Keating, GST, Spending Cuts, And A Budget Debate Worth Having

THE TARGET may be awry, but its objective is not: former Prime Minister Paul Keating yesterday said government spending could be slashed by $90bn per year — or 20% — to fix the federal budget without endlessly lifting taxes; Keating is not only right, but his words are a siren call to the spineless minnows on all sides of politics who live in perpetual fear of electoral doom, lest efforts to rein in haemorrhaging red ink produce so much as a single loser.

It really does say something — and render horrific judgement in passing on the 226 individuals sitting in elected sinecures in Canberra, along with their thousands of mostly useless advisers — that the clearest message to date on fixing the stinking mess that is the federal budget should come from a former Prime Minister booted out of office 20 years ago, and whose heyday and (deserved) reputation as a reformist Treasurer was at its zenith a decade before that, but there you have it: like him or not, Paul Keating can still cut through the bullshit.

I have been thinking about his remarks yesterday (predictably seized upon by the government and opposition in Question Time to try to bludgeon each other into submission) and they form a useful starting point not just for a debate about how to fix the budget, but also to consider additional reforms beyond that (and yes, I’m talking about lifting and broadening the GST) that keep it sustainable into the future whilst enabling massive cuts across the board in direct taxes and the elimination of some of them altogether.

And in that vein it says something, too, that what I say today will likely never form the basis of any mainstream political party’s blueprint; the ALP, Communist Party Greens, and all the other state socialists who think taxing hell out of everything in sight in order to shovel largesse out to “the underprivileged” as a way to buy elections is the way to perpetuate a “civilised” society will leap down my throat. Those on the Right (or who claim to be) will simply distance themselves from the points I make: for them, cutting into the Labor-woven social spending infrastructure is a path paved with peril, and these gutless types who are incapable of selling an idea (let alone come up with one themselves) will simply dismiss me as a crackpot.

But let’s look at a) what Keating has had to say; b) how his initial $90bn in savings could be redeployed; and c) how this could form just the first stage of a two-step process for comprehensive reform of Australia’s tax system, which is cumbersome, uncompetitive, labyrinthine, and ripe for evasion and abuse.

Keating’s central (and I would have thought, obvious) point is that “what the world pays us” — i.e. the proceeds from exporting things like mineral commodities — has fallen, which in turn is eating into both personal and company tax receipts, and that rather than simply jacking up taxes in whatever way possible to enable the shortfall to be covered, cuts in spending are the logical and requisite path to budget repair.

Too much has been said, on both sides of the political divide, about whether Australia has a “revenue problem” or a “spending problem” and it should surprise nobody that both sides are capable of producing immaculately sourced and referenced statistics, pie graphs, bar charts and other impressive-style (but worthless) paraphernalia to “prove” their case and debunk that of their opponent.

But as a small-government conservative with a philosophical distaste for the idea that government not only knows better than its citizens but that it should be the arbiter of what monies are spent and where, it is hardly a generalisation to suggest that too much of the money doled out by federal governments is tax revenue being stolen from the Australian public and abused in the form of electoral bribery that is tantamount to institutionalised corruption.

Federal governments pay for “black spot” road programs in local council areas in which they have no road funding responsibilities. They promise a few million dollars to help revamp a local sports stadium. They cough up $10,000 to first home buyers for a grant that makes minimal difference these days to the affordability of housing but which still soaks up billions in outlays. They provide funding to propaganda-peddling groups like this one that ought to be community-funded (or not exist at all, ideally). They gift money into low-income earners’ superannuation accounts, from a defunct tax that raised no money, for no other reason than to bribe to poor.

On and on it goes.

This is a problem that has existed for decades, but which has really taken on a life of its own in the past 20 years: ever since the Howard government introduced modest levels of so-called “middle class welfare” which in themselves have driven up the costs of everything they were meant to alleviate — the home owners’ grant is a case in point; the “baby bonus” is another; there are plenty of others — and all of it, all of it, is money taken from Australian residents and citizens to be arbitrarily pissed up against a post in whatever politically expedient fashion best suits the government of the day.

This country is in real — perhaps where its fiscal arrangements are concerned, existential — trouble, unless drastic steps are taken to bring the avalanche of unaffordable and unjustifiable spending to a shuddering halt; I’m politically pragmatic enough to acknowledge that there are limits to what might be done, and that any systemic program of cuts is more likely to be a process rather than some wham-bam-thank-you-ma’am king hit. But unless that process starts very soon, the prospect of fixing Australia’s debt and deficit spiral may well evaporate altogether.

But to go down the path Keating alludes to (and to which I’m a ready subscriber), whoever forms government in Canberra will need a few attributes that are conspicuously lacking at present: ideas that target the problem at its core, rather than reshuffle it and perpetuate it by creating “new” spending from “identifying savings” in a zero-sum game. The ability to communicate and sell those ideas in the form of policies to an understandably jaundiced and cynical electorate, which has rightly come to expect nothing from politicians in order to avoid disappointment. The backbone to take risks, to make decisions, and to pursue policies that are actually right in the knowledge that inevitably, some people will lose out. And above all, the intellectual honesty to concede publicly that governments of both political stripes have been playing fast and loose with taxpayer cash for decades, and to admit that the vicious spiral of largesse simply has to stop.

