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Tony Abbott: the most radical prime minister since Gough Whitlam

Date

Peter Martin

The government's first budget is likely to change the social fabric of Australia, with measures that will be impossible to undo.

 

I and many others got the Abbott government wrong. It’s turning out to be more like Gough Whitlam’s than John Howard’s, perhaps the most radical in Australia’s history.

The only prime minister in living memory to have put forward such a far-sighted program is Labor's Gough Whitlam. 

My first mistake was to think his first budget would be a typical first budget, full of cutbacks to be followed later by generosity nearer the next election.

It’s been the other way around. The immediate impact of his first budget is close to nil. That’s not how Tony Abbott sells it and it’s not how Shorten sells it, but it’s how the governor of the Reserve Bank sees it. Here’s what he said at the Economic Society conference in Hobart last week: “Over the next couple of years the estimated impact of the budget is not very different from what we had previously been assuming.”

The cutbacks are “actually not particularly large” in the governor’s words.

But that’s just in the here and now. In the longer term the changes will be profound if the newly installed Senate approves them. The only prime minister in living memory to have put forward such a far-sighted program is Labor’s Gough Whitlam. And just as many of Whitlam’s measures became part of the social fabric and almost impossible to undo, Abbott’s changes will stick.

If you doubt that he is governing for the long term rather than the electoral cycle, consider the timing.  Almost all his measures build up slowly, beginning to have an effect at or just beyond the next election.

Pensions. Whitlam announced that pensions would climb until they hit 25 per cent of average male earnings. Abbott has announced that they will fall relative to male earnings without limit, being indexed only by the consumer price index from 2017.

Whether or not you think that’s a good idea (I do, I can’t see why pensions should have had first call on the proceeds of economic growth) you would have to agree that it’s farsighted. It’ll change society in the long term rather than right now. It’s also far reaching. It’s difficult to imagine a new government rolling it back. A new government would face its own budget pressures and would have other priorities. CPI adjustment would become the norm.

The Commission of Audit recommends much the same thing for minimum wages. They would increase by CPI minus 1 per cent for the next 10 years after which they would settle at a new permanently lower level relative to other wages.

States. Whitlam took responsibilities from the states. Howard took more. Abbott is shoving them back. If they want to maintain their hospitals and schools in the future they will have to do it themselves. He will lift grants to hospitals only in line the consumer price index and population even though medical costs are rising rapidly. All he will offer them is the ‘opportunity’ to lift the GST. White papers on both the federation and the tax system are due before the election. If they take the opportunity to lift the GST schools and hospitals will become their problem from then on, not the Commonwealth’s.

Medicare. Whitlam made it easy for doctors and medical providers to provide services without charge. His successor Malcolm Fraser undid Medibank and his successor Bob Hawke reinstated it as Medicare. With one brief exception, the option of free medical care has been sacrosanct ever since, until now. Once fees are in and the reward for waiving them is removed it’ll be hard to go back.

Universities. For as far back as anyone can remember bright students have been able to get into university for free. The method used to be the Commonwealth scholarship, then it was free education under Whitlam and after that a loans scheme under Hawke where the debt didn’t accumulate in real terms if you were unable to pay it off. Abbott’s proposals allow universities to charge what they like (up to an international ceiling) and require students to repay loans at a rate well above the rate of inflation. For students who move quickly into good jobs that won’t be a problem. For those  who do not, the debt will build and build toward a crippling burden making university an  unattractive financial option for people with poor financial prospects. Future governments will be unable to reverse the decision to charge a real interest rate because fees will be, by then, so expensive the cost will be prohibitive.

Financial advice. Independent advisers want to ban kickbacks and the misery they have caused. That’s what the previous government did and what would have come into force on July 1 had the Coalition not sneaked through regulations that will continue to allow kickbacks for “general advice” so long as the kickback is not solely for that purpose and so long as the adviser is affiliated with the institution handing over the money. It’ll allow “general advisers” to set up in competition with genuinely independent personal advisers stifling the best chance the industry ever had of turning professional. And the general advisers will win. The kickbacks will make their conflicted service cheaper.

Regulation. The Australian Securities and Investments Commission is about to lose 12 per cent of its budget. It will have to adopt a lower-cost model of catching corporate crooks notwithstanding a damning Senate report about how little it was able to do with the budget it had. Neither corporations nor charities are universally honest. Labor’s Charities and Not-for-profits Commission was the best chance Australia ever had of subjecting non-profit organisations to the same sort of scrutiny as companies. And the good ones loved it. It was a one-stop shop. If it is abolished as Abbott intends, it will be hard to restore.

Energy. We are in the middle of a life or death struggle between coal and gas-fuelled electricity generation and renewable energy led by wind. Only one side will win. The Renewable Energy Target has tipped the scales in favour of wind. If it stays, coal-fired power stations are likely to close. If it goes, we’re likely to have seen our last big new wind farm. Abbott is siding with coal. If the Senate lets him remove the target we will wear the consequences for a long time.

It is said that when you change the government, you change the country. That wasn’t true of Howard and it wasn’t true of Rudd or Gillard. It’s only true of governments with plans. We live with them for decades.

Peter Martin is economics editor of The Age

Twitter: @1petermartin

148 comments so far

  • I disagree that Rudd and Gillard didn't have plans. They came up with the Carbon tax, the NBN, the NDIS etc etc despite being hamstrung by a hung parliament, internal fighting and a toxic opposition. Abbott, on the other hand, has no ideas and no vision. Most of his goals are predicated on removing any policy initiative that Labor implemented. His only 'idea' is perhaps the PPL, which is simply a juvenile one upmanship of Labor's policy, but has to be seen to be bigger and better.
    Abbott is a danger to us and our way of life. He must not be allowed to destroy our country. His attacks on health and education could indeed be so far reaching that Australia will never be the same again.

