FORMER HOWARD ADVISOR ON RUDD'S STIMULUS PACKAGE

C O N F I D E N T I A L CANBERRA 001074

NOFORN

E.O. 12958: DECL: 10/23/2018
TAGS: PGOV ECON AS
SUBJECT: FORMER HOWARD ADVISOR ON RUDD'S STIMULUS PACKAGE

REF: CANBERRA 1036

Classified By: Deputy Political Counselor John W. Crowley, for reasons
1.4 (b) and (d).


1. (C/NF) SUMMARY: A former adviser to John Howard says the
Rudd Government likely made a purely political decision
rather than a carefully thought out economic one when it
decided on the size of the A$10.4 billion stimulus plan
(reftel). New Liberal Party MP Jamie Briggs, who won the
seat of former Foreign Minister Alexander Downer in
September, told poloff that the A$10 billion package,
representing approximately half of the budget surplus, was a
huge amount for an economy the size of Australia's and,
although the Government claims the funds are part of the
budget surplus, Government revenue was likely dropping like
a stone. The real problems for the Government will become
apparent in 2009, when falling revenue would be unable to
match spending commitments and Rudd would be forced to make
tough choices. Briggs agreed that first-time governments in
Australia are almost always reelected and the return of a
Coalition government to Australia is likely a five-year
project at least. END SUMMARY


2. (C/NF) From 2004-07 Briggs was a senior adviser to Prime
Minister John Howard on Workplace Relations, Employment,
Industry, and Small Business. Post had selected him for the
International Visitor Program in 2007, and he was about to
travel to the United States in early 2008 when Alexander
Downer approached him to run for the former foreign
minister's seat of Mayo in South Australia. Briggs faced a
number of competitors in the contest for the Liberal Party's
nomination for this safe seat but, with the support of Downer
and former Prime Minister Howard, Briggs prevailed. Only 31
years old but with three years experience in the Prime
Minister's Office, Briggs is in the forefront of the Liberal
Party's renewal process.

SIZE OF THE STIMULUS A POLITICAL DECISION


3. (C/NF) At a meeting with poloff on October 23, Briggs said
that he suspected the Rudd Government made a political
decision, and not an economic one, in providing for an
immediate A$10.4 billion stimulus package. Briggs claimed
the Government would not have had any economic data yet on
the global financial turmoil's impact on the Australian
economy, and the decision on the size of the stimulus package
would have been "guesswork." Briggs said he suspected $A 5
billion would have been a more judicious initial stimulus but
the Government likely made a political decision to throw
caution to the wind in an attempt to avoid a recession. The
stimulus will allegedly be paid from the budget surplus but
with government revenue undoubtedly falling fast, Briggs
wondered if there would even be a surplus large enough to
cover the stimulus package. (Comment: most observers
believe that even with reduced revenues, the surplus will
more than cover the stimulus package. End comment.)

THE HARD DECISIONS WILL COME NEXT YEAR


4. (C/NF) Briggs pointed out that the tougher economic
decisions for the Government will come early in 2009. With
revenue likely to fall dramatically, Rudd will need to decide
which commitments he will fund and which he will postpone.
It will be difficult for him to run a budget deficit because
it would be unfavorably compared to the Howard-Costello
balanced budgets.

LIBERAL PARTY RENEWAL


5. (C/NF) Briggs agreed that the Liberal-National Party
Coalition was unlikely to win the next election. New
QCoalition was unlikely to win the next election. New
Australian governments are almost always reelected and there
was no reason to believe 2010 would be any different. The
Liberal Party needed to undergo a renewal process, Briggs
said, and bring in new MPs like him to replace many of the
old Howard-era politicians. This would take a few years.
Downer and Costello both entered Parliament when the Liberal
Party was in opposition, Briggs noted.

INDUSTRIAL RELATIONS BATTLE HAS BEEN WON


6. (C/NF) Briggs, who was Howard's workplace relations
adviser when WorkChoices was passed in 2005, was dismissive
of the Rudd Government's plan to rollback WorkChoices. The
battle had been won, Briggs maintained. The real work had
been done in 1996 when the wildcat strikes and the pattern
bargaining and worst forms of union aggression had been
outlawed. Those changes were not going to be reversed by the
Rudd Government's industrial relations proposals and were now
accepted practice.


7. (C/NF) COMMENT: While Briggs is a political opponent of
the Rudd Government, he is also a keen political observer
with three years experience working a Prime Minister's
office. His criticisms of the economic stimulus package
appear to be drawn straight from Liberal Party talking points
- they mirror what Opposition Leader Malcolm Turnbull told
the Ambassador about the stimulus package right after it was
announced. In fact, many economists argue that the generally
well-received stimulus package (reftel),coming to about 1%
of Australian GDP, is more likely to be too small than too
large. Only elected last month, Briggs will have to spend
some time on the backbenches. He is already doing "doorstop"
interviews and making appearances on television, however, so
it is clear that the Liberal Party is grooming him for the
future.

CLUNE