Labor Victory in Australia
An era of economic conservatism ends
By blackhedd Posted in Australia | Foreign Affairs | John Howard — Comments (10) / Email this page » / Leave a comment »
The Howard Era in Australia has ended, as the Conservative leader, who came close to losing his own seat in Parliament, telephoned his opponent to concede.
Incoming Labor Prime Minister Kevin Rudd has promised to pull Australian troops out of Iraq and to sign the Kyoto Treaty on greenhouse-gas emissions, leaving the US as the only major nation not to do so.
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Considerable attention in the election was paid to economic issues.
Prime Minister Howard has been lauded by economic conservatives throughout his nearly-twelve years in power for managing to free-market principles. During his tenure, Australia have had strong economic growth with generally lower taxes and a light-handed approach to business and financial regulation.
Mr. Rudd comes to power with substantial support from labor unions, and there is an expectation that he may reverse some of the Howard government's economically-beneficial policies.
One quite important promise that Kevin Rudd made, which appears to have resonated with voters, is to lower interest rates.
Australia (as well as New Zealand) has some of the highest short-term interest rates in the world. Australia is one of the linchpins of the Pacific Rim economy, benefiting strongly from trade with China and Japan.
As a result, Australia has seen extremely high inflows of foreign capital, which have naturally bolstered the domestic economy. And just as naturally, they have resulted in higher interest rates.
"Hot-money" inflows to Australia have already sharply fallen in recent weeks as global investors dial back their exposure to yen-aussie "carry trades." Reducing interest rates now, as Mr. Rudd has promised, could produce a disastrous spike of inflation.
At this point, I don't have enough knowledge to tell you whether Kevin Rudd is the kind of economic illiterate (as Hillary Clinton definitely is), who will make such a superficially-logical but potentially dangerous move. Time will tell.
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Labor Victory in Australia 10 Comments (0 topical, 10 editorial, 0 hidden) Post a comment »
Rudd promising to lower interest rates, which he couldn't do anyway by government fiat. Howard claimed that he would keep interest rates lower than they would be under Labor; it was a big campaign point.
And yes, his promise was to withdraw combat troops from Iraq, not a complete withdrawal.
Howard appears to have conceded that he is likely to lose his seat.
I suppose him losing his seat is relevant only for historical purposes, he will retire in any case.
Forgive me if I have assumed wrongly Pliny, but I had guessed you were left leaning from previous posts. You must be fairly happy with today if you are. Not a wipeout, but in the end, confortably home.
Will you do a blog on the result?
a blog; I imagine the press will cover it fairly well. But I'll join the discussion if you write one :) (but not tonight)
I'm cautiously optimistic about Rudd; he'll make some changes for the better, but whether it will be a good government overall, time will tell. I think Costello will be a force for good as well.
I noticed Rudd is 50 vs the 68 yr old Howard. Could age have been a huge factor moreso than Kyoto perchance?
Now there's no more oak oppression,
For they passed a noble law,
And the trees are all kept equal
By hatchet, axe, and saw.
50 - yes, not just age, but generational. I think Rudd vs Costello will be interesting, and probably productive.
As an FYI - the Canadian government, although it ratified Kyoto under the then Liberal government, has said for all intents and purposes that it will not abide by it.
of environmentalist extremists. By the AGW promoter's own reckoning, Kyoto fully implemented does nothing. What Kyoto is, is a training excercise to get societies of free people used to giving up technologically, economically and in freedom for the great scam of managing the climate.
Aussies are tough minded people and do not like being taken for fools. The political hacks using Kyoto as some sort of positive will, as the climate scam becomes plain to see, not be kind to the hacks forcing it down our throats.
reminds me of the Kellogg-Briand Treaty of the 1920's; it outlawed war. Then, of the forty something nations that signed it, almost all of them ended up fighting WWII. But hey, treaties make us feel better don't they!
Pam
I live here in the land down under and being a bit of a polical junkie I have had many conversations with australian voters ( who btw have mandatory voting) The main reasons I was given for voting Labor were 1. Howard has been there too long. (11 1/2 years) 2. Labor will "fix" the schools and health system. 3. Work Choices program. 4 It's Labor turn. Not one person told me they were voting labor because of Iraq. But I know people with jobs. Students are another matter.
Both my daughter and I work here in australia. Should the Labor goverment inact the changes proposed then we will be leaving as we will both be fired as soon as possible by the union bosses at our respective jobs. BTW both our jobs are currently non union. The union reps have toured my in October work site and informed me of my empending loss of work. Under the old work place rules hiring and firing are union responsibilities. I work software and my daughter in the hospitality industry. I have been told that we will not be replaced.
It is a given among australians that Labor will trash the economy. The last Labor economy had 17% interest rates and high unemployment. Basicly the Carter administration econ record. Almost everyone in my office voted for Howard in 2004 and switched Rudd in 2007.
Just watch the Australain dollar. It lost 10% of it's value in the two weeks leading up to the election in antispiation of a labor victory
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Rudd has said he will allow the independence of the reserve bank, so he can't directly change interest rates. Interest rates are expected to go up further next year.
He himself would be reasonably economically literate, it will be keeping the left of his party under control that may be a problem.
He has said he will withdraw combat troops from Iraq (although has left wiggle room on troops for training), but possibly increase commitment to Afghanistan.