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Balancing Act
QUARTERLY ESSAY 61

Balancing Act

Australia Between Recession and Renewal

George Megalogenis
 

Extract

Australia is in transition. Saying it is easy. The panic kicks in when we are compelled to describe what the future might look like. There is no complacent middle to aim at. We will either catch the next wave of prosperity, or finally succumb to the Great Recession.

Each force that is pulling apart our present reads like a turgid unit in a university degree. The technological revolution. Population ageing. The Asian century. Global warming. The mining boom, and bust. The crisis in capitalism. What are the challenges and opportunities? Discuss.

Some of our leaders have revelled in the detail. Kevin Rudd wanted to be across every subject, although he couldn’t stick to any one topic long enough for the public to catch up. The annoying imprecision of his method sent his successors to the other extreme of simplicity. It will be impossible for coming generations to separate the banalities of Julia Gillard from those of Tony Abbott. “Moving forward” and “Stop the boats” will be slogans shorn of their contexts, and our children will wonder if our prime ministers were really that shallow. No, they were the most talented politicians of their era, their old supporters will reply. It was just that governing was impossible in the digital age.

Malcolm Turnbull brings us back to where we started with Kevin07 – this is a leader who sounds unafraid of the future. But we are no closer to understanding where the world is heading, or our place in it. We do know we want to remain affluent and egalitarian. Turnbull had that platitude worked out before he took over. He told us on the day he sought the Liberal leadership last September that he wants Australia “to remain a high-wage, generous social-welfare net, first-world society.” But in making that pledge, he acknowledged the root of our anxiety: the fear that we will be overrun by globalisation once China no longer has any need for our coal and iron ore.

The national mood has been defensive for so many years now that it is hard to recall the last time we were genuinely free of hang-ups and could look to the future with optimism. We greeted the new millennium as the cheery hosts of the Sydney Olympics, but virtually every message we have sent to the world since then has betrayed our parochialism. The Tampa episode of 2001 marked the birth of a long, complex phase of Australian insularity. Its first peak had nothing to do with asylum seekers. It came a few years after the Tampa, when the boats had stopped and the mining boom was underway. John Howard gave back every windfall dollar in the budget so that we could treat ourselves. That was the more revealing expression of our self-absorption, unprompted by a global crisis. We simply didn’t care enough about the future to reinvest some of that money on behalf of our children. But then Howard double-crossed voters with his WorkChoices program, and the true source of our anger was confirmed – it was globalisation itself. With WorkChoices, Howard reminded Australians that their government no longer felt obliged to defend them against the open economy. Rudd’s election win in 2007 briefly broke the spell. We applauded his handling of the global financial crisis, but once the danger had passed he lost his governing nerve, and a new cycle of narcissism commenced. The boats returned in 2009, reviving the old Australian dread of foreign invasion. Abbott ultimately turned the asylum seekers back again with the help of Labor’s more punitive policies but still we were miserable, with him in particular and the world in general.

The supposed strengths of the Australian character – our openness, our love of technology, our pluck – have been notably absent in our attitude to the future. Put bluntly, we don’t have a plan. We know we need one, written jointly across government, business, trade unions and civil society. But we keep finding excuses to return to the trenches of our prejudice. Even there, within the sanctuary of the tribe, there is little cohesion. The Liberal Party is split along fault-lines of ideology and personality. Labor still lacks purpose. The trade unions divide between the ineffective and the corrupt. Within my own profession, the media, too many commentators have assigned themselves to covering their rivals. News Corp, for instance, deploys more resources to attacking the ABC than analysing the economy. Only business appears to have unity of purpose in its relentless pursuit of concessions from government.

The most consistent message sent by voters to the main parties over the past decade and a half has been the demand for security. Both sides have taken this to mean border protection and bribes at the ballot box; one fist clenched against the rest of the world, while the other hand offers cash to the most aggrieved. Yet each leader that tried this was bewildered when voters could not be appeased. The truth is that the demand for security is more sophisticated than politics has allowed. We want our leaders to think for the long term; to prepare us for life beyond the mining boom. Both sides have found this in their research since the earliest days of the boom, but both have been unable to see past the next Newspoll. Something deeper is happening here than the predictable incompetence of politics. The system knows what voters are really asking for: a return to some form of government intervention in the economy. Yet this is resisted because of a misguided faith in the open economic model. The only leader who seriously tried to find a way out of the impasse was Rudd, but he lost focus after the global financial crisis. Now a Liberal prime minister is being asked by the public to redraw the line between the market and the state.

