June 09, 2007 | Graham

Keating Cute

Paul Keating’s Wednesday night appearance on Lateline is more good news for Kevin Rudd.
Rudd, Swan et al were suitably dour, with you-can’t-speak-ill of the deadpan faces, but must have been inwardly smirking.
Here’s John Howard trying to paint them as men of the past and high interest rates, and here’s the living spectre of those things pointing an apocalyptic finger in their direction and saying “You’re not half the men your father’s used to be.” Perfect.
And then, on top of it all, the spectre has a spray at Howard and Costello on the basis that all their achievements are really his because he floated the dollar and he brought in collective bargaining.
So at the same time the past is swept away, it erodes some difficulties in the present for you as well.
This way you can have your argument that you’re a clean break with the past, as well as your argument that Howard has done nothing, and eat it too, without anyone noticing the crumbs all over the place.
Keating’s performance was enhanced by a godawful performance by Tony Jones who allowed him to get away with all sorts of mad whoppers (like that real wages fell because the dollar dropped), without once picking him up.
Seems the gods have deserted Howard.

Posted by Graham at 9:32 am | Comments (12) |
Filed under: Australian Politics


  1. One of those Gods being Rupert Murdoch.

    Comment by Graham — June 9, 2007 @ 11:14 am

  2. You don’t have much of a grasp of economics, do you?

    Comment by Fred Bastiat — June 11, 2007 @ 4:08 pm

  3. Mr Keating needs to remember he belongs to the past & stay there.Let Rudd have his day, lets see what changes he has on offer.Mr Howard has shown his so called best,& what he has instore.I am yet to see something that will benefit Australia.

    Comment by Dr Who — June 12, 2007 @ 2:18 pm

  4. Paul Keating one of the greats of the ALP.But he should not have come up with those remarks,at a critical time,such as now.Kevin Rudd will be Prime Minister come hell or high water

    Comment by Karooson — June 12, 2007 @ 2:42 pm

  5. the sainted paul gave us a brief golden age of society and politics and anything he says must be viewed in that context.
    i hope that 1996 was an abberration that we have finally got over and that we can move onfrom the me too mediocrity that the current regime represents.

    Comment by Colin Gradolf — June 12, 2007 @ 8:04 pm

  6. Hope you are right, Karosoon.
    Nonetheless, Keating raised issues that have not been faced over more than a decade of failure ( think of the disgraceful Lennon treachery of 2004! ), for rank and file and the ordinary citizenry, concerning internal democracy, goals, policies and presentation that needed to be fixed before the ALP could reasonably hope to regain office, with the hope of doing something worthwhile.
    The public is quiet, but the most recent disappointing op.polls speak eloquently for themselves and the public they represent. They show a public still are not convinced that “new” Labor is “dinkum”.
    They want the Labor leadership to finally commit to Australia and Australians rather than shonks like Gunns and so-called “developers” that always seem to hanging around politicians.

    Comment by paul walter — June 12, 2007 @ 8:12 pm

  7. Your comments mirror my thoughts. Howard has been trying to link Rudd with Keating and Keatings spray put a lie to that. Yes, T Jones let Keating get away with furphies for a reason….and Howard and Costello bit today in Parliament. I had a chuckle.

    Comment by Bobbie — June 12, 2007 @ 9:41 pm

  8. “like that real wages fell because the dollar dropped”
    Under the Accord, with wage increases negotiated between unions and government and then largely ratified by the Conciliation and Arbitration Commission, real wages did in fact fall in the face of a falling dollar because of inflation being imported into the country. If the dollar had not fallen then prices would have been lower and real wages higher.
    All through the mid 1970s and early 1980s there was a debate about the “real wage overhang”. This phenomenon largely disappeared during the late 1980s and early 1990s.

    Comment by Mark U — June 12, 2007 @ 11:08 pm

  9. Jeeze Graham dont think so not going by the almost hysterical EDs and columns in Murdocks OZ against Labour.
    If ever a paper can be said to be barraking for Howard and the Libs its the OZ

    Comment by John Ryan — June 13, 2007 @ 10:13 am

  10. Mark U, that’s not how exchange rates work. For starters, they only affect that part of the economy which is exposed to international trade. And then they increase the prices that some industries receive, increasing their ability to pay higher wages at the same time that they increase costs for importers, decreasing their ability to pay higher wages.
    But in an economy with relatively inflexible labor markets, wage increases will reflect the average balance between the two. As a devaluation of the dollar means exports are more competitive, it provides a real boost to that part of the economy, while it also boosts those parts of the economy that are import competing. The result is an economy with an overall enhanced ability to pay higher real wages.
    The inflation part of the argument is a furphy. Inflation is governed by money supply, not exchange rates.
    The real reason that Keating cut real wages was because he was trying to move a proportion of the share of the economy held by employees to business as a further boost to the economy via investment.
    The Accord was used to depress real wages, and there was also a trade-off against compulsory superannuation, which represented in an increase in real wages, but did not show up in the wage packet. Keating saw this as a way to increase wages and savings at the same time without causing inflation.

    Comment by Graham Young — June 13, 2007 @ 3:44 pm

  11. Graham
    During the 1980s, the Accord set nominal wage growth, the float of the curency was followed by a large fall in the dollar in 1985. This led to rises in prices of imports and contributed to overall price rises because monetary policy was accommodating in order to keep unemployment low. The net effect was that wages fell behind prices during this time.
    The whole thing with superannuation occurred in the early 1990s, well after the drop in real wages had occurred.

    Comment by Mark U — June 16, 2007 @ 1:08 pm

  12. Michael, precisely – it was monetary policy, not the fall in the dollar that led to inflation. Keating used to frequently boast that the “conservatives” would euthanase the economy, but only Labor could provide a high growth economy. So he had slack monetary policy because he thought the accord could contain inflation.
    The result was boom bust inflation and boom bust interest rates, with the higher interest rates caused by the inflation leading to currency appreciation.

    Comment by Graham Young — June 16, 2007 @ 5:16 pm

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