THE ABBOTT GOVERNMENT – A MID-TERM REPORT

With reaction to the Abbott Government’s second budget a great deal more favourable that that which greeted the budget for 2014, The Sydney Institute brought together four political commentators to assess how the government could be seen to be doing. Jennifer Hewitt, National Affairs columnist, for The Australian Financial Review, Chris Kenny, columnist with The Australian and Sky News presenter, Rebecca Huntley, social researcher and writer and Dimitri Burshtein from the financial services industry and former NSW Treasury official addressed The Sydney Institute on Monday 22 June 2015.

 

THE ABBOTT GOVERNMENT – A MID-TERM REPORT

CHRIS KENNY

Judgments at the mid-point can be fraught – anyone who’s made the road trip between Sydney and Adelaide will know the town of Hay doesn’t give you much of a feel for either end of the journey.

For governments, we should be able to make assessments mid-term. We should be able to see achievements and direction, and make assessments about that crucial element of competence. But we often get it wrong.

We’re 21 months into the Abbott Government, so as a point of comparison I did a quick refresher on how the Rudd and Gillard governments looked at the same stage. For Rudd we’re talking July/August 2009 and it is a time I remember well, serving then as opposition leader Malcolm Turnbull’s chief of staff.

The GFC had hit, giving the government a challenge but also a sense of purpose; and an excuse to send out $900 cheques to just about everyone – even if they were living in a village in Lebanon apparently. Newspoll at the time had Labor consistently up 55/45 or better on a two-party preferred basis.

The Rudd Government was in control and the opposition was in strife over the Godwin Grech affair (that’s the first time I’ve uttered those words publicly – mainly because I have an aversion to physical pain).

On 11 July 2009, Peter Hartcher wrote in the Sydney Morning Herald: “Labor’s nightmare was that it would win power just in time for the next economic downturn…(but)… midway through his term, Kevin Rudd has turned the nightmare into a political dream.” Hartcher quoted Fairfax’s pollster John Stirton who said, “‘Politically, Rudd is in the strongest position of any new prime minister since Bob Hawke.”

Yet, within a year, Rudd was knifed by his own party and Labor went on to lose its majority. The real convulsions on both sides of the aisle were to come on climate policy – a flip of policy and leader by the Liberals and the abandonment of the greatest “economic and moral challenge of our time” by Labor.

For Julia Gillard, the comparison point is around March 2012, just weeks after Rudd spectacularly resigned as foreign minister from Washington and returned for a bitter leadership rematch. This was when we saw that leaked tape of Rudd doing a message in Chinese and swearing at everyone … glory days.

Down in the polls at the time, Gillard excoriated Rudd. She said the 2010 election was “sabotage” and slammed months of “paralysis and chaos” under Rudd.

Communications minister Stephen Conroy settled old scores: “Kevin Rudd had contempt for the cabinet, contempt for the cabinet members, contempt for the caucus, contempt for the parliament. And ultimately what brought him down a year or two ago was the Australian public worked out that he had contempt for them as well.”

Wow. This was on television. And, in government.

After Gillard handsomely won the spill, the ABC’s Barrie Cassidy wrote about her improving prospects. She’s seen off “Kevin Rudd twice and Tony Abbott once” said Cassidy, building up a “political record to run alongside her legislative record.” Cassidy said Rudd would not challenge again but, rather, would “eventually leave the stage.”

This was also just two months before Wayne Swan famously opened his budget speech with the immortal line; “The four years of surpluses I announce tonight…” Yet, of course, we all know now that we saw only record deficits …. and the dead, buried and cremated Kevin Rudd returned as Rudd Resurrected for the 2013 election.

So, you get my point. Even close to two-thirds of the way through a term, government assessments can be misleading … especially if we look at the superficial media debate rather than the fundamentals of government.

So, to assess the Coalition now, we have to look beyond the bump and grind of daily politics to see where it is really placed. We have to consider simultaneously two separate but related questions – what is the government achieving for the nation and, politically, has it done enough to be re-elected.

My argument for some time has been that Tony Abbott’s government, despite some dysfunction, political mistakes and leadership self-harm has put policy fundamentals in place that favour it for re-election.

In a deliberately provocative opening line in February, I wrote: “For all the Coalition’s failings and missteps, it is surely incontestable that Tony Abbott has provided the best 16 months of government Australia has seen in more than seven years.”

The Rudd/Gillard years don’t provide a very high bar to get over, so it’s not hard for the Coalition to appear relatively competent, even with an antagonistic gallery.

It has had its problems … losing an assistant treasurer to delayed ICAC hearings and a defence minister who was silly enough to mock the government’s own shipbuilding company. It’s started a few battles in the culture wars, but has been unable to finish them.

However, its prime weakness has been on fiscal repair. It overburdened itself with promises in opposition then made the mistake of breaking them in the first budget.

The fiscally insignificant debt levy was the worst of these because it cut across the Coalition’s economic narrative about a spending rather than revenue problem, and it was so blatant that it prevented the government from arguing the toss on other alleged breaches that might otherwise have been defendable.

