October 8, 2007

Huh? Let me repeat that: Huh?

Kevin Rudd is regarded as a greater visionary and more trustworthy than John Howard, but the Prime Minister far outranks his rival as an economic manager.

Meanwhile, in a wily attempt to set an election agenda, Prime Minister Howard has proclaimed that the election will be a (defacto) referendum on jobs. The PM will attempt a triple half pike midair tumble with a delicate twist by dredging up the ALP's "shameful" record on employment.

All in all, it's looking as though we can look forward to one of the lamest, least visionary, least trustworthy, dog's breakfast, spuriously construed federal election campaigns in living memory.

10 comments:

  1. Anonymous9:38 PM

    Why doesn't the silly old fool call the election huh?

    He's not doing himself any favours here, by procrastinating. Just pissing people off, and wasting more of the taxpayers money!

    And yes, Caz, a dogs breakfast indeed!

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  2. Well, the journ's don't help with their perpetual obsessing about "a date".

    Fixed terms work perfectly well, with a fixed date, with no ill effect. The ACT has a fixed election date, something that has gone uncommented upon by everyone in the country!

    Notice how Howard has framed the iss-th-ue as one of "jobs", rather than of "IR Laws". He's a cunning little sausage, albeit, his market research people would have told him to do that.

    Fact is, no matter the laws, companies don't let themselves go down the gurgler because of the government of the day. They don't spit the dummy and refuse to hire necessary staff, choosing to lose clients or go bankrupt instead.

    78% of employers surveyed a couple of weeks ago said the ALP proposals would make no difference to them. Why would they? Businesses manage their business within the parameters of the law; governments don't manage their business.

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  3. Anonymous11:00 PM

    Kathy, he hasn't called the election, because not doing so isn't costing support (unless it's hardening current intentions), and delaying it MAY give him time to claw back support. Why would he call an election now that he looks like loosing if he doesn't yet have too, and there's no downside (yet) of not doing so.

    Businesses manage their business within the parameters of the law; governments don't manage their business.

    Caz, I'd agree with that to a certain extent. But in so far as Governments write & enact the laws, they DO manage the businesses. Or at least effect the dynamics of business management.

    You also didn't mention the main motivation for running a business-Profit. In so far as the government sets higher wages thru IR legislation (or sets higher costs to business through legislation) then businesses will try and get by with fewer people, or worse, head offshore to take advantage of lower wage countries.

    If Labour IR changes force the cost of personnel up, then expect job losses and/or higher prices, feeding into higher CPI and higher interest rates.

    TonyP

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  4. Sure Tony, I didn't include all of the fine print and provisos.

    Salaries have gone up and up and up under the Libs, but so has employment.

    See, there are much bigger forces at work! The Libs cannot take credit for that. Their policies did not create that situation, and certainly the IR laws didn't, as we already had almost "full" employment.

    Indeed, the economic circumstances under which Howard has been PM aren't predicted in any economics books. It's supposed to be "not possible".

    I'm making an assumption that wages won't spike under the ALP. They aren't even fully implementing their IR laws until 2012 for goodness sake! (What an earth are they going to do for the first three years?)

    I do believe some businesses would be wary of the ALP, and it will change the business landscape significantly, but the economy won't crash and burn because of the ALP - the gov't budget might, but not business.

    Across the banking and finance industry job vacancies have already fallen, tightened, with things likely to stay that way for a while. Why? The repercussions of the US financial markets. Tightening in one market has a flow on to related industries. That's just a small example, but lots of small examples can add up to big things. I don't believe the ALP would be well placed to "manage" those things so as to ensure the economy retains its buoyancy. I don't think they would have a clue what to do, policy wise.

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  5. Anonymous12:44 AM

    Fine Print and provisos? I’d have thought Business Profitability would have been a central theme, not a fine print issue.

    Yeah there are bigger forces at work. One thing affects another, which has a knock on effect right through the economy, both nationally and globally. Even the promise/threat of changes being brought on by a change of government will have an effect on business decisions.

    If a Business owner believes the IR laws are going to be changed so that laying off unwanted staff becomes more difficult, or staff become suddenly more expensive, they may well lay them off now, or at least delay hiring new staff.

    To suggest the Coalition cannot take ANY credit for the current economic situation is rather far-fetched IMO.

    Paying off the $96b debt eased pressure on interest rates, The introduction of the FHOG helped get people into housing, Selling off Telstra has introduced a great many 1st time investors into the Sharemarket, The halving of the CGT on investment assets held for > 12 months has made investing more attractive, Changes to superannuation have/will put more money into retirees pockets, easing the strain on the public pocket into the future, The introduction of the GST has funnelled more funds to State Governments while simultaneously allowing the Fed’s to cut personal taxes, Setting up the Future Fund has provided for future Public Service Superannuation commitments (previously unfunded). Freeing up the Ports from restrictive work practices has lead to higher productivity on the wharves, thus less expensive exports. Free Trade agreements have opened up previously restricted markets to our products, and the loosening up of IR laws has made it easier for employees to increase their workforce. (Some hundreds of thousands of jobs created since the introduction of WorkChoices is more then co-incidental) Running surpluses has allowed government to increase spending when required without going into deficit (no upward pressure on interest rates).

    Sure, plenty of the current economic boom has been driven by overseas demand for our products, but to suggest that we would be in the same position today if the government had done none of the above is ridiculous.

    What an earth are they going to do for the first three years?

