Friday, May 14, 2010

Abbott Signals Return To Work Choices

So far, Tony Abbott and the opposition have been scoring political runs by highlighting the failures of the government. And there has been plenty of ammunition to work with: the home insulation debacle, perceptions of wasted money in the school hall construction program, broken promises on childcare centres and private health insurance, and policy backflips on climate change and even the COAG health agreement which wound up leaving the states in charge of the implementation. Despite the legitimate reasons for borrowing money to prop up the economy and protect jobs, the budget deficit has also provided the opportunity for the opposition to accuse the government of spending too much, at the cost of too much debt, with too little to show for it. That’s why Tony Abbott chose to fling Kevin Rudd’s own words back at him last night in the Budget Reply speech and proclaim loudly that “This reckless spending must stop.”

Of course, what we saw last night was more than just a budget reply. It was a campaign speech for the election due to be held before the year is out. As such, the strident criticism is only to be expected, and as long as it seems to be striking a chord in the opinion polls we can be sure that it will continue. However, with the reality of the election drawing ever closer, it’s time for Tony Abbott to deliver more than just criticism. It’s time for him to start outlining just exactly what he would do if he becomes Prime Minister. On this front last night’s speech offered very little, but the little that it did offer should sound a warning. Aside from a nebulous promise to bring the budget back to surplus “at least as quickly” as the government, and a plan to trim the public service through natural attrition over two years, the big moment for Tony Abbott was near the end of the speech when he mounted what can only be seen as a defence of the old Work Choices policy.

Despite prefacing his remarks with the observation that we all know that the previous government went too far, the tone of his voice and the expression on his face seemed to suggest that he didn’t really believe it. Then came the “but”, and everything that followed seemed be an argument that despite its unpopularity, Work Choices was responsible for creating the prosperity that saved us from the worst effects of the Global Financial Crisis. Tony Abbott gave every appearance of suggesting that Work Choices was the right policy and that the Australian people were the ones who had made the mistake for rejecting it. He gave every appearance of blaming us for having the stupidity not to recognize how well off we all were thanks to Work Choices and the Howard Government. Those were not his words, but the nature of his argument can easily be construed as conveying that meaning. Then he sealed it with his promise to bring back individual contracts.

The reason John Howard was so successful was that he was able to appeal to middle Australia, as well as those who aspired to move up to the middle class. He gave rise to the phenomenon of the so called “Howard Battlers”. These were the people who maybe started with very little, but were prepared to work there way to prosperity. They were described as the aspirational voters. Then Work Choices disempowered workers who aspired to better things by eroding their pay and conditions, taking away their bargaining power in the workplace, and disenfranchising them after they trusted John Howard to look after their best interests. That’s when Howard’s Battlers became Rudd’s Working Families. Now, Tony Abbott has the opportunity to win back those working families and convert them into Abbott’s Battlers.

That’s not going to happen if he disenfranchises them again by taking away the means for them to pursue their aspirations.

Thursday, May 13, 2010

How Could We Have Been So Foolish?

While there is continuing debate about climate change and whether the world really is warming up as a result of human activity, one thing we can be sure of is that Kevin Rudd’s temperature was elevated after being accused of abandoning his climate change policy. Asked by the ABC’s Kerry O’Brien about the policy reversal, the Prime Minister appeared to undergo a personality transplant on the spot and actually show some emotion. Of course, if you have seen the footage you would know that it was not exactly an outrageous outburst, but more like a slightly raised tone, and a slightly harder edge with a slightly firmer set of the jaw. In anybody else it would have barely registered, but in the Prime Minister, who has perfected being cool and calm to the point of being robot-like, it was decidedly testy.

Perhaps we have all misjudged our Prime Minister. Perhaps it’s all our fault. Perhaps we just don’t understand. After all, climate change is the greatest moral, social, and economic challenge of our time, and it’s not his fault that the mean spirited Tony Abbott upset the apple cart by voting against the Carbon Pollution Reduction Scheme. It’s not his fault that the Copenhagen conference failed to reach a clear global agreement. We just misunderstood what Kevin meant when he announced that the emissions trading plan would be postponed until 2013 at the earliest, two elections away. We all thought he was abandoning his headline policy, turning with the political breeze and saying what he thought would be expedient. Apparently we were wrong, and what he really meant was that the climate plan had been derailed by the forces of evil so badly that it would take at least until 2013 to get it back on track.

