Sunday, 18 November 2007


Some of the more senior of us have long memories. We remember John Howard’s performance as Treasurer. .

The example of Whitlam’s economic woes as an argument against trusting Labor with the economy has become a feature on many conservative blogs – so it is valid to talk about Howard’s history.

The Stone Report provides an interesting perspective.

It was commissioned by Bob Hawke the day after he took power in 1983, and authored by John Stone, Treasury Undersecretary. Inter Alia; it reported unemployment of 11%, inflation at 11%, interest rates of 22% and a deficit of $9.6 Billion in 1983 dollars. This $9.6 billion deficit is more than $40 billion in today's terms.

John Howard was Treasurer at the time. Stone characterised his record as the "worst economic performance since the end of WW2" with the Budget deficit "unprecedented in peace time at 6% of GDP".

During Howard's tenure as Treasurer, the 90-day cash rate peaked at 21% on 8 April 1982 while home loan mortgage rates were capped at 13.5%, and inflation peaked at 12.5% in September 1982. Peter Costello commented, in 2007, that "The Howard treasurership was not a success in terms of interest rates and inflation... he had not been a great reformer."

This little piece of history shows that Howard's line that the Liberals are always better economic managers is nonsense. Much of the strength of the Australian economy today is because Labor under Hawke and Keating had the courage to reform, something that the Liberals lacked...

The judgment of every economist and international financial institution is that the restructuring reforms undertaken by the Hawke government with the full co-operation of the trade union movement created the strength of the Australian economy today.

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