Albo’s choice: do the heavy lifting or just play at economic reform

The Prime Minister needs to heed the lessons from his hero Bob Hawke and go early and hard on the tough decisions.

New Prime Minister Anthony Albanese, visits the Bob Hawke mural in Marrickville. He needs to follow Hawke’s consensus style of leadership. Picture: NCA NewsWire / Christian Gilles

Labor has inherited what is sure to be a difficult period in government. It is a problem it would rather face than miss out on. Whether Anthony Albanese handles it well or badly across the course of a full term remains to be seen. The degree of difficulty certainly grows if the politics gets away from him. You can bet Peter Dutton and the Coalition will work hard to expose failures, or at least promote the perception of failure.

Without a hint of shame, within weeks of Labor coming to power the recently deposed government has blamed it for an energy crisis many years in the making and rising interest rates Labor had no fiscal hand in whatsoever. Right now voters aren’t paying much attention, but the job of blaming the government for anything and everything that happens on its watch starts early. Too early for anyone with a hint of realism to swallow, but we know voters can be swayed easily by unjustified scare campaigns.

The budget set down for October 25 is new Treasurer Jim Chalmers’ first major opportunity to recalibrate the economic settings. Treasurers always face prime ministerial constraints. Having promised to ease cost-of-living pressures, the Prime Minister will want to ensure Labor’s first budget doesn’t undercut his campaign pledges.

But the head of Treasury has already used a post-election speech to make the point that the tax system needs reforming and spending restraint should be on the agenda. Where were such strong pronouncements before the election?

The needs and wants of economic management are already butting heads. New governments have a limited window to meaningfully reform what they inherit.

Bob Hawke and Paul Keating quickly moved to enact the micro-economic reforms the Fraser government should have overseen but never did. It was a 13-year Labor government, but the heavy lifting happened early. Similarly, John Howard and Peter Costello’s first budget was a painful one. Howard’s first term included major industrial relations reforms; his first re-election involved campaigning for a GST.

Kevin Rudd was quickly engulfed by the global financial crisis, curtailing his capacity to pursue meaningful economic reforms. The Henry review was commissioned, but the retreat from tax reforms it recommended, coupled with Rudd baulking at a double-dissolution election to legislate the twice-rejected emissions reduction scheme, left him with little more than an apology to Indigenous Australians as his legacy. Symbolically important, to be sure, but without a substantive follow-through. That task is now Albanese’s.

Tony Abbott’s government understood the need for a new government to make hay while the sun shines, which is why Joe Hockey’s first budget was so brutal. Unfortunately for the newly elected Coalition government, Abbott had ruled out all manner of spending cuts before polling day. A small-target strategy can have big consequences. As a result, the new parliament blocked most of Abbott’s fiscal agenda, and by the time federation and taxation white papers were announced his time was up. Malcolm Turnbull rolled Abbott and junked the reforming process in the name of political survival.

An unedifying period in Australian politics has followed ever since: do-nothing governance with little ideological direction. Few good men, and even fewer women, willing to confront the challenges the nation must overcome to retain our prosperity and global standing. When ideology has reared up it has presented as intolerant and exclusionary, divisive by nature.

The pandemic was a road bump and a sizeable one at that. But it hit after the Coalition government was already 6½ years old and on to its third prime minister, having won three elections. Its failures were already baked in, fear of the other its only pathway to victory.

This is what the Albanese government has inherited, having overcome the Coalition’s scare campaign. The challenges of the pandemic have accentuated the need for reforms, yet the tumult of the past few years has jaded voters, turning them off politics. This is the context in which the rise of the teals and a surge in support for the Greens played out at the election this year.

So where does all of that leave Albanese and his team? Do they merely preside, tinkering with the edges of reform, or do they do what progressive governments are supposed to and go all in?

Labor has come to power in a difficult economic environment. Interest rates will continue to go up, inflation remains problematic, debt is growing and productivity challenges remain. There is a good chance ratings agencies take away Australia’s AAA credit rating, increasing interest payments and threatening confidence. All of which is before even considering the challenges of insecure work domestically or the threat of China internationally.

The opposition will stoke voter uncertainty about the government’s capacity to lead in a bid to unsettle it and erode its standing.

Australian political history tells us when Labor loses it loses big. The Whitlam government was thrown out by a record margin. Keating lost to Howard in a landslide, as Rudd did to Abbott. Will Albanese be able to defy such an outcome, or at least push it over the horizon the way Hawke and Keating did for 13 years?

A lot has been said about the strength of the team Albanese has around him, the most experienced line-up to transition from opposition to government in a generation. They will need to shine, using their collective experience from the failures of the Rudd and Julia Gillard years to do better this time. Learning to overcome the instincts of the opposition to wreck things for political advantage. The fact there is no clear successor to Albanese despite the quality of the line-up should help maintain unity.

It seems utterly silly to even contemplate such challenges so soon, but we need to remember the last two opposition leaders to win their way into the prime ministership were both rolled in their first term.

Albanese will need to manage his cabinet as Hawke did, with a consensus style of leadership. He has flagged his intention to do just that. But he’ll also need to do well himself so that any rumblings of dissent don’t undercut his authority. Hawke benefited from such standing for years before Keating started to agitate. The same was true of Howard.

Albanese is nearly 60, the oldest opposition leader to win the prime ministership. A wise head will be important if he is to break from the recent and govern well.

Peter van Onselen is a professor of politics and public policy at the University of Western Australia and Griffith University.