Coalition attempts to win votes with submarine politics
The extreme political folly of the Abbott government’s approach to industry policy was dramatically highlighted at Adelaide’s Osborne shipbuilding facility on Tuesday. Owned and operated by ASC, formerly the Australian Submarine Corporation, an outfit the first defence minister in the Coalition government said he wouldn’t trust to build a canoe, it is now entrusted with building 12 state-of-the-art submarines. The price tag: a cool $50 billion.
Malcolm Turnbull was almost Churchillian as he stood dockside and proclaimed: “This is a great day for our navy. A great day for Australia’s 21st-century economy. A great day for the jobs of the future. Australian built, Australian jobs, Australian steel. Here, right where we stand.” It was a comprehensive burial, almost at sea, for an agenda championed by the right-wing Institute of Public Affairs and embraced enthusiastically by the dumped prime minister and his hapless sidekick, the retired treasurer Joe Hockey.
It could be summed up as concentrating on the cost of everything while appreciating the value of nothing. Of course, the debate is multilayered. It does require nuance and an approach to spending taxpayers’ money in a way that invests in the nation. But there are strong arguments as to why the submarine decision has more to do with craven, almost panicky pre-election politics than it has to do with a rational, calm-headed appraisal of the best and most cost-effective way to serve national security.
Veteran journalist Brian Toohey, who has a longstanding interest in defence procurement, was scathing in his analysis. In The Australian Financial Review he cited government estimates of the added costs of building the subs here at more than $20 billion – “simply to try to win a couple of Coalition seats in Adelaide”. He clearly has sympathy with the arguments Tony Abbott was putting forward as he began crab-walking away from the 2013 pre-election promise to build a dozen submarines in the South Australian capital. The then prime minister assured everyone the decision would be in the best interests of the nation’s defence and budget. As of this week, nobody seems to be asking how the subs will be paid for while at the same time repairing the budget and handing out company and personal income tax cuts.
But the fact Abbott could not bring the nation with him, let alone Adelaide, had everything to do with a huge credibility deficit brought on by broken promises and his willingness to see the end of the Australian car industry. Would the Turnbull government have gone for the most expensive option on defence shipbuilding – the submarines are on top of $35 billion for nine new frigates – if thousands of car-making jobs had been saved? This is where the accusation of “old-fashioned protectionism” has to be measured against broader national interests. And there’s nothing like an election to focus politicians’ minds.
The debate that raged at the end of 2013, before the dramatic collapse in the government’s standing thanks to the 2014 budget, was that if the car companies couldn’t survive without government assistance, they didn’t deserve to. After General Motors concluded the Coalition had no interest in investing in the jobs and skills of the automotive industry, Hockey was unrepentant. “Ultimately, what it comes down to is prosperity only comes from hard work and enterprise,” he said. “It doesn’t come from the benevolence of taxpayers.” Tell that to the thousands of investors relying on taxpayers’ “benevolence” to negatively gear their second, third or fourth properties.
While “defence” is a sacred cow, especially to conservative governments, all the arguments proffered by Turnbull and Industry Minister Christopher Pyne on Tuesday could just as equally be applied to the nation-building national broadband network or indeed the car industry. Germany and South Korea, to name just two manufacturing countries, subsidise or invest in their car industries, the rationale not lost on policymakers in Berlin or Seoul. Mike Devereux, the then GMH managing director, said he needed another $150 million a year from the government to convince his masters in Detroit to stay. He didn’t get it and, along with Toyota and Ford, Holden is shutting up shop.
Labor’s industry spokesman, Kim Carr, says the Holden decision was taken after Hockey and Warren Truss, as acting PM, “goaded” them in parliament to stay on their own account or leave. That decision will lead to many more job losses than have been saved in the shipbuilding industry. Indeed, there will be thousands more facing unemployment in the automotive and shipbuilding industries in Victoria than in South Australia. The Williamstown dockyard seems to have been overlooked.
