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2010-06-23

McKibbin is correct on Rudd government's crisis handling and RSPT

Comments on report "McKibbin slams Rudd's handling of GFC, RSPT", by businessspectator, 23/06/2010, see http://www.businessspectator.com.au/bs.nsf/Article/McKibbin-slams-Rudds-handling-of-GFC-RSPT-pd20100623-6NTTX?OpenDocument&src=hp2

I share McKibbin's view totally, as the indicated in the following report:

"Reserve Bank of Australia board member Warwick McKibbin has slammed the federal government's handling of the global financial crisis, and labelled Prime Minister Kevin Rudd's response to the downturn as "panicked" and "rammed through", according to a Fairfax Media report.


According to the report, Mr McKibbin said the government had overspent on the stimulus package it implemented during the downturn, and was trying to compensate with a "really badly designed" resources super-profits tax.

Mr McKibbin hit out at Treasury Secretary Ken Henry, saying that his fellow RBA member does not consult experts on economic issues and instead attempts to silence them.

He also said Labor's planned $43 billion National Broadband Network was a ''gigantic white elephant waiting to happen''.

The comments come as Kevin Rudd comes under increasing pressure over his leadership, with the PM privately gauging the extent of support for his position among the Labor party."

PS: for a longer report by Stephen Bartholomeusz titled "Warwick the wise", 23/06/2010, see http://www.businessspectator.com.au/bs.nsf/Article/Warwick-McKibbin-RBA-RSPT-mining-tax-resource-supe-pd20100623-6P3K8?OpenDocument&src=sph
To quote the first few paragraphs:
Reserve Bank board member and leading economist Warwick McKibbin has shown some courage in making an explosive contribution to the debate about the Rudd government’s management of the economy and the quality of the design its proposed resource super profits tax.


As McKibbin himself noted in an interview with The Age, the government – he nominated Kevin Rudd and Wayne Swan – has a tendency to attack their critics, vigorously.

The potency in McKibbin’s criticism of the government’s policies is that it isn’t just a critique of a ‘’really badly designed resource tax’’ or of ”a gigantic white elephant waiting to happen" in the $43 billion national broadband network, but a holistic assessment of the government’s economic management credentials that puts the RSPT in context.


He accused the government of panicking in response to the crisis and ramming through decisions "fraught with risk". It had over-spent in its stimulus package (and, indeed, is still stimulating even as the RBA raises official interest rates to control growth) and had then come up with the RSPT to try to compensate.

In order to get that spending back on track and ‘’because of the politics" claim a fiscal surplus – for which he said there was no economic basis – it had come up with a badly designed tax and "in the middle of a sovereign debt crisis exposed the economy to a reassessment of sovereign risk".

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