Keating talks of sitting in the Expenditure Review Committee for 10 hours per day for ten weeks of the year, looking for ways to cut government outlays and in the process slash government spending by 6% of GDP: this is exactly the approach that must be taken now, with spending running at or near historic highs. So much is now handed out by the federal government for no credible reason that Keating’s target of $90bn in annual savings should be a cinch: his target figure might be awry to whatever degree, but the sentiments and objectives that underpin it are not.

If it means a whole lot of people all lose a bit here and a bit there, then so be it; they will also get something back, as I will discuss shortly. But government isn’t meant to be your big brother or your nanny, who gives you cash and tells you what to buy with it, just like it shouldn’t tell you what to say or think or do. Government in Australia is guilty of doing all of these things, and it’s time it stopped.

So without bogging down in the minutiae (which in any case is impossible: I don’t have thousands of hours to go through the budget line-by-line on my own time), let’s accept the Keating figure of $90 billion per year is correct.

Remember, at this point, we’re talking about $90bn in expenditure cuts which won’t affect revenue in any meaningful sense; for the purposes of my point, we’ll divide that $90bn into three chunks.

The federal budget deficit is currently running at about $45bn per year: the first half of Keating’s $90bn in spending cuts eliminates it altogether. Hey presto, the budget is balanced, or even slightly in surplus over a four-year estimates period.

Of the remaining $45bn, half of it every year should go directly to paying down the principal component of Commonwealth debt; in 15 years’ time, the government debt pile is approaching zero (or, if it’s possible to renegotiate those obligations, combined with ongoing reductions in interest payments, it may in fact have reached zero). The progressively falling interest on the debt is a secondary source of budget savings that will grow over the 15 year period as it did during the Howard years.

My reasoning in setting this out over 15 years is simple; the debt burden we face today — accounting for inflation — is roughly double what the Howard government inherited in 1996; it stands to reason that it will take roughly double the time to get rid of it if the hard calls on cutting spending are made. Many people remain blissfully unaware that whilst the Howard government left the Commonwealth debt free, that milestone was only reached in late 2004: almost a decade after the Coalition was elected. 15 years to get rid of some $400bn in debt in today’s dollars seems a realistic timeframe.

The remaining $22.5bn should simply be handed back to where it came from: the taxpayer.

With such a large amount of money to play with, big changes that would otherwise be prohibitively expensive become possible. The tax-free threshold could be lifted from $19,200 to $25,000, for example; that $50 per fortnight everyone clamoured to have added to pensions and unemployment benefits a few years back might be possible. The PAYE tax scales could either be indexed to end the scourge of bracket creep and/or flattened, thresholds lifted, or the rates reduced. The options are almost endless. But for the whole thing to become possible, a government must first find a spine: and an opposition (in the present circumstances probably a forlorn if not utterly pointless hope) would need to behave responsibly, and desist from mindlessly opposing everything simply for the hell of it.

Yet even for those who say the number of losers would be too punitively high to make such a wholesale overhaul possible, I’d counter very strongly that most of those people would get back the money in their own pockets to make the decision to pay for whatever was taken away themselves; this is how it should be, and even if a zero sum game in the end, what we’re talking about — ultimately — is curbing the lethal culture of government being involved in things it shouldn’t be, and empowering people to make their own decisions on how to spend their money.

I would point out that for those who are wont to crap on about “Tory tax cuts for the rich” and similar melodramatic twaddle, I have included measures that would benefit the least well-off in my list of possibilities.

But once we get this far, I think there’s a strong case to go even further.

It is a fact — whether your political outlook permits you to like it or not — that taxes on consumption are more efficient, more sustainable and more straightforward than taxes on income; this is why many countries (not least the economically glittering jewel three hours’ flight east of Sydney and Melbourne) have in recent decades enacted the “tax switch.”

The application of Keating’s thesis, as I have theorised above, is just the first portion of what can and should be a two-tier process for a colossal overhaul of this country’s taxation arrangements.

If I haven’t lost readers just yet (and if people aren’t screaming at me for advocating, once again, a healthy dose of orthodox Tory finance), I disagree utterly with those who claim there is no case or reason not to lift the GST and to expand the base of goods and services it covers.

Most comment on the issue of broadening the GST base notes that healthcare and education should be exempt; I agree, and believe financial services (or at least that section of the financial services industry that applies to retail banking and consumer items like car insurance, home and contents insurance, personal loans and so forth) and residential rents should also be added to that list.

All other goods and services should be subject to GST — yes, that means food too — and as comment in the Courier-Mail observes today, the bulk of the GST burden on fresh food would disproportionately fall on wealthier consumers. There goes the “smash the poor” counterpoint, although in any case, I will deal with that, too, in a moment.

