Abbott navigates his crucial “year of reform”

While it’s true that a week is a long time in politics, and politicians’ careers can be made or unmade in the course of a day, there are still some things in the political domain that tend to follow the same pattern over the years.

One such thing is the cyclical approach taken by governments, particularly those that are new, to what should be done over the course of an electoral term.

Traditionally the first year is when exclamations are made about budget black holes, the other side’s profligacy and the need for “tough decisions” to be made. This is the best window for implementing such decisions, thereby giving time for voters’ memories to fade before the next election.

The mid-term period is for developing and implementing the government’s new policy initiatives. Any contentious matters should be dealt with well before the final 12 months of the electoral term, leaving that year for the government to hand out goodies at the pre-election budget and focus on the re-election campaign.

The Abbott Government has adopted this approach, as did the Howard and Rudd-Gillard governments before it. In fact, the first Howard government budget is considered to have been tougher than the one handed down by Treasurer Joe Hockey last year, although certainly not as unfair.

This strategy becomes difficult when governments have only three-year terms, leaving only 12 months or so to undertake policy reform. That’s not a lot of time to research, consult, negotiate and formulate draft legislation, let alone get it through the parliament.

We saw this with key policies implemented by the Rudd-Gillard Labor governments, such as the National Disability Insurance Scheme and the Gonski education reforms. Both were initiated during Labor’s first term under Rudd but not implemented until the second term under Gillard.

Perhaps the need to have more than one term to put policies in place is why voters have traditionally been disinclined to toss out first-term governments. That of course assumes voters support an incumbent government’s policy agenda.

The Abbott Government is now well into its mid-term, and is receiving considerable pressure from corporate and other business sectors to reform taxation and workplace relations laws. However, these are not reforms the broader Australian community necessarily supports, and it doesn’t seem likely the Government will be able to convincingly explain them to a public already made cautious and sceptical by last year’s budget.

Until now, Abbott’s reform plans have assumed his government would be given at least two electoral terms. The PM has consistently stated that following inquiries into taxation and workplace relations laws, and public discussion of the issues, he would take any proposals about changing the GST or labour laws to the 2016 election.

In fact, Abbott may even be depending on this plan to revive his flagging leadership. It has become folklore in Liberal circles that PM Howard revitalised his electoral standing in 1997 with his “bold” tax reform strategy, which delivered victory at the 1998 election. Others argue the GST almost lost Howard the election.

Granted, business and welfare groups were both calling for taxation to be reformed then, as they are now, but it was a huge risk for Howard to take a new tax (albeit one that replaced 10 others) to an election. Abbott may think he can emulate this feat but he should keep in mind that taxation reform (and a possibly expanded GST) is not the only policy minefield he is trying to navigate during this mid-term period.

Abbott is also trying to meet demands for workplace relations reform from a business community grown impatient and frustrated by the previous Labor government’s dismantling of Howard’s WorkChoices: a policy reform, it should be remembered, that Rudd and the union movement used to bring Howard down in 2007.

Taxation, workplace relations, and also the nature of our federation – these are the complex and fraught policy reform agendas PM Abbott is attempting to wrangle – within the confines of this mid-term period, which for all intents concludes at the end of 2015. Meantime, Abbott is also trying to draw a line under the previous, tainted budget while positioning the upcoming budget as being about jobs and families.

Aside from its evident lack of humanity, the biggest flaw in last year’s budget was that it tried to do too much, too fast. Abbott’s policy reform agenda is similarly defective. The PM has only this year to get his policy reforms under way, but he mustn’t lose sight of the need to get re-elected in order to implement them.

In pursuing what are likely to be major reforms on both the taxation and workplace relations fronts, Abbott is inviting his opponents to run a double-barrelled scare campaign against him. The 2007 federal election as well as recent state elections in Victoria and Queensland show how formidable Labor can be when it campaigns closely in association with the labour movement. The next federal election will be no different.

Howard almost lost, or only just managed to win, his second term of government by taking a new tax to the election. He lost his final election thanks to a masterful campaign by Labor against his workplace relations reforms.

If Abbott takes proposals to expand the GST and change workplace relations laws to the next election, he will be combining the electoral risks that Howard chose to face individually at two separate elections. Abbott would be crazy-brave, bordering on foolish, to think he could win an election proposing both.

