Tuesday, 27 March 2012

Queensland election

Of course the Queensland election has federal implications. No-one can quantify how much but the consequences of one of the biggest losses ever in Australian politics cannot be ignored.

To suggest otherwise, as has been the ploy of senior government people like Bill Shorten and Craig Emerson, is to collectively bury their heads in the sand.

And it suggests that they want to ignore public opinion. The idea that politicians can just blithely ignore public opinion is not realistic in a democracy. When confronted with an adverse sample poll like the Newspoll most politicians say that polls are not perfect and that the only poll that counts is the poll on Election Day. When confronted with a 'real poll' like Queensland's poll we now hear that the poll only reflects Queensland politics. The truth is that polls are useful and this explains why the political parties and newspapers are always polling the electorate. In Queensland, and earlier in NSW, the polls were quite accurate in predicting that Labor was going to be thrown out of office.

The same polls have been saying for months that federal Labor will lose the next election. These polls also said that John Howard would lose in 2007 and they were right.

Julia Gillard had a good win over Kevin Rudd last month but the result was built on the oft-stated view of Labor MPs that they took no notice of public support for Kevin Rudd. I understand why they don't like Rudd but that is a diversion. Their fatal mistake was not their veto of Rudd but their failure to realistically assess Gillard's standing with the Australian public. She is probably now locked in to lead Labor to the next election but it was a bad decision by Labor's caucus. If they don't reassess their leadership then the chances are they will have to reassess it straight after the next election.

Gillard's standing is a complex list of various factors; in the same way that Anna Bligh had her pluses and minuses. Bligh certainly undermined her standing by promising, before the previous election, to keep a state fuel rebate and then abandoning the rebate after her re-election.

Her support in the polls also took a dive for her assets sale policy by not mentioning the proposal until after the election. She seems to think that such back flips are ok. She promised before this election that she would remain in the Parliament if she lost to Newman. She ditched that promise within 24 hours.

There is a parallel between Bligh and Gillard. Gillard promised that she would not introduce a carbon tax six days before the last federal election and then broke the promise. The issue goes to the heart of public concern about economic management and the cost of living and reinforces the perception that Gillard can't be trusted. Labor ministers say that everyone knew that Labor wanted to price carbon and that therefore this absolves them from the broken promise. The trouble is that no-one else sees this as a credible excuse for the spin.

The consequences of the Queensland election are not confined to Labor. They will confirm Abbott's view that he should stick with his approach on policy. The truth is that he is under no pressure to initiate economic policy measures because he is well ahead. He could announce what he will do on unfair dismissal to support small business but he reckons he does not have to bother because Labor is on the nose with business large and small. He will keep his paid paternal leave because his own MPs will not criticise him while he remains well ahead. He will not reshuffle his ministers because why bring in new talent while his team looks better than Labor. And why should he worry about being targeted personally by Labor. Anna Bligh was obsessed with her opponent and look where that got her. No-one was listening; a problem that besets Gillard.

Campbell Newman has achieved an incredible double feat. He stood for a marginal seat that needed a swing of 7 per cent and won a convincing majority. Then he won the right to form a state government without ever having been a Member of Parliament and reduced Labor to a rump of seven MPs.

Politics is in his blood. It now seems likely that Campbell has paved the way for a federal Coalition government. This is not new for the Newman family. His father Kevin Newman won the Bass by-election for the Liberal Party thereby setting up Malcolm Fraser's huge win in 1975. Then later his mother Jocelyn Newman became a senator for Tasmania, helped Howard win in 1996 and served as a cabinet minister in the Howard government.

Of course, a day can be a long time in politics and if Newman does not meet expectations then a swing to the LNP in the next federal election may not be so great. But, he has already made a solid start. If he tackles Queensland's finances in his first budget, then he will have made a strong start. Reducing unemployment to 4 per cent may not be easy but if he does something for small business like cutting out penalty rates in tourism and if he reforms Queensland's industrial relations system then he will not only help Abbott politically, he will also be showing him how to address the labour market reforms needed in the federal system.

PS - Bob Katter got a drubbing. The best he could do was win one seat with his son as the candidate, lose one and win one. Most of his votes were from Labor. In this election, anybody could win votes from Labor. His policies were bizarre including a funny money proposal to reduce interest rates to 2 per cent, a vicious homophobic advertisement and an alliance with militant unions who then repudiated him. Then he declared he was the new political force in Queensland. What a joke!

Tuesday, 20 March 2012

Labour market needs reform now more than ever

Paul Keating made the claim that good policy equals good politics. It may not have been original but regardless of party political views, it is an approach that serves the national interest.

