Turmoil-enomics VIII

We have finally reached the end of a tumultuous week. The guarantee on savings has caused side-effects, Turnbull and Bishops know everything with perfect 20-20 hindsight, and the markets have been up and down quicker than the level in a blogocrat’s glass at five o-clock on a Friday.

So this is the thread for everything economic for Friday, and will stay open for all discussions over the weekend. This will (hopefully) allow the Friday thread to stay ecomomically free.

Overnight, the Dow was up 2%, but the SPI200 Futures was down 77 point. Fasten seat-belts, please, it may get bumpy.

(I will be out most of the time on Friday getting an MRI scan on my dicky shoulder, so it will be up to reb to approve any comments that get trapped in the spam queue – joni)

85 Responses

  1. An admission of catastrophic failure by a man previously dubbed the ‘Maestro’ should come as a slap in the face for market fundamentalists the world over.

    Greenspan admits market system is flawed
    Former US Federal Reserve Chairman Alan Greenspan, describing the current financial crisis as a “once-in-a-century credit tsunami”, has acknowledged that the crisis had exposed flaws in his thinking and in the workings of the free-market system.
    Greenspan told the House Oversight Committee that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had been proven wrong by the current crisis. He called this a “mistake” in his views and said he had been shocked by that.
    Greenspan said he had made a “mistake” in believing that banks operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.
    Greenspan called this “a flaw in the model that I perceived is the critical functioning structure that defines how the world works”.
    The head of the US central bank for 18 years, Greenspan said in his testimony to the committee that he and others who believed lending institutions would do a good job of protecting their shareholders were in a “state of shocked disbelief”.
    During questioning, Greenspan was challenged about various statements he had made during the five-year housing boom including forecasts that a nationwide collapse of home prices was unlikely.
    Greenspan said he had failed to predict a significant decline in home prices because the country had never experienced such a decline before.
    Greenspan said that the current crisis had “turned out to be much broader than anything that I could have imagined”.

  2. Well, at least we know that we are not the only ones who do not know WTF is happening.

  3. Joni

    I’ve locked in my answer

    I think much of the real solution can be found by examining the problem at a systemic level. Let’s face it, like any system ‘capitalism’, especially ‘global capitalism’ is flawed. But should that mean we should be willing to throw away the ‘baby with the bath water’? No!

    For example, economist Hyman Minsk wrote:

    “To be exact leadership does not seem to be aware that the normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty, in the midst of what could be virtual universal affluence. In short, financially complex capitalism is inherently flawed.

    Over a a protracted period of good times, capitalist economies tend to move from a structure dominated by hedge finance units to a structure in which there is a large weight to units engaged in speculative and Ponzi financing”

    Minsky would not attribute the crisis to “irrational exuberance” or “manias” or “bubbles.” Those who were caught up in the boom behaved “rationally,” at least according to the “model of the model” they had developed to guide their behavior. That model included the prospective course of asset prices, future income, behavior of policymakers, and ability to hedge risks or shift them onto others. It is only in retrospect that we can see the boom for what it was: mass delusion propagated in part by policymakers and those with vested interests.

    However, a large part of the blame must be laid on the relative stability experienced over the past couple of decades—the tranquility that made the boom possible also created fragility because,according to Minsky, stability is destabilizing.

    The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

    I think it is far too simple to attribute the current crisis to a speculative boom in real estate, to excessive monetary ease, or even to lax supervision. The causes are complex and have developed over a very long period.As such, solutions will also be multifaceted, tentative,and contingent upon continued evolution of the financial system, with an eye to longer-term trends that have made the system much more prone to crisis, in my opinion..

  4. Joni

    In other words, when Howard and Costello tried to take credit for the growing economy they were simply winging it.

  5. http://www.abc.net.au/rn/latenightlive/stories/2008/2398603.htm

    That ABC radio Late Night Live interview is well worth listening to, fascinating stuff.

    One interesting point Saskia makes is the system has been broken since 1980 and this isn’t the first collapse but the 5th with each being bailed out by governments. This current collapse happens to be the worse and yet again government’s have bailed out a very broken system so the next collapse will be even worse again.

    What the US did in trying to fix the problem was the very worse thing and it seems Bush wants to continue down this same flawed path with his crisis meeting.

  6. Adrian

    The best analysis and explanation I’ve come across to date comes from George Soros. Soros writes:

    “T he current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.

    However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

    Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

    Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.”

  7. Did anyone else hear how the government is now going to cal droughts “Dryness” to take away a lot of the emotion.

    I am amazed, once again we have politically correct fools trying to change what a word means. A drought is a drought. Dryness is when things are dry. Two completely different meanings.

    I am off the land and when things were dry they were dry. When things were dry for a long time it was a drought.

    Why don’t they stop this rubbish and get rid of these wowsers who invent word games to justify their existence. There are more important things to concentrate on.

    I can imagine the cost in rewriting everything and new stationery if this ridiculous proposal is allowed to continue.

  8. Adrian

    Also worth mentioning, Soros explains:

    “Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.

    The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.

    Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks’ commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.”

  9. Adrian

    All the wisdom of some great minds couldn’t dislodge the flawed thinking surrounding the ‘free market fundamentalist’ mentality and perhaps it’s this crisis that will finally put an end, once and for all, to the lunatic ideas that have brought us to this point.

    As far back as 1998 John K. Galbraith issued a warning:

    The effect of the speculative collapse is something which economists have not yet, even to this day, fully appreciated, because it is not the collapse that causes the trouble, but the further effect on investment, and also the further effect on consumer spending.

    A very large part of our present consumer spending is based on debt creation, credit cards, or the impression given by stock market gains or real estate gains. If and when the end comes, the economic effect will be the drying up, the slump, in consumer expenditure and, of course, the economic effects of that

    In fact, Keynes expressed it well when he said:

    When the capital development of a country becomes the by- product of the activities of a casino, the job is likely to be ill-done.

    And, the alleged father of the ‘free market philosophy’, Adam Smith was keenly aware that the human propensity to take risks (gamble) propelled economic growth, he also feared that society would suffer when the propensity ran amuck. He as actually careful to balance moral sentiments against the benefits of free markets (something that gets overlooked by some who refer to his writings).

  10. The cause is very well understood even if it was deliberately ignored, at least from 1980 onwards. The first collapse of 1987 should have been enough to have the system changed and warning bells, klaxons and sirens sounding out loudly but they were muted.

