In Search of Good Government

by Laura Tingle

  This reflected an increased emphasis on private funding, but also – uniquely among these developed democracies – a reduction in real terms in public spending on tertiary education. In 2005, Australia spent 0.8 per cent of GDP compared with an average of 1.1 per cent… In the other countries for which we have data, public spending on tertiary education was up by 30 per cent in real terms over the decade 1995–2005. Only Australia’s decreased.

  The economy, meanwhile, continued to transform during the Howard years under pressure of the change that had started with the floating of the dollar and now increased with the new mining boom. Australians had grown accustomed to a lower Australian dollar and saw it as a good thing, but the dollar started to rise, reflecting record prices for commodities. Services and tourism, which had expanded dramatically under the low dollar, started to contract. Traditional manufacturing continued its decline. The privatisation of government instrumentalities saw large numbers of skilled workers leave the safety of government employment and go out on their own, setting their own price for their work. By 2007 Australia seemed to have become a world dominated by “subbies”: independent contractors whose numbers spread from the building industry to all the other industries that were being deregulated or outsourced. John Howard was able to claim them, too, as part of his battler tribe.

  The mining boom led politics further away from fiscal restraint and good policy and towards idolatry of the hippocket. The first decade of the new century saw political parties shovelling money out the door in unprecedented tax cuts that helped fuel a once-in-a-lifetime consumption boom. It did not suit politicians to talk anymore about “the power of the markets.” Instead the quest was to make the world a more certain place, with slogans such as the Howard promise that he would govern “for all of us,” which implied that the government had Australians covered. At the same time, the Coalition mouthed the rhetoric of free markets and competition, particularly when it came to the workplace. Yet economic reform was increasingly wrapped in so many blankets of compensation and political bribery as to be largely unrecognisable. Consider the GST: to get it through, everyone was compensated with tax cuts or increased benefits. First-home buyers received a special grant which was intended to offset the one-off increase in building inputs, but which is still with us today. Food was exempted, as were other day-to-day items. Politicians still talked about reform, but the extent of government intervention in the economy was slowly back on an upward path, concealed by the fact that Howard so often put the intervention in the form of a government subsidy of the private sector. Economic change became something that politicians could get kudos for if they got the bribes right, not because they had convinced voters that the change would be in the long-term national interest.

  By the time of the 2007 election, interest rates had been set by the markets for over twenty-five years. It was a sign of how the political debate had regressed, or perhaps failed to come to terms with the deregulatory push in the first place, that discussion of rate movements was still framed by the question of politicians’ influence over them – whether politicians could or should bully the Reserve Bank or the banks about their decisions. At that same election, voters made it clear that the process of freeing up wage-setting had gone far enough and rejected Howard’s attempts to push it further with his WorkChoices legislation.

  The election would also see another longstanding issue about how we are governed come to the fore. Hawke and Keating had found themselves increasingly bumping up against the states in the reform processes they unleashed. Howard’s preference for giving money to individuals or the private sector through subsidies, rather than to state-controlled institutions such as hospitals, meant he had largely avoided confrontation with the states. But by 2007 he, too, was being forced to confront the difficulties of the federation.

  Health and education were the obvious areas. The community expected the federal government to fund the health system properly, yet it was controlled by the states. The long-ignored dilemma prompted an intense debate within the Coalition over health policy, which gave rise to Tony Abbott’s proposal to bypass the states and put individual hospitals under local community control. There had also been shouts from business for years for government to do something about infrastructure. The ports and transport hubs in major cities had to be addressed. But while there had been some infiltration by federal governments into road and rail systems over the years, it had tended to end at the fringes of large cities, where the states – which did not have the necessary funds – took over.

  Enter Kevin Rudd, who made a renovated federalism a central feature of his election campaign. So many of Rudd’s political and policy instincts were right in 2007. He recognised that voters now rarely drew a distinction between the powers and responsibilities of state and federal governments: they just wanted things fixed. His pitch was to break down the divide by taking the federal government squarely into the realm of service-delivery, in areas such as health and transport. He had a proposal for doing this with hospitals, and one for doing it with infrastructure that looked “cooperative first, confrontational second.” He also promised an education “revolution,” which would reverse the fall in funding under the Coalition: “a substantial and sustained increase in the quantity of our investment, and the quality of our education at every level of education, from early childhood to mature age.” This wasn’t about a takeover of schools and universities, but rather a huge increase in federal funds: tax write-offs for parents on education expenses, massive investment in computers in schools, more subsidies and scholarships for university students.

  Rudd was “Kevin from Queensland,” the bureaucratic nerd who was “here to help.” There was no more discussion about the withdrawal of the state. Government was not just here to give you hand-outs but, once again, to look after you properly. Rudd made public servants fashionable, even trendy. He spoke the incomprehensible language of bureaucracy, and for a time people found that engaging and endearing. Here was what we needed, someone who actually understood the system and could get it working for us. Not only that, he was taking personal responsibility for fixing it all. He wasn’t going to sidestep the complex issue of funding public hospitals by simply increasing subsidies to private ones. If he couldn’t get the states to fix their hospital systems, the federal government itself would pay.

