Newly elected as Prime Minister Anthony Albanese promised voters he would not lose a second in getting down to the tasks for which he had been elected. In the period leading up to the election, he had been criticised by followers for having a narrow agenda. But that included some big-ticket items in childcare, NDIS repair and wage increases for aged care workers, as well as a primary task of budget repair. Affording much in the way of extras was going to be difficult and lobbying for it much discouraged.
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Albanese, his Treasurer, Jim Chalmers and his Minister for Finance, Katy Gallagher have now been at the job long enough that there is a long queue outside their doors. Queues for projects dear to Labor hearts, in health, and education and training, in overseas aid, in payment of social security benefits and the reform of inefficient arrangements established by Coalition governments more for the handout of money to their cronies than for the equitable administration of government services.
Though there is no shortage of rent seekers and opportunists in the queue, many of the causes being put forward have been accepted by the Albanese and the Labor leadership as matters fitting within their agenda, but only when the time is right. Right now, the budget position and the priority of Labor promises doesn't permit even highly desirable policies and programs.
Only when the government has put the economy into a better position will it be debating other urgent and pressing calls for increased spending. Even then proponents can expect a very heavy foot on the brake as a guard against spending over-runs, and rigorous debates about the priority of any fresh task taken up. The government may not have spare money within what will still be a deficit in this term. They do not have the luxury of being able to do things simply because they are popular, help some neglected constituency, or are mere ideological flourishes, party branding and prime ministerial self-indulgences.
Choices can be - must be - made, but they must compete with other pet projects, and events, including defence, managing Pacific relationships, and the still disorganised pandemic response which will also make heavy on scarce money.
Some, conscious of this, are already eyeing off alternative ways of bolstering the government's resources. A decade of logrolling, boondoggles and partisan rorts can be wound back, at least in part, even if some of the savings must immediately be dedicated to health, education and welfare projects that were consciously underfunded by a treasurer expecting the worst at the election. Fixing that problem does not mean lifting the mean-minded, oppressive, coercive and morally judgmental foot over the necks of welfare beneficiaries. That will largely remain policy - until righting the wrong finds its way up the priority list. People in the position that Albanese's mother once was cannot expect much help from this government in this term; their cause is simply not pressing enough.
Of course, the government could improve its financial position, to the tune of hundreds of billions of dollars over 10 years from 2024, by abandoning the legislated plans for third stage tax cuts. Most of these tax cuts flow to the wealthiest half of the population, and the moral case for these cuts would be weak even if the economy were in splendid shape. It is not now, and the country simply cannot afford them if it is to provide the goods and services the public expects.
When the tax cuts were first proposed as part of a three-stage plan, Labor strongly criticised the case for the third-stage cuts. But, conscious of how they were conceived as a double trap for Labor, they ultimately let the legislation go though. The trap was the likelihood of the Coalition declaring Labor to be fighting a class war against tax cuts five or more years before the tax cuts would be in force. The second part of the trap was to create the conditions of a reduced pot of money, in which a Labor government would have to seriously cut government spending to make ends meet.
Lobbies must work hard to be seen to drag an apparently reluctant Labor to dump tax cuts. They must accept blowback
A good many people, Labor and conservative, in academia, business and in the lobbies are publicly urging Albanese and Chalmers to dump the cuts. The case for doing so improves with their arguments, heard by the public. The theatre of it all has seen Albanese and Chalmers to be quite unresponsive and discouraging. They point out that during the election they responded to questions by saying they did not propose to drop the cuts. Even earlier Albanese had consciously thrown out most of Labor's previous policies on tax reform, as put forward in 2019 by Bill Shorten and Chris Bowen and stared down those who criticised him for being weak on Labor principle.
But on a subject like that, Albanese has all the political time in the world. Announcing something new now does not help address his immediate problems. It would not change estimates of government revenue over the next two years. The out-year forecasts would seems better, but there's little political dividend from that. Out-year costs are always difficult to estimate, because so much can occur during the three years before. That is to say that the "market" would not reward the government for an early dumping of the promise. The national market might never welcome a dumping, but the international markets would probably think it responsible and forward thinking. With a decision announced now, an uninspired opposition would try to make mileage from claims of broken promises, incompetent economic management, Labor's incapacity to manage spending, and so on. Why have all this now, unnecessarily, while Labor is working hard - and so far, fairly successfully - to sell and implement its immediate policies and priorities?
One can take it that Albanese would dearly love to drop the tax cuts, but he must balance the political and economic benefits against the costs. Not having decided anything yet, he can deny any plan, even as he complains of the legacy left to him by the Coalition. If economic conditions deteriorate - as well they might - he can at some future time of his own declare a budgeting emergency requiring a review of the cuts. If he does then dump them, he can balance the political costs against the immediate benefit of money he is able to push into new programs and projects. We must, of course, all hope that this extra money is not dissipated in marginal seat rorts - as they were so often by Coalition governments. But if the money was seen as being recommitted into some worthy and widely distributed program - say Medicare fee and rebate review - the public, including the middle class, might perceive the equity of the trade-off.
From a political marketing viewpoint, it might seem a good strategy to have two or more years of Albanese playing Mr No firmly, if sympathetically. His Treasurer has already shown himself well up to the task, able patiently to acknowledge the case for doing more in a particular area, to damn the opposition for their mean-mindedness about the poor and failures to deal with fundamental problems. He has a practiced style of then insisting that he simply does not have the money or the resources to do anything immediately. He can explain that Labor's initial priorities were set on need, even as Labor knew there were other needy projects about. It would only be after they had achieved some of their goals that there might be some spare money to eke out.
