Tuesday, November 19, 2013

Policy failure led to loss

The election of the Abbott government a little over two months ago heralded the end of arguably the worst government in modern Australian history.

While injurious political leadership changes and subterranean shifts in internal political alliances unquestionably contributed toward instability of public administration, the fact is that innumerable policy failures, unfolding over six years, were the key causes for the change in government in early September.

In no particular order, arguably the five worst economic policy failings overseen by the Rudd and Gillard governments were as follows:

Carbon tax and climate change

After three years of policy uncertainties over the timing of an artificial emissions trading scheme organised by government, Julia Gillard became central to one of the more infamous episodes in Australian political history when she introduced a carbon dioxide tax, in direct contrast to an August 2010 pre-election statement not to do so.

The Labor government also extended the Howard government's scheme of mandating the use of renewable energies in Australia's energy mix by 2020, giving emphasis to the installation of subsidised solar panels and solar water heaters by households.

To administer the Rudd-Gillard green leviathan, the government employed over 1,000 staff in a Climate Change Department, a Climate Commission publicity body headed by climate change alarmists, and a gamut of smaller agencies dedicated to doling out corporate welfare subsidies and loans to wind and solar power companies.

Determinations of allowable price increases by state electricity regulators have shown that about eight per cent of average retail residential electricity bills is accounted for by the carbon tax, with the renewable energy target and other green schemes raising costs by another four per cent.

Fair Work Act (FWA)

The erection of a centralised workplace relations regulatory apparatus, under the Rudd-Gillard FWA, was arguably the greatest concession accorded to the trade union movement for its astonishing $30 million in financial support for Labor's 2007 election campaign.

The capacity for individual employees and their employers are arrive at their own bargains over working conditions has been severely curtailed under the Rudd-Gillard workplace relations regime.

In addition, representatives of trade unions have been legislatively granted unprecedented "right of entry" into private sector workplaces.

Under the sprawling Fair Work bureaucracy, including a Fair Work Commission with significant arbitral powers, decisions such as rising minimum wages, elaborate penalty rates, and recent hikes in economy — wide regulated wages for apprentices threaten the capacity of young people and the unskilled to attain secure employment.

Unemployment had risen in trend terms over the life of the Rudd and Gillard governments, remaining consistently at about one percentage point higher than under the predecessor WorkChoices regulations.

While many factors inform unemployment outcomes, there seems little doubt that implementation of a centralised workplace relations system, which has fuelled rising labour costs in recent years, would be one of these.

Fiscal mismanagement

One of the more enduring policy failings during the Rudd-Gillard government was its deliberate destruction of Australia's sound public financial management settings, and its repeated, but tragi — comically unfulfilled, promises to return the federal budget to surplus.

Deeming discretionary interest rate reductions, exchange rate depreciation and automatic fiscal stabilisers as insufficient to rescue Australia from widely — held pronouncements of economic doom during the 2008-09 global financial crisis, the Rudd government plunged the budget into deficit and became a global frontrunner in the race to rack up public debt.

Rather than saving the economic structure of Australia, the stimulus package distorted our economic structure by prioritising political objectives, such as the desire to tide over unionised construction workers for several months, in some cases years, by refurbishing or constructing primary and secondary school buildings, over private sector priorities.

As is well known, some of the stimulus programs were also implemented at a heavy human cost, such as the tragic home insulation program originally proposed by Bob Brown and the Greens.

Leaving behind a budget deficit of some $30 billion, and gross public sector debts perilously close to the $300 billion mark, the former government has left behind a legacy of fiscal imprudence and waste which is likely to take many years to resolve.

National Broadband Network (NBN)

With much fanfare prior to the 2007 election, Kevin Rudd proposed a NBN providing high-speed broadband internet services, at a cost to the Australian federal taxpayer of about $5 billion by 2013.

Originally intended to be undertaken in partnership with the private sector, in early 2009 the government announced it would itself spend up to $43 billion replacing Telstra copper wire infrastructure with fibre optic cabling.

Whereas the projected costs of installing the NBN have blown out astronomically, the rollout and customer targets had been dramatically curtailed by the former government over time.

In 2010 the government promised that the NBN would be available to 1.3 million premises, and servicing about 500,000 people, by June 2013, however the latest information reveals that the network has passed only 207,500 premises and less than 34,000 households were actively using the service.

Labor's broadband policy clearly represented a throwback to the period prior to telecommunications deregulation, as taxpayers are forced to bear the costs incurred by a governmental monopoly, NBN Co, charged with rolling out the network.

The Rudd-Gillard government has lumbered taxpayers with an infrastructure white elephant of colossal scale which, in the absence of corrective actions, will deliver internet at slower speeds than other countries and at much higher costs.

Live cattle export ban

There is never any delicate manner in which cattle can be slaughtered to provide nutrients for the masses, but the suspension of the month-long live cattle trade to Indonesia in mid-2011 has simply been an unwarranted economic disaster for an efficient and reputable agricultural industry.

Inspired to act by sensationalist reporting by Australian state-owned media about animal welfare practices overseas, the Gillard government's temporary halting of live cattle exports to Indonesia deprived hard — working cattle producers in northern Australia of an ability to generate incomes.

The ban also severely disrupted elements of the beef supply chain in Indonesia, and has needlessly strained economic and diplomatic relationships with our northern neighbour.

The adverse combined effect of these, and other, policy positions adopted during the terms of the Rudd-Gillard government were manifold, and included the declining cost competitiveness of business, reduced job opportunities especially for those on the fringes of the labour market, and, more generally, reduced economic freedom for all Australians.

Unless what is left of the former crop of Labor government ministers and backbenchers concede the gross errors of their policy ways from 2007 to 2013, they are at risk of being left on the political sidelines as the Abbott government gradually takes credit for correcting past policy mistakes.

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