Charles Gutjahr

Melbourne, Australia

The Coalition doesn't deserve a reputation for good economic management

17 May 2019 — a 1 minute read on opinion

Bob Hawke was many things, but I want to highlight one: his Hawke/Keating government was the best economic manager our country has ever had. That's obviously a personal opinion but I think it's fair to say it is a view widely held amongst economists, and certainly what I was taught when I studied economics in the late 1990s.

I try to write an opinion here each week, and I was already planning on writing how I think the Coalition fails at economic management. Hawke's death throws that into sharp relief for me. Why do more people seem to think the Coalition manages the economy better than Labor, when Labor is the one with the good record?

The Coalition threw out an efficient carbon price and replaced it with an inefficient (and ineffective) direct action plan. They defend wasteful subsidies like negative gearing and cash refunds for imputation credits. They focus on the wrong levers like corporate taxes when it's clear that wage growth needs attention. The Coalition made a big fuss about government debt while Labor were in office, then proceeded to double the debt when they got into office.

But their big failure, the one that I wish more people understood, is what Howard/Costello did in the early 2000s. They took temporary revenue from a mining boom and used it to pay for permanent tax cuts. They imposed a ratchet to force smaller government on an unwilling Australian population. The Coalition put their political ideology of small government ahead of responsible management of the economy, and in opposition to what I believe most Australians want: a government that provides excellent services.

I think the Coalition doesn't deserve a reputation for good economic management. They've been our worst economic managers for perhaps 40 years, and I don't see that changing yet.