Steady as she goes

CONSIDER Kevin Rudd's opening strokes: his first executive action was about climate change, he refused any "night of the long knives" public service executions and, after being briefed by the Treasury, he still decided to honour his election promises.

These are unusual events by Australian standards. They define Rudd and his times. Transitions of power are decisive events and, while usually enjoyable, they are never easy. History suggests that transitions define a new prime minister, perhaps for his entire existence. This is because transitions expose the elemental forces of nature.

Reflect on Gough Whitlam. He insisted on a two-man government, himself and Lance Barnard, because he refused to wait. He wanted in haste to impose his imprint on history immediately. At a famous December 5, 1972, meeting recorded by Peter Wilenski, Whitlam and Barnard took their first decisions: action to abolish conscription, to support equal pay and to change our UN voting to back sanctions against Rhodesia. It was the rush that never ended: the Whitlam government never stopped running, never stopped fanning epic expectations and, in its lifetime, leapt before it thought.

Reflect on Bob Hawke. On the day after his victory he cancelled his main election promises, notably his tax cuts, after being briefed by the Treasury about the extent of the $9.6 billion budget deficit. It was an act of slick opportunism and resolution reinforced by prior inside knowledge. It was an omen: Hawke was determined to show his economic responsibility. The financial community was impressed; the public accepted the dramatic ditching of the election platform; Hawke and Paul Keating gained great authority from such audacity. Their direction was set as economic realists, astute manipulators and ruthless pragmatists.

Reflect on John Howard. In his initial briefing he discovered a deteriorating budget and a $96 billion public debt that set the scene for his government. Howard disliked his economic inheritance and distrusted the system of Labor governance that delivered it, so he pledged to run a sound money government, restored the flag to the PM's car, sacked one-third of the public service's chiefs in a night of the long knives slaughter (the greatest since Federation) and went into a tough first budget that involved breaking "non-core" promises.

The character of the Howard era was set: surplus budgets, upholding traditional symbols, profound antagonism to Labor's legacy and suspicion about its promises.

In the same way, Rudd's early messages will be pivotal. Treasury and finance officials have delivered their briefings devoid of dramas. Rudd and Treasurer Wayne Swan have affirmed their plans: Labor will honour its election promises. There is no reversal, no turnaround, no backtrack.

This is good news for Rudd but also good news for the new Coalition Opposition. It assists Rudd's transition but reveals a strong economy and a powerful budget legacy. The Coalition returns to Opposition without a recession or a budget black hole to be recruited against it for a decade.

Rudd, unlike Howard, trusts the public service establishment he inherits. Will he make changes down the track? Of course. But Rudd is sending the message of a smooth transition without rupture, executions or intimidation. Rudd, unlike Howard, seems a traditionalist in his outlook on Westminster governance.

He expects good advice from those departmental heads appointed by Howard and, as a result, he will probably get it. The head of the PM's department, Peter Shergold, is leaving not at Rudd's desire but because of a longstanding decision. The impression Rudd seeks to engender is that he knows how to govern properly.

Almost certainly for the first time, a new government has enshrined the environment in its opening executive act. Rudd has moved to ratify the Kyoto Protocol with Australia's representative at Bali, Howard Bamsey, announcing the decision amid applause. Rudd will lead a delegation of his ministers to Bali within days toformalise further this event and begin negotiations on the post-2012 Kyoto system.

The Coalition Opposition had the sense last week to reverse one of Howard's articles of faith and back Kyoto ratification. The swiftness of such recanting, just after the election of Brendan Nelson as Liberal leader, betrays the political folly of Howard's Kyoto denial. This denial handed Rudd the image as leader of the future and invested Labor with the historical kudos of taking Australia into the global climate change system.

Rudd seized his chance. He will be remembered forever as the Labor leader who ratified Kyoto. By locating the Climate Change Department under the PM's umbrella Rudd signals that he will closely oversee climate change policy and politics. Labor wants to own this issue, against the Greens and the Coalition.

The report by Ross Garnaut on Australia's response to climate change goes to Rudd in mid-2008. It will be the foundation for Labor's response, the event that sees this issue shift from symbol to "diabolical" policy, to use Garnaut's words.

In a complex speech last week almost coinciding with the election, Garnaut sketched the challenge. He argued several propositions that won little traction in Australia's sub-standard climate change debate.

Garnaut began by warning that climate change wouldn't be solved by cutting back economic growth. Such ideas (popular in Australia) were foolish and not "remotely feasible".

The task is to de-couple growth from greenhouse gas emissions. This will be hard because global warming is worse than believed and because, unlike in global trade policy, where all nations are better off for cutting barriers, many nations have an incentive to free-ride on mitigation efforts by others instead of acting themselves.

Only a global solution will suffice but it is unlikely a single, multilateral regime will be created any time soon. A messier process of individual action or regional action is likelier. It is in Australia's interest to price carbon and fit into other global arrangements.

Garnaut argues our carbon price in the early years must be higher than projected by Howard and, if a proper market price, would render obsolete the mandatory renewable energy targets. If the carbon price is too low, then such schemes will be needed. Pricing carbon will trigger domestic income redistributions away from low-income households demanding compensation for them.

Welcome to the network of climate change decisions confronting Rudd in his first term. Kyoto ratification is merely buying a seat at the box office. The real show is yet to begin.