They Have No Plan

Really, They Don’t

This week’s economic bombshell was the news from the ABS that private investment data compiled by the ABS shows that Capital Expenditure is falling fast. For those of you who have been following the narrative of what happens after the mining investment boom ends, well, other sectors were supposed to take over. Back in the days of Julia Gillard as PM and Wayne Swan as the treasurer, they decided that housing building growth was going to take over and they were banking on, even though it was clear that private debt had reached a limit – the Minsky moment- where there wasn’t likely to be much more in that pipeline of money.

This left it to manufacturing and tourism that should come back except the ‘Dutch Disease’ essentially crippled those sectors as well as Australia’s overall productivity growth. That is to say, the question used to be “what’s going to replace the mining investment boom when it’s over?” The overwhelming answer as of the ABS data is “nothing.” Most notable in the figures is that Total construction fell 1%, and residential construction fell 1.7%.  This means the scenario dreamed up by the RBA and Treasury (and JG and Swanee) was completely misguided.

This means it is incumbent upon the government to boost spending in something like infrastructure projects. Joe Hockey’s been talking some of the government assets to fund infrastructure projects but nothing concrete has been said. We’re not even sure if this government’s got the ticker to move ahead with Badgerys Creek Airport. What’s happened instead is this Union bashing and withdrawing support for big companies that have strong unions which has resulted in closures of the Car industry and other manufacturers as well as Qantas sacking 5000 people. So manufacturing and tourism can probably be counted together with housing and construction as not being the next thing to replace the mining boom as the big driver.

The curious thing about this Abbott government is the impunity with which it is trying to cut off corporate welfare in a hurry. In most instances, this can be argued as a good thing. Indeed, business commentators are arguing that Qantas should be allowed to be bought by foreign entities and that even the closing of the car industry means we can lower tariffs (Hey, I picked that first). As I mentioned in previous posts, they seem to be doing this explicitly in order to attack the union base. Thus, they might dress it up in the language of ending corporate welfare but they’re really going after the unions.

What’s additionally troubling about their motive and modus operandi is that the Abbott government seems to want to use these cuts to fund its ballyhooed parental leave scheme for the rich – which is to say he’s replacing a public sort of welfare propping up unsustainable jobs, with a more targeted private welfare – which I think would be described as “robbing Peter of a job AND still taxing Paul to pay rich-Liberal-voting-lawyer Mary to have a baby”.

I guess you could file this under ‘Stop The Corporate Welfare’. Other than that this government still seems to be about ‘Stopping’ things (boats, entitlements) and ‘Repealing’ things (the ‘orrible Carbon TAX! And the Gina-hurting Mining TAX!) rather than actually doing things. It speaks volumes that the most credible member of the front bench is Joe Hockey. It’s not that he’s a great – he’s average – the rest of them are simply the pits (yes, even you, toe-the-line Malcolm Turnbull). They really are Economic Vandals and the business sector that supported them so much is only waking up to the horror now.

The overall impression one gets from the cumulative chaos of things is that this government is as ad hoc as the previous Gillard government, and while that Government had the legitimate excuse of presiding over a hung Parliament with some deals to sellotape it together, this government has no such excuse. They ‘re simply terrible at governing – but like a bad poker player they’re playing with house money thinking they’re great players, they think they’re doing a great job. So the only real conclusion we can (and necessarily must) draw from this is behind all the bluster and blame on the Carbon Price; the demonising and cruel treatment of asylum seekers; the economic vandalism of cutting off one’s pecker to spite one’s eyeballs; the throwing of the ALP under the bus at every international meet; the hiding behind military protocol to do questionable things and then deny them in the face of evidence  – and then shooting the messenger which just happens to be the respected national broadcaster, – is that these policy imbeciles have no plan.

That’s it. No Plan.

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