Rudd stalks PM on education crusade

Eric Lobbecke

WHILE Julia Gillard is out there selling her education crusade, Kevin Rudd has been shadowing her, doing the rounds of schools and pushing soft messages on life in politics and extolling the virtues of the cost-plagued Building the Education Revolution.

When Paul Keating's first challenge to Bob Hawke failed, he went to the backbench and crafted substantial policy speeches that demonstrated what a loss he was to the government.

Hawke was rudderless without him and promptly collapsed in the face of John Hewson's Fightback manifesto.

If Rudd wants to show some substance now, he should step up and call out the $120 billion spending spree consuming the Labor government. The Prime Minister and Wayne Swan are spending like drunken sailors, creating policy confusion in the public service and undermining commonwealth-state relations.

Labor's vote stalled in the latest Newspoll and the Greens seem to be losing some of their shine, meaning the election is probably 12 months away. Australia cannot afford another year of reckless spending, much of it focused on the years out to 2020.

Gillard will keep fighting to the last dollar of the public's money. Forget about Swan playing the responsible Treasurer. Swan has no option but to acquiesce in this spendathon; he has no future under Rudd.

Gillard and Swan aim to get their poll numbers up into the respectable high 30s to survive to year's end.

The Coalition will continue to stand its ground on new spending rather than engage in a Dutch auction with Labor.

It is not negative to focus on Labor's fiscal blowout and whatever fudges and re-profiling of spending are used to shore up the 2012-13 budget surplus in the mid-year budget outlook. It is not negative to hold Swan accountable for how, amid signs of a weakening economy, he proposes to preserve the surplus without exacerbating the malaise in non-mining parts of the economy.

Retail sales, job advertisements and other indicators are down, suggesting that Labor's cash handouts are not driving a sustainable rise in household spending. The carbon tax may have dented business and consumer confidence by more than the government will admit.

Recent policy announcements have added billions to the budget across the next decade. There is a good case for detailing budgets up to that time to explain how Labor's spending will be paid for in the context of sagging tax revenues. The government does such projections when it suits, for example the intergenerational reports, and should be held accountable for all this future largesse.

Publication of the structural budget position, which strips away the impact of the economic cycle on tax and spending, would identify the real budget black hole facing an incoming government.

Some initiatives such as removing the floor price for carbon have been designed in part to pull the rug from under Rudd. He had promised to review the carbon floor price as part of his February leadership push.

Overturning their hitherto vehement opposition, the Greens supported this backflip; not coincidentally, the government announced a multi-billion-dollar dental scheme sponsored by the Greens. The party of principle claims that new limits on purchases of developing country credits will support the carbon price and we can rely on European policymakers to reform their carbon trading market to vindicate Treasury modelling of a high price in 2015-16.

Meanwhile, the government will nearly triple the number of permits to be auctioned to urgently raise additional revenue.

Gillard also is squeezing further public service numbers and costs, a strategy that has very little downside outside Canberra and the surrounding region. However, it could lead to further chaos in an increasingly demoralised public service under pressure to churn resources through a lengthening list of new initiatives.

Commonwealth grants to the states are reportedly on the chopping block. The blame game is back with a vengeance. The big states are run by the Coalition parties and are therefore fair game. State governments will cop the political backlash when community services are cut in response to the withdrawal of commonwealth funding. This is from a government that wants the states to step up on education funding and disability services while ignoring the proportionately greater contraction in the states' taxation base.

No wonder Ted Baillieu, the Premier of Victoria, came out swinging in relation to the building union stand-off in the Melbourne central business district.

If Canberra wants state co-operation on its funding initiatives it will need to accommodate state demands for structural reforms to address economic growth and productivity. Labor's one-size-fits-all industrial relations policy is fanning union militancy and its much touted national harmonisation agenda is raising costs for more than one million small businesses that do not operate across state borders.

A new agenda that engages the states to raise economic efficiency, cut layers of waste (including through one-stop shops for federal and state approvals) and redirect resources to frontline services is needed but must await a change of government in Canberra.

Rudd's address at the launch of a new biography of Gough Whitlam last week was designed to send the message to his colleagues that only he can craft and sell a narrative to engage voters in the aims and objectives of this Labor term in government.

Rudd argues Labor is the party of hope and reform and that the Coalition is just a collection of nay-sayers and obstructionists. This is partisan tripe but, more important, ignores Rudd's own test for serious reform - the capacity to take on one's base.

By that measure he has signally failed, presiding over labour market re-regulation to appease the unions and the dismantling of the Howard-era border protection regime to mollify the Labor Left.

He has fallen into the same trap as Keating, who cruelled his chances of carrying the debate on the republic by resorting to crude anti-British sentiment and boasting about putting a stake through the Menzies legacy.

This was not a strategy designed to win over the conservative voters needed to seal the deal. His supporters got a warm inner glow but in due course he got the chop for his arrogant and patronising ways.

Rudd's speech suggests that he has nothing new to offer Australia; the choice for Labor backbenchers is Gillard or Gillard-lite.

Arthur Sinodinos is a Liberal senator for NSW.