July 5th 2008

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Articles from this issue:

COVER STORY: The real China the West prefers to ignore

EDITORIAL: Lessons of the equine influenza (EI) inquiry

CANBERRA OBSERVED: Two big unknowns for the Rudd Government

ECONOMIC AFFAIRS: Emissions-trading a "bureaucratic indulgence"

EQUINE INFLUENZA: AQIS responsible for EI outbreak, says report

INTERNATIONAL TRADE: Rudd's scheme for an EU-style Asian community

GLOBAL TERRORISM: Australians supplying arms to Colombian guerrillas

POLITICAL IDEAS: Champion of the humane economy - Wilhelm Röpke

OPINION: Why the Howard Government fell

REPRODUCTIVE HEALTH: Abortion damage to women ignored by inquiry

EUTHANASIA: Doctor-assisted suicide halted... for now

EDUCATION: Environmental jihadists terrorising our children

SCHOOLS: Teaching grammar: the blind leading the blind

AS THE WORLD TURNS: Masculinity under attack / Denying global warming deemed a crime against humanity / Ireland defies European Union

Small business and farmers should make more noise (letter)

Renewable energy? (letter)

BOOKS: THE REVOLUTION: A Manifesto, by Ron Paul

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Two big unknowns for the Rudd Government

News Weekly, July 5, 2008
The economy and the proposal to introduce a carbon tax both have potentially massive ramifications.

Speculation about a possible one-term Rudd Government is a case of wild optimism on the part of the federal Opposition and rash judgment from sections of the media.

Some observers appear to be misinterpreting a series of early mistakes and teething problems with new ministers with a congenitally flawed government.

There have been reports that Mr Rudd's office is "chaotic" and filled with junior inexperienced staffers, that he interferes too much in his ministers' work, that departmental heads have been kept in the PM's waiting room for hours on end, and that the government's agenda is driven entirely by trying to control what will be on the nightly television news.

Such reports add to Mr Rudd's reputation of being a control-freak and poor people-manager, but it is a big stretch to think these problems will cause the downfall of the government.

After all, even the Whitlam administration was a two-term government.


Nevertheless, it is surprising that, after seven months in office, there are any commentators at all who are prepared to stick their necks out and predict the demise of the Rudd Government so soon after being elected.

The Government is riding high in the polls. Kevin Rudd's approval ratings as Prime Minister are at near record levels.

And a majority of Opposition MPs, by a considerable margin, do not believe that Dr Brendan Nelson will be Liberal leader come the next election.

Most commentators and Liberal