Arise Sir Malcolm


Is Brendan Nelson a dead man walking, as Michelle Grattan and more than a few of his colleagues believe?

Yes. He’s gone.

Last night’s budget reply speech showed why. While Nelson is an empathetic and even likeable speaker, it is becoming clearer by the day that he doesn’t have the policy credentials to pull his party out of its current mire.

Nelson’s rhetoric and language has improved since his disastrous reply to Kevin Rudd’s national Apology, but last night’s headline policies of a 5 cent reduction in federal petrol excise and blocking the Rudd-Roxon "alcopops" tax increase are hardly substantial policies around which he can build an alternative government. In fact, they’re not even fiscally responsible.

Nelson has had a lot of problems coming to grips with the economic debate as Opposition Leader. That’s hardly surprising, given his major competitor for the leadership is the Shadow Treasurer. But Nelson and the Opposition in general have been all over the shop on economic policy, and particularly inflation.

Perhaps Malcolm Turnbull and Brendan Nelson genuinely believe that inflation is not a long-term macro-economic concern for Australia. Or perhaps blocking important revenue-positive measures like the alcopops tax increase is merely politically expedient. The advantage of being in opposition is that neither man has to run the economy. But with both underlying and headline inflation bumping up over 4 per cent, it’s time someone in their party reminded them that the Australian economy is in real danger of sliding into a nasty bout of "stagflation" – a term coined in the last oil crunch of the 1970s to describe slowing growth and rising inflation.

Surely Nelson remembers the damage caused to John Howard’s government by successive interest rate rises last year. Yet just 6 months later, he wants to introduce an obviously inflationary policy like cutting petrol excise. As nearly every media commentator has observed today, Howard refused to cut the excise for a decade. It’s this kind of policy back-flip that makes Nelson look desperate.

And what about the climate change implications? Climate change was a huge vote-changing issue for middle Australia last November, driven by Howard’s stubborn refusal to face up to the scientific reality. Nelson appears not to have noticed. A cut in petrol tax only plays in to the hands of a government keen to portray the Liberals as climate change sceptics.

On the alcopops tax increase, Nelson is fighting both health policy experts and common sense. This is doubly surprising given his background as both a General Practitioner and head of the AMA. As I explained in my article last week, there is overwhelming evidence, both in Australia and internationally, that increasing the tax on alcohol decreases consumption. The alcopops tax increase is a policy supported by medical researchers, doctors and police.

Nelson’s argument that the tax hike won’t stop binge drinking is even sillier. One hundred years of prohibition hasn’t stopped people all over the world taking illicit drugs, so a minor tax increase on pre-mixed drinks is not going to stop binge drinking. Taxing cigarettes doesn’t stop smoking either. But it does reduce the harm. So will this tax increase. It’s a simple concept backed by enormous amounts of research.

Where can the Opposition go from here? Nelson and Turnbull must start by building on last night’s policies for tax breaks to small business. Labor’s budget contained little for small business, offering an obvious opportunity for Nelson to shore up his base. Labor’s union-friendly predilection for industry policy is another area where the Opposition should be able to attack the Rudd Government as Mark Latham observed on Thursday in the Australian Financial Review.

Nelson and Turnbull need to get started. It wouldn’t hurt Julie Bishop to lend a hand.

Like Simon Crean, Nelson is destined never to face the Australian electorate as Opposition Leader. But there is much he could still do to help the Liberal Party win the 2010 or 2013 election. Like Crean, he could embark on internal party reform. As anyone who has glanced at a newspaper in recent weeks knows, the various State branches of the Liberal Party are riven by self-destructive factionalism.

Out of government in all States and federally, the conservative side of politics in Australia needs renewal. It is currently unelectable in States such as Queensland and West Australia. There is an opportunity to bring in fresh talent before the 2010 election, with the retirement of Peter Costello and perhaps Alexander Downer. The Liberals need to entice candidates with broad popular appeal — right-of-centre versions of Peter Garrett and Maxine McKew — and many fewer party hacks. At all costs, Mal Brough must be urged to run again. Brisbane’s popular Lord-Mayor, Campbell Newman, is another possibility. There are talented people in business that Turnbull could reach out to. But until the Liberal Party cleans up its act internally, it will find it hard to recruit and pre-select good candidates.

It’s probably all too late for Brendan Nelson but Australia needs a viable party of opposition.

Sensible fiscal policy, good candidates and party reform should be the first items on Malcolm Turnbull’s agenda.

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