The trouble with a lot of today's politics is that too many people start by worrying about the politics before they consider the merits of good policy. The better approach is to first focus on what would make good policy and then worry about how to manage the politics.

A lot of Australian politics is about economic management. An opposition party wanting to win an election needs to make sure that they have the policies that will also win the election after next and beyond. Good policies need to be implemented early in the first term of a new government if it is going to last more than one or two terms.

Labor's strongest pro-reform team in the last 30 years was Hawke and Keating. Their early reforms to deregulate the financial markets, to float the dollar and to cut tariffs gave the Hawke years a solid economic foundation. Keating was elected prime minister because Hawke was judged as inadequate to meet the challenge of the Coalition's Fightback! policy.

Fightback! was the next instalment of reform; Keating should have pinched Fightback! But instead, to win the '93 election, Keating had to abandon his best policy proposals. He opposed the introduction of value-added tax he had earlier advocated and he spelt out a new approach to labour market reform but then capitulated to the unions on implementation.

In 1996, the Howard government moved quickly to balance the books by cutting Labor's massive debts and to significantly improve the operation of the labour market. Both reforms paid handsome dividends and underpinned the longevity of the Howard years. One very obvious thing about the Gillard Government is that despite all the spin about reform it has undertaken very little real economic reform. As a result it has already shortened its likely tenure in office.

One of Keating's best policy initiatives was the speech he gave to the Institute of Company Directors in April 1993 when he said:

Let me describe the model of industrial relations we are working towards.

It is a model which places primary emphasis on bargaining at the workplace level within the framework of minimum standards provided by arbitral tribunals. It is a model under which compulsorily arbitrated awards and arbitrated wage increases would be there only as a safety net.

This safety net would not be intended to prescribe the actual conditions of work and most employees, but only to catch those unable to make workplace agreements with employers. Overtime the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses.

This idea of labour market reform, sponsored by Keating, died with his departure from the parliament in 1996. It was then the Coalition's challenge in the face of Labor opposition. In 1996 the Howard government confronted the challenge but 16 years later the opposition to reform still haunts Australia's economic prospects. The unions' 2007 campaign highlighted the difficulty of campaigning on labour market reform. But instead of attacking the bogeyman of WorkChoices straight after the 2007 election, many within the Coalition simply acquiesced in Labor's assertions of how incredibly potent the union movement were in removing the Howard government.

This was a huge tactical mistake. There were various reasons for the loss in 2007 and certainly one of them was the fact that the Howard government had been in 11 years. The obvious tensions between Peter Costello and John Howard were also no help to Howard's re-election campaign.

What the Coalition has forgotten is that the WorkChoices bogeyman is nothing new. The bogeyman was alive and well in the period leading up to the '96 election but the Coalition never walked away from labour market reform.

In reflecting on the election, veteran journalist, Peter Charlton said in the Courier Mail on March 30, 1996:

Prime Minister John Howard made industrial relations the major difference between the two parties in policy terms, as the advertisements in the last week of the campaign showed.

Unlike the situation in 2012, in the 12 months leading up to the 1996 election, the Coalition was constantly taking the fight up to the Keating government on labour market reform. The Coalition had a clear view about unfair dismissal, the need to reform to the Trade Practices Act and other key elements of the changes that were necessary to correct the imbalance in the system. In contrast today the Coalition remains largely silent on the question of industrial relations reform.

If you have a good policy you can win the debate. In 1996, having hammered the Keating government over unfair dismissal law for many months, in the last week of the campaign, the Keating government finally gave way and announced that it would review the unfair dismissal law if Labor were returned. We won that debate because we never gave up on our small business constituency. At no stage did John Howard announce that he would not have individual agreements. He made it clear that our policy was to tie wage increases to productivity and thereby lift living standards. As Bill Kelty admitted after the March 1996 election, "the community and also their own membership had rejected the Accord". The ACTU's folly is now being repeated with demands for wage increases without productivity, more arbitration and the reappearance of a 'them versus us' mentality.

In many respects the challenge for Australia on labour market reform now is even greater than it was in 1995/6. In 2012 the system is going backwards. Union militancy is on the rise; in the latest statistics strikes are the worst since 2004. Choice of agreement making has been cut. The ACTU is pushing for more arbitral powers and the system has been widely re-regulated. And poor workplace practice is starting to impact on the resources sector which is maintaining our living standards. Keating's concept of a simplified award system has been trashed with Gillard's modern awards. Australia's productivity performance is poor and living standards are clearly under threat. Small business is discouraged from employing people and the Government has been stacking the industrial tribunals with its own people. The scandal within the Health Services Union has basically been buried by the system. The former head of Fair Work Australia retired without mentioning the scandal and the new head is yet to make any comment and it is unlikely that he will. FWA is refusing to cooperate with the police in Victoria and New South Wales.

