Painting the Record Black


While some might question whether Kevin Rudd fulfilled the first injunction of the aphorism "campaign in poetry, govern in prose", there’s no doubt that the PM is a dab hand with symbolism.

Waking from our summer torpor to inspect our new leader, the Australian people were treated to two highly symbolic actions from Rudd: the meeting, accompanied by Wayne Swan, with the Reserve Bank last Monday; and the Community Cabinet meeting in Perth on Sunday.

After the election Peter Costello claimed his sound economic management to have been proven by the absence of any "shock, horror!" announcements about the size of the deficit from the incoming Labor regime.

But Costello may have counted his chooks before they hatched. It can hardly have escaped anyone’s attention that something akin to Costello’s "financial tsunami" is washing up on the fiscal beach. The US economy is teetering on the brink of recession, the stock market is having a bear run, banks are putting their interest rates up without waiting for the Reserve, and the inflation dragon shows signs of getting a little fiery again.

Now the Australian share market has experienced its largest one-day fall in 18 years.

In this environment, symbolism is crucial – because there’s little concrete Rudd can do before the Budget other than try to reassure the public and the markets. The sense of trepidation from yesterday’s plummet in the market extends far beyond investors.

The new Government is concerned to communicate that it will abide by its election promises, but also that the Coalition has left behind severe inflationary pressures, through inaction. So from Rudd we get action, and visible assurances of being in touch.

Sunday’s Community Cabinet meeting was important in this regard. Although it’s easy for the political class to be cynical about this nifty little idea – borrowed from Peter Beattie, who cooked it up on coming to office to lay to rest the Goss Government’s image of arrogance – it’s both a powerful tonic against Ministerial delusions of grandeur and a concrete illustration of a willingness to listen. It’s no coincidence that it was followed in short order by the announcement of the "war on inflation".

Again, there’s a clear opening for cynicism – after all, both the war on drugs and the war on terrorism are seemingly eternal and unwinnable. It is, however, a powerful metaphor. The textbook of political communication would suggest that a five-point plan is also a superb campaign message – it sounds well thought out, and five points are just a couple more than can easily be committed to memory, which is a neat way of deflecting attention from the detail.

If you thought the age of the permanent campaign ended with John Howard’s departure into the sunset, think again.

As Richard Farmer suggested in Monday’s Crikey, the odds of an election sooner rather than later in this term shouldn’t be discounted prematurely. There’s scope for a new and popular Government to tilt the seat pendulum quite nicely with only a small swing in its favour in Queensland and Western Australia – and to reconfigure a Senate which could prove obstructionist, as well as driving another very large nail into the Liberal coffin.

The wheat among the chaff is a very tight fiscal policy and a promise to lift the surplus to 1.5 per cent of GDP. This will be broadly welcomed in policy circles as a return to discipline after Howard’s 1 per cent fetish, which was a poor excuse for medium term fiscal policy and a good excuse for large scale pork-barrelling.

Meanwhile, Cabinet on Monday approved the creation of Infrastructure Australia – signalling that spending will be targeted at sustained economic growth rather than electoral handouts. Wayne Swan has been doing a bit of creative jawboning about consumers being prudent with their spending, and we can expect to see more concrete incentives to reinforce this at Budget time. And although his work has been little heralded to date, one of Julia Gillard’s offsiders, Minister for Employment Participation Brendan O’Connor, has been usefully squirreling around finding new ways to increase labour supply.

And there may be a silver lining in the storm clouds. Gloomy economic news will hit consumer confidence, and therefore make the Reserve more cautious about lifting rates.

While all this has been going on, Brendan Nelson has been invisible. Perhaps he’s still on holidays. That’s probably ill-advised, because Malcolm Turnbull has been grabbing the running, albeit with inconsistent messages about the economy and the Government’s actions.

The Opposition really has no scope for complacency, because as the political year begins, the Government has been very busy indeed painting their economic record black.

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