Voters forgive leadership change, but not disunity

Only days since returning from a short summer break, Prime Minister Tony Abbott is struggling with the issue he left unresolved before Christmas – the Government’s litany of policy disasters, its rejected budget, and his own failure to deal with his increasingly alarmed ministers and backbenchers.

Admittedly, the PM made some half-hearted attempts to ‘reset’ matters at the end of last year. He reshuffled the ministry without offloading most of the dead wood, held a press conference in which he failed to nominate any policy for resetting, and then went on to ‘give ground’ on policies such as the Medicare rebate and the paid parental leave scheme without actually giving any real ground.

Not surprisingly, this fooled no one, leaving ABC 730’s Leigh Sales to be the first to ask the PM whether he would consider stepping aside in order to give the Coalition the best chance of holding on to power. Abbott’s response was to evoke the deposing of Rudd as justification for his retention, arguing “the one fundamental lesson of the last catastrophic government was that you don’t lightly change leaders”.

This rationale has become almost an invocation, most recently uttered by the PM today in response to questions about the viability of his leadership:

“If there is one lesson to be learned from the fate of the former government in Canberra – maybe even the former government in Victoria – is you do not change leaders. You rally behind someone and you stick to the plan, and we’ve got a good plan.”

To make matters worse, the PM was then treated to a serve by a talkback caller describing himself as a Liberal voter, who said Abbott was “on the nose with Liberal voters” and “the world’s worst salesman”, and that “people don’t know where you are going and business is saying there are roadblocks because there is no direction and no leadership”.

Once one gets past the irony of Prime Minister Tony Abbott citing the coup against Kevin Rudd as the main reason not to dispense with him, it’s worth examining whether it’s actually true that voters don’t like parties who change leaders midstream.

In fact, several Australian governments have changed leaders and gone on to win the following election.

After stalking and then knocking off Australia’s once most popular PM Bob Hawke, Paul Keating went on to beat Opposition Leader John Hewson at the 1993 federal election.

At the state level, a leadership transition was made from Queensland Premier Peter Beattie to Anna Bligh, who despite losing seats at the next state election still retained government. And after losing the confidence of his party room, South Australia’s Premier Mike Rann stood aside for Jay Weatherill, who scraped through the following election to form a minority government.

Sure, each of the governments took a hit in the polls, but they still managed to retain office.

And let’s not forget that despite PM Abbott using Rudd’s political demise as a cautionary tale, Julia Gillard actually managed to form government after the subsequent election, albeit a minority one, despite Rudd’s best efforts to sabotage Labor’s election campaign.

That’s not to say Labor voters weren’t unhappy with the way Rudd was treated. Firstly, they were shocked at the seeming swiftness of the rebellion, and then mystified when it became clear neither Gillard nor those who backed her would give a valid explanation for the coup.

That emotion later intensified to anger when Gillard failed to deliver on the fresh start she had promised voters, demonstrating the same political tin-ear and poor judgement that had plagued Rudd. Gillard’s perceived broken oath on the carbon tax combined with her various political mishaps and pratfalls had more influence on her poor electoral standing than the way she became prime minister.

Despite PM Abbott’s protestations to the contrary, there is no golden rule in Australia politics damning a governing party that changes leaders mid-stream to eternal political opprobrium.

Most of those that did manage to retain office after a leadership change occurred late in the life of long-running governments looking to extend their incumbency. And while some of the changes were orderly handovers, a couple were so well telegraphed they became inevitable.

There are messages in these facts for the current prime minister: governments that have an orderly transition of leadership can survive to fight and win another election. And the removal of a prime minister will generate less voter anger if it’s clear why the change is being made.

If there is a lesson for anyone in the Rudd-Gillard saga, it is actually for Abbott. Voters are more concerned about political disunity, incompetency and unmet expectations than they are about changes in the Government’s leadership.

Signs of mutiny on the Good Ship Abbott

That sound you hear is the whisper of Liberal Party MPs carefully shuffling around a Prime Minister who’s taken on water and is listing dangerously.

They’re hoping to avoid being dragged down with him into the dark waters of electoral opprobrium and are eyeing those who hope to replace the PM as potential lifeboats.

We’ve known for some time that the Good Ship Abbott was in trouble, partly because it was constructed using shonky policies and shattered expectations, but also because it was steered with the reckless abandon that comes from political hubris mixed with a misguided sense of entitlement.