I think the rate of GST should be lifted to 15%; and as consensus seems to dictate, those changes would raise a further $35 billion in consumption tax receipts. A program of closing existing tax loopholes (I mean actual loopholes like deductions, not arbitrary imposts on “the rich” or other ideological gobbledygook) would probably push that pot of additional revenue billions higher still.

In return, the states could abolish stamp duty on residential property and/or payroll taxes; the company tax rate could be cut from 30% to perhaps 25%; PAYE scales could again be adjusted — one of the ideas I’m leaning to here is to align a 25% company tax rate with a 25% PAYE bracket that covers income up to $250,000 per year — thus eliminating the avenue for tax avoidance through incorporation; fuel excises could be slashed; another $50 per fortnight could be added to pensions…and of course, a fair chunk of the money would end up with the states, whose unfunded liabilities to provide health and education services should, finally, be resolved, although I must note that whether or not state governments behave responsibly, and not go on spending sprees with their newfound GST booty as they did in the 2000s with nothing in the end to show for it, is a question for them.

The end destination would be a debt-free federal government within ten years that does not throw money at everything in sight to buy it off: the sort of irresponsibility that will never be excised from electoral politics, I know, but which right now needs to be quite literally attacked with an axe.

It could see people earning less than $30,000 taken out of the income tax system altogether; it would realign Australia’s personal and company tax rates to make them competitive with most comparable countries; it would target more direct aid to those who most need it, whilst studding the system with incentive and reward for effort at the other end; and it could render redundant a raft of state taxes and charges that might be incremental in scale, but which all add up to overrun the capacity of the individual to make ends meet.

These do not need to be complex arguments, and if set out clearly and logically, do not need to sound the death knell for any party proposing them.

Indeed, I may have been a little muddled in recording my thoughts and I apologise: one, it’s already 3am and I’m tired; and two (and more to the point), I’m very passionate about this stuff, and the temptation to let it just to flow into print is one I have to temper with oversight of what the reader will see. Sometimes, that gets to be a difficult line to navigate.

One thing I would like to emphatically point out is that I have refrained from ripping into either major political party today, and to the extent I have criticised, both sides have received a bit of the treatment: today’s post isn’t to score political points, although it is obviously an expression of conservative economic principles. I just wanted to run with Keating’s comments, and apply them to some ideas for real tax and budget reform that are positive in outlook even if the hard political courage and determination to enact them is in short supply at present.

But were a program like this to be set out as a two-term economic reform strategy by, say, the Turnbull government — with the first stage presented to the electorate this year, and the second subject to a further mandate three years hence — and were that program explained clearly, sensibly and logically, and capably sold by the government’s communications people in the proper execution of their duties, then I think the reservoir of public support would run very deep indeed.

What do you think? I didn’t come down in the last shower, and I have been around politics long enough to comprehend just how hard this kind of fundamental change can and would be to implement.

But with one eye on the country’s problems and the other on the Senate (and how to get control of it at an election, or close enough to it to render it functional), if anything could kill both birds with the one stone, I think an integrated tax and budget management package along these lines is almost certainly it.

 

Labor Pain: Even Hawke And Keating Support Spending Cuts

PRESSURE IS RISING on the ALP and its “leader,” Bill Shorten, to stop their mindless obstructionism and allow government spending cuts to pass the Senate; with Labor legends Bob Hawke and Paul Keating lending their imprimatur to the need to urgently restore the federal budget to health, the cynicism and sheer bloody-mindedness of the ALP’s blocking tactics are stripped bare: not that further proof of their hypocrisy is required.

It must be galling, if you’re Bill Shorten, to find two of Labor’s most successful modern leaders publicly repudiating your entire political strategy; that is what Bob Hawke and Paul Keating have, in essence, done, and it’s time Shorten — and his erstwhile colleagues — woke up to themselves.

Not content to have merely served in a government that did its level best to bankrupt Australia (an enterprise foiled, in no small part, by the solid condition in which the books were left by John Howard and Peter Costello), the ALP has refused to allow a single bill containing expenditure cuts pass the Senate since Parliament reconvened after last year’s election.

To date, this has involved some $20bn in spending cuts, including — damningly — $5bn in cuts the ALP itself proposed from government.

The best we can say about that is that it really does show how much backbone there is to the “conviction” the ALP rattles on about nowadays.

Now — speaking on the occasion of the release of cabinet papers from 1986-87, during the Hawke government — both Hawke and Keating have urged the Abbott government to cut expenditure deeply and rapidly to restore the budget to health, likening the present mess in the nation’s books to that which confronted them in 1986 at the time of Keating’s infamous “banana republic” remarks.

Implicitly, these calls crucify the present incarnation of the ALP and the wilfully destructive course it has determinedly embarked upon.

In the interests of expeditious use of space, readers can access this report from The Australian, detailing the comments of the two former Labor leaders.

