You have to hand it to our hard-working politicians: after only a couple of weeks holiday, both the Prime Minister and the Opposition Leader are now back at work trying to woo voters and stake out their positions. The election year has begun.
Kevin Rudd returned from a holiday in Tasmania — where he still managed to get himself on TV at the cricket — to embark on a national speaking tour. Those speeches dealt with meaty policy issues, so were largely ignored by the mass media in favour of his new children’s book Jasper and Abby and the Great Australia Day Kerfuffle.
But there is actually some merit in many of Rudd’s recent speeches. He has examined issues such as social exclusion, the challenges of an ageing population, infrastructure and productivity. While there is a lot of repetition — especially if you read them as transcripts — they all address the long-term issues faced by the nation.
For instance, Rudd’s speech in Brisbane on the topic of productivity sets out a fundamental fact of life: that productivity is the key long-term determinant of a nation’s standard of living. As Nobel-prize winner Paul Krugman once noted, "how much productivity is in the economy is almost the only thing that matters." Better productivity — all other things being equal — means higher rates of economic growth, with all the resources for governments, firms and workers that growth brings.
And what is productivity, exactly? In technical terms, it’s the rate at which we can deliver goods and services for a set unit of inputs — chiefly labour. It’s not so much building a better mouse-trap, as a better mouse-trap factory. Across an economy, productivity is also influenced by innovations. Information technology, for instance, has had a massive impact on important sectors of the economy like freight and logistics, where better IT systems have allowed innovations like "just in time" delivery to help firms lower the amount of inventory they need to keep in stock.
But productivity is also a constantly moving target. As new technologies and innovations are implemented, productivity typically rises. Once the new systems are in place, productivity tends to slow again. Australia’s productivity, which whipped along at approximately 2 per cent in the 1990s, then slowed to around 1.4 per cent in the 2000s. No one is quite sure why.
Kevin Rudd’s speech on productivity makes obvious, but nonetheless valuable, points. He quotes Treasury figures suggesting that "if average productivity growth was lifted back towards the 1990s mark of an average 2 per cent per year … our economy would be $570 billion bigger in 2050, [and]on average, every Australian man, woman and child would be $16,000 better off a year in 2050."
And what will get us back up to 2 per cent productivity growth? Why, Labor policies such as the National Broadband Network, the "education revolution", health reform and infrastructure spending. Rudd is setting up his new agenda for 2010, which is to seize the economic high ground by framing the Government’s policies in a nation-building narrative.
You’ll notice one important policy area that Rudd doesn’t mention much: climate change. In the wake of the debacle of Copenhagen, the Prime Minister is moving to de-emphasise climate as an issue which no longer appears to be cutting through. Although he will still keep it up his sleeve as a handy stick with which to beat the Opposition, Rudd appears to want to move on from the ETS and fight this year’s election on the issue of the economy.
It’s good short-term politics, but woeful policy. In the medium and long-term, many of the greatest productivity gains are likely to emerge from a more sustainable economy. Think about the time lost in traffic congestion alone, or the productivity drain represented by the increasingly creaky public transport systems of our major cities. In contrast, big productivity gains are likely to be found in the renewable energy and clean tech sector which is currently languishing due to Australia’s addiction to cheap and dirty fossil fuels.
Actually, it’s poor long-term politics too. This is because Labor is "losing the ground war" on climate change. A revival of climate scepticism, stoked in no small part by the increasing polarisation of the debate between Labor and Coalition voters, has flowed through to increasing opposition to an emissions trading scheme. The result is that Labor is going backwards on an issue that was an important vote-winner in 2007. Not only are we unlikely to have a double-dissolution election over climate change, we now may not even see an emissions trading bill enacted at all.
Over on the conservative side of the fence, Tony Abbott is making headlines for the things he’s been saying too. Unfortunately, they’re all the wrong headlines. Instead of gaining traction with the intriguing gimmick of a workforce of 15,000 environmental workers — "a standing environmental workforce, perhaps 15,000-strong, capable of supplying the skilled, motivated and sustained attention that large-scale environmental remediation needs" — Abbott instead got himself noticed for his views on the virginity of his daughters.
As my colleague Jeff Sparrow argued yesterday, Abbott may have copped brickbats from predictable directions, but that probably won’t have hurt his perception among key demographics like parents of teenagers, who are probably uncomfortable about the idea of their children having sex too young.
Sparrow thinks Abbott’s tenure as Opposition Leader has already shifted Australian politics to the right. I’m not so sure, but there is some recent opinion poll evidence that suggests Labor is struggling on issues it should comfortably own — and not just on climate.
According to the latest Essential Research poll, Labor is actually trailing the Opposition on the issue of "better management of the economy", surely an uncomfortable statistic for Alistair Jordan and the backroom boys in Rudd’s HQ. It’s also trailing on "controlling interest rates", which is arguably worse for Labor, as interest rates are only headed in one direction: up. On the other hand, it comfortably leads in environmental issues, education and jobs, so it’s not all bad news but the numbers are certainly encouraging for an Opposition at the start of an election year.
The big dilemma for Rudd and Labor is whether to use its political advantage to press ahead with its agenda in the remainder of this term or to go negative on climate change and health reform, play it safe and try to protect its lead heading into the election. Everything we know about Kevin Rudd suggests he will choose the latter.
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