Dennis Shanahan was the first to use the term ‘benchmark’ in his 27 November piece in The Australian Rudd sails on perilous waters to identify the criteria of success, or failure, of the Rudd Government’s budget strategy according to the economic oracle, Malcolm Turnbull.
Leaving aside Shanahan’s applause for Turnbull’s tactical moves, he identified three benchmarks that to Turnbull would denote failure of economic management.
First benchmark, going into a deficit. As Shanahan put it, “Malcolm Turnbull had cornered Rudd and Wayne Swan over the deficit by establishing a budget surplus as a benchmark for economic success.” So by corollary, a budget deficit would be a benchmark for failure. And the longer the deficit lasts, the greater the failure, according to Turnbull: "Experience and history tell us that Labor deficits are never temporary. The last Labor deficit lasted for six years. It only came to an end with the election of a Coalition government."
Next benchmark, rising unemployment. Shanahan’s take is “...Turnbull and the Liberals are starting to frame the argument that any rise above the current 4.3 per cent unemployment rate is another benchmark for economic failure.”
Third benchmark – recession. Shanahan ends with a prediction: “The next challenge for the Government will come as Turnbull begins to demand it keeps the nation out of recession.”
So here we have the setting of benchmarks for failure of the Rudd Government, two of which cannot be avoided, and a third that also might be unavoidable.
Turnbull knows full well that Australia has been hit by an extreme economic storm not of its own making, that if the nation is to avoid a severe economic downturn and loss of jobs, radical fiscal measures will be needed which will likely create a budget deficit. To not take these measures would be economically irresponsible, so knowing the Government will take them Turnbull is setting it up for economic failure by his own definition.
Regarding unemployment, last month’s forecasts for unemployment of more than 100,000 have worsened over the past three weeks. So rising unemployment is an unavoidable given. The Government cannot meet Turnbull’s benchmark.
Finally, since ‘recession’ is an academic term for two successive quarters of negative growth, a product of the economic circumstances, over which the Government has limited control, another benchmark is looming on the horizon, one the Government would find it difficult to avoid unless it took extreme fiscal measures which in itself would create a deficit, another benchmark of failure.
So Turnbull is trying to establish a lose-lose-lose situation for the Government, a win-win-win for the Coalition and of course himself, and seems prepared in the process to accept a lose-lose-lose situation for the nation and its people. More...