Former Prime Minister John Howard has hailed the first Abbott budget as “right for the times” and urged Labor to support its tough savings measures.
Speaking at the World Business Forum in Sydney, the former Liberal leader said the pace of economic reform had slowed and that a new bipartisanship was required to strengthen the economy into the future.
Raising the pressure on the Labor party, Mr Howard said that being in opposition came with responsibilities too and urged Opposition Leader Bill Shorten to take a “mature” approach to the budget.
“We have reached the stage where we are starting to run on empty,” he told a packed audience of several hundred people. “We have down-tooled on economic reform”.
“You need a level of maturity on both sides on these issues to get the reform process going again… It is important that the Labor party take a mature approach to the budget and to other measures of the government.”
Mr Howard said the most immediate part of the reform challenge was to “attend to Australia’s budget position”. While there was no immediate crisis, expenditure needed to be controlled now to avoid a significant worsening of Australia’s fiscal position.
The warning comes as Labor, the Greens and the Palmer United Party hold out against more than $20bn in announced budget savings, presenting a Senate roadblock to the Abbott government.
While Mr Howard said comparisons between the first Abbott budget and his first budget in 1996 were relevant, the better comparison was with the first Cameron budget in Britain in 2011.
Despite warnings from peak economic bodies such as the International Monetary Fund that tough savings would lead to contraction, Mr Howard said the growth rate in the British economy was “significantly ahead” of other advanced economies.
“The best time to bring in a difficult budget is in the first term, in the very first budget of that government,” he said.
He warned that Australia’s international competitiveness in sectors like manufacturing could only be secured if further steps were taken to liberalise labour relations and employment practices.
Mr Howard was also positive about the outlook for the global economy in the wake of the global financial crisis, saying the US economy was now in recovery mode. However, he warned of growing problems in the Chinese economy including its ageing population and a growing demand for political reform on the part of younger generations.
“It will grow old before it will grow rich,” he said. “Don’t be mesmerised by China.”