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It was near midnight on Monday when news of the political coup began to leak. An unpopular, headstrong, abrasive leader had been rolled by his colleagues.
In the small hours of Tuesday, his anointed successor fronted a hastily convened press conference and recited from the conservative script du jour.
“As a government I acknowledge we could have done things better in the past,” he told reporters. “Discontent with the direction of government I suppose has been around for some time amongst a number of my colleagues.”
He acknowledged also that electors were sick of having decisions foisted on them without discussion or explanation.
“Under my leadership, this government will be more consultative …” he said.
Willem Westra van Holthe, the new leader of the Northern Territory’s Country Liberal Party government, was the speaker of these words.
Those who have followed the subsequent bizarre events in the Northern Territory will know Westra van Holthe didn’t stay party leader for long, and never got to be NT chief minister, as a result of a counter-coup from the incumbent, Adam Giles. For our purposes, however, those events are not relevant. What is relevant are the factors that led up to the attempted coup and inspired those words.
The same sentiments, expressed in near identical terms, have been echoing across the conservative political landscape all week, from Brisbane to Canberra to Darwin to Sydney to Melbourne. The buzzword is “consultative”.
Most significantly, Prime Minister Tony Abbott, in his desperate pitch to avoid a leadership challenge at the National Press Club on Monday, gave the C-word a big workout. He directed it mostly at his parliamentary colleagues, for they are the ones imminently likely to terminate him. But he also promised he would henceforth be more mindful of the need to consult the electorate.
On the basis of past behaviour, however, one might be suspect of his sincerity.
As the Seven Network’s Mark Riley noted in his question at the Press Club, Abbott has promised many times before to be more “consultative and collegial”.
Said Riley: “I just want to remind you that on the 1 December 2009 when you were elected leader you said you would do your best to be a consultative and collegial leader. In the election campaign of 2010 on 16 August you said, ‘I have said to my colleagues that I will do my best to be a consultative and collegial leader.’ There are many other examples, but…”
Abbott unwisely interjected: “You can go on if you like!”
“Thanks very much, I will,” said Riley, and gave a couple more of the dozen or so examples he had collated of Abbott promising to be consultative. Why, Riley asked, should anyone believe Abbott this time?
The prime minister responded by saying repeatedly that he had lately “listened and learned”. He conceded his decision to reinstate knighthoods, and his meddling in the choices about who got them, were overreach. He “accepted” that the time was not right for the introduction of his paid parental leave (PPL) scheme.
In short, he followed the long-established Abbott pattern: hubris and overreach, followed by expressions of contrition.
Maybe his contrition was even genuine this time, given the pressing threat to his leadership. But it was also limited. His remedial action was restricted to the dumping of his widely reviled PPL scheme and a promise that all awards would in future be “wholly and solely the province of the Council of the Order of Australia”.
Abbott’s general philosophy is better summed up, though, by what he said back in March 2010, when seeking his party room’s absolution for having failed to consult it or his shadow cabinet before announcing the PPL scheme.
“Sometimes it’s better to ask forgiveness than permission,” he told them.
That’s been the consistent approach of Tony Abbott over many years. It’s the style of his office, under the autocratic rule of chief of staff Peta Credlin. It’s also the approach of Adam Giles. And that of Campbell Newman, the first-term Queensland premier who lost an election in a landslide last Saturday.
As events of the week have shown, a substantial number of people in the Liberal and National Party believe Abbott is incapable of change. They want a new leader.
A lot of the critique has focused on presentation. The argument is that given a front person who is less erratic, less abrasive, less headstrong and maybe even a bit likeable, voters can be persuaded of the virtue of government policies.
But there is reason to suspect the problem goes much deeper than just the frontmen. That it’s not just the medium, but also the message: the policies themselves.
As one observer put it: “Just because you smile as you hand people a turd, it doesn’t change the fact that it’s a turd.”
To illustrate, let’s start in Queensland, for it was the election debacle there that caused the simmering discontent within the Northern Territory and federal conservative governments to boil over.
In retrospect, perhaps the most remarkable thing about the Queensland election result was that so many were surprised by it.
History was simply repeating itself. Yet the political class failed to learn from what had happened just three years earlier.
In 2012, the Bligh Labor government went into an election with a comfortable majority 51 of 89 seats in the parliament. It came out with seven.
The overwhelming reason the Labor government was kicked out was that it broke faith with the electorate – and broke with previous party policy – by moving to sell $15 billion worth of state assets. This was necessitated, it argued, by a deteriorating state economy and the need to pay down state debt.
In came the Newman government, which immediately began laying the groundwork for unpopular measures to address the alleged economic crisis. It did this by resorting to the common subterfuge of incoming governments intent on breaking their election promises, appointing a commission of audit – in this case headed by former federal Liberal treasurer Peter Costello – to reach a predetermined conclusion.
