Until Costello and his ilk on the right accept some responsibility for the current financial crisis, they will remain irrelevant in developing any sort of solution.

However hard Costello tries to claim credit for Australia's relatively strong position, his is still unable to distance himself from the extreme philosophical position of minimal regulation and laissez faire economics. After all, Costello was one of the strongest proponents of this within the former Government, and nothing he has said since the crisis fell has indicated any change in his position.

Perhaps if he were to contrast the steps he took to strengthen regulation of the Australian financial industry with mistakes of overt deregulation made elsewhere in the world, and to put this in a clear philosophical context, he may get some traction. Until then, however, he appears to be a smug ideologue who was lucky to be treasurer in a time of economic plenty due mostly to booming asset prices, excessive consumer debt and the commodities boom.

I find it amazing that anybody could blame Costello for the GFC. Nobody ever says what he should have done differently. People waffle on about not enough regulation, but what exactly do they mean? No Australian banks have collapsed, even Macquarie is well capitalised.

Australia's main problem is too much spending and not enough saving. The banks have to borrow overseas and the credit squeeze is making it impossible for many businesses to get a bank loan. The squeeze is causing a big rise in unemployment.

Kevin Rudd has encouraged consumer spending but ignored business finance. His policies have greatly increased unemployment and lowered our standard of living.

Wattle. No Australian banks have collapsed because the average taxpayer is propping them up.
Profits are given to shareholders and directors in the good times, and the public props them up so the profits keep flowing in the current crisis.
Wealth cannot be wished into existence. When the banks make billions and the net economy isn't expanding this caused net wealth to be reduced elsewhere.
Under Howard/Costello the taxpayer funded non-viable insurance, welfare to the wealthy, restricted funding for public hospitals, schools, roads while giving millions in aid to his family.
Under Howard/Costello the rich got quite a bit richer, and many middle class were made poor. And the poor...well what have *they* done for the economy?
What is *really* bad about their performance is the sure knowledge that if you pump up markets, they will crash. Call me cynical but I reckon they deliberately pumped the economy in order to cash out and hand over an unstable system to the opposition when the inevitable cyclic electoral flip-flop occurred.
I almost wished the Libs had won the last election to see how they would shirk blame for such irresponsible policies.

Ozandy, the only part of your post I agree with is the bit about wealth cannot be wished into existence.

The big four banks contribute about $7 billion in Federal taxes each year. Rudd has offered a guarantee on overseas borrowing but the banks pay for this and the alternative is much higher interest rates.

In Australia, the rich certainly got richer under Howard but so did the poor although they didn't do as well as the rich. This is in contrast to the US where the median wage actually fell while the rich got richer. Howard used Family Tax benefits as a way of transferring wealth to lower income families. The wealth transfer is now in doubt because company profits have crashed.

The market was pumped partly by government but primarily by very low interest rates on money borrowed overseas. That money has now dried up.

I have this vision of the Australian population at the moment just sitting back enjoying giving M Turnbull a few slaps. But what they are really waiting for is P Costello to stick his head back up then Whack Punch him in the face.

The smug smirker was never well like and even less so after his cowardly efforts under Howard. People hated Keating but he got a lot of respect for his knifing of B Hawke. He even got voted in after it.

If Costello has good advice he will stay around just long enough to see off Turdbull and then retire to obscurity without risking an even worse drubbing from the Aussie public than rich malcolm is getting at the moment.

Why do Liberals do this to each other all the time?

I seriously doubt Costello will make any move , why would he crucify himself for a lost cause ? How could he win the affection of the voters who think someone else will pay Rudd's fanciful debts .

Rudd's borrowing means someone else will own our resources .

Our new Schools and the Rudd Internet to everywhere will be paid for by Chinese money and the Chinese will be reimbursed by our children's children .

Costello wouldn't want to be less popular than Adolph Hitler like he would be if he adjusted up the GST to 35% to get the Chinese Tiger off our backs !