  Rudd’s 2007 election platform offered a return to large-scale government intervention, institutional solutions to policy problems and a new take on federal–state relations. These were three places where Howard just couldn’t go. But it was also a place that planted a huge bullseye on Rudd’s forehead, saying: “Blame me.” Only someone possessed of remarkable hubris would have taken on federal–state reform, something that had defeated, or been cunningly avoided by, three of our most politically talented prime ministers: Hawke, Keating and Howard.

  Rudd failed from the start to enlist the states: to persuade them that there was a mutual interest in coming up with a new model for the health system. His political successes had always been about “people power.” He won the Labor leadership, despite his caucus colleagues’ dislike of him, because he was popular on morning television. He enjoyed record levels of popularity as prime minister simply because he was the nerd who seemed to be trying to get things done. It all fell to pieces, however, because he lacked the organisational skills and persuasive ability required to win over the professionals with whom he had to deal on the big reform issues. Despite coming out of the state bureaucracy and therefore claiming to know all about federal–state relations, he did not have the political savvy to propose deals on which the states were prepared to negotiate seriously.

  The ambition of Rudd’s agenda, and the fact that it, at least briefly, changed our expectations of the role of government, was a breath of fresh air in 2007. But he was to disappoint voters on climate change and become stuck in no-man’s-land on health reform. There were questions of competence in the way services were administered that quickly saw cynicism abo
ut the public sector re-emerge. Perhaps the very ambition of his agenda made voters tougher on Rudd when he couldn’t deliver it. His high standing in the polls through 2008 and 2009 slumped in 2010. Emboldened and alarmed by the reversal of his poll standing, Rudd’s colleagues, sick of the autocratic way he ran the government, moved against him. Yet, as it transpired, if there was one entitlement that Australians believed they had above all others, it was to decide who would be their prime minister. The caucus move to override that right would be catastrophic for Labor.

  They’re an Angry Mob

  Kevin Rudd raised voters’ expectations to a risky degree. He suggested that he could make government respond to our needs. It was a change from the politics of personal entitlement of John Howard. Labor gradually introduced tighter means testing on measures such as the baby bonus and private health insurance rebates, but Rudd was reluctant to challenge head-on the idea of entitlement that Howard had embedded in Australian governance. There things sat until September 2008 and the onset of the global financial crisis.

  In the scramble to respond, Australians got the full monty of government intervention: cash payments to households, support for industry through building programs, support for the financial system through guarantees. Many of these measures replicated the protections that had existed in the original Australian settlement and been dismantled in the era of deregulation. There wasn’t protection for industries in the form of tariffs this time around, but there were cash payments.

  Instead of the raft of legislation and controls that had once provided support and comfort to voters, the government had just one lever at its disposal: the budget. It used its financial resources and capacity to borrow, confident that the bottom line would quickly recover. After all, for the previous five years, the mining boom had repeatedly delivered billions of dollars in extra revenue. Saving Australians from the world meant going into deficit: it meant not offsetting the big fall in tax collections while also engaging in extra spending. Budget surpluses had by now become a talisman of good government for both sides of politics, seen to equal good economic management. One could almost hear a sharp intake of breath among journalists in the press gallery as the treasurer was asked in the early months of the crisis whether the times might actually call for going into (gulp) deficit.

  The government’s measures to stave off recession and keep confidence buoyed were supposed to be one-offs that could be quickly implemented and equally quickly unwound. The reality proved more difficult. Having put financial guarantees in place for the banking system, it was hard to take them away. Many voters – rather than being grateful for the cash hand-outs and understanding that they were designed to keep consumers in shops and, therefore, the economy ticking over – were cynical about getting money for nothing.

  Perhaps most significantly, the program that sought to double up the policy goals of providing employment and improving the insulation of Australian housing exposed a harsh reality: the changes of the previous two decades had left the federal bureaucracy with no direct experience of running service-delivery programs. This lack of experience also left the federal government at the mercy of the states to administer the huge outlay on school buildings. The vision of seamless, cooperative federalism that had been a central plank of Rudd’s 2007 election victory stumbled even before he ran into trouble on hospital reform.

  By the time Rudd was toppled, there was a perfect storm brewing of confused expectations about what government and politicians could do for us. For a society built on state paternalism there is no deeper expectation than that the government is in control of events. In the experience of most voters, the only true governmental crisis to that point had been the last days of the Whitlam government.

  In 2010, the government walked away from its policy on climate change, an issue that had been so important to voters in 2007 and which Kevin Rudd had said was the “greatest moral, economic and environmental challenge of our generation.” Rudd was declaring surrender because the Opposition wouldn’t support him, rather than taking the question to voters in a double-dissolution election. Business, which had either been aboard the Hawke–Keating reform cart or pacified by various bouts of industrial relations reform by the Howard government, was now openly critical of the Rudd government’s economic management as a result of a proposed new mining tax. The assault, particularly from the miners, was not only massive and well funded, but, for many voters, something new. The Opposition relentlessly attacked Labor’s competence to deliver services, run the economy and keep boat people out of the country.