    Commenter
    Anna
    Date and time
    July 08, 2014, 12:30AM
    • The problem for Rudd/Guillard was not a lack of plans, but the Greens and Abbott and the Libetal philosophy of "born to rule". The have been the most obstructionist opposition since Malcolm Frazer leading up to November 1975. Abbott is facing tje same problem with this "liquorice allsorts" senate.

      Commenter
      DrPhil
      Date and time
      July 08, 2014, 9:47AM
    • ...to everyone who watched Four Corners last night which lampooned Abbotts stance on alternative clean and renewable energy it is blatantly obvious that this fool simply doesn't get it !!!!

      Commenter
      MP
      Date and time
      July 08, 2014, 10:06AM
    • @Anna: "Abbott, on the other hand, has no ideas and no vision."

      Wrong. As Peter Martin sets out, Abbott DOES have a vision. He just didn't tell us about it before the election. His vision is of the sort of social relations that he imagines prevailed in the 1950s. He is attempting to roll us back there, despite the Internet, despite the mass entry of women into the paid workforce, despite the vastly greater size of our cities, despite the changed multicultural nature of Australian society and despite the multitude of ecological crises which confront the world.

      There is a name for this program. It is called reaction. And it can only be imposed with great violence, because not only is he ignoring he social change of the last 60 years, he operates with an idealised and imagined society as his reference point (forgetting about the Cold War, forgetting about the strong trade union movement and forgetting about the wife-bashing and open misogyny that was the other side of the coin of Aussie mateship.

      And finally, he is trying to wind social relations back while putting recent economic changes into overdrive. Menzies saw home ownership as a necessary part of a society which rejected the temptation of Socialism, but Abbott continues to preside over policies which will return the working class to being renters. Under Menzies, the Basic Wage and the award system guaranteed a civilised life for all (except, of course, indigenous people) - once again, a price paid to prevent Socialism. Abbott, however, wants to slash the minimum wage and thrust ever-larger slices of society into poverty.

      Tony Abbott's program needs to be resisted with every means at our disposal. And the Liberal Party needs to be wiped from the face of the Earth.

      Commenter
      Greg Platt
      Location
      Brunswick
      Date and time
      July 08, 2014, 11:58AM
    • Peter, you have used a very very generous definition of the word plan. Not that they are comparable but for the sake of the analogy Hitler had plans too. Difference between Abbott's plans and Whitlams' plans are the latter was trying to make Australia a fairer society and make those basic rights afforded to a mature Western Demiocracy Health and Education available to all not just some. Abbott seeks to destroy the fabric of our society , he is about making the wealthy wealthier and the poor and disadvantaged worse off. He lied to achieve high office like no other Prime Minister in living memory. I think if all goes well Australian's are planning to send him on his way back to opposition. Let's hope not to much damage is done by then.

      Commenter
      KIDDING
      Date and time
      July 08, 2014, 12:07PM
    • MP - I did see 4 Corners last night and came away with the impression that this government is so far in the pockets of big business (in this case the coal industry) that the future for us, the Australian people, mean nothing to them. To see how they have tried to stop the renewable energy industry from competing with the coal industry is a disgrace and shows they have no interest or belief in Climate Change or the future of Australia's or the world's environment!

      Commenter
      Darcy
      Location
      Sydney
      Date and time
      July 08, 2014, 2:14PM
    • This is the most reckless Government in Australia's history. No regard for the environment, total disregard for international conventions that mould and contain the behaviour of nations, scant regard for the needy at the expense of the wealthy. This country could end up with the best budget outcomes in the world, juxtaposed with the worst human outcomes in the history of this country. It is beginning to take on a kind of economic totalitarianism, where economic freedom is the privilege of a few, compassion is slowly being expunged from the lexicon of government and the quality of life that we had is becoming subservient to the radical excesses of a budget bottom line obsessed group of extreme right ideologues. Sinister and scary times ahead.

      Commenter
      Roger F
      Location
      Melbourne
      Date and time
      July 08, 2014, 3:15PM
    • Anna and Greg,
      Tony doesn't have a plan of his own - he has been following the 75 point blue print given to him by the IPA whose membership are the amjor sponsors of the LNP. It is Government by an unelected, selfish and very greedy bunch of people - many of whom are not Austrlaians - and I am not only talking about Murdoch, but also Adani and a number of Asian property developers and investors.
      Any one not familiar wit the blue print can find it on the IPA website: http://ipa.org.au/publications/2080/be-like-gough-75-radical-ideas-to-transform-australia
      All Peter Martin is doing is regurgitating the line the IPA took well before the election as you can see from the wording of this link.

      Commenter
      Christopher
      Location
      Watershipdownunder
      Date and time
      July 09, 2014, 8:08AM
  • abbot is not radical,
    more like regressive.

    Commenter
    nkelly
    Date and time
    July 08, 2014, 12:46AM
    • Certainly not a worthy comparison considering the fact that Abbotts policies are designed to destroy any remaining egalitarian advances remaining from the Whitlam era. Very regressive as they try to reinstate ideology that Whitlam was trying to overturn. This is liberal ideology in full throttle, but the underlying attitude to Australian society will exist no matter who is in charge.

      Commenter
      LJanes
      Date and time
      July 08, 2014, 9:08AM

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