New talk, old story

THE gap between Labor's promises of reform and delivery seems entrenched.

JULIA Gillard is right to warn of economic Hansonism and the political risk to reform measures, yet this seems more an exercise in political spin to de-legitimise the Tony Abbott Liberal Party.

There is only one relevant question from Gillard's new position: is this a declaration of how she will govern or an electoral tactic to save Labor from its deepening mire of minority government now reflected in the alarming fall in its primary vote?

The language of "economic Hansonism" is indelible rhetoric. These are words that stick. They are designed to derail and discredit Abbott before he can ruin Gillard with the same political steamroller that crushed Kevin Rudd. On cue, this week's polls show Labor in trouble: the ACNielsen poll has Labor's primary vote at 34 per cent and Newspoll at 33 per cent compared with a dismal 38 per cent at the August election that cost Labor majority government.

Gillard has been denied any post-election honeymoon. Within weeks of the poll Labor's core vote is under attrition. It remains under attack in a two-front war without precedent in its history and, as usual, this is the problem. Labor is pledged to Murray-Darling water reform yet the regional backlash against reform has seen its Newspoll vote fall to 31 per cent in regional areas. This two-front threat will occur on a bigger stage when Labor embarks on its new effort to price carbon.

It is no accident that in Gillard's speech to the Australian Industry Group on Monday that the key to her reform agenda was pricing carbon. Indeed, she hardens this commitment almost weekly. Gillard has moved from her campaign caution of searching for a consensus to ringing declarations that she is "determined to deliver a carbon price". Aware that Abbott will try to destroy her government on this issue, Gillard seeks to discredit Abbott before the onslaught. It is a sensible tactic and contrasts with the Rudd government's blunder of accepting the majority media view that Abbott was unelectable.

Early signs are that Gillard recognises where Rudd failed; she knows that as PM she must shoulder the selling and marketing of the carbon price policy and that unless she commits to this responsibility then her project is doomed. But will she possess the fortitude to persevere?

Beyond tactics, if Gillard's latest speech on economic reform is an accurate guide to her vision, strategy and values as Prime Minister then it deserves full support. She has made some defining statements: that minority government does not terminate economic reform; that leaders must lead and "my voice will be loudly heard"; and that her government will walk "the reform road every day".

Does Gillard grasp the meaning and impact of such declarations? The problem is obvious: Labor's credentials on economic reform are flawed and the gap between its promise and delivery seems entrenched. Since 2007 Labor's message has been its fidelity to Hawke-Keating pro-market reformism yet this is more a ritualistic slogan reflecting the party's pride in its history than a serious platform for action.

Gillard's statement that she believes "the reform consensus is now under serious threat" because of a few comments from Joe Hockey and Andrew Robb cannot be taken seriously. The reform consensus, in fact, has been unravelling for years and this has been the subject of an intense political and policy debate that, among other things, has dominated The Australian's coverage of national events for some time.

The irony is that Gillard's attack coincided with John Howard's book. At the launch yesterday Howard nailed Labor, lamenting "when we were in government we received no support at all" from Labor on economic reform. Howard won in 1996 on a mandate for industrial relations reform but as early as May 1996 his government's bills were being fought by Labor.

This story was repeated for 11 years, election after election. Labor opposed the GST-led tax reform after Howard's 1998 election victory and took its "rollback" policy to the 2001 poll. Its tactic was to return to power off the destruction of the GST. Labor opposed most of the Howard government's privatisations; it was consistently hostile to measures designed to return the budget to surplus; it initially opposed the independence of the Reserve Bank; it won in 2007 by rejection of Work Choices reform and by depicting Howard as weak on climate change action. After Howard's defeat, Rudd even dismissed the idea of economic reform as a shared Labor-Liberal project. The history affords only one conclusion: Abbott's tactics are a repeat of Labor in opposition. The pivotal question is whether they will be more successful at an earlier stage.

Gillard indulges in hyperbole that the Coalition under Abbott rejects the reform bipartisanship that endured all her adult life. She bemoans that the "once reform-advocating Liberal Party" (of Howard and Peter Costello) has been abandoned by Abbott.

Abbott needs to be careful precisely because there is substance in Gillard's case and his vulnerability lies in being branded as simplistically negative.

But Gillard's position is loaded with risk. Consider the $43 billion National Broadband Network, a government-owned monopoly that is the biggest infrastructure project in the nation's history, a venture that Treasury says has financial risks for the public balance sheet, for competition policy and for efficiency in telecommunications. This government, so dedicated to economic reform, refuses to have the Productivity Commission conduct a cost-benefit analysis for a project that Malcolm Turnbull correctly says has no precedent in this country or abroad. The point, of course, is that Labor has no confidence the Productivity Commission would deliver a favourable report.

Gillard's problem is Labor's abject weakness on pro-market reforms, a point hammered by Ross Garnaut. Consider the record: Labor has partially re-regulated the labour market, walked away from carbon pricing in its first term, mismanaged its mining tax, backed a government monopoly in telecommunications, staged a historic retreat on immigration at a time of low unemployment, left the university sector increasingly uncompetitive and falls short on supply side reforms at a time of capacity constraints.

If Gillard's reform pledges are serious, she must review and re-shape how Labor governs. Hopefully, improvements will come, yet Gillard has deep commitments to many of the reform retreats and rollbacks.

The truth neither side wants to admit is that the post-1983 reform age has long since surrendered to another age defined by prosperity, complacency, poll-driven politics and scepticism about markets, a transition that will ultimately damage Australia.