Australia’s economy: same policy, 33% poll lead

A poll commissioned by The Australian newspaper puts Australia’s Labour Prime Minister, Kevin Rudd, 33 per cent ahead of Liberal Opposition Leader Malcolm Turnbull in terms of who is most capable of handling the country’s economy. Why has Labour’s sister party in Australia performed so well against its conservative opponents and what lessons does Britain have to learn from Kevin Rudd?

A poll commissioned by The Australian newspaper puts Australia’s Labour Prime Minister, Kevin Rudd, 33 per cent ahead of Liberal Opposition Leader Malcolm Turnbull in terms of who is most capable of handling the country’s economy. This compares with a 2 per cent lead Turnbull had on the same subject in September 2008.

A similar ComRes poll for the BBC’s Daily Politics Show put the Conservative party 12 per cent ahead of Labour in the UK. Why has Labour’s sister party in Australia performed so well against its conservative opponents and what lessons does Britain have to learn from Kevin Rudd?

Faced with the same challenging economic circumstances as the UK, the Australian Government published is Economic Stimulus Plan earlier this year. Worth $42 billion, the scheme mirrored the approach taken by Alistair Darling, by using government spending to support and protect jobs from the onslaught of the downturn, and investing in future economic growth. As the Australian Government has concluded:

“A temporary deficit has been the only responsible course of action to support jobs and economic growth.”

Since then, in an echo of Conservative attacks of Gordon Brown and Alistair Darling’s efforts to take the UK out of recession, the Australian Liberal Party has criticised the stimulus package being led by Treasurer Wayne Swan. Speaking on ABC’s Insiders programme, the Liberal’s Deputy Leader, Julie Bishop concluded:

“We would not have driven Australia into record levels of debt with the largest budget deficit in peace time Australia.”

Such comments, however, appear misplaced as Australia this week saw an increase in employment and its currency reached a 14 month high as the country’s central bank now feels confident enough to increase interest rates. The Governor of the Reserve Bank of Australia, Glenn Stevens said:

“Economic conditions in Australia have been stronger than expected and measures of confidence have recovered.”

Indeed, the Australian stimulus plan has received significant praise, with the International Monetary Fund concluding:

“the downturn has been milder than in most other advanced countries. This is because of strong commodity exports, a flexible exchange rate, a healthy banking sector, and a timely and significant macro policy response.”

Critics of the British government’s approach may point out the Australian case was different since they were able to avoid a full blown recession. But the stimulus package pursued in Australia demonstrates the power of government spending in a downturn. Indeed, it was through such stimuli that France and Germany have been able to come out of recession.

In an apparent sideswipe to those in the Liberal Party who have attacked the stimulus plan, the most senior civil servant in the Australian Treasury Department, Dr Ken Henry warned that any dumping or loosening of the stimulus could cost 100,000 jobs. The remarks echoed the comments of Professor David Blanchflower, former Member of the Bank of England Monetary Policy Committee, who wrote in Saturday’s Mirror:

“The plans that David Cameron and George Osborne outlined this week are the most wildly dangerous economic proposals that Britain has seen in the past 100 years.”

The coming months will see a clear ideological debate over the future of the country and the role that government should or should not have in supporting the economy and protecting jobs. It should act as a clear repost to those who complain that all the parties are the same.

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