Australian Politics – U.S. Politics. You Pick The Difference.

Posted on Wed 05/13/2009 by

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Australian Prime Minister Kevin Rudd (right) and Treasurer Wayne Swan.

Australian Prime Minister Kevin Rudd (right) and Treasurer Wayne Swan.

There are some differences, and as always, I like to explain them up front, because sometimes it can be a little confusing. Those differences are only in the naming of the Parties themselves, because when it comes to policy, and overall Political Agendas, they are almost a mirror image of your U.S. political parties.

The Party currently holding Office here is the Australian Labor Party. (ALP) When it comes to politics, they would almost align themselves with the U.S. Democrat Party, and here, they are joined at the hip to big Unions, and in a large number of cases politics is the next step up the ladder for Union leaders.

The party previously in power was the Liberal Party, and even though you align the word Liberal with a different political outlook in the U.S. the Liberal Party of Australia neatly lines up with the Conservative political outlooks of the Republican Party in the U.S. They have been called the Liberal Party of Australia since they formed immediately following the end of World War 2. They form a close political alliance with the National Party of Australia, having close political affiliations, the National Party representing the regional areas, and areas covered by the farming and grazing Communities, while the Liberal Party represent mainly the city constituencies of the Conservative political leanings, both those parties being staunchly Conservative in their nature.

The Labor Party have traditionally been the party of big spending and Government deficits, while the Conservative Liberal/National coalition align themselves with small business, which they correctly term ‘the engine room of Australia’, and like to run a tight ship.

From the mid 80’s and into the early 90’s Labor held Government office. During that time, they ran Government mostly with a deficit, and that deficit blew out somewhat. It would seem that the largest spending periods were in the lead up to a General Election, and even though the Conservative side of politics may also have done the same thing, that big spending from them always seemed to be funded, whilst Labor was not all that worried about running up Government debt. When the previous Labor Government lost power in 1996, they left the Country with a huge Government debt of around $8 Billion. That might not seem much in this day and age when Governments talk in trillions, but to a small Country with a population of only 20 million people that amount was huge at the time.

John Howard led the Liberal/Nationals to Government in 1996 and he became the Prime Minister. He named as his Treasurer Peter Costello, and those two men guided Australia carefully until they lost power at the election at the end of 2007. The Treasurer during that time, Peter Costello held  the similar position to what you call The Secretary of the Treasury in the U.S. the position now held by Timothy Geithner.

Faced with what was at the time, huge Government debt, Costello was faced with the prospect of keeping Government running at a deficit, paying the huge interest on that and finding ways of keeping Government spending in check. The other thought was to pay off that debt, so that the interest being paid on it could be better used. He took the second option, paid off the Government debt, and then gradually started building up, not a Government Deficit, but an actual surplus. That surplus gradually rose, and because of that, taxes were able to be eased for the people, and the bracket creep on those tax rates was altered each year. The Government ran effectively during that period, although Labor would say that the Country stagnated during their tenure.

Governments suffer from inertia over long periods, and the paople decided on a fresh way of looking at things, and on a platform of ‘Change’ (sound familiar?) Kevin Rudd led Labor to victory in 2007.

What Rudd inherited was a Government with no Government debt whatsoever, and a surplus close to $15 Billion, keeping in mind the population is only 21 million. On top of that Costello also introduced a ‘Future Fund’, and financed that with a starting fund of $18 Billion, and legislated in stone that it could not be raided at a future date for any other purposes. Further money was added to this Future Fund, and when Howard lost Government, the fund stood at close to $70 Billion. They also funded a Higher Education Endowment Fund along similar lines and funded that to the tune of $6 Billion. All of this they achieved while still running Government in surplus with no debt, and the Country still prospered.

Rudd won power and selected Wayne Swan as his Treasurer. Last night, Wayne Swan handed down his second Budget since taking the reins as the Country’s Treasurer. His first Budget last year was comfortable, and he actually increased the Surplus to around $20 Billion.

Then the Global Financial Crisis came upon us.

Since that, so far, the Rudd Government has given Australia two Stimulus packages, mainly in the form of Government cash handouts to taxpayers and infrastucture announcements, effectively given the name of ‘Nation Building’. They have made wild claims that these Stimulus packages have worked wonders in insulating Australia from the major effects of the Worldwide financial meltdown. In the same breath, everything, and here I mean everything, can be blamed on the previous Government. (sound familiar?) No matter what the topic, the current Labor Government will not directly answer any question asked, and at the same time will change the subject to blame the previous Government for all the current ailments, no matter what.

I have an opinion that had it not been for the foresight of the former Treasurer Peter Costello in paying off  the former Government’s debt, and then gradually increasing the Surplus, have played the major part in insulating us from the major effects of what has happened.

So, what has happened since Labor has come to power?

That Surplus of $15 Billion has gone completely, and in fact the deficit after last night’s budget is $57 Billion, what amounts to a $82 Billion turn around. Treasurer Swan, in the lead up to last night’s budget told us, and also leaked (like a seive) that this would be the toughest budget of our lifetime. If so, then we have been hit with what amounts to a powder puff. Spending went up dramatically, and he termed this budget as the third round of stimulus packages. Spending in this Budget also increased dramatically, and that Budget deficit is expected to blow out to $210 Billion within three years, and that’s something Treasurer Swan has not even denied. Conveniently any hard decisions as to where to find ways to start paying off that huge debt have been put off a few years, and surprise surprise, those hard decisions do not come into being until after the next election cycle. This huge deficit, and the huge increases in spending will be funded from Government borrowings. His so called hard decisions were actually trying to find savings, and taking into account the current deficit of 57 Billion, he found savings amounting to $2.1 Billion, what in reality is a tiny amount when looking at the bigger picture of a huge deficit.

Treasurer Swan has called this huge increase in the deficit for this year, and up to that larger figure of the $210 Billion as TEMPORARY, and his confident outlook is that we should be back in surplus by 2015/6.

TEMPORARY. Six or seven years is temporary now.

Incidentally, the former Treasurer Peter Costello has said that this debt level will probably not be paid back within 20 years, and most probably not in our lifetime.

Temporary?

Okay then, picture this when comparing it to the situation in the U.S.

Don’t you just love the way that these politicians spend money like it’s water from a never ending tap, in this case a monstrous great pipe pouring it out of a huge dam behind it. The spending part, (right now) is the really easy part. However, the part where it has to be paid back, well that’s some time off in the future, long after they have finished with their time in politics.

As is often the case, whenever the incumbent Government loses power, then those leaders and people in those important positions all step out of the way. The excuse is that they need more time with their family after a long career in politics. They also tell us that it’s time for some new blood to lead the Party forward.

The truth is more like they don’t want to step back to a lesser position after holding the reins of power. They take their huge Government Superannuation packages and benefits, and move sideways into the ‘lecturing’ circuit or other positions of power.

The real truth is that they ‘crash and burn’ the Country, put off reconstruction of it until a long way in the future, and when that time comes, they leave the hard work to someone else, and disappear into the sunset.

We are the ones left with the damage. We are the ones left to pay it all off. Our children and future generations are saddled with a huge debt that hangs over all our heads like the sword of Damocles.

The current deficit of $57 Billion amounts to $2600 of new debt for every man woman and child in Australia, and if extrapolated out to the U.S. then the figure for you is around $800 Billion, and the amount after three years of that $210 Billion here in Australia approaches $3.2 Trillion.

If all this sounds familiar to you, it just goes to indicate that left leaning Governments around the World act in similar manners, no matter what their names may be.

This is not Government debt. It’s debt that the people have to pay back, somehow.

Temporary? Give me strength!