Ideally, from Labor's view, one could have interest groups arguing forcefully with the government that it ought to liberate the money put aside for tax cuts for some vital national project - such as health insurance and the restoration of bulk billing. Labor could play coy and reluctant, but eventually surrender, in circumstances where the Coalition, if it still exists might find it hard to criticise.
Marketing an economic plan must appeal to the heart as much as the head
Waiting until almost the last minute to decide what to do about the tax cuts serves another political purpose. Albanese and Chalmers have done a good job of making each of the present priorities seem part of an integrated economic plan. A major investment in childcare, for example, might well appeal on needs and emotional grounds to hard working families. But its stated purpose is to make it easier for women and other carers to fully participate in the workforce, with the general economic benefits to the economy (and the government's revenue) that this implies. The task is more urgent following a pandemic that changed the labour market, affected participation rates, and created extra challenges for managing family work-life balances. Likewise, plans to improve salaries for aged-care nurses are not top priority only because the workers concerned are underpaid and overworked. They are top priority because the economy needs to attract, train and retain many more aged care health workers. Likewise with policies designed to further encourage people into such careers, although in my opinion some of these policies will fail.
It has been repeatedly shown over cycles of offering incentives that dropping or reducing education and training fees in particular industries, such as teaching or nursing does not much work to increase and retain vocational workforces. People choosing such careers are more motivated by other factors, including job satisfaction, work-stress, and career paths. Their industries are plagued by poor retention rates particularly in times, such as now, of serious work stress.
Alas politicians, state and federal, rarely look at the evidence on such matters. The fad for "stimulating" student demand by reduced fees comes around about every decade. By then, with departmental memory, experience and expertise having been run down by ideology and finance departments, and policy work subcontracted out to consultants and interest groups, there is hardly anyone equipped to point out the shortcomings of an undisciplined idea.
This is not to discount ways of encouraging more people into careers where they are desperately needed. Even help with costs (including accommodation) can be part of the package. But much more effort has to go into improving the quality of workplaces, the conditions that create job satisfaction and a sense of doing and achieving something worthwhile, and the sense that a well-rewarded career is in the offing. The pandemic, staff shortages, and the extra shortages caused by medical staff being in quarantine, have massively increased work-stress and resignation rates. It has been aggravated by feelings that the work and the sacrifice have been under-appreciated within government and among the community.
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It may well be that the medical workforce, in hospitals, the community or in aged care could be increased in number and quality best by halving the rate of losses from resignation, rather than mere recruiting to top up the losses. Jim Chalmers might also note that one of the biggest obstacles to retaining staff in these fields is the lack of affordable childcare. It might be a perfect example of how dealing with one problem in a planned way can incidentally solve other ones, to the overall benefit of the economy.
Government needs to recover lost expertise-and experience
Albanese was profoundly influenced by his association with the old lion of the Labor Left, Tom Uren. Uren is particularly remembered for his work as minister for urban and regional development, his focus on planning and belief in collectivism and market intervention to achieve good outcomes in public policy, particularly in housing, and the social and physical infrastructure of cities. But by the time Albanese first became a minister - in the Rudd government - he complained that there was only one person in Commonwealth employ who could be described as a planner. (That was better than the ACT, where planning on the old model has been firmly abolished, and the role of people described as planners has been as uncritical and unresisting handmaidens of cheap and crappy development.)
I commented at the time that the Commonwealth was also shedding almost all of its people who knew anything much about labour market programs, particularly for times when it was necessary to kickstart job development and training. The expertise assembled by Paul Keating, Simon Crean and Derek Volker around Working Nation in the early 1990s had been allowed to disappear, partly on the ground that John Howard, or someone in his government, thought that such matters could and should be planned and organised by McKinseys or Boston Consulting, or some other such group of consultants.
Albanese had to deal with debilitated programs of lost expertise and memory, diminished faith in public programs, and reduced government capacity. His path through was to work with the states to refurbish and develop public infrastructure, particularly in transport. It was an investment the more necessary after years of neglect of roads, rail, and communications technology. Infrastructure is still a buzzword for regional development and labour market stimulation (and National Party rorts). But it is becoming increasingly capital-intensive and ineffective in stimulating local economies.
Over the last three decades, social infrastructure has been neglected and run down. The universities, schools, TAFEs, hospitals, healthcare centres, and the networks providing community services in areas such as mental health, integrated aged and disability care, and childcare. It's not a mere matter of buildings, or paintjobs. It is also a matter of staff, of coordination, or planning and investment to meet future needs, such as an ageing population. In priority terms, these are ahead of more roads and bridges, where Albanese can still rattle out facts and figures from memory.
But the primary focus of the Albanese government has to be social infrastructure and he deserves some credit for the discipline with which he is pursuing this. It's not, of course, a new idea. It's what Medibank was about, in its first incarnation, and in its second as Medicare. And the sewering of eastern capital cities. The doubling of money going into schools and universities and the development of programs for single mothers. Policies based on evidence, but with significant emotional and human appeal - so much so that they mostly continue today without much controversy.
It's Whitlamism with better ministerial management. And with a lot more money in real terms, even in these troubled times. Those with no love of Whitlam see that period as one of chaos, profligacy and waste. Perhaps. But Whitlam's spending as a proportion of GDP, at its zenith, was about 65 per cent of the money as a proportion of GDP available to Scott Morrison and now Albanese. And in his last year of government, Whitlam budgeted for a surplus, something we may not see again in our lifetimes.
- Jack Waterford, a former editor of The Canberra Times, has been writing on public policy for 50 years. jwaterfordcanberra@gmail.com