Australia’s most renowned and straight-shooting economists, Saul Eslake talks to CCI about a number of topics that influence the Western Australia economy ahead of the Lighthouse Leadership Series business lunch on November 2 – limited tickets are still available here.
Independent economist Saul Eslake says US presidential candidate Donald Trumps’ notorious rise is further evidence of how authoritarian leaders are gaining momentum around the globe. While markets are far from predicting a Trump win, Eslake points out that they didn’t expect a Brexit either.
Saul will share his thoughts on the US election and the dangerous trend in world politics as part of the CCI’s Lighthouse Leadership Series on November 2.
“If Trump were to win, putting it alongside the Brexit vote and the rise of authoritarian parties and leaders across the rest of Europe such as (Vladimir) Putin, Turkey’s Erdogan, Hungary’s leader Orban, Heinz-Christian Strache who almost became leader of Austria, the Alternative fur Deuschland party in Germany and various others, this is saying something dark and ominous about the state of Western democracies.
He told CCI that Australia was not immune to what is happening around the world.
“We do have a few people like that, partly because we haven’t known hard economic times in the last 25 years, these people are on the fringes of Australian politics rather than the centre of it,” he says.
“Pauline Hanson and her crew, but I would also include Jacqui Lambie, Clive Palmer, Nick Xenophon and his people and I’d even probably put Barnaby Joyce in that category.
“You have one or two odd National Party people over there in WA who seem to think that putting an extra $5 per tonne royalty on the price of oil when the prices drop by two thirds is a smart idea.
“These people are on the fringe of politics rather than at the centre of it, but it is a worrying thing about the state of the world and perhaps a warning of what might happen to our political system in the event that we do have hard times.”
Balance of power warning
While stressing his bipartisan stance, Eslake warned of what may happen if a minority party held the balance of power, as Nationals WA leader Brendon Grylls did two elections cycles ago.
“He may hold the balance of power and use it in a different way from the way he did after the 2008 state election but the impression is your state Labor party seems to be fairly rational, I don’t think there is anything scary about it,” he says.
“But if you had some crazies holding the balance of power and influencing policy then in a sense whoever is actually the premier, that’s worrying.”
Eslake was critical of how the WA economy had been managed and pondered what West Australians would see they had gained from such a lucrative time in a hundred years from now.
“My own view is that what’s true of Australia as a whole through the mining boom is even more true in WA,” he says.
“That is to say I think Australia as a whole frittered away much of the windfall gained from the commodities boom.
“I lived in Melbourne for 32 years and the legacy of the gold rushes of the middle 19th century are everywhere in Central and inner Melbourne.
“I don’t just mean Collins Street, you go to Collingwood or Richmond or St Kilda or North Melbourne and there are grand public buildings, arguably much of Melbourne’s tramway system and that sort of thing was funded by the gold Rush.
“I kind of wonder if in 100 years’ time what residents of Perth are going to point to and say ‘That’s the legacy of the biggest commodity boom in this state’s history’.
“A sports stadium and a few more funny shapes on the Perth Foreshore, and I know what people in Perth refer to as ‘Betty’s Jetty’ and so forth. Hospitals, well that’s more worthwhile, but compared with Melbourne there is surprisingly little to show.”
Eslake says the problem with state governments from both sides is that they thought the boom would last forever.
“I don’t wholly blame Colin Barnett for the problems WA is now financing; the fiscal indiscipline started under the previous Labor Government and continued under the present one until Mike Nahan became treasurer when he by and large put a stop to it.”
Eslake says as a Tasmanian, he has zero sympathy for WA’s complaints about the GST sharing revenue.
“There has never been a time in Australia’s history where one state was so much richer than the rest of the country as WA has been in the last five years. WA’s per capita gross product has been 50 per cent above the national average in the last five years.”
He says it will take at least three years but less than 10 for WA to get a grip on its finances.
“What Nahan has been trying to do for the last two or three years will, if it is combined with some sensible asset sales … will probably fix the problem up over two parliaments. But sustaining that discipline over two parliaments isn’t easy.
“If they do have to keep a tight rein on things then obviously they can blame it on their predecessors as any incoming government does.”