    Set up committees, reviews, panels, commissions etc. by all accounts.

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  6. Tony - that last question was rhetorical. I think you'll find most of us are aware of the committee / enquiry proliferation being proposed by the ALP.

    Oddly, a lot of voters aren't concerned by that though.

    If covering all the fine print and provisos, I would have needed to write, at minimum, a 5,000 word essay, just to scratch the surface. Not something I have time for, and I assume an intelligent audience who are familiar with the wide range of events and gov't initiatives that can potentially effect a business, and who can mentally fill in the space.

    BTW - lay offs and dismals are not interchangeable concepts. Neither ALP nor Lib policies stop companies from reducing staff numbers.

    As I've already noted: 78% of employers are unconcerned by the ALP IR approach. To add one proviso, purely by way of example: I take a guess that they may not feel the same way if the economy takes a different turn.

    The Libs didn't do anything to reform the economy or taxation; many wasted opportunities.

    There is no causal evidence of jobs being created because of the new IR laws. Those jobs would have been created anyway.

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  7. Anonymous3:27 PM

    I think you'll find most of us are aware of the committee / enquiry proliferation being proposed by the ALP.

    I don’t disagree. However, I believe you can never point it out enough lest some people confuse the setting up of commissions etc, as an equivalent for actually doing something

    If covering all the fine print and provisos, I would have needed to write, at minimum, a 5,000 word essay…

    Again, I can’t see how business profitability can be considered a “fine point” issue. It is at the centre of a Businesses ethos. Not a side issue.

    I assume an intelligent audience who are familiar with the wide range of events and gov't initiatives that can potentially effect a business, and who can mentally fill in the space.

    The Libs didn't do anything to reform the economy or taxation; many wasted opportunities.

    You contradict yourself in the above two arguments.
    If, by reform, you mean a comprehensive, overarching, all encompassing reform, then I would agree with you. But politics is about doing what’s achievable, not what you want.

    To say they have done nothing to reform the economy and taxation, just isn’t true. Simply by repaying the $96b in government debt, they have saved the economy billions in annual interest payments, as well as reducing pressure on interest rates.

    Both PAYG & Company Taxes have been able to be cut because of the implementation of the GST. The halving of the CGT and the sale of former government utilities has lead to a greater number of people in the stock market for the first time.

    Superannuation reform has and will continue to put more money into the pockets of retirees, and makes super a more attractive investment. This encourages people to save for their own retirements, taking pressure off the public purse in the long term.

    Waterfront reform has lead to increased productivity in our ports, making our exports more competitive, which has a flow through benefit to the wider economy.

    There is no causal evidence of jobs being created because of the new IR laws. Those jobs would have been created anyway.

    There’s no direct evidence, I agree. NO-ONE hires staff just because of a government law. Government laws do, however, provide a conducive atmosphere to hiring people, or not. It’s like weeding a garden. It creates an atmosphere in which the plants can grow unhindered. If the weeds aren’t removed plant growth can be hindered or choked off completely.

    Employers make decisions based on risk v return. Is the hiring of another staff member going to provide a greater return for the risk of taking on an unknown employee? What is the cost involved in dismissing this employee if they don’t work out? If, for example, unfair dismissal laws make it difficult to dismiss employees, is that more or less likely to lead to hiring?

    To suggest jobs will be created by business regardless of the IR laws or economic conditions is unbelievably naive.

    TonyP

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  8. "I don’t disagree. However, I believe you can never point it out enough lest some people confuse the setting up of commissions etc, as an equivalent for actually doing something."

    Alas, that cause has been lost already. The electorate, by and large, have become committee devotees. Very strange.

    I did a sub-major in economics, both macro and micro, so I already understand many of the points that you have explained to me, but I appreciate the effort. I truly do understand risks, returns, profits, diminishing returns, economic fallacies, headline figures, blah, blah. They're automatic. I tend to assume most people have some rudimentary clue.

    "To suggest jobs will be created by business regardless of the IR laws or economic conditions is unbelievably naive."

    I very specifically did not suggest any such thing.

    I very specifically linked economic conditions to jobs.

    The context, being the ALP IR laws, is simply that, given the current economic conditions, I don't believe, and clearly the majority of employers don't believe, that the economy, or jobs, will collapse as soon as the ALP win office.

    Could they wreck the economy in three years? They could certainly made "good" progress on that path. We do not have a measure of the worst yet. The ALP continue to be on their very best "first date" behavior.

    What might be interesting,if they win, will be to see whether the strength of the economy can out-wit, out-last and out-survive damaging ALP polices.

    I'm not being facetious with that last point. It could prove quite interesting, academically.

    Hey, they might not win!

    If they do, our economy won't collapse on Sunday though.

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  9. Anonymous5:10 PM

    Caz, i wasn't suggesting that the economy would collapse the day after the election of a Labor government. But they get elected for 3 years, and if, as the saying goes, a week is a long time in politics, then 3 years is a millenium. A lot of good work can be undone, and the foundations for a lot of bad work can be layed.

    You ony have to look to State Labor governments for examples.

    TonyP

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  10. For the sake of brevity one tends to take metaphoric license on blogs Tony.

    Sorry. :-(

    I think it's a done deal that the ALP will get in, by a blood-bath style landslide.

    On that basis alone, I have no choice but to be relatively sanguine about the whole thing, even before we go through the pains of an election campaign!

    I think it will be interesting.

    Let's not forget the Chinese *curse*: may you live in interesting times.

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