Happy new year - or happier, anyway
Sydney Morning Herald
Friday January 1, 2010
THE crowds welcoming the new year may have been forgiven for a little extra fervour in their celebrations. Thank heavens 2009 is dead and gone. It had more than its share of bad news and disappointments; 2010 could not be much worse - could it?Leading the long list of 2009's bad news was the economic downturn across the world. Australia has been lucky that its economy, almost alone, has not fallen into the sort of recession that is widespread across Europe and the US. Unemployment rose a little in this country, but it appears to have stabilised for now at a point well below the glum Treasury forecasts at budget time. Not so elsewhere: in the European Union 28 million people, or about 10 per cent of the workforce, are unemployed, and the rate is expected to rise further. It may not begin abating before next year. In the US, where unemployment is usually well below European levels, it has also reached 10 per cent, although it fell slightly in November. In the same month Australia's unemployment was also down slightly, to 5.7 per cent - a sign of how fortunate this country has been.Will the luck continue? The Australian sharemarket clearly thinks so, having finished the year on a high after its best 12-month performance - rising more than 30 per cent - since 1993. But doubt remains over the strength of the recovery. Extraordinary government stimulus packages here and overseas have helped keep economies moving. China's encouragement of borrowing to stimulate growth has produced bubbles in stocks and property. Its enormous investment in US dollar-denominated investments - as the US acts to devalue the dollar to stimulate its own economy - has made it dependent more than ever on stability in financial markets. In current circumstances that is hard to guarantee. Given China's central role now in Australia's economic performance, that uncertainty will cast a pall across the coming year.In politics last year Labor in NSW continued its decline, while in Canberra it appeared to reach its zenith and to have entered a period of decline. The Nathan Rees experiment - a premier from the Left faction appointed with the backing of elements of the NSW Right - failed. Rees tried to bring renewal to the party and to the state but he was hamstrung by the factional alliances that had put him in power. He wanted to bring determination and energy to decision-making, particularly on public works projects where it has been so lacking, but his desire to appear decisive led him to ignore planning in favour of action. When investment decisions commit billions of dollars - as in the CBD Metro, for example - any errors will be expensive. It was not his investment decisions, though, that brought him undone, but his desire to wield the power other Labor leaders, such as Kevin Rudd, had demanded of their caucus - the power to appoint his own ministry. In ejecting from the ministry the factional leaders who had put him in the top job, Rees both undermined himself, and laid bare the truth of NSW Labor: that it is run by, and for, its own factions, and has little connection with the people of the state. His successor, Kristina Keneally, has not been long in the job. Her achievements, though, amount to a series of picture opportunities, and the return of Labor's factional heavyweights to the ministry. Thus far, they do not suggest that she is an agent of radical renewal for a state and a political party that badly need it.In Canberra Labor looks to have experienced what might be termed the curse of John Howard. Rudd came to power suggesting that he would be as comforting and unthreatening as his predecessor, while in fact holding a mandate for considerable change, particularly in education and the environment. But 2009 showed him unable to claim much more than Howard's main boast - that he kept the economy healthy. The much vaunted education revolution has, it is true, been favoured with vastly increased investment, as a way to stimulate the economy, but many of those investments are now mired in controversy over their cost and their effectiveness, and besides them achievements are few. On the environment Rudd suffered a big defeat when Chinese diplomacy snuffed out any hope of a breakthrough on emissions trading at the Copenhagen summit. He promised to be just like Howard and, lo and behold, just like Howard he is.Rudd is now contemplating taking the issue of an emissions trading scheme to a general election, which must be held this year. After Copenhagen this is now a much more risky strategy. Even Rudd concedes there is no point acting faster - and disadvantaging Australian industry more - than the biggest greenhouse gas emitters are prepared to act. Just as the world's leaders have failed to reach a consensus on the right approach to climate change, so have Australia's politicians. In Tony Abbott the Coalition has found a leader who better expresses its innate scepticism on the issue than Malcolm Turnbull, who acknowledged the truth of climate change but failed to convince his own supporters that the logic of that position meant they had to talk seriously to the Government about it. It may well be that the time for emissions trading schemes has not yet come - they are, after all, advocated with the assumption that national schemes will fit into an overarching international framework, so that emission rights can be traded globally. Without that international framework, an emissions trading scheme imposing costs only on Australian industries would be a single large target for Abbott. It would give him a focus - something that his mercurial pronouncements on other matters suggest he needs if his leadership is to maintain coherence. Rudd will be calculating whether it is really necessary to make the Opposition Leader's task so easy.
© 2010 Sydney Morning Herald