Fuel hike hits Labor – again

Soaring oil prices brought the Whitlam government’s honeymoon to an abrupt end, a generation ago.

And the Rudd government’s luck, with oil prices, hasn’t been good, either.

So far, though, it hasn’t suffered anything like the damage that the Whitlam government did.

But the opposition, led by a reinvigorated Brendan Nelson, has been making its attack stick.

Nelson – and his colleagues – have been demanding a guarantee that the government’s Fuel Watch scheme won’t add to fuel prices.

The Prime Minister, Kevin Rudd, has of course, refused. Political leaders, since the time of King Canute, have known that government orders don’t hold back waves.

Bob Hawke learnt his lesson, on decrees, the hard way, after he had he boldly declared that “by 1990, no Australian child will live in poverty.”

Still, Rudd has been left in an awkward position.

His Fuel Watch scheme was never going to have much effect on fuel prices, either way.

And it became an embarrassment, when news that the Resources Minister, Martin Ferguson, had opposed the plan  was leaked.

The government’s embarrassment became acute, a few days later, when another leak revealed that at least four government departments had also advised the government against adopting the Fuel Watch plan.

That’s the rub. The government appears to be incompetent, because it can’t stop its own public servants leaking embarrassing information, about their submissions to Cabinet.

The government’s defence is sound enough. The Treasurer, Wayne Swan, says the Competition and Consuumer Commission, which is the expert in this area, had said that the scheme would probably help to keep fuel prices down.

But there are, also, more fundamental forces, like supply and demand, at work.

Governments, of course, do have a right to reject bureaucratic advice, when they believe that is necessary.

That’s what we have governments for. To make democratic choices. And to take the consequences, if they get it wrong.

But a sense of perspective is needed, too.

Fuel price hikes are certainly painful.

But petrol prices in Australia are still among the lowest in the developed world.

We should remember, too, that oil prices quadrupled, in a very short time, back in the early 1970s.

So far, they have risen by just 60 per cent, in the six months the Rudd government has been in power.

The responses of the two governments have been very different, too.

The Whitlam government came to power, back in 1972, with a big spending program.

It destroyed any economic credibility it might have had, when it persisted with its heroic spending, despite the then rising threat of oil fuelled inflation.

The Labor party has never forgotten that lesson.

With inflation a serious problem, once again, the Rudd government cut deeply into Federal spending programs, when it brought its first budget into parliament in May.

But the present oil price hike will, certainly,  require a careful response.

It is due, in large part, to increased demand from developing countries, such as China and India.

That suggests that higher oil prices will be permanent, this time. It’s time, as Gough Whitlam might have said, to start thinking of smaller cars a better public transport.