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

JENNIFER HEWETT

It’s good to be here but one of the disadvantages I have discovered in talking to The Sydney Institute is the need to go back to the last speech and see what I thought at the time. It’s a sobering experience. The last time I addressed The Sydney Institute was 200 days into the Abbott Government before Treasurer Joe Hockey’s first budget.

I have to say I was a lot more optimistic about where we would be now.

I did warn that Abbott was still finding his sense of direction, that he had made many, quite a few, silly mistakes and that he would need to do much better to cope with the coming challenges and to manage the need to take the public with him.

But I still believed that Labor had – once again – continued to underestimate and misinterpret Abbott and his willingness to take on the hard choices facing the country. That included persuading the voters of why they were necessary, while also positing a convincing story of the opportunities opening up for Australia.

I also said Abbott had been less prone to obvious gimmicks than his Labor predecessors and realised that, in the end, gimmicks only work if there is a consistency of policy and principle behind them. Which is why it was important, I stated, that Abbott told the Coalition party room that it was even more important to stick to principle as a sort of lodestar in tough times.

Well that commitment to principle certainly hasn’t been too obvious over the last year, has it?

Of course, Abbott’s promise to be a no surprises government was always going to be quickly flawed given the inevitability of nasty surprises visited on any economy and any government.

But Abbott’s initial view was that real reform could wait until a second term and after Labor’s messes had been cleaned up. This was always misplaced. It always required an overly optimistic view of how government works in terms of both timing and outcome given the economic challenges Australia faces – and the fast pace of change in the rest of the world.

Unfortunately, now I think that the government’s initial judgement on how to handle its approach just looks absurd. And that’s not just because many of the government’s proposed changes were stymied in the first year of its first term. It now looks as if Abbott is willing to rule out more than very modest changes for any second term of government as well.

This is as part of the necessary down-payment in managing to get even just a lukewarm endorsement by the community to win a second election with, at best, a much diminished majority.

I still think – despite the polls – that it will be very hard and unlikely for Labor to win the next election and, correspondingly, that the Coalition is likely to be returned – although without any enthusiasm from voters. Abbott has certainly tightened his messaging and his grip on the party room since his near death experience of February this year.

But the harsh view is that the main appeal of the Liberals at the moment is not so much that they still have the potential to be a good government but that they wouldn’t be as bad as a return of Labor. That they effectively will do less harm rather than more good.  This may well be true but it’s far from inspiring or even adequate leadership.

Now, it is true that Australians do tend to believe too much in the power of governments to fix things. But articulating and delivering on a clear sense of policy direction is very important in providing the confidence for the private sector to try new things and take on new risks.

The very different success of the conservative Key government in New Zealand is in increasingly stark contrast to the sense of milling about that is now standard operating procedure in Australian political leadership. It’s why the business community is so frustrated.

Certainly, part of this sense of just going through the motions in much of government is the very obvious difficulty of dealing with the Senate and with the states. The Coalition did woefully overestimate its ability to deal with Palmer United Party senators and independents last year.

Yet, even the government now likes to say it made wrong decisions in its first budget, failed to explain things and “tried to do too much”. I love that last line. But it also means conceding that the Senate opposition, in some senses, saved it from itself in terms of unpopularity and bad choices. That’s a little odd.

It is also why, of course, we had such a very different second budget which focussed far more on giving out tax breaks to small business rather than cutting any spending. Back to shoring up the base, as one minister explained it to me.

I still think the larger issue is the government’s failure to explain where it is going and why, to create a positive vision of future possibilities as well as challenges. This affects Canberra’s relations with the states too, a situation made even more difficult by the election of the new Labor government in Queensland and the Andrews Government in Victoria and the unpopularity of the Barnett Government in traditional conservative heartland in WA. No wonder everyone’s so keen to praise Mike Baird. He really is the best friend Tony Abbott has. I hope to be wrong but I don’t think the casual get together with the state premiers next month will achieve much despite a late entry from South Australia

That’s why it’s even more important for Canberra to create what politicians like to call a persuasive “narrative”.  I am not underestimating the difficulties of doing so, especially these days.

