Dis­tor­tions of the su­per truth

Paul Keat­ing takes is­sue with Mike Steke­tee’s re­view of David Love’s Un­fin­ished Busi­ness

The Weekend Australian - Review - - Books -

WHEN the na­tional af­fairs ed­i­tor of a news­pa­per, with all the space oth­er­wise avail­able, re­views a book, smell a rat.

Mike Steke­tee’s ‘‘ re­view’’ of Un­fin­ished Busi­ness: Paul Keat­ing’s In­ter­rupted Revo­lu­tion by David Love, pub­lished in Re­view ( Septem­ber 13- 14), was Steke­tee at­tempt­ing to re­write a bit of his­tory, but this time through the de­vice of call­ing into ques­tion the ca­pac­ity of a fel­low com­men­ta­tor, Love, to write eco­nomic his­tory free of il­lu­sion or favouritism.

When it comes to mat­ters to do with me, Steke­tee has form.

He and his leftie for­mer mates at Fair­fax, Brian Toohey, Mar­ian Wilkin­son et al, with whom he still shares com­mon cause, would have hated the fact that Love, en­tirely at his own ini­tia­tive and with his an­a­lyt­i­cal abil­ity and wide ex­pe­ri­ence of the Aus­tralian fi­nan­cial sys­tem, has writ­ten a book gen­er­ally praise­wor­thy of the fi­nan­cial re­forms I in­tro­duced both as prime min­is­ter and as trea­surer, es­pe­cially uni­ver­sal su­per­an­nu­a­tion.

Steke­tee says, cor­rectly, that Love was ‘‘ a dis­tin­guished eco­nomic com­men­ta­tor; a for­mer eco­nomics ed­i­tor of The Aus­tralian Fi­nan­cial Re­view and the founder of Syntec’’, the most pres­ti­gious eco­nomic con­sul­tancy through the 1970s. Yet Steke­tee, in an ar­ro­gant dis­tor­tion of the in­tel­lec­tual dy­nam­ics and con­sid­er­a­tions that went into Love’s book, says that ‘‘ Love was sold a pup’’.

The fact is that Love did com­men­tate on the Aus­tralian econ­omy through­out the ’ 70s and early ’ 80s. He re­ported on the years of hope­less­ness, when re­me­dial eco­nomic changes were put on the back­burner. Imag­ine in the ’ 70s, su­per­an­nu­a­tion as­sets be­ing what they are now at 100 per cent of gross do­mes­tic prod­uct: in to­day’s dol­lars, $ 1000 bil­lion. Love knows, in Aus­tralian and West­ern world terms, how valu­able and rare this pool of sav­ings is, as he un­der­stands how the open­ing of the fi­nan­cial, prod­uct and labour mar­kets changed the way Aus­tralia func­tions and the level of wealth those changes have in­duced.

Nev­er­the­less, Steke­tee stu­diously ig­nores Love’s ad­um­bra­tion of the ur­gent rel­e­vance of get­ting su­per­an­nu­a­tion con­tri­bu­tions to 15 per cent of wages to avoid col­laps­ing sav­ings and a widen­ing cur­rent ac­count deficit.

He also ig­nores Love’s point that with su­per­an­nu­a­tion con­tri­bu­tions at 15 per cent we would have been in even bet­ter shape to ride out the Amer­i­can melt­down.

Let me as­sure Steke­tee that in no way did I pur­sue Love with his book. Love first in­ter- viewed me about changes to the fi­nan­cial sys­tem in 1999 and he pub­lished his book this year, nine years later, af­ter hav­ing in­ter­viewed all those closely as­so­ci­ated with the changes. In­deed, for many years Love was not at all cer­tain he would even get to pub­li­ca­tion.

But let me deal with the other mis­takes and ob­fus­ca­tions in Steke­tee’s piece.

He says that ‘‘ the na­tion in the fu­ture is un­likely to be able to af­ford the present gen­eros­ity of the su­per­an­nu­a­tion sys­tem’’. This is straight out of the Toohey hymn book.

Why jour­nal­ists of this ilk have it in for uni­ver­sal su­per­an­nu­a­tion — the right for work­ing peo­ple to have a re­place­ment in­come in re­tire­ment — is be­yond me. In fact, con­trary to Steke­tee’s claims, as Don Rus­sell pointed out re­cently, dur­ing the rise of the su­per­an­nu­a­tion guar­an­tee charge from 3 per cent to 9 per cent, real unit labour costs in Aus­tralia ac­tu­ally de­clined, putting no bur­den what­so­ever on busi­ness or the profit share. In other words, pro­duc­tiv­ity paid for the lot. Steke­tee is ei­ther too dumb to recog­nise this fact or too dis­hon­est to ad­mit it.

He then talks about the in­equity of the su­per­an­nu­a­tion sys­tem fol­low­ing Peter Costello’s in­tro­duc­tion of tax- free ben­e­fits for those 60 years and over. But Steke­tee fails to tell read­ers that Costello, in mak­ing his change, re­moved Keat­ing’s ‘‘ rea­son­able ben­e­fits lim­its’’, the sem­i­nal de­vice Keat­ing em­ployed to limit ac­cess to the tax con­ces­sion for those on higher in­comes.

Steke­tee, un­able to hide his spleen, then uses his ar­ti­cle to re- run the old lie that Keat­ing did not re­ally float the ex­change rate; it was done by Bob Hawke and his ad­viser Ross Gar­naut. For what it is worth, I have put on the record many times that Re­serve Bank gov­er­nor Bob Johnston and I de­cided to float the ex­change rate as early as April 1983. The eight months be­tween that time and when it was floated were taken up pre­par­ing the sys­tem for it and pick­ing the mo­ment when the spot rate could be thrown open without dam­age to the fi­nan­cial sys­tem or to the econ­omy. Gar­naut was pop­ping up and down at the time like an en­thu­si­as­tic am­a­teur but the no­tion that the dol­lar could be floated on the whim of a gov­ern­ment staffer can se­ri­ously be pro­posed only by some­one as jaun­diced as Steke­tee or as de­voted to self­pub­lic­ity as Gar­naut.

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