People were just not prepared to believe the economy could contract so fast and hard, after being told by John Howard and Peter Costello that growth was powering along. Voters were also led to believe the GST would be good for the economy and good for them, despite independent warnings that the housing sector would collapse after the introduction of the new tax system. If the economic growth figures for the next quarter show Australia has slipped into recession, voters will be even more annoyed that they were not better prepared for it by a government that told them everything would be hunky dory. The Prime Minister is also trying to manage the switch from emphasising the national interest and the need for economic reform to appealing instead to the bush constituency, which is sick of deregulation. This included his backdown on petrol and has also prompted a very ambivalent reaction from the government to the prospect of promising the full sale of Telstra.
Full privatisation is like a red rag to a bull in the bush.
Therefore the government has effectively shelved the issue until after the election, much to the irritation of the investment sector. However, the government is reluctant to publicly ditch its policy because it is included in the budget's forward estimates and would prompt an even worse reaction from the markets, already jaundiced about the government's conflicting messages and the economy's prospects. While Howard managed the petrol switch by admitting he had been wrong, and the economic dip into negative growth by apologising to some, he looked shop-worn. According to one Liberal Party MP yesterday, voters have marked down Howard as a consequence. Howard now looks like a politician who will do anything to win the election, instead of an economic reformer willing to take unpopular decisions in the national interest.