There is strong support to suggest that Australia’s hosting of the G20 in November this year is not going to bode well for Tony Abbott. One suspects that our reputation in two key areas, that of economic management and climate change, will take a hit. When the finance ministers of the world’s richest countries together with the European Union and the IMF gather to discuss future plans, we are going to look very odd indeed. The central themes established by the government to host the summit will be growth and a more resilient world economic platform dedicated to preventing the circumstances that could lead to another GFC. Intrinsic to these themes and as unavoidable as a giraffe in my kitchen, is the question of climate change.
Much can be said about the how and why of Australia avoiding a post GFC recession. But the government that navigated our journey through that calamity is not the government we have today. And today’s government does not share the economic fundamentals the previous government employed to achieve that result.
Much can be said about our advances in climate change management and the previous government’s courage in pioneering landmark reform. But today’s government does not share the scientific fundamentals the previous government employed to achieve that result either.
What madness is this that we have a functioning carbon price mechanism in place providing valuable revenue that the present government, so ideologically blindsided, wants to dismantle? Worse still, what madness is it to replace what is a successful, responsible, future-focused initiative with a scheme that is totally reliant on the goodwill of our community conscious corporate leaders and which plans to pay them for their dedication and commitment to a better world? What madness! What ideological clap trap!
On the question of economic management, most of the G20 countries are debt laden and far more so than Australia. Economists use the ‘Debt to GDP ratio’ as a quick guide to assess the relative merits of a country’s financial standing. This ratio simply reveals how much we owe against how much we produce. Without it, to simply say we owe $X would not mean anything. It needs to be compared with something. The USA’s debt to GDP ratio is 100%. Japan’s is 230%, Germany is 80% The UK is 90%. By contrast, Australia’s debt to GDP ratio is 25%. Up until now, Australia has been seen as a leading light in fiscal management in a post GFC environment. Our debt to GDP ratio is our report card to the world. It makes our treasury bonds currently paying 3% look very attractive. It reflects a highly responsible level of fiscal management.
Predicated on nothing more than the emotive outcry from a compliant media determined to bring the previous government down, the regressive, tight fiscal policies of the Abbott government are going to threaten that. Furthermore, they will be viewed as unhelpful by representatives from Europe, the US and China as well as the IMF. While the rest of the G20 is still in recovery mode and engaging in incentive programs, we are ruling a red line underneath that sort of activity. That would be okay if all other factors that kept us in a growth pattern remained in play. But those factors aren’t in play anymore. Our revenues are down and we are forsaking healthy revenue streams associated with responsible climate change programs. We are proposing wasteful spending on corporate incentives that are the reverse of every sound idea currently circulating the globe and we are proposing a continuation of unnecessary and expensive middle class welfare policies. And, we are continuing to borrow to pay for this. This money should be used for infrastructure, not welfare. It should be employed in value adding, not indulgence.
It seems that within the corridors of power in Canberra a systematic agenda is underway to dismantle as much of the machinery upon which both the issues of growth and global economic stability are reliant. It seems we are navigating a course in reverse of that, one that more or less parallels isolation.
This is not the direction the G20 will want to take. For them it is far too soon. It is leading us into an unemployment spiral and recessionary pattern while the rest of the G20 goes in the opposite direction. Already we have overtones of disapproval from Christine Lagarde, chief of the IMF, a political conservative, who has diplomatically chided Abbott on the removal of the carbon tax. “Australia was very much at the forefront, Australia was pioneering in this field and I would hope that it continues to be a pioneer,” she said. “I do think that climate change issues and progress in that regard are critical and are not just fantasies, they are real issues.” Therein lies the essential contradiction in the aims of the G20 and the present direction our government is taking us.
While the US Secretary of State, John Kerry recently stated that climate change was a “weapon of mass destruction”, Tony Abbott travels to drought stricken rural areas and hoses the problem down by claiming that these things happen every few years. While the US and China seek ways to implement tighter emission controls, Abbott appoints Dick Warburton, a climate change denier to review our 2020 renewable energy target.
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