03-June-2010
Articles, The Economy
From: The Australian
June 03, 2010 12:00AM
AFTER three years of governing, it is extraordinary that people still ask of Kevin Rudd: "What do you really stand for?" There is no sense that he has a plan to protect and expand the economy.
The Coalition is determined to offer a clear alternative. We need to rebuild the economic resilience the Rudd government inherited if we are to rebuild business and consumer confidence and weather any new global financial crisis.
We need to bring down debt, embark on a productivity-based growth strategy, stop the reckless spending, lock in budget surpluses, rein in make-work projects that add nothing to productivity growth and protect the safe haven reputation for global investment that we have enjoyed for 30 years.
Wealth is best created when people and organisations are empowered to maximise their potential, go with their strengths, take risks, take responsibility for their own decisions and actions. Labor does not understand this. Rather, for it, government knows best, and if you see a problem, throw our money at it, even if it is borrowed.
Our economic road map features smaller government with a greater reliance on the private sector and individual initiative.
It also features a flexible, fair and internationally competitive tax system for business and individuals, with flatter and lower levels of income taxation as well as fairer and more flexible workplaces, where real wage increases can be expected.
Labor's reckless spending continues, putting pressure on interest rates and leading to six rate rises in a row. Australia is paying the price through a $57 billion deficit and debt approaching $130bn once the broadband billions are borrowed.
There is government borrowing of $700 million a week for the next two years, multi-billion-dollar interest repayments for years to come, six interest rate increases in a row and much greater vulnerability for all of us if the world experiences a double-dip recession. Households that took out a typical mortgage last year arenow paying $4000 to $5000 a year more in loan repayments, resulting in enormous cost of living pressures.
This reckless stimulus spending, a response to one-quarter of negative growth in the December quarter of 2008, is programmed to continue until 2012, four years after the GFC. It makes no sense.
Already we have announced $22bn of capital account savings that will come straight off the Rudd government's projected debt. In addition, we have announced detailed cuts to 39 Rudd government spending programs, totalling $24.7bn. This is an unprecedented pre-election commitment.
We also must not squander the financial benefits that will flow from the demand from China in the immediate future. We must not be lulled into adopting the naive Rudd government assumption that the commodities boom will continue indefinitely.
There is a four or five-year window in which to capture many new resource projects that will benefit Australia for 30, 40 or 50 years. If we don't capture this opportunity we will have missed the boat.
This is why the Rudd government's introduction of a deeply flawed and onerous 40 per cent resources rent tax in the middle of all this is so stupid.
Big resource companies have many options. Companies are extremely sensitive to the relative taxation positions between countries. The brutal and personal political attacks by the government on this important export industry and its leaders, combined with the naive and dangerous design of the tax and the deliberate failure to consult, have left Australian business and overseas investors bewildered. Business confidence in the government has been shattered. In particular, optimism that once surrounded the Prime Minister is rapidly fading.
Ronald Reagan said government's view of the economy could be summed up: "If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it."
Rudd's approach can be summed up: if money has been saved, spend it; if an industry is profitable and successful, tax it; if it questions or opposes you, vilify it.
This is not reform. It is governing by the news cycle.
What if we have another three years like the last? Australia needs clear policies, but also the resolve to see them through. And the strength to say no, a word foreign to Rudd, Wayne Swan and Lindsay Tanner.
Andrew Robb is opposition finance spokesman.