Labor’s boondoggle charter

Labor in power would run an activist, entrepreneurial Finance Department. The idea is to use the commonwealth balance sheet to invest in “new inclusive growth”, opposition finance spokesman Jim Chalmers said in a speech yesterday. This is a vague, value-laden political goal and nothing new; it’s a charter for the same old boondoggles. The other familiar element is the exposure of taxpayers’ money to high levels of risk; Dr Chalmers wants the government to bankroll projects that the private sector won’t touch.

The Finance Department does not recruit for commercial nous, nor should we expect any from Dr Chalmers; he is a party apparatchik who served on the staff of Wayne Swan, the former (world’s greatest) treasurer who promised four years of budget surpluses and delivered none. Theirs was the government that gave us the National Broadband Network blowout, roof insulation fires and gold-plated school sheds. Labor should have learned its lesson after a string of state government disasters in the 1980s and early 90s. These included the collapse of Tricontinental, the merchant banking arm of Victoria’s state bank; another state bank implosion in South Australia; and the web of corruption and incompetence known as WA Inc.

Public money was squandered in sleazy corporatist deals or financially risky ventures as Labor administrations searched for a prosperity shortcut that would spare them the unexciting task of reducing barriers to investment and allowing the market to allocate funds. The result of these scandals was damage to the integrity of government, mountains of debt and economic stagnation. The old Victorian Economic Development Corporation — perhaps the best parallel to what Dr Chalmers proposes — had tried to pick winners by taking equity in new ventures; it cost taxpayers $110 million.

If Labor under Bill Shorten is serious about investment and job creation it should begin by signing up to the corporate tax cuts for companies with turnover up to $50m. And would it be asking too much for Labor to promote workplace flexibility and productivity? These are the ways to produce inclusive growth — well, growth that may energise the economy at large, not just a few politically favoured sectors.