We’ve a pretty smart Government, but what would it be without the guidance of the genius that suffuses the Opposition benches?
Ever since the top genius was elected to the position of Opposition Leader, there has been a flood of sage advice flowing from him to the Government on all matters financial and economic to keep it on course as it works to minimize the damage to Australia from the GFC tsunami. In fact even before that Malcolm Turnbull as Shadow Treasurer offered plenty of gratuitous guidance to Kevin Rudd, and particularly Wayne Swan, trying as he was to keep vertical on his training wheels. One cannot blame Turnbull for offering his counsel, as, after all, he once was a merchant banker and he did make a lot of money at it. It follows that he must be supremely qualified on all matters banking, the economy of the country, and fiscal management at a governmental level, even in the once-in-a-century circumstances that now engulf the world. Genius knows no bounds; genius is built to manage the unusual, the unique. And he has the ego and confidence to match his genius.
The fact that we’re all in this desperate situation because of the inspired work of banking genius in the US and indeed all around the world, the fact that US Treasury Secretary Hank Paulson, previously Turnbull’s boss at Goldman Sachs, has so far been unable to devise a solution, and has changed his mind radically in the space of a few weeks, should cause us to marvel at Turnbull’s capacity as an ex-banker to read and correct financial catastrophes. With his obvious ability and authority, Turnbull should offer his help to Paulson, and thereby help us all.
In contrast to Turnbull’s unquestioned ability, Rudd and Swan are characterized by him as not knowing what they were doing, as incompetent on matters financial, as indeed all Labor Governments are by definition. ‘They just don’t understand’ is an oft-repeated phrase.
Turnbull’s advice has been ubiquitous; space will not allow all of it to be captured here. The first of the Turnbull gems came when Swan declared the ‘inflation genie was out of the bottle’. We know this was part of a strategy to diminish the financial credentials of the Howard Government, and that it was not the smartest metaphor, since genies are notoriously difficult to get back into their dwelling place. But it was the cue for Turnbull to pounce and accuse the Government of ‘talking up inflation’, a theme to which he has returned again and again. Neither he nor anyone else in the Opposition, or for that matter in the media, has explained how it is possible to ‘talk up inflation’, if by that Turnbull meant that talk was capable of increasing inflation. If he meant ‘talk about inflation’ he should have said so. It was a natural segue to go onto say that by ‘talking up inflation’, Swan was ‘egging the Reserve Bank to raise interest rates’. Since the fierce independence of the Reserve Bank was established beyond doubt during Peter Costello’s Treasurer-ship, it’s improbable it would dissipate immediately after his exit, to the point that the Bank would be susceptible to ‘egging’ from anyone. In any case, why would an incumbent Government want interest rates to rise immediately after its arrival, especially after the pillorying Labour suffered for years for its period of high interest rates? So the Turnbull mantra was always fanciful, and being the smart man he is, he knows that too. But that has been no impediment to his repeating it ad nauseam. Expect more. [more]
Then along came the GFC and the emergency measures the Government took to counter it. Turnbull was clearly in his element. Being in Opposition, he found no difficulty in having several positions on the one issue, and changing as often as it suited him to gain political traction. After all, being ignored is anathema to Opposition leaders, and being ignored is not an option for Turnbull. So as often as the media could tolerate, he was on the airwaves. First he agreed with the $10.6 billion economic stimulus package, and grandly gave it bipartisan support without quibble, only to later express reservations and declare that he would have targeted the package ‘more astutely’. Fortunately it was passed by both houses before he could interfere with it.
