Policy by popular command

Mike Baird has shown how to gamble and win, despite a political scare campaign.

29/03/15 Sydney, N.S.W. Australia © Andrew Murray Mike and Kerryn Baird in Manly after the Premiere won the election. The Premiere held a press conference before going for a stroll on the promenade.

Not this time. Despite facing one of the biggest dirty-tricks, distortion-riddled scare campaigns of modern Australian politics, Mike Baird and his government team avoided a repeat of recent state election disasters that have bedevilled the Liberal-­National coa­lition parties.

Baird rolled the dice at the weekend. Despite the risks, despite the supposed lessons of history, the Premier won.

He gambled that voters would stick with him and his unpopular plans for privatising the state’s electricity network — even if it meant the collateral damage of losing valuable seats held by MPs he described as “good people”.

The NSW election result, characterised by Baird in his ­victory speech as a triumph of “hope over fear”, was not dogged by ill-timed interventions from Canberra.

Except for Tony Abbott’s inclusion at Baird’s official campaign launch, the Liberal machine ­behind the NSW Premier went out of its way to keep the unpopular Prime Minister out of the spotlight in his home state.

There was no negative fallout for Baird from Abbott government cuts to car subsidies, which helped Premier Jay Weatherill’s seemingly doomed Labor government limp back to office in South ­Australia.

There was no Abbott-inspired increase to fuel excise or talk of fiddling with the GST rate that helped kill off Victorian premier Denis Napthine’s chances of ­riding back into office.

Nor was there a surprise Abbott knighthood for Prince Philip, which upset republicans and pos­sibly added to the woes of much-disliked premier Campbell Newman in the late-January Queensland election.

But the absence of such interference in no way underrates Baird’s NSW result. His victory is already being touted as a study in how personal popularity and the courage to stand by policy, no ­matter what reservations might show up among voters in opinion polls, can be a winning combination. It can pay to hold your nerve.

It was only 11 months ago that Baird took over after the abrupt resignation of Barry O’Farrell, forced out of the job after inexplicable memory failings about the gift of a $3000 bottle of red wine.

O’Farrell’s Coalition landslide victory in 2011 against a scandal-ridden, tired Labor government of 16 years, with a succession of ­premiers near its ragtag end, meant that Baird inherited a ­generous buffer of Coalition seats to stave off electoral defeat — 69 to Labor’s 20.

Still, recent history told him that the political climate was vola­tile. State governments had been tossed out despite apparent competence, and the Coalition in particular had been punished.

It would have been so much easier to adopt O’Farrell’s safer strategy for achieving victory: minimise risk by never over-promising or committing to a bold policy that could give an aggressive opposition the opportunity to frighten voters.

After he took over on April 23 last year, Baird, the cleanskin Premier, built his popularity relatively quickly thanks to his direct but easygoing demeanour and can-do image.

In part based on his brand of ­religious faith, he believed there was little point in holding the reins of power without trying to improve things. Winning for the sake of power meant little. He sold himself as the “infrastructure” Premier who wanted to transform the state’s ailing transport network by using $20 billion from selling the “poles and wires” of the state’s electricity grid to construct major motorways, tunnels and rail links.

Such ambitious plans always carried a potential sting. Labor, as political commentator and former Howard adviser Grahame Morris points out, faced a tough time winning the election.

Its political strategists opted for the “fairly orthodox and predictable” tactic, says Morris, of running a negative campaign against a popular premier — but it would become a ­campaign that tested the boundaries of truth in advertising. Wild claims could run completely ­unchecked, considering political election advertising is not subject to the regulation of the commercial world.

Baird was repeatedly forced on the back foot when Labor leader Luke Foley campaigned hard on the claim that a partial sell-off would inevitably lead to rises in power bills for consumers.

The fearmongering negativity reached fever pitch in the last days of the campaign when the Construction Forestry Mining and ­Energy Union upped the ante with pro-Labor ads alleging NSW electricity assets could fall into foreign hands — and in particular suffer a takeover by China’s State Grid Corp, a company accused of ­alleged corrupt dealings.

There were even claims of a “secret meeting” between the ­Chinese and NSW Treasurer ­Andrew Constance — based on a puerile interpretation of what were really innocuous comments reported by China’s Xinhau newspaper and then exaggerated.

To allay public doubts and suspicions, Baird had no choice. He would have preferred to spend the last few days of the campaign promoting the economic management credentials of his government. Instead, he was forced to devote precious time reassuring voters that a majority of NSW electricity assets — 51 per cent — would remain in government hands, and that all “protections” would remain in place to safeguard the NSW interests if overseas investors took a part-lease in the assets.

