The developing trouble with the Government’s economic stimulus package is it’s pulling in two different directions at once: one economic, the other political.
There is no argument the injection of emergency taxpayer funding into the economy in the face of the Global Financial Crisis has been a stunning short- to medium-term success. Witness the 0.6 per cent growth rate in the National Accounts this week.
Among the developed economies, Australia alone continues to grow. We have avoided a technical recession in a world where the International Monetary Fund is forecasting a 1.4 per cent global contraction, the first since the 1950s.
Our unemployment peak — forecast at the outset of the GFC to top eight per cent — now looks as if it will be downgraded to something with a seven in front of it.
In a short-term economic sense — before we factor in higher interest rates and debt — this has so far been an unalloyed policy triumph. But the package risks haemorrhaging politically.
For the first time in her career in government, the chief implementer of the package, Deputy Prime Minister Julia Gillard, is under real pressure.
Two things have happened to Gillard: the costing of the Building the Education Revolution Fund has blown out by $1.5 billion, the sloppy accounting exacerbated by repeated reports of money going to schools for things they’d never asked for, or didn’t need — in one case, a $250,000 grant to a school with just four students that was slated for closure.
Then came revelations that although Gillard and Rudd hadn’t been able to keep track of the money, they’d been diligent enough to insist all schools that received stimulus cash erect signs acknowledging government beneficence.
Not only that, but no matter when the construction finished, the signs were to stay in place until well past the likely date of the next election.
After the Opposition initiated the intervention of the Electoral Commissioner this week, the Government was forced to concede the signs were nothing more than political advertising and, what’s more, had to apply authorisation stickers acknowledging as much.
Now comes another, and potentially much more serious, charge against the stimulus package — that it is politically skewed in Labor’s favour where it counts — in seats on the ground.
The strength of this analysis, by up-and-coming Victorian Liberal Senator Scott Ryan — a protege of Victorian powerbroker Michael Kroger — is that it is mathematically based and backed by the apolitical resources of the Commonwealth Parliamentary Library.
Here’s is how Ryan has broken down the numbers: the so-called Science and Language Centres for 21st Century Secondary Schools (SLC) is one part of the $14.7 billion Building the Education Revolution (BER).
On 30 June 2009, Julia Gillard announced 537 projects would receive $810 million, allocated to the electorates based on postcode and Parliamentary Library information. Using the AEC classification of seats and compiling the projects by electorate, Ryan asserts the political bias is obvious.
“Labor marginal seats receive, on average, nearly $1 million more than Coalition seats.
“Inner-metropolitan seats held by Labor receive three and a half times as much as Coalition seats — $3.5 million compared to under $1 million. Labor seats in outer metropolitan areas receive almost double that of Coalition seats — $5.6 million to $2.9 million.
“When all metropolitan seats are considered, the difference in favour of the ALP is more than double — $4.4 million to $2.1 million.
“When all non-rural seats are added together the bias remains — $4.3 million to $2.9 million per seat “Even rural seats see a discrepancy in favour of the ALP, albeit smaller: Labor seats receive $9,559,905 compared to Coalition seats receiving $9,348,173.”
A separate Coalition analysis of the government’s $550 million Community Infrastructure Program paints a similar picture. Labor seats get 46 per cent of the projects by number, compared to 31 per cent for the Coalition. Funding figures are also similarly comparable.
The trouble for Gillard is to many voters, Ryan’s claims will start to ring true. The case against the stimulus on political grounds is building. And in building, it risks reeking like the 1994 “sports rorts” affair that brought undone then Sports Minister Ros Kelly.
In his dissection of the Kelly case, respected academic James McKinnon said it illustrated much about the “relationship between poor record-keeping and incompetent, negligent or corrupt public administration” and Kelly’s “inability to counter allegations” sports grants had been distributed “disproportionately to marginal electorates to gain electoral advantage” for the ALP.
The Rudd Government is not the Keating Government which fell two years later. But substitute Julia Gillard for Ros Kelly and it all starts to sound terribly familiar, does it not?