The price of political expediency

In opposition, Kevin Rudd was vociferous in his criticism of taxpayer-funded political advertising, but appears to have changed his mind. Picture: Ray Strange

THE federal government's decision to use taxpayers' funds to bankroll its $38.5 million advertising blitz to sell the new super-profits tax on the mining industry has the potential to backfire on Kevin Rudd and the Labor Party.

To get the ads up and running, Rudd bypassed his own advertising rules, which were already a watered down version of what he promised to implement at the 2007 election.

Treasurer Wayne Swan secured an exemption from Special Minister of State Joe Ludwig so that the advertising campaign now appearing in newspapers, on radio and on television didn't have to be reviewed by the Independent Communications Committee, thereby allowing it to be partisan and misleading.

Given Rudd's rhetoric against taxpayer funded political advertising before he was elected Prime Minister, it is a shameless act of opportunism.

The advertisements include details of various goodies Labor plans to introduce hand-in-hand with the new mining tax, such as dropping the company tax rate from 30 per cent to 28 per cent and introducing an annual $700m infrastructure fund. But they don't mention the cornerstone of the new tax arrangements, the 40 per cent profits tax that kicks in at the government bond rate of about 6 per cent.

Grounds for issuing such an exemption include: a national emergency, a matter of extreme urgency, or other compelling reasons.

Ludwig justifies avoiding independent scrutiny for the taxpayer-funded campaign on the second and third grounds.

The new ads also refer to the highly contested notion that mining companies previously paid $1 in every $3 in tax, yet now only pay $1 in every $7 (which includes royalties). As Swan has admitted, this figure doesn't include the 30 per cent company tax mining companies pay, just as other businesses do.

The ad campaign has infuriated the mining industry, which is also rolling out advertisements of its own. From small miners to larger ones, as well as various mining associations, the industry is pouring millions of dollars into a campaign to force the government to water down its new tax plans. If that fails, it is expected to start advocating voting Labor out of office at the next election.

It is the strength of the miners' opposition to the new profits tax that has panicked the government into reneging on its previous commitments to stamp out inappropriate usage of taxpayer funded advertising.

The ads are a backflip on a 2007 election commitment made by Rudd. They highlight the overblown rhetoric the Prime Minister uses but doesn't live up to.

Like the Howard administration's Work Choices ad campaign, this campaign may do more harm than good to the reputation of the government of the day. And the justification for it suggests Rudd may have misled parliament last week on the impact the new tax was having on the industry.

(Ludwig justifies the exemption to run the ads on the grounds that "the tax reforms involve changes to the value of some capital markets, they impact on financial markets". But Rudd spent last week in question time claiming the opposition's line that the new tax is harming the economy is "wrong, wrong, wrong, against the factual data".)

The government is already under siege over backflips and backdowns relating to policies such as the emissions trading scheme (delayed until 2013 at the earliest), the building of 260 childcare centres (the rollout of which ceased at 38) and schemes such as GroceryWatch and FuelWatch (both now defunct).

Most concerning for Labor must be the decline in the Prime Minister's satisfaction ratings, down again according to today's Newspoll. In a sign of how deep this concern goes, we learned last week that Labor strategists are planning to sell the government as a team in the lead-up to the next election, so damaged is brand Rudd.

On May 19, 2007, Rudd said: "We need to have the politicians no longer controlling taxpayer-funded advertising. It's as simple as that.

"Governments are entrusted to spend taxpayers' money to provide essential services, not to use them as a re-election war chest."

At the time the Coalition was (mis)using taxpayer funds to

sell its ill-fated Work Choices laws.

On May 23, 2007, at a doorstop media conference, Rudd inflated his rhetoric against partisan taxpayer funded advertising even further: "This actually is a long-term cancer on our democracy."

On October 9, 2007, on ABC TV's The 7.30 Report, he called it "a sick cancer within our system".

Rudd issued a challenge to John Howard: "Here's a challenge to Mr Howard. Whoever wins this next election, why not have a system whereby three months prior to when an election is due, for there to be a ban on publicly funded advertising unless explicitly agreed between the leader of the government and the leader of the opposition?"

Host Kerry O'Brien asked if that represented a promise Labor would honour in government. Rudd replied: "That is an absolute undertaking from us."

Of course, such a ban is impossible to adhere to without fixed parliamentary terms. But Rudd also said he would introduce fixed four-year terms, another promise that hasn't been kept.

