Malcolm Turnbull is a good choice as Liberal leader. But he will only become prime minister if Kevin Rudd opens the door for him. Although Rudd is riding high in the opinion polls, his support could easily turn brittle if he doesn’t make headway on big issues such as health, education, global warming and the age pension. He also has to minimise the impact on Australia of the global financial crisis triggered by mad lending practices in the US.
Like Rudd, Turnbull is highly intelligent and extremely hard working. Turnbull’s more personable and a better speaker. Neither is an ideologue. Each has a short attention span.
Despite Labor’s jibes, Turnbull is not “out of touch" because he’s wealthy. He achieved a big swing at the last election in his diverse Sydney seat of Wentworth. That’s not a sign of a politician who’s out of touch when most other Liberals went backwards. John Howard lost his seat. Like all recent prime ministers, Rudd has trouble staying in touch, simply because he travels by VIP plane, is surrounded by bodyguards, and has a stupendous workload.
Rudd rightly argues that Australia is better placed to deal with the global credit crunch than most countries, especially the US where President Bush's profligacy has left its budget in terrible shape. But the Governor of the Reserve Bank of Australia, Glenn Stevens, raised an awkward question last week — what should be done to avoid a repeat of the borrowing binge behind the current crunch. Stevens canvassed one unattractive solution — keeping interest rates at higher than normal levels. Other options, such as restricting negative gearing for shares and property and removing tax concessions on capital gains, are unlikely to be more popular.
Rudd is often accused of running a “do nothing” government obsessed with setting up reviews. The alternative of making an instant decision is often worse. Rudd did so before the May budget when he succumbed to pressure to repeat Howard’s supposedly one-off, pre-election Seniors Bonus of $500. Rudd and key ministers were under the false impression that this expensive payment would be confined to age pensioners. It wasn’t. Nor was the revived $500 Utilities Allowance.
Now Rudd is being hammered by persistent criticism that basic rate single pension is too low. Having confessed that he couldn’t live on it, he refuses to do anything before next May’s budget. Instead of his rushed decisions in the last budget, Rudd would have been better to increase base rate pensions and let the means tests contain the cost. Perversely, he has ignored the obvious funding measure — amending the tax-free status of superannuation pensions for people over 60.
Once retirees have a decent tax free threshold, there is no excuse for letting people over 60 pay no tax on investment income of $200,000-$300,000. This only means that those still in the workforce, or taking entrepreneurial risks, have to pay more than their fair share. So far, Rudd is lucky that age pensioners have not drawn attention to how he could fund a better basic pension by making well-off retirees at least pay some tax.
Rudd has a tendency to announce big policy ideas and then forget about them, or suddenly move in the opposite direction. First, he said he wanted to broaden the “six party” talks in North Asia to try to draw China further into the international system. Next, he talked about building an integrated Asian community, based loosely on the European Union. Earlier this month, he switched to announcing that he will expand the navy to respond to rising military spending by countries such as China.
When Rudd made this announcement, the public was still being invited to attend community consultations and make submissions to help the authors of a new Defence White Paper recommend what sort of force structure Australia should have. The government was not supposed to decide on a bigger navy, or whatever, until after the White Paper is published in February. Rather than following the process he established, Rudd pre-empted the outcome.
The bigger question is why he didn’t wait until the White Paper is finished and focus instead on building support for tackling global warming, which he calls the “greatest moral challenge of our generation”. Rudd has handled the issue badly. He talked up the costs of taking action and urged companies to lobby Canberra for compensation. Some, who will be barely affected, have demanded a hand out to keep doing what they’re already doing.
For example, the natural gas producer Woodside has repeatedly warned that no new gas exports would occur with special compensation. It seems likely, however, that a new $12 billion export plant for Darwin will be announced this week. Exports of coal seam gas from Gladstone in Queensland have already been announced. After Woodside initially whinged that it looked like missing out on compensation under the government’s proposals, Rudd said he thought something could be done for it. It was silly thing to say. The responsible thing would have been to say nothing or better still, “No”.
The latest report from the government's climate change adviser, Ross Garnaut, says that cutting greenhouse gas emissions to 10 percent below their 2000 levels would mean that average annual economic growth would be only 0.1 percent lower than otherwise. The loss for a 25 percent cut would only be 0.15 percent. This compares with a 35 percent drop in the annual growth rate during the six months to June 30, 2008. But Rudd is saddled with his rhetoric about the huge pain involved in acting on global warming and is now struggling to meet the great moral challenge he set himself.
Turnbull will make mistakes. But if Rudd fails to deliver on the big policy promises he’s made, Turnbull won’t be slow to slip though any opening he’s given.
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