Core promises

My article in today’s Fin is over the fold

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.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

38 thoughts on “Core promises

  1. John,

    Myanmar’s qunadry is ir adoption of socialism.

    How many disasters of this magntitude are needed before you might, in the words of Oliver Cromwell suspect you are wrong?

  2. Louis,
    Dictatorship is dictatorship – whether run under the banner of “The Burmese Road to Socialism”, “All power to the Soviets” or “Arbeit Macht Frei”. While I frequently disagree with our host on several areas, I would not confuse his opinions with any of those three.

  3. Howard more honest that Hawke – you’ve got to be kidding! I don’t recall Hawke saying “never ever” about a CGT. Howard’s “never ever” was a blatant lie – for political expediency only.

    Query – what percentage of the population were affected by the introduction of an FBT or CGT? I know what percentage was affected by the GST. I don’t think you can put them in the same class.

    I also don’t recall Howard advertising his work “choices” legislation before an election – he had no mandate on that one. How valuable is the Senate – our house of review? Perhaps the Howard Govt. only lasted as long as it did, because the Senate did such a good job of moderating the bills that came before it.

  4. Yes a good history article John about terms that have recently faded from the lexicon. It’s now all about ‘meeting commitments’, rather than unseemly core/non-core and L.A.W promises, etc. Even undertakings is a bit too strong it seems. Of course if you are not ‘meeting your commitments’, then that could be termed ‘attempting to meet your commitments’ or for those with more revolutionary zeal and fervour, it would be a case of the ‘struggle to meet your commitments’. Either way it would no doubt involve the need for lots more meetings.

  5. I’m sure you have some sort of snark intended here, observa, but it’s not working. It’s really difficult to get past the brute fact of Howard’s mendacity, no matter how fast you spin.

  6. Actually John I think it’s more a case of an increasingly hostile attack dog media that’s making life progressively more difficult for our leaders and as such they’re becoming more PC with their vocabulary over time. Can’t blame them. Cause and effect. Also I suspect the incumbents are fast running into the-‘Gotta problem? Blame Labor!’ paradigm. Be interesting to see how the meeja react to the Rudd Govt’s first Budget.

  7. Heather Ridout scored the budget 8/10, and said she was a hard marker – also said that business had been waiting for some of these things for years. NAB economist said the budget delivered all of Labor’s promises. One economist said that nearly all promises were met, except for a change to have high income ($150k) means testing for some ‘welfare’ elements.
    Sky news seemed to take the budget okay. Malcom Turnbull had a bit of a sook about inflation even though he did’t believe in inflation a fortnight ago…

    But, will the telegraph still have “Beer, cigs, up” as its headline tomorrow?

  8. PeterRickwood wrote: “SJ, much as I disliked Howard, I have to side with Howard on the GST. He may have been hiding his true intentions for some time before running on the GST, but at least he did bring it out in the open and run on it.”

    Donald Oats wrote: “The fact that (Howard) placed GST as centrepiece in the next election campaign does not let him off the hook …”

    spiros wrote: “(Howard) at least fought the 1998 election saying he would introduce the GST in his next term.”

    In fact, as I demonstrated on 15 Sep 05, it is a myth that Howard openly and honestly put his GST proposal before the electors even during the 1998 elections:

    (John Howard) concealed his intentions to introduce the GST almost to the last minute. A farcical inquiry into our taxation system was held. When Liberal commmittee Paul Zammit came to realise that the Government was not interested in seriously considering submissions other than submissions in favour of the GST, he resigned.

    John Howard timed the elections to make it impossible for Parliament to examine the GST legisaltion prior to the elections.

    In the weeks leading up to the elections, millions of taxpayers dollars had been spent to promote the concept that ‘reform’ to our tax system was necessary.

    In spite of that the Coalition still lost the popular vote in the lower House (roughly 51.5% against the Government on a two party preferred vote) and a decisive majority of Senators who stood opposed to the GST were elected.

    After the election a Senate Inquiry found that many of the claims made during the election campaign were false.

    The Government still had the hide to push through its GST legislation. The most galling aspect of this whole sad episode was that Australian electors were never given the choice at the next election to reject the GST because, as Peter Costelllo so impudently reminded us over and over and over again, “The Labor Party is so opposed to the GST that they are fully committed to implementing it should they win the next election.”

    SJ, I wholeheartedly agree with you. Thank you for finding that article by Alan Ramsay Let’s have the honest truth, once and for all of 18 Aug . In case, it may be of interest, I have also posted material on NSW electricity privatisation at candobetter.org/NswElectricity.

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