It’s always hard, given the inevitability of unexpected problems in the economy or sudden political train wrecks. In an environment recovering from the combination of the end of a mining investment boom and dramatically falling terms of trade and an economy constantly said to be “in transition”, it’s much tougher still. In a fragmented but constant media onslaught and political messaging, it is very complicated indeed.

Nonetheless, the Coalition has had some notable successes – such as the free trade agreements with China, South Korea and Japan. So far, their appeal is more theoretical than real to most of the population. But they are also a useful political counter to the campaign initially run by Labor – and followed for too long by too many in the media – that Abbott was not sophisticated enough to cope with international relationships.

Despite the tensions, particularly with Indonesia and the growing unease about China’s expansive intentions, the Abbott Government has by and large negotiated tricky terrain reasonably well. Certainly as well as Labor would be able to. Julie Bishop and Andrew Robb remain extremely effective in their respective roles.

Abbott has also obviously used this broader foreign policy issue to promote the government’s national security credentials on terrorism. He is confident this will be popular with the public despite the quibbles of lawyers and many in his own party. He also can’t resist the temptation to lambaste Labor for being soft on terror. Sometimes, as with last last week and Abbott’s lines about Labor rolling out the red carpet for terrorists, it can be a little hard to recall who was PM and who was Opposition leader.

Of course, there are different views within Labor and vulnerabilities for the Coalition to exploit, but the politicised nature of the government’s attack made it obvious that the real strategy was to undermine Shorten rather than to build any national political consensus or political cooperation. That, I think, does not serve Australia well even if it serves the Government’s short term tactics.

Abbott told parliament today that Labor wanted to tax super, raise rents (presumably by changes to negative gearing) and bring back the boats. Easy one liners of attack but not much more.

The sudden flurry in Labor over the idea of means testing for public schools thanks to a draft paper from PM&C was another nonsense. As well, as a waste of time for senior bureacrats given the government’s attitude.

Labor’s confected outrage on the suggestion a schools tax was also fatuous. And none of it from either side had anything to do with the very real need to improve teacher quality in Australian schools and produce the skills necessary to do well and compete in such a globalised leaders world.

But even in such a globalised world, the real problem for Australia remains domestic economic momentum and the sort of major structural changes necessary to underpin a modern vibrant and resilient economy.

Despite haphazard attempts by Hockey – again at the CEDA conference today, to make the case for the necessity of that shift and the possibilities of future growth based around new markets and services in Asia, the combination of Hockey and Abbott is nowhere near consistent and persuasive enough in putting this case, let alone developing the policy to go with it.

Nor do I think they have a coherent view about what this new economy will look like beyond talking about the idea that the digital economy and digital disruption are totally changing traditional business models. That’s partly because it is unpredictable.

But Hockey in particular makes clumsy comments too often, which, fairly or unfairly, distract and divert attention too easily. Meanwhile Malcolm Turnbull, who can talk best about this, is largely written out of the government’s economic script.

Scott Morrison is better at getting deals and in forcefully making a case. But he is primarily focused on particular deals like pensions or child care. While these are important, they are not the means to growing an economy or removing impediments to constant innovation by business or doing more to encourage the type of education and training that creates a skilled workforce

The real risk to the government is the prospect the economy will stay sluggish indefinitely. Bill English told me that back in 2008 at least New Zealand, in the depths of recession, had the advantage of being able use adversity as the lever for the community’s acceptance of change, of the population realising things couldn’t just stay as they were.

That acceptance is not apparent here. There are many reasons for this, including often the failure by business to take up opportunities or risks or possible changes. But the lack is not helped by a government so far unable offer a large and positive vision for the country beyond talking about the need to reduce regulation and red tape and costs and free business to find its own opportunities and to create new jobs. Oh, and to have another review.

So I regret to say the report card for the Abbott Government, at this stage, is barely a passing grade. Saying that Labor is actually failing that same test doesn’t lift that mark any higher for the government. And the description “could do much better” is not a particularly satisfying outcome for anyone.