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Core promises (repost from 2008)

May 18th, 2014

Now that Tony Abbott’s ‘fundamentally honest’ has joined John Howard’s ‘core promises’ in the lexicon of spin, I thought I’d repost this piece from 2008, urging Kevin Rudd to keep his (unwise and damaging) promise to adopt most of Howard’s proposed tax cuts.

If there is one word that will be tied inexorably to the Howard government in historical memory, that word is ‘non-core’. Indeed the word is so closely associated with Howard, that it’s surprising to recall that he never uttered it. Rather, having ditched a large number of inconvenient promises after the 1996 election, Howard proudly announced that he had implemented all his ‘core’ promises. The implication that the broken promises were ‘non-core’ was left to the electors.

The process by which Howard came to this point is instructive. In 1975, the Whitlam government had come to grief by sticking rigidly to its platform commitments even when economic shocks rendered a change of course vital. Subsequent governments, starting with that of Malcolm Fraser, learned the lesson too well, becoming increasingly willing to promise whatever was required to win an election, then renege when the election was over.

Howard himself was an early exemplar of the process, when, newly appointed as Treasurer after the 1977 election, he ditched the ‘Fistful of Dollars’? tax cuts that had been the centrepiece of Fraser’s successful campaign. Bob Hawke followed suit in 1983, after the convenient discovery that the budget position was much worse than expected. The Hawke-Keating government continued on this path through its four terms in office, on issues ranging from privatisation to the L-A-W tax cuts.

By the time Howard was running for office in 1996, voters had woken up to many of the standard tricks. Howard was asked explicitly what he would do if, as with Hawke, the budget position turned out worse than expected. Howard made the commitment that he would stick to his promises anyway. Once the election was out of the way, however, this commitment was adjusted to apply only to ‘core’? promises. A couple of years later it was the turn of the GST, which Howard had promised would ‘never ever’ be introduced.

The great majority of the economic commentariat cheered the repudiation of promises they regarded as obstructing the process of economic reform. Many of them simultaneously deplored the deterioration of the policy process in the later years of the Howard government. However, most failed to make the link between the two.

By the end of the Howard years, it was impossible to take any long-run policy commitment seriously. So the only credible promises Howard could make were those that involved lump-sum handouts (like the baby bonus) or immediate interventions to subvert long-term policy (like the Mersey hospital takeover).

The process is continuing with debates over the tax cuts promised by Labor before the 2007 election, and over proposals to privatise the NSW electricity industry, a violation of long-standing Labor policy.

Most economic commentators would prefer a larger budget surplus to tax cuts, and a privatised electricity industry to a continuation of public ownership. But they failed, before the election, to persuade the parties or the voters to adopt their preferred position. In seeking to retrospectively invalidate the outcome of the election, they are willing to subvert democratic processes to achieve their preferred outcomes.

As with the Whitlam government in the early 1970s, changing circumstances may make it necessary to abandon or modify electoral commitments. But that excuse does not apply here.

It’s true that the economic outlook is worse than when the cuts were promised six months ago. But the risks of higher inflation were evident even then, and were pointed out by critics at the time. And some of the adverse changes, such as the increased risk of a US recession, strengthen the case for tax cuts.

As regards electricity privatisation, the debate has been going on for years, and the advocates of privatisation have conspicuously failed to the carry the public with them. They can scarcely claim that current circumstances, with financial markets in turmoil and proposals for emissions trading in flux, are more favorable to privatisation than they were when the Iemma government was re-elected in 2007.

The Rudd government has rightly sought to reverse the damage to public confidence in political processes inherited from its predecessors, of both political colours. Keeping inconvenient promises, such as the commitment to tax cuts, is an essential part of that task.

The loss of public confidence is even worse at the state level, and particularly in New South Wales. The state Labor government should emulate its federal counterpart and follow the policies on which it was elected.

Who knows? If governments were made to keep their promises, perhaps politicians would be more careful about what they promised.

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  1. John Quiggin
    May 20th, 2014 at 09:29 | #1

    Please, no personal attacks on other commenters

  2. John Quiggin
    May 20th, 2014 at 09:30 | #2

    Midrash, as noted elsewhere, nothing more on these lines please.

  3. Ikonoclast
    May 20th, 2014 at 10:28 | #3

    The Abbott/Hockey government knows how to squeeze oranges but it does not know how to grow oranges. That is to say it knows how to squeeze the existing wealth and opportunities (such as they are) out of the poor and middle class to give to the rich but it does not know how to produce new wealth and opportunities. Production of new wealth requires investment in people and infrastructure. This budget claims to invest in infrastructure though I want to check the detail as I have serious doubts. There is much that is tricky and deceptive about this budget.

    Nobody who has examined this budget thoroughly claims that this budget invests in people and their capabilities. Indeed, this budget very clearly gives youth (teens and twenties), who should be our future, the complete shaft. This is the way to create a very disengaged and even angry youth cohort. Homelessness, crime and unemployment will soar under this budget as an entire very important cohort has their life chances trashed. This trend to pro-cyclical austerity and youth bashing will damage Australia’s future very significantly unless it is reversed. There is nothing uglier than the spectacle of rich self-satisifed middle-aged and old men accreting wealth to themselves and ripping off impoverished youth.

  4. zoot
    May 20th, 2014 at 11:35 | #4

    @Ikonoclast
    And, this budget will probably put the economy in recession.

  5. Ikonoclast
    May 20th, 2014 at 13:24 | #5

    Unfortunately, we probably need a great depression to change the political spirit of the time. We probably need to have what I term a salutary disaster. Only a salutary disaster of this type will break the power of neo-liberalism and neo-conservative ideology. The West is possibly on track for a great depression. Europe is moving into a recession. The last quarter of last year saw year the EU’s economy shrink. Australia will very likely have a recession under this govt. Canada is flat and the US only appears semi-sound due to the deluding effects of the parasitic FIRE (Finance, Insurance, Real Estate) sector. US manufacturing has just clawed back to pre-GFC levels.

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