Rudd must stick to basics, not sideshows
letter published in The AFR, 13 March 2009
The very belated acknowledgement by the International Monetary Fund and the World Bank that there will be a world recession in 2009 reminds us that the government's February forecasts for Australia, based on 0.5 per cent growth in the world economy, are also again well out of date. It also warns us that, in circumstances which forecasting models have never had to deal with, official forecasts are no better than guesses.
It is pertinent that the forecasts by the two international bodies have been made after taking account of the massive fiscal and monetary "stimulatory" measures already announced by all major governments and central banks.
What does this mean? It suggests that such measures are far from being the answer to the loss of confidence in the economic management capacities of governments and their central banks. Indeed, it is almost the case that the more that government leaders assure citizens that they are dealing with the problem the less is the citizenry confidence.
What then should governments do?
The richest man in the US, Warren Buffett, told President Obama to concentrate his whole attention on the economic war and forget about other policies, such as climate change, he wants to implement until that war has been won.
How sensible to recognise that businesses have more than enough on their plates without having to cope with major new structural changes that impact on their competitive positions.
Prime Minister Kevin Rudd should take cognisance and suspend the immediate implementation of all major new policies, particularly those involving the regulation of emissions of CO2 and of relations between employers and employees.
If he fails to do this, Australia will quickly become one of the leaders in forecasts - downward
Des Moore
Director, Institute for Private Enterprise
South Yarra, Vic 3141