It is never too late to advocate good policy. Whether it is Gillard or Abbott, the need for genuine labour market reform is becoming more pressing every day in the national interest.

Tuesday, 13 March 2012

Carr is in, Rudd is out, but nothing much has changed

I have been away for three weeks and sadly nothing much has changed except that Kevin Rudd is out of the leadership race for now.

Although his popularity could have been a help to Labor, even marginal seat holders wouldn't have him. So we now know how much his own side can't stand him.

Apart from Kevin's current demise, the Labor leadership contest did nothing to deal with the many problems being loaded onto the Australian public.

Julia Gillard still holds the keys to the Lodge but we don't know for how long.

The basic equation for Labor remains; can Gillard get the votes to win a second term? Today, this issue has little prominence. The next election is not due until late 2013. When the election is nearer the poll ratings will not be ignored as they were by the ALP on February 27, 2012.

A last-minute change of leader is not new; there have been lots of last-minute changes at both state and federal levels. It will be an option carefully considered by Labor in 2013. It might be like the Rudd takeover of Beasley or Bob Hawke's last minute substitution of Bill Hayden that secured
Labor's win in 1983. Or it might be a John Howard situation in which case Gillard will go to the next election and lose.

The leadership election provided no response to the obvious fact that Australia's economic performance is not nearly as great as claimed by the Government. The latest GDP figures are worse than average, unemployment is up a notch as expected and we know productivity is languishing. Poor productivity is not helped when time lost to strikes in the last 12 months was twice the previous 12 months. This is indicative of the slow burn of Labor's economic management. And, from the July 1, 2012, the carbon tax will further penalise economic performance and will just add to the pressure to living standards.

Unfortunately another very obvious problem is our growing debt burden. Although Labor still promises a surplus, it is hard to believe unless there is some fiddling of the books. And that does not take into account the National Broadband Network which still looks like being the biggest white elephant ever built in Australia.

There are at least five other issues on the agenda still simmering away.

Education reform is most unlikely to go anywhere because Gillard is too weak to push big changes and even small changes are likely to raise suspicions about her real motives.

The referendum proposals for local government and Indigenous Australians are both too difficult. Labor has only ever succeeded once in persuading the Australian people to change the constitution. Gillard does not have the public standing to successfully propose a referendum.

Fourthly, pokies reform was always going to be uphill and it will now be buried. The final element to this saga will be when Andrew Wilkie loses his seat to the ALP at the 2013 election.

Fifthly, Labor's boat people policy is an unmitigated disaster. The weather has been particularly bad for boat arrivals in the last three weeks so it has not been an issue in the press most recently. However the weather will soon improve and the boats and the drownings will sadly resume.

Maybe the only thing to come out of the saga of Labor's leadership struggles will be the impact on two of the players in Labor's senior ranks.

Bob Carr's appointment was bungled at first but he is now Foreign Minister. Bob has been out of state politics since 2005 and is new to the Federal Parliament. His new job is far more physically demanding than any job he has had before. Premiers are busy people but driving around even a big place like NSW is not in the same league as the travel and night time phone calls of Foreign Ministers. He will have to accept and understand every detail and every big issue in a huge portfolio. He will get away with a few mistakes for a short time but not for long.

He will already be feeling a cultural shockwave. One moment he was a 64-year-old partially retired ex pollie enjoying mid-morning coffees at his own pace, probably reading the daily papers, doing the Sudoku, and saying 'no' as often as saying 'yes' to various things that ex-pollies are invited to do. Then in the next minute, he is a minister who no longer has five minutes of his own, the telephone calls keep coming 24/7, they are all important, he still can't remember all the names of his new advisers and he has not had one decent night of sleep since he started.

And that is just for the entree. Then he will have to learn the ropes around Parliament House and he will have to learn to work to his new boss. He has the experience to make a fist of the job but only time will tell if this was a good appointment or not. And he will have the added responsibility to all the under 64 'has beens' who dream of being rediscovered and reappointed to a top job in the cabinet.

The person who missed out was Stephen Smith. I surmise that Gillard knows that Smith sees himself as the dark horse alternative to her so she decided she would not give him any encouragement. If he is the man to replace her then he needs a strategy to make that happen. And he needs to get on with it.

So, we are sort of back to where we were three weeks ago. At least politics is never dull even when not much happens.