PM's financial achievement no accident

The good news keeps coming

The Howard Government could lose the forthcoming election because it has been too successful in managing the Australian economy for too long. It all just seems too easy.

After 16 years of unprecedented uninterrupted economic growth, no wage breakouts despite our lowest unemployment levels since 1974 and a skills shortage, real wages growth, reduced inflation, the lowest working days lost since 1913, and in sectors such as construction, the lowest on record, we have taken economic success for granted.

That Australia during the past decade has sidestepped the Asian economic crisis and successfully weathered the economic stagnation of Japan, our largest trading partner, reinforces the significance of this success.

And the good news keeps coming. The recent Federal Budget is in massive surplus and gave everyone tax cuts. It is the envy of most Western countries.

Also, just recently we learnt retail sales are up 5 per cent and consumer confidence has hit a new high.

That this has been achieved with a relatively targeted, fair and efficient welfare safety network, avoiding the cost overruns of the dated European system or the glaring gaps of the US, underlines the uniqueness of the achievement both in Australian and international terms.

Yet, the Howard Government sinks in the polls. It sinks because we have become so used to good economic news for so long that we have assumed that it is the result of factors other than government policy, leadership or particular judgments.

This is like former prime minister Paul Keating's claim that Australia's post World War II boom just happened because of the easy times of the 1950s and early 1960s and had nothing to do with Menzies Coalition government's policy settings. Menzies just struck it lucky.

So too, apparently has Australia been the "lucky country" with its economy, as shadow treasurer Wayne Swan stresses, largely driven by the Chinese economy. Like Menzies, the Howard Government apparently has just been fortunate enough to be in office and to preside over the good times.

The implications are clear - anyone can manage the Australian economy which will just keep on keeping on, regardless of who is in power.

But the Australian economic success in the past and now has never been easy. During the 1950s the international environment economically and politically was in a state of flux and uncertainty. While the Menzies government made mistakes, its basic judgments and policy thrusts were right. Few nations did as well economically, managed social change and large-scale immigration so well, or developed such a targeted welfare system as Australia. By contrast, the Labor Party was stuck in the past of wartime collectivism, controls and outdated ideology.

Neither has Australia's present economic success been accidental nor without effort. Financial deregulation begun by Howard in 1979 and later implemented by the Hawke-Keating governments was initially resisted.

Privatisation of wasteful government business enterprises had to overcome entrenched interests. Reducing government debt, pruning public spending and retargeting welfare required major ideological shifts. Ending corrupt union practices and thuggery on the wharves, in the building industry and elsewhere necessitated resolve and harsh tactics.

Australia has been able to capitalise on the demand for our resources only because these reforms made it all possible.

There is no hope for the Howard Government because its greatest electoral asset, management of the economy, has become devalued with the growing perception that Australia's economic success requires no particular skills or key policy drivers such as deregulation.

According to this view, it doesn't matter who is in power, as running the economy in these times is just too easy. Even converted fiscal conservatives like Kevin Rudd can do it.