John Hewson on the negativity of opposition politics
About six weeks after this year’s federal election was finalised, the Turnbull government went looking for some positive economic policies. Not before the election, mind you, but after.
Before the election the government had a slogan: “Jobs and growth.” It also had a list of negative policies – programs and spending it would cut. But its positive agenda was essentially the same as that of every neoliberal political party since Reagan and Thatcher 40-odd years ago: tax cuts for business and higher-income earners.
Now, returned narrowly to government, it was seeking ideas about how it might actually deliver on jobs and growth. On September 16 a letter from Treasurer Scott Morrison arrived at the Productivity Commission, requesting that it “undertake an inquiry into Australia’s productivity performance and provide recommendations on productivity-enhancing reform”.
To call the brief given to the commission comprehensive would be an understatement. The terms of reference called for the PC to look at the market sector, the non-market sector and “human and physical capital”. It asked them to harvest ideas from overseas, from the states, from other current or recent policy reviews, from interested individuals – indeed from anyone, anywhere, who might have any clue about where the government might find a productivity agenda.
Having won power, the government now was seeking purpose.
And that annoys the heck out of John Hewson.
Winning came first
“Their endgame was winning, and as for what they’d do once they got there, they’d worry about it afterwards,” he says.
“They tapped various populist sentiments, or tried to with various slogans, but you could hardly call them policies. It was just about winning.
“Turnbull does not have a policy agenda. He never has had. My view is he’s taken positions on issues that suited his political interests at the time, differentiating himself from one of the other leaders on climate or same-sex marriage or tax reform or whatever.
“But did he really believe in any of those things? The evidence so far is that he didn’t, or if he did, just gave them away for nothing. I find that just so hard to stomach.”
That was not Hewson’s approach to politics. For him policy came first. He took his comprehensive vision of economic reform, the central element of which was a goods and services tax, to the 1993 election. But Paul Keating, who had previously advocated a GST at the 1985 tax summit, ran a highly effective scare campaign against it and Hewson’s platform was rejected by the Australian people.
His loss in what had been thought to be an unlosable election against a highly unpopular incumbent was a big moment for Australian politics, and maybe more so in political than policy terms; after all, we eventually got a GST.
It reinforced in our political leaders an unfortunate lesson: the power of negativity. Thus a few years later John Howard won the prime ministership by adopting his “small-target” strategy, promising “never, ever” to introduce a GST.
The Hewson experience taught that oppositions were better off hiding their policies – and if necessary lying about them – until after they won. Howard also introduced the expression “non-core promises” to describe the act of lying to the electorate.
Being wholly negative
Fast-forward 20 years, and we saw the Coalition under Tony Abbott take this approach to its greatest extent. The strategy in opposition was to be wholly negative about almost everything, to scare the gullible and deceive the electorate about its true economic intentions. Until, that is, it won government and could hide them no longer and brought down its first grossly unfair, wrong way redistributive budget.
Fast-forward again to 2016 for the next evolution of the strategy: Malcolm Turnbull’s ascension to the Coalition leadership by not only going negative on the other side of politics, but on his own side. His pitch to the populace was that he would be different from Labor and Tony Abbott. His would be a new style of leadership – positive, considered, reasoned, that explained complex issues inclusively and set out clear courses of action, that respected the people’s intelligence, that would be based on “advocacy, not slogans”.
Then he took us off to an election, sloganeering about “jobs and growth” and what an exciting time it was to be an Australian.
Plus ça change, plus c’est la même chose. Except this time the small-target strategy was being run by the government, not the opposition. At the 2016 election the Labor opposition and the Greens were the ones advancing policy ideas.
Hewson accords Labor a measure of credit for that, and accords to the government a greater measure of contempt for its response.
“So you get a proposal by [opposition leader Bill] Shorten, for example, to address negative gearing and capital gains tax, and the other side immediately rules it out. Not only that, they say it will smash housing – those were the words – which is just not true,” says Hewson.
Yet such changes are necessary. Broad reform is necessary, he says.
“It’s pretty well known what needs to be done, and there is a fair degree of bipartisan agreement, if you discount short-term politics. But politics always cuts across it,” he says.
Which brings us back to Morrison’s pleading referral to the Productivity Commission, and the commission’s response, made public on Monday. Stripped of its bureaucratically polite language, it said essentially the same thing: “We’ve already told you what to do, but you haven’t done it.”
It highlighted seven – count them, seven – major economic reviews presented to the federal government since 2009, five of which have been done at the behest of the Abbott–Turnbull regime. It also pointed to another five currently in train.
These reviews covered the tax system, the financial system, public infrastructure, competition policy, workplace relations, and the reform of state taxes, superannuation, the regulation of agriculture and more. In short, just about every aspect of the economy.
“There is no shortage of previous reviews that provide insights into pro-productivity policies,” said the commission.
It also pointedly said, in boldface italics: “The Commission is particularly interested in new and novel ideas because there is already a strong awareness of many reform options that parties would like to see implemented. More of the same is not likely to be helpful.”
It is hard to avoid the impression that the economic boffins have concluded this government is more about reviewing than about doing.
