Government and governance | Australia, The World

28 September 2015

Sudden political changes could broaden the policy gap, writes John Hewson. 

A distinguishing feature of Australia’s political discourse in recent years has been the narrowing of differences between the major parties, undermining what would otherwise have been even significant ideological and policy differences.

For example, when Kevin Rudd ran against John Howard he argued that he too was a fiscal conservative, so both sides have committed, more or less, to return the Budget to surplus. Similarly, both sides commit, more or less, to stop the boats, and so on.

It is an interesting contrast to observe the political classes (both right and left) in the United Kingdom now trying to adjust to fact that the opposition Labour Party has elected Jeremy Corbyn as leader – a hard-line Socialist, anti-monarchist and pacifist. Moreover, as one of his first acts, he appointed John McDonnell, who is even more extreme than he is, as shadow chancellor.

Between them they propose a particularly radical policy agenda. They support nationalisation of the banks, re-nationalisation of the railways and public utilities, reopening of the coal mines, new powers for trade unions, a blanket ban on fracking, an end to the independence of the Bank of England, a 60 per cent top rate of income tax (plus a 10 per cent wealth tax), imposition of some sort of Glass-Steagall split between investment and retail banking, and a Tobin tax on financial transactions.

In addition, they support a massive program of publicly funded infrastructure development, and insist that there is at least GBP 120 billion of uncollected taxes that could be used to give the economy an immediate boost.

This is a very sharp contrast to the stance of the previous, Ed Miliband-led, opposition, and obviously caught Prime Minister David Cameron offside, whose initial, ill-considered response was that the election of Corbyn represented a serious threat to national security.

Of course, it is some years to the next election, and so the electoral appeal of this Socialist alternative won’t be tested for some time. Nevertheless, Cameron can be expected to encounter significant resistance to policies of austerity or other market-based initiatives. It should be a genuine contest of ideas and ideologies.

However, I suspect that Corbyn will be mugged by economic, and some political, realities. The case of Greek Prime Minister Alexis Tsipras immediately comes to mind – he was initially elected on a very strong anti-austerity agenda, only to have to settle for even more austere policies to sustain bailout support to remain within the Euro.

Returning to Australia, there is a very interesting and important question as to just how different the policies of a rejuvenated Malcolm Turnbull will be, in respect of both the Abbott government and the Shorten opposition.

Clearly, some policy positions were compromised, at least on face value, by Turnbull to win the vote, most noticeably his quick recommitment to Tony Abbott’s climate policies – the emissions reduction target, opposition to an Emissions Trading Scheme, and support for Direct Action – and by passing responsibility for water back to the Nationals.

However, he still has some room to move here by increasing support for renewables, expanding the Clean Energy Finance Corporation and the Australian Renewable Energy Agency, and so on, and there are some early indications that this may be happening.

I was concerned by new Treasurer Scott Morrison’s first media appearance, where he argued that the Budget problem was essentially an expenditure, rather than a revenue, problem, when clearly it is both. Inconsistent statements are already appearing in other policy areas.

It will be very important for Turnbull to soon delineate an overarching economic and social narrative, to spell out how he sees the transition from an economy based on a resources boom, to whatever, within which he should be able to spell out a reform agenda in key areas, also clearly emphasising the differences from Bill Shorten.

Turnbull criticised Abbott for failing to sell the message. Actually, Abbott never had a consistent message to sell.

Turnbull needs one as an early priority.

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One Response

  1. Iliapi Ratuvuki says:

    I just want to congratulate Jeremy Corbyn.

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