Costello didn't have the ticker to challenge Howard, he didn't have the ticker to take on the task of opposition leader after Howard's defeat and I doubt if he's got what it takes to be Prime Minister. I just wish the Victorian Liberals would see this and pre-select someone else to run for his seat at the next election. I don't think they can afford to pander to his self-serving behaviour and refusal to use his talents for the benefit of the party and those who want see an effective opposition taking the fight to the Government.

I thought Malcolm Turnbull would perform a lot better.In our most dire time of need ,we seem to have a leadership void.If the Libs don't consolidate soon,they will lose the next two elections.

While labor is running rampant, I think Costello has made a wise choice to let someone else assume point position and take all the hits, especially during labor's honeymoon phase.

When chickens come to roost after labor's wild spending frenzy and interest rates hit the roof again, Costello as the fiscal conservative will be able to step in with "I told you so" and offer a alternative leadership that the public will understand.

In the interim, all the new first home buyers can expect to lose their shirts when the economy recovers and the debt pushes interest rates to levels of about 17% as per previous labor administrations.

Wattle,
While Costello & Co didn't single-handledly cause the GFC, their actions certainly contributed to our vulnerability.

As well as selling off much of our public assets (mostly to overseas owners) and gold reserves, they increased the total national debt to over a trillion dollars.

This was mainly due to them embracing Greenspan's economic theory of keeping downward pressure on wages while providing access to lots of cheap credit so people were encouraged to borrow to fill their consumption gap while being fed the line of never-ending prosperity and growth.

Costello was just copying what the US was doing while riding a resources boom - hardly an economic genius.

If he came back to the front bench now he would have to explain the consequences of these decisions.

17% interest rates when interest rates were high across the globe?

As I recall this was because the economy was growing too fast, not because of debt.

Better not mention them being 22% under Treasurer Howard during the 80's.

Peter Who?

Rache,

Interest rates never reached 22%, the highest was 17% under labor when growth rates dropped to close to zero. (an economic achievement).

The highest growth rates and lowest average interest rates occurred after 1996.

Looks like Costello loses going by the above write-ups so far.

If the earlier political climate was any example, certainly Costello was one who gained from the illicit boom which grew from the late 1970's Get Big or Get Out deregulationary spinnaway.

Only thing we could say for Costello that though he might have wondered where all the profit was coming from, he knew how to save it rather than worry about it.

Now with the financial turn down rather than the uppity up up, one wonders what would be his jingly recipe right now?

Shadow Minister,

In April 1982 the home loan rate was 13.5 per cent.

But it was a time when banks were regulated, home loan rates were capped by the government, and you would probably only get two-thirds of the loan to buy a house.

You would either have to have a huge deposit, or would have to get the rest of the loan at a finance company or credit union at a much higher rate, and end up with a cocktail of loans.

The Reserve Bank stats don’t show what credit unions rates were at this time, but large businesses were paying 17.5 per cent to borrow money, and the first reference to building society rates was 14.8 per cent in December 1982.

There was also no Reserve Bank cash rate target on which interest rates are based on today and which the Reserve uses to guide monetary policy.

The equivalent - the rate at which banks borrow and lend to each other - was purely set by market rates.

And on April 8, 1982 the 90-day bank bill rate did indeed hit 22 per cent.

Official market rates on that day at the so-called 11am call were 17.50-18.50 per cent, and the 24-hour call rate was 20.50 per cent.

If this seems like a selective definition, then it's no more so than the spin of "interest rates always being lower" under the Libs.

Rache,

In 1981/2 the US treasury bond interest rates were between 15 and 20%.

The interbank capital exchange rates would be in that order as those are the rates that banks lend to each other, and the US market is where the majority of Aus banks get a large chunk of their funding.
The 13.5% cap was to reflect the long term bond rate and to give short term relief to bond holders.

In 1990 the US treasury bond rate was about 8%, and the 17% rate reflected the long and short term rates and was entirely home grown.

http://www.treasury.gov.au/documents/1496/PDF/01_Debt.pdf

Perhaps this will enlighten you. Note Chart 5 and the positive correlation between labor and public debt.

To quote "Socialism is great until you run out of other people's money to spend."

Shadow Minister,

To paraphrase that Margaret Thatcher quote - "Capitalism is great until you run out of other peoples assets to sell".