It is interesting that the best Labor figures seem to be capable of in response is to bluster and to obfuscate; shadow Treasurer Chris Bowen seems to be the designated driver of the ALP’s response, and his replies speak of “a con” (in relation to the Coalition’s declaration of a budget emergency) and the singling out of a decision to abolish the means testing of the private health insurance rebate that was introduced on the watch of the Gillard government.

Labor’s position seems to be that the Abbott government has no entitlement to make any changes to the revenue/expenditure mix that, in gross terms, increase outgoings; such a position is naive and assumes its audience is stupid enough to be unable to differentiate between individual measures and overall outcomes.

On the health rebate, I would make the observation that if it didn’t exist, the total pool of health funding — comprising federal government monies and consumer expenditure on private health insurance policies — would immediately shrink by tens of billions of dollars as ordinary Australians dumped their policies en masse and strained the already-overloaded public system beyond breaking point.

But in terms of “a con,” Labor is the last party to national events with any moral authority to cast stones in relation to the bona fides of the new government, its intentions or its actions, so woeful is its own recent record in office on measures such as honesty, accountability, or integrity.

A lot of Labor’s approach to politics these days — especially on issues where it occupies extremely shaky ground, such as economic management — is to make bold proclamations of its own competence and the uselessness of the Liberal Party, then stand back — with a bow and a wave — and wait for the adoring masses of voters to swallow every word like wine.

That’s the “con,” if ever there was one when it comes to the state of the budget, and the ALP’s paw prints all over it.

Labor simply can’t be believed, as it seeks to depict “blowouts in spending” as the result of new initiatives announced by Treasurer Joe Hockey, when it steadfastly refuses to allow one cent of the offsetting savings presented by the Liberal Party to the Senate to pass.

And the fact it has refused to even allow the cuts it itself claimed to intend to enact to pass simply beggars belief.

Hawke and Keating have both suggested that a similar amount should be cut from the budget by the Abbott government, as a percentage of Commonwealth outlays, as Keating cut during 1986-87; in 2014 dollars this equates to some $40bn per annum, and — as The Australian notes — such a program of savings would see the budget return to surplus within two years.

In other words, the bills Labor has rejected would have already done half the job; Hockey’s 2014 budget — coming as it will in the wake of the report of the Commission of Audit — can more than reasonably be expected to do the rest.

After all, astute fiscal management and an emphasis on budgetary rigour were the keys to the Howard government’s reputation as a competent economic steward: it’s a record the Liberal Party is rightfully proud of, and a key difference with its opponent to be defended — especially as the ALP appears determined to perpetuate its achievements of economic vandalism from opposition.

The point is that the ALP — not content to have virtually wrecked the structural integrity of the federal budget, and having attempted to enshrine its sabotage by legislating tens of billions of dollars in recurrent spending measures for the Liberals to either fund or try to unpick in the Senate — is happier to run the country into the ground than it is to behave as the responsible participant in national affairs it claims to be.

It seeks to split hairs over semantics; dismiss Coalition savings measures from reality in order to focus on ridiculous claims of a Liberal Party spending binge; and prevent the government from doing what it was elected to do which is, rather quaintly, to govern.

In fact, about the only thing the ALP has to say which contains more than a shred of truth is its oft-stated claim of ownership over the fact Australia retained its AAA credit rating during the six years of the Rudd-Gillard junta: a claim whose truth ignores the fact that ratings agencies adjust credit ratings over a period of years, not weeks or months.

Indeed, the expectation of a change of government may in itself have preserved the AAA ratings Australia continues to enjoy. Conversely, were those ratings to be downgraded during a period of expenditure reduction and fiscal consolidation under the Coalition, it would be only because that process proceeded too slowly: ultimately, something else the Labor Party would have to wear responsibility for.

But with legendary Labor figures apparently now giving public backing to the Abbott government’s objective of hauling in recurrent government expenditure, Labor has few rocks behind which to hide.

The only people who really believe what it has to say — apart from itself — are its hacks and cronies in the union movement, whose only desire is to see a conservative government fail.

Few doubt the enormity of the task Abbott and Hockey face to push the country back onto a sustainable financial footing, and the results from Hockey’s Commission of Audit — which will be forthcoming soon enough — should dispel any remaining doubts that linger.

Budget crisis? You bet there is. Labor knows it, which is the reason it is acting like a group of headless chooks; it knows the true state of the books will soon be laid bare.

And if the redoubtable Bill Shorten were anything approaching a real leader’s bootlace, he would cut short his leave and respond to the situation — and to Hawke and Keating — himself, rather than leaving lesser minions like Bowen to do the dirty work while he hides safely away from the prying eyes of public opinion.

 

Paul Keating, Julia Gillard, And A Surprisingly Gracious Speech

IT’S FUNNY what you find when you’re not looking; searching YouTube for an old ALP election ad (for a different article) I came across the concession speech made by Paul Keating on 2 March 1996; after 15 minutes to watch it and another 15 in thought, we need to include this in the conversation here.