    So Mac is the cause is so very well understood and many have like Soros have written about it and warned of it, the solution must also be understood as is what not to do.

    Then why the fuck are we ignoring the well understood solutions and doing exactly what is known not to do?

    That’s a rhetorical questions as I know the answer. As with all the previous failures of the system the very same people who have caused this at least since 1980 are the same ones influencing and consulting governments and financial institution on how to fix it, and the idiots are listening to them.

  11. Adrian

    Minsky offers some very interesting insights and remedies, in fact, yesterday I purchased a copy of “Stabilising an Unstable Economy. http://findarticles.com/p/articles/mi_m1093/is_6_45/ai_95629327/pg_1?tag=artBody;col1

    Perspective: Why ‘Market Fundamentalism’ Has Failed

    What adds to Minsky’s credibility is his detailed knowledge of banking and the role debt (lending, borrowing and investing) has on the whole system. He covers the three categories of investing; hedge, speculative and Ponzi. The Global Economy has clearly entered the Ponzi Phase hence the fallout hence the reason the global economy is experiencing large scale instability.

    Every effort needs to be made by governments to control and limit speculative (to a certain degree) , Ponzi type (absolutely) investment schemes. Instead, the free market system has done nothing but encourage the recklessness with its hand-off approach to regulation and support of deregulation.

  12. Ouch! This must be causing the Maestro a lot of angst – I hope so.

    Resistant to Regulation

    Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $US660 billion in writedowns and losses tied to US subprime mortgages.

  13. “once again we have politically correct fools ”

    I disagree that their wish to call drought ‘dryness’ is political correctness. It is an attempt to manipulate the meaning of words for politcal purposes, pure and simple. Just like ‘collateral damage’ is used as a means to try and disguise the fact that innocent people are being killed. This is not, IMO, political correctness but an attempt to manuipulate the public by making the reality of a situation seem less serious than it is.

    Real political correctness is about attempting to use language that is not offensive to certain groups. So you don’t call people ‘niggers’, ‘coons’, ‘gimps’, ‘fags’ etc because the terms have offensive connotations. ie it is about being sensitive to the feelings of others.

    I think political correctness gets blamed for a lot of things for which it is not responsible. Unfortunately I think most people misunderstand what political correctness was and is really about.

  14. Polly,

    I agree – and ultimately, it blurs the meaning of both words.

    I always used to find it amusing that a friend of mine wouldn’t use the word “shit” but instead would call someone a “poo brain head’. Everyone knew what she meant and the intent to swear was there. Ultimately a word depends on its meaning and context and if the meanings are the same and the context they are used in are the same, then two previously different word become interchangeable and any negative connotation that previously attached to one word should either pass across to the new word, or dissipate.

    Nowadays, phrases like ‘war’ are used whenever we are talking about action against a defined target ie, terrorism, inflation, credit crisis etc. When we actually engage in a war like Iraq or Afghanistan, it is usually degraded to a conflict, campaign or something similarly benign – the end result is that we devalue strong words and mangle the meaning of commonly used words.

  15. Point taken Polly

    Either way I wish they would stop it.

  16. “Either way I wish they would stop it.”

    So do I.

    In regards to the use of ‘dryness’, you would think they were critiqueing the qualities of a wine (chardonay perhaps?) rather than a very real and serious problem.

  17. I agree with the gist of what Shane says, as I think do above comments, in as much as they are bluntening the language in a (transparent) attempt to lessen the gravity of the situation(s).

    As mentioned, this trend is especially prevalent when “we” decide to do benevolent stuff like “liberate” (read invade) other cultures; conversely, when “they” visit harm upon us we unleash a barrage of self-righteous condemnation which spares no literal force in our haste to paint our “enemies” as the worst of the worst. Interesting hypocrisy indulged by all sides.
    Chomsky’s “Manufacturing Consent” delves into this willingness to mislead ourselves when expedience & faux moralisation dictates.

  18. Back on topic I see that the NSW government is back in debt again. Amazing!!! A budget deficit when unemployment is around 4%. What will happen when the unemployment rate increases???

    What is it with the ALP and debt??? They seem to go together.

  19. “Amazing!!! A budget deficit when unemployment is around 4%. ”

    What does unemployment have to do with state budgets? Most of their revenue comes from non-employment related sources.

  20. Neil,

    The NSW Labor government is woeful but the opposition seems like a worse option…it is not as bad up here in QLD but the choice for the people is either ordinary or less than ordinary.

    The people seem to accept this and this has produced an apathetic culture that is far from contributing to the welfare of this nation and I fear for the future if this continues.

    We deserve better than this.

  21. But the unemployment figure for NSW is well above the national 4% average, which of course makes a lie out of Howard falsely claiming the kudos for low unemployment. Apart from overs tacking the Canberra bureaucracy Howard did smick for unemployment.

    What is about Liberals and bullshit? They seem to go together.

  22. Like pees in a pod adrian…


  23. You also have to wonder how much effect unemployment has on state budgets when their only employment related revenue is from payroll taxes. Most of their revenues are from other sources.

  24. Apart from overs tacking the Canberra bureaucracy Howard did smick for unemployment.
    adrianofnowra | October 24, 2008 at 3:40 pm

    Howard actually took unemployment from 8% to 4%. Have a smoke of them figures.

    Furthermore how about a little abuse for the NSW Labor govt. I have amazingly seen even staunch Labor voters giving some stick to the NSW ALP govt.

    Excuses, excuses, excuses…..

    Also you need to watch the language Adrian.

    Although i forgot, you are allowed to abuse Howard and me but I am not allowed to use rude words about Prime Minister SuperDudd on this blog.

    EDITOR REB: Look you are ‘allowed’ to use rude words about Kevin Rudd. The mere fact that your posts are published unedited is a testament to the fact.

  25. Gawd the market is down 3% and limping at around 3850 points..

    Jesus, Mary and Joseph!

  26. Twelve billion dollars of Australian’s funds frozen?


    The regular payments that a lot of self funded retirees could be stopped…Swan says to go to Centrelink…are they going to assist people with assets that put them off the radar as far as payments are concerned???

    This bank guarantee for certain institutions has done more harm than good in my opinion…there are no winners on the political stage!

  27. “there are no winners on the political stage!”

