resolve the causes of income inequality and wealth concentration, and the social problems created by them. New Zealand also needs substantial policies on climate change, if only – as Pesek suggests – to counter the more serious droughts that will be hitting our farming sector more often in future.
To date, the Key government has merely been tinkering with these issues. In that respect, the surplus and how it has been achieved are probably the least important aspects of this week’s Budget. Inevitably, the surplus will be treated as a fetish object and political totem, when the election year debate should be about the planning – and if need be, the debt financing – for long term growth. On that score, John Key would do well to consider the Sydney Morning Herald’s conclusion: “Hard decisions on the economy, with its ageing population, need to be made, and made now; and to act otherwise is the greater hypocrisy.”
Sunglasses After Dark
When Jim Jarmusch was playing keyboards for the Del-Byzanteens during the early 1980s, their debut album’s lead track contained these striking lines: “If I only have one life / let me live it as a lie…” It was a hipster’s prayer: since meaning is self-generated, we need to live our lies with integrity. Jarmusch’s latest movie Only Lovers Left Alive – it could just as easily have been called Only Hipsters Left Alive – makes exactly the same point, with vampires. As others have noted, the main male vamp (Tom Hiddlestone) is a petulant, perpetually adolescent recluse, but the female undead (Tilda Swinton, Mia Wasikowska) remain alert and alive to the sensory wonders of the cosmos. Make of that what you will.
Near the end of his film, Jarmusch shoe-horns into the narrative a terrific cafe performance by the Lebanese musician Yasmine Hamdan. Hamdan, now 38, lived in Paris during the mid 2000s after her band Soapkills broke up, and she has collaborated at times with the French EDM producer Mirwais. She has also resolutely refused to broaden her appeal by singing in English – which is exactly the kind of integrity that Jarmusch’s film snootily, and endearingly celebrates. For starters, here’s a clip of Yasmine Hamdan’s performance from Only Lovers Left Alive. Reportedly, the translated-from-Arabic lyric includes lines such as:
“Oh, my heart is fragile /Separation hurts me,
I do not have a solution/ The heart loves only once…”
I’ve also linked to a track called “Samar” from her 2013 album Ya Nass.