Sydney Morning Herald
September 27, 2004
A Martian would find it amazing. Here's John Howard spending money like water as he seeks to buy his re-election, while claiming that only he can be trusted to keep the budget in perpetual surplus and thus keep interest rates low forever.
Brushing aside the quite dishonest depiction of the factors that drive interest rates, this is the gaping contradiction of the election campaign. The man's hypocrisy is breathtaking.
And yet he gets away with it. Why is there no surge of cynicism from talk-back radio? Why aren't even the political commentators pointing to the glaring disconnect between what's being done and what's being said?
I'll tell you why not. It's because, as the opinion polls have long revealed, the public has a deeply ingrained belief that the Liberals are by far the better party to be entrusted with the management of the economy.
Labor has its obvious strengths - handling education, health and welfare - but on matters pertaining to responsible economic management - inflation, interest rates, taxation, the balance of payments - the Libs are clearly superior.
The strength with which these views are held varies somewhat depending on which party is in power and how the economy's travelling at the time but my scrutiny of Newspoll findings confirms that the underlying views have been remarkably constant for as far back as records go.
So here we're observing something the public just knows and has always known deep in its bones. My guess is that these prejudgements go back to the historic stereotyping of the parties.
If Labor is the workers' party while the Libs are the party for the bosses, it follows that bosses ought to know a lot more about managing the nation's economic business than the workers would.
My point is that the public's belief in the Libs' superiority as economic managers is so deeply ingrained that evidence to the contrary isn't easily recognised. If Mr Howard's doing it then it must be economically responsible - otherwise he wouldn't do it.
On the other hand, if Labor is making many big-dollar promises - which it is - this just reinforces our suspicions that, were it entrusted with office, it would go wild and mess things up - again.
Part of the syndrome is that Labor's past failures - 17 per cent mortgage rates, the recession we had to have, even the excesses of the Whitlam government - are more easily called to mind than the past failures of the Libs.
(Such as? Mr Howard's far from impressive performance as treasurer in the Fraser government - the recession he presided over, which led to 10 per cent unemployment, his return to double-digit inflation and mortgage interest rates - and the more recent fact that, after promising to keep the budget in surplus throughout the present term, he incurred a cash deficit of $1 billion in 2001-02.)
Of course, the public's prejudices - pre-judgements - on this issue are being reinforced at present by the economy's sterling performance. But the fact remains that the public has a double standard on the question of which party can be trusted with the economy.
And get this: it's not just the ignorant punters. Whether they realise it or not, the business community, the financial markets and the media economic commentators apply the same double standard.
They're invariably terribly suspicious of Labor, wary of any signs that it may stuff up, while being terribly tolerant of the Libs' little peccadilloes - "boys will be boys".
Right now, for instance, the economic establishment is in plague-on-both-your-houses mode. It's true Mr Howard's being irresponsible with all his spending commitments - commitments that are vastly expanding middle class welfare and tend to substitute tax breaks to special interests for general tax reductions - but we're not speaking up about it because Labor's just as bad.
Really? Are you sure? According to the Financial Review's figuring at the end of last week, since the May budget the Libs have announced spending promises worth $7 billion over four years, offset by savings measures of just $500 million.
By contrast, Labor has announced spending promises (including the tax and family plan and last week's Medicare stuff) worth $21.3 billion over four years, offset by savings measures of $21 billion.
So thus far Mark Latham is raiding future budget surpluses to the tune of $300 million, compared with Mr Howard's $6.5 billion.
(There is, however, a question mark over $5.1 billion in spending announced by the Government since the budget but before the calling of the election. Labor hasn't said whether it's accepting or repudiating these commitments.)
Two points to note. First, no one in the media or elsewhere has bothered to bring clearly to your notice this news that fits so ill with our prejudices about who are the good economic managers and who aren't.
Rather, everyone's kept a straight face while Peter Costello's tried without ceasing (and so far without success) to find the Black Hole in Labor's costings. It's occurred to no one to point to his double standard: his side doesn't really have savings measures to be costed.
Second, when you look at these figures you realise that, in terms of minimising the call on future surpluses, Labor has defied our ingrained expectations by being more fiscally responsible than the Libs.
It follows from all this that, because the public and the economic elite are so convinced of his economic rectitude, Mr Howard always gets the benefit of the doubt and doesn't have to live up to his reputation. He can be as politically expedient as he chooses.
The other side of the coin is that Labor is always treated with suspicion and never gets the benefit of any doubt. (See, for instance, the commentariat's wild overreaction to Labor's industrial relations policy.)
So Labor always has something to prove. It's always got the public, business, the markets and the media commentators on its case. It must always be on its best behaviour.
See the point? Our beliefs about who's good on the economy and who isn't are so deeply held that, in practice, they're almost self-defeating. The Libs don't bother trying, whereas Labor lives in fear of being judged irresponsible.
That's why, contrary to all his emotional button-pushing, electing another Labor government would not involve any greater risk to the economy than re-electing the hugely complacent John Howard.
Ross Gittins is the Herald's Economics Editor.