July 2010


Rudd’s collapse

By Robert Manne
Illustration by Jeff Fisher.

In the history of Australian politics there has never been a collapse as dramatic, unexpected and unnecessary as the one experienced by Kevin Rudd during the past two months. Those who have been supporters of the prime minister and his government must now try to answer as honestly as possible the overwhelming question: what has gone wrong?

The story of the Rudd government falls rather neatly into three discrete chapters. The first involves the fulfilment of promises and the conjuring of dreams. In coming to office, the Rudd government ratified the Kyoto Protocol, an important but easy and essentially costless exercise. On the first sitting day of the new parliament, with considerable eloquence and grace, Kevin Rudd offered an apology to the stolen generations, by almost universal agreement the high point of his government. Some months later, the prime minister called one thousand Australians to Canberra where his ego was massaged by an adoring crowd but where, in the absence of anything resembling rational process, virtually nothing of substance was achieved.

More seriously, the government took the first steps towards the fulfilment of its rather grandiose agenda to “fix the Federation”, to enact an “education revolution”, to prepare for root and branch reforms of the national health and the taxation systems, to “close the gap” between Indigenous and non-Indigenous Australians, to revitalise Australian manufacturing with an industry policy, and to build a $43 billion national broadband network and a formidable submarine fleet. In the sphere of domestic policy, the government began work on the replacement for WorkChoices and on a modest system of paid parental leave. In the sphere of foreign policy, it promised to play a major role in reducing world poverty and the nuclear weapons threat, in reshaping the international architecture of the Asia–Pacific region and, above all other things, in helping solve the diabolical problem of climate change. Hopes were high. Ambitions were Whitlamesque. Both the prime minister and his government enjoyed one of the longest political honeymoons in the history of Australia.

The second chapter began with the coming of the Global Financial Crisis in September 2008 and concluded with the failure of the United Nations Climate Change Conference in Copenhagen in December 2009. This was the Rudd government’s finest hour. During this period it was preoccupied less with long-term grand visions and more with short-term pressing tasks. As an ideological opponent of Hayekian neo-liberalism principally on social justice grounds, Rudd threw his government into the task of saving the Australian economy with a bold program of Keynesian stimulus spending, delivered through massive but hastily designed programs supporting its broader public policy objectives – $4 billion of free home insulation to help with climate change; $16 billion of school building to support the education revolution. As a macro-economic policy the stimulus was a great success. Evidence suggests that because of the immediate spur it gave to consumption and because of the injection soon after of considerable public spending, Australia, almost alone among the countries of the OECD, was able to avoid recession. As part of broader public policy, unhappily, the success of the stimulus was far less clear.

While the Rudd government was rolling out its Keynesian program, it was also preparing its climate change legislation. Because of his instinctive political caution, Rudd looked right to the Liberals rather than left to the Greens in his plans for an emissions trading scheme. By early November 2009 a deal with the Turnbull Opposition was close; by December it had collapsed. Rudd had banked on Turnbull to deliver his legislation. Turnbull was narrowly derailed by an eleventh-hour rebellion of the Coalition global warming sceptics. Although Rudd went to Copenhagen empty-handed, he threw himself into the task of negotiating a decent international agreement there with as much energy as any politician on the planet. Copenhagen’s failure was also Rudd’s and for him another bitter blow.

The third chapter in the history of the government now opened. Rudd was under pressure on two fronts. Precisely because recession had been successfully avoided, the public began to think that the danger had been exaggerated; to adopt the Keatingism, it now appeared to be the recession that after all we did not have to have. Even worse, reports began to emerge about the deaths and house fires caused by the cowboys who had been given a free ride on the government’s insulation program and about the ludicrous cost blowouts in the delivery by state government bureaucrats of the Education Revolution’s building program. Gradually the stimulus package was transformed in the public mind from splendid economic success to comprehensive public policy failure. At the same time, Tony Abbott made it clear that if the Rudd government persisted with its plans for emissions trading scheme legislation, he relished the prospect of fighting on the theme of the Rudd government’s supposed “big new tax”.

The Rudd government now faced the most crucial decision of its first term. In November 2009, in a passionate and persuasive speech to the Lowy Institute, Rudd had characterised any backdown on ETS legislation as abject political cowardice. He now chose cowardice as his way.

In late April, to the near-universal astonishment of the political nation, the prime minister announced his decision to defer all consideration of the emissions trading scheme until late 2012. The prime minister had famously called climate change the greatest moral challenge facing humankind. How was it possible for him to nonchalantly abandon the issue that more than any other had shaped his political identity since assuming the leadership of the Labor Party in late 2006? The decision was particularly puzzling precisely because of the ease with which the passage of the ETS bill might have been achieved – by a double-dissolution election and a joint sitting of the houses. Rudd could achieve in a day something that Barack Obama might not achieve in a year. Apparently neither Rudd nor his advisers possessed sufficient political nous to see that with the abandonment of his climate change legislation his credibility as a politician of conviction had been almost entirely destroyed.

