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TONY JONES: John Howard almost transformed the last election into a referendum on interest rates and trust. But now he's revealed that a backlash from debt-laden voters is not the biggest concern he faces.
JOHN HOWARD: It's the greatest worry of my political life, petrol, in terms of its impact on the average Australian, because we love our cars, we Australians.
-- Lateline, 2 August 2006Following day addendum: "John Howard has finally let the cat out of the bag: instead of stating that the rising fuel crisis is the greatest threat facing all Australians, he simply implies that it is his biggest "politcal fear". That obviously points to a total selfishness and arrogance that has long been hidden behind a facade of care for the Australian people in general." G. Pike, letter to The Age.
Funny the PM should say that on the eve of an interest rate rise to 6 per cent. Suddenly he has nothing to say about keeping interest rates low, the one thing he hammered into his frightened flock at the last election. And he surely won't be talking about the spate of home-loan defaults, up an incredible 50 per cent from last year.
If you are familiar with Little Britain, you've seen Kenny Craig, the unfortunate stage hypnotist who rarely fools anyone. Whenever he feels cornered, he starts his spiel: "Look into my eyes, look into my eyes, the eyes, the eyes, not around the eyes, don't look around my eyes, look into my eyes ... you're under." Kenny could take lessons from John Howard, the con artist who has successfully kept a majority of voters "under" for over ten years.
Under Howard's watch, and with his blessing, housing prices have broken the sanity barrier. Yet people continued to spend $400,000 for $250,000 houses. Why? Because John Howard has created a fool's paradise of economic prosperity. Cuts in social spending, annual tax cut bribes and his somnolent reassurances that nothing wrong can happen have kept his aspirational swinging voters sound asleep. But now, with this rate rise and another forecast before year's end, these moral Rip van Winkles are stirring. The question is, when petrol hits the panic price of $1.50 a litre, what will they do?
Nothing, probably. Because John Howard knows how to work them, he knows how to massage them back to the sleep that keeps them incognizant.
And that means he will win next year's election. His supporters are in too deep to suddenly realise, let alone accept, their part in bringing Australia to its moral knees.
It would help if Labor had a backbone or a suitable leader. But there is no one in the party to remind Australians that they were part of a once proud nation. They need a Whitlam but they are stuck with Beazley.
By the time Australia finally bottoms out into the depression now being talked about, the two major parties may have become irrelevant.
Did I say depression?
PETER COSTELLO: We have lived through the longest period of continuous economic expansion in Australian history. Nearly every other economy in the world has been through a recession. The United States has, Japan's been through several. Europe has. Hong Kong has. Singapore has.
Now, the object is to keep the economy growing. If anybody tells you there is a recession which we have to have, they're wrong, completely wrong.
STEPHEN LONG (Economics correspondent for PM): But after a record 15 years of economic growth, we're overdue for one. And when the cycle turns, thousands of families could be in big trouble, because one blot on the copybook during the terms of Ian Macfarlane and Peter Costello is a record rise in household debt. And there was a warning today that unless that's curtailed, we could be looking at more than recession.
Steve Keen is Associate Professor of Economics at the University of Western Sydney.
STEVE KEEN: Well it will end in another depression because you simply can't sustain debt levels like this.
We're now looking at aggregate debt in Australia exceeding 140 per cent of GDP (Gross Domestic Product) when back in the 1950s it was 20 per cent of GDP.
Now you can work for a while by borrowing money and continuing to service your debt. But if you get to the levels of debt we're looking at now I think most people would know on their own personal finances, they can't sustain that pattern.
And yet there seems to be no end to this exponential increase in the level of debt compared to the level of income.
STEPHEN LONG: Glenn Stevens (the new RBA governor) will being doing his utmost to make sure it doesn't all fall apart on his watch, but with the inflation rate as high as it's been for more than 10 years, he takes over in interesting times.
-- Theodore G. Willikers