    Scaper, you obviously missed Talcum’s media coverage this week. One minute he’s giving the government complete and unfettered bipartisan support, the next he’s blaming them for the international monetary meltdown…

    We’re all gonna be rooned….ROONED!!

    What we need is the steady hand of Howard and Costello at the helm…It’s our only salvation..

    Kind of the like The Blues Brothers – Howard and Costellio are probably secretly talking about “putting the band back together again…”

  28. “The regular payments that a lot of self funded retirees could be stopped’

    But where does the article suggest that their regular income payments have been or could be stopped? Capital redemptions have been frozen but that does not mean income payments have or will caese.

    Can’t say I’ve read anything that suggests income payments have been stopped. In fact this article suggests that income distributions are unaffected.

  29. stuntreb,

    Can you please save my post from the spaminator.

    EDITOR REB: Done!

  30. Reb,

    I don’t waste my time listening to Turnbull’s nonsensical invective…he has contributed to the events and has not the welfare of Australia in mind, it’s all a political game whilst people out there feel the pain.

    I also don’t believe the government was prepared for what is unfolding as their response thus far has been somewhat bemusing.

    I say, let it all crash now and rebuild a better system as one can only repair so many chips in the windscreen.

  31. Adrian wrote:

    What is about Liberals and bullshit? They seem to go together.

    They should be renamed the Lieberals.

  32. comments 13, 14
    Polly and Dave, very informative as well as eye opening.

    I pick up a lot from the behaviour of others, im fascinated how you do it with words(i guessing you must be very switched on). 🙂

  33. They should be renamed the Lieberals.
    31. Caney | October 24, 2008 at 5:34 pm

    Calling me a liar hey Caney.

    Hope it makes you feel better.

    Actually you are the sort of blind dead Labor party tribal loyalist I detest. Not matter dishonest, corrupt, immoral or unethical the ALP is you still vote for them.

    This sort of attitude is what gets our country into trouble.

    Hey Caney i see the ALP has spent $15M on climate change propaganda adds since being elected. Didn’t hear you complain about this.

    Only heard you complain about the Libs spending on Federal govt advertising. Well the Libs are not in power any more and Federal govt advertising is still continuing.

    Your silence is deafening

  34. Neil of Sydney | October 24, 2008 at 3:54 pm

    Howard actually took unemployment from 8% to 4%. Have a smoke of them figures.

    And just how did he do that? Unemployment is measured by State and it just happened those States with the lowest unemployment levels dragging the national average down were the resource States. I suppose that’s just a coincidence and it was really Howard’s doing? And if what you say is even remotely true then how come Howard could not bring down unemployment to 4% for NSW, Tasmania and SA?

    And then how come Rudd got unemployment to a record level lower than Howard’s figures, but of course that wasn’t Rudd’s doing?

    Furthermore how about a little abuse for the NSW Labor govt. I have amazingly seen even staunch Labor voters giving some stick to the NSW ALP govt.

    And the NSW government deserves every bit of stick it gets and deserves to lose the next election. I’ve been one of the most vociferous against that government, just as I was against Cain/Kirner and voted for Kennet twice went I lived in Victoria.

    Also you need to watch the language Adrian.

    Who the hell are you to tell me what I can and can’t say in my language? What jumped up high horse committee gave you the oversight of other posters? Bloody typical wingnut.

    Although i forgot, you are allowed to abuse Howard and me but I am not allowed to use rude words about Prime Minister SuperDudd on this blog.

    Let me see if I have this right, I supposedly abused Howard. I never called him Mr. Coward or most of the other names he was called, I almost always called him Howard or John or if I was being really nasty John Winston Howard. I only referred to him as the Lying Rodent in referring to his own party calling him that, as they called him other names.

    I said you belittled and weakened your arguments in name calling Rudd in them, not that you can’t do it. And where did I abuse you?

  35. “very informative as well as eye opening”

    Aww, shucks, thanks. How do I blush on this site?

    “The NSW Labor government is woeful but the opposition seems like a worse option”

    The NSW Government is truly awful. Yesterday our premier was comparing traffic congestion to being in love. Truly bizarre.

    Unfortunately the opposition at the last election were an atrocious alternative so we stuck with bad.

    I had high hopes that O’Farrel would do better. He hasn’t done as badly as Debnam (I still shudder to think where NSW would be now if he had been elected) but they still haven’t done much about their policy problems ie they don’t seem to have any.

    They haven’t done that well on pulling up the atrocious NSW Government because although it is easy to criticise, the opposition hasn’t offered any policy alternatives. I doubt you could find a non-Liberal in NSW who could tell you what they stand for and I sometimes wonder if you could find a Liberal who knows either.

    At this rate the next election is looking like another choice between bad and worse. It will be interesting to see who the voters think ‘worse’ is this time.

  36. Polly,

    The next election down there will be interesting…I sense a shift to the Greens and in some cases, the independents.

    I’m watching the alliance in WA…the first in many in my opinion.

  37. Many Liberals seem keen to never mention Howard’s record as treasurer.

    Howard as treasurer took unemployment from 6.3 per cent when he took over, to 10.2 per cent when he handed over to Treasurer Keating.

    Growth went from 1.6 per cent when he took over, to negative 0.4 per cent when he handed over to Keating. Recession.

    Inflation went from 8 per cent when he took over, to 11 per cent when he handed over to Keating. Staglfation.

    The budget deficit he took from $3.2 billion, to $4.3 billion by the time he’d finished.

    The Canberra Times, 9 April 2007

  38. Many Liberals seem keen to never mention Howard’s record as treasurer.
    36. Caney | October 24, 2008 at 9:34 pm

    That may be so, but I am willing to have a go. There was a worldwide recession when Howard was Treasurer back in 1983. You must be a very old man Caney.

    These things happen from time to time. We also had a worldwide recession when Paul Keating was in control. I got these unemployment figures from


    According to this website unemployment rates when Labor was last in power were

    Dec 1991- 10.1,
    1992 Jan-Dec, 10.0, 10.2, 10.2, 10.3, 10.4, 10.7, 10.8, 10.5, 10.4, 10.7, 10.7, 10.9
    1993 Jan-Dec, 10.6, 10.8, 10.6, 10.5, 10.6, 10.7, 10.5, 10.8, 10.5, 10.7, 10.6, 10.3
    1994 Jan-March 10.2, 10.1, 10.1

    We had 28 months of double digit unemployment when Labor was last in power. I remember this very well since I was one of them.