The summer break provided an opportunity to put the ship in dry dock, replace the defective policies and adjust the political navigation system. At least that was the point of Tony Abbott’s “reset” press conference and the ministry reshuffle conducted late last year.

However, it would appear that no such reset actually took place. Instead Abbott pressed on, continuing to make poor political decisions like the no-media visit to Iraq while bushfires raged in three Australian states, and even worse policy decisions like the unannounced $20 cut to the Medicare rebate.

Now a leak about the Medicare cut from the Cabinet’s expenditure review committee over the weekend suggests hope is fading fast for HMAS Abbott to be successfully refloated, and that the decks are being cleared for a regime change.

Ministers are already jostling to be in the new leadership line-up, and the weekend’s leak flags that Joe Hockey, the one-time heir-apparent but now only the beleaguered Treasurer, wants to be back in contention. It would also appear Hockey is unafraid to tarnish the PM’s reputation while seeking to rehabilitate his own.

According to a newspaper report of the leak, Hockey and then health minister Peter Dutton “opposed the move during a ‘heated’ exchange with the Prime Minister” but the PM insisted on the $20 cut the Medicare rebate for short GP consults, which apparently were “developed by the Prime Minister’s Office and then costed by the Department of Finance and Health”.

This isn’t the first time efforts have been made to shift responsibility for the budget from Hockey to Abbott, particularly by drawing attention to the PM’s insistence on chairing every meeting of the Expenditure Review Committee as it put the budget together.

One well-briefed commentator wrote around that time:

The core problem with the budget is the design, and responsibility for design faults ultimately lands at the feet of the Prime Minister … Abbott used his authority to take charge of the Government’s first budget, yet he seems to be using his political skills to sidestep responsibility, leaving ownership of the document with Hockey.

Since then, the Abbott Government has begun to leak like a scuttled dinghy. Political observers have been treated to a flotilla of leaks to the media, seemingly to position ministers impatient for promotion in the best possible light, or put the case for one ambitious backbencher over another.

It would seem not even the Prime Minister’s Office has been above such shenanigans, appearing to provide leaks to the media at various times to rein in potential leadership contenders such as Foreign Minister Julie Bishop.

Another recent leak, aimed at the Treasurer and suspected to also have come from the Prime Minister’s Office, was described by one press gallery stalwart as exposing the disunity, paranoia and distrust that currently exists at the highest levels of the Government.

This latest leak in Hockey’s favour won’t change the perception of omnishambles, nor will it dissuade voters from booting out the Abbott Government as swiftly as the Rudd-Gillard one if the rot is not soon arrested.

This certainty is what occupies the minds of the shuffling MPs.

The only factor that remains in Abbott’s favour is that there’s no clear front-runner to replace him. Traditionally the leadership team is agreed mostly between NSW and Victorian MPs because combined they have the most votes in the party room. Hockey re-entering the field complicates matters, but at least gives NSW MPs another option other than the invidious choice between the left’s darling, Malcolm Turnbull, and the hard-right’s poster boy, Scott Morrison. Victoria doesn’t have a leadership contender but could supply an able deputy.

And at this point it’s anyone’s guess what deals the Western Australians might do with NSW or Victorian MPs to put Bishop into the top job.

What is clear is that now Abbott has apparently single-handedly botched the “reset”, he’ll likely be deemed unseaworthy and slated for a visit to the ships’ graveyard, perhaps by mid-year.

Meantime we can expect to see a veritable ocean of leaks to the media and other forms of self-promotion as the contenders set their spyglasses on the leadership and set sail for what is guaranteed to be a deceptively perilous journey.

A three-point plan to get Abbott back on track

Running a government isn’t meant to be easy. It necessarily involves protecting and maintaining the well-being of millions while responsibly managing a budget of billions. And like some prime ministers before him, Abbott has been judged by voters as not having done a particularly sterling job in the first year of running his.

Like those predecessors, Abbott still has time to turn things around. But it will take him tapping into qualities that we have not yet seen present in the man.

Article for The New Daily.

Abbott follows the Howard blueprint on GST

More than a decade after the Howard Government introduced a goods and services tax, political pundits remain divided over whether the accompanying GST campaign was effective.