The key flaw in Labor’s argument was that the fight over electricity was a fuss over very little, probably nothing. It was Labor, after all, who privatised NSW electricity generation and retailers: all that remained for sale was transmission and distribution, the so-called “poles and wires”. Past Labor premiers Morris Iemma and Bob Carr had endorsed full privatisation of electricity, yet now Labor claimed it was akin to party sacrilege to sell what was left.

The dishonesty of Labor’s campaign was blatant when it came to rises in electricity prices because Baird was forced to argue against a simple claim that was refuted by facts. Victoria has privatised electricity, and prices are cheaper than in NSW.

Furthermore, electricity prices are controlled nationally by the Australian Energy Regulator, not by supposedly profiteering companies that could be foreign owned. Even Foley’s claim that selling the remaining assets would cost the state budget $1.7bn in annual dividends was wrong. Treasury figures show, and Foley now accepts, that dividends have dropped to $400m and the impact of a sell-off would not affect plans to keep the budget in surplus.

The only hitch for Baird as he struggled to argue against Labor’s flawed anti-privatisation message was the Premier’s own claim that his government proposed a 49 per cent partial lease of remaining electricity assets. Baird’s proposal, while technically a lease, really amounts to a 100 per cent sale of Transgrid, plus 50.4 per cent of Ausgrid and Endeavour Energy, which provide power to 70 per cent of the state.

The basis for claiming that it is only a 49 per cent sell-off is that 100 per cent of Essential Energy will remain in government hands. Ironically, Essential Energy distributes power to regional areas where Labor and the Greens ­appear to have been successful in worrying voters that distribution of power to their homes was about to go private.

In the face of such a negative campaign, the counterbalance that Liberal strategists hoped would work in Baird’s favour was his popularity. It worked.

As John Black, an electoral demographics expert and former Labor senator puts it, Campbell Newman possibly could have ­survived in Queensland if he had been able to sell himself and his government. “The difference in outcomes in NSW appears to be due to the ­relative unpopularity of ­New­man,” Black says.

It was not to be, this time, for Luke Foley’s Labor Party in NSW. There is, however, a sense of renewal and hope for the ALP, after the devastation of its 2011 defeat. Foley claims the party is once again in the political game as a ­relevant player and a serious ­future contender for government. “We have gone from a rump in the parliament to a real opposition,” he declared on Saturday night, referring to how Labor’s seat tally in the lower house, where the government is formed, had jumped from a poor 20 to at least 34.

The Coalition is expected to rule, easily, with 54 seats. The Greens have won up to four seats, adding inner-west Newtown to the party’s inner-city seat of Balmain, and most likely both Ballina and Lismore in the state’s north, after a very successful campaign against local coal- seam gas.

Foley says that the next NSW election is winnable for Labor and, for a state with a reputation as a traditional ALP stronghold, his prediction does not appear ­unrealistic.

Labor won back much of its “heartland” on Saturday, as Foley alleges, and there is a base for more gains next time: the goal for a ­government majority in NSW is 47 lower house seats. Baird cannot afford to put a step wrong. Nor can he afford any more ICAC corruption controversies involving his ministers or backbench.

At the latest count, it appears the Baird government will gain a majority in the upper house — possibly with or without support from Christian Democrat Fred Nile. That means Coalition legislation to approve the electricity sell-off is assured of approval by both houses.

Michael Egan, a former NSW Labor treasurer and staunch advocate of electricity privatisation, says the Baird Coalition has won a “mandate” to privatise electricity, and NSW Labor should not try to govern from the upper house by opposing it. The numbers suggest it will not be possible for Labor to block the relevant legislation using upper house numbers, anyway.

Possibly the best outcome for Foley would be if the power sale went ahead, and Labor won in 2019. That way the entire issue of electricity privatisation in NSW would be resolved, and an ­incoming Labor government could reap the political benefits of $20bn unlocked for public spending by Baird.

Of course, in the wake of Baird’s strong victory on Saturday, talk of NSW Labor victories might seem ridiculous.

But at least one of the NSW ­Coalition partners — the National Party — has been left with a few questions to ponder about its future and political direction.

The strong showing for the Greens in Ballina and Lismore in the state’s north means that the natural opposition for the Nationals in the regions and the bush is no longer Labor: it is the Greens.

The Greens might only have four seats; their main significance for a future Coa­lition or Labor government is the potential to hold the balance of power in the governing house, the Legislative Assembly, if both major party groupings are evenly matched in future elections.

If the Greens can maintain the rage against CSG projects in the backblocks of NSW, they could prove to be a lasting headache for Mike Baird’s junior coalition partner. Labor became a rump after the last NSW election. It is not something the Nationals would want to emulate.