Peter 147 said:
The Liberals have only been in power nationally since March 1996.
That's a bit of an overstatement, given that Keating became PM in 1991. However you are right that the 1990-91 period distracted Labor from what was going on in the real economy and meant that interest rates were held too high for too long. Yes they did fiddle while Rome burnt in this short but crucial period.
Keating's proposed 12.5% 'consumption tax' discriminated against low income earners and would have been more regressive than either Hewson's 15% GST MkII (ex-food) or Howard's Democrat-modified 10% (ex-food) GST.
Peter Walsh's autobiography gives an excellent account on why it was bad policy and deserved to be defeated.
The sharemarket overheated in late 1987 and the economy (and property) overheated in 1988- early 89) I'm not sure if it's fair to entirely blame the Federal government for the failings of private companies. I think the banks, who were given the keys to the lolly shop when they were deregulated in 1983 deserve much of the blame. Also some of the state Labor governments (especially Vic, SA & WA) were guilty of getting into bed with big business.
The 1993 election was won on a lie from Keating - that you can have tax cuts but no GST. Of course this was never true and the result was the budget deficits of the 1994-96 period (when the economy was recovering and deficits should be falling as government fiscal stimulus to the economy became less necessary).
But the public fell for it. The result was the successful 'small target' strategy of Howard in the lead-up to the 1996 election. Labor copied 'small target' under Beazley. But the 'small target' strategy (of telling people what they want to hear) is bad for democracy long-term as it means politicians can't maturely talk to the public about national issues.
Tax takes the biggest proportion of GDP under Howard than it has for any previous government. At least though this is more responsible than running a big deficit, which as you say has insulated us.
However Howard has done some silly things financially, eg cut petrol tax indexation, pampered private health and given handouts to retirees that are either environmentally counterproductive, regressive or will increase government liabilities long-term. There are also inequalities in the tax and social security system that the government has done nothing about and disproportionately hurt PAYE taxpayers.
I agree that low costs for necessities are very important as the poor benefit disproportionately. In this regard, micro-economic reform such as removing protection on clothing has probably been a good thing (except for those whose jobs were lost, and this industry has been in long-term decline even before tarifs were cut anyway).
I am not worried about a Latham government, even if they did abolish negative gearing.
Government policy changes seems to have a reverse effect to that intended. For instance removing -ve gearing in 85-86 may have increased rental yields by reducing supply. Investors who bought in this period did very well, benefiting from the 87-89 boom. And Howard's FHOG was a ploy that probably contributed to house price increases greater than what the grant was worth (excepting many country areas prior to 2002). So conditions may be different, but will not necessarily be worse.
Regards, Peter
