Gearing into 'Post-War' Mode

Respected Australian economic think tank, Access Economic's in its December 2008 business outlook paints a grim picture for the Australian economy in 2009 and its director, Chris Richardson said that the federal budget is 'buggered' and a recession is inevitable. The only comfort is that among the developed economies, Australia will experience a small recession as opposed to the deadlier ones overseas. And without fail China is in the centre role of Australia's economic quagmire.

Resource-rich states like WA and Qld will be hard hit as China's demand for resources soften while NSW has already joined the US and its in recession. Victoria will be next in line.

Prime Minister Kevin Rudd has returned from his holidays and was back to work this morning and on my twitter he posted: 'The Global Financial Crisis will create some tough challenges in 2009, but my priority remains the economy and jobs.'

I replied to his twit, 'Keep us afloat, Kev. Cheers'.

I am sure he and Treasurer Wayne Swan would be pulling their hairs and cringing over the gloomy economic outlook. Is there a way out of this mess?

What would I do if I am in Kev's shoes? My instinct tells me to shift the cabinet into a 'war-time mode' government in terms of policy execution and decision making process but managing the economy as if we are in a post-war mode; focusing on rebuilding the economy by spending on what is most needed by the country such as:

1. Improving public transportation;
   
2. Critical infrastruture expenditure;
3. Financial system reform/tweaking;
4. Fix the local credit market;
   
5. Encourage business and labour union partnership;
6. Lower taxes;
7. Education investment;
8. Increase defence budget; and
   
9. Provide incentive for community/grassroot economic self-reliance stimulus.

But whether the government is able to do so is another question that has to be answered before embarking on this plan. There are also other critical issues that have to be solved first such as budgetary constraints, funding, and federal-state cooperation. If the blockades are removed the end goals of this move should result in that the money spent would eventually reach the real economy and in the hands of the ordinary people and provide a new bedrock for an economic recovery.

Can we do it?