Watching Kevin Rudd exhort the nation to work harder to deliver greater national productivity reminded me of a university attack that humanities students used to level at graduating students in the engineering faculty.
Arts students used to mock engineering graduates for what they claimed was an inability to communicate beyond formulas and equations.
They used to assert engineers would say on graduation: “Last year I couldn’t spell enganeer, this year I are one.”
Kevin Rudd’s achilles heel has always been his lack of economic experience and nous.
And like some illiterate engineering student attending a Shakespeare festival, Kevin “economic conservative“ Rudd has finally woken up to the fact that as Prime Minister he has to steer us through one of our greatest economic challenges – demographic change.
He’s urged us all to work harder for longer in a bid to wring more out of the economy as the workforce starts to inexorably shrink.
But in finally acknowledging what serious policy makers have been working on for years, he has ignored the inescapable fact that that his own policy decisions have worsened the productive efforts of the country.
And the problem is that, as a result, taxpayers and their kids will have to foot an even greater tax burden for longer.
Wind the clock back to the pre-election environment of 2007. At that time, Rudd came under fire because it was discovered that he didn’t know what productivity actually was.
He fell apart when a leaked economic briefing exposed him over the issue of productivity, which he wrongly claimed was declining.
This lead to questions being asked about his understanding of the drivers of productivity and their effects on the economy.
He ducked them and, in the immediate aftermath of the gaffe, hid by appearing only on soft FM radio stations. Nevertheless, he continued his gratuitous attacks on the then government’s policies which were aimed at actually increasing productivity.
In particular, he decried exactly what he’s now trying to achieve by denigrating the so-called Welfare to Work reforms, which he labelled : “work until you drop.”
Now he’s asking people to do just that.
I’m sure there would be many who would argue that Rudd was merely attacking the Coalition as a tactic to winning in 2007.But that would ignore the fact that the first two years of Rudd’s government have been littered with policy decisions which have actually damaged the country’s efforts to increase productivity.
Untargeted spending on pink batts, for example, has driven the country deeper into debt than necessary and done nothing to improve our economic capacity or productivity.
When Rudd refers to budget deficits widening, taxpayers can thank him for the huge debt servicing costs which are now accruing. This is largely due to his haste to repaint schools and knock down serviceable buildings to build others.
Net debt is forecast to rise to $153.2 billion debt by 2013-14. Already debt servicing cost have risen from zero in 2007-08 to $7 billion in ‘09-10 and will rise to $13.9 billion by ‘12-13.
That’s money which will end up in the hands of overseas lenders when it could’ve been put to better use improving the productivity of the economy.
The unwinding of workplace reforms to suit the union movement will also cost the economy. Measures designed to promote flexibility have been dismantled and union control reinstated, making it harder for employers to attract workers.
The Government’s decision to replicate existing broadband services with an unaccounted for $43 billion slush fund without any cost benefit analysis must surely be the most egregious example of nonproductive madness.
No-one knows what the NBN service will cost the end user, although most calculations have it far in excess of the current provider’s internet charges.
The big beneficiaries of the NBN will be gamers and big households with multiple simultaneous users – hardly a key to future national growth.
To be sure, the country has an enormous demographic challenge as the population ages and costs to service that ageing rise – all off a declining number of workers.
Greater productivity is one way of meeting that challenge. If the workforce does not become more productive, the required funds to maintain a decent quality of life for all Australians will have to be made through additional taxation, or services will need to be rationed or cut.
The golden rule of government has always been, firstly, to do no harm. Labor cannot say that its economic policies have contributed to the overall productive efforts of the country.
In fact, in addition to other non-productive spending, introducing new environmental taxes and regulation will reduce Australia’s competitiveness and wealth at a time when the economic outlook is highly uncertain.
In this regard, taxpayers and their children will now need to work harder to overcome the damaging economic inefficiencies as a result of poor policy. Rudd needs to practice what he preaches.
He can’t ask people to work harder when he has not had the discipline to impose sensible productive reforms on the economy.
It’s easy to imagine the Prime Minister in the depths of night wondering just how he is running the country’s economy as an economic conservative when he was at a loss to grasp fundamental economic policy just two years ago.
“Last year, I didn’t know what productivity was,” he would say to himself in an honest moment. “Now I’m telling everyone to do it.”
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