For a number of reasons, now is not a good time to be Australia’s federal treasurer. The resources boom has lost its mojo, the economy is faltering and the dollar is falling along with the terms of trade. Business and consumer confidence is subdued and unemployment tipped to rise. Internationally, Greece’s reluctance to bend to austerity could trigger more economic turbulence.
Usually when conservative governments are elected to power the times are good. Not this time. If that was not enough, the Senate still has not passed Treasurer Joe Hockey’s first budget and he is about to bunker down to prepare his second. Even Bill Hayden’s momentous budget of 1975/76 (which was blocked, causing the constitutional crisis), was eventually passed in its entirety by the Fraser government; Labor stalwarts always took great comfort in that.
Hockey will know that Labor’s shadow treasurer, Chris Bowen, is writing a book on 12 past treasurers of note. It not entirely an innocent bit of scholarship. It could be used to expose the weakness of Hockey as treasurer. To be called The Money Men, it will be published sometime this year.
Bowen’s book will no doubt be an engaging one, out long before the more authoritative and comprehensive work of John Hawkins, which forms the basis of his doctoral study at the ANU. In past issues of Treasury’s Economic Roundup, Hawkins has profiled all the post-war treasurers including Ben Chifley, Artie Fadden, Harold Holt, Les Bury, Billy Snedden, Billy McMahon, Frank Crean and Jim Cairns. The Treasury will not release Hawkins’ profiles of treasurers who are still living, so his assessments of Hayden, John Howard, Paul Keating, John Kerin, John Dawkins, Ralph Willis and Peter Costello will be embargoed.
Bowen will inevitably be drawn into assessing the success of each of the treasurers he is writing on. Some had patchy performances. Cairns, for instance, never actually brought down his own budget, while the earnest but lacklustre Crean complained that the 1973/74 budget he delivered was the work of many hands.
As Bowen has acknowledged, the relationship between the treasurer and the prime minister is an all-important one in determining how successful a treasurer’s reign can actually be. In the past, only when there was a harmonious relationship between the two has the Australian economy fared well or engaged in significant and timely economic reform.
Recall, for instance, the long and fruitful relationship between Hawke and Keating before it all turned sour and silly. Keating’s vision was shared by Hawke. Even today they squabble about just who took the initiative to float the dollar, by far the most significant economic reform in the modern era.
Later, Howard and Costello kept the economy on an even keel and let Australia enjoy its resources boom without it degenerating into a wages explosion or a balance-of-payments blow-out. That partnership also introduced some microeconomic reform, including the implementation of the GST.
Further back there was a strong relationship between Bob Menzies and Fadden in the 1950s, with the only blemish being the bust that quickly followed the wool-price-led boom of 1951. The relationship between Holt and Menzies was also comfortable though the 1960 “Holt Jolt” - a policy-induced credit squeeze that nearly led to Menzies’ undoing in the 1961 federal election.
It’s too early to fathom how the Abbott-Hockey relationship will be written by the history books. The squabbling over the GP co-payment and the Medicare rebate are just straws in the wind. Hockey is definitely more inclined to fiscal rigour than Abbott who, under that flinty countenance, is more caring and compassionate than one might imagine. Remember he has a strong Catholic faith.
When the Coalition won in 2013 we were told that the adults were now in command. For the moment, though, it looks a little more like dumb and dumber.
Despite having a PPE from Oxford, Abbott finds economics boring. Hockey, meanwhile, mouths his Treasury’s lines well and has commissioned inquiries on the financial system, competition policy and the tax system, but he has not won over the electorate about his competency. It remains to be seen if either man will be holding their respective position this time next year.