We started to see the details of what Rudd's intended policy to address misuses of government advertising would look like when he did an interview with Southern Cross Broadcasting a month out from the 2007 election.

"There should be, both at a federal level and a state level, a process involving the auditor-general . . . who should scrutinise all proposals for government-funded advertising . . . Otherwise you are just scooping your hand ever deeper into the taxpayers' pocket and throwing out effectively political propaganda."

Labor's 2007 election manifesto states: "Labor will not support the use of government advertising for political purposes."

That didn't mean Labor would remove government advertising altogether. As Rudd said on November 19, 2007: "I agree that there are public information campaigns that are appropriate. What I disagree with is the absence of any mechanism under the auditor-general to deem that to be so. What's wrong with that? I mean if you've got a decent public information campaign, have an independent office like the auditor-general make that determination."

On his election, Rudd decided not to give Auditor-General Ian McPhee powers to determine appropriate government advertising campaigns. He instead handed those powers to a committee that McPhee agrees is less effective than the old system.

As of last Friday, it has also been sidelined.

The Prime Minister wasn't alone in using strong rhetoric to express disgust at partisan government information campaigns.

Finance Minister Lindsay Tanner, while in opposition, told the National Press Club on August 8, 2007: "The bloated government advertising programs and politicians' electioneering entitlements are simply cynical raids on the Treasury coffers to ensure political survival." And on November 1, 2006, Chris Bowen, who is now the Human and Financial Services Minister, said: "When a government expropriates taxpayers' money for its own political purposes, it is a sure sign that that government is out of touch, arrogant and has been in office far too long."

He was talking about the Howard government, which at the time was more than 10 years old. It seems that after little more than 2 1/2 years the Rudd Labor government has also become out of touch and arrogant, and has been in office far too long.

The University of Melbourne's Sally Young, Australia's leading academic scholar who tracks government advertising, has written numerous books and articles on the topic. She tells The Australian: "It is really disappointing. Rudd made such strong commitments for reform. It seems people are almost expecting that this will just go on. It shouldn't happen and we shouldn't tolerate it."

While the Labor government has egg on its face for going back on commitments to do something about blatant misuse of taxpayers' funds for government advertising, the Coalition can hardly claim policy purity on this front. On September 5, 1995, then opposition leader Howard pledged in a press release that "in government, we will ask the auditor-general to draw up new guidelines on what is an appropriate use of taxpayers' money in this area. There is clearly a massive difference between necessary government information for the community and blatant government electoral propaganda. Propaganda should be paid for by political parties."

As in Labor's case, it didn't happen. The promise became a non-core commitment and the Howard government went on to spend hundreds of millions of dollars on selling its goods and services tax, and later Work Choices.

Earlier, in 1995, Howard had described the Keating government's Working Nation ad campaign, in which actor Bill Hunter described unemployment as a national resource to be taken advantage of, as "a disgraceful sham".

Young notes that both sides are as bad as each other: "This has been a problem for 15 years now. It has been a big issue for Australia. Governments on both sides have been guilty of backflips."

Although Rudd's rhetoric might have gone further in criticising the status quo than Howard's did, overstating intentions for government seems to be a contagious condition suffered by oppositions.

Just the other week, following shadow treasurer Joe Hockey's address to the National Press Club, opposition finance spokesman Andrew Robb said that if elected, the Coalition would cut $175m over four years from the Rudd government's advertising budget.

Given the track record of both sides of politics in this area, the public has a right to be cynical about whether it will ever happen.

It is hard to understand why governments continue to think the benefits of taxpayer ads outweigh the negative reaction to them. "I imagine what these ads do is remind people it is their money being spent on messages they don't want to hear," Young says.

"People aren't fooled by that. Surely parties can't think that people are that stupid?"

The government claims the latest taxpayer campaign to defend the new mining tax is justified because of the scare campaign being mounted by industry, which it also claims is misleading. Labor says that is a first in the Australian body politic. But Howard said the same thing when the unions were attacking Work Choices in order to justify the Coalition government's taxpayer ad campaign.

The opposition now claims it is inappropriate to mount a taxpayer-funded campaign for a government policy that isn't law yet, conveniently forgetting that the GST ads (spun as a new tax system) ran before the legislation had been passed.

Both sides of politics have turned parliament into a house of disrepute when it comes to curbing the misuse of partisan government advertising. The loser is democracy. And, given the many millions of dollars spent, the budget bottom line.