The Costello commission duly did as expected and produced a 1000-page report making 155 recommendations for austerity measures. Most prominent among them was that the Newman government should embark on a round of asset sales, even more sweeping than that proposed by Labor.
The big-ticket item was the sale of electricity assets. It also recommended handing the delivery of other services, including health and transport, to private contractors.
And, so, as with the Queensland Labor government before it, the CLP broke its pre-election promises on asset selloffs.
It pretended it was not doing as its Labor predecessors had done. It pretended long-term leases of 50 or 99 years were not the same as privatisation. The punters saw through that.
It ran a $6 million taxpayer-funded ad campaign intended to soften public resistance to the privatisation agenda. The punters resented that use of public money for party advertising.
It promised that while the bulk of the anticipated $37 billion raised through selloffs would be used to retire debt, $8.6 billion would be reserved to build new infrastructure and fund various giveaways. That didn’t work either.
Even the fact the Murdoch media ran a ferociously partisan campaign in support of the Newman government didn’t help.
Just like Labor before it, the LNP suffered a massive swing. Privatisation was the main reason for that. But there were other reasons, too. Milton Dick, a former Queensland ALP state secretary and campaign manager, and an adviser to this campaign, ticks off a long list.
“They embarked on a series of fights, with public servants, with doctors, lawyers, the judiciary, ambos, police. They moved to unravel the Fitzgerald anti-corruption reforms, wind back the political disclosure laws. Then there was Newman’s own personality. And the Abbott factor,” he says.
But the big issue was privatisation.
Most elections are like auctions, where the parties try to outbid each other to buy voters. But in this one, Labor made spending promises totalling only about one-fifth of those of the LNP. Instead of an auction, it wanted a referendum on the way the LNP was funding its promises.
“Privatisation was a perfect referendum issue because it was not only based on public concerns about prices and services, but it was a broken-promise issue as well,” says Dick.
Outgoing deputy premier Jeff Seeney, the most senior man still standing after Newman lost his seat, agrees with this assessment. He used a post-election press conference to declare that the LNP no longer favoured privatisation.
“I think it is very clear to me and the other senior members I have spoken with that we went to the people of Queensland seeking a mandate for asset leases. We didn’t get that mandate,” Seeney said. “So the question is gone. The question is gone completely.”
The amazing thing is that it took an election defeat of historic proportions for him to realise the public overwhelmingly dislikes privatisation. Surely this has been clear for at least 20 years.
Associate professor of politics at Monash university Paul Strangio points to the example nearly two decades ago of the Kennett government in Victoria.
The trajectory of the Kennett government was very like that of the Newman government, he says.
“There were many similarities. The bombastic governance, the hostility and rudeness to opponents, and of course the asset sales stuff.”
Like Newman, Kennett came to power in a landslide. Like Newman he immediately cut services, sacked public-sector workers and set his government on a course of massive privatisation of assets to reduce the state’s debt.
Some $30 billion worth were flogged off between 1995 and 1998. Kennett went to the 1999 election with what appeared to be an unassailable buffer of parliamentary seats. But he narrowly lost after a big swing back to Labor. It was so big and unexpected that ABC election analyst Antony Green at first distrusted the numbers. Just as he did last Saturday in Queensland.
Kennett survived two terms, Newman just one.
“The difference is that things happen in a more compressed time cycle now,” says Strangio.
The fact is privatisation has been fraught for both the major political parties over many years. Let’s cite just a few examples.
In 1999 the NSW Liberal Party under Kerry Chikarovski could not sell its plan to privatise the state’s electricity assets, even when it offered a $1000 per household bribe. More recently the Labor Party in that state tore itself apart over the issue.
The previous NSW Liberal premier, Barry O’Farrell, recognised privatisation as the “third rail” of politics in the state and determined not to touch it.
More recently still, the Victorian Liberal government’s plan to kick in $2 billion towards a $6.8 billion private toll road project, the East West Link, played a significant part in its downfall.
While this was not strictly a privatisation – the government was paying the private sector to build infrastructure rather than selling its infrastructure to the private sector – it falls into the same general category of government vacating areas that were traditionally part of its function.
And as with most such actions, the Melbourne East West Link, had it gone ahead, would have been a big loser for the state. Only after the fall of the Napthine government did we get to see financial analysis it had prepared, showing the project would have involved a loss-making return of between 16 and 45 cents in the dollar.
Up in the Northern Territory, last Monday’s coup attempt was motivated in significant part by Adam Giles’s rush to privatise the Territory Insurance Office and Darwin Port.
These moves were, as ever, unpopular with electors as well as some in his government. When the coup plotters saw the outcome of the Queensland election, they panicked and moved against Giles.
Regardless of all this history, the man who succeeded Barry O’Farrell as NSW premier, former investment banker Mike Baird, will go to the polls in eight weeks’ time proposing to raise $13 billion from the sale of the state’s electricity transmission infrastructure. More on his plan shortly.
