Costello hates debt – so should hate himself
Posted by Dave Bath on 2009-04-29
Regular The Age columnist and my local (probably only part-time) parliamentarian Peter Costello is attacking Rudd/Swan in the paper today ("Enjoy Mr Rudd’s Largess Now – It’ll Hurt Later", The Age, 2009-04-29) in his typical smirking and disingenuous fashion.
Costello points to the problems of paying for debt, and the silliness of "spend! spend! spend" calls from government, yet won’t point out that Australia is in the current mess mainly because of all the national debt accumulated under his watch as Treasurer, and the bubbles he did his best to inflate.
Costello and his boss (the only person able to wipe the smirk from Costello’s face) presided over the longest-running trade deficit in Australian history, a ballooning current account deficit (it’s now about the same size as the GDP), and a massive increase in household indebtedness compared to income.
As long as your budget deficit as a proportion of GDP is less than your current account surplus, with the money coming into the country subject to tax the year after, your budget deficit is sustainable.
And under Howard and Costello, money was leaving the country faster than the economy was growing (the deficit usually between 5% and 6% of GDP), we didn’t invest the debt in infrastructure that would help long-term income prospects, and almost all the increases in asset values were illusory.
But Rudd and Swan aren’t that much better. The government is pumping out money in ways that doesn’t provide much of a money multiplier, it’s still trying to maintain the unsustainable housing bubble, it’s protecting those that screwed up the economy, … the only bright spots are the ability to talk of an Australian trade surplus without entering the realms of fantasy.
Costello says that Rudd is like a spruiker for furniture that you take home and pay later, one that won’t tell you the interest rate. Costello was worse… more like a spammer for penis enlargement, because he encouraged crass consumerism and people’s self-worth depending on the size of (illusory) assets compared to the next person.
- "Economic growth is obesity not muscle" (2007-10-17).
- "Hypocrisy of debt: Government v Personal" (2007-06-07)
- "The Economist" damns Howard with faint praise" (2007-05-17)