First things first: at this stage I am not prepared to divulge which TV commercial I was looking for, or why, although I will say it was a Labor ad from the 1996 campaign (hint, hint…any Labor types who might be able/willing to help…)

Having been thwarted — temporarily at least — I happened instead to find a link to Keating’s concession speech from 1996, after he had been walloped in that day’s federal election, ending 13 years of ALP government in Australia.

My first thought was an evil one: I am looking forward to Julia Gillard having to mumble and stumble and spin her way through a similar obligation in a few months’ time, and having been very pleased to see the back of Keating in 1996, thought I may as well watch this seeing I hadn’t been able to find what I was looking for.

Readers can access Keating’s 1996 concession speech here, and I encourage (nay, implore) people to watch it, and watch it in its entirety.

This will be especially illuminating for dyed-in-the-wool, rusted-on supporters of the Liberal and National parties, and conservatives generally; but I think those who are disaffected supporters of the ALP who have either decided to jump out of the Labor pond or grudgingly remain in it and continue to support it will get something out of this too.

Unsurprisingly, those who have voted Labor all their lives and will always ever do so, and are certain Labor is always right and the Liberals always wrong, or hold a similarly heads-up-their-own-backsides view of the ALP will probably find my point lost on them.

I watched this speech, unsurprisingly, on 2 March 1996; I lived in Brisbane back then, and after a day on the hustings as part of a mobile team the Liberal Party had on the road to visit selected booths in specific electorates, had joined a large group of other campaign workers at the party’s headquarters in Lutwyche for (quite) a bit of liquid refreshment and celebrations: after 13 years in Opposition, we were back!

I tell that story because watching Keating’s speech tonight I have absolutely no memory of it whatsoever; it hadn’t even been all that late, because with Brisbane not adopting daylight saving, we didn’t have to wait very long to get across what was going on in the southern states where it was — nominally — an hour later.

So whether due to a glass of Shiraz too many too quickly that night, or simply on account of the passage of time, the Keating speech was an eye-opener.

Or, more cynically, perhaps the standard of public discourse in Australia has fallen a lot further than I had thought in the ensuing 17 years.

In any case, I found this to be a surprisingly gracious speech; it was marked by none of the invective or aggression that were Keating’s daily trademarks, and there was no hint of arrogance, or hubris, or recrimination.

In the speech, Keating limits John Howard to a single sentence, which whilst perhaps churlish certainly isn’t done in such a way as to deliberately draw attention to the fact.

And perhaps the most annoying aspects of the exercise are Keating’s own supporters, who interject constantly, refusing to allow him to speak, and at least some of the time doing so in a manner that can only be described as aimless.

(Cut out the interjections and the speech would be five minutes shorter, too).

My point in sharing the Keating speech tonight centres on the cogency of the Keating message and the simple but effective manner in which he gets that message across.

Knowing his — and Labor’s — time in government has drawn to a close, Keating makes a forceful yet straightforward case for the legacy of the 13 years of Labor government; there is no diversion into minutiae, or accusations that anyone made a mistake in voting them out, or even a last stand to advocate the retention of any specific Keating government program by the incoming Howard government.

It’s a masterclass in political communication, and one which the present crop of political leaders (including some Liberals) would do well to study.

Tony Abbott has political skills in spades; and whilst his communication skills are brilliantly suited to the hard grind of daily retail politics, even he would benefit from a little more polish when it comes to the task — so lovingly described by mainstream media journalists — of framing a narrative.

Gillard, on the other hand, is smart, there is no question of that; but her political skills and her communication skills are truly appalling.

Either her government is as good as she claims it is, in which case its poll numbers are an indictment of her skills on both counts; or it truly is as hopeless and horrible as many think, which is also an indictment on her skills as a political operator and communicator given her reputation within her own ranks for astute judgement and competence which is rarely visible to the wider electorate.

Whichever way you cut it, there will be a loser on a podium, in Sydney or in Melbourne, delivering a speech on the evening of 14 September for the same reason Keating had to back in March 1996.

And I will wager that whichever of the two leaders whose task is to do so — and you’d have to bet tens that it will be Gillard — it will be a styleless, stultifying, and eminently forgettable oration when viewed alongside the Keating effort all those years ago.

Back to retail political issues tomorrow.

 

Hawke Elected, 5 March 1983: 30 Years Ago Today

SPARE a thought: it’s 30 years since Bob Hawke led the ALP into office, just seven and a half years after the dismissal of Gough Whitlam’s government and the shattering electoral defeat of 1975; 1983 heralded change in Australia, and its impact on politics could never have been foreseen.

It was the election Prime Minister Malcolm Fraser should never have called; popular mythology had it that Fraser was simply too slow off the mark on the morning of 3 February, when Labor leader Bill Hayden resigned in favour of former ACTU president Bob Hawke a couple of hours before Fraser was granted his double dissolution election.

But the truth is that Fraser had wanted to go to the polls in December 1982 and was talked out of it by his cabinet colleagues. Had he done so, he would likely have been re-elected.

