We are in danger of becoming another Italian job

We’ll end up like Italy as Australians are spoiled, soft and unwilling to bite the bullet of much-needed reform, writes Stephen Lusher. Picture: News Corp

Reserve Bank of Australia governor Philip Lowe and former Infrastructure Department secretary Mike Mrdak have it right with their recent comments: reform is off the agenda.

I have just returned from nine years in Italy observing that country and the EU as governments progressively have thrown in the towel on anything that looks like reform. The explosion of identity politics and social media, the one reinforcing the other, have so fragmented communities everywhere that there is no longer consensus about what might be good for us.

Where a few decades ago there were peak bodies for labour, industry, farmers, welfare and the like arguing collective viewpoints that massaged the best interests of their constituencies, these have almost lost their voices amid a cacophony of special interest players. It is this multiplicity of ­voices and those that coalesce around them on social media and email campaigns to MPs that are roadblocks to reform.

In Italy, particularly during the Berlusconi years but going back further, the public was corrupted with generous benefits, job protections and the like that are now so entrenched it is proving impossible to wind them back. Matteo Renzi offered hope of some element of sensible reform. He introduced labour market changes to give employers some flexibility in managing their workforces. It was so watered down by the parliament as to be close to meaningless.

Emmanuel Macron is trying something similar in France. It will be interesting to see if he has any more success than Renzi. Optimism is diminishing just as Macron’s approval ratings are dec­lining by the day. Renzi proposed a constitutional referendum, an electoral reform that would have allowed the party winning the greatest share of the votes in a fragmented party system the ability to govern. Italy needs stable majority government; multi-party coalitions have not served the EU’s third largest economy well.

Even The Economist found reasons to oppose the proposition and it was defeated. Renzi promptly resigned and Italy is back to floundering in its inability to reform its sclerotic economy, bloated and protected bureaucracy and glacial judicial system.

Italians I regard as sensible are seriously speaking of voting for Beppe Grillo, a comedian whose Five Star Movement is matching the government in opinion polls and whose candidate won the mayoral election in Rome. Grillo is a populist more concerned with exiting the euro and possibly the EU than with anything that may resemble reform. It does not look good for Italy.

British chancellor George Osborne’s first budget after David Cameron’s decisive Conservative win sought to reform some welfare payments but he was rattled by the fierce opposition to it and gave up. His successor Philip Hammond’s proposed changes to National Insurance payments were similarly withdrawn.

A Theresa May election policy to have those who could afford it accept some responsibility for their aged care was abandoned before the parliament sat. Opponents had termed it a “dementia tax” and the strongest opposition seemed to come from children whose inheritance might have been reduced.

Britain’s National Health Service is such a sacred cow it cannot be mentioned politically in the same sentence as reform. Malcolm Turnbull surely knows the feeling after the last year’s “Mediscare” campaign.

Similarly, not even a Republican-controlled congress would pass Donald Trump’s health system reforms after constituent protests and arguments dominating the media about the millions who would be disadvantaged.

It is more than 30 years since I left the parliament and, looking back, things seemed so much easier then. Both major parties polled in the middle 40s and the Senate was reasonably stable even if the Australian Democrats were flexing their muscles. It is a far cry from today’s primary votes for the major parties in the mid-30s, a fragmented Senate and independents in the House of Representatives. Identity politics is largely responsible for the presence of the Greens, One Nation, Nick Xenophon Team, Family First, Shooters and Fishers, and the like. Most of those who vote for these parties would have been Labor or Liberal supporters a decade or so back.

A lesson I learned from Jim Carlton during the Fraser years was about programs. “Never initiate a program if you can possibly help it,” he would say. “Once started they can never be stopped.”

Electors today, in most Western countries, are spoiled. They have been given too much and what they have been given cannot be taken away.

Examples of government largesse in our time include the National Disability Insurance Scheme, Gonski and the National Broadband Network — all unopposable motherhood policies readily accepted by the community but mostly unfunded. Unfunded and unreformable, at least well into their operating lives by which time they will be as untouchable as Medicare.

These programs are the result of lazy government; government that wants to look generous but does not have the discipline to spread the generosity in affordable ways. It will be future generations who pay for today’s education, health and broadband; today’s taxpayers have kicked the bills down the road. It’s called the national debt.

Those who can most afford a little belt tightening, giving a little back, are often the loudest voices against reform. Negative gearing is a case in point. Abolishing negative gearing may be impossible but putting a cap on future access to the benefit would do little other than improve the budget bottom line. Yet the wealthier in our community argue the sky will fall in and, aided by government ministers, the housing market will crash if this benefit were to be modified.

I left Italy depressed about the future of a country that has given the world so much. I don’t call it great because since unification in the 1860s Italian history has not been less than a series of disasters: wars, mismanagement and corruption that have more than offset the natural advantages and enterprise it so clearly has.

Italy is a country that arguably has a great future, the basics are there, but it has no present. It is not willing to do the hard yards to create an environment where initiative, creativity and progress can flourish. It is easier to sit under an olive tree with a glass of wine and let someone else worry about it.

Coming home I find myself as depressed by Lowe’s and Mrdak’s comments. Tragically, I know they are right. The country is soft. There is no appetite for reform. Our natural advantages are over-mortgaged. Special interests rule. Social media is the new weapon. Reform may be hard in office but it is harder proposing it in an election environment. Don’t expect to see too much of it anytime soon.

Stephen Lusher was the federal member for Hume, 1974 to 1984.