Leaders lost in struggle over policy

THE degeneration in Australia's political culture has been on display this week in the dire warning issued by Labor's adviser, Ross Garnaut, and parliamentary exchanges marked by negative and personal denunciation.

Newspoll showed deep disillusionment with both Julia Gillard and Tony Abbott. Gillard was in negative territory, 35-54 per cent, on her satisfaction rating while Abbott had a similar negative 37-53 per cent on the same measure.

This reflects an obvious truth - the bitter Gillard-Abbott brawl over carbon pricing is disliked by the public and weakens both leaders. Anybody hoping for an improvement this term is deluded; the contest will only deepen in its ideological, negative and personality dimensions with the leaders locked in a political death struggle.

In his final 2011 Climate Change Review Garnaut warns that special interest group politics now threatens Australia's future. In his most contentious report, Garnaut projects his belief that Australia's governance has reached a crossroads. He sees the battle over carbon pricing as a "great struggle" that will determine not just how Australia responds to global warning but, in a larger sense, whether its political system can deliver the results needed to make Australia a successful 21st century nation.

Garnaut argues the post-1983 reform era of the Hawke, Keating and Howard governments terminated at John Howard's mid-point in 2001 with his GST-led tax reform package. Since then, market-based reform to achieve productivity has been non-existent. Business and unions have taken a leap backwards to pursue sectional gains.

Garnaut savages a range of business leaders including Business Council of Australia chief Graham Bradley, BlueScope Steel chief Graham Kraehe, BHP Billiton chairman Jac Nasser and Australian Workers Union head Paul Howes. His thesis is a withering critique of the final Howard years and the Rudd government, and means leaders, in effect, have succumbed to sectional politics once known and discredited as McEwenism.

While many analysts believe Gillard Labor cannot be saved, Garnaut sees its pledge to carbon pricing as "the most difficult and long-dated policy reform that has ever been attempted" and as the critical opportunity to regain Hawke-Keating reform momentum and halt the decline of our political culture.

Garnaut says: "It is impossible to overstate the significance for productivity growth and future economic performance of the reversion to pre-reform Australian political culture. In such a culture, economic reform is impossible if there is any prospect of there being a loser, no matter how large the gains for the community as a whole." As a result the future "depends on us now breaking this great Australian complacency of the early 21st century".

It is hard to conceive a more powerful thesis. Garnaut invests this Gillard-Abbott struggle with epic dimensions. By implication, he casts Labor as hero and Coalition as demon, yet he has a deeper message - true conservatives should have no problem with pricing carbon; witness other conservative leaders in Germany, Britain, France and some prominent US Republicans. His logic is that Abbott is debasing our conservatism and leading his side down an intellectual dead end.

Garnaut's argument means Labor has reached a turning point. With Kevin Rudd tying his prestige to global warming action, only to falter, the ALP's entire policy integrity and political credibility now hinges on Gillard legislating her package and being re-elected. If she fails, Labor will be reduced to ruins, conquered on the contemporary issue on which Rudd and Gillard gambled their fortunes.

This view of Australia is gaining international traction. In its 16-page special report on Australia this week, The Economist offered a bullish account with one proviso; the quality of political leadership.

"That Australia is successful is not in doubt," The Economist wrote. "It has a prosperous economy, a harmonious and egalitarian society, an ability to accommodate immigrants, an excellent civil service, an independent central bank, a good balance of personal freedom and limited government, sensible pension arrangements, sporting prowess and fine cuisine."

The problem? Too many people think small and its political leaders "are perhaps the least impressive feature of today's Australia." Yes, this idea is taking hold.

The magazine makes the valid point that if America had come to a national decision on climate change then "Australia would soon follow suit". If the US had a carbon price then Australia would have a carbon price. US equivocation, as the main developed economy, has triggered an agony for Australia.

Trying to analyse Australia's political problem The Economist gets it nearly right - it says the defect lies not in the structure (three-year terms) but in the culture.

Few democratic systems operate in such a constant state of political hysteria driven by polls, media and combat between leaders as their party banner-carriers. What are the debilitating features of Australia's political culture today?

First, the power of the negative campaign. The negative has always been a potent tool but modern communications invests negative messages with greater lethality. Consider Paul Keating's 1993 destruction of John Hewson, branding Hewson the "feral abacus" and his GST as a "lifestyle tax". Consider the ACTU-Labor campaign against John Howard in 2007 over Work Choices, branding Howard as terminating agent of the "fair go". Consider Abbott's rolling thunder against Rudd and then Gillard over the carbon tax, a campaign that wrecked the former and threatens the latter.

Success for Gillard and Abbott now depends upon their negative campaigns. For Abbott, the aim is to cripple Labor as the party of the "great big new" carbon tax. For Gillard, it is to brand Abbott as a totally negative hollow man outdated for the times and alienated from women. Hence this week was dominated by unjustified hyperbole - Abbott's depiction of Labor as the party destroying manufacturing industry via its tax and Labor's depiction of Abbott as a sexist unable to offer respect to women. Given a chance, there are few limits on the recklessness of such negative messages.

Second, the globalised world has undermined the tribal, class and ideological foundations of the main parties, though this identity crisis is more profound for Labor. Since Labor's 2007 return to power it has faced a crisis of belief, a decline in its base vote and a conflict between its pro-green, socially progressive backers and its working-class voters, with carbon pricing being the wedge that shatters the nexus between these constituencies. In short, the precise issue that Garnaut names as the key to Labor's policy revival is the issue that threatens Labor's political survival in office.

Third, the new hyperventilating political system has changed the culture of both opposition and government. Abbott is the classic case study of what "opposition" now means. He grasps that in Australia's new system there are only two fates for an opposition leader: you succeed in the polls and survive, or you fail in the polls and are removed.

The new rules began after the 2001 election, when in 10 short years Australia has had seven opposition leaders: Simon Crean, Mark Latham, Kim Beazley, Kevin Rudd, Brendan Nelson, Malcolm Turnbull and Tony Abbott.

Once an opposition leader sinks in the polls the political water torture orchestrated by the media begins; the narrative becomes bad polls, internal disunity, leadership rivals, leadership challenge speculation and, finally, the execution. The culture tolerates no other option. In this climate the successful opposition leader must retain polling ascendancy over the government; witness Rudd in 2007 and Abbott today.

The frequent advice given to Abbott by journalists, that he must get "responsible" and embrace carbon pricing, is worthless. If Abbott followed such advice he would betray his own constituency, lose his base, suffer an irreversible decline in the polls, trigger an internal party crisis and lose the leadership. He is not fool enough to listen to such nonsense. This leads, in turn, to the conclusion that the current Gillard-Abbott struggle is a high policy conflict, the type that can be resolved only by an election.

In relation to governing, the new culture puts a disincentive on policy courage; witness the Rudd experiment. Politics becomes more short-term, driven by focus groups, tactics and media. This contrasts with policy that becomes more long-term, driven by factors such as climate, demography, infrastructure, resources and productivity. So the politics-policy tension has rarely been as intense.

The story today is that Gillard as PM is conscripted to try to correct for Rudd's failure. Gillard seeks to prove that Labor can implement a market-based approach to climate change, legislate the policy, reclaim her Labor base, win an election and, in the process, meet the test imposed by Garnaut of returning Australia to the economic reform path. With Labor on a primary vote around 32-34 per cent it is a truly mammoth task.

The Abbott-led Coalition, obviously, rejects Garnaut's report and call for carbon pricing.

The bigger question, however, if Abbott breaks through to become PM, is what does the Coalition stand for under his leadership. Would he reposition to market-based economics or sink into the slough of policy despond that Garnaut fears?