The Liberal Party retained a key marginal seat  (Flinders) in a difficult by-election that was held the day Fraser had wanted to go to an election.

This imbued Fraser and the Liberals with false confidence, as the result in Flinders also made certain a leadership change in the ALP; its unpopular leader Bill Hayden had already survived, narrowly, one leadership challenge from Hawke.

The Flinders by-election virtually guaranteed any subsequent challenge would succeed.

So Fraser — thinking he was locking Hayden in — called an election, and was soundly beaten by Hawke; it was the beginning of 13 years of Labor government, and Hawke’s would be just the second Labor government (after Whitlam’s) to see a Labor Prime Minister elected twice to office.

Labor bequeathed Australia a clutch of enduring reforms, such as the floating currency, financial deregulation and the dismantling of tariff barriers; it is questionable whether their primary architect — Treasurer Paul Keating — fully understood the far-reaching nature of these reforms, but this was lasting legacy of the Hawke government, and remains today.

These reforms, of course, were consolidated and built upon by the Howard government, in areas such as industrial relations, taxation, and prudential regulation.

It is reasonable to assert the Hawke/Keating years represent a zenith for the ALP which it will never revisit: the government’s reforms, so diametrically opposed to traditional Labor policy, have fundamentally changed the politics of the Left in this country.

We can see the results of this change today: the splintering of the ALP Left, which has sustained and grown first the Australian Democrats, and lately the Communist Party Greens; Labor has returned to its interventionist, tax-and-spend past, untroubled by economic rigour, and a preference for “social justice” at the cost of fiscal responsibility.

The Liberal Party, too, was changed by the 1983 result: descending first into a protracted period marked by leadership ructions and coalition infighting as it grappled with the reformulation of its economic policies, it emerged — finally — in 1996 to reclaim government a stronger, more resilient and arguably more durable entity than it had been since the retirement of Sir Robert Menzies 30 years earlier.

(If anyone doubts this, compare the 1974 and 1984 election results to that of 2010: nobody could seriously argue that the Liberals of 1974 or 1984 had commenced an inexorable march toward regaining government, whereas in 2010 I believe they did; indeed, had the Senate numbers in 1974 not been so favourable to Fraser, history may have played out very differently indeed).

As I said at the outset, I believe Fraser would have won an election in December 1982 against the hapless Hayden; but by the same token, just three months later I think Hayden would have beaten Fraser — he was probably right when he memorably proclaimed, after his resignation, that a “drover’s dog” could have won office against Fraser by that time.

The campaign is of historical note for a couple of things; the Ash Wednesday bushfires in the country’s south that wrought such destruction and misery — at the midpoint of the campaign — did nothing whatsoever to augment the fortunes of the Fraser government; indeed, the disaster probably hardened the resolve of voters in these areas against it.

But with unemployment, interest rates and inflation all rising as Australia was hit by the world recession of 1982-83, the final blow to Fraser’s credibility was self-inflicted; his remark that voters would be best served hiding their money under the bed if Labor won was devastatingly answered by Hawke, who simply quipped that people couldn’t hide their money under the bed — because that’s where the “Commies” (Reds, or Communists) were.

Subsequent events showed Fraser’s claim mightn’t have been as ridiculous as it seemed, given the assortment of state Labor governments that presided over the catastrophic collapses of financial institutions toward the end of the 1980s, John Cain’s in Victoria and John Bannon’s in South Australia especially. But at the time, the damage was done.

Victoria and South Australia were, ironically, the best-performed states for Labor in 1983, providing almost half of Labor’s 75 lower house seats between them.

And at the other end of the political spectrum, Tasmania not only stood by Fraser, but swung heavily to the Liberals as popular sentiment favouring Liberal Premier Robin Gray’s plan to dam the Franklin River saw Fraser government MPs widen their margins over Labor in all five Tasmanian electorates.

Malcolm Fraser today is a virtual pariah within the Liberal Party, roundly (and I believe correctly) dismissed as a left-wing bleeding heart whose views are totally out of touch with modern mainstream sentiment in Australia.

Hawke is a revered elder statesman in the Labor Party; his Treasurer and one-time friend, one-time foe Paul Keating succeeded him as Prime Minister and stayed there for five years before losing in a landslide in 1996.

Of course, Fraser’s Treasurer, John Howard — sarcastically dubbed “Honest John” by Keating — ultimately became PM too, but it took two attempts and more than ten years.

After a decade of rivalry with Andrew Peacock that culminated in him losing his leadership for six years in 1989 (and the Liberal Party going through three different leaders in those six years), Howard’s return in 1995 and his triumph in 1996 surely marked the closing of a circle in conservative politics that began to be drawn in March 1983.

Readers shouldn’t interpret my remarks tonight through the paradigm of serious analysis; I simply think that 30 years on from what was unmistakably a turning point in Australian polity and society, it is fitting to mark the occasion with some recollections and thoughts.

These are mine. If anyone would like to add to them, please feel free to comment.