Some point to Howard’s re-election after proposing the new tax as proof of the campaign’s success, while others claim Howard almost lost because of it.

Despite the lack of consensus it appears the Abbott Government is using the same campaign blueprint, this time in an attempt to create public acceptance for increasing or broadening the GST.

Back then, Howard was saddled with an earlier promise to “never, ever” introduce a GST but was being pressured to introduce one. According to one account, senior members of the business community were openly questioning Howard’s economic reform credentials, while the press gallery were asking why he wouldn’t lead (or at least follow).

So the then PM created a situation where journalists and economists, business and welfare organisations and even voters called for him to “reverse” the never-ever promise for the good of the nation. Howard did this by focusing the numerous fragmented commentaries into one national discussion: one that centred on Australia’s “broken” tax system and how it could be “fixed” by scrapping a bunch of inefficient taxes and replacing them with just one.

The mechanism Howard used to focus the conversation was a taxation taskforce (incidentally chaired by Treasury official and former Keating adviser, Ken Henry). It was established to prepare options for tax reform, and recommended that a consumption tax be part of the mix.

A year later, following much public discussion, the Howard government presented voters not only with a proposed GST but an entire package of tax reforms. The package included personal income tax cuts, increases in the tax-free threshold and pensions, and the scrapping of wholesale sales tax. Nine other taxes imposed at the state and territory level were also slated for elimination. Most importantly, all the money raised by the GST was to be provided to the states and territories, supposedly ending their dependence on the federal government’s largesse.

Howard then blitzed voters with a controversial advertising campaign before immediately plunging the nation into a moderately early federal election, which he either cleverly won, or foolishly almost lost, depending on whose analysis one finds more convincing.

PM Abbott is clearly banking on the campaign having been a success for Howard, because his “increase the GST” campaign looks eerily familiar.

A bevy of Treasury boffins is currently developing a tax reform paper, while the general public’s awareness is slowly being raised through discussion in the media about the need to broaden or increase the GST.

Comments such as those made last week by government backbenchers and ministers serve to kick along the public discussion while keeping the PM’s hands clean of the debate until the Treasury report is released later this year.

Those Treasury findings will shape a tax reform package that Abbott will – like Howard – take to the next federal election, which is due in mid to late 2016. Unfortunately for Abbott, even if one accepts the Howard GST campaign blueprint was a winning strategy, his is unlikely to deliver similar dividends.

For a start, the Abbott Government’s “budget emergency” narrative is a harder sell than the “broken tax system” one used by the Howard government to justify its tax reforms.

Back then, voters could see the impact of inefficient taxes on their everyday lives, such as the balance on their bank statements being whittled away by a debit tax AND a credit tax. They also took quickly to the notion that wholesale sales tax was illogical and expensive to administer. In short, voters understood the proposed tax reform was for the public good.

In contrast, the Abbott Government has singularly been unable to explain the budget emergency or what it means for voters. Not long after the budget was announced, 32 per cent of voters remained unconvinced there was a budget emergency, and while another 24 per cent accepted the need to fix the budget they didn’t think the new measures would help.

This lack of a compelling narrative is going to make it considerably harder for Abbott to focus public attention and discussion on the benefits his tax reforms would bring.

It should also be remembered that much of Abbott’s GST conundrum is of his own making. He is hindered by the voter perception that new and increased taxes are bad – largely created by him in opposition – and by the expectation that his would be a low-taxing government.

This difficulty is compounded by the fact that the main tax in people’s lives these days (other than income tax) IS the GST. While Howard offered to scrap 10 taxes and replace them with one, Abbott will be constrained to offering what is essentially an increase to an existing tax, perhaps with modest income tax cuts and compensation for those on low incomes.

Lastly, Abbott’s Finance Minister, Mathias Cormann has helpfully placed the bar particularly high in identifying the level of support the Government will take as being permission to change the GST. According to Cormann, any proposed change will have to have broad support across the community and the parliament as well as the unanimous support of all state and territory governments.

That will be no easy feat, particularly with a contested strategy, a distrusted salesman, and a dubious product.

It is said by those who favour Howard’s tax reform campaign that it rejuvenated his electoral prospects by giving the then PM a new purpose and stature in the eyes of voters. Even if this were true, it’s hard to imagine any reform proposal involving the word “tax” endearing estranged voters to Abbott or making him more electable.