Kennett's failed experiment
One year ago Jeff Kennett became premier of Victoria because of widespread disillusionment in the previous state Labor government. He immediately launched a blitzkrieg of cuts to education, health, public transport and other social services; new regressive taxes and attacks on workers' rights. His program set a new reactionary standard for state governments — the NSW Coalition government's efforts looked timid by comparison.
Kennett's message was simple: he would pare down the public sector, regardless of social cost, attack unions and privatise as much as possible. This would reduce the state's debt and give confidence to the private sector which would then lead the state into a new, sustainable economic boom.
The social cost has been terrible, but that was expected — especially because the union movement was hamstrung in resisting Kennett's attacks by its misplaced allegiance to the ALP. But even by Kennett's own standards, his reactionary experiment has been a failure. While the public sector has been savaged with a program of lay-offs that match in absolute terms the discharge of soldiers after the last world war, the much vaunted private sector recovery has not materialised.
According to the Kennett government's figures, gross state product has risen by 4.4%, but a more detailed analysis shows the failure of the experiment.
- Total real spending in Victoria and total incomes began rising about a year before Kennett came into office. Real spending in the first half of 1992 (before Kennett) grew faster than in did in the first half of this year.
- Most of the growth under Kennett was due to a rise in government spending. Public investment fell 4.75% so this government spending (with more loans) went mostly on redundancy payments for the 20,000 public sector workers done out of a job. Kennett intends to get rid of at least another 18,000 jobs, so perhaps redundancy payments might keep the state economy growing!
- While Kennett claims to have restored "investor confidence", private investment actually fell 2.9% under Kennett even though private consumption rose 2.1%. The private sector has not been soaking up the jobless created by public sector cuts. Victoria's unemployment is 13%, the second worst state figure after Tasmania.
When the Victorian economy eventually does recover this will not be a result of Kennett's cruel experiment. But what Kennett will have done is made sure that the rich and powerful get an even greater share of the fruits of the next recovery.