By Greg Jericho
Photo: The Lodge has to undergo massive renovations before Tony Abbott moves in. (ABC News)
As the dismal state of The Lodge demonstrates to us all, saving money by not spending it on areas that need funding doesn't make the need go away. That same lesson should be applied in politics, writes Greg Jericho.
Not surprisingly the Abbott Government has thus far been more symbolic than substantive. Amidst reports that Mr Abbott hoped to slow the news cycle it is good to know that there is always room for the new-PM puff piece. This time round it was to reinforce - if such reinforcement was required - that Tony Abbott is proud of his masculinity.
It was relayed on the weekend that Mr Abbott will be staying in the student accommodation at the AFP College while The Lodge is being renovated. The pitch of the story is that not only is Mr Abbott very careful with taxpayers' money, but that he really is suited to the Spartan life of the police recruit. Heck he'll even get to use their gym!
But as with a lot of hair-shirt economy drives it hides that such parsimony is mostly overrated (and ignores that Julia Gillard also stayed there, so it is not that big a deal). The only reason Mr Abbott is staying at the college is because The Lodge has had to undergo massive renovations - renovations which were put off for so long because of the dumb underlying assumption that money spent on politicians is all waste.
And rather unsurprisingly not spending money renovating The Lodge has not caused the asbestos present in the building to disappear.
The media might enjoy relaying anecdotes from Julia Gillard remarking on how once a dinner needed to be quickly ended because of possums urinating down the wall, but that the building was allowed to be reduced to such a disgraceful condition only highlights that saving money by not spending it on areas that need funding doesn't make the need go away.
Which brings us to the Government's new economic position.
Joe Hockey as Treasurer and the Finance Minister Mathias Cormann are two men who for the past three years have talked the big game on waste. So strong were they both on the waste perpetuated by the ALP that you would think shifting to surplus was an easy step of just cutting that great gob of waste and voila surplus heaven.
But it seems now, through background briefings given to the AFR, that Joe Hockey is suddenly a Keynesian.
Gone is the talk of living within our means and not spending borrowed money. Now the message is stimulus!
While this shift will no doubt infuriate the ALP who had to defend the charges of economic mismanagement all because they did not deliver a surplus, the ALP has only itself to blame for not using the past five and a half years to educate the voters that a budget deficit or surplus is not a signifier of economic health or ill.
Wayne Swan and others also failed to convey that a budget is not a bank account - the amount of surplus/deficit in one year does not actually affect the surplus or deficit in the following year.
Too often a deficit gets viewed interchangeably with "debt". It does indeed take a long time to pay off debt, but the reason it usually takes a long time to move from a deficit to a surplus is not because you have to pay off a deficit, but because reducing the size of the deficit is in effect reducing the amount of demand in the economy provided by the government.
That was why when Wayne Swan proposed shifting from a deficit in 2011-12 to a surplus in 2012-13 the issue that worried most economists was that it would require Swan putting his foot on the economic brake harder than had any treasurer in over 40 years.
Photo: Graph of Change in Budget Cash Balance as a percentage of GDP. Click to Enlarge(Greg Jericho)
And while Swan did jam his foot on the brake (though still not enough to get into surplus) a look at the employment growth shows that while he was doing it, Australia's employment situation was falling:
Photo: Graph of Annual employment growth Click to Enlarge (Greg Jericho)
Were Joe Hockey in any doubt of whether to keep up the rhetoric of opposition while in charge of the Treasury, it would have been dispelled with last week's unemployment figures.
When we breakdown the annual employment growth among the different types of states we can see that the mining states/territory0020(Western Australia and Northern Territory) were for most of 2011 and all of 2012 growing well ahead of the non-mining states of New South Wales, Victoria, South Australia, Tasmania and ACT, while QLD (which is a bit of both types) since the middle of 2012 has been struggling along behind.
But now we have a situation where the non-mining and mining sectors of the economy have converged (at least in employment terms). Two speed economy no more.
So now instead of budget emergency and the need to pay off debt in double-quick time, we hear talk of a plan to quickly boost infrastructure spending, as Laura Tingle wrote in the AFR (paywall), "to stave off the post-mining boom slowdown".
And here I thought all was needed was for Tony Abbott to declare "Australia is open for business", and "under new management" to get things going.
But what infrastructure is being built? Roads, is pretty much the only answer. Public transport in the form of rail has been handballed to the states due for seemingly little reason other than an ideological predisposition of Tony Abbott's that that is the way it should be done, because that was the way it was done in the past. But it is clear that doing it 'that way has' led to a stockpile of transport problems.
During the election Andrew Robb - then spokesperson for finance - suggested the Liberal Party's expenditure on roads would free up money for the states to spend on rail projects. A suggestion that is best filed under the "we'll believe that when we see it" category.
The next put-off-till-later move seems to be the mid-year economic and fiscal outlook, which usually comes out in November/early December. The whispers are that this will be put off till January for the laughable reason of not hurting consumer confidence before Christmas. It rather suggests the new Treasurer believes confidence is based on fairy tales and moonbeams rather than the actual economic and employment situation.
If the economic situation is dire then a government should be able to inspire confidence by outlining what will be done to deal with it. In the end the ALP failed to do this. It seems Joe Hockey, Mathias Cormann and Tony Abbott are preferring to put off doing things till later - possibly when everyone is on holidays and more concerned with the cricket and tennis than what our politicians are saying.
But just like asbestos in the Lodge, sooner or later the government has to deal with the situation at hand.
Greg Jericho writes weekly for The Drum. His blog can be found here. View his full profile here.
If it's broke, you've got to fix it - The Drum (Australian Broadcasting Corporation)
