Leading the Banana Republic

Reports are coming in that John Howard has confirmed to party colleagues that he will stay on to fight the next election. The reports widely suggest that this isn't the answer Peter Costello would have wanted. But is that really so?

For one, it's quite possible that Howard might have stitched up a deal to win the next election and hand over to Costello soon afterwards. Such a deal would keep the Costello forces quiet until the next election, and would give Costello time to build up his credibility.

However, as we look forward to a week in which interest rates will almost certainly be lncreassed, and back on a week when the government has been forced to make the absurd claim that much of the current inflation is due to the high price of bananas, the real question is - would Howard be handing Costello a country he really wants to lead?

I wish I could remember the name of the economist who suggested the 2004 election was `a good one to lose', given the blips looming on the economic horizon (it may well have been John Edwards, but don't quote me). Given the nature of its policies, Labor has a habit of coming to power in lean times often engendered by their predecessors, only to founder as they attempt to unpick it all. The Scullin government of the late 1920s is a good example. Elected on the basis of a strong `it's time' feeling, they were out of government only two years later, after failing to deal with the effects of the Depression.

Today, it is easy to see parallels. Growth accompanies lax financial behaviour by people who figure the good times will never end. I'm certainly not suggesting a Depression is just around the corner, but the growth of the past 14 years is not something that will last forever. Given information released over the past two weeks, the end could be a lot closer than many think.

I'm a strong believer in the idea that governments stay in power by creating a society that wants to vote for them. The public has been educated for years that the economy is the only thing that really matters. You are prosperous. We are wholly responsible for this. If you want this to continue, you can't afford to vote for anyone else. This was of course the crux of the 2004 `Who Do You Trust' election. I have said many times before that I lost count of how many people actually said `I'd like to vote for Labor, but I just can't afford it because interest rates will go up to 16%'. It was a patently false message, but it cut through.

By claiming responsiblity for Australia's prosperity for so long the government paints itself into a corner. We will now hear claims that interest rates would still be higher under Labor, and treatise on the independence of the Reserve Bank. But, in the end, the government still asked `Who do you trust?' in the last election. For some voters, the answer may be `You. And you failed us'.