We Save And We Stimulate: Economics, Wayne Swan Style

Treasurer Wayne Swan put in a truly cringeworthy performance yesterday; I think the Treasurer was trying to make the case for his government’s economical credentials but, unfortunately, he shot himself in the foot.

And underlined why Labor governments cannot be trusted with money.

According to Wayne Swan, the government is “ready” to introduce a further stimulus package if the economy crashes.

According to Swan, “This government has a track record of delivering stimulus to the Australian economy in times of economic difficulty.”

“This government has a proven capacity to respond to global financial instability,” Mr Swan said. “We’ve done it in the past and we can do it again, if it should be necessary.”

Well, quite.

A track record of throwing money at everything that moves, with little regard for value for money or for propriety.

How many tens of billions of dollars did the federal government borrow to deliver that stimulus?

In the next breath — with an eye on Labor’s promise to run a budget surplus next year — Swan says that “You can be…making savings and implementing our fiscal discipline, while at the same time have a growth outlook that is consistent with our view that we need to see growth at trend or above.”

Excuse me? Fiscal discipline?

Fiscal discipline from a government that has borrowed $200 billion in four years?

Spare me.

More to the point, on the one hand Swan talks about “making savings” (read, budget spending cuts) and then on the other, talks about borrowing more foreign money to pump it through the economy if the effects of his “savings” induces a recession.

Can anyone spot the problem with this picture?

Ever the pious type, Swan continues to utter mealy-mouthed slogans about the need to run a tight ship in light of the problems in foreign countries.

But what about the problems in Australia?

Our own economy isn’t exactly in stellar shape; consumer confidence is at an all-time low; businesses are both shedding and refusing to hire staff; tourism and other industries exposed to the high Australian dollar are being ravaged, unemployment is beginning to rise, productivity is stalled, and if the “mining boom” is excluded, Australia is already in heavy recession.

Of course, the Gillard government — in which Swan is a senior minister — wants to tax hell out of the mining sector, for good measure; and it wants to impose its blasted carbon tax at a time every other substantial country in the world is either abandoning their own “emissions trading” measures or rethinking their inclination to even go down that track.

Those proposed taxes — despite their framing — aren’t aimed at the national good; they’re aimed at manufacturing a budget surplus.

The Labor Party has committed itself to producing a budget surplus by the 2012-13 financial year; it did this in the middle of last year’s election campaign.

It was a silly promise on one level; here in Australia we have absolutely no control over what happens in Europe, the US, or China, which is showing signs of entering an economic slowdown itself.

Yet on another level, it was a promise that had to be made — by borrowing so much foreign money during the so-called GFC and flinging it around like confetti, with little apparent regard for any standards of probity or accountability insofar as how that money was handed out, the government had left itself wide open to charges of mismanagement, incompetence and fiscal ineptitude.

And Labor generally, and historically, isn’t exactly regarded as the party of economic prudence, the early Keating years notwithstanding.

Now Swan says he can slash government spending and promote economic growth; is financially responsible whilst presiding over record government deficits; and will “devise” another stimulus package if the economy deteriorates or enters recession (which is likely) whilst government debt is at a record $210 billion, and rising.

Sound like good, old-fashioned wishful thinking to me.

Still, Swan is the world’s best Finance Minister…

What do you think?