Big news but no one's listening

Jenny Macklin and Kevin Rudd at a courtyard press conference. Picture:Kym Smith

A BIZARRE fate has befallen the Rudd government.

Its historic break with a century of Labor welfare policy tradition is ignored as Labor is defined totally by its new resources tax on the mining industry.

Rudd Labor is now engaged in political struggles with unequal opponents: with the world's biggest miners and with the welfare lobby headed by the Australian Council of Social Service.

Both are over path-breaking policy that rewrites the established order.

Yet the resources tax is an all-consuming political and media issue that hurts the government, while the new system of national income management will pass into law virtually beneath the radar.

It is an insight into Kevin Rudd's political tactics, media persona and leadership.

The welfare reform shatters 100 years of Labor tradition in the cause of mutual responsibility and attacking passive welfare. If John Howard were advancing this law the media would be awash with rows, denunciation and wall-to-wall ABC coverage of the controversy. Putting income management into white households, not just grog and drug-affected Northern Territory indigenous communities, is a turning point. The bill empowers the minister to do exactly this. It means that a concept integral to the Howard government's Territory intervention is being modified and extended on a national basis.

In her second-reading speech, Indigenous Affairs Minister Jenny Macklin called this a landmark reform that over time would permit income management - compulsory quarantining of 50 per cent of regular welfare payments - to be applied in designated disadvantaged areas across Australia.

The Greens have attacked this policy as "arguably the biggest change to Australia's welfare system since" World War II. That's hyperbole, but it does constitute a historic shift.

This week ACOSS chief executive Clare Martin said bluntly: "We are calling on the federal government to halt this scheme. There is little evidence to show compulsory income management assists people overcome disadvantage." ACOSS cannot abide the scheme's purpose. It rejects any role for social security to effect "social or behavioural change".

Macklin is unmoved. She has been working in this direction for two years. She believes mutual responsibility is vital in welfare.

Asked recently by The Australian if she was embarrassed by compulsory income management, Macklin said: "Not at all, I think it's a beneficial tool. If you look how it has worked, it has helped families put more food on the table. Labor is committed to progressively reforming the welfare system to foster individual responsibility."

The Senate is expected to pass the law next week with support from Tony Abbott's Coalition. From July 1, it extends existing powers for income management to urban, regional and remote areas of the Territory.

It will apply on a non-discriminatory basis to designated categories of welfare recipients, the main groups being disengaged youth, long-term welfare recipients and people assessed as vulnerable.

At the end of 2011 there will be an evaluation as a prelude to taking the system nationwide. The existing bill gives the minister the power to extend the policy to areas outside the Territory.

Rudd has given firm support to Macklin in this project. His commitment to the policy is manifest. Yet Rudd has declined to project himself as a champion of such welfare reforms that challenge Labor's instinctual faiths.

By contrast, Rudd defines himself as a new resources tax specialist, thereby validating Labor's deepest class-based instincts.

Given that confusion over what Rudd really believes is fundamental to Labor's present plight, this juxtaposition is illuminating.

It penetrates to the events of last Wednesday morning in the PM's courtyard.

Rudd, with Macklin at his side, convened a media conference. It was a belated, almost sad, effort to seize back the political agenda and to sell himself as a political reformer.

Rudd's opening words were: "The government is committed to a program of reform", with his main exhibits being the paid parental leave scheme and the new welfare reform bill.

"Welfare should not be allowed to become a way of life in Australia," Rudd said. But he was whistling in the wind. The story was resources tax, not welfare reform, not paid parental leave.

Rudd ploughed on, depicting himself correctly as an opponent of passive welfare and advocate of individual responsibility. His aim was to ensure "that parents spend their welfare in the interests of their children".

But the news was elsewhere. The questions and answers were about the resources tax. Rudd had a year to market himself as a welfare reformer, with all the risks and opportunities this involves, without waiting until the eve of the bill's passage, when his stocks were at their lowest.

This is a morality fable of modern politics.

The story in politics is only about conflict and dispute. If the opposition agrees with the government, there is usually no media story and no publicity, regardless of how significant the policy or reform.

This mindset creates a classic backdoor method of influence for the opposition leader. The resources tax is a huge story, not just because of the mining industry but because Abbott rejected the tax and enshrined it as the election issue.

The welfare reform is a media non-event because Abbott supports it and the new system is bipartisan.

ACOSS protests but the welfare groups are divided and the peak body wins little traction. "We fear that people will not seek help from Centrelink with emergency relief, homelessness or domestic violence services in case income management applies to their payments," Martin said on Thursday. Who listened?

No party-political conflict means no story. By denying Rudd any fight, Abbott denies Rudd the opportunity to became a welfare reform champion.

This week, however, Rudd belatedly tried to create a new narrative. The organising principle of his government, he insisted, was reform across the economy, health, education, welfare and resources.

This is what he really represented. Here was Rudd seeking to inject fresh meaning and purpose into a government adrift and plagued by too many competing announcements for too long.

Rudd has realised too late that serious reform means defining your opponents, but inaugurating this lesson with the mining industry was not the best place to start. Still, the contest is joined and Rudd will seek warrior status in the battle.

Despite the political and policy pressures, the government is sticking by Rudd.

Frankly, it has little choice. Julia Gillard is not positioning for the leadership. The cabinet is holding together on the principles behind the resources tax.

The party, for better or worse, knows that Labor has crossed the Rubicon on this issue. There will be no deal, agreement or settlement with the mining industry.

The core goals guiding Rudd, Wayne Swan and Resources Minister Martin Ferguson in dealings with industry over the resource super-profits tax seem clear.

First, they will protect the estimated revenue from the tax, $3 billion in year one and $9bn in year two. That dictates no fundamental concession in what counts.

Second, they will preserve the integrity of their tax package with the mining tax financing corporate tax cuts and assistance on superannuation and small business. Third, they will maintain their economic integrity and return to surplus in three years.

Fourth, they want to say they consulted, listened and responded to the industry as a reasonable government should. Finally, they will make changes that recognise different needs of different parts of the industry and offer concessions in the transition.

As Ferguson said this week: "There can only be one cut. We will announce what we think is appropriate, draw a line and then get on with life."

The gulf between the Rudd government and and the main mining companies is unbridgeable. The distrust between them runs deep and will take years to repair. Labor's aim is to extract heat from this political war and weaken the industry's capacity to sustain a credible campaign to voting day.

The miners believe they are dealing with a government that refuses to acknowledge their core concerns over the application of the tax to existing projects and the 40 per cent rate. "They simply cannot tell us on what basis they selected this 40 per cent tax rate or why they think it is 'about right'," one mining leader said.

Rudd must stabilise his government and revive its standing before calling an election. At a time of such global uncertainty the task of a Prime Minister is to ensure investment confidence in Australia, not perpetuate a war with the nation's main export industry.

Rudd will risk the election if he fails to honour this rule.