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Australian elections Tuesday, 29 September, 1998, 13:00 GMT 14:00 UK
Dodging the Asian crisis
[an error occurred while processing this directive]With the Asian crisis probably yet to find its way down under, it is no coincidence that Australian Prime Minister John Howard has gone to the polls six months before the end of his government's term.

The leader's claim that Australia is the "economic strongman of Asia" may eventually take a beating, but for now he can run with it.

The generally bi-partisan political wisdom of recent years that "Australia's future lies in Asia" is looking a little shaky as its northern neighbours descend into deep recession.

Over the last two decades Australia has switched its trading focus towards Asia and away from Europe, looking to ride on the East's high growth rates by trading on its natural advantages in tourism, education, technology and raw materials like wool, wheat and coal.

But in 1998, the Australian dollar has been hammered, descending to record lows since the currency was floated in 1983. It fell as low as 55 US cents, down from the high seventies a year ago.

However, so far the country's fundamentals are holding up reasonably well in the face of the Asian crisis.

Unemployment is still stuck around the 8% mark but economic growth remains reasonably strong at 3.9% - for the moment.

Football or the ballot box

But even with the prospect of an overhaul of the tax system, the threat of the Asian contagion savaging growth in an economy ever-vulnerable to external shocks and the rise of the right-wing, low tax, One Nation Party, Australians are finding it hard to get excited about the upcoming national election.

The timing of the election on October 3, amid the fanfare of the 'festival of the boot' has a fair bit to do with it.

The grand finals of the country's two main football codes has diluted some of the focus on tax and the economy.

Tax shake-up

However, the parties have carved out tax reform as the central issue. For a decade the country's politicians have grappled with the need for an overhaul of the currrent tax system - based on income tax.

Australia is the only western industrialised nation not to have implemented a broad-based consumption tax - similar to the UK's VAT.

For the second time in five years the ruling coalition of the Liberal and National parties are hinging their electoral hopes on a goods and services tax (GST) set at 10%.

Only charities, health, education and childcare services are exempt.

The opposition Labor Party, under Kim Beazley, has responded with a A$6bn offer of tax cuts for low- and middle-income earners as its central platform.

Labor nailed its anti-GST colours to the mast in the 1993 election homing in on the coalition's plans for similar reforms and running so hard, and successfully, against it that the party has been unable to embrace anything similar since.

An emphasis on employment and job creation programs is Labor's other major economic platform.

Not to be outdone, Pauline Hanson and her One Nation party have come up with a tax policy dubbed "the happy tax" - a proposal for a flat 2% personal income, company turnover and sales tax.

It is a policy greeted with scorn by political opponents but one of a range of populist policies, including cuts to immigration and aboriginal welfare, that have found widespread support in depressed rural areas and suburban fringes.

Depending on how the world's financial market contagion pans out, with Australia on the front line of Western nations trying to keep it at bay, this may not be a good election to win.

Links to more Australian elections stories are at the foot of the page.


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Links to more Australian elections stories

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