Home > Aus Economy, Banking and Finance > With Kevin Rudd Everything is the Same Only He Isn’t Here

With Kevin Rudd Everything is the Same Only He Isn’t Here

It has been said that not long after the October 5 2000 uprising that ousted Slobodan Milosevic from power in Serbia many people grumbled that “everything is the same, only he isn’t here.”

So it is in Australia since the 2007 election. Remember when Brand Rudd told us that he’s “Kevin from Brisbane” and that “he is here to help.” Come in spinner! Everything is the same only he isn’t here.

The Age newspaper reports that the two-speed economy is to “return with a vengeance.”

The gap between the resource states and the rest is set to widen in years ahead as the two-speed economy comes back ”with a vengeance”, a report says.

Forecaster Access Economics says that, as the commodities boom gathers pace, Western Australia and Queensland will expand fastest this financial year, with growth rates of near 3 per cent extending this lead in the long term…

…After raising interest rates at five of the past six Reserve Bank board meetings, RBA governor Glenn Stevens last week said the CPI would shed some light on whether inflation was staying within the RBA’s target range of 2 to 3 per cent.

Rising interest rates, needed to nip inflationary pressure resulting from the boom in the bud, tend to hit the eastern states hardest because households there have larger mortgages

So we are going back to the two-speed economy. I though Brand Rudd wanted an Australia “that makes things.” Notice the bit about mortgage stress.

But much more important was an article by Charles Purcell, also in today’s The Age, that reports on the seething anger out there in the community that has been provoked by the massive declines in housing affordability. As I pointed out in my last entry the commodities boom threatens to crowd out Australia. The anger that Purcell reports on is the type that led to the rise of One Nation. Just take a look at what Purcell has to say

there is a voter groundswell of anger over housing in Australia. But it’s not the sort of transitory anger that one might have over many issues of the day — it’s a deep anger, a bitter anger that extends not only to those trying to buy their first house but also the parent who sees his children potentially locked out of the market forever, a fear his children share…

…It is an anger that grows as prices continue to spiral upward, rising to higher, ridiculous multiples of average yearly wages. It is an anger that festers over the outrage of negative gearing. It is an anger that grows as mortgage stress sweeps the land. It is the impotent anger of letters to the editor and calls to late-night radio programs, desperately searching for answers and reassurance

Purcell could have added that this sort of anger and concern is what got Rudd elected. That’s why Rudd told us that he was “here to help.” Interestingly, The Age today also has a report on a huge fine that has been given to a unionist in the building industry. According to the report

Electrician Mirek Grzegorek was stunned to receive a letter from the building industry watchdog warning him he could be fined $22,000 for attending a couple of short union meetings…

…”At the time there was an understanding if you go on a union meeting during working hours then your employer rightfully can deduct up to four hours of your time, even if the meeting takes 10 minutes.”

But the letter warned that Mr Grzegorek could face a much bigger penalty for attending an unauthorised union meeting

No wonder the Rudd Government caved in to a right wing campaign, pushed with force by The Australian newspaper, to reject a statutory charter of human rights.

The real estate market has been inflated, to a fair degree, by deliberate government policy. It itself is a type of bailout for property investors who banked on perpetually rising asset prices. This is all linked to the Government’s extraordinarily pro big bank friendly nature; to bailout the property investor class is to ultimately bailout the banks who don’t want to be exposed to too many non performing loans. It’s like the bailout of Greece is not a bailout of Greece. It’s a bailout of Greece’s creditors at the expense of the broader population.

So the affect that the real estate asset price boom is having on affordability is the type of externality that we should expect when Australia’s property market is positively geared towards investors, including foreign investors. The Government was just forced to scrap the pro foreign investor measures, but I reckon they’ll be back in one form or another after the next election.

So when Kevin told us that “he is here to help” he, actually, was telling the truth. But who was he trying to help? It is possible to write a thousand word, full referenced, essay in order to answer this question. But there are times when a picture tells a thousand words

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