Abbott also clung too long to the paradoxical Paid Parental Leave scheme – a government that wanted to end the age of entitlement was introducing a new one; a government wanting to wind back the hand of government was increasing the role of the state; and a government intent on cutting taxes was adding a new one to fund this scheme.

The first budget also ambushed the public with radical reforms – such as the Medicare co-payment and higher education deregulation – which I would argue were worthwhile packages badly managed. To deliver reform on that scale you need to instigate a debate about the problem, lead a discussion about the options, consult widely and then announce your considered policy.

Dropping major reforms from on high seldom works – it is surprising the Coalition got this so wrong because the Hawke/Keating and Howard/Costello governments provided the template for this reform advocacy – and the Rudd/Gillard period’s mangling of the mining tax demonstrated what not to do.

What’s worse, because many Coalition measures were introduced and then thwarted in the Senate, the government received all the political odium – for what Sir Humphrey would call “brave decisions” – but none of the budgetary benefits. Joe Hockey’s second budget essentially gave up on the reform task – it was a document aimed at political rather than fiscal repair.

This is worrying because there is much more required – the government has taxation and federation white papers underway and we await some action on workplace deregulation. Still, Scott Morrison has shown in his welfare and pension reforms that energetic advocacy and consultation can achieve change – so there are signs that lessons are being learned.

And, if we look beyond the trials and tribulations, the government has perhaps done enough to underpin success. It has made good on central promises to repeal the carbon and mining taxes. That second budget delivered tax cuts and concessions to small business and signs are that the economy is standing up reasonably well despite the winding down of the mining investment boom and the fall in commodity prices.

The Coalition has implemented strong border protection, ending years of trauma and cost, after Labor and most commentators said it could not be done. The positive impact of this success is underestimated – it has restored the integrity of our immigration system and therefore helped maintain public confidence in a crucial aspect of our economic and social good fortune.

The Coalition has also delivered free trade deals with three of our largest trading partners – China, Japan and South Korea – with the prospective giant of India next in queue. Elsewhere its foreign policy has been adroit, especially in handling the Jakarta relationship through the difficulties of boat turnbacks, the embarrassing spying revelations from the Rudd years, the change of president and the Bali 9 executions.

National security challenges have been generally well-managed in a bipartisan manner although, to be frank, disharmony such as we’ve seen over citizenship changes tends to play to Coalition strengths.

Perhaps the most salient point when it comes to both policy and politics is that while there has been a flurry of movement, both positive and negative, by the government, Labor has been stuck, lead-footed, in the mud of the last election. It hasn’t changed its position on border protection (still rejecting boat turnbacks and temporary protection visas). It still supports a price on carbon – and whatever name it uses, Abbott will call it a carbon tax. And it is yet to concede that it allowed spending to get out of control and that expenditure must be constrained.

Governments don’t get returned in acts of gratitude but rather for what they offer in the future. The Coalition will promise secure borders and be believed, while it runs a scare about a return to chaos and tragedy under Labor. During an extended period of global uncertainty, for all the Coalition’s Senate difficulties, it will be able to argue that Labor is not interested in fixing the budget – that under them debt and deficit will be worse, taxes could be higher.

Labor’s policy indolence means Abbott gets off lightly for his greatest policy weakness – the lack of achievement on fiscal repair. The numbers don’t lie – government spending as a share of GDP is 26.2 per cent this year, right up at 2009 stimulus levels. We are looking at a $33 billion deficit this year followed by $23 billion the year after and just under $10 billion the next, so long as growth holds up.

On the forecasts, revenue will rise to over 25 per cent as a share of GDP over coming years and spending doesn’t drop below that 25 per cent marker. So big government is here to stay for a while yet.

In a political sense, Abbott’s greatest danger must be the internal instability we saw in February’s farcical move for a spill without a contender. The controversy was stirred by poor and arrogant processes, and ham-fisted political decisions (Sir Duke Prince Philip anyone?) and it means Abbott, and his office, must continue to work better with their team and listen to them. That’s a good thing.

But, sadly, this means the Prime Minister will also continue to keep a very close eye on the polls, just to keep everyone calm. And we all know that if election landslides are Viagra for economic reform, poll-watching is a cold spoon. So we shouldn’t expect too much reform excitement from here on in.

Abbott has recovered well from his near-Rudd experience but he knows he’ll never enjoy the unqualified embrace of his party room. Fickle backbenchers reacting wildly to media and polls are nothing new but social media amplifies the effect. The news cycle is not just quicker now but louder, more superficial and more personal.

The art of politics has always been about knowing when to bend to the public will and when to stand on conviction. The feral world of social media – and the way it plays into mainstream media – makes that even harder. On the bright side for the Coalition, this tends to be a bigger problem for the Left, sucking them further to the fringes and away from the mainstream, as they dance to the siren song of the Q&A audience and the twittersphere, leaving the middle ground for others to claim.

The Abbott Government has staked out that middle ground and looks increasingly well-placed – even in turbulent times.

The Abbott Government has staked out that middle ground and looks increasingly well-placed – even in turbulent times. The most fascinating and important question from here is what sort of a reform agenda the Coalition is prepared to take to the coming election.

From this vantage point it’s looking almost as featureless as the Hay plain … but we’ll see.