 

Crawl Back Under Your Rock, Keating

It’s a new book providing the pretext for re-emergence this time…but for years, Paul Keating has behaved as if he was never booted from office. Reviled as Prime Minister, ultimately rejected by millions, it’s time for the “Lizard of Oz” to crawl back under his rock — and stay there.

Reading Paul Kelly’s interview with Keating in today’s Weekend Australian, it struck me that when it comes to the former PM, the more things change, the more they stay the same.

Mind you, unlike many conservatives — who regard Keating with visceral loathing and positive hatred — I have nothing against him personally, and whilst I’ve never met him, I’ve been assured by those who have that the published accounts of his personal warmth and charm are correct.

But his agenda is something I have a very large problem with — and so do those of our countryfolk who tossed his government from office in 1996 in one of the biggest landslides in Australian history.

And that agenda, it seems, is unchanged.

After the chaos of the Whitlam years, and after the patrician, right-wing authoritarianism that so coloured perceptions of Malcolm Fraser’s government (but infected few if any of its legislative achievements), the climate in Australia was ripe for the consensus politics ushered in following the election of the Hawke government in 1983.

Hawke was successful because he always sought to take the electorate into his confidence and to ensure that the majority in the political middle were carried with him.

I’ve always found it ironic that having been in politics throughout, and having witnessed these episodes in full — Keating was first elected in 1969 — that his government is looked back upon as one of the most divisive in our history, Whitlam’s own government (in which Keating was a minister) the only competitor for that dubious mantle.

Indeed, the agenda of Keating’s government was, in many ways, Whitlamesque.

Much of what Keating covers in his interview with Kelly I have no quarrel with, but eventually — and typically — the agenda resurfaces: the focus on the elites, the arts, the minorities, the republic, the insistence on Australia being an Asian country in preference to a focus on more traditional links…all the stuff that left the majority of Australians feeling alienated, overlooked, and forgotten.

The people who elected John Howard on slogans like “For All Of Us” and “Building A Better Australia Together.”

It might surprise readers to know that my objective is not to tear the Keating agenda apart — that’s no longer necessary, receding in the rear-view mirror of history as it is.

Rather, my point is to question the relevance and value of former leaders like Keating, who resurface at intervals to share the benefit of their “wisdom” long after they were despatched at the ballot box.

Bob Hawke and John Howard surface very infrequently; Howard’s messages are generally limited to the economic management credentials (or otherwise) of the ALP; Hawke’s typically limited to comment on issues facing his own party.

It’s a moot point these days when it comes to Gough Whitlam, now aged 95 and obviously in the twilight of his life.

And Kevin Rudd, still a serving cabinet minister — a vocation that will lead God alone knows where — is best overlooked in the context of this discussion.

But Fraser’s noblesse oblige-driven agenda since leaving office has seen him increasingly resemble an unreconstructed socialist more so than the small-l liberal he purports to be, and certainly more so than the right-wing authority figure he was characterised as in 1975.

And then there’s Keating, clinging determinedly to the minorities, the elites, the republican ideal, and to Asia.

It’s certainly true of Keating that he sees his place in Australian history and is prepared to fight for it; it’s also certainly true that he has — and had — a vision for Australia.

The problem is that his vision was not shared by the men and women of Australia, who terminated his tenure in 1996. The truth be told, they would in all probability have terminated it three years earlier, had Keating been faced by anyone other than the politically useless John Hewson at the 1993 election.

At what point does the relevance of an agenda such as Keating’s cease?

Malcolm Fraser these days is widely viewed as completely out of step with majority opinion in Australia; his party had moved on from him long before he moved on from it; and his views are hardly taken seriously in political circles today (except, perhaps, by the Greens).

It is well-known that Keating could never accept the legitimacy of Howard’s government or of his own defeat; whether through arrogance or denial, or sheer strength of conviction, he remains determined that he was right and that even now, more than 15 years later, that Australia should embrace his vision and his agenda.

The point is that I question how much value — if any — is added to political debate by beaten leaders endlessly trundling their wares in front of an electorate which has assessed their wares, and passed judgement on same at an election.

I will, in all likelihood, get a copy of the Keating book and read it, perhaps over Christmas.

But I do think that having made their contribution — the merits or otherwise not in question — the likes of Keating, Fraser et al should retreat from the field, and let the current generation of elected representatives get on with doing what they are charged with, and for the reasons they have been allocated those tasks by voters: running the country.

And so, to use the vernacular, I think Keating should crawl back under his rock; for the self-styled “Placido Domingo” of Australian politics, the show was over many, many years ago.

What do you think?

A Historical Perspective On Gillard Labor

Having for the first time been able to log in at home, I thought it worthy to talk about Julia Gillard’s government in the historical context of leadership coups and their consequences.

Previously, I described Gillard’s government as being in deep and deepening trouble. I won’t cover that in one post. However, the problem logging into my blog has had an unintended consequence: it has rendered the recent federal budget irrelevant.