  Bipartisanship on major reforms in the 1980s had started to break down when John Howard came to office, particularly under the Labor leadership of Simon Crean. When Labor won in 2007, the Coalition scarcely acknowledged the government’s mandate, despite the sweeping nature of its victory. It had learnt a brutal form of politics when it was in government and now turned it on Labor. Howard had not only created a battler tribe of voters, but also, according to the writer Norman Abjorensen, brought about a “tribalisation” of the Liberal Party itself. Abjorensen says the Liberals’ dislike of Labor:

  went from the political to the visceral; not a single appointment under Howard had the slightest tinge of bipartisanship about it – a striking contrast with the Rudd–Gillard government’s appointment of former Liberal politicians, including Nelson, Downer and Bruce Baird to various posts.

  The … unprecedented interjection in parliament directed at the prime minister from the advisers’ boxes by Abbott’s chief of staff, Peta Credlin, is simply a manifestation of the new Liberal tribalism; it is anger, resentment and frustration all rolled into one, underpinned by an intense loathing, verging on hatred.

  Tony Abbott won the leadership of the Coalition from Malcolm Turnbull in December 2009, when Turnbull was attempting to reach a bipartisan position with the government on an issue of significant government intervention in the economy, the emissions trading system. The shift from Turnbull’s willingness to negotiate to Abbott’s blanket opposition (a position he had reached only a couple of months earlier) finished off not only the proposals for a carbon trading scheme, but broke the back of the government’s authority.

  In June 2010, Australians woke to find they had a new prime minister they hadn’t voted for, who was telling them that the government had “lost its way,” but was unable to say how that had happened or whether she was going to lead them somewhere different. There were weeks of uncertainty about when Julia Gillard would go to the polls to seek “legitimacy,” and weeks of uncertainty about how she would fix, as she had promised to, the government’s three big policy problems: asylum seekers, the mining tax and climate change.

  Governments, in our general experience, were competent and stable. We weren’t like one of those European countries, or Japan or Thailand, where governments, formed by alliances of small parties or racked by corruption scandals, were always falling. In such countries, voters tended to greet the comings and goings of governments with a shrug of the shoulders. Similarly, we hadn’t experienced the perpetual battle between the US Congress and the president over the budget or specific reforms that American voters take as the norm.

  Julia Gillard sought to resolve the question of her legitimacy with an early election. We remember the 2010 election campaign now for the devastating leaks that reinforced images of her as duplicitous. We remember her statement a couple of days before the election that there would be “no carbon tax under the government I lead.” But for the purposes of my argument about entitlement and expectations, the 2010 campaign was significant for things not so widely remembered.

  Since the 1980s, big tax cuts and hand-outs had been the rock on which election campaigns were built. As the Howard government grew older and older, the size of the cuts, and the size of the election promises, became bigger and bigger. Labor had matched Howard’s huge 2007 tax-cuts promises – some of which would not be delivered until years into the next parliament. But the global financial crisis, and Labor�
��s determination to spare us from it, changed all that. Not only had the Rudd government spent everything in the war chest, but a slow recovery from the crisis, and the impact of massive investment write-offs in the resources sector, meant there was no prospect of it being refilled anytime soon.

  The 2010 campaign was therefore the first in living memory when voters were asked to back a side not on the basis of what might be in it for them and their hip pocket, but on the basis of policy differences, such as they were. A sustainable population size and immigration were early hot topics. There were lingering questions about carbon pricing (and Gillard’s dopey early suggestion of a “citizens’ assembly”) and the mining tax. The parties were for or against the National Broadband Network; for or against different education policies; for or more-or-less for an industrial relations status quo. The Coalition tried to trump Labor’s paid parental-leave scheme with one of its own, but only managed to confuse people about how it would be funded. In the unique political circumstances of 2010, without a sack of promised entitlements, everyone found it hard to focus on policy, turning instead to the character of the leaders. Gillard had her problems with the Rudd coup. Abbott’s attitude to women was also a problem, whether he was urging them to save their virginity for marriage, or making bad jokes suggesting that when it came from Julia Gillard, “no” didn’t mean “no.”

  A very different election campaign produced an equally different parliamentary result: for the first time in almost seventy years, a minority government was formed. It turns out that Australians loathe minority government, and we now had one with a credibility problem and which was cornered by the parliament, the states, business and the media. In 2012 it was hard to find people who were not angry about at least one aspect of the present dispensation, be it Gillard herself, Labor in minority government, the role of the Greens, the role of the independents or the uncertain parliament. That prime minister, that parliament, those minor parties and independents were not what we expected. A government that spends every day protecting itself could hardly be looking after us.