The absurdity of Australia’s politics

So the Australian Federal election is days away, and it looks like Tony Abbott is going to win. What I can’t fathom is why.

Is it Labor’s in fighting?
The chopping and changing leaders has been pretty ridiculous, labor does need a good slap and time to really think about what they’re doing, however, what they have achieved despite that is phenomenal, and it didn’t really bleed over into the nation as a whole, it really just ravaged the party, but fair enough, I can understand that reason, but then you have to think about your alternative options, and that’s where it starts to get uncomfortable.

The policies

On economics, the Coalition has a reputation for being good, responsible economic managers, where Labor has a reputation for over spending, but is this true? The answer is actually NO.

Two Australian treasurers have won international awards for “treasurer of the year”. That’s Paul Keating and Wayne Swan. Both Labor treasurers.

On all economic performance indicators, Labor outclasses the Coalition at every turn.

“Aah”, people say, “but Labor couldn’t do that if it wasn’t for all that money the Coalition saved for them!”
But this is also not true. The coalition cut taxes, sold off assets and relied on economic legislation brought in by the Labor Keating Government for that surplus. Their surplus came not from improving productivity and economic growth, but on a resource boom they had no control over, which meant they couldn’t help but bring in some income. But what did they do with it? Nothing. They threw money at voters at elections and invested nothing in infrastructure. Infrastructure is key to economic growth, if you don’t look after your infrastructure, you’re not looking after the economy. Infrastructure has costs to maintain and grow, not investing that money is NOT a cost saving, it is a cost deferred, an invisible debt.

But on top of that, they relied entirely on economic good times for their surplus, based on the growth of the Chinese economy and THEIR investment in their own infrastructure, ironically. They invested nothing in future proofing the economy against the inevitable end of the resource boom and growth of china. They may not have been able to predict when it would change, but no economic situation lasts forever. The opportunity for economic diversification and growth was squandered.

On top of that, the low tax rate meant revenue raiding was insufficient to meet the needs of the growing economy. They left the incoming Labor government with far less surplus than they claim, and a series of unpaid debts that were conveniently not in their budgets.

How is any of that responsible economic management?

“But such things are the purview of private enterprise and industry!” I hear the economic conservatives cry!
But this is a ludicrous suggestion. Much infrastructure does not itself run at a profit, and therefore it makes no sense to rely on private enterprise for it. Unless you wish to dramatically increase the cost of living and send inflation into an explosive rise.

Also government is in a unique position for major infrastructure to facilitate large projects for social and economic benefit and direct increases in productivity. More of that economic diversification I mentioned.

But that’s all the past. What about now? Well lets take the key infrastructure investment of the decade: the NBN.

Labor’s plan

Labor’s plan is to connect the majority of premises with fibre optic cable to a robust network of nodes, which are connected with in built redundancy for future growth and capacity. The network is stages so that an area is all connected up at once, which reduces the labour costs. It is expensive because it is a Very large project, but it is also a very forward thinking piece of infrastructure for economic growth. The beauty of fibre is that unlike copper, it doesn’t corrode, so the only replacement needed is the end connections rather than the whole cable.

The Coalition’s plan

The Coalition is making a big deal of the cost of the NBN, as well as the time, but have recognized that having an NBN is something people want, but spending money on infrastructure is not something they consider good use of public money, so they came up with a compromise. Fast, cheaper, sooner.

By only taking the fibre to the node, and relying on copper for the rest, they’re dramatically reducing the cost. The problem with this is that relying on corroded copper wires for the rest of your connection makes the entire exercise nearly pointless. They’re also planning less redundancy to reduce the cost to prevent blow outs.

So what’s the solution, well, the user pays for the connection from node to premises, except favored businesses, who are included in the rollout. Reasonable, right? At $1000+ for a connection, not really. So obviously they’ll subsidise the connection to the premises. Problem solved, right?

Technically yes. But what about the cost? Lets directly compare the two modes of connection.

Labor’s plan rolls out whole streets or suburbs in one go. Keep in mind this involves digging up streets, installing cables, repairing roads and paving after. It’s an expensive and labor intensive process, which is why the coalition cut it out in the first place, however, ask any cable company if it’s cheaper to do a house individually or a whole street, and they’ll tell you it’s cheaper to do a whole street.

So lets take an example of a street with say 40 houses. Labor’s plan will connect all 40 in one go, as one project, running the cables down the street, digging up the road once and connecting every place.

The coalitions plan means the resident must front part of the cost, partially subsidised, but this happens in the street up to 40 times, in the end costing significantly more, think about it, that’s up to 40 Tim’s that street needs to be dug up and repaired, wages to the workmen paid and new cables run. It’s impossible to make that cheaper than doing it in one go.

So the coalition offers a shorter term solution, slower speeds and with a lower initial cost, but much higher ongoing costs and much higher rate of upgrade required, costing the tax payer far more than they’re accounting for.

Is that good economic management? Is it responsible management? I think not.

The state of the economy

To put it briefly, Australia has done well through the economic crisis. This is widely recognized by the international community to be partially due to Labor’s management and stimulus, and partially due to our strong resource sector.

The coalition claims the economy is doing badly, and that this is due to labor’s mismanagement. While revenue is lower than expected, the economy is still up there as one of the world’s best.
Both parties recognize that the resource boom has been our major source of revenue. This also tells us that our economy is heavily influenced by nations such as china who buy our resources. China’s growth has slowed, they’re buying less, and so revenue is lower than expected. There’s nothing controversial about this assessment.

The coalition, however, claims is resource revenue is down, it is labor’s fault. This is blatantly false, and if this is what the coalition truly believes, they are economically illiterate. The truth is they know it’s a lie as well as any economist does though.

I could go on, about climate change, the environment, social factors, education, rhe supposed disasyers of insulation batts and school halls,but the arguments would be the same. The coalition ignoring professional, expert advice to further a populist campaign built on false claims, no evidence and no costings.

Maybe I’ll talk about some of those later if I can be bothered, but all all fronts, the coalition is offering nothing to the country except overly expensive policies for minimal impact, and I can see no reason to vote for them even if Labor has been a mess recently.

So if you’re planning on voting for Abbott this election, I really want to know why? what do you think you’ll get out of it? How will it benefit you or the country? I genuinely want to know.