Editorial
A giant slice from the magic pudding
September 28, 2004/SMH
The alliance of policy to politics is amply demonstrated by the distance between John Howard's re-election campaign launch in 2001 and his display on Sunday. Three years ago electioneering was forged by the emotion - elicited by Mr Howard, not initiated by him - that swirled around the twin issues of border security and international terrorism. The Prime Minister limited his spending largesse to one centrepiece promise - the $1.2 billion five-year ill-fated baby bonus. He did not need any more, and he knew it.
On Sunday Mr Howard was far less certain. He left nothing to chance, pledging $6 billion in new measures from child care to Medicare, from stay-at-home mums to at-home minnow businesses, from tax breaks for small business to tipping the funding of schools and technical training on its head. He confronted Labor in its old heartland and shored up key Coalition constituencies. The splurge lifted the four-year cost of new measures, beginning with the May budget, to more than $60 billion. Mr Howard almost certainly won himself and his Government many votes.
Just as certainly, he surrendered much of his claim to disciplined economic management, effectively renounced the economic philosophy that guided his Government's restoration of the Australian economy and exposed himself to the very claim with which he wants to spear his Labor rival - that the election of a Mark Latham government would inevitably lift interest rates. It opens Mr Howard to challenge on this point, if his projected four-year surpluses - probably $10 billion to $15 billion - shrink to deficits and high spending puts pressure on interest rates.
Big spending carries big risks. Magic Pudding economics will not preserve the capacity to finance the Howard promises if there is a halt to the extraordinary run of growth for which the Howard Government is entitled to much credit. But Mr Howard is a wily politician. He knows voters are attracted to hip-pocket incentives more than they are scared by macroeconomic criticism. This huge spending holds the promise of huge political rewards.
Nowhere is the spending more contentious than with schools and technical colleges because Mr Howard promises to bypass the states and go it alone. The extra $1 billion to build new classrooms, libraries and other facilities in state and private schools will be appreciated. Parents and principals will approach the Federal Government directly for funds, with Canberra deciding which schools deserve them. This will have particular appeal to parents who believe state governments have failed public education and are captives of teacher union ideology and resistant to reform. Disingenuously, Mr Howard calls this doing things "a little differently". There is nothing little about it. This one-time champion of states' rights has turned his back on federalism with the assertion that a Canberra bureaucracy is guaranteed to better judge the order of need and to keep supply ahead of demand. Mr Howard's planned technical colleges program is another blow aimed deliberately at the states. The two dozen new colleges would be run by the Federal Government - with teachers paid on performance, a deliberate swipe at the reluctance of government-school teachers' unions to make pay a function of pedagogic skill.
The schools program will be a winner among parents running fetes to finance even basic school facilities, or battling to rid their state school of a sub-standard teacher. The proposed technical colleges, and related programs, are an overdue recognition of skills shortages already upon us, while expanding the range of vocational opportunities for school leavers. All good politics, but not all good management. Mr Howard's education initiatives pose a blackboard full of unanswered questions about how they are to be administered; they look like a $2 billion boondoggle that a government could manipulate to improve its chances in marginal seats. Running these education initiatives from Canberra raises the alarming prospect of new or expanded federal bureaucracies, duplicating work already done by six state education administrations.
A federal government should use its financial clout to rationalise inefficiencies between Canberra and the states, not multiply them. The proposals merely make worse a federal system already characterised by Mr Howard as dysfunctional.
There is nothing as radical in Mr Howard's
families and child care package, with its 30 per cent tax rebate on out-of-pocket child-care costs and a $300 annual increase in maximum Family Tax Benefit Part B. The two measures will cost $2.1 billion over four years. The tax rebate will be welcomed by thousands of parents who find the benefits of work substantially eroded by child-care costs. The concern, however, must be that what is intended as a boost for parents will instead encourage child-care providers to lift charges. Having offered the rebate to working parents, Mr Howard says the boost to Family Tax Benefit B is "to ensure complete fairness of treatment for families" because it is available to families with one primary income earner.
If fairness is the aim, however, the Coalition might have directed the $1.1 billion three-year subsidy to those in greatest need, rather than boosting a payment that goes to the rich as well as the poor. It sounds a lot like the "middle-class welfare" the Government justifiably finds objectionable outside election mode.
Mr Howard insists he is expanding the choice of Australians. There are simpler, more effective courses to that end than piling on duplicated bureaucracy and tax complexity. He might start with meaningful tax cuts because cash in hand extends choice.
The Howard package, however, has Labor in a pincer. Mr Latham can persevere in his campaign launch tomorrow to accuse Mr Howard of a reckless spending spree. But Mr Latham knows he is in a bidding war for votes and few voters will opt for sound economic strategy over a truckload of goodies. That is the triumph of politics over policy.
http://www.smh.com.au/editorial/
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(Nothing to do with Howard's spending junket that's driving us all nuts today.)
An extremely depressing thought: A week & a half till the election! We have become so used to being in campaign mode that it seems to be a permanent state of affairs. But, but .... What if we wake up on Sunday the 10th of October 7 he's still there! 