The economy was the primary reason Turnbull gave for challenging Abbott. “It is clear enough that the government is not successful in providing the economic leadership that we need,” he declared.

It is not the fault of individual ministers. Ultimately the prime minister has not been capable of providing the economic leadership our nation needs; he has not been capable of providing the economic confidence that business needs … The big economic changes that we’re living through here and around the world offer enormous challenges and enormous opportunities and we need a different style of leadership. We need a style of leadership that … explains the challenges and how to seize the opportunities. A style of leadership that respects the people’s intelligence … We need advocacy, not slogans.

He wasn’t pitching to undecided colleagues, because the numbers to topple Abbott were already locked in. This assessment was delivered for the benefit of the public, and six months after the coup it remains the most remarkable admission that a Coalition government has made while in office.

No previous regime removed its leader on grounds of economic incompetence, although others probably should have. Before Abbott, the conservatives had replaced three sitting prime ministers – Billy Hughes in 1923, Robert Menzies in 1941 and John Gorton in 1971. In each case, the basic complaint was leadership style: arrogance, in short.

Our political history offers little comfort to Turnbull, because the governments which transformed the economy in the past were Labor, not conservative. The first was led by John Curtin, the second by Bob Hawke. Both had treasurers who were their equal, and who succeeded them as prime minister. In each case, Labor had consciously changed its governing culture in response to a global catastrophe. The key members of the Curtin–Chifley government lived through the collapse of Jim Scullin’s Labor government during the darkest years of the Great Depression. The Hawke–Keating ministry witnessed the implosion of Gough Whitlam’s government. On both occasions, Labor remade itself in Opposition before it returned to power.

To inspire a similar transformation in a Coalition government, Turnbull has to convince his colleagues they have already failed in office. They can’t pretend that their former leader was an anomaly – a poor communicator with a brilliant program – because it was the conservative agenda for small government which undermined confidence.

Labor and now Liberal have made the same inexcusable blunder. They took the shortcut to power without the necessary policy renewal in Opposition. When they found governing much harder than expected, they turned to what they knew best – politics – and removed a first-term prime minister. Policy renewal could wait until after they had secured re-election with a new leader. The question for Turnbull is whether he can buy enough time to reset the system. One three-year term surely won’t be enough. He has to correct for policy errors on the conservative side running across two decades – the six most wasteful years of the Howard government from 2001 to 2007, and the six combative years when Abbott led the Liberal Party from 2009 to 2015. The way government is run has to change along with the substance of policy. Turnbull conceded this point on the day of the challenge. “We need to restore traditional cabinet government,” he said. “There must be an end to policy on the run and captain’s calls. We need to be truly consultative with colleagues, members of parliament, senators and the wider public. We need an open government.” For that to happen, Turnbull has to give up some of the self-defeating powers that his predecessors accumulated in the prime minister’s office.

As a journalist I am wary of giving advice, especially when it involves a greater role for government in the economy. I can think of no generation of politicians I would trust less with the responsibility of redrawing the line between the market and the state than the current crop. But the choice is being forced on Australia anyway. The political system cannot restore public confidence without a more responsive government. And the economy won’t stabilise without a more active government. The default setting of politics in the twenty-first century – to trust in the market – has proven to be bad economics, even for Australia, the only high-income nation to avoid the Great Recession. It has left us with gridlocked cities, growing inequality and a corporate sector that feels no obligation to pay tax. If politics waits any longer to address these issues, we will muddle into a recession and government will have to prop up the economy, but from a position of weakness, with the budget in deficit and interest rates too low to cut in a meaningful way.

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This is an extract from George Megalogenis's Quarterly Essay, Balancing Act: Australia Between Recession and Renewal. To read the full essay subscribe or buy the book.

ABOUT THE AUTHOR

George Megalogenis has thirty years’ experience in the media, including over a decade in the federal parliamentary press gallery. His book The Australian Moment won the 2013 Prime Minister’s Literary Award for non-fiction and the 2012 Walkley Award for non-fiction, and formed the basis for the ABC documentary series Making Australia Great. His most recent book is Australia’s Second Chance and he is also author of Faultlines, The Longest Decade and a previous best-selling Quarterly Essay, Trivial Pursuit: Leadership and the End of the Reform Era.

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