Next came the bank guarantee that Turnbull still maintains should have been capped at $100,000. Again he pitted his superior knowledge of banking against the amateur understanding of Rudd and Swan. He accused them of not consulting with the Reserve Bank Governor, although everyone knows they received Glenn Stevens’ advice via Treasury Secretary Ken Henry, himself a Reserve Bank member. Turnbull said they were hiding behind Henry, whatever that means. Turnbull still insists he was right about the guarantee, and at his recent Press Club appearance asserted that the Rudd Government, by giving an unlimited guarantee, was the only one in the world that had made the situation worse. But so far Turnbull, nor anyone who agreed with him, has shown how or why the $100,000 cap would have been better, a point Laura Tingle made in her piece in the 25 November issue of the AFR Malcolm over-eggs his case. She goes on to say that although there are flaws in the bank guarantee, “...it is just ludicrous for the Opposition Leader to suggest the government’s handling of the guarantee has single-handedly made Australia’s position worse in relation to the global financial crisis.” Later she says “In fact bankers were worried his comments about limiting the guarantee to $100,000 had led to nervousness among larger deposits in the days leading up to the announcement of an unlimited guarantee” In another article in the same issue, Banks warn Turnbull as guarantee bill fast-tracked, Tingle begins “The Big Four banks have told Opposition Leader Malcolm Turnbull his attacks on the bank guarantee have been unhelpful and have urged him to back speedy passage of the legislation to ensure funding for the guarantee.” So our banking genius has not shown superior understanding of how to manage the guarantee, has not convinced his banking colleagues of the merits of his case, and has had a slap on the wrists for opening his mouth too wide.
Then came the ‘deficit’ word, much-cherished by the Opposition, much feared by the Government. This time it was Turnbull doing the egging, waiting breathlessly for Rudd and Swan to concede that the stimulatory measures the economy may need could send the budget ‘into temporary deficit’. That they took so long has drawn criticism. It seems it was the dire forecasts from numerous sources since the MYEFO, and the gloom that permeated the APEC conference, that persuaded Rudd that the possibility of a deficit was now very real if the Government took the fiscal measures needed to stimulate the economy and preserve jobs. But before Rudd opened his mouth to make his long statement to this effect in Parliament on Wednesday, Turnbull was in the media proclaiming that to go into deficit would be a sign of economic mismanagement. Once the ‘deficit’ word was uttered, the attacks intensified. Turnbull now insisted that Rudd’s statement was a request for “a leave pass for economic laziness” and that Rudd “wants to be able to drop any pretence of fiscal discipline”, and threatened that the Coalition would not support any spending that took the budget into deficit.
Turnbull also asserted that a temporary Labor budget deficit was never temporary, the most recent one lasting six years. No logic is capable of proving his point, but who cares about logic, reason or balance?
By Lateline that day, Joe Hockey was in full flight talking as if the budget was already in, or definitely headed for deficit, despite that fact that in this fiscal year it will likely remain in surplus, and that Rudd said that a deficit would occur only if further spending was needed to sustain the economy, which admittedly is likely. In what must have been one of his most unconvincing and incoherent interviews in which he was repeatedly asked by Tony Jones to justify his statements, which he never did, he blustered his way through with answers that bore little resemblance to the questions. Then he showed that genius is not confined to his leader. He insisted the Government must wait until the effects of recent and predicted interest rate cuts and its $10.6 billion economic stimulus package were apparent before ‘plunging’ the budget into deficit. Now who would have thought of that? Bravo Joe. Julie Bishop too echoed this perceptive admonition in her short time on the airwaves. Feel for a Shadow Treasurer cowering in the shadow of the genius of her leader.
So there it is. A show of fiscal genius from the Opposition, a helping hand, or a kick up the backside, depending on where you stand, charitably offered to a bumbling Government way out of its depth, but not too subtly accompanied by the threat of blocking expenditure that would push the budget into deficit. That this stellar approach has little or no support from rational economists or political commentators, that such an approach would be detrimental to our nation’s economy and the preservation of jobs, seems to be of no relevance to Turnbull or the vocal among his Opposition members, so long as it achieves political traction.
The genius among the Opposition’s ranks is an illusion. Under the guise of economic and financial brilliance, it is displaying only one purpose: irresponsible opportunism for political advantage no matter what the cost to the economy, the nation and its people. It should be very careful. The people are watching.