Opinion & Commentary
Aussie election offers Key a warning
For New Zealanders, the sight of Liberal party leader Tony Abbott in budgie smugglers seemed a ridiculous sight. Classic ocker, but not an alternative Prime Minister! Yet, under Mr Abbott's leadership, the Liberal Nation Coalition has gone from a fractious rabble to within a whisker of taking government.
Had any serious commentator suggesting this possibility a year ago, they would have been ridiculed. So how did it occur?
First, it happened because of the gap between policy and promise of the Rudd/Gillard government. Second, it occurred because some Labor’s biggest policies were terrible policy and poisonous politics. These points hold a grave warning for John Key's National Party.
When Mr Abbott, a former Rhodes Scholar, journalist and Roman Catholic Seminarian, won the Liberal Party leadership by one vote, the commentariat immediately dismissed him as being unelectable due to his socially conservative views and rejection of an emissions trading scheme (ETS) as the preferred response to climate change. However, in six short months, Mr Abbott turned the opinion polls round to be competitive with Labor, saw off Prime Minister Kevin Rudd, panicked Labor into junking policies, and brought the Coalition within reach of government.
Mr Abbott was very effective at pointing out the fundamental untruth at the heart of the Rudd government. Mr Rudd had been elected as an economic conservative, but in Canberra he morphed into a big spending Keynesian Social Democrat as soon as given the opportunity. The global financial crisis gave him and his government the excuse to place government in the heart of Australian society. This represented a departure of the past 25 years of economic reform begun by the Hawke/ Keating government in 1983. Practically it meant re-regulating the Labor market, new taxes such as the Resource Super Profits Tax, an emphasis on redistribution rather than growth, and a 'government by focus group' approach to public policy.
Ms Gillard, having deposed of Mr Rudd, adopted the same economic conservative credentials Mr Rudd once held as well as conservative positions on a range of other issues, including border security and population control in order to get re-elected.
But ultimately, it was Labor's implementation of massive spending programmes that revealed its incompetence. The BER school building programme resulted in billions of dollars of blowouts. The home insulation scheme, which provided subsidised and free insulations to homes across Australia, was a debacle resulting in deaths, house fires, electrified roofs, a billion dollars worth of clean up, and a decimated industry thathad sprung up to fill the new government created market.
The Rudd/Gillard government showed a penchant for 'nation-building' projects that, even where cost-benefit analysis had occurred, rarely demonstrated an acceptable commercial rate of return. The much vaunted National Broadband Network (NBN) that will supposedly deliver fibre to the doors of around 90% of households in 10 years for A$43bn is an example of this.
This is where the philosophical difference between the two parties was most apparent: The Labor government essentially proposed a nationalised state-run monopoly that would never provide a commercial rate of return, whereas the Coalition argued that a monopoly was undesirable and that the government would only step in to provide where the private sector would not – they also argued that 'putting all of your eggs in the fibre basket' was not prudent – especially at a price tag of $5,000 per household, before charges for the service were applied.
Although the NBN was where philosophical differences about the role of governments and the private sector came into sharp relief, Tony Abbott’s real success was caused by a return to 'red meat Toryism'. He was resolute on government debt, waste, carbon pricing of any sort, and the illegal boat arrivals – as well as offering a generous paid parental leave scheme. By sticking to populist and largely conservative principles that people understood, and by continually highlighting the Labor government's incompetence and hubris, he didn’t need to provide much more.
Had the Labor government actually risked some political skin and shown leadership on issues it believed in, it would have gained credit. Hawke/ Keating proved this with economic reform, Howard/Costello proved it with GST, and, in New Zealand, Lange/Douglas and Bolger/Richardson also proved on deregulation and liberalisation.
There is a lesson in this for John Key. Political capital is not something that can simply be ferreted away and never spent. It doesn’t see a good return unless wisely invested, and although Mr Key and the National Party's poll ratings are still sky high – an effective opposition could easily point out what hasn’t been done: namely raising living standards. Indeed, the Key government has barely made a case for a peel back of the state that New Zealand desperately needs and without which the country will never get ahead. It is all very well arguing for ambition and step change, but at some point it actually has to occur. There is a certain truth to the cliché that if people aren't protesting, you aren't really doing anything.
So far this has manifested itself in an ETS that National previously wasn't going to undertake before Australia. It has seen a promise of lower spending and lower taxes ultimately squibbed, through lack of political courage in actually taking on interest groups and cutting spending and, moreover, it has not seen a clear articulation of what the role of the government should be.
Tony Abbott is not a small government libertarian, but he has articulated what he broadly sees the state's role as being – and the election shows that voters responded. Should Phil Goff (or whoever is Labour leader) be able to construct such an idea, our MMP system could well see Labour returned to office.
To put this into context, if a general election is called before the Rugby World Cup, then John Key now is in the position Kevin Rudd was a year ago: flying high in polls, an opposition in disarray, and the prospect of long-term government. Yet also, with few policy achievements, little direction, and few identifiable convictions.
This alone should be the big lesson from the Australian election. A political resurrection on this side of the Tasman is not a ridiculous prospect.
Luke Malpass is a New Zealand policy analyst at The Centre for Independent Studies in Sydney.
