In politics, sometimes it can be difficult to see the wood for the trees.
What is glaringly obvious to many Australians too often remains unsighted by your elected representatives.
Of course no-one gets it right all the time. That is part and parcel of being human and venturing an opinion on the future direction of the country. However, if there is a failing of modern politics it is the focus on short-term impacts rather than long-term consequences.
Over the weekend I read a report that ten per cent of first home owners who bought less than two years ago have sold, or are considering selling their property due to financial stress.
They are victims of rising interest rates, spiralling utility bills and their own excessive borrowing. However, irresponsible government policy is also to blame.
In March of 2009, I wrote:
At the current low interest rates, taking on a large debt might not seem too threatening. However, how are these same first home owners, who couldn’t save a deposit of their own, going to manage their obligations if they lose their job or get caught by rising interest rates? And interest rates will rise. It is an inevitable consequence of the imprudent short-term monetary policy settings being pursued by government in Australia and across the globe.
Such a conclusion was blindingly obvious to anyone with a basic grasp of economics and prepared to learn from history, yet the government trebled the first home buyers grant to encourage people to buy homes. As most of the purchases were of existing dwellings, there was little economic stimulus but a rapid escalation in house prices. The government incentive encouraged people to borrow more than was prudent through fear of missing out.
The effects of that knee-jerk policy are now being felt by many who were lured into making such a long-term commitment based on a short-term incentive.
Unfortunately this is not an isolated policy incident. The government has repeatedly enacted policy measures without a considered regard to their long-term consequences. This has plunged our nation into debt, resulted in increased taxes and many families struggling with a rapidly rising cost of living.
While things are tough now they look set to get worse. Food prices are expected to skyrocket in the months ahead. Electricity bills are forecast to double over the next four years – and that’s before the government’s mooted carbon tax increases them further.
There are some clear lessons from history that we should all heed as they have proven themselves to be correct time and time again. You cannot borrow and spend your way to prosperity. Higher taxes are not good for individuals or the economy and debt is a millstone around the neck of future wealth generation.
One can perhaps excuse the new home buyers who have overextended themselves through inexperience. They will pay the price and never forget the experience, but when the same mistakes are being committed by our national government we have every reason to be concerned about the direction of our nation.
Cory Bernardi is the author of seven books and has been a member of the Australian rowing team, a publican, an investment portfolio manager and spent nearly 14 years as an Australian Senator.
