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Howard and Costello faced no adversary and yet squandered a 10 year resources boom

September 25, 2011

Howard and Costello did not need to deal with a Global Financial Crisis. Labor faced the GFC as a new government without much of a majority and successfully implemented the huge task of a stimulus package. Stimulus was not their idea, in fact Joe Hockey stated that he would go for a 20 Billion package rather than 40 Billion. If in power, the LNP most likely would have implemented a 30 Billion package.

Stimulus called for rapid spending, like fast food which is rapid to prepare and is rapid to consume. Rapid spending is what Labor did, and there were serious problems, for which they are still accused of being incompetent. Howard and Costello never faced such a challenge.

The AUD was low: Howard and Costello did not need to deal with the high Australian Dollar. The currently high AUD near parity is one of the biggest challenges Australia has EVER faced. The high dollar is a disaster for Australia and is providing a huge challenge for the Government. With the low AUD and a nice continuous ramp in resources export volume, the Howard and Costello government was able to enjoy a huge boom in overseas students coming to Australia, as well as a manufacturing sector enjoying exports. The natural state of the lucky country was so optimal that any government would have succeeded spectacularly.

The GFC converted the AUD into a speculative currency. First the AUD dropped dramatically, demonstrating that the AUD had a much higher volatility than previously known. Nobody predicted that it could drop from 75c to 50c in such a small time frame. Then the mining boom and record low interest rates in the USA combined to push the gambler’s AUD currency to ridiculous highs. The education and manufacturing and tourist industries are much larger than the mining industry and are being severely damaged by the high AUD. Resources are keeping the terms of trade at record highs but we are completely reliant on China for staying afloat. One slip and we’re screwed. Labor is facing this challenge as a minority government with an obstructive, destructive and bullying opposition not agreeing to any bipartisan policy for the good of Australia.

During these great years of prosperity Howard and Costello also privatised Telstra to pay off debt. At the end of the 10 halcyon years of navigating the world economy around calm waters, Howard and Costello had saved 20 Billion Dollars and paid off our national debt (Edit: a reader told me it was 47 Billion, an impressive figure, regardless). WOW, great achievement, I agree, and yes I agreed it needed to be done, and I voted for them. But this great achievement was easy to achieve, and could have been achieved without running down education and health. It could have been achieved while also building infrastructure. If the infrastructure had been built, we could have been stronger now. Believe it or not, infrastructure also pays dividends. We all know the 20 Billion saved by Costello was spent in the stimulus package. It is no coincidence that Joe Hockey specified 20 Billion as a responsible level of stimulus, because it would have looked like he didn’t need to borrow any money, so he’d be seen to “balance the books” by the simple folks.

The simple consumer budget mentality is no longer valid. We can no longer enjoy a nice calm slow ramp up of resources, overseas students, successful manufacturing. We have to face real adversary and take real action. The sort of action only Labor knows how to deal with, while the spoilt brat opposition and their supporters sit back on their acquired wealth and enjoy pointing fingers at an “incompetent” government. This Labor government has implemented more difficult decisions in the past 4 years than were done in the entire term of Howard and Costello.

Where the hell did all the money go? Howard and Costello had it so good, and there was so much money, but where the hell did it go? It was squandered! It became middle class welfare. It became new people movers and 4 wheel drives. It became large TV’s, when they were really expensive (not the cheap ones bought with stimulus money!).

The Howard and Costello money went to WARFARE. The military money grew. Howard eagerly agreed to every war that his conservative USA leader George Bush proposed. John Howard told us there was indisputable evidence that Saddam Hussein possessed weapons of mass destruction that were so terrifying that we had no choice but to invade Iraq aggressively with shock and awe. He assured us that our lives would be in constant danger of terrorism if we did not do this. Whether we are safer or not, we’ll never know; but one thing is for sure, the evidence he claimed to be privy of simply did not exist. There was only one source who provided unreliable information. The evidence was not credible at all so John Howard misled the Australian public and betrayed our deep trust in this strong leader.

