JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

Hockey would be no soft touch as treasurer

<em>Illustration: michaelmucci.com</em>

Illustration: michaelmucci.com

If the Liberals take over the management of the economy in September - as seems likely - one advantage should be that big business becomes more realistic about the extent to which it imagines the government can solve its problems. And just to make sure, Joe Hockey, the opposition's treasury spokesman, gave business his first pep talk along those lines last week.

Hockey is much underestimated. If you've been watching you've seen him progressively donning the onerous responsibilities of the treasurership, the greatest of which is making it all add up.

He has used his - now less considerable - weight to avoid raising unrealistic expectations and to tone down overly generous promises. You can see him thinking: ''I'm the guy who'll have to find a way to pay for all these commitments. We've made a huge fuss about the need to get the budget back to surplus and it'll be down to me to ensure it happens.''

In opposition the temptation is to espouse populist solutions that sound good but don't work. As a former cabinet minister, Hockey knows it's hard for governments to get away with such wishful thinking. If you've been listening carefully you'll have noticed Hockey quietly taking an economic rationalist approach while others demonstrated their lack of economic nous.

Those who doubt the strength of Tony Abbott's economics team should note that Hockey would be backed by Senator Arthur Sinodinos, a former senior Treasury officer. I believe Sinodinos played a key part in formulating the ''medium-term fiscal strategy'' - ''to maintain budget balance, on average, over the course of the economic cycle'' - which the Libs developed when last in opposition.

If so, Sinodinos deserves induction to the fiscal hall of fame. There have been few more important or wiser contributions to good macro-management of our economy.

One of the greatest failings of the Rudd-Gillard government was the way, in an attempt to keep in with big business, it yielded to the temptation to modify its policies in response to lobbying from particular industries. The consequence was to annoy other industries and incite them to get in for their cut. But the more concessions business extracted from Labor, the more business lost respect for its judgment and self-discipline.

This generation of Labor doesn't seem to have learnt from its Hawke-Keating predecessor which, with some lapses, stuck to the line that the days of industry rent-seeking were over and that, in a well-functioning market economy, the main responsibility for solving an industry's problems rests with the industry.

Judging by his speech to a business audience last week, I suspect Hockey has learnt the lesson. He outlined the many ways in which he believed the Coalition's policies would be better for business than Labor's, but stopped well short of promising business everything its heart desired.

For instance, he discussed the case of ''a significant manufacturer with similar operations in Australia and the United States'', who complained that labour costs were much higher in Australia.

''Australian labour is expensive,'' Hockey said. ''Is that a bad thing? No, not at all. We can compete with higher wages provided our output per worker is globally competitive.

''Higher household income means that our people have higher spending power. That provides a high standard of living and facilitates strong household consumption. And it benefits businesses because it provides a strong and expanding domestic market.''

Australia's standard of living must not go backwards, he said. There was no national benefit in cutting wages. ''What we do need to do is to ensure that our workers have the skills and knowledge that our industry needs. Education, training and retraining is a key step to unlock labour productivity gains. And we need to ensure that employment conditions can meet the varied and changing requirements of Australian workers and Australian businesses.'' This was why, within the framework of the Fair Work Act, a Coalition government would look at ''cautious, careful and responsible improvements to labour market regulation''.

Hockey noted that part of the reason Australian wages seemed high relative to US wages was our high dollar, which ''is impeding the competitiveness of Australian exporters and making life difficult for Australian producers.

''But on the other side of the coin,'' he said, ''the high Australian dollar brings benefits for businesses which rely on imported goods, and for consumers who purchase cheaper imported products. So what could or should be done?'' He made two points in reply. First, there's no ''correct'' value for the dollar. Second, all movements in the currency create losers as well as winners. ''Those who argue for a lower dollar are effectively arguing in favour of higher prices for consumers.'' he said.

A Coalition government ''would need to be extremely cautious in tinkering with such a successful policy measure'' as the freely floating dollar. ''We would encourage businesses to view the high dollar as an opportunity. A high dollar means imports are cheap. Business should be utilising this period to import cutting-edge equipment and world-class technology.''

Hockey is already sounding like a more forthright treasurer than the incumbent.

Twitter: @1RossGittins

162 comments

  • This is going to be the longest 6 months of my life...

    Commenter
    John Howard
    Date and time
    March 04, 2013, 10:50AM
    • No, if we are fair dinkum about policy over politics, then we need 6 months to get to the bottom of it all.

      Commenter
      Norm
      Location
      Maroubra
      Date and time
      March 04, 2013, 11:12AM
    • This article fails to mention that the economy has never been better than it is now. And that's thanks to Hockey having no say in it.

      He's a buffoon and a loud mouth.

      Commenter
      sarajane
      Location
      melbourne
      Date and time
      March 04, 2013, 11:29AM
    • I get a sense of inevitability.

      Commenter
      Julia Gillard
      Location
      Rooty Hiil
      Date and time
      March 04, 2013, 12:09PM
    • @sarahjane

      What basis do you make that statement on?

      Labor did inherit a two speed economy, what have they done since? A good treasurer would close the gap between the two, which the current Treasurer has tried to do. But rather than learning from the faster and more efficieny economy, he and the PM have tried to put the breaks on it in the form of a MRRT.

      Take the mining sector out of the equation, and then tell me whether our economy has ever been better...

      Commenter
      Ryan
      Location
      Sydney
      Date and time
      March 04, 2013, 12:57PM
    • From a being bored to death with meaningless spin and revolting repetitious rhetoric at our expense,Iagree.And with all of it supposed to be about going on with the show ,too.Ad nauseum.Bring back hereditary monarchy I say.

      Commenter
      Kane
      Date and time
      March 04, 2013, 12:59PM
    • @sarajane.....Ice Hockey at the Ice Capades.

      Commenter
      Bazza
      Date and time
      March 04, 2013, 1:03PM
    • It is unimaginable isn't it.

      If the "polls" are right we have 6 months of "Slick" Abbott saying no, followed by 3 years of Joe "don't know" Hockey saying, no.

      1 things for certain, they both get a "no" vote from me.

      Commenter
      J. Fraser
      Location
      Queensland
      Date and time
      March 04, 2013, 1:08PM
    • @sarajane ... what rubbish ... this economy is on its knees at the hands of Swan, et al. We have more debt that ever in the history of our country and a government simply incapable of keeping even the most basic economic promise.

      Commenter
      JZCarr
      Location
      Sydney
      Date and time
      March 04, 2013, 1:11PM
    • @sarahjane
      If the economy is better than it's ever been (and I think it is), that doesn't say a lot for a government who are still running deficits. All it means is that the countries debt will keep growing. Unfortunately, Swan is such a dud that 1. he can't recognise the economy is good, 2. he doesn't care about the debt and just keeps spending to get reelected leaving someone else to eventually sort out the mess.

      Commenter
      nick
      Date and time
      March 04, 2013, 1:20PM

More comments

Comments are now closed
Featured advertisers

Special offers

Credit card, savings and loan rates by Mozo

Executive Style