Kevin Rudd has no idea how to run or reform the economy

Wednesday, 5th May 2010

John Humphreys, the Liberal candidate who will take on the PM in the federal seat of Griffith, says that Ruddonomics has not saved us from the global storm

Now that Kevin Rudd has admitted failure on the insulation program, building school halls and border protection, and abandoned his plans for an emissions trading scheme, real tax reform or a health takeover, the Labor party will be forced to rely on its economic record to justify its time in office. At the moment, many in the media and public agree with Rudd’s assessment that he ‘saved the country from recession’. But the evidence is building that Rudd doesn’t understand economics and that his stimulus was poor policy.

The best place to look for Rudd’s understanding of economics is his article published last year in the Monthly magazine, which was littered with errors. The first mistake comes in only the second paragraph, when Rudd starts his fear-mongering about ‘free-market fundamentalism’ and ‘extreme capitalism’, leading to a ‘crisis’ (a word he uses 14 times within three paragraphs).

But what is this scary ‘neo-liberal’ revolution? As his essay later explains, economic liberals believe ‘government activity should be constrained’ and the government should play a small part in the economy. If Rudd’s dramatic hyperbole is right, then we should have seen a significant fall in the size of government. The opposite is true.

Federal government spending grew significantly during the 1970s, from 19 per cent to 24 per cent of GDP, mostly due to Whitlam. During the 1980s this rose to 25 per cent, in the 1990s to 26 per cent and over the past decade government has grown to 27 per cent. If this is ‘free-market fundamentalism’, then what would the chatterati on the Left call it if spending was actually reduced?

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