We might also note the Productivity Commission deals only with things strictly economic, and so did not look to other inquiries initiated by government as a substitute for action, into big problems as diverse as the treatment of Aborigines by the criminal justice system and Australia’s response to climate change.
This brings us to the first, unavoidable conclusion about this government: if you don’t come to office with a clear positive agenda, it’s very hard to bolt one on after the event. And while you are looking for big ideas, you are apt to have to resort to distractions.
Policy in limbo
“This government is still playing opposition games,” says Hewson, citing other examples.
“Look at this latest refugee thing. It’s just about trying to wedge Shorten. It’s not an essential part of a refugee policy. After the South Australian power blackout the government immediately went on the attack against renewables. It was an unsustainable position if they really wanted to achieve a reduction of emissions of 26-28 per cent by 2030.
“It just is being done in ignorance of what needs to be a fairly significant policy agenda for structural adjustment across a broad range of policy areas. They are just being ignored. Health policy is being ignored, education policy left in limbo. The big story today is our scientists threatening to leave because they can’t get funding.
“The issues are not being addressed, the problems are not being solved.”
In fairness it should be noted this is not a situation unique to Australia. The Productivity Commission pointed that out, too.
It lamented the fact productivity – that is, increases in economic output per unit of input, which is the ultimate measure of material standards of living – had stagnated across the developed world for more than a decade.
It also suggested a reason, that the benefits of past productivity gains had not been fairly shared.
It said: “Productivity growth provides a capacity for higher incomes and poverty alleviation – either directly through higher wages or indirectly by providing a ‘bigger cake’ from which transfers can be funded.”
It flagged the prospect of a greater role for government “in increasing the capacity of people to move to productive jobs and in redistributing incomes…”
Elsewhere, it noted there was “evidence that policy changes that avoid too great a dispersion in incomes can increase productivity”.
While inequality had not grown to the same extent in Australia as elsewhere, there was a growing concern worldwide about not only the unequal distribution of incomes, but of “good ideas, technologies and practices”.
This amounts to an acknowledgement by the economic elite in Australia of a long-ignored reality, that the economic model they have advanced for decades has big, big problems.
John Hewson acknowledges this. He cites an example, borrowed from America, where in 2015 the top 25 hedge fund managers made more money than the country’s 150,000 kindergarten teachers. And paid a lower rate of tax on it.
“It’s an extreme way of making the point, that wealth has been concentrated in a very few hands,” he says.
“That happened because while the intent of a lot of the policies of neoliberalism made sense, they were not implemented correctly, either because they ignored the inequity or didn’t have proper transition strategies.”
He sees the reality, as does the Productivity Commission, not to mention the OECD, the International Monetary Fund, and a host of smart economists everywhere, that productivity growth must lift all boats, not merely a relative few luxury cruisers.
So, increasingly, does the public, as evidenced by a dense, academic study of inequality by French economist Thomas Piketty having sold more than 2.5 million copies around the world.
If Scott Morrison sees it, he gives little indication of appreciating the problem. His terms of reference to the commission mentioned the word “productivity” 19 times, but made no reference to the distribution of its benefits.
Which is hardly surprising. All the available evidence suggests the Turnbull government, no different from the Abbott government, adheres to the belief that a globalised, privatised, deregulated market will by itself solve all problems.
But we’ve seen where this limited prescription leads.
“It gives us Trumpism, Brexit, Hansonism in Australia,” says Hewson.
“All are a sort of expression of a nationalistic anti-establishment reaction. It’s anti-free trade, anti-immigration, anti-globalisation, anti-privatisation.”
Hewson is not against any of those things, but laments gross mistakes in the way they have been managed.
In the United States, the average worker has seen their income go backwards between 1980 and 2015.
According to Washington’s Economic Policy Institute, a labour-affiliated think tank, while the wages of most workers stagnated or declined, real GDP grew 149 per cent, and net productivity increased 64 per cent.
“…but these economic gains have largely bypassed the vast majority,” it said.
That’s why Americans just elected Donald Trump. It wasn’t that they wanted to be led by a boorish quasi-fascist. In fact, if you look at the rust-belt states that fell to Trump in the election, you will see they were substantially the same ones that fell to the democratic socialist Bernie Sanders in the Democratic primaries.
Middle America finally woke up to fact that the establishment parties there – like the establishment parties here – had systematically deceived them. In reality they represented the interests of a minority of wealthy and powerful people and vested interests.
Sadly Americans, just like the Britons who had been exploited by the elite, reacted in an unreasoned way.
No, it’s not yet nearly so bad in Australia. But inequality has grown here, too. And while we have not had a recession, according to the textbook definition based on GDP, it feels to many Australians that they are in one.
As the Productivity Commission noted, the “single best indicator of economic prosperity”, real net national disposable income per capita, has declined for the past four years in succession, “the only time a sequence of this kind has been experienced in close to the last six decades”.
And while the headline unemployment number looks healthy, it hides the fact that full-time jobs are declining and insecure part-time work, as well as underemployment, are on the rise.
Jobs and growth? A lot of people must be wondering where they will come from. And wondering also where the vision, policy and courage will come from.
Judging by Morrison’s brief to the Productivity Commission, the government is among them.
This article was first published in the print edition of The Saturday Paper on Nov 12, 2016 as "Negative cheering". Subscribe here.