Thursday, March 6, 2014

CAAANBRA: Campaignomics

Chris Berg was bang on the money last week when he stated in The Drum that now is "Not the time to convince us of economic prowess". He was right again when he claimed that every election is about the economy. If we're being honest, its never a good bet to expect to win points or elections by talking about the economy, and Mr Berg's article is one reason why.

As I've stated repeatedly, what you see depends on where you stand. Mr Berg's two key arguments are based on the economic figures released less than two weeks ago by Treasurer Bowen and Senator Wong, and a question mark over the credibility of the major ratings agencies. Both are fair arguments, but this campaign isn't about selling the economy as healthy; it's about winning an election.

All the ALP has to do is convince the electorate that they are better economic managers than the Coalition, and Chris Berg knows this. When better than the midst of the dullest, least engaging, election campaign in living memory? When better than now?

The earlier financial statement released just before the election was called, and the PEFO, aren't flash on two fronts. Firstly, they're potentially scary numbers, easy for the opposition to frame and feed to the media. Secondly, they make the Government's ability to read the tea leaves look about as solid as the Liberal Party's policy pamphlet. 

The major ratings agencies which have rated Australia's economy as Triple A are, according to Mr Berg, largely responsible for the Global Financial Crisis, and therefore, nothing to get excited about. 

That's one perspective. Here's another: it doesn't matter that much. What does matter is the message. In order to convince Australia that our economy is in grave danger, you first need to convince Australia a deficit - any deficit - is bad. That's not hard to do; the imagery is negative. The Coalition's message was a simple sell, assisted by a compliant media. 

What does matter is that Australia, under Labor's guidance, avoided the full financial disaster of the GFC. Our official interest rate is low, but it hasn't bottomed out. In fact, it's being used as it was designed to be used - as a control mechanism. Productivity, inflation, unemployment: all of the standard measures are solid. We know the counter-argument, that it was the surplus left by the Howard Government that enabled Australia to skate around the perimeters of the GFC. Why has that argument never been challenged? 

The numbers are what they are. They aren't the entirety of this election campaign, other than by accident. As John Howard reminded us recently, context is everything. The credit ratings are a comparative measure. Australia is rated higher than about 95% of the countries in the world is noteworthy, just not hugely important. 

Having said that, the biggest failure of the past six years of Rudd and Gillard Labor Governments has been their inability to sell good news. We have heard ad nauseum about debt and deficit and big black holes and bigger new taxes and failed this and dodgy that. We've heard relatively little about the governments' successful navigation of the GFC, or the relatively smooth implementation of the carbon economy. These things happened. No spin required.

Ask the question: are we better off now than we were under the Howard-Costello team? Voters seem to be terrified that the cost of living is being driven ever higher by the loathesome carbon tax when in fact, 

Demographic Analyst David Chalke from Australia Scan is another who suggests a disconnect between economic reality and economic perception. The fear-of-the-future mindset has seen more and more discretionary income squirrelled away for that rainy day instead of being spent.

Feeding into that fear is the haze surrounding costings for the Coalition's policies and promises. Will they or won't they release their numbers, and if so, when? In 2010, the Coalition decided that they didn't trust Treasury, and had their coatings independently audited by WHK Horwarth, who produced a flimsy one-pager just two days prior to the election. It was subsequently shown that the "audit" provided to the Coalition, and subsequently to Australian voters, breached professional standards and was the result of  cosy deal between Horwath and the Coalition.

This time around, would-be Treasurer has ummed and ahhed at Olympic standards, suggesting at one point that if we wanted a Coalition bottom line, we should add it up for ourselves. The Coalition's reluctance to share their costings has become the basis for Labor's first really provocative ad of the campaign.

And Joe Hockey's response is to assure us that economics are boring and we don't care anyway. Chris Berg was right - now isn't he time for Labor to sell their economic credentials. At this stage, all they have to do is show up.

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