How could we have been so wrong? How could so many Australians have been so badly mistaken that they decided to no longer support the government in the opinion polls? How could we blame Saint Kevin for a set of circumstances which was forced upon him by the opposition having the temerity to actually oppose something? This misunderstanding has so deeply offended our Prime Minister that he was last night moved to call Kerry O’Brien “mate” in that tone of voice reserved for dealing with home invaders who are about to take to your family with a baseball bat. As a result, much has been made about an exchange which would have been completely normal for anyone else, but coming from the Prime Minister has been described as reminiscent of Mark Latham.

Of course, that’s just ridiculous. Comparing Kevin Rudd to Mark Latham is like comparing a negligent doctor to Jack the Ripper. Both of them are dangerous, but only one of them is actually a lunatic. No, it’s all our fault for misjudging the Prime Minister in the first place. Never mind that we might have been led to making false assumptions by the failure of the home insulation program, the wasted billions of the school hall construction plan, and the broken promises for childcare centres and GP super clinics. None of that is relevant. All that really matters is that now we know that Kevin Rudd is not a moral coward for abandoning his own climate change policy at all. He is just misunderstood.

And that my friends, is quite obviously our fault. How could we have been so foolish?

Wednesday, May 12, 2010

The Boring Budget

Well, Wayne Swan promised us a boring budget, and it appears that he has delivered. Imagine that, a politician actually keeping a promise. It’s true that there were no real surprises in the federal budget. Even the triumphant announcement that the budget would return to surplus three years earlier than previously forecast was not unexpected. It has been evident for some time that last years dire forecasts of economic doom have turned out to be far too pessimistic and the economy is already recovering strongly enough to propel a dramatic increase in revenue. Of course, as our politicians are so fond of telling us, we are not entirely out of the woods yet.

The return to surplus is predicated on the return to economic growth gathering pace, not only here but around the world. Some have suggested that such an assumption may be overly optimistic, especially in the light of current events in Europe where the Greek debt crisis is yet to be completely resolved. The trillion dollar bailout plan has certainly helped, but it is too soon to say if it will be enough to prevent further economic ripples washing around the world and rocking our own economic boat, even if it is half a planet away.

The centerpiece of the budget, in terms of new revenue, is of course the proposed Resource Super Profit Tax, and that is also a source of some uncertainty. Firstly, it remains to be seen whether or not the legislation for it can pass when the opposition has already indicated that it will vote against it. Secondly, even if the government can get the legislation through, the question remains as to whether such a hefty tax grab can be sustained by the mining sector. The big mining companies say that it will discourage investment and cost jobs, and it would seem that plenty of Australians are worried that they might be right.

Of course the real trick to any budget is not that it will accurately predict outcomes over the ensuing four years, but that it will provide voters with sufficient comfort that they will be convinced to re-elect the government. In this difficult economic environment, such a task is not to be accomplished simply by bribing the electorate with big tax cuts or big spending programs. The voters of Australia are a bit more sophisticated than that and they know that now is not the time to be recklessly throwing money around without anything of substance to show for it.

That’s why Wayne Swan was aiming for a budget that would be considered to be boring, even though it contains enormously significant structural changes in the form of the Resources Super Profits Tax and the reshaping of health and hospitals funding. That’s why the Treasurer has focused on the accelerated time frame for the return to budget surplus as the headline story from the budget. And that’s also why the opposition will continue to insist that no matter how quickly the government manages to wind back the deficit it just won’t be quick enough.

The gamble for the government is that if international conditions do take a serious turn for the worse, it will make the opposition look like they were right, even though such external effects are beyond the influence of any government.

Tuesday, May 11, 2010

Don’t Hold Your Breath

Can Kevin Rudd lose the election later this year? Yes he can. Can Tony Abbott become the next Prime Minister? Yes he can. Can Wayne Swan rescue the fortunes of the government from the risk of electoral annihilation with his third federal budget to be delivered tonight? Yes, he can. But he probably won’t. After the bucketing taken in the polls over the past two weeks, it would take a budget packed with miracles to arrest the slide, but instead Wayne Swan has promised a budget which will be “no frills” and “boring”. Not exactly the kind of thing to provide a high level of inspiration.

