It’s now or never for Labor to abandon its comfort zone
Inviting connected people to come forth with proposals to solve their problems, even if they are presented as ‘national interest’ concerns, is at first blush crazy-brave.
Upping Mao by an order of magnitude, Jim Chalmers is letting a thousand flowers bloom on the path to the economic reform roundtable. In the digital tonne of submissions on budgets, productivity and economic resilience, there’s an idea from every school of thought for the Treasurer to contend with.
Just over a week before the three-day event begins, the process is becoming more contentious, overwrought and messy. Dozens of satellite and fringe gatherings, hosted by ministers, and a “boardroom blitz” of CEOs by the custodian have got policy pulses racing.
Inviting connected people to come forth with proposals to solve their problems, even if they are presented as “national interest” concerns, is at first blush crazy-brave. As well, the Productivity Commission has released three of five interim reports from inquiries into the pillars of prosperity, including a radical proposal on corporate tax detailed here a week ago.
Expectations, dear reader, expectations. Still, managing them in the wake of a tremendous victory is a more pleasing outcome for Anthony Albanese, say, than dealing with a riot of a parliament in both houses, which many pundits thought would be the Prime Minister’s likely prize.
The shock of the scale of Labor’s win revived the concept of a mountain of political capital just waiting there, like a $3m-plus super fund: use it or lose it. For the wonkerati, it’s a joyous moment. “I’m trying to keep a lid on my excitement,” a roundtable participant tells Inquirer.
Albanese and Chalmers have tried to corral lurid proposals on the GST, company tax and copyright, as well as ambit pre-game claims from friends. The PM this week reminded everyone that the cabinet was the engine room of his show. Sure, the blow-ins would sit in new chairs for a few days, but Labor’s executive makes the ultimate policy decisions.
In 80 days from polling day to parliament’s opening day, the bubble’s denizens filled text and voice lines with psychodramas about succession: the 62-year-old Prime Minister had set up his 47-year-old rival to fail. Another take was the roundtable was a ploy to let everyone talk themselves to a standstill, and move on because consensus is a 1980s throwback, like half of Albo’s votes in the Hottest 100.
Naturally, the clickety-click curmudgeons were quick to yuck the whole exercise as a talkfest and distraction. Not so, says Chalmers, calling out the “grumps and cynics”, claiming he’s got used to partisans “saying that the effort has failed before it’s begun”. “But what they’re really arguing for is to not include people,” he told reporters this week. “To not try and farm the best ideas that people have. And I don’t see why that’s a better course of action.”
Farmer Jim is praying it’s harvest time, for the reason we’re here is because Albanese Labor had run dry; the bureaucracy had become an enabler, not an agent of influence; the Coalition was, to be as frank and fearless as their election autopsy should be, brain dead on policy. The political machine, of bitter conflict, vested interests, bastardry and obsession with trivia, can’t get good things done; it often spits out antagonists, as it did a pair of vanquished party leaders in May.
Rolling back the years, Albanese won in 2022 without pushing his heart rate beyond 60 beats per minute; he offered safe change and minimal disruption. Pandemic-weary voters were also sick of Scott Morrison, the last Liberal standing after three terms of turmoil.
Fat fiscal times allowed Labor to have its cake (two budget surpluses, which could have been three) and eat it (a historic social spending splurge). Albanese was true to his pledge of stable government, delivering most of his promises, providing cost-of-living relief, managing his caucus and avoiding risks at all costs, bar the voice misadventure. His mini mandate mirrored his ultra-thin margin and he never wavered from his primary goal: a second term, while avoiding the Rudd-Gillard dysfunction.
As incumbents the world over were put to the sword last year after the big inflation and post-Covid lethargies, Albanese looked as if he, too, had run out of fuel. The new year, however, revealed a lusty campaigner, with a credit card. Labor’s platform was cash-heavy: more borrowed money in voters’ pockets, including student-debt relief, free TAFE and cheaper childcare, and Medicare times 100.
