Managing expectations

Obama started on a high, before falling short in the delicate task of managing expectations against realistic delivery. In Australia, Turnbull faces a similar challenge, writes John Hewson.

One of the essential skills of good government and good politics is the management of expectations.

Perhaps President Obama’s greatest failing was to raise expectations right across American society, way beyond his capacity to deliver.

I clearly recall many of those speeches to almost every conceivable American audience, through the Democratic Primaries, and then through the Presidential Election itself, making all sorts of commitments and promises, all collectively under the banners of  “Change We Can Believe In”, “Yes We Can”, “Our Time For Change”, “Stand for Change”, and so on.

Yet, after some six and a half years in the presidency, he has fallen way short of the expectations created, both in general, and in terms of specific policy areas and issues. In fact, he has “changed” very little.

Not only did he enjoy enormous initial electoral popularity, but he began his presidency with the Democrats having control of both Houses of Congress.

As it happens, according to the Gallup Poll, his popularity peaked just a few days after his first inauguration, in January 2009, at 69. It has been as low as 38, and currently sits in the high 40s, about the average of his whole presidency to date.

By comparison, at this stage, he rates above George W. Bush, Johnson and Truman, but well short of Eisenhower and Clinton.

In Australia, there is little doubt that the switch from Abbott to Turnbull has been generally well received, and there is also little doubt about Turnbull’s popularity in the polls.

Turnbull has created great expectations, and continues to feed them with his willingness to open up many policy areas and issues, and to encourage who-ever to place all options on the table.

But, is Turnbull doing an Obama? Has he raised expectations well beyond his capacity to deliver?

So many of the policy challenges in this country have been left to drift, for so long, that any solution will be, both politically and in policy terms, large and difficult. Moreover, Turnbull must deal with a rump of some 30-40 of his colleagues in the Government that simply don’t like him, an Opposition that still propagates “Nope”, and a hostile set of Greens and other cross-benchers in the Senate.

Popularity can be quite ephemeral, and Turnbull’s will surely wane as he actually takes key decisions where, inevitably he will create both winners and losers.

Letting issues run, with an unstructured public debate, may prove quite costly, both politically for the Turnbull Government, and in terms of the substance of the policy outcome.

For example, the recent tax debate has seen expectations starting to run wild, with various interest groups not only staking a claim, but also hardening their bargaining positions.

Big business is happy to see an increase in the GST provided it funds a significant cut in the corporate tax rate.  Small business wants a lower rate and more targeted concessions. The welfare lobby wants adequate compensation, with some net real increases in some benefits. Individuals, households, and unions want compensation, a refund for bracket creep, and lower personal tax rates. The Opposition won’t wear an increase in the GST, but want cuts in superannuation concessions. The States want sustainable funding for hospitals and schools, and so on.

This so-called debate mostly ignores the numbers – just how much revenue can actually be raised, how much adequate compensation will actually cost, and what trade-offs will be essential.

Inevitably, the Government will need to come up with a tax package where clearly some expectations will need to be trimmed, others unmet altogether – there will be pluses and minuses, winners and losers. This will need to be managed very carefully.

And all this against a Budget that is running well out of control, in a still very flat economy.

This piece was also published by the Southern Highland News.