Howard and Costello squandered the money in an orgy of vote buying. Every election there were goodies from the government. Our personal greed grew with every election. I know, because I lapped it up – for a while. Then half way through the 10 years it felt dirty. The money was wonderful. Miners paid more taxes to Costello every year. Exporters of education, tourism and all the other powerful drivers of the Australian economy paid more taxes. Things were wonderful and the love affair of the middle class with Howard and Costello grew deeper each year. If you had kids, you loved Peter Costello. This was the government for the family. There were goodies with tax cuts and baby bonuses on July 1 of every year. We became the 6th lowest taxed country in the OECD. The greed was becoming a stench, it meant serious things like infrastructure in transport or education or health were COMPLETELY OVERLOOKED. The neglect of Australia under Howard and Costello was profound. Yet people still love them.

Conservative voters, I plead with you to stop thinking about Australia in terms of your own budget. Stop thinking about the Carbon Tax affecting YOU, even though it will probably benefit you. Think about the country as a whole and think about what a terrific job Labor has done in reversing so much neglect in Australia during the Howard and Costello years.

After 10 halcyon years of world and Australian growth, the electorate remains brainwashed that tax is BAD and tax cuts are GOOD and that government spending is BAD and that mining is GOOD. If we’re over taxed then yes, reduce tax! But we’re not over taxed. If an opportunity presents, to retain vast amounts of money in this country by taxing polluters then introduce a tax! Taxes had to come from somewhere. We can’t forever reduce taxes or eventually we’ll face the problems of Greece and many other problem states of the world. The Carbon Tax retains money in Australia that otherwise flows out. It is that simple, MONEY STAYS IN AUSTRALIA and we are better off. I’m surprised conservatives do not grasp this concept. They instead focus on outflows. A small percentage of collected tax will flow out of Australia. Do your math, more is retained than leaves = net balance MONEY STAYS IN AUSTRALIA.

Some conservatives claim the carbon tax will dampen investing in mining. Investment in mining is restrained by other factors such as infrastructure, mining approvals, productivity, market for the products. Even if Australia instantly shut down all coal fed power stations, we will still dig up and export coal. But coal fed power stations are unlikely to be shut down. New coal fed power stations will be less likely to be built when subject to a carbon tax. Even IF the tax dampened investment in mining, this would have a highly desirable outcome: it would lower the AUD. The benefit from all the other industries combined would way exceed any lost investment in mining.

Fears about job losses due to the carbon tax are a complete fabrication by shock jocks. They will tell any story to make Labor sound bad or incompetent. Shock jocks take a few simple facts and do domestic math to product fabricated nonsense. For example, they look at the renewable energy funds generated by the carbon tax and take the number of jobs directly created by those funds and do a simple division. Their conclusion is any job created by the carbon tax costs the tax payer $600K. The reality is vastly different. Renewable energy inherently uses more jobs than fuel burning energy. Fuel burning energy production is mostly about burning fuel and doesn’t need that many jobs. The main input to renewable energy is people. The other inputs are free, sustained by the sun or wind or waves or geothermal heat. So follow the money and see that jobs are the end result.

Howard and Costello saw renewable energy as a sideline distraction. They did nothing to position Australia to compete with Germany and China and EVEN THE USA for developing technology for renewable energy. They were asleep at the wheel. The carbon tax will reverse some of the effects of this neglect and help Australian industry develop great new technologies and position us well for the future. Your grandchildren will look back very fondly at Julia Gillard and the Australian Labor movement and praise them for thinking beyond a single term.

I congratulate Julia Gillard for having the guts to back flip and “break a promise” to implement the carbon tax. Some see her as a liar but I see that it is something she had to do to reverse a mistake she’d made.

Please leave a comment or tweet to @james00000001. Also see my articles on photography and general technology or politics.

3 Comments leave one →
  1. patriciawa permalink
    September 26, 2011 1:44 pm

    About that so called promise PM Gillard broke – if it wasn’t in writing, was it a promise anyway?

    Like your article James. It covers some important points and it all makes sense to me!

  2. jane permalink
    September 26, 2011 4:21 pm

    Loved your article. It says all that I’ve been saying for years, except that I never voted for Howard. I never trusted him from the moment I laid eyes on him and that opinion was reinforced each long and dreadful year he was in power.

    He never gave a toss about this country and I feel equally certain his ambition was to reduce public infrastructure to a shambles so that he could provide his mates with a large unskilled and uneducated pool of cheap labour.

    A mean spirited little man with little mean spirited ambitions. Character traits only too obvious in the second rate mob who have inherited his mantle.

  3. September 27, 2011 11:16 pm

    Thank you for your comments!

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