This isn’t an anti-Labor piece but an anti-dumb politician plea for economic intelligence. It’s also a tip to Labor to learn from one of the smartest guys ever — Edward De Bono.
Thankfully Treasurer Josh Frydenberg has taken my tip (or someone’s tip!) and got on the front foot to warn us that the economic growth number we get tomorrow will be weak but the September one is bound to be better. He referred to what I pointed out yesterday that two months of the June quarter were pre-election and that wouldn’t have helped the economy.
To that the AFR tells us that the new kid on the block, Labor’s Treasury spokesperson, Jim Chalmers, returned fire with something that underlines his newness, saying: “Ridiculous contributions like this explain why the Treasurer’s shrinking in the role.”
I have high hopes for the promising Chalmers but he won’t win over any of the disaffected older Labor voters by simply playing name-calling politics. Chalmers’ predecessor, Chris Bowen, made the mistake of playing silly politics when he was economically smart enough to take on former Treasurer, Scott Morrison but instead he toed the Bill Shorten party line and ran with policies that were so objectionable that in frustration he told the media if people didn’t like Labor’s policies “they didn’t have to vote for them”!
It looked like arrogance but it might have been frustration. For example, he might have known that if Labor put a $10,000 cap on franking credits for retirees, Bill now might be PM.
If they didn’t spook investors in the property market with promised changes to negative gearing and the capital gains tax discount, they might have kept some voters who were worried about their own house prices.
If Chris or Bill had said to the electorate before the election that their policies were sound but they would be delayed until the economy is strong enough to take these changes, then they would have grown in political stature, rather than shrinking into political pygmies.
Economists like me knew our economy was slowing and it wasn’t being helped by a pile of negative headwinds such as:
• The trade war.
• The Labor-inspired Royal Commission into the financial sector, which hit the stock market while doing some good work to clean up an industry that is a huge driver of the All Ords.
• Bank lending was being restricted because of APRA and Royal Commission pressure.
• House prices were dropping like Aussie tennis players at the US Open right now.
• The fact most people expected Labor to win.
• Labor’s policies were tough on property players, self-funded retirees and small business owners concerned about things like “the living wage”.
• And wages haven’t been doing much for a long time as digital disruption makes life hard for conventional businesses, such as bricks and mortar retailers.
If you can’t look at these scary economic issues and not see why our economy might have been slowing in the June quarter and why Labor should have pulled back on the anti-business and anti-investor rhetoric, then you have the same one-eyed problem that explains why Labor lost the election.
When I interviewed Labor-stalwart Graham Richardson before the election at our Investor Strategy Day (with over 800 people present), I asked about Labor’s policies on negative gearing and franking credits. He used one word: “Dumb!”
Richo was arguing from a political point of view but I would argue it from both a political and economic stance.
Jim Chalmers has to realise that the team of Bob Hawke and Paul Keating lasted in power between them from 1983 to 1996 because they didn’t appear as anti-business and weren’t economic nincompoops.
Bob Hawke gave me the best education in politics when he explained his anti-traditional Labor policies by saying that he couldn’t do much for his constituents if he wasn’t in power!
After interviewing him a few times, Edward De Bono (the man who gave us the term “lateral thinking”) taught me that the high achieving winners “think outside the square” to solve problems and to be champions in business, sport, music and even politics.
Labor and Jim Chalmers should show themselves as being economically literate and flexible because the last election showed we aren’t dummies and we might like a lot of Labor’s social ideals but we (the majority) don’t want rabid left-wing economic solutions to our problems. That’s why Jim needs to think outside the square.
If Jim wants to ignore my words, he should take stock of this chart of the NAB business confidence survey.
The business confidence was falling for seven months before the election. It spiked on the election result in May and then fell but is now trying to rise again.
Business like most of us thought the Coalition was dead party walking and Labor was a shoo-in, and that was not good for business confidence.
If Labor can become less scary for business, entrepreneurs and investors, who risk their capital to make stuff, back stuff and employ, whether you like them or not, they can become a real possibility of forming government.
But they need to think outside the square, and getting to know us, as a group, better might be a really good start.