It’s always good to remember that economics never exists exclusively. In our world, economic challenges are commonly seeded from political and policy interests. For Australians, the most pressing economic issue currently facing the nation is the lack of policy direction and meaningful policy being created at the Commonwealth and State level.
From Canberra with self-interest
At the Commonwealth level, the knife-edge balance that keeps Prime Minister Gillard in office has led to weak economic policies that do not provide for what Australia needs. This is paralleled at the state level, with each Premier unprepared for their respective states’ challenges.
Subsequently the nation stands unprepared to capitalise on its economic charms envied by many developed nations around the world. The current power sharing agreements at the Commonwealth level have dulled the Labor Party’s ability to provide meaningful economic reform. The new carbon tax introduced this year highlights the dog fighting between Canberra’s policy makers. From an economic point of view, the $23 per carbon tonne levy, which will in time evolve into a full emissions trading scheme, is ambitious and forward looking. Yet the recriminations between the parties concerning who this policy will affect and how much it will cost tell a different story. It articulates parties in election mode battling out for electoral fortunes in 2013.
This tit for tat has repeated itself on many vital economic reforms ranging from the Mineral Resource Rent Tax to key social issues such as asylum seeker policy and marriage equality.
Anything by statesmanlike
In the context of Victoria, we see a Premier unprepared for the policy challenges needed to improve its economy. The state’s 2012 budget cuts to achieve a $126 million surplus point to a lack of creativity and unresponsiveness in addressing Canberra’s policy inertia.
In facing the task of funding vital infrastructure works and having to collect tax dollars from its structurally challenged manufacturing and retail sectors, the government’s current economic policies look unlikely to succeed. In these trying times, the state should be focused on creating incentives to attract and consolidate new business. Cuts to TAFE courses and delaying infrastructure improvements to fund the state’s budget surplus will set the state back. Stagnantly skilled labour forces and infrastructure bottlenecks do not encourage productivity growth after all.
For Queenslanders, their leaders are following the same route of budget cuts. Supported by Campbell Newman, current Premier, a range of departmental expenditures were axed in order to improve the state’s financial operations. In inheriting a state currently borrowing money to pay public servants’ wages, his concern centres around “borrowing to pay wages, to keep the lights on, to put the fuel in the tanks of the police cars and the ambulances and the fire engines.” Keen readers will know this was the financial plan followed by Greece pre-euro crisis. Little can be left to the imagination as to what will happen.
So while Premier Newman’s fiscal plan is practical, it's his scrapping of the Premier’s literary awards that has drawn most ire. Worth $230,000 prior to its discontinuation, the award motivated Queensland writers to improve works produced within the state. As Queensland was never the cultural capital of this country, much less a cultural petri dish by any measure, the scrapping is a step backward. As their capital city, Brisbane, wants to host the G20 summit in 2014, it is difficult to say how the summit will play out given the State’s blatantly minor appreciation of the cultural arts and how its establishment is strongly linked to a vibrant service industry.
Nation as a whole
Currently Australians benefit from an unprecedented wealth generated from its mines in West Australia, whilst grappling with the effect of an appreciated Australian dollar on its tourism, manufacturing and retail sectors. Our tragedy is that this nation lacks the political leadership needed to guide it going forward.