Governing by deeds, not debate

IMPORTANT lessons from federal politics in the late 1980s are applicable now.

CABINET papers released yesterday from the National Archives revealed strong parallels between the dilemmas confronted by the Hawke government in 1988-89 and those facing the Abbott government now.

Current politicians on both sides have much to learn from the way Bob Hawke and his team achieved budget savings and lasting economic reform, generally with bipartisan support from the Coalition in opposition. One of the main lessons was that, in a single year, the Hawke government achieved savings three times greater than those planned by the Abbott government over the next three years. Tony Abbott and his economic team, as well as the opposition, should not lose sight of that comparison. As former finance minister Peter Walsh warned cabinet as it prepared for the 1990 election: “We do not have the luxury of being able to contemplate undisciplined wish lists.’’ Nor does the Abbott cabinet, which has stewardship of a $40.4 billion deficit and a commonwealth debt set to rise by 29 per cent to $316bn by 2018.

Budget repair is essential this year if Australia is to avoid succumbing to the European disease of slow growth and soaring unemployment. As former Treasury secretary Martin Parkinson has warned, Australia is living beyond its means, with too much spending on health, welfare and education. For those who do not remember 1988-89, the policy issues facing Australia at the time were similar. They included medical co-payments, access to subsidised childcare and the introduction of the Higher Education Contribution Scheme in 1989. The introduction of a $2.50 co-payment for pensioners under the Pharmaceutical Benefits Scheme in the 1990-91 budget, for example, was an acknowledgment, as one cabinet paper said, that marginal changes were no longer viable and major reform of the PBS was needed. A quarter of a century later, it is absurd that a $5 rise in the PBS for general patients and an 80c rise for concession patients, which should have begun yesterday, have been delayed while the government negotiates with the Senate.

Reforms to the Disability Support Pension took effect yesterday, while eligibility changes for Family Tax Benefits will take effect from July 1. When parliament resumes, Education Minister Christopher Pyne will be negotiating to secure passage of higher education reforms that would put Australia’s universities on a more sustainable footing. The reforms are supported by Universities Australia, the Group of Eight, the Australian Technology Network of Universities, the Regional Universities Network, Innovative Research Universities and TAFE. Like former education minister John Dawkins, who oversaw the introduction of HECS, Mr Pyne has agreed to drop the imposition of real interest rates on student loans. The opposition or the crossbenchers should put the interests of our universities and the nation ahead of short-term point-scoring and pass the legislation.

In exclusive interviews yesterday, Mr Hawke, Paul Keating and John Howard urged the major parties to unite behind a transformative economic policy agenda. Mr Howard, who was opposition leader from 1984 to 1989 during the most important reforms and fiscal consolidation of the Hawke government, was right when he said bipartisanship on measures in the nation’s long-term interests were needed at crucial times. Bill Shorten must demonstrate he understands this is such a time. A more constructive approach would boost his economic credibility and show he had learned the lessons of Labor’s defeat in 2013.

Australians normally respond well to reform once they know the facts, as Mr Hawke pointed out. Mr Abbott must communicate a clear message about why Australia cannot continue piling up debt to the detriment of future generations.

The outcomes of his taxation and federation reviews, due to report this year, should help guide the discussion and the solutions. It is not enough, as Mr Keating said, to allow people to first learn about structural changes via the budget. As he said, the government needs ambition and a sense or urgency. And Australia needs a government of deeds, not just debates.