Federal Politics

Will Australia be caught short as politicians sacrifice the national interest to stay in power?

The tabloid critique of Tony Abbott, and indeed Kevin Rudd, is that they were bonkers. It is made by MPs who claimed to be aware of their idiosyncrasies before casting a leadership ballot for them. Conveniently, they assumed these men would modify their behaviour after they won an election.

The fulfilment of ambition, and the responsibility of government, was supposed to turn Abbott and Rudd into statesmen. Instead, success made them unaccountable. Both men challenged the very system they served by elevating their personal offices above the ministry and caucus.

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Abbott, Turnbull tensions on show

Tensions between Prime Minister Malcolm Turnbull and former prime minister Tony Abbott is on full display for all to see.

They behaved like presidents. It is uncanny how Malcolm Turnbull's eloquent call to restore cabinet government echoed Gillard's plodding justification for taking Rudd's job five years earlier: a good government had lost its way.

Abbott and Rudd were not bad at politics. On the contrary, they were masters of campaigning, so skilled that they rewrote the rules. Abbott was elected prime minister despite his unpopularity. Rudd was the first Labor leader to win office when the economy was strong. Both men made perfect sense in Opposition, yet repeated their predecessor's mistakes.

Rudd nailed Howard for wasting the proceeds of the mining boom, and then lost control of the budget after the global financial crisis. Abbott mocked the Rudd and Gillard soap opera, and then governed by yelling. Was either side actually paying attention in Opposition?

What these driven individuals could not grasp, refused even to countenance, was that an Australian prime minister does not have the formal power of a president. A president is directly elected by the people. This provides security of tenure. A president can only be removed by Congress in the most extraordinary circumstances. The US House of Representatives has impeached just two, at the rate of one per century: Andrew Johnson in 1868 and Bill Clinton in 1998. Both were acquitted by the Senate.

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Australian prime ministers are elected by the party room and, although they have more effective power than a president because they usually control the House of Representatives, they can be dismissed without warning when their colleagues fear losing office. A rapid turnover of leaders is not a recent affliction of our system.

From the moment the Australian colonies were granted self-government in the 1850s, the most precarious position in the parliament was that of premier. In the first decade of federation, Australia swapped prime ministers seven times – from Barton to Deakin, then Watson, Reid, Deakin, Fisher, Deakin and Fisher. Only the first departure was voluntary. The next five changes occurred on the floor of the House of Representatives.

On a superficial level, the Rudd–Gillard–Abbott era matched the chaos. There were five prime ministers between 2010 and 2015, with only one change occurring at the ballot box, in 2013. But there was a crucial difference. In the federation's formative years, there was continuity in policy, from leader to leader, and from party to party. Deakin and Fisher were aligned on the biggest questions of the day: industry protection and the settling of wages through arbitration. (The sole exception was George Reid's Free Trade Party, which ruled for 10 months between 1904 and 1905.)

With Rudd, Gillard and Abbott, entire programs were thrown out with the leader. And on the most vexing issue of all, climate change, each leader took several different positions. John Howard was no better. In government, he was an advocate for the original Kyoto protocol on climate change before he became an opponent, and was against emissions trading before he was for it.

I have no doubt that Rudd and Abbott sincerely believed their centralised approach was necessary, because their parties stood for little more than acquiring power. Ideas had to come from somewhere, and so it made sense to generate the big ones out of the prime minister's office. Rudd immersed himself in the paperwork. Abbott relied on his gut. But their decision making was compromised by a shared insecurity. They wanted to be the smartest guy in the room and so they cleared it of contrary view points.

Inevitably, policies became associated with the leader, not the party. The danger of throwing out policies along with the leader can be seen in how Gillard dealt with the mining tax. To prove that she was not Rudd, and that she could cut a deal with the mining companies, Gillard allowed them to design their own tax.

