The big spenders have been out in force recently: internationally, nationally, and locally – all with an eye to the ballot box.
A lot of the spending pledges have been questionable at best and foolish or immoral at worst.
In the United States, $700 billion was allotted by the administration and the Congress to a bailout of Wall Street bankers. It was described as being designed to stem the “haemorrhage”, or prevent stock-market “carnage”, “slaughter”, or any number of other hyperbolic epithets.
The hyperbole was misplaced in reference to a street where more than 3000 people were really slaughtered in 2001.
It was even more misplaced when one considers what $700 billion could do for the poverty-stricken in Africa or in the Middle East. In Africa, it would provide 700 million people with $1000 each. It would be life changing.
Just $35 billion of that $700 billion, could pay for free testing and treatment for malaria and eliminate the disease within seven years. Malaria kills about a million people a year. Where is the morality in putting the lifestyle of a Wall Street banker above the life of a malaria-stricken African?
Why the urgency to “rescue” the bankers and the tardiness to deal with world poverty and disease?
But if one worthwhile thing comes out of the so-called banking crisis it is this: the West has been shown to be capable of raising vast sums of money in its own interest and that the size of those amounts far outweighs the amounts of money that is needed to transform the lives of so many millions of people in the world. The banking “crisis” has highlighted our capacity to act on world poverty and our unwillingness to do so.
Nationally, we are bombarded with the refrain “doing it tough”. Millions of people around the world would love to be “doing it tough” in Australia.
Even within our own borders we are spending money foolishly. What was Prime Minister Kevin Rudd thinking about when he decided to pump $10 billion into the Australian economy in the way that he proposes?
He is dishing out the money in a way that will promote consumption rather than investment. Sure, that might help a few retailing businesses who are “doing it tough”. But most of the money will be spent on imported unnecessary junk and we will have not much to show for it in two or three years’ time. Compare that to the wisdom shown by Franklin Delano Roosevelt and the New Deal program that he set up to counter the Depression in the 1930s. That program did things like construct highways and the Hoover Dam which are still contributing to the US economy today.
Why did Rudd fall for the pressure-group mantra about first home buyers? The experience under the previous government showed that increasing the first home buyers grant does not help first home buyers, in fact it hinders them. The trebling of the first home buyers grant for new homes will merely put the price of those homes even higher than the value of the grant. You always have a mad scramble for anything that is “free”. That just drives up demand and prices.
No doubt, Treasury advised that the Government to spend the surplus, but it is unlikely it advised it to spend it in such a frivolous and idiotic way. Small wonder, the government does not want to release that advice to the public.
It has parallels with the behaviour of the previous government. Then Treasurer Peter Costello did his damnedest to prevent the release of Treasury advice about increasing the value of the first home buyers grant. He issued a “conclusive certificate” under the Freedom of Information Act that it was not in the public interest to release it. He resisted a challenge to that certificate all the way to the High Court and, sadly for the Australian public interest, the High Court upheld the certificate. Labor at the time attacked conclusive certificates and promised more open government. How the worm has turned.
At a local level, vote chasing has resulted in an array of big-ticket promises by the Opposition. However, given that the surplus has become identified in voters’ minds as being synonymous with sound economic management it has meant that the opposition has had to find significant savings out of existing programs.
It is a vote-chasing formula that is likely to result in poor public policy and public administration. Instead of working at incremental improvements in the delivery of existing programs we have a series of big-ticket announcements: bulk-billing after-hours GP clinics; low interest loans to attract GPs; re opening of schools; cash for single pensioners; a weekly green bin service; and so on. The trouble is that existing services will have to be cut or at best mark time if the surplus is to be retained, and retained it must be because to lose it would cause a media outcry. Electorally, the across-the-board-trimming of existing services does not matter a great deal because it is not newsworthy.
Alas, fear, agreed, emotion and the gut feeling appear to drive voters, so why should we expect our politicians to do anything other than to respond to those basic instincts?