    The same website gave me 7 months of double digit unemployment back in 1983 when Howard was Treasurer. Which was the worst recession??? The recession in 1983 was the worst since the great depression and Howard handled it better than the recession Keating was faced with from 1991-1994.


  39. So, Neil, if a ‘worldwide recession” is the excuse you give Howard, then I expect you will have no criticism for the current government for the current economic problems?

  40. 38. joni | October 24, 2008 at 11:49 pm

    No- its how you handle it.

    We all face problems from day to day. Caney was trying to blame Howard for the double digit unemployment way back in 1983. The unemployment rates are interesting. When Howard was Treasurer WAY back in 1983 the world was having a recession. Guess what??? According to the website I quoted unemployment in the United States was double digit also. The 1983 recession was a bad recession.

    But when Keating was in control when we had DD unemployment, unemployment rates in the US was around 8%.

    Labor kept the interest rates too high for too long and destroyed the economy back in 1991-1994.

    Furthermore what problems do we have??? Our banks are sound. We have no Federal govt debt. Unemployment is low.
    We should be O.K.

    As yet we have no problems. People who have a job can buy food. We are lucky to live in Australia. Lets hope the ALP handles outside problems wisely.

  41. This week we have been offered $48,500 of credit…some credit crunch!

  42. Fraser/Howard handled it better, you have to be kidding. Howard isn’t known as the worst Treasurer we’ve had because he handled things so well back then. He was woeful and made some terrible fiscal decisions, along with doing his usual bit of reneging on major promises made during an election. Hawke/Keating through reform managed to clear up the Fraser/Howard mess. I have not read one report stating Fraser/Howard handled the economy well under the circumstances with many stating the opposite.

    Just how did Labor keep interest rates too high for too long, remember at that stage they had reformed the RBA to make it independent (initially opposed by the Liberal opposition)? So are you saying Keating should have forced the RBA to lower interest rates? Part of Keating’s problem was the reforms he had bought in in part caused the economic downturn then he went into debt to boost the economy which was inflationary, thus in part causing interest rates to rise. But Keating knew (and as history has proved) that this was only temporary and eventually the economy would improve because of his reforms, which is exactly what occurred. A good part of the Labor debt of the time was for unemployment and social welfare benefits, another consequence of the reforms they bought in. Also Keating’s had one thing on his side, relatively low household debt, so much so that in most families only one partner worked and still managed to pay off the mortgage at 17% interest and live. That is how low the amount of debt they had. The proof is that there were more house and SME foreclosures under Howard than under Keating, as well as there being far more personal bankruptcies under Howard, and that during a time of unprecedented economic boom.

    Howard lost credibility when he ran an election campaign almost entirely on interest rates knowing full well he only had peripheral influence over them (through inflationary policy and profligate spending, which is a lesson he should have learnt from Keating). That was to come back to bite him big time when interest rates went up and continued to go up in some part due to his inflationary policies and spending. Howard also reaped the benefits of the Keating reforms in that Australians were now amongst the hardest workers in the OECD, something Howard was to abuse and throw WorkChoices back in their faces for all their hard work.

    From 1994 to 1996 the economy was improving, our growth boom started in 1993/94 (not 1996 as Howard stated and his right wing media aped). Howard was handed a good and improving economy, which he acknowledged in 1996 with the words “I was handed a better economy by half than I thought possible.” Keating’s one failure was the attempt to short term spend his way out of trouble and rack up a massive government debt. The Howard government’s one triumph was to pay down that debt within a decade, but they also shifted debt to other areas of government and broke the central plank of their 1996 election campaign to bring down the current account deficit, which went to record levels under Howard as he skimped on infrastructure and skills.

    Howard has never done well with the economy even when a good and improving economy was handed to him on a platter and he landed in the midst of the largest resources and economic boom the world had seen. He has always been ideologically driven instead of looking at the necessities and practicalities, always looking for the short term tactical political advantage instead of the long term strategical social benefit. Something his own side said of him and are now saying of him, which says a lot of the man that for such a long serving leader you would think there would be great things being said about him, but instead he is either being marginalised or widely criticised, even by his own side. And to think of what he could have achieved in greatness with all that was given to him on a plate.

  43. Neil is caught out again at the reliable old Lieberal custom of blaming everyone and everything else for things that go wrong, and taking a false credit for everything good that happens. The fellow’s hero, Honest John, the economic savant, didn’t even pass general maths at school!

  44. “As yet we have no problems. People who have a job can buy food. We are lucky to live in Australia. Lets hope the ALP handles outside problems wisely”Neil

    All partisanship aside, I completely agree with this Neil.

  45. Yes HD that one sentiment says it all and so far the ALP has been handling it fairly well (with a few stumbles along the way and some utter crap like the Internet censorship) as much as the ever changing opposition attempt to make out they are utter failures. In fact if we had taken up even a fraction of the opposition’s demands by now we would be in massive debt, increasing inflation and interest rates and would have been in deep deep poo during this crisis.

  46. HD,

    I too hope the government handles this wisely but I have concerns with this package that will be delivered before xmas.

    I agree that the pensioners and low income families should be assisted but the FHBG and the middle income is not a wise move.

  47. I too have reservations about the FHBG but then what do we do, allow the same thing that happened in America happen here? There must some way of not allowing house prices to drastically fall without a FHBG. Also what else can you spend on that can rapidly stimulate the economy in a measured way? Any large infrastructure scheme is going to be very limited, only cover a three or at the very most four Eastern States, take a long time to plan for and get up and running, and cost a lot for the limited result.

    I can’t think of anything else outside of housing that can achieve what needs to be achieved in the shortest time. But of course like nearly everything there is a medium to long term downer to be had as well.

  48. But of course like nearly everything there is a medium to long term downer to be had as well. Adrian

    …and one thing we don’t want is another Downer!

  49. Oh frig, another Downer, the very thought sends shivers down my spine, just driving through Downer in Canberra sends shivers down my spine even though it’s named after his father.

    Wonder what John would have made of his son, you read his bio and Alexander is nothing like him, being more of a prig and wimpish without being anywhere near as good an orator.

    On another tract I notice that Truss has come out and said that the Labor government has undone all the good economic work of the Howard government, but without saying what he or his National Party would do in the circumstances.

