If interest rates are to be considered a political football, the 2007 Federal election was the Grand Final. They have becomes such a fixture of economic discussion that’s it’s hard to imagine we’ll ever move past it, but I’m hoping this was the last time they will feature so prominently in an election debate. So let’s put the issue to bed.

The Coalition were guilty of misleading the public on nearly all aspects of the way role interest rates play in our economy. In 2004 they made as much hay as they could out of this, and paid a price for it. Why couldn’t they resist the temptation? Well, we all know that Australia is awash in a sea of debt. The numbers certainly attest to the fact that Aussies were sensitive to interest rates in their political leanings. (more…)

The Australian Bureau of Agricultural and Resource Economics latest report indicates that we are to be one of the countries worst affected by global warming with a decrease in agricultural production on the order of 17%. This figure pales in to comparison to India’s 25%, truly a scary number when you consider how many mouths that 25% is feeding. We hardly needed any more reminding, but the visions of our planet’s broiling future keep on coming. (more…)

I went to a private school. Although I didn’t care for school life, I guess I got a pretty good education. I received a partial scholarship to my school, but even so the school fees were a struggle for my parents, and to this day I appreciate their sacrifice. My sister went to a local public high school instead, and so within our family and neighbourhood we could make a good comparison, and I think they compare well: my sister’s education was far from lacking, and we both ended up at the same university.

95% of rapists and murderes are public-school-educated. No offence, but it’s true.

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What happens at a typical branch meeting? Perhaps you imagine a handful of political nerds trading gossip, or some minor union functionaries concluding their factional horse-trading. Perhaps a group of students in Che Guevara T-Shirts discussing Marx?

The reality is perhaps less interesting but more fun. Our branch is a very active one, and we have about 130 people as members. We generally have north of thirty locals attending the monthly meetings, many more if we have a high-profile speaker.

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According to conventional wisdom, the Coalition are the ones to be trusted on economic management. A current poll offers these distressing statistics:

The Coalition is strongly ahead as better economic manager — 40 per cent, compared with 12 per cent who put Labor as the better manager of the economy.

I’m sure many Labor insiders bridle at these sorts of statistics, because like most conventional wisdom, if you really try and investigate the logic behind it, you don’t come up with much. For instance, according to Wikipedia – a source that Howard’s own staff are free to edit:

During Howard’s tenure as Treasurer, the 90-day cash rate peaked at 21% on 8 April 1982, while home loan mortage rates were capped at 13.5%, and inflation peaked at 12.5% in September 1982. Peter Costello commented, in 2007, that “The Howard treasurership was not a success in terms of interest rates and inflation… he had not been a great reformer.”

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The Government’s line on inflation and the economy in general consistently includes a line about “wage pressures”, and how the Coalition’s economic wizards can hold them down, and how Labor’s slavish devotion to the unions will drive them up.

Think about this for a moment. What does economic growth with low wages growth mean? It means that corporate profits increase disproportionately faster than the wages of average working Australians. If you derive most of your income from investements, and use your salary as pocket money, then this is great news for you. You want a booming stock market, and low wages can only add to corporate profits. If, like most of us, you live on your salary, you want to be paid a fair wage for the amount of value you are adding to the company or comminity in which you work. Modest and proportional wage growth is not only good news for a worker, it’s a necessity for social justice in this country.

So how do they get away with using this line? Well, a big part of it is sure to be interest rates – having your income growth kept low is less scary than having your mortgage rate go up. Although most of us do live on our salaries, a lot of Australians have their overall wealth overwhelmingly tied up in the family home. This precarious balancing act of debt and unaffordable housing does not seem to me to be a healthy thing.

So what will Labor do about it? Not a lot, I fear is the answer.

(Originally from http://claytonsouthlabor.blogspot.com/)