So, Prime Minister John Howard, Treasurer Peter Costello and the nervous nellies on the Government benches can breathe easily for another month at least. The Reserve Bank of Australia (RBA) today announced that it was going against market expectations by keeping interest rates on hold for the moment.
According to the Australian Financial Review (AFR), the focus is ‘now on the March quarter consumer price index (CPI) figures due on April 24’. If those figures show a blow-out in the underlying rate of inflation then there will be growing speculation of an interest rate rise in May or June.
That would be a disaster for Howard, coming after three interest rate rises in 2006. It would also take the shine off what’s expected to be the Mother of All Pork Barrel Pre-Election Budgets in May. Imagine the cries from the dries in the business community and the financial media as Costello talks up a spending spree while the RBA cranks up interest rates because it’s worried about inflation. Howard and Costello must be praying that the expected downturn in the USA economy in the next couple of quarters (some commentators are talking ‘recession’) helps dampen growth in Australia until around September/October that is.
The softening up of our expectations has already begun with Howard saying that, even though rates haven’t risen this month, ‘I am not going to purport to give any guarantees about future months. That will be a matter for assessment from time to time by the Reserve Bank.’
And if there is a rise next month or in June, expect Howard to put on his Captain Sensible costume and tell us it’s all a minor hiccup in the middle of the longest running economic banquet in our history. Remember this rhetorical twostep from around this time a couple of Budgets ago?:
Prime Minister John Howard has warned homeowners another rate rise could be on the cards as the Reserve Bank revealed voters complained about the Government’s election campaign tactics. Mr Howard said he did not think rates would rise or fall in a significant manner which he defined as any rate movement of at least two percentage points.
The Reserve Bank board is due to meet the week before the May 10 Budget. A substantial rise in inflation could force the bank to lift rates another quarter of a percentage point. But in a move to ease concerns of a major movement either way in rates, Mr Howard said a substantial change was unlikely:
‘I would believe that under present settings any significant rise is very unlikely and also any significant reduction is unlikely’ he told Melbourne radio 3AW. ‘I didn’t regard a quarter of one per cent as being a significant rise. I mean obviously two, three, four per cent would be a significant rise.’
That was on 2 April 2005, and we’ve had four rate rises since then. If the RBA raises interest rates in May or June, as seems likely, expect Howard and Costello to whip out a thesaurus and start arguing over the meaning of ‘substantial’ After all, a fifth rise of one quarter of one per cent is still less than the ‘two, three, four per cent’ that Howard ventured in 2005 ‘would be a significant rise’.
The real question is, whether voters in marginal, mortgage-belt seats around Australia will be just as happy to pull out their thesauruses or whether they’ll just vote Howard out.
Thanks to Bill Leak
The other story of the week is how animated Philip Ruddock was on Lateline on 3 April. OK, ‘animated’ in this case has to be read as ‘relatively animated’. But at the very moment when interviewer Tony Jones might have expected the usually lugubrious Attorney-General to squirm or prevaricate or pontificate about the David Hicks plea-bargain, Ruddock, instead, went (relatively) jaunty.
This, no doubt, reflects the great relief felt not only by Ruddock but by the whole Government. Hicks’s ‘homecoming’ represents another deck cleared in the lead-up to the Federal election. Howard and Ruddock and Alexander Downer obviously believe that soft-Left inner-city elites who regularly get themselves into a lather about the treatment of Hicks will never vote for the Coalition anyway (so why worry about them). But there had been a sense that ‘middle Australia’ was growing increasingly uncomfortable about the mistreatment of Hicks and especially the callous way Howard had abandoned him to his fate in Guantánamo Bay.
The last thing the Government needed was people being distracted from how efficient and effective Howard & Co had been in conducting the War on Terror, by some underdog battler (!) who kept making embarrassing and unfortunate accusations about the way the US treats its prisoners. Hicks is now about to be repatriated from Cuba and, from Ruddock’s performance on Lateline, the Government thinks their electoral ‘problem’ is over. Even if Hicks breaks his plea-bargain agreement and speaks out, the Government clearly thinks this will now be but a minor and manageable kink in the campaign.
I’m not so sure. Some, maybe most, Australians are willing to believe that our designated enemies in this amorphous ‘War on Terror’ are evil and fanatical monsters. But it’s no longer 1939 or 1941 or 1952 or even 1968 any more. The world is more complicated. And the more we hear about the treatment of David Hicks, and the more we discover about the Bush Administration’s policies of rendition, torture-under-another-name and just plain bastardry, the harder it is to be wholeheartedly solid with our allies.
The more we hear about the mistakes, idiocies, corruption and cover-ups done in our name around the world, the harder it becomes to believe that the course of action Howard started us on in 2002 when we joined Bush and Blair and ignored the UN is honourable or even sensible.
What Hicks and all the other prisoners or ‘enemy combatants’ in Cuba and elsewhere represent is not just a series of one-off incidents that can be easily forgotten — they are a cumulative indictment of the profligate way that Bush and Blair and Howard have forever compromised the West’s sense of righteousness in the face of our ‘enemies’ in this ‘War’.
Of course, this may turn out to be a good thing in the long run (there are none so dangerous as those who are fundamentally and unequivocally certain of their righteousness whether they be Muslim or Christian). But for the moment, the Hicks case has done nothing but expose our leaders for the weak, opportunistic and morally tainted people they are.
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