  50. Just how did Labor keep interest rates too high for too long, remember at that stage they had reformed the RBA to make it independent (initially opposed by the Liberal opposition)?
    adrianofnowra | October 25, 2008 at 9:13 am

    Is that so Adrian. In case you do not know I do not believe/trust anything you say. I did a google search.

    The independence of the Reserve bank was introduced by Peter Costello and the Liberal party in 1996. Labor actually opposed this and wanted to take Peter Costello to court and sue him for doing this. Why labor wanted to do this I have no idea but this is what Labor wanted to do.

    Also everyone knows that Keating said ” I have the Reserve Bank in my pocket.”

    Everyone except of course you Adrian. He said this back in 1990. The “Recession we had to have” was worse because labor (and the people who voted for labor) did not know what they were doing.

  51. “Is that so Adrian. In case you do not know I do not believe/trust anything you say. I did a google search”Neil


  52. Neil is caught out again at the reliable old Lieberal custom of blaming everyone and everything else for things that go wrong, and taking a false credit for everything good that happens.
    43. Caney | October 25, 2008 at 11:23 am

    Is that so!!!. That was actually my comment about the NSW ALP. With unemployment at 4% and a booming economy they cannot balance JACK.

    Pollytickedoff actually tried to support them rather than critique them.

    Excuses, excuses , excuses.

    The NSW ALP cannot balance the budget with unemployment at 4%!!!!

  53. Just picking up on a few political comments.

    Most large corporations require their senior management candidates to undertake some capability tests on aptitude, intelligent and ability to work with others.

    We don’t even bother to with this. We simply choose from the few that managed to manipulate their way into parliament.

    Doesn’t this simply indicate the total inadequacy of the political party structure in Australia? And in particular the inadequacy of the ALP to attract a modicum of capability into its ranks to help regulate the economy.

    The structure of Australian political parties is stuffed.


    Neil do a history of the independence of the RBA and what Costello actually did in relation to it. Please spare me the ignorant.

    There were no major changes in the functions of the RBA until the abolition of Exchange Control following the float of the Australian dollar in 1983. There had, however, been a gradual movement to market-oriented methods of implementing monetary policy, away from a system of direct controls on banks, and in the five years following the appointment of a major financial system inquiry (the Campbell Committee, in 1979), the Australian financial landscape was transformed to a virtually fully deregulated system. At the same time, the RBA gradually built up a specialised banking supervision function.

    Below is what Howard/Costello did, from the Wallis Report and Labor didn’t oppose it but opposed aspects of it. Labor always advocated an independent banking system and central reserve bank, it was a tenet of Hawke’s as was floating the dollar, something the Liberals via Peter Reith at the time opposed.

    Another inquiry into the Australian financial system (the Wallis Committee) was announced in 1996. There were two major outcomes of this inquiry for the Bank, both taking effect from 1 July 1998. The banking supervision function was transferred from the RBA to a newly created authority, the Australian Prudential Regulation Authority, which was to be responsible for the supervision of all deposit-taking institutions. The Reserve Bank Act was amended also to create a new Payments System Board, with a mandate to promote the safety and efficiency of the Australian payments system. New legislation – the Payment Systems (Regulation) Act 1998 and the Payment Systems and Netting Act 1998 – was introduced, giving the Bank relevant powers in this area.

    I don’t know what you Googled but why not go to the source?

  55. Ah Tom the tendency to have a dig at the ALP yet again. Why particularly the ALP and thus inferring that the Coalition attract a better capability, which is patently false? Over time they both have attracted a mixture of good, bad and terrible in equal measure.

  56. Gotta quote this bit and highlight the relevant piece:

    In August 1996, the then Governor-designate of the Reserve Bank, Ian Macfarlane, and the then Treasurer, Peter Costello, jointly issued a Statement on the Conduct of Monetary Policy, which essentially reiterated and clarified the respective roles and responsibilities of the Reserve Bank and the Australian Government in relation to monetary policy and provided formal Government endorsement of the Reserve Bank’s inflation objective, which had been in place informally for some time.

    Peter Costello just reiterated and formalised what was already in place. That’s the real history of it. And I will say that the reforms bought in on the back of the Wallis Committee (damn, a Liberal government had a committee where’s was the outrage) were good and have helped us in our current situation. but this was built on the back of reforms bought in by Hawke/Keating.

  57. Fascinating watching Bolt on The Insiders trying to make a mountain out of a molehill. He is trying as hard as possible to make out the Rudd government has made the greatest stuff up any Australian government has ever made, and he keeps going on about the government supposedly doing things that he believes they did as fact but has no evidence for.

    But The Insiders fawning to Turnbull continues from last week.

  58. Adrian

    Yeah – he was making a fool of himself.

    And the freeze on the mortgage funds is only on the capital withdrawal, regular withdrawals are still happening. So – all this doom and gloom that retirees are going to have to visit Centrelink to survive is just like Turnbull – a little bit of truth and a lot of hyperbole.

  59. Adrain – I don’t wish to distract from the economic discussion, but the ALP is selecting from an ever decreasing gene pool.

    And I’ll make 2 observations – 1. Neither Swan or Bishop would go close to making it as a Chief Financial Officer of any major public company – and the want to run the entire Australian economy! And 2. I should avoid posting at 1am following unrestrained over indulgence.

  60. But the same goes for the Liberal Party.

    You have this dig at the ALP as often as you can, whilst either leaving the Liberals off the hook or ignoring their short comings. You say it’s because you know the ALP but that doesn’t wash with me. If you are ignorant of one side then it should behove you to learn about it.

    From what we have seen of the opposition so far (and that goes somewhat for State oppositions as well) I would be far more worried about them running the entire Australian economy than the current government who on the whole have done quite well.

    It may have taken the previous government 11½ years to stuff up the economy, but stuff it up they did none the less.

  61. Addendum:

    CFO’s of major financial companies sure have done brilliantly over the last few years haven’t they? Who are they asking to bail them out, why the likes of Swan.

    Sorry I missed Bishop in your post. On current performance I would put Swan over Bishop any day. I think Swan is much better than he either comes across or as he is being portrayed, mostly by the right wing media riding on the back of opposition jibes and put downs.

    joni did you not how Insiders attempted to paint Turnbull as ahead of the game and having the government dancing to his tune, when it was blatant Turnbull started his attacks well after the fact and tried to rewrite short term history. They did this thing of lifting Turnbull onto a pedestal last week as well.