The irony here is that Australia, as an island nation, has a great interest in keeping crucial sea lanes open. That will be a task for our excessively expensive subs to perform to ensure our fully imported cars and trucks can safely make it to our roads.
In his apology of sorts published in Quadrant and The Weekend Australian, Tony Abbott nominated ending “the practice of bailing out failing businesses” as one of his proud achievements. The surviving SPC Ardmona cannery workers in Shepparton have the Victorian state government to thank for their jobs, not him. Auto workers and car component makers clearly are not so lucky.
Turnbull’s big effort to refloat the Liberal vote in South Australia may work. Much will depend on how forgiving the threatened car industry workers and their families are. It may well depend on how far South Australian voters are prepared to take their love affair with Nick Xenophon. He is now a political “Team”, with candidates in lower house seats as well as the senate. His preferences at the very least pose a threat to some seats that have been hitherto safely in the Liberal camp.
Turnbull’s willingness to dump Abbott’s IPA-inspired industry policy may not mean he is now more willing to embrace what is widely perceived to be his old truer self. Abbott in his ersatz confession of failure wrote that the most compelling vindication of his government has been the Turnbull government’s maintenance of key policies, among which he listed “direct action on climate change”. You may recall that back in 2009 Turnbull, smarting on the backbench after losing his job by one vote to the climate change denialists and coal industry-aligned apologists who backed Abbott, damned the policy as a fraud.
Turnbull said the policy of giving billions of dollars to major polluters to pollute less was “a recipe for fiscal recklessness on a grand scale” and “an environmental fig leaf to hide a determination to do nothing”. His tune has changed somewhat. In parliament he pretends to believe that Direct Action has been improved and there are more ways to deal with carbon emissions than a market mechanism. Unfortunately for him and the planet, they are not working. One of the ways in which Australia is reaching its woefully inadequate targets so far is thanks to Labor’s ditched carbon tax. But our emissions are again increasing. The United Nations needs no convincing: it has refused our application to become a member of the “high ambition coalition”.
The acid test on this issue was posed on Wednesday, when Bill Shorten released Labor’s climate change action plan. At the heart of the plan is to deliver 50 per cent renewable energy by 2030. Labor has also adopted a net zero emissions target by 2050 as the only meaningful way for Australia to meet its Paris commitment to keeping the global temperature rise between 1.5 and 2 degrees. The Labor plan also involves a suite of policies aimed at maximising the transition away from coal-fired electricity generation to solar, wind and other renewables. This transition, as the opposition points out, is a great opportunity for new industries and new jobs. The most contentious element of the package is a two-stage emissions trading scheme (ETS). The scheme will be propelled by a cap on emissions. This will allow polluters, principally electricity generators, to trade credits internationally and domestically to stay beneath the cap. It will be the market that puts a price on these credits. Shorten rightly says this is not a government-imposed carbon tax or price.
But Treasurer Scott Morrison insists it’s just another Labor tax. And for those looking for the enlightened, inner-green Turnbull, his response was more Abbott or even Howard before he converted to the cause in the run-up to the 2007 election. The PM described the ETS as “effectively another tax”. Then he went straight to the overblown scare campaign so familiar in the old carbon tax debate: he said the policies will have to very significantly increase the cost of energy, of electricity and all other power. “It is going to be another brake on the economy.” And unlike John Howard, who was prepared to be world leading, Turnbull wrongly claimed Labor’s plan was out ahead of other countries.
The Climate Institute’s John Connor is hoping Turnbull’s admission that targets will have to be more ambitious eventually is laying the groundwork for his promised review in 2017. Those ambitions could be dashed if a tight election result leaves him with a paper-thin majority and a party room full of sceptics who would rally behind Abbott’s calibrated denialism. The precariousness of this scenario was highlighted by the latest Essential poll. For the first time since Turnbull assumed the leadership, it has Labor in an election-winning position at the end of the first week of the unofficial campaign: 52-48 two-party preferred.
It may take more than 12 submarines to save the government.
This article was first published in the print edition of The Saturday Paper on April 30, 2016 as "Refloating the vote".
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