A genuine revival of the economy will require a reversal of the wrongs of the past 28 years of so-called economic "prosperity" that left us vulnerable to the COVID-19 crisis, and for the government to lend credit to grow the economy, not borrow and burden it with unserviceable debt.
The recent banking royal commission exposed the greed that motivates the major banks and while Australia desperately needs a legislated national bank-like the old Commonwealth Bank, directed by the government-right now, we must build out of this crisis.
By simply amending the Clean Energy Finance Corporation Act 2012, the CEFC could be re-mandated to function as a national development bank.
Bob Katter is pushing the amendment in parliament and it must be supported. What's proposed will not diminish the CEFC's mandate to fund green projects; rather it will broaden it to include all manner of projects requisite at a national, state and local government level, whether green or otherwise.
As a development bank, the CEFC will have the authority to leverage lending to build these projects which would eliminate the constraints of budgets, what's in the kitty, or dependence on private or foreign investment.
Many political commentators say we should learn from history; some specifically cite the economic models employed during the depression and post-war period by former US president Franklin D. Roosevelt and Australian prime ministers John Curtin and Ben Chifley. In 1933, Roosevelt repurposed the Reconstruction Finance Corporation to act as a national development bank and issued enormous amounts of credit to finance his New Deal program which transformed the US economy into a powerhouse of manufacturing and productive capacity.
Curtin and Chifley used the power of a national bank, the original Commonwealth Bank, as the credit mechanism to transform Australia's manufacturing capabilities which prepared us for WWII and drove the post-war reconstruction; the establishment of the BHP steel works in Newcastle under Essington Lewis was part of this initiative.
IN OTHER NEWS:
- Stationary RBTs, drug tests return ahead of June long weekend
- The koala and the wombat who became best friends in lockdown
- Weight lifted but pain still being felt as gyms set to reopen
- Paramedics call off industrial action as parliament votes against public sector wage freeze
- Watson facing surgery as hooker curse strikes the Knights again
Keying off recommendations from the 1937 Banking Royal Commission, Curtin and Chifley made government the ultimate authority over the Commonwealth Bank. During a 1937 Federal Election speech at Freemantle, Curtin elaborated that point, he said: "If the Government of the Commonwealth deliberately excludes itself from all participation in the making or changing of monetary policy, it cannot govern except in a secondary degree".
The Opposition leader, Anthony Albanese, is calling for the revitalisation of high-value manufacturing and for investment in nation-building infrastructure projects like high-speed rail which has long been his passion. While federal transport minister he called for debate on a high-speed rail link from Melbourne to Brisbane in 2013. The estimated cost then was $114 billion with a completion date of 2053. Forty years! The downfall for Albo was the project's dependence on funding out of the budget.
Capital works should not be a budgetary expense; capital works are an investment in the future because the completed project improves the way the economy operates. The debt is re-paid out of the increase in revenue generated by the transformation the completed project brings to the economy.
To build infrastructure we need manufacturing. Newcastle could lead a revitalisation.
To build infrastructure we need manufacturing. Newcastle could lead a revitalisation. There is much to be gained from making things, and Newcastle has a number of proposed projects that could engage local industries and people to build; the economic and psychological value from employment in a meaningful productive enterprise cannot be underestimated, but there is also a huge financial argument for making finished products as opposed to simply exporting raw materials.
A 1970 submission to the John Gorton Cabinet regarding aluminium production aptly makes the point. Using 1970 dollar terms it stated that exporting 1 million tonnes of bauxite earned $5 million; processed into alumina it earned $27 million; processed again into aluminium ingots it earned $120 million; and when processed into finished aluminium products it earned $600 million.
Newcastle didn't accidentally become a "steel city". It was chosen because of its proximity to power, coking coal and shipping and-utilising the most cost-effective, state-of-the-art technology-can produce steel again.
Domestic demand for high-grade steel will be immense if Australia builds major infrastructure such as a ring-rail for the nation, of which the high-speed train from Melbourne to Brisbane would be a good start.