Preface
This book arose from my perceived need to dispel confusion and uncertainty about economic policy in a small open economy. It draws on global best practice plus my understanding of what has worked well in Australia and what has not worked so well. There is some early history, including of my family and the great crises in our nations history. Mainly however, I cover events since my birth in 1946, with increasing detail as I grow up.
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Main coverage is the great post World War II era of global growth and development. Australia has greatly expanded its resource business, which meshes brilliantly with the development of China, India and the dynamic countries of South East Asia. Agriculture has also boomed despite drought, fire and flooding rain. In the 1980s and 1990s development in Australia was especially strong, fuelled by productivity-enhancing policies devised by the Hawke-Keating governments and the Howard-Costello government.
Since the defeat of the Howard-Costello government has largely stalled. My hope that this book will be useful to current and future governments. Also that it serves as a guide to Macroeconomic policies that need fresh attention. Chief among these include:
* Monetary policy where there is one main policy - altering cash interest rates - and a need for two more supporting policies. The monetary authorities need the ability to tax capital inflow when the exchange rate is uncomfortably strong. Also to deal with asset inflation, partly by raising or reducing cash rates, reinforced by a new policy to rein in asset inflation. Chapter 10 deals with this issue.
* Fiscal policy in Australia's modern history was largely 'reduce rations', my label for the policy of governor Phillip when the second fleet was late in arriving. But in all crises until the recession of 1960/61 this policy was effectively 'reduce rations', even in the two great depressions Australia has experienced. Then at the time of the global financial crisis of 2007-2008, the government dramatically 'increased rations'. The Rudd government spend far more than they needed to and worse still with cheques posted to many people who did not need them and on ludicrous spending on schools and insulation in the roof space of people's homes. Chapters 4 and 14 deal with this matter.
* Productivity policy was practiced by the Hawke-Keating governments and the Howard-Costello government, but is the hardest policy to persuade people to accept. This is because big overall gains are usually accompanied by losses of specific groups. A vital need for government to develop a powerful 'narrative', explaining why changes are needed to make the country safer and more productive. Productivity histoory and some suggestions for future policy to raise productivity are dealt with in Chapter 9. The final chapter deals with the narrative and outlines a suggestion about how a modern government might follow a successful sales pitch to get the voters to accept a serious attack on poverty.
The book also provides information on my career at the Reserve Bank of Australia and then working as an executive in the private sector of the economy. Chapter 16 discussed my mistakes both as an official and in the private sector. It also tells of my real passion for painting landscapes, economic issues and religious subjects as a semi-professional painter. Also my passion for economic research which I did intensively in the early time in my career, and again as an old codger. The research covered mainly using full economy modelling in order to test scientifically various economic hypotheses. So the book is partly a 'memoir', and I hope those bits are of some interest.
In my research career, Geoffrey Blainey, Clifford Wymer, Keiran Donaghey and Harry Johnson all stand out in various ways, along with teachers of economics at Melbourne University.
Finally I must thank my family and others for wonderful support, Sir Harry Knight, John Phillips, Aussie Holmes and Bill Norton, and members of Research department all stay in my memory. In the private sector John Stanforth, Barry Laws and Trish Kelly all made my time at Norwich a pleasure. Plus global CEO Alan Bridgewater. At ANZ my CEO and other senior colleagues were less pleasurable to remember even though my business unit's profit performing efforts were nothing short of stunning.
If you are lucky your chief memories are of your family. My wife Libby was a great support in my corporate endeavours, a hard critic of my literary efforts and an occasionally gives praise to a painting. 'Constructive criticism' with a lady with a steel trap for a mind, and a great partner in all our family and travel pursuits.
David supported my Quixotic efforts to win a seat from Josh Frydenberg in the seat of Kooyong in 2013. A learning experience. When he was very small he found a way to persuade me to dial down my workload and spend more time at home. Eliza for being a loving daughter and telling me useful truths when shoe thought I needed them. Tim for advising me when he was really young to stop trying to change every aspect of the modern world, and (occasionally and reluctantly) helping with an IT challenge.
All of the children fortunately do not take drugs, worked hard at school and university, have good jobs and good senses of humour, although they rarely enjoy my daggy 'Dad jokes'. An above all to Libby for orchestrating the children's upbringings, interacting with family and friends, being laid back about problems and dealing effectively with them. And also for supporting my post-income earning literary, research and artistic efforts.