    Annabel Crabb had it right when she said Turnbull is trying to leave behind a whole bunch of narratives and positions so if anything goes wrong in the future he can go back and say he had flagged it on such and such a date. A man for all seasons is our Turnbull, as long as the seasons have well and truly passed and he doesn’t have to make a forecast about the upcoming season.

  62. Adrian

    Yeah – Turnbull is using the scatter gun approach. A bit like the “I told you so” person in office politics who never offers their own solutions, just snipes when things go wrong with “I told you so”.

  63. The ALP has serious structural problems. They select candidates from an ever diminishing base, ie union officials. I can’t recall the last occasion that a rank and file member was selected for a safe seat.

    It shows in the quality of the ministry.

    The Liberals are probably equally factionalised but I think members can get preselected. Though this may often be through branch stacking.

    Most of the intellectual horsepower of the ALP has traditionally come from the branch structure. They are at risk having this disappear.

  64. Tom,

    I just went through the resumes of the federal cabinet and found that out of 24 cabinet members, only 8 have a union official background (and some of those are where they were a lawyer to a union).

    So tell us again how this “structural problem” in the selection of ALP members has affected the “quality of the ministry”?

  65. But that is a good thing Tom and you can see that as their traditional base disappear there are many others ready to step up to the plate. The Insiders had a bit on Hackett going into politics in ten years, and apart from Bolt being a dolt as usual and actually thinking there is a huge ideological difference between the parties (with the Liberal brand being the far superior of course), it is very telling that Hackett stated he had not made up his mind which party to go to and it didn’t really matter. Annabel Crabb said this shows how close the parties have become. Howard tried to move the Libs to the right and failed because of it, and you need look no further than America for the massive damage the far right can do, who Howard stated he wanted to model his IR and social policies on. Hawke, but more so Keating, moved Labor towards the middle and slowly but surely cut unions out of the deal. Another massive mistake Howard made in going all out after the unions, again following America and again purely on ideological lines (and also as an attempt to cut off Labor’s funding base). Fact was unions were slowly dying anyway and reinventing themselves in new employee advocate roles, which was a good thing. The dinosaur unionists are becoming extinct so Howard had no need to attack them.

    joni has it right, Labor have been moving away from unions ever since one of the most staunchest of the old dinosaur union leaders became PM, and his successor move away from them even more. Business has more and more moved toward Labor and support for them and business leaders are making their way into that party. Only big business unions with vested interests stick to the Liberals on IR ideological lines, but even they are shifting towards the centre and towards Labor.

    Also many of the union leaders who have moved into politics have turned against the old union supporting policies that actually muzzled the very organisation they once led. Similar to how Garrett has mostly towed the line on things he would never have condoned before entering politics.

    Labor now own the centre ground and that doesn’t include union militancy but does hold some business unions support. The Liberals left the centre ground under Howard and moved to the extreme big business unions and worse toward the religious right, a factor that destroyed the Bush Administration and America along with it dragging the rest of the world along as well. Unless the Liberals find a way to the centre and that means also courting reformed worker unions (as Howard did in Tassie) then they are doomed to be on the outer for a while yet.

  66. Hi joni – I can’t check on the bios right now, but last time I looked about half the cabinet had a union background.

    There are plenty more in the outer ministry, and obviously all the union heavyweights learning the ropes as cabinet secretaries.

    Given that they have about 18% of the workforce, less than 10% of the adult population, this seems like over representation.

    It is this over representation, and union affiliation that politicises industrial relations. It also focuses the ALP unnecessarily on IR, to the detriment of other legitimate interest groups.

    For example indigenous groups struggled to get their issues considered at the Federal Conference last year. Unions dominated it.

    There are plenty of capable people in the ALP. Plenty also representing non union interests. But they can’t get a look in.

    This weakens the party .

  67. Peter Costello just reiterated and formalised what was already in place. That’s the real history of it.
    56. adrianofnowra | October 26, 2008 at 7:42 am

    Maybe so. But i have seem many times where it was stated that Labor opposed what Costello did and threatened to take him to court and sue him. All my references are from Liberal party people. I have never seen anyone from Labor state this. I guess if it was true Labor would not want to be reminded of this.

    At this link


    which is a debate between Costello and Simon Crean at the National Press Club Costello said this

    “When I signed an agreement with the Governor of the Reserve Bank to target inflation, Labor threatened to sue me, saying it was contrary to statute. When we determined to balance the Budget Labor opposed the savings measures which were required to get there. Labor opposed the big tax changes which took the taxes off our exports and replaced a whole host of indirect taxes. And promised to roll those tax changes back up until the last election”

    This is a debate in a room full of people and provided the transcript is correct he clearly stated that labor wanted to sue him for targeting inflation and making the Reserve bank independent.

  68. I see it the same way…the party machines have frozen out the people of talent to somehow fulfill their predetermined agenda…this leads to a somewhat degradation of governance.

    I have made my concerns quite clear of the federal arena lowering itself to the standard of their state counterparts.

    This is materialising and it is a worry…we deserve better.

  69. That has to be wrong Neil as no political opposition can sue a government over policy, especially tax or monetary policy, they can only oppose it. This is purely Costello being his usual mischievous and disingenuous self.

    I really don’t feel like trolling through Hansard’s but my memory of the time was that Labor opposed some aspects of the policies but not the stuff Costello is going on about. That exchange between Costello and Crean shows nothing of the actualities. Crean does hit on some of Costello’s deceptions though like his demand for Labor party release whilst he bought in legislation that allowed him to hide detail on his policies from the public.

    The targeting inflation bit must be wrong as well for Keating’s entire “recession we had to have” was to target inflation as was the deregulation of the banking system and the independence of the RBA. Look at the history and you will find it was worker unions that set the inflation band for the RBA for Keating, not Costello.

    You do this all the time Neil, take Liberal Party statements and information from their ministers and website as absolute gospel, yet dismiss out of hand as lies anything that comes from the Labor Party. It would be better for you arguments if you were a little bit more cynical of your side of politics as well, especially when they have a recorded history of lies and deceits.

  70. You do this all the time Neil, take Liberal Party statements and information from their ministers and website as absolute gospel, yet dismiss out of hand as lies anything that comes from the Labor Party
    .69. adrianofnowra | October 26, 2008 at 6:07 pm

    Thats true. I tend to believe (although not totally) what the Libs say. I don’t trust anything a Labor party politician says.

