Balancing Act

In reply to George Megalogenis's Quarterly Essay, Balancing Act: Australia Between Recession and Renewal.

BALANCING ACT

Response to Correspondence


George Megalogenis

One of the delightful challenges of a politics-heavy Quarterly Essay is the shelf-life of the subject matter. The risk is that a prime minister or opposition leader will implode on deadline, or soon after publication, dating the essay before the quarter is up. Malcolm Turnbull was the foundation victim of the QE curse, and its most recent beneficiary. Annabel Crabb’s profile of the then Opposition leader, Stop At Nothing (Quarterly Essay 34), was released at the end of June 2009, a matter of days after Turnbull was forced to make a humiliating apology to Kevin Rudd, whom he had falsely accused of corruption based on the fabricated evidence of a rogue Treasury officer. Twenty-five essays later, in September 2015, Turnbull reversed the hex by toppling Tony Abbott as David Marr was finalising his profile of Bill Shorten, Faction Man (Quarterly Essay 59).

As I completed Balancing Act, I wondered if the curse would assume a new form, mocking my earnest attempt to start a debate about our economic model. A festival of innovation from Turnbull and his reinvigorated government could easily have made my modest proposals to renew our system appear dull on arrival. No such luck. With every idea he floated and discarded – a cut to the corporate tax rate, allowing the states to levy their own income taxes – Turnbull demonstrated that he had learnt nothing from the mistakes of the Rudd–Gillard–Abbott era. He didn’t explain the problem he wanted to solve, or allow time for options to be discussed before the policy was finalised. I thought he would be smarter than that.

Paul Strangio points to an apparent contradiction in my argument. He agrees that genuine change requires collaboration. “Meaningful and enduring reform,” he writes, “is more likely to spring from distributed leadership and a community of ideas rather than the centralised decision-making favoured by recent prime ministers. As such, it is a little incongruous that the essay ultimately places so much weight on whether Malcolm Turnbull is the leader who can propel Australia towards the desired [policy] reconstruction.”

I was setting the challenge, not making a prediction. The public had projected onto Turnbull the role of saviour, and so the question for me was how that might work. Restoring a sense of shared purpose to the system begins with a conscious act of leadership to let go of the excessive but counterproductive power that has accumulated in the prime minister’s office over the past twenty years. Greater freedom for the commonwealth public service, and cooperation with Labor and conservative states, are crucial elements of any project for more active government. Turnbull had ticked the first box, but not the second. He was the first national leader since Paul Keating to champion the bureaucracy. By contrast, his initial handling of the premiers was more Abbott-like than I expected. I know his polling told him that the public was frustrated with service delivery at the state level, and in any disagreement between jurisdictions voters would err on the side of the commonwealth. But the fight he picked at the Council of Australian Governments meeting in April was juvenile. He left the meeting without a tax policy, and with the threat of more intransigence to come on funding for public schools.

At the time of writing, the federal budget and the prime minister’s trip to Government House to start the formal election campaign were only a matter of days away. The safe thing to do, then, is step over the landmines of the present and imagine what a new economic and political model might look like, based on the feedback from the correspondents. 

Andrew Charlton and Jim Chalmers provide a neat summary of the challenge. For Hawke and Keating in the 1980s, it was globalisation. For this generation, it is “the digitisation of the economy.” Technology is accelerating the shift in power from labour to capital in the domestic economy, and the shift from local business to globally networked oligopolies. While governments will find it difficult to collect tax from companies operating across borders, technology also provides the opportunity to revolutionise public services. “Are huge productivity gains in health and education potentially within reach?” Charlton and Chalmers ask. I hope so.

Clare O’Neil sees government involvement in the economy in the twenty-first century as a practical, rather than an ideological, issue. “We may not be looking at a new economic orthodoxy, but rather a shift away from orthodoxy altogether.” The “guiding principle,” she says, should be for intervention where the evidence shows that governments “can make a difference.”

Tom Bentley and Jonathan West take the idea of intervention much further than other correspondents. They want to move “away from remote federal rule-making institutions and towards more dynamic, partnership-based efforts in city-regions.” Their vision for a model in which state governments and local councils wield more power raises two very obvious questions for me: can a fragmented system collect enough tax, and how will it avoid the trap of increasing inequality between cities and regions? While Victorians, for instance, might cheer a state government that can restore funding for the arts that was cut by a vindictive federal government, a bush council in Queensland will not have the means to maintain a critical mass of working-age people to provide for a population that is much older than the national average.

Among the correspondents, the optimists comfortably outnumber the pessimists. But I share the concern of Elizabeth Humphrys and Tad Tietze about the ability of the political system to mobilise community support for a new model. The two previous examples of national reinvention in the 1940s and 1980s relied, in part, on the Labor Party’s links with the trade unions. As Humphrys and Tietze explain, the mass and active membership base meant “organised workers could at times play a consensual role in economic change, even though at other times they locked horns with employers and governments.” As recently as 1983, half the workforce belonged to trade unions; now the figure is just 15 per cent.

The reasons for the collapse in coverage are complex, and they mirror the hollowing out of the main political parties themselves. But it does not necessarily follow that a new model is unobtainable in a world where large numbers of people no longer join political parties or trade unions, or go to church. Unlike earlier projects, the idea of an active government already has widespread public support.

I am grateful to everyone who replied to my essay and look forward to continuing this conversation.

George Megalogenis


George Megalogenis’s books include The Longest Decade, The Australian Moment and Australia’s Second Chance. His documentary Making Australia Great: Inside Our Longest Boom was screened on ABC TV in 2015. His previous Quarterly Essay was Trivial Pursuit: Leadership and the End of the Reform Era.

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