Weathering the summer storms

Karin Sowada

Financial shudderings of global stock markets in recent weeks are a stark reminder that the problems of the GFC are far from resolved.

Australia is relatively well-insulated, thanks to the prudent financial management of the Howard-Costello years and the early-response stimulus spending of Kevin Rudd’s Government. Unemployment is relatively low compared to other developed economies like the United States, and parts of the country are riding high on a China-led resources boom.

In a move that surprised just about everybody, Wayne Swan was even recently named Euromoney Magazine’s Treasurer of the Year.

The roller-coaster that is the Australian stock market creates a sense of uncertainty when we see each night’s TV headlines. But for many, the impact is distant, unless one is on the verge of retirement and need superannuation savings, or you are the fund manager for the Sydney Anglican Diocesan Endowment (or similar). Here the pain is sharper, more immediate.

With this overall positive picture of the Australian economy, it is astonishing that the Gillard Government has so little traction with the electorate. There is even speculation of a return of Kevin Rudd.

Much of this can be traced to policy mis-steps on issues such as refugees and the carbon tax. More fundamentally it stems from the Government’s perceived lack of legitimacy after a knife-edge election and Gillard’s personal rise to the role of PM. This is further compounded by community confusion over the carbon tax and its long-term costs and benefits. This may settle now that the legislation has passed the parliament. The Government is constrained on all fronts by the independents, the Greens, the unions, the High Court, the lack of talent in its own ranks and of course an aggressive Opposition giving no quarter.

Although things seem uncertain, we should thank God that Australia is actually well-placed to weather the current storms. This is the result of good decisions made by successive governments of both persuasions. Despite the plaudits given to the important reforms of the Hawke-Keating years, the Howard-Costello government built on this foundation with wise financial stewardship.  For all their other faults, on both sides of politics it was a time of visionary economic leadership.