To date, Turnbull has limited the policy repudiation to the soft targets of his predecessor's obsessions. He terminated Abbott's imperial honours system, lifted the veto on wind farms, and declared the federal government once more willing to fund public transport infrastructure, science and innovation. No doubt he wants to do more, but is wary of giving Abbott a right of reply this side of an election.

The difficulty for Turnbull, indeed for the entire system, is that too much is expected of the prime minister. The rhythm of politics today is the permanent volatility of the financial market. Messiah bubbles form around individuals, then burst. Then the speculators move on to the next saviour. Labor's Kevin07 campaign was the prototype for the leader as superhero. Rudd was the policy nerd who would restore serious government after the cynicism of Howard, and the Mandarin speaker who would keep the Chinese onside.

A similar set of qualities has been projected onto Turnbull. He is the suave intellect who will counter the small-mindedness of Abbott, and the merchant banker who will tame globalisation on our behalf. If the Rudd experience is any guide, Turnbull may remain popular for quite some time, because the public is willing him to succeed. But this type of political celebrity can be a trap. The Rudd bubble ultimately burst because he would not lead. One non-decision was enough for people to write him off. When Rudd dumped his emissions trading scheme, voters concluded that he was just another politician.

On the previous two occasions when Australia reinvented itself, in the 1940s and 1980s, it was taken for granted that the project would be collaborative. Strong bonds of trust existed between politics, bureaucracy and the press, and between the representatives of labour, capital and welfare. Those connections have been broken by a culture that favours the attention seeker over the expert, and the bully over the consensus builder.

The debate we have to have is on the role of government in the economy. It is being forced on us by the market failures of the twenty-first century. Both sides cling defensively to the open model because it tells them a reassuring story of Australian success. But that open model has been exhausted by capitalism's extended crisis and the end of the mining boom. It cannot guarantee prosperity in the future without an active state. Once politicians understand this, they can release themselves from the spell cast by the leader they wish to be, Paul Keating.

The open model excels when the economy is strong, and in response to a global shock. But it struggles when the economy is in transition, because the market forces it is responding to are compromised. The four components of the model are a floating currency, low tariffs, interest rates set independently of the government, and wages determined directly by employer and workers above a minimum standard. Each is now delivering perverse results that are actually increasing the risk of recession.

All the elements of the open model operated with textbook efficiency in the global financial crisis. The currency tumbled, interest rates were slashed and employers spared their workers from mass retrenchment by reducing the hours they worked. The Rudd government's cash handouts were effective because they complemented these measures. The need for fiscal policy now is to relieve the open model from a burden it was never designed for – managing an economy in transition. I am not arguing for stimulus to tide us over until capitalism resolves its crisis, but for a permanent change in the relationship between the state and the market.

Government must reclaim responsibility for the areas of public policy that will prepare us for the future – most notably, education and infrastructure.

As a journalist I am wary of giving advice, especially when it involves a greater role for government in the economy. I can think of no generation of politicians I would trust less with the responsibility of redrawing the line between the market and the state than the current crop. But the choice is being forced on Australia anyway.

The political system cannot restore public confidence without a more responsive government. And the economy won't stabilise without a more active government. The default setting of politics in the twenty-first century – to trust in the market – has proven to be bad economics, even for Australia, the only high-income nation to avoid the Great Recession. It has left us with gridlocked cities, growing inequality and a corporate sector that feels no obligation to pay tax.

If politics waits any longer to address these issues, we will muddle into a recession and government will have to prop up the economy, but from a position of weakness, with the budget in deficit and interest rates too low to cut in a meaningful way.

Australia is in transition. Saying it is easy. The panic kicks in when we are compelled to describe what the future might look like. There is no complacent middle to aim at. We will either catch the next wave of prosperity, or finally succumb to the Great Recession.

This is an edited extract from Quarterly Essay 61, Balancing Act: Australia between Recession and Renewal by George Megalogenis, being published March 14, 2016.

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