Would you like to ride in my beautiful balloon

Would you like to ride in my beautiful balloon

We could float among the stars together, you and I

For we can fly, we can fly

Up, up and away

In my beautiful, my beautiful balloon

Up, up and away indeed. So the old Fifth Dimension song goes.

And if you had asked Australia's Treasurer, Peter Costello, the ruling coalition's chief head-kicker in Parliament, he'd have gladly sung for that tune, and even ridiculously jigged along.

Why? Because the Australian economy, at 3% GDP, is sailing. So much so, Costello would've happily karaoke-d the raspy-voiced Rod Stewart's old number, Sailing.

Though Prime Minister John Howard would not be outdone by Costello, his heir apparent, who has been praying for years that his boss would quit politics soon after the next election, due this year.

On April 12, Howard characteristically duck-walked to his presidential-style, open-air press conference at his office in Parliament House in Canberra. And there he stood, savoring the moment, smirking, like the Cheshire Cat. Why? The economy's latest monthly numbers had just been released. There are, it seems, no two ways about it: it's good. It's all good.

On that news alone, the Australian share market spiked to a new record. The little Aussie didn't look so little anymore. It, too, soared, breaking through US83.30 against the greenback the next day, the highest it has been in 17 years.

Then again, the US dollar has been weakening for quite some time. Even so, Howard and Costello aren't worried. Their thinking isn't unlike the early days of Japanese and South Korean economic miracle mantra: a strong economy is a strong country.

And, in an election year, in such rarified, good economic times in Australia as today, the strong Australian dollar reifies that mantra.

After being hammered week upon week in one public opinion poll after another, Howard now sees in the economic numbers an opportunity to claw his way back to front and centre of voters' minds. They've been deserting him in droves. These numbers, made in heaven, may just do the trick against a resurgent opposition Labor Party. Or so Howard thinks.

Saving grace

For all his other weaknesses, most of which have been aggregated since his deception over the boat people soon after 9-11 to linking national security to Washington's manic military adventurism abroad, his one saving grace will be, he hopes, his record on national economic management.

Here, the conservative media says Howard is formidable. If he is, it's only because the opposition Labor Party has been weak on economic policy alternatives. Nevertheless, a number of Howard's claims are questionable, even scurrilous.

At his now normalized presidential-style press conference on April 12, Howard claimed the unemployment number of 4.5%, a 32-year low, as his government's doing. It s true: Australians have never had it so good.

Under the Hawke-Keating Labor government, interest rates had skyrocketed to 17% in the 1990s. Adult unemployment hit double digits. Youth joblessness hovered around 25%. The budget faced massive deficits. Government raked up debt as high as Mount Everest.

But those days are a distant memory for many Australians. Today's talk is about full employment. There are hopes of this reaching 4% in the next 2-3 years. Costello, who was in Washington for an International Monetary Fund meeting, would hymn only this: "Let see how low we can go".

Howard wasn't so coy. Having created 276,000 new jobs in the last year, Howard attributed this spectacular growth to his industrial relations legislation and workplace reforms.

"What I'm doing today," Howard said, "is pointing out that WorkChoices (has) in fact contributed very significantly through the abolition of the unfair dismissal laws ... to a reduction in the number of unemployed in our community, and I think that s a wonderful thing".

And this gem: "I do believe after a year, and a year in which 276,000 new jobs have been created, it is reasonable to assert that one of the contributions to this spectacular growth in employment has been the removal of the unfair dismissal provisions under WorkChoices".

To which the Labor opposition leader, Kevin Rudd, responded: "I think pigs might fly".

He's right. The problem is just that: Howard's assertion. And that's all it is: an assertion. No senior Labor economist has been able to find any credible evidence linking Howard's WorksChoices to jobs growth. None. Even Howard cannot produce that evidence, which is why he can only assert the claim. It's too easy.

For Labor's Rudd, the jobs growth is a result of the resources boom. "The mining boom, the resources boom, is throwing into the economy some $55 billion a year," Rudd said.

"If you look at where most employment growth is occurring, it is occurring in the resource-rich states."

That means Western Australia, primarily, and Victoria, New South Wales and Queensland. In fact, it's the vast resources boom in Western Australia, principally, that's red-hotting the rest of the Australian economy.

Riding on sheep's back

Two things about which Howard was certainly coy at his press conference was just what kind of jobs were created since his WorkChoices reforms came into play, and what will happen once the boom resources dissipates.

Take the second issue first. It'll dissipate if countries like China and India that have been chugging along and carrying the rest of Asia, don't quit snorting fires from the bellies of their rapidly industrializing economies any time soon.

And it does not seem likely for another decade, at least, unless the Chinese and Indian governments wreck their macroeconomic policy balances.

The real problem in these economies, especially China, of which few experts can tell with any degree of accuracy, is just how well Chinese businesses are being managed. For if they sink, because of their shenanigans, they'll fold one after another.

It'll swamp China and bury foreign investor confidence before Beijing can say boo . Everybody will lose, including Asia, even the Americans.

However, if the American economy goes into recession in a big way, and it'll have to be a huge recession, it'll hurt China big time, and that'll hurt Australia squarely.

Because, although Howard won t admit it, the old story still rings true: Australia continues to ride on the sheep's back. Only this time Australian sheep are ferrying minerals, mostly to a ravenous China.

So where are the real jobs in the Australian economy? The mining sector has been attracting workers away from traditional productive sectors, including manufacturing, which is closer to decimation, and agriculture, which is facing its worst drought in five years.

Miners salaries are between A$70,000 and $100,000 per annum. Even security guards are reaping huge salaries. But they'll have to put up with the harsh remoteness of outback Australia.

The construction industry is the next biggest employer in Australia. But there's a dire shortage of workers in every sector of the economy.

There's another sector which has taken more new entrants: services.

Which, specifically? Hospitality. Food, beverages, cafes, restaurants - all of whom are run by small businesses. And it's the small business sector which is as chuffed as corporate Australia about Howard's industrial relations laws and workplace reforms.

Whining businesses

Once small business owners whined constantly about the unfairness of unfair dismissal laws of their staff. Now they're happy about who they can hire and fire and the conditions under which staff will work.

In most cases now, they wouldn't have to justify their decisions legally or morally, including paring down wages, holiday and penalty pay rates and entitlements, including sick leave and redundancy.

But guess what? Like retailing, also owned mostly by small business, this sector has raised its employment growth by wait for it a net 1%. Big deal.

Howard says that 96 per cent of the jobs created in the past year were full-time, compared with 61 per cent the previous corresponding year.

While the March jobs figures show that part-time jobs are being converted into full-time positions, with 31,000 new full-time jobs created, some 21,000 part-time positions were also lost.

It's how the government crunches the numbers and spins out the story it wants people to hear. If Howard is fair-dinkum about his WorkChoices pudding, why are the queues at job centers still a mile long?