Rudd's Risky, Rushed Populism


In his book Sideshow, former Rudd government finance minister Lindsay Tanner wrote that there were only two rules that mattered in contemporary politics. “(1) Look like you’re doing something; and (2) Don’t offend anyone who matters.”

Kevin Rudd's first term could scarcely be faulted when it came to rule 1. The peripatetic Prime Minister spent so much time on the government jet he earned himself the moniker “Kevin 747”, and in general, his administration was notable for the frenetic pace of his policy-making.

But Rudd's manic performance had its drawbacks. All too often, policies were announced, frantically campaigned on for a few weeks, then discarded as the caravan moved on to the next topic. In 2009 and 2010, for instance, Rudd invested huge amounts of political capital in health and hospitals reform. But voters were barely aware Rudd was fighting a battle before he declared victory and moved on to his next set piece: a disastrous tilt at the vested interests of the mining lobby, in the form of the Resource Super Profits Tax.

The Resource Super Profits Tax was an idea that had emerged from Ken Henry's “root and branch” review of the taxation system. This long-running effort resulted in a detailed series of recommendations from the then Treasury Secretary on the future shape of Australia's taxation system. Again, voters were no sooner told of the Tax Review's reform agenda before Wayne Swan ruled most of them out. What he ruled in was the mining tax, which Labor then attempted to legislate with almost no attempt at explaining the need for the reform. In the meantime, Labor had enraged a powerful interest group that quickly moved to attack the government in a massive media campaign.

You can spot the pattern here. Meeting Tanner's first rule of the political sideshow often risks violating his second. The problem is traditionally described as “policy on the run”. Policies that are announced without being fully worked through, or explained to voters thoroughly, or without effective consultation with the vested interests they will negatively affect, can quickly run into a storm of criticism. And that's exactly the risk Kevin Rudd Mark 2 is currently running.

The phenomenon is one familiar to historians and politicians down the ages: the law of unintended consequences. Actions have reactions. Crashing through can sometimes just mean crashing. Even if things go well initially, a steady accretion of damaging criticism can slowly chip away at the popularity of a policy and a government.

We might be seeing the beginning of that process with Labor's bold new plan to resettle seaborne asylum seekers in Papua New Guinea. The plan has so far proved very popular with voters. A recent Essential poll finds 61 per cent of those surveyed are in favour. A Galaxy poll finds Kevin Rudd has pulled ahead of Tony Abbott on the question of which leader is best able to deal with unauthorised arrivals. On initial polling, then, the manoeuvre appears to be a tactical masterstroke.

But in politics, matters are never so simple. Unexpected events can often strike down a policy or announcement from an unexpected direction. Labor thought it had a similar panacea with the Malaysia Solution of 2011. The High Court struck it down.

Similar pitfalls could await the PNG Solution. A legal challenge to the policy here in Australia seems inevitable. International commentators are also beginning to view the deal with opprobrium: today, for instance, the editors of news wire service Bloomberg criticised the Rudd government for what it called a “dangerous new refugee policy” that they say will weaken international support for the UN Refugee Convention.

Politics in our northern neighbour is volatile, to say the least, with local opposition to the deal already beginning to emerge. The stability of PNG is an open question, with the country's main medical school recently trashed by two truckloads of rampaging PNG soldiers. PNG's civil bureaucracy is weak and corrupt, its governance institutions far from effective, and the country is wracked by ethnic tensions related to land tenure. Just last year, landowners on Manus Island blockaded the airport in a protest calling for preferential treatment on construction and employment at the detention centre there.

The policy is not without controversy in our region, either. Fiji's military government has slammed the deal, with Fijian foreign minister Ratu Inoke Kubuabola saying yesterday that the deal will destabilise the region. “For an Australian problem you have proposed a Melanesian solution that threatens to destabilise the already delicate social and economic balances in our societies,” he said.

Not the least of the Government's worries is the likely cost of the PNG Solution. Like his predecessor, new Treasurer Chris Bowen has some serious money troubles, as tax revenue continues to disappoint. Further, on returning to office, Kevin Rudd made a number of decisions that will cost billions in future years, including the PNG deal and the decision to move to a floating carbon price a year early. There is also talk the government will reverse the unpopular cuts to parenting payments implemented under Julia Gillard, and perhaps find some extra money for universities or manufacturing industry hand-outs.

Consequently, Bowen now has to put together something approaching a mini-budget in the remaining weeks leading up the federal election. The Treasurer is expected to release an economic update in coming days that will update the current state of the budget deficit. Bowen has said that he remains committed to the government's mythical surplus target. “If you are returning to surplus, and you have a reduction in revenue, then there are decisions that need to be made responsibly to get to surplus,” he said on ABC 24 yesterday afternoon. Given this, the statement is expected to include some new spending cuts to help pay for Rudd's new spending and the ongoing weakness in taxation receipts. 

Bowen might not be missing his previous responsibilities as Immigration minister, but that doesn't mean his current duties are any less onerous. The Treasurer is between a rock and a hard place, with little fat left to cut from federal spending, and not enough revenue flowing into ATO coffers. Further deep cuts to government spending might seriously jeopardise economic growth, which is itself trending down as the massive mining investment boom ends. The government might need another $20 billion over three years to reach its target of a 2015-16 surplus. As ANZ economist Cherelle Murphy told the ABC's The Business last night, that equates to roughly $7 billion a year. “That's worth about 0.4, 0.5 per cent of GDP, its a fairly substantial number.”

Perhaps that's why some of Bowen's colleagues are looking for easy “announceables” that will make headline and save money at the same time. Kate Ellis and Bill Shorten have reportedly taken a proposal to the Expenditure Review Committee for a “boot camp” style policy for unemployed youth, which would, according to Shorten, “provide motivation, focus and employment skills for young jobseekers.” They would also provide some extra money that could be allocated out of current Job Services Australia providers to pay for reinstating benefits to single mothers. The proposal has yet to go to cabinet, but it is of a piece with recent Rudd Government announcements: long on populism, short on substance.

The lurch to the right that Rudd warned about after being deposed in 2010 has so far worked a treat in dialling back Tony Abbott's electoral prospects. But should Labor win re-election, the rush towards populism that currently characterises Labor's policy-making is storing up plenty of trouble for a third term.

Ben Eltham is New Matilda's National Affairs Correspondent.