Political chronicles Western Australia January to June 2008
Faculty of Education and Arts
School of Communications and Arts / Centre for Research in Entertainment, Arts, Technology, Education and Communications
Grim economic news greeted the incoming Rudd government in early 2008. After a decade of strong economic growth for most of the Coalition's period in office, the prosperity bubble suddenly began to burst in spectacular fashion. Rising petrol prices (over $1.50 per litre), higher inflation (4.3 per cent) and interest rates (7.25 to 9.3 per cent), and a slowing economy (nationally down to just 2.5 per cent growth) haunted the new governmnet even before it settled into office. In the midst of the sub-prime financial crisis, major trading banks also began to lift interest rates independently of the Reserve Bank, as did other mortgage lenders. Local councils were particularly exposed as may had invested public funds in worthless "collateralised debt obligations". The "global financial meltdown" had begun and Australia experienced both a credit squeeze and sharp decline in the share value of companies. The big four banks alone lost market value of $100 billion in just a few months. Media reportslabelled the crisis as "carnage", a "mauling" and a "wipeout". Only mining exports appeared immune from the economic shocks, and the labour market remained tight with unemployment at a thirty-three-year low of just 4 per cent.