Australia's dirty secret

In that context and with a premium on propping up confidence in the economy (both consumer and business) it may be a good idea to encourage the punters to look the other way in April and to focus on which new plasma to buy. It may also be a good idea to discourage them from buying newspapers. Although, judging by the Fairfax results, that’s happening anyway.

The government is clearly mindful of these factors. There are compelling reasons for the stimulus package and its sensible, well timed and well aimed policy - in the short term.

But a problem remains. Keating’s famous banana republic line still rings true. Australia’s economy has a structural problem. The dirty little secret was hidden from view by the booming commodity price fig leaf. We are overly reliant on digging things up and shipping them off. Then we buy back things made from the stuff we dug up. Value is added, jobs created and profits are realised off shore.

The long term trend in commodity prices before China and India started firing on all cylinders was down. The commodities boom is over. But have we wasted the money?

The Howard years saw very little investment in critical parts of the economy. We failed to build up our workforce through proper funding for education and training. We failed to invest in infrastructure and build our capacity in other areas. We woefully failed to invest in R&D. We are dangerously close to becoming a country that doesn’t make stuff -  an economy wholly reliant on the service sector (in a time of belt tightening), agriculture (in a time of drought) and mining (in a time of global recession).

The legacy of the Howard/Costello years may yet turn out to be a diminished Australia. We had all the cash in the world and totally failed to do anything useful with it.

Now let’s hope that China doesn’t come down with the severe dose of the ’flu - if that happens, we’re headed for life support.