    However the accusation is so outrageous I tend to believe it. I used the Press Club link because it was said in a room full of people. However i have never heard anyone from the Labor party say they were going to sue Costello for making the Reserve bank independent. But if it was true it must be in Hansard.

    Here is another Liberal party source. I found this on the Liberal party website by Julie Bishop

    “Like most of the Coalition’s economic reforms, Labor in opposition did not support the decision to give the Reserve Bank independence to manage monetary policy with an inflation target.
    In fact, Labor declared that a policy to give the Reserve Bank such independence and set an inflation target was ”illegal” and threatened to sue then Treasurer Peter Costello.”

    At this link


  71. Adrian, unions are a declining institution. But through their control of the ALP, they continue to dominate party forums, policy and preselection. While ever they are affiliated they will misdirect and distort the party, they will use it to seek favourable legislative arrangements that they could not justify on the merits of their level of representation.

    They politicise industrial relations, and because of affiliation the conservatives see them as their political enemies.

    An example of the outrageous behaviour of unions within the ALP is the treatment of Simon Crean a few years ago. He supported the rebalancing of unions to (only!) 50% of the representation (from 60%). The self interested unions put up that outstanding candidate Martin Pakula against him. Crean had to fight bitterly to retain the seat, and only won because he had local membership support. There are numerous others that have lost to union careerists.

    With regard to the proportion joni suggested, I’ve just had a quick look at Wikipedia, they list 20 members of cabinet. I counted 10 that have a union background, and that doesn’t include the likes of the deputy PM, who made her legal career out of union representation.

    The numbers appear to increase as you look at other ministers and the likes of Shorten, Combet etc.

    John Button continued to make a few good contributions before his death. One was that union officials had won about 20 preselections in a row for winnable seats in Victoria, the other was his commentary that it was time for unions and the ALP to have an amicable divorce.

    Button was an outstanding thinker and contributor to the ALP, and to Australia. The one action of Rudd that I am bitter about is that he had more important things to do than go to Buttons funeral. Button deserved far better from Rudd.

    If the ALP had taken the advice of Button, I’d certainly have a lot less to say.

  72. But that makes no sense Neil as the RBA was independent before 1996 as the RBA own history states.

    And this crap about Labor not supporting most Coalition reforms is just that and a line the Liberals often run.

    I find it incongruous that you almost unreservedly believe the Liberals who have a known history of deceit and malfeasance yet believe everything Labor says is a lie.

    Here is a statement from Julie Bishop from your link:

    We have been able to boost productivity by linking wages to enterprise and individual productivity. There has been greater scope for direct negotiations between employers and employees helping to deliver higher productivity which has underpinned higher real wages.

    Well that isn’t true as productivity went down, especially after WorkChoices came in and only slightly improved in 2007 but was still down on previous levels. Julie doesn’t give the fact that union workplaces and those on common law contracts had higher productivity levels than workplaces on AWAs.

    Again though Bishop goes against history. What she and Costello refer to are the reiteration of the RBA’s independence and it was not them who set the band but unions and it was set even well before that. The Wallis Committee just put into formal legislation what was already happening with the RBA and had been for a long time, ever since the floating of the dollar by Hawke.

    From the APRA website: (bold mine)

    Bell argues that under this ‘Keynesian-inspired’ regime the RBA had no independence in the formulation of monetary policy because all major decisions required the approval of the treasurer. By contrast, the RBA had considerable power over a highly regulated financial system. Bell shows that the RBA began to acquire a more important ‘advisory’ role in 1970s, mainly because the federal government gave priority to stemming high inflation that arose early in the decade after a steep hike in world oil prices. During this time, the deregulation of international financial markets also caused a reconsideration of the RBA’s role. In particular, the floating of major foreign currencies, following the breakdown of the Bretton Woods system in 1971, posed challenges for the management of the Australian monetary system. However, Bell shows that the turning point for the RBA’s emergence was the deregulation of the Australian financial system, especially the floating of the Australian dollar

    Bell argues that the RBA made the running on this inflation-slaying stance and by the early 1990s it had gained independence over monetary policy. With the RBA having gained ‘credibility’, especially with the financial markets, the Keating Labor government was not inclined to challenge its newly won independence. Indeed, the government endorsed the inflation target of two to three per cent proposed by the RBA in 1993. After Ian Macfarlane became governor in 1996, the incoming Howard Coalition government more formally endorsed the bank’s independence and its inflation target in a document entitled Statement on the Conduct of Monetary Policy. Bell notes that, with the Statement, the RBA’s statutory goal of full-employment has now been submerged. It is ironic that at a time of high unemployment and low inflation this goal was at least publicly downgraded, especially when the RBA’s ‘credibility’ had been established at the terrible social cost of high rates of unemployment throughout the 1990s.

    Full story here from APRA: From instrument to actor: the changing role of the RBA

    As I keep saying Neil all the Howard government did was formalise something the Hawke/Keating government had either allowed to happen or had actively implemented through their monetary policies, like floating the dollar and seeking independence for the banks.

    You really should stop using things from the Liberal Party as a source, they have a history of attempting to rewrite history and claim things others have done as their own. They have always been very quick to blame shift even when something is blatantly their fault and they are just as quick to take the credit for anything when just as obvious they had little or nothing to do with obtaining a good outcome, like low unemployment.

  73. Lot’s of union boo! again Tom. For a party supposedly dominated and crippled by unions they certainly are doing a lot of things unions don’t like and the very ex-union members are behind some of the union scuttling.

    Now if we can get the Coalition to be just as hard against business unions and reform them from being so predatory and seeking to circumvent Federal and State laws to increase profits for their members.

  74. Tom,

    As I stated very carefully – only 8 out of the 24 were union “officials” – which is the term you used, and I acknowledged that some were lawyers who worked with unions.

    But honestly, Tom, I do not understand the fascination that you have in playing the unions (boo!) line. The public knew this at the last election and still voted for the ALP.

    And let’s wait a little longer before passing final judgement on this government. Just like the last government, they need to learn how to be in power.

    Or are you suggesting that the only people who should be in power are those who have government experience? In that case, you better hope that this is a single term government, otherwise we will be looking for your comments against the coalition members running for the next election.

    And finally, shall we dissect the relationship between the National party and farmers? or the Liberal party and business?

