Former PMs should ride into the sunset … and stay there

Former PM Kevin Rudd. Picture: Twitter

What is it with some former prime ministers? They won’t let go of the delusion that we are hanging out to hear their opinions on pretty much every policy-­related issue.

It’s a close-run race between Paul Keating and Kevin Rudd. Both former Labor PMs spring regularly into the media spotlight sounding as if they are still in charge and slagging off those who don’t share their irrefutable opinions — Coalition politicians are a popular target.

Close friends of these has-beens need to have a word to them about retiring gracefully in order to retain what little policy reputation they have — which, in Rudd’s case, was pretty close to zero anyway.

It’s not just Keating and Rudd who have fallen into this myth-based trap. Malcolm Fraser wasted decades trying to convince us that he was really a highly empathetic globalist committed to the disadvantaged, which was in contrast with his tenure in office.

The other Malcolm — Turnbull — also hasn’t slipped quietly into the sunset. He’s regularly out there on Twitter and elsewhere criticising the Morrison government’s energy and climate policies, among others.

He tellingly described the government’s recently announced technology roadmap as “nuts”. The message is always the same — if he were still at the helm, things would be much better.

Last week, Keating decided to have a serious go at the Reserve Bank of Australia, circulating an unveiled attack on both the governor and deputy governor of the RBA. Keating wrote that: “It has to be remembered, these are the high priests of the incremental. Making absolutely certain that not a Bank toe will be put across the line of central bank ­orthodoxy.”

He went on: “Certainly not buying bonds directly from Treasury. Wash your mouth out on that one. What would they say about us at the annual Bank for International Settlements meeting?”

It is worth noting that Keating has no economics qualifications, in contrast to the RBA governor and deputy governor who have doctorates in economics. And Keating’s years as treasurer were in a different era with very different economic challenges from today.

No doubt, he regrets that the non-independent RBA — monetary policy was strongly influenced by Treasury — kept interest rates too low for too long in the late 1980s and then too high for too long after. The recession that followed — the one we had to have — was harsh and prolonged.

Fast forward to now and the economic challenges we face have distinct characteristics. The economic harm has been a direct corollary of the restrictive measures imposed for public health reasons, both here and in many countries.

There is no inflation in the system and interest rates, here and overseas, are close to zero. This was the case going into the pandemic-induced recession.

While the RBA has been doing its bit to support the economy, it has stopped short of effectively printing money, the course of ­action that Keating advocates. There are many reasons for refusing to take the Modern Monetary Theory route, not least the wasteful government spending and the ill-gotten gains that would ­accrue to certain companies and individuals.

Whether full employment would be achieved without the ­destructive impact of high rates of inflation coming to pass is most unclear. The few examples we have are not encouraging; Venezuela being one.

It’s not just monetary policy on which Keating is claiming expertise. Evidently, he’s also a gun on superannuation policy and how any increase in the contribution rate is paid.

According to him, the superannuation contribution is paid by the employer with no impact on the workers’ pay packets, notwithstanding that the system was set up to do just this — to act as a substitute for a pay rise. Keating has also been a vociferous opponent of the limited early withdrawal from superannuation introduced by federal Treasurer Josh Frydenberg.

“They want to drain money out of the bottom of the system and stop money coming into the top of the system” Keating reckoned of recent superannuation policy developments.

His only evidence is that wage growth has been low for some years in the absence of any increase in the superannuation contribution rate — which, according to his simplistic logic, proves there is no connection between the contribution rate and wage growth.

At least Keating has some legitimate reason to be involved in the debate, even if his contribution borders on absurd. The same cannot be said of Rudd.

He says the idea that an increase in the superannuation contribution rate would come at the expense of wages is “the biggest bullshit argument I have ever heard”. (He might want to talk to some of the best-qualified economists in Australia who overwhelmingly agree with this statement: increases in compulsory super contributions are likely to be largely paid for via slower growth than otherwise in workers’ wages.)

Florid language is clearly in vogue with some former PMs. Rudd went on: “This is a cruel ­assault by Morrison on the retirement income of working Australians and using the cover of COVID to try to get away with it.”

Even Turnbull has voiced an opinion on this issue, having achieved nothing in this space as prime minister apart from imposing higher taxes and restricting the value of superannuation for many members.

Given his dislike of the Morrison government and certain parliamentarians, however, it is hardly a surprise that his judgment was: “We would be better off sticking to the legislated increase. This is a vexed issue because there are people who say the money is better in people’s hands now than down the track. I think that is all a bit patronising, to be honest.”

Indeed, the whole system of compulsory superannuation is more than a bit “patronising”, based on the notion people are too shortsighted and stupid to save for retirement. They must therefore be forced to save through superannuation and contribute massive fees to the funds and fund managers controlling the system.

The solution to these bizarre and error-laden interventions by former PMs is that, for the good of the country, they should simply desist.

But not all of them show such poor judgment.

Both John Howard and Julia Gillard have been circumspect about weighing into political debates, mainly reserving their measured comments to their areas of interest and steering clear of stirring up unnecessary controversy. There is a clear lesson there.