There are only two plausible explanations for the decision. According to the first, as an intensely “risk averse” politician or, less politely, a “gutless wonder”, Rudd did not relish the prospect of fighting an election against Abbott over the question of his “big new tax”. According to the second, Rudd abandoned the ETS for narrow budgetary reasons. To consolidate his post-GFC credentials as a “fiscal conservative”, Rudd had pledged that his government would not increase spending by more than 2% in real terms in any year. Abandoning the ETS would help a little in the fulfilment of this unnecessarily rigid self-denying ordinance. Both explanations were dismaying.

Whatever the cause of the backdown, the consequence was not long in coming. On the weekend following the decision, Newspoll reported that Labor’s primary vote had collapsed from 43% to 35%; that the prime minister’s personal satisfaction rating had plummeted from 50% to 39%; and that, for the first time since Rudd had become Labor leader, the Coalition led the ALP 51% to 49%. In late August 2001, John Howard and the Coalition had soared in the opinion polls following his audacious campaign to prevent asylum seekers setting foot on Australian soil. In late April 2010, Kevin Rudd and Labor had slumped even more dramatically because of his pusillanimous climate change retreat.

While the meaning of the Newspoll result was sinking in, the Rudd government finally released the Ken Henry proposals for the reform of the Australian taxation system that it had been sitting on for five months. Although for the most part Henry’s recommendations were rejected as too politically contentious, one radical proposal was embraced. Henry advocated an elegant, economically rational and to the non-economist almost incomprehensible new tax on mining at the heart of which was the proposal to replace state royalties calculated on volume with a 40% tax calculated on so-called “super profit”. Once again the political nation was astonished. When the Hawke government had floated the idea of a similar, though less complex and radical, tax on offshore oil and gas, it had been preceded by two years of public discussion and negotiation. The Rudd government’s mining tax proposal caught almost everyone by surprise. Even if it was necessary and good, what possible political advantage was to be gained by treating the far from powerless miners so discourteously? For Abbott the tax was a godsend. Scarcely a week had separated Rudd’s decision to abandon his “big new tax” to combat climate change from his decision to replace it with his “big new tax” on mining. All this was deeply puzzling. Rudd’s climate change retreat seemed to have been driven by fear. In both its substance and the manner of its introduction, Rudd’s new mining tax was crazy brave.

Part of the response to the tax proposal was predictable. Most economists were enthusiastic. All heads of mining companies were appalled. Less predictable was the response of the general public. Would opinion be swayed by the government’s case that the new mining tax would finally allow the nation to take its fair share in the bounty of the mining boom by enabling it to cut company tax, provide new infrastructure spending and help raise compulsory superannuation contributions from 9% to 12%? Alternatively, would it be swayed by the argument of the mining companies and the Coalition that the new tax was an act of socialistic madness likely to kill the goose that for the past decade had been laying Australia’s golden egg? Only time would tell.

What happened next had the political nation once more scratching its collective head. During the dying days of the Howard government, Rudd had described taxpayer-funded political advertising as “a cancer on democracy”. He had promised, as a cure, that under his government no political advertising would be permitted without the prior approval of the auditor-general or, in a later version, a panel of three independent public servants. Despite all this, in its budget the Rudd government allocated $38 million dollars for government advertising to explain a tax that was certain to be politically controversial. Shortly after the inevitable battle was joined, it even asked one of its own ministers for relief from the requirement that its mining tax advertisements be approved by the public service panel. In part, the Rudd government justified its political advertising drive on the ground that with the mining companies it faced an enemy with deep pockets. This was precisely the justification the Howard government had used when answering the anti-WorkChoices advertising blitz of the trade unions. In part, it argued that even if it were true that political advertising was a cancer on democracy, at least Rudd’s cancer was smaller than Howard’s. If the ETS retreat suggested that Rudd believed in nothing, his reversal on the question of political advertising suggested that he was, in addition, a moraliser and a hypocrite.

Once more, the consequence was not long in coming. In the Nielsen poll of early June, the Labor party’s primary vote had reached the calamitous level of 33%. In the two-party-preferred vote, the Coalition led Labor 53% to 47%. Rudd’s personal popularity had moved, in just two months, from 59% to 41%. Even the gamble on the popularity of the mining tax had failed: 41% approved the tax, 49% did not. What was most remarkable about all this is that the strange and sudden collapse of the government’s and the prime minister’s fortunes was not a consequence of any external political crisis or sudden economic shock, or even of an upturn in the fortunes of the Opposition – in both Newspoll and Nielsen, Tony Abbott remained even more unpopular than Kevin Rudd – but of a series of nearly inexplicable and easily avoidable government own goals.

