John Howard’s main weapon in this election is his image as an economic ‘superhero’. But what’s the real story? The economic upturn is international, it’s not just here. In reality the role of the Howard government has been merely incidental.
Economic growth is mainly based on the export of commodities to China. This boost for mining filters through to the rest of the Australian economy. Low interest rates also help boost spending, but despite the credit claimed by Howard and Costello these rates are set by the Reserve Bank not by them.
Interest rates have been high before under the Coalition (13% when Howard was Treasurer under Malcolm Fraser). The key point is not simply the interest rate but also how much one is in debt – today interest rates are lower than in the 1970s and 1980s but people have more debt so the amount of interest payments they pay as a percentage of disposable income has risen dramatically under Howard and Costello.
The boom time for bosses has been helped by changes like privatisation, user pays, tax cuts for businesses, and anti-worker industrial relations changes that have the combined effect of boosting profits. The share of national income going to profits has risen from 18% in 1980 to 27% in 2005. The share of national income going to wages has dropped from 63% in 1982 to 54% by 2006.
Many people – some estimate two million – have been left behind by the boom such as the army of casual workers and those displaced in industries like manufacturing, which have been smashed by international competition. Those workers who have raised their net wealth during this boom have done so through overtime and debt. This makes them slaves to the banks when interest rates rise. The long hours worked also undermine their quality of life.
The next government – whether it is led by Rudd or Howard – may soon face a different economic backdrop. The collapse of the sub-prime mortgage business in the US provoked panic on the money markets. The credit crunch also threatens a global downturn.
Yet some in the ALP, like Lindsay Tanner, lead the charge for more and more economic rationalism and capitalist globalisation. He is to the right of Howard, Costello, Latham and Beazley on economic issues.
The Australian’s political editor has explained what this paper has claimed for years: “Budget surpluses, climate change, national security, broadband rollout, education and public health, there’s hardly a cigarette paper between the Coalition and the Labor Party. So in the drive to be different, Bib the elder and Bub the younger have started a fight. Who’s a risk? Who’s too old? Who’s too young? Who hasn’t been around long enough?”
It is only a democratic socialist planned economy that could address the economic hardship faced by ordinary people and introduce a system where we could immediately reduce the working week and increase spending on essential services. This is what the Socialist Party is fighting for.
Editorial from the November 2007 federal election special edition of ‘The Socialist’ newspaper