Keating's Chinwag With The Public
The Sun Herald
Saturday May 14, 1994
THERE'S an advertisement on television and in the newspapers at the moment in which a car is sitting on the roof of a house. A boat sits on top of the car and a swimming pool, a kid's cubby house and a new kitchen are all piled on top of the boat.
The advertisement is urging people to borrow for new consumer items and load the loan on to their housing mortgage.
The Commonwealth Bank, which is running the advertisement, promises that"almost any loan you take out in future can be included in your home loan".
Other bank advertisements actually urge people to borrow for a holiday and add it to their mortgage.
The push by the banks to boost consumer lending on the back of housing loans would not seem to really be a high economic priority in Australia.
Apart from encouraging more consumption when we are constantly told that savings need to increase, the clear requirement is for small- and medium-sized businesses to have better access to funds for investment purposes.
Ironically, the Commonwealth Bank, although leading the pack in trying to entice people to extend their mortgages, is still majority-owned by the Federal Government.
The benefits of government ownership of a bank so aggressively expanding its retail base in this manner would appear to be zero, yet the L eft of the Labor Party is campaigning against further privatisation of various government-owned enterprises.
The benefits of privatisation are easily overstated - Laurie Connell's privately-owned Rothwells Bank was hardly a model of "international best practice".
But there seems to be little point in continued government ownership of a bank which is busy flogging a new financial product that runs directly counter to the Reserve Bank's wish for lending to business to be given precedence over the sort of borrowing encouraged by the Commonwealth Bank advertisement.
Despite being government-owned, the Commonwealth Bank is behaving in exactly the same manner as any other member of the financial markets.
It too has its share of people who these days seem so successful in getting up the nostril of Prime Minister Paul Keating - "the 24-year-old kid at a Reuters screen" as he put it in a post-Budget radio interview last week.
Keating used the interview to urge the public to listen to people who"actually make things and do things rather than simply trading financial securities".
IT is all a long way from the earlier enthusiasm Keating displayed towards the kids at Reuters screens following his decision in the 1980s to deregulate Australian financial markets.
He has since discovered that financial markets are not solely devoted to allocating resources to their most productive uses.
They also contain speculators whose activities are not always stabilising -and who are not always interested in obeying Paul Keating.
As it happens, the financial markets' initial response to the Budget was to shrug it off, rather than go into the sort of frenzied sell-off that Keating feared.
So he turned most of his guns on "sour-puss commentators" whom he described as "rabid, right-wing ideologues with company-paid cars and $200,000 a year salaries who couldn't care less about the unemployed and kids wandering around Kings Cross and St Kilda".
Some commentators no doubt fit this description, but others are simply saying that if Keating wants to provide a social safety net he should not be so reliant on deficit financing to do so.
Again, the contrast with the Keating of only a few years ago is striking. Back then, he was happy to party on board one of Alan Bond's big boats and bask in the praise of the same commentators he now lambasts.
The commentators haven't changed much since then, apart from enjoying hefty pay rises (and big tax cuts) while urging restraint on others. What has changed is Keating's rhetoric and, to a lesser extent, his policies.
These days, his speeches and interviews are peppered with references to trying to build an "inclusive society" and prevent the further development of the sort of underclass that characterises the US and the UK.
There is also a lot of talk about achieving a social democracy which reflects the economic dynamism of Asia while maintaining the Australian traditional of a "fair go".
Keating has even used a phrase - the "culture of criticism" - loosely taken from the title of a book by American-based Australian author Robert Hughes in order to attack the commentators he now finds so distasteful. Hughes was actually referring more to commentators who espouse fashionable nostrums in"cultural studies" rather than those who embrace "economically correct" dogma
Keating's purpose, however, is clear enough. He wants to bypass the commentators whose views he once helped to make fashionable and instead conduct what he calls a "conversation with the public and not with the media"
In the process, he's hoping that the markets will ignore the commentators'advice that he should be punished for his new-found enthusiasm for "soppy talk" about Mabo, street kids, and breast cancer rather than the latest wrinkle in the long-term bond rate.
Provided the economic recovery manages to deliver the sort of growth rates projected in the Budget, and provided the banks' lending for boats and overseas holidays does not get out of hand, he might just pull it off. After all, fat bonuses are once again being paid to the "24-year-old kids at the Reuters screens" and Keating is not asking them for any more tax to fund his"conversation with the public".
© 1994 The Sun Herald