Of course, it is important that tonight’s budget should be responsible, bringing the deficit under control, while delivering on expectations for reform of health, tax and welfare. It is important that the government is seen to be keeping the faith on these matters, and all the more so after the recent policy reversals which triggered the decline in popularity in the first place. Failure to do so would only reinforce the perception that the government has wimped out on its own agenda and has become a “do nothing” administration, bogged down in its own rhetoric.

On the other hand, if the government succumbed to the temptation to use tonight’s budget to try to buy voter support by spending up big, it would destroy any credibility it has left as economic managers. Already the government has been seen to fail as managers of the home insulation program, and the school halls program, but at least the intended purpose of those programs was met, that is propping up the economy while the rest of the world went down the gurgler. But having done that, failure to contain the deficit and begin work on reducing debt now would be seen as an indication that managing the economy was also slipping out of their grasp.

Instead, I expect that Wayne Swan will be true to his word and present a budget which shows the deficit being reined in, while delivering on the health and hospital measures that have already been announced. It is likely that there will be an overhaul of how we handle our personal income taxes, and we might even see some improvements in the way the tax and welfare systems interact. I would even go so far as to suggest that the Treasurer might even wheel out a modest surprise for us all just to provide a juicy headline for tomorrow’s papers. But if I knew what it was, then it wouldn’t be a surprise.

But the bottom line is that even if Wayne Swan’s budget tonight ticks all the boxes, and is a sensible responsible plan which delivers genuine reforms and improvements for everyday Australians, it won’t be enough to restore the government’s popularity overnight. To do that, it would have to be spectacular, and right now the government cannot afford “spectacular”. Instead it needs to be the first step towards regaining the confidence of the public. That can only happen if there are no more mistakes, no more policy reversals, no more stuff ups.

Given the track record, I’m not going to hold my breath.

Monday, May 10, 2010

Standing At The Electoral Precipice

Following the recent Newspoll showing a substantial decline in support for Kevin Rudd, today’s Neilson Poll shows that the result is no anomaly. Both polls show the Prime Minister’s popularity plummeting, both show the Prime Minister’s disapproval rating rising, and both polls show that the Liberal-National Coalition would win an election if it was held today. Between them the two polls are considered to be among the most reliable indicators of public opinion, and there’s no denying that a significant shift has occurred in a very short space of time. So why is Kevin Rudd, previously one of the most popular Prime Ministers of all time, all of a sudden so on the nose?

The conventional wisdom is that it all started with the Emissions Trading Scheme, and the success of Tony Abbott as the newly elevated Opposition Leader in spreading skepticism about climate change. Further damage was done by the deep embarrassment of the fatally flawed home insulation program, along with the wasteful spending of the Building the Education Revolution program, both of which further eroded confidence in the government’s competence. Even so, support for the government remained robust up until a couple of weeks ago. Then it all fell apart, so what has changed?

Firstly, the decision to postpone the Emissions Trading Scheme, no matter how pragmatic, has been interpreted as abandoning a policy which was one moment the “greatest moral challenge of our time”, and the next merely something that could wait until a more opportune moment. Even those who oppose such a scheme were left wondering just what the Prime Minister stands for. Then there was the supposedly monumental agreement to reform health and hospitals, which was supposed to bypass the states, but in the end still relies on those states to actually administer the funds. Far from ending the blame game, the game has simply moved to a new level. And even then, the agreement was only reached thanks to the negotiations of Kristina Keneally, who not only dug Victorian Premier John Brumby out of a hole, but could also be said to have done the same for Kevin Rudd.

Then there was the Henry Tax Review. Out of 138 recommendations, Kevin Rudd picked up just a handful. The big one of course is the proposed super tax on so called super profits of mining companies, which many people interpreted as being an attempt to buy votes with promises of better superannuation and better infrastructure paid for by big multinational mining companies. It turns out however that substantial numbers of those voters seem to believe the mining companies who claim that the tax will kill investment and cost jobs. And who can blame them. After all we have been told repeatedly that the prosperity which has seen us through the worst of the Global Financial Crisis has been delivered by the mining sector, and who in their right mind would want to jeopardize that?

Nobody is yet prepared to say that Tony Abbott has the election in the bag, but right now he appears to have sufficient support to become Australia’s next Prime Minister. Kevin Rudd is standing at the edge of the electoral precipice, and if tomorrow’s budget turns out to be a turkey, it could be the end of him.