First the question: why do governments persist with privatisation despite the long evidence that these kinds of deals are (a) wildly unpopular with the public, (b) in most cases net losers for the government and public, and (c) often electorally damaging, if not fatal?
There are several reasons.
Often it is a matter of desperation. Cash-strapped governments are apt to think flogging off assets, unpopular as it is, is more palatable than alternatives such as raising taxes or cutting services. But selling assets to meet recurrent expenses is a bit like selling the silverware to pay for food.
Particularly on the conservative side of politics, it is also a matter of ideology: the increasingly contested belief that the private sector can deliver almost all services more efficiently and that government should be as small as possible.
A third and very important reason: selloffs are good for some people, namely the political-financial-managerial class. As a story in The Australian Financial Review gushed last September:
“The combined $48 billion sale of the NSW and Queensland network companies will be a bonanza for bankers and advisers.”
And this week, after the Queensland election result, Sydney Morning Herald business columnist Adele Ferguson lamented that the “sudden and brutal change of governments in Queensland and Victoria” came as “a big blow for investment banks, super funds and companies that anticipated being part of the sales”.
The fact is privatisations make some people rich. And those people, by virtue of their wealth and connections, have the ear of politicians and their advisers. Often they are former politicians and former advisers.
That’s not to suggest corruption, merely to say, in the oft-quoted words of Upton Sinclair: “It is difficult to get a man to understand something when his salary depends on not understanding it.”
So to the Baird plan to sell off his state’s electricity assets. There is one important difference between it and most other privatisations, including that proposed by Campbell Newman’s government.
Baird’s plan is not to use the proceeds to pay down debt, but rather to reinvest in other infrastructure. He’s not selling silverware to buy food, but to buy more silverware.
That’s an improvement, but the real test will lie in how good a deal the government can do on its sales. The historical record shows government assets are almost always undervalued when they are sold.
And there are other options. Such as borrowing.
As The Age’s economics editor, Peter Martin, noted a couple of weeks ago, there has never been a better time for governments to borrow money.
“The 10-year bond rate is the rate at which the government can borrow for 10 years at a fixed rate of interest. Right now it’s just 2.55 per cent, an all-time low,” he wrote.
That is barely above the 2.3 per cent current rate of inflation. And since he wrote, the rate has fallen further. On Tuesday this week it was 2.28 per cent.
In effect, this means interest-free money. The federal government could borrow up to $100 billion without affecting its AAA credit rating, according to Martin and some of the leading economists he cited in his piece.
It would cost states slightly more if they borrowed in their own right. But a little bit of co-operative federalism would allow the federal government to do it on their behalf.
The problem is that the Abbott government came to power decrying all debt as evil, without making any distinction between debt used to fund recurrent spending and debt used to fund productive investment. And there is a world of difference between the two.
“Who’d say no to the deal of a lifetime?” asked Martin in his piece. “Tony Abbott would, and it’s our tragedy.”
But it’s only part of our tragedy. The bigger part is the growing disconnect between the government and the governed.
“The flavour of the month is talk about volatility and fickleness in the electorate,” says Paul Strangio.
But in a sense the electorate is not volatile at all, as the example of privatisation shows. The electors have been utterly consistent over decades. They don’t like it, yet they have been ignored and lied to.
“To say the answer is to communicate the message better just tells you they haven’t got it,” says Strangio.
“They think it’s about messaging when it’s about something far deeper, their suite of policies and how governments operate and engage.”
Dr Stephen Mills, of the Sydney university graduate school of government, puts it more pithily.
Governments that are disdainful of the voters create voters who are disdainful of government, he says.
“What we have is a cultural debate, not even an economic debate,” says Mills.
“It’s about what are Australian values, what is government for?”
The Australian electorate expects certain things from its government. Decent and affordable healthcare, welfare, education and services.
What it doesn’t expect, says Mills, is “hard ideology about small government”.
Veteran pollster and researcher John Stirton makes the same point.
There has been a big change in the profile of swinging voters over the past decade or so, he says.
“The proportion of people who are wedded to one side or other of politics is much smaller now. People also are less ideological. What is seen to be an ideological crusade is not tolerated anymore.”
Which is ironic, given that we have a federal government that is ideological to an unprecedented degree. Almost anyone who might be termed a moderate Liberal has been driven out.
A few live on elsewhere, though. Mike Baird is one. Unlike Abbott or Campbell Newman, he is relatively progressive on social issues. He hasn’t lied about his intentions. And he is personally likeable, which is why most people, me included, expect Baird to win the upcoming election, privatisation notwithstanding.
As for Tony Abbott and the matter of whether or not he can change his style? People are asking the wrong question.
The real question is whether the party will allow a leader who is substantively, as opposed to cosmetically, different.
And the prospects of that are not so hot.
This article was first published in the print edition of The Saturday Paper on February 7, 2015 as "Autocratic for the people".
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