I returned to Australia last Saturday, just in time to vote,
after having spent a month travelling around Britain and Ireland. That means I had
the good fortune to miss the election campaign.
However, missing election campaigns is not always an unmixed
blessing. The last time I missed an election campaign, in 1983, when the Hawke
government was elected, the country seemed to change in my absence in ways that
I found difficult to understand. Prior to leaving Australia I think there was a
fairly common perception, which I shared, that Bob Hawke was a divisive figure in Australian politics. After I returned just a
few weeks later, it took some time for me to adjust to the fact that Hawke had
come to be widely viewed as a national leader, capable of bringing the nation
together to deal with difficult issues. The mood of the country seemed to have changed
while I wasn’t looking.
I don’t think I missed much by being absent during the most
recent election campaign - there doesn’t seem to have been any marked change in public mood. It was predictable that voters who were having doubts
in 2010 about the leadership offered by the old Kevin Rudd, would realize during
the campaign that the new Kevin was still the same person. It was also
predictable that people who were having difficulty bringing themselves to vote
for Tony Abbott prior to the campaign would not suddenly see him as offering
inspiring leadership. The issue was whether Tony would be able to demonstrate
during the campaign that he had learned how to keep his foot out of his mouth.
How much will the change of government change Australia?
There are some who argue that when the government changes, the country always
changes. Paul Keating famously put that view to voters in 1996, as his period
as prime minister was drawing to a close. I suppose some of the people who decided to
vote for John Howard would have disagreed with Keating’s warning, but others
would have actually wanted the country to change.
In my view, the Howard government did not actually change
the country to a huge extent relative to the course that had been set by the Hawke
and Keating governments. The size of the federal government (measured in terms
of cash payments as a percentage of GDP) contracted from 25.6% in 1995-96 to
23.1% in 1999-00, and then rose again, peaking at 25.1% in 2000-01. The trend
toward greater centralisation of power in Canberra continued unabated. There
was a change of style and some change of emphasis – possibly including greater
enthusiasm for privatisation of government business enterprises - but the
direction of policies did not change to any great extent until the final term
of the Howard government.
In its final term the Howard Government introduced ‘work
choices’ in an attempt to further free up the labour market. The net result,
however, was one step forward and two steps backward. The reform encountered so
much political opposition that it helped Kevin Rudd and Julia Gillard to gain
power and introduce tighter labour market regulations than had existed prior to
the Howard reforms.
In my view, the Rudd-Gillard-Swan governments changed the
country to a much greater extent than could reasonably have been anticipated in
2007, when Rudd came to power. As well as the change of direction in industrial
relations, the emphasis of policies turned towards redistribution of wealth as
opposed to wealth creation with the introduction of an additional tax on mining
profits. The change of style of government in the Rudd era – a prime
minister with delusions of infallibility announcing policy on the run – made
government seem chaotic. The Rudd-Gillard-Swan governments also brought about a
substantial expansion in size of government – cash payments rose from 23.1% of
GDP in 2007-08 to 26.1% in 2009-10. On the positive side of the ledger, the changes
to health policy are possibly having positive outcomes (but I haven’t seen the
evidence) and changes to education policy might also be positive. However,
these policy changes have occurred at the expense of further centralisation of
power in Canberra.
There seems to be a widespread expectation that the Abbott
government will cut back the size of government, but I’m not sure that view is
warranted. The government will probably reduce the number of federal public
servants, but when election promises of increased spending are taken into account it
seems unlikely that there will be a substantial reduction in government
spending.
It is possible that the new government could take action to
reform federal-state relations, by retreating from some policy areas that are
more appropriately dealt with by the states. However, I will not be holding my
breath waiting for that to happen. As noted a few years ago in my review of
Tony Abbott’s book, ‘Battlelines’, he
seems to be in favour of greater centralization of power in Canberra.
Perhaps the government will move on tax reform in its second
term of office. But the most likely outcome will be a higher rate of GST to
raise more revenue. If we continue to drift toward a European style welfare
state, we will need a European style tax system to fund it!
I am not sure that we can even expect the new government to
maintain policies favourable to free trade. Policies proposed with respect to
‘dumping’ suggest a lack of understanding of normal business practices and the
role of international competition in the economy.
Postscript:
I had intended to mention that I was prompted to begin thinking about this question by a post last week on Jim Belshaw's blog. Jim's post was entitled: 'What can we expect of a new Coalition Government?'
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