And politically, irrelevant it is. The issues with Gillard’s government are identical after the budget to what they were before. Reinforced, but identical.

Looking through the history of federal government in Australia, what happened in the ALP in 2010 is an anomaly.

Since the two-party system stabilised 100 years ago, a coup attempt against a Prime Minister by a member of the same party has only ever succeeded outright once: in 1991, when Paul Keating beat Bob Hawke.

There were only three other attempts: in 1982, Andrew Peacock’s challenge was defeated by Malcolm Fraser, but the consequent blow to Fraser’s authority was one of many factors that led to his defeat the following year.

In 1969, after a swing of 7% against the government — which survived the election despite losing most of the (then) largest majority in Australian history — Bill McMahon unsuccessfully challenged John Gorton for the Liberal leadership.

Of course, McMahon succeeded on his next attempt (by virtue of Gorton’s dubious casting vote) eighteen months later, which probably put the last nail in the coffin of the ageing Coalition government and helped gift power to Gough Whitlam.

In recounting history, a pattern emerges: the voting public don’t go along with this sort of thing.

In Australia, whilst we don’t vote for a Prime Minister directly, we know what we’re signing on to when we wander into the polling booth and mark the paper. It’s the reason “preferred Prime Minister” polls exist.

People vote for a government and a leader. Whilst the relationship isn’t what, say, the Americans feel for their President, there is still a passive, unspoken consent that the elected Prime Minister is just that.

The concept of tearing down a Prime Minister mid-term, wilfully, with forethought and intent, appears not to sit well with the Australian electorate.

History will judge Billy McMahon on many criteria, but he did himself, and the Liberal Party, no favours in his naked pursuit of his ambition.

Andrew Peacock, by contrast, had reasons rooted, rightly or wrongly, in his view of the conduct of Fraser and saw it as his duty to challenge. He failed, Fraser lost the ensuing election, and Peacock later led the Liberal Party to two election defeats in 1984 and 1990. The latter was the first of two so-called “unloseable” elections.

Keating is a different. Consensus dictates Bob Hawke was finished by mid-1991. In the face of what the commentariat deemed a young and talented liberal leader in John Hewson, he was wrong-footed.

Faced with Hewson’s “Fightback!” package, Hawke was gazumped, and clueless as to how to deal with it.

Enter Keating as PM on the second attempt. He correctly assessed Hewson as a political lightweight and set about dismantling Hewson piece by piece.

It is a matter of history that Hewson imploded under the pressure. A week from the 1993 election, he spent two minutes gibbering, unable to answer an interview question from Mike Willesee about whether a cake would be cheaper under GST.

Keating won in 1993 solely because he was faced by the worst political salesman in at least 30 years to have masqueraded as a Leader of the Opposition (Mark Latham, a decade later, would claim that mantle, but I digress).

The point is, whether by Keating’s guile or Hewson’s incompetence, Keating got away with something nobody had. Of course, not six months later, his treasurer presented the most electorally dishonest budget in Australian history with tax rises, vast public sector borrowings, and contempt for the mainstream in favour of fringe interests, and at that point the 1996 landslide against him was irrevocably sealed.

And Gillard…say what you like about Kevin Rudd (I detest the guy) but he was a first-term Prime Minister who’d won a modestly comfortable victory over arguably the best Prime Minister Australia has had in nearly 50 years.

Then the polls turned sour, the magic disappeared from the numbers, and the hatchet men emerged from the shadows…

Tony Abbott was ridiculed when he coined the term “Sussex Street Death Squads.” Yet to look at the recently-dispatched ALP government in New South Wales (four Labor Premiers in five years), he was right. The same ultimately unsuccessful tactics were transferred to the federal party.

The 2010 election result has much to do with contempt for the type of leadership change, within a governing party, that was ruthlessly executed by Julia Gillard and her minders.

Everyone gets a second term, don’t they? Look at 1931 if you think that. Tony Abbott is unelectable, isn’t he? Look at the polling numbers his predecessor posted for months if you believe that.

Add 1500 votes across three electorates, and Abbott would be Prime Minister today. He achieved a 7% swing on the six-month average poll results of his predecessor. Polls on their own are meaningless, but in a bloc, over time, they are a powerful tool.

Since last year’s election, Gillard’s government has shown itself as incompetent, incapable of communicating anything meaningful, out of touch with mainstream opinion, and guilty of extreme political ineptitude.

The point — long-winded, perhaps — is that mid-term assassins don’t win in Australia.

That possibly the most reviled cabinet-level politician to ever hold office in Australia — Keating — could pull the feat off and win a subsequent election speaks more to his opponent than it does to him or the merits of his coup.

Gillard is a dead person walking; an election would finish her. She knows it, and the independents who prop her up in office know that it wouldn’t just finish her, but it would finish them also.

If the truth be told, she’s already finished.

But there is more to this…and so next time, when I can access my blog at home, we’ll look at some of the other reasons Julia Gillard is in virtually irretrievable trouble.