Broken promises and budget anger …

this chaotic mess won’t be fixed with the usual political script

That’s the headline for my latest piece in The Guardian. It’s over the fold

Broken promises and budget anger …

As its first full year draws to a close, the disarray of the Abbott government is obvious to all, and easy enough to understand in terms of broken promises from a government that came to office almost entirely on the basis of branding its opponents as liars. Only slightly less obvious, but much less well understood is the disarray of the entire political process, reflected in wild electoral swings, the success of ‘anti-political’ candidates and the breakdown of the assumption that a newly elected government can expect at least two terms in office.

This disarray in turn reflects the exhaustion of the project that has dominated Australian politics since the 1980s, and the rejection of that project by the electorate. Variously described as economic rationalism, microeconomic reform and (my own preferred term) market liberalism, the set of policies comprising deregulation, privatisation and competition policy was, in some respects, a necessary response to the economic breakdown of the 1970s. But whatever was useful in that agenda has long since been implemented, along with much that was harmful. What remains is an unthinking assumption on the part of the political elite that adherence to this agenda is the hallmark of good policy, whereas following the wishes of a democratic electorate is irresponsible populism.

In policy terms, the first year of the Abbott government followed a script that has been played out many times, by governments of both parties, since its first run under the Hawke government in 1983. Having been elected on a ‘small target’ strategy, with seemingly ironclad commitments not to cut spending on services or to engage in radical deregulation, the government discovered a budget emergency and appointed a Commission of Audit which recommended ditching all electoral commitments. This produced a ‘tough’ budget, which somehow managed to avoid imposing any significant pain on the kinds of people who make up Commissions of Audit.

According to the script, public hostility to the budget cuts should have dissipated over time, and strong economic outcomes should have produced an endorsement of the government’s policies. The tough first budget would have made room for some sweeteners in the leadup to the election, which would result, as usual in the return of the government for a second term.

But the script has stopped working.The benefits of microeconomic reform were always oversold. Our economic success over the years since the deep recession of the early 1990s was mainly due to good macroeconomic management and, to a lesser extent, good luck with the mining boom. The mining boom is over, and macroeconomic management has been rendered ineffectual by obsessive focus on budget deficits, with the result that unemployment is rising and real incomes are falling for many workers.

More importantly, the public, which stopped believing in the microeconomic reform agenda many years ago, is now punishing governments when they persist in pushing it. The obliteration of the (generally competent and otherwise popular) Bligh government in Queensland after it used the standard ‘budget emergency’ script to introduce a privatisation program was the first clear instance of this. Bligh’s successor, Campbell Newman, followed the same script to justify the sacking of thousands of public sector workers and is now facing the possibility of defeat himself. The Victorian state election result is yet another example.

The political class seems incapable of responding to this situation. The best evidence for this is a recent Quarterly Essay by one of the most acute observers among that class, Laura Tingle, accompanied by a shorter piece from a former minister in the Bligh government, Rachel Nolan. To quote Tingle “The things we are angry about betray the changes that have been taking place over recent decades. Politicians no longer control interest rates, the exchange rate, or wages, prices or industries that were once protected or even owned by government. Voters are confused about what politicians can do for them in such a world”

Tingle and Nolan can see the problem: after decades of experience with the policies of deregulation and privatisation, voters don’t believe that these policies have delivered the promised benefits, don’t want any more of these them, and would rather see them reversed than extended. But ‘governments don’t do that any more’. The alternative view, that, having failed to convince voters of the merits of their preferred approach, the political class should instead try to give them what they want, is literally unthinkable for them.

And this is the position of some of the most thoughtful of the insiders. Tony Abbott and his ministers, along with many of the Labor Party, are living inside a bubble where the problem can’t even be posed. In these circumstances, is it surprising that voters turn to Glenn Lazarus and Jacquie Lambie?

It is, of course, impossible to wish away the changes of the past thirty years. Equally, there is no reason to take those changes as permanent and irrevocable. The growth of the financial sector and the redistribution of power and resources to the top 1 per cent of the income distribution have not, as promised, delivered improved outcomes for all. In most developed countries, the outcomes have been disastrous.

Thanks to a combination of good luck, good management and a comparatively resilient commitment to fairness Australia has avoided much of the growing inequality and poverty seen in countries like the US and UK. Rather than mindlessly pursuing the deregulatory policy agenda of the 1980s, we should be looking for ways in which governments can in fact do more for voters in general, even if this means doing less for the financial sector and for wealth elites.

The Abbott government is clearly not up to this task, and Labor has a long way to go before it can begin to tackle it. But until the political class accepts the need to meet the wishes of the electorate, the chaotic mess before us will remain the norm in Australian politics.

108 thoughts on “Broken promises and budget anger …

  1. It would be good to get a clear statement of what they hope to achieve with this additional “price signal”.
    Maybe there’s a member of the rabble which now occupies the Treasury benches who is honest enough to admit they want to destroy bulk billing.

  2. It is pretty obvious, Zoot, that they are attempting to throw the blame for the funding cuts onto doctors who have the “option” of absorbing the cut themselves and maintain pricing to the public or operate a 2 tier pricing programme with a cheaper price for the disadvantaged and a higher price for everyone else. Or, most likely, just slug everyone the same, and take the blame for being greedy.

  3. @zoot
    My daughter spent a year in the US and to be fair to their health system, Americans are poisoning themselves through what is loosely described as ‘food’. Large swathes of the population practically live on processed and fast food.

  4. @John Brookes
    As doctors have quickly pointed out, there is a cost to their collection of the $5 from the patient, so they will possibly add a charge—to the patient—to cover that additional cost. The alternative is to see more patients per standardised day, but wait, didn’t PM Tony Abbott say this would increase doctor-patient time? This whole thing strikes me as a political calculation and not a financial one.

  5. @Salient Green Thats not necessarily by choice – fast food is often cheaper than home cooked and for those working long hours and who live out of town it’s often the only way a family can be fed – the family eats in the car en route. To keep prices down some “restaurants” serve meals that are largely pre cooked ie they open packets and assemble product on a plate.

  6. @rog Thanks for adding weight to my point that the American health system is pissing into the wind. Trying to brake a car with the throttle fully open is another metaphor.
    The wind and the open throttle being population growth, consumption growth, eating poor food, taking too many medicines, gambling, lack of jobs, poor education.

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