In February, the Reserve Bank’s first interest rate cut in four years, with signals of more to come, changed the game; the jobless rate had stabilised at around 4 per cent and few Australians thought they would lose their jobs. The Treasurer’s budget in March offered a tiny tax cut while shirking the grown-up work of fiscal repair.
Early in the campaign, Donald Trump dropped the T-bomb. On April 1, the US President’s Liberation Day tariffs rocked global markets and helped Mark Carney win in Canada in late April; Trump’s (rather mild) 10 per cent penalty on imports from Australia likely hurt Albanese’s main opponent among nonpartisans.
Labor was also aided, the country denuded, by Peter Dutton’s policy incompetence. The Coalition not only misread the electorate on tax cuts and 2025’s reality of working from home, it shovelled up fiscal crapola like taxpayer-funded nukes, subsidised business lunches and deductibility of home mortgage interest costs.
Dutton’s economic-culture war signalling on cutting migration (trust us to “stop the visas”) and lowering grocery costs (by supermarket divestment) were unworthy of parties of government. Junk policy, as it proved, is junk politics. The Coalition has 43 lower house seats in the 48th parliament, down from 90 in 2013, 77 in 2019 and 58 in 2022. You might say this is a steady, sure path to net zero by 2050.
The election campaign was no country for old reformers, yet in the blink of a mammoth victory, the truth telling began. Chalmers declared the country was not productive enough, the federal budget wasn’t sustainable and we needed to be more resilient in the face of further perils.
The message: we should collectively change our ways, aim higher and get closer to the frontier of innovation. But so must a plodding if methodical government, which has frustrated supporters, the policy-minded and a younger cohort of MPs in a hurry who feel stymied by the old guard of 2007-13. A generation of go-slow also has exasperated policymakers, privately and publicly, during Coalition and Labor rule.
Asked about the RBA’s expectations from the coming economic roundtable, deputy governor Andrew Hauser says “we take the economy as it is and we deliver our mandate which is low and stable inflation and full employment”. Matters such as workplace relations, for instance, are “political choices … based on the democratic process”.
Hauser notes productivity is stuck at roughly the same level as a decade ago in most countries except the US. “That’s a screaming siren for all of us and something that we need to focus on, and it is very good therefore that we are focusing on that,” he told an investment conference last week.
The RBA deputy explained the level of productivity growth, in effect, set the speed limit for the economy. “Let’s suppose productivity remains weak, consumption doesn’t pick up very much, people say that must be because policy is too tight,” Hauser said.
“It may very well not be. It may be that’s the speed rate of the economy. It is lower than we wish it was. It’s lower than it has been in the past. We shouldn’t be loosening rates, the need to speed that economy up lies with other people.”
After post-election scene-setting speeches by Albanese and Chalmers to the National Press Club in June, a government fixer put it to Inquirer that the three-day reform event was akin to a conqueror’s gift to the nation. As in, “we don’t have to do this”.
OK, so what’s the plan, chief, because business as usual isn’t going to cut it?
As we saw in early 2023 when the PC delivered a blockbuster reform blueprint and the migration review led to a new strategy later that year, the policy follow-up can be maddeningly slow or non-existent. In the former, it was due to the multidimensional nature of the task, in the latter because of the toxic politics of migration amid record population growth.
Let’s hope the roundtable can provide a policy circuit-breaker on our growth malaise, although consensus on big issues such as tax or budget repair may be a distant shore. The latest messaging from Canberra is that the focus will be on cutting red tape and building more homes.
Chalmers maintains it’s a “big agenda”. He argues if “we finish up those three days and the worst we’ve got is a whole bunch of ideas, well-motivated ideas, that we can work through in the context of the next couple of budgets, then that would be a great outcome”. Maybe for him.
Better still, he adds, would be to “get people to try and get around some of those ideas and reform directions”. Nirvana? Smells like team spirit. Then comes the real grind and toil, as long as Labor broadens its ambitions, engages the electorate and exits its policy comfort zone.
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