In trying to fathom the collapse in the fortunes of the Rudd government there are several main lines of explanation. The first, which I have drawn from scores of newspaper articles and David Marr’s persuasive Quarterly Essay, makes the style of the Rudd government central. In these accounts, power is said to be far too centralised in the person of the prime minister. Rudd is by temperament hyperactive, controlling, hectoring and interfering. While he prides himself on his command of policy detail, others think that what he lacks is native political instinct. The prime minister works too hard and sleeps too little. He drives those around him to near-exhaustion. A manic work ethic is unhappily no substitute for judgement. The prime minister is also said to be bad at delegation. In the many areas of interest to him, he dominates policy formation and implementation. Rudd’s private office, led by his devoted and filial chief of staff, Alister Jordan, has been inhabited by talented young staffers, who are unlikely to argue with their boss or question his wisdom. Domestic policy advice comes almost exclusively from the so-called “kitchen cabinet” – Wayne Swan, Julia Gillard and Lindsay Tanner. Political advice comes principally from the new school of focus group driven, ideas-free members of the New South Wales right-wing Labor machine. Under the Rudd prime ministership, cabinet has been reduced to a rubber stamp for prime ministerial and ministerial decisions. Submissions are distributed shortly before meetings. Meaningful debates in cabinet are rare. Even senior ministers have difficulty gaining time with the prime minister. Sometimes their only chance is while he is flying. The prime minister is extremely unpopular with both his ministers and his backbenchers. He has no real factional backing. He has no real political friends.

The style of the Rudd government is, then, according to this account, set by a domineering prime minister, lacking political touch, who has surrounded himself with advisers too obsequious or too cynical or too constrained to be of any great assistance. For this style of government, and the withering away of proper process, there has already been a very heavy price to pay. In the case of the ETS retreat, it seems likely that the lethal advice was offered by “clever” advisers from the New South Wales Right and that it was unresisted in Rudd’s private office. Astonishingly, no one close to the prime minister seems either to have dared to explain to their boss or even to have seen the bleeding obvious that, with a retreat of the kind proposed, the prime minister’s reputation as a conviction politician would be shattered. In the case of the super profits mining tax, it seems unlikely that any detailed cabinet discussion took place either on the merits of the tax or the best means for its announcement and implementation. If it had, the many pitfalls awaiting the government would, almost certainly, have become apparent.

But there is more to the sudden collapse of the government’s fortunes than a failure of style and process. With Rudd there is also a deep confusion and an unresolved tension between word and action. In ‘Faith in Politics’, an article published in this magazine in which he launched his bid for the Labor leadership, Rudd argued that asylum seekers must be treated according to the ethic of the good Samaritan. Once boats of asylum seekers returned, Rudd found himself trapped in a hopelessly confused situation in which he argued that asylum seekers must be treated as human beings and the people smugglers who brought them here as “vermin”, and in which his government’s policy was described as simultaneously “tough” and “humane”. As we have seen, Rudd rightly condemned the Howard government’s addiction to taxpayer-funded political advertising as a cancer on democracy. He did not seem to understand that by the use of such language all future political advertising by a government he led was verboten. Both before he was prime minister and once he held this position, Rudd described climate change as the most important moral challenge facing humankind. He did not seem to understand that rhetoric of this kind, which allowed him to occupy the highest moral ground, would eventually seem ludicrously inconsistent with the feeble legislative compromise he negotiated with Turnbull. During the course of these negotiations Rudd condemned all those who postponed climate change action on the grounds that Australia ought to wait on the actions of other nations as hypocrites. This was precisely the justification he offered in April for his own two-and-a-half-year postponement. With Rudd there has been, then, a permanent tension between past words and present performance, and an even deeper tension between an idealistic rhetoric drawn from people such as his hero, the anti-Nazi martyr Dietrich Bonhoeffer, and a supposedly pragmatic political practice reflecting the advice of members of the Sussex Street school of cynicism from the New South Wales Labor Right, such as Senator Mark Arbib.

The distance between his words and his deeds is not the prime minister’s only problem. Equally disabling is his seeming incapacity to foretell the predictable consequences of his actions. After he came to office, the government nobly dismantled the Howard government’s Pacific Solution. Yet he and his government seemed genuinely surprised and unprepared when, altogether predictably, boats bearing asylum seekers returned. This failure of judgement will play an important role in the coming election. With the government programs of home insulation and schools building, there is no evidence that anyone predicted the high likelihood, or sought to minimise the obvious risks, of systemic mismanagement and corruption. This failure is now certain to create scepticism about the government’s new plans for health reform, which it hopes to make the centerpiece of its re-election bid. Most astonishingly of all, there is no evidence that in thinking about the content of its new mining tax and the manner of its introduction the government weighed carefully any of its predictable consequences: the certainty of ferocious and well-funded opposition from the miners; the electoral influence of the decision in the mining states of Western Australia and Queensland; and the gift it offered to the Coalition, in the raising of its spirits and in the filling of its election-fighting coffers.

In politics it is easy to propose plans about education revolutions, reforming the tax or health systems, building submarine fleets and new broadband networks, closing the gap between Indigenous and non-Indigenous wellbeing, reducing global poverty and nuclear weapons, redesigning the international architecture of the Asia–Pacific, combating climate change, or whatever. But without high-level political skills they can begin to resemble Walter Mitty dreams. To make real headway, even in less daunting areas of politics than these, is extraordinarily difficult. This is the lesson that the Rudd government has now learnt. I hope that it is a lesson that has not been learnt too late.

16 June 2010

Robert Manne

Robert Manne is emeritus professor of politics and vice-chancellor’s fellow at La Trobe University. His most recent books are The Mind of the Islamic State and On Borrowed Time.

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