Cassandra curse the bane of Costello

NOT being listened to when you are right is one of the most frustrating things a person can experience. In this respect, Peter Costello is sharing a little of the experience of Cassandra, daughter of king Hecuba of Troy.

In ancient Greek mythology she had the gift of prophecy but was cursed by Apollo and denied the power to persuade.

In the lead-up to the 2007 federal election, Costello as treasurer warned that a financial tsunami was on the way, and Australians should be careful about who they voted for to run the economy.

To be sure, when predicting the tsunami Costello was first and foremost referring to what would happen if China floated its currency, the yuan.

That hasn't happened yet.

But he was also referring more generally to what would happen if China's economy faltered. Data released this past fortnight indicated China's growth has dramatically slowed to 6.8 per cent. By Chinese standards that puts them in a virtual recession.

More important, Costello's tsunami comments also made reference to the impact the US sub-prime mortgage crisis would have on world economies, including Australia's. That impact is now known as the global financial crisis, the worst economic meltdown since the Great Depression.

Costello was ahead of the curve in predicting it.

When he made his prediction that a financial tsunami was on the way, in October 2007, the Australian Stock Exchange was near record highs at over 6600 points. Today it is languishing at less than 3500 points, a 47 per cent decline.

Because the Coalition was voted out of office within a month of Costello making the tsunami prediction, we never got to see exactly what he would have done to ready the nation for the impending meltdown.

One thing we do know is that he would not have droned on about fighting inflation the way Labor did shortly after it won office. Remember the "inflation genie" that was supposedly "out of the bottle", according to Wayne Swan and Kevin Rudd?

That little piece of rhetorical colour is one they would rather forget.

Here's what Swan, then Opposition Treasury spokesman, had to say about Costello's tsunami remarks: "Rather than desperately exploiting financial market movements for political purposes, Mr Costello needs to roll up his sleeves and start tackling the inflationary pressures that he has clearly failed to contain."

Costello's point was that given the economic woes about to befall us, inflation shouldn't be the focal point when managing the economy. He was right.

Not that Reserve Bank of Australia governor Glenn Stevens was listening. He raised interest rates in November during the 2007 election campaign for the eighth time in a row in a bid to contain inflation, wrecking any chance the Coalition had of retaining government.

Over the past few months, with egg firmly planted on his face, Stevens has had to cut interest rates a lot to preserve what's left of the Australian economy now that Costello's prediction has been proven correct. Next week Stevens and his board are expected to cut rates even further.

Not that anyone is taking him to task for his back-pedalling. A strange situation has developed in Australian politics where our elected representatives are not permitted to question the decisions of appointed bureaucrats.

In politics, Costello was alone in cautioning that an economic meltdown was on the horizon. While Labor was talking up the risk of high inflation, John Howard was campaigning on his promised ability to reduce unemployment to less than 4 per cent. With the financial crisis now in full swing, unemployment is expected by some to hit 9 per cent. Had the Coalition won the election Howard's unemployment pledge would have sat neatly along side his 2004 election pledge to "keep interest rates at record lows".

Costello's frustration at not being listened to when it came to the impending financial crisis came on the back of his frustration at not being listened to over what he saw as the need for the Liberal Party to make the transition to him as leader.

Costello's problem has always been that he lets his frustrations show.

In politics, being right does not always result in success. He was right about the economic meltdown. Because the Coalition lost the last election he was also right that a leadership transition should have taken place.

However the approach a politician takes to the task at hand is every bit as important as being right in the first place. Costello's approach has always grated on the public and his colleagues.

The question is: does Costello still want a career in politics? The Liberal Party certainly needs a competent Treasury spokesperson, but it is hard to see Costello playing second fiddle to Malcolm Turnbull when he outgrew that role under Howard.

Costello likes to point out that he never challenged Howard because he didn't want to plunge the party into a debilitating 1980s-style leadership war as occurred between Howard and Andrew Peacock. If he wants to become prime minister that is exactly what might have to happen between him and Turnbull.

After all, one of the two figures from the original Howard-Peacock clashes did go on to become Australia's second longest serving prime minister.

Peter van Onselen is an associate professor of politics and government at Edith Cowan University.