  75. In fact, isn’t there currently a Union funded advertising campaign criticising the current Labor Government?

  76. And this crap about Labor not supporting most Coalition reforms is just that and a line the Liberals often run.
    72. adrianofnowra | October 26, 2008 at 8:10 pm

    I reached the second paragraph you wrote and then stopped.

    Labor NEVER supported the GST. The 1998 election was all about the GST. The libs only got it through because of Meg Lees. I will try and read the other things you wrote after i have recovered.

  77. Neil @ 76,

    But Neil – Adrian’s key word in #72 is “most”. That is the word you must have missed.

  78. God Neil so the Libs have been found out in a misrepresentation (again) and you stop reading. And the GST is just one thing Neil, just one, and that was a broken core promise by Howard, but Labor did not go against all Coalition economic policy which is what Bishop is making out. Go back through the 11½ years of the Coalition in power and you will find the opposition parties only went against less than 10% of the Coalition’s policies.

    So what about Bishop’s rewriting of history Neil?

    Bloody hell no wonder you believe the Liberals as you won’t read anything that proves they are liars.

  79. Asian, European leaders close ranks on credit crisis

    43 countries from Asia and Europe have agreed there must be fundamental reform of the financial sectors around the world with greater regulation, but America still goes on about there being nothing wrong with the free market system.

    The US financial system having gobbled up US$700 billion of tax payers money with barely a hiccup are now asking for 2 trillion and of course more deregulation. According to them and the Bush administration the problem isn’t an unregulated US financial system but that the current handful of weak regulations are too harsh and restrictive.

    I can only hope Obama gets elected and falls in with the rest of the world’s thinking and actions. Bush has come out and stated there is nothing wrong with the free market and it will be sorted out in time.

  80. Go back through the 11½ years of the Coalition in power and you will find the opposition parties only went against less than 10% of the Coalition’s policies.
    78. adrianofnowra | October 26, 2008 at 9:01 pm

    They also opposed Iraq. Labor never agreed with Howard on Iraq. They opposed Workchoices. So there’s another two. They never agreed with what the Libs did on the waterfront. So that makes three. They opposed the Regional Partnerships Scheme. In fact they abolished it when they got into power.
    So that makes four.

    According to Bishop they opposed everything they did to try and get the budget back into surplus way back in 1996-97. Like I said I believe Bishop and I do not believe what you say

  81. Let’s see:

    Opposing Iraq – Good
    Opposing Workchoices – Good

    I’ll give you the waterfront – but not the manner in which it was done.

    And isn’t the point of the opposition to, um, oppose?

    And just on the Kiwi haka – I was worried that Benji was gonna hurt his shoulder.

  82. But I proved Bishop was a liar on the Coalition setting the inflation target band for the RBA and on productivity, plus she has been caught out on other loose with the truths.

    Sorry Neil the fact is that the opposition parties during the Coalition government supported 90% or more of government legislation. The fact you so readily believe whatever the Coalition states, even when they are proven to be liars, yet out of hand believe everything Labor says is a lie means that you have absolutely no credibility in political discussions. To me you are a blind ideologue of the worst kind so not worth responding to.

  83. Opposing Workchoices – Good
    81. joni | October 26, 2008 at 9:22 pm

    O.K. But I do not know enough to comment. Believe it or not I actually trust John Howard. I do not trust Dillard. This is a long post but I got this from Ken Phillips of Crikey

    “Last Wednesday Julia Gillard’s Press Club speech gave more detail on Forward with Fairness (FF). In her introduction she attacked WorkChoices (WC) associating it with rising inflation, high interest rates and stagnating productivity.

    Most observers however agree that when the politics is stripped out and policy is analyzed, FF adopts a large percentage of WC. In substantial measure Howard’s big picture reforms are being retained except for unfair dismissals.

    Under both WC and FF minimum wages setting has been removed from the adversarial environment of the Industrial Relations Commission to a structure where economic specialists make assessments. The Commonwealth largely retains sovereignty over the states on workplace matters. Pattern bargaining is banned. The right to legally strike is limited to periods of enterprise bargaining. Union right of entry to workplaces is restricted.

    FF goes further, replacing the Industrial Relations Commission. Labor, not the conservatives, has closed this Federation invented institution.

    Some areas present marginal but important differences. Statutory minimum employment rights are enshrined but with FF having some additional clauses that weren’t in WC.

    When implemented, FF retains a form of individual employment agreement but with a different model. WC had statutory individual agreements which overrode awards and enterprise agreements. By comparison FF has individual “flexibility clauses” which build on top of awards and agreements effectively making these the “fairness” test. But the extent to which FF’s individual agreement stream is genuinely individual must wait for further detail.”

    And it goes on. I do not have a PhD in IR laws but it looks like “Forward with Fairness” looks awfully similar to Workchoices

  84. joni, I have no problem with farmers joining the Nationals, conservative business people joining the Liberals. I have no problem with union officials joining the ALP.

    What I get bothered about is organisational affiliation. The business organisations that supported the Liberals are paying a political price for the support. But despite this support, they did not form part of the Liberal Party. They don’t vote on preselection committees.

    I don’t think parties need experience to gain government, the Hawke Government was outstanding and had very little experience. What it did have was a number of highly intelligent and capable individuals, who brought a wider range of external experience than the government today.

    Stuntreb, the construction unions are avaricious, hungry for power. They don’t want any regulation, they will push the government as hard as they can. This will result in the government giving them more than they would prefer, but it still won’t be enough for them.

    Nothing is enough for them.

  85. Neil,

    Ken Phillips is an idiot – he doesn’t know as much about IR as he thinks he does and he knows even less about about OH&S law which is his pet topic. His articles about the Gretley mine disaster and the following litigation and prosecutions are very poorly researched and thought out.

    That said, much of what he says in the extract you have put forward is correct. There are aspects of the IR reform introduced by Howard that are OK, however the scrapping of the no -disadvantage test and the removal of the right to have a Union negotiate the terms of an agreement for you was a serious flaw in the legislation that was rectified too late. Most of us who opposed WC didn’t hate every aspect of it, just those parts of it that shifted the balance of power too far towards the employer where there were no safeguards. When the safe guards were reintroduced, they were an administrative nightmare for everyone.

    Phillips and many conservatives use the fact that FF retains significant aspects of WC to defend the initial WC legislation. While there may not be a lot of differences between WC and FF numerically, in practice these differences are significant. The Unions are unlikely to be happy with a lot of the stuff in FF but to me, it strikes a pretty good balance.

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