The Rudd Government ''narrative'' on a parlous economy is becoming more clear. Mostly, it is that it is not his fault. Blame the world, particularly the neoliberals who reduced many of the economic checks and balances which might have stopped the US economy falling off the cliff. To the extent that it has local ramifications, blame John Howard. For his philosophy, and for his squandering of the good times. Meanwhile, all of Rudd's own ''decisive'' actions are just what is needed, and any other solution, or doing nothing at all, is pretty close to treasonous.
Perhaps he has the politics right, though whether he does or not will not be clear for some time. The politics, after all, have to be right for both the short and the medium term.
For short term, read opinion polls, because if they suggest that the Government's support is eroding (as New Year polls suggested) then nothing is more certain than Rudd will panic and do something else, or something more, in a way which will makes yesterday's statements almost politically irrelevant, if still awfully expensive. A bit like any one of Peter Costello's election-oriented budgets of 2005 to 2007.
In the medium term perhaps a year from now, by when we are in full election mode three or more separate questions will affect the state of the politics: whether the economy is improving, preferably at a rate faster than other nations with which we compare ourselves; whether the measures taken by the Government are perceived by voters (and markets) to have made much of a difference; and whether Rudd and his Government have so capitalised on events, including non-economic events, so as to be in better tune with popular preoccupations of that moment. A lot can happen in a year and much of it cannot be forecast by an economic model. Or even by an astute politician.
Two points that jaded observers of economic lever-pulling might notice are that it is a long time since there was last a serious economic downturn and that Kevin Rudd appears to have an enormous faith in the capacity of state governments. Each fact puts significant obstacles in his path of smooth recovery.
Australia had significant downturns in the mid-1970s, and the early 1980s and 1990s. In each case governments, of varying persuasions, adopted aggressive labour market policies to sop up unemployment, and, in doing so, to develop infrastructure projects that would create jobs and increase demand. Armies of public servants were involved; government had access to bureaucrats skilled in devising schemes and in implementing them, whether directly or through state governments and third parties. Particularly under Simon Crean and his Working Nation projects in the early 1990s, the public administration had become quite sophisticated in packaging, focusing, implementing and tap-turning, as well as in adding training and lasting value to projects. We came a fair distance from painting stone, or digging then filling in holes. Government departments and agencies were well structured around the experience gained.
Alas, much of the expertise gathered and most of the experience gained disappeared during the Howard years. It might be tempting for Rudd to think that the loss of this experience was a neoconservative plot, but that would be unfair whatever Howard's predispositions, he was not averse, when it suited him, to focused and successful labour market programs, or pump-priming. But he did not need them much, because he was presiding over a period of unparalleled prosperity and falling unemployment. There were people who pointed to the need to husband some sort of force-in-being able to cope with a future downturn, or at least to preserve some of the accumulated experience, but such sentiments ran counter to an early focus on contraction of government, on contracting out, on distaste for market intervention, and on a foible of Howard in believing that the ''voluntary sector'' could handle some of the tasks.
Yet even the Howard Government came to recognise it had some problems, even if it did nothing much about it. Drought, as inevitable as economic downturns if not always in sync, caught government by surprise, in part because Commonwealth public administration had virtually disappeared from rural towns and the Commonwealth lacked the mechanisms to manage relief programs.
And then there's the problem of the states.
Of yesterday's $42billion package, $28billion is focus on infrastructure, primarily education infrastructure, rather than going directly into the pockets of the cash-poor. Most of it, whether on schools or roads, will have to be administered by the states.
The states have already been doing nicely with infrastructure money from the election of Rudd, with election commitment spending on computers, roads, public housing, hospitals and communications, and first steps on a major program of renewing and developing the national infrastructure in place by late last year. There are, in theory, also major programs involving the development of pre-school education, homelessness and reviving public health in play.
When Kevin Rudd says ''he'' is going to build 20,000 houses, or ''give'' every high school kid a computer, he means that he is going to write a cheque to state and territory governments to do it.
Rudd, like Howard, Keating and Hawke before him, has devoted considerable energy to improving cooperation and coordination with the states, streamlining and refocusing accountability arrangements and in getting high-sounding communiques from premiers and chief ministers. Until the election of a Liberal Government in Western Australia, he has had at least the motive of trying to help Labor regimes.
Yet the record of the states in delivering on their commitments is lamentable. And the record of the Commonwealth, in being able to bribe, cajole or force better delivery is, if anything worse.
It's a proposition which might be tested with the question of whether one thinks that the NSW Government, in its present condition, can be expected (or trusted) to deal wisely with the $5billion Kevin Rudd proposes to give it, more or less immediately, to improve facilities in that state's primary schools. Or whether the Northern Territory Government, with its abject record of failure (and dishonest misappropriation of resources) can be trusted, this time about, to share out the money appropriately in its primary schools.
One does not have to expect corruption, conscious maladministration or plain incompetence to foretell the worst. One simply has to note that the states themselves lack the staff, resources, the experience or the expertise to efficiently manage the money. Quite apart from the menaces presented by the politicians is the fact that state public administrations are exhausted, debilitated and under deep stress. As often as not, their senior managers (even those who have not jumped ship to a sudden welcome in Canberra) have become deeply compromised by concubinage with their bosses. Others are deeply compromised by years of running things not in the public interest, but so as to appease their ''stakeholders''. These are not people well equipped to make good quick judgments between school libraries or assembly halls, or to organise prompt execution.
Rudd, in short, is setting himself up for the sort of agony, writhing and frustration the Commonwealth has long had over state management of public hospitals, or the setting of standards and outcomes in public education. And the problem is much more than a structural one, or an inconvenient incident of federalism: indeed, given the Commonwealth's ultimate hand on the purse, it is as much its fault as the states.
Inertia about changing things is also as much about dodging political responsibility as inability to recognise what could and should be done, within prevailing constitutional and political possibility.
One could be more certain of something happening on the ground, achieving the dual purpose of helping citizens and priming the economy, if one contracted out the performance of the government's ambitions to one of the much despised edifices of pirate capitalism, such as Macquarie Bank or Babcock and Brown.
Jack Waterford is Editor-at-Large.
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