Academic journal article The Australian Journal of Politics and History

Commonwealth of Australia: January to June 2001. (Political Chronicles)

Academic journal article The Australian Journal of Politics and History

Commonwealth of Australia: January to June 2001. (Political Chronicles)

Article excerpt

The year began with centenary of Federation celebrations but the first six months of the New Year brought very little for John Howard and the government to celebrate. The economy lurched towards recession, Labor triumphed in the Western Australian and Queensland state elections, and followed these successes by a win in the Ryan by-election held on St Patrick's Day. Predictably the Prime Minister argued that state elections were fought on local issues and that federal issues such as the GST and petrol prices had little impact. It was clear however, that the GST was becoming increasingly unpopular among voters who had once supported it.

Newspaper headlines announcing that the Australian economy was on the brink of recession began appearing at the beginning of March with reports showing an increase in unemployment, declines in business and housing investment and falls in consumer confidence. On 14 March the Australian dollar fell to an historic low of 49.87c against the American dollar, bringing it below the psychological US 50c barrier. The dollar continued to fall throughout March. In response, the Reserve Bank cut official interest rates to 5.5 per cent, followed by a further cut to 5 per cent in early April.

Bad News for the Government

The bad news continued with the collapse of the HIH insurance company in March with losses which some estimates suggested could be as high as $4 billion, leaving thousands of policy holders facing financial rain as a result of public liability claims. The government promised to fund a package for "the hardest hit" (Courier-Mail, 15 May 2001) and reluctantly bowed to pressure to establish a royal commission into the collapse. There were further shocks in store when phone company One. Tel folded at the end of May, leaving the Packer and Murdoch media empires with huge losses on their investment in the company.

By June, newspaper headlines were offering some comfort to the government with the news that the economy had escaped recession and was experiencing growth as a result of government and household spending. The dollar returned to above 50c against the US dollar and exports rose. In an election year, however, the government was not prepared to rely on media reports alone to convey the good news to voters. By June, spending on media promotion of various government initiatives had reached $20 million a month (Courier-Mail, 19 June 2001).

What appeared to be an annus horibilis for the Government had started early in the New Year with an Australian National Audit office report released in mid-January, roundly condemning the Howard government's policy of outsourcing its information technology needs, a policy that appeared to be driven by ideology rather than good sense. A month later another Auditor-General's Report drew attention to administrative errors in Department of Transport procedures which had led to an apparent $2.9 billion shortfall in national road funding. There was initial alarm about the "missing" billions, which, it transpired, were not really missing but only appeared to be because of an accounting arrangement that the government had undertaken to fix, but had subsequently forgotten about. Both the Prime Minister and Transport Minister John Anderson appeared confused when questioned on the issue, which was defused in time-honoured fashion by the sacrifice of two of the Minister's advisers who accepted the blame for mismanaging the issue and resigned.

These incidents were eclipsed in seriousness for the government, however, by the results of the Western Australian and Queensland state elections (See relevant state chronicles, this issue). The government faced the 17 March Ryan by-election in Brisbane with some trepidation, and a series of policy reversals designed to appease restive voters. On 22 February, the Prime Minister announced revisions to the Business Activity Statements, cutting them from four a year to one. Five days later he announced the abandonment of plans to tax family trusts. …

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