After Tony Abbott led the Coalition to victory in the 2013 federal election, many pundits blamed Labor's loss on Kevin Rudd: his inconstancy, hollow opportunism and the disunity he invoked among colleagues. These were valid criticisms. But polling suggested the party's hopes were dead well before Mr Rudd wrested the reins from Julia Gillard a few months before the election.
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Labor's demise was rooted in its gradual loss of trust among voters. There was what Mr Abbott called Ms Gillard's "great carbon lie", though that was a requirement of balance-of-power MPs rather than dishonesty. A likely far greater "deceit", in voters' eyes, was Labor treasurer Wayne Swan's repeated promise to deliver a budget surplus.
It was a foolish gamble: Mr Swan knew that no government exercises complete control of the economy. The vicissitudes of the market can be modelled and forecast, but never guaranteed. As Mr Abbott's barbs about "Labor waste" gained traction, Mr Swan made the promise that effectively broke the government. He cut spending in a desperate bid to grasp his surplus but, by December 2012, it was clear it wouldn't be achieved. Commodity prices and company tax revenues slumped, and the Treasury advised Mr Swan that cutting public spending further would endanger economic growth. Labor was finished.
Canberrans are a month away from electing the next Legislative Assembly. Neither of the two main parties have promised a surplus, though both talk about it a lot. Chief Minister Andrew Barr says Labor protected the territory's AAA credit rating despite deep cuts to the federal bureaucracy under Mr Abbott; he says he has a "clear and credible path to a budget surplus in 2018-19", which the Liberals' will junk by wasting hundreds of millions of dollars tearing up light-rail contracts. The Liberals say the light rail's costs will sink the city into debt for decades.
Putting aside whether light rail is the best way to deal with Canberra's traffic congestion, ACT voters should avoid the mistake that politicians regularly (and probably deliberately) repeat: mix talk of surpluses and deficits with capital spending. Departing Reserve Bank governor Glenn Stevens bemoaned this misunderstanding last month, saying governments that borrowed to build useful infrastructure created "good" public debt. Australian Institute of Company Directors chief economist Stephen Walters said the same last week: "The 'more government debt is bad' mantra has dominated ... debate for too long. This accepted public policy orthodoxy ignores the fact that government actually has significant capacity to borrow right now, unlike the household sector."
The main pledges of the ACT campaign have been to build infrastructure (light rail and public hospitals) that will last generations. The costs of these projects are small when seen in that context. Nor should Mr Barr's economic credentials be judged on whether the ACT is in surplus in two years: under treasurer David Nicols' latest budget update suggests that could be decided by external factors, such as federal government decisions or the performance of superannuation investments, as much as anything else.
What voters should decide over the next month is which party is offering the infrastructure and services that best meet Canberra's needs. If they are right for our city, we can afford them.
