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Canberra Times

How prepared is Australia to handle the biggest crisis facing it since December 1941, when Japan entered the war?

Australia is not yet in crisis as a result of the international financial meltdown. It is still living off accumulated fat.

Most analysts agree that bad times are in front. However, they have been reluctant to put the forthcoming crisis into context and to give it shape and form. Only by doing so will we meet and match the challenge the crisis offers and develop appropriate responses.

The response so far has been one of panic, akin to the sale of harbour-side properties and the flight to the Blue Mountains when the elite of Sydney feared a Japanese invasion. Risk-averse politicians and public servants, nurtured on a diet of a paralytic fear of terrorism for the past 10 years, went into full panic mode before Christmas throwing $10billion at consumers. It evaporated like water on a hot road.

Half went to pay off debt and of the rest, most went overseas to China and other producers of goods. I would estimate that around $1billion went into circulation in Australia. Which means that only one tenth of the money outlaid by the Rudd Government, on the advice of Treasury, had the effect it was intended for; not such a good result, although with the massive private debt, paying some off is not a bad thing.

The politically sensitive Australian Bureau of Statistics recorded a 3.5per cent growth in pre-Christmas spending as a result of the injection of taxpayers’ money. It claimed it was the best result for eight years. The claimed result flies in the face of anecdotal evidence.

In any case, the effect on jobs and the economy was limited because beyond the short-lived benefit to the services sector, very little money was spent on Australian-made goods. There are not many of these with many manufacturers having gone offshore under Keating and Costello.

The impact of severely reduced economic activity will dramatically affect Australia because of our narrow economic base, resting as it does on mining and agriculture, the former dependent on sales to China and the latter on the sale of wheat, wool and meat.

The Howard and Rudd governments ripped the competitive advantage from Australian wheat sales by abolishing the single desk after the Australian Wheat Board bribed a corrupt Iraqi government to hold the market in the face of Australian preparations to go to war against it.

Australian banks pushed easy credit for the past 15 years, urging the young, the weak and the infirm, among others, into building up a national private debt of $1.2trillion dollars.

Those same urgers are still running the banks. How is it then that Australia is, ”better placed than most other countries to withstand the effects of the global meltdown”, according to Finance Minister Lindsay Tanner? It is not.

Of course, it is a good thing to spend money on schools and all other forms of infrastructure whether or not there is an economic crisis, but where might savings be made? Savings will be achieved by the effectiveness of each dollar spent on productivity leading to jobs and import replacement.

Defence is the first place to look, together with the over-inflated budget of the Australian Federal Police and the racist and ideologically driven budget of the Department of Immigration.

Defence spending over the past 10 years has been geared to pleasing the American alliance and fitting in with US force structures rather than the defence of Australia. Australia could have got by with smaller submarines but in order to continue to get praise from the US for the work of the Oberon Class submarines spying for the US off Vladivostok and Cam Ranh Bay during the Cold War, Kim Beazley, as Minister for Defence, built the ill-fated Collins-class submarine. It was the technological equivalent of building a one-off run of eight Airbuses.

The economic meltdown will bring political instability with it, including to our region. The ADF is not geared to fight a prolonged engagement in our region. The purchase of the very expensive and untried F35 fighter was a poor strategic decision made by John Howard. It should be reversed and pressure put on Barack Obama to sell us the F22.

The recently purchased Abrams tanks cannot operate in our region; who can we sell them to?

What resources do we need to sustain operations in our region? Australia spends billions on state of the art defence equipment manufactured overseas, paying for it with non-renewable mineral exports. Australia has a luxury boat industry looking for work; why not use it to build fast and cheap patrol boats? We should start to think outside the loop as the Somali pirates have done.

The movement of goods produced by the two major economic sectors in Australia, mining and agriculture, has been inhibited through poor infrastructure now is the time to address this long outstanding problem in rural Australia.

As Rudd has noted in his article in The Monthly magazine, the private sector is not the answer to solving all problems. There is no case to be made for the market place to regulate the flow and placement of water through trading.

Water, like clean air, is a national commodity with equal entitlement of all citizens to adequate and clean supplies. Selfish sectional interests have cornered the supply with the connivance of government. The supply and protection of water resources must become part of the Government’s infrastructure program.

Handing money to the states for these projects looks like a prescription for double dipping. Who will monitor their expenditure of federal money on national projects? How much will be lost as the states take their cut through wages, real and contrived administrative costs, and poor procedures? The federal Government must take a measured approach to the crisis. It must display prudence, wisdom, character and compassion in other words leadership of a high order. However, having elected to keep many of Howard’s acolytes in senior public service positions it is operating with one hand tied behind its back. It needs balanced and considered advice; the days of snowing with spin are over.

As the crisis deepens and the need to create jobs grows, the Government might consider the introduction of national service for the ADF, national infrastructure, hospitals, aged care and social welfare institutions and organisations