The question here is how the Howard Govt will be remembered as economic managers in years to come? My guess is that they will be seen as a shining example of how an economy should be managed (wink)
I’ve also got to say that John Howard and Peter Costello are probably very relieved that they lost the last election, for reasons that are now becoming very obvious in hindsight.
Lets assume for a moment that the following ‘doom and gloom’ assessment is true. The impact on not only jobs but government coffers is likely to be very significant (well, of course it is).
THE AUSTRLIAN’s Michael Sainsbury has revealed the worst case scenaio for exports today, when he writes:
It poses a bigger shock to the nation’s terms of trade than at any time since the 1997-98 Asian crisis.
The nation’s top 10 trading partners are in the middle of, or entering, an economic meltdown, with Western and Asian economies entering a cycle of contraction that experts fear could mean up to five years of flat global growth.
The next shock to the Australian financial system is expected to come when contract prices for our exports, particularly iron ore and coal, are renegotiated. The nation’s terms of trade — the difference between export prices and import prices — hit record highs last year thanks to the seemingly endless commodities boom. But the news from Asia — the destination for more than half our exports — hasn’t been good this week.
UBS economist George Tharenou told The Weekend Australian: “The main near-term weakness is going to come through export terms of trade. There will be a considerable fall from the second quarter onwards when bulk commodity price are renegotiated downwards.”
Export figures for the last quarter of last year are also shaping up as the worst for 50 years. “Fourth-quarter 2008 and first-quarter 2009 exports volume will be weak. We are expecting exports in them to fall by 5 per cent for (the December quarter),” Mr Tharenou said.
If this is correct, it will be the worst for the past 50 years, beating the 4.8 per cent fall in the third quarter of 1997 as the Asian currency crisis hit Australia.
There’s no doubting that the Howard Government were riding a very favourable wind whilst in power as Andrew Charlton puts it:
The economy is much like a little boat on Sydney Harbour on Boxing Day. Whether the trip is calm or rocky depends much more on the weather and the wash from the bigger boats than anything that might be done internally. If the weather is bad, you cannot blame the skipper for the bumpy ride. In fact, unless you know a lot about sailing, it is hard to know whether the skipper is doing a good job in bad circumstances, or whether he’s making it worse.
The same is true of skippering the economy. If you ask Australians about the economy in the decade or so of John Howard’s prime ministership they will remember the low unemployment rates, the low inflation, low interest rates and the general mood of affluence which suffused the nation. Howard turned this prosperity into stunning electoral success.”
The truth behind their legacy, however, is likely to end up being buried beneath a pile of rubble, especially in voters minds. Mark Davis describes the Howard Government’s laying of the groundwork for the current crisis beautifully:
“Australia’s ‘age of prosperity’, as Peter Costello calls it in his memoirs, has been underwritten by the mining boom (even as manufactured exports stagnated during his tenure) and massive increases in household debt (now more than $1 trillion – about the same as the annual national output), even as the government has wound down its own debt. The national debt has in effect been privatised while, at the same time, risk has been shifted away from government and business onto the shoulders of ordinary people, in the shape of long working hours, casualisation, and the sort of uncertainty that is written in the fact that Australians take the least holidays of any western nation.
Not exactly the perfect start the Rudd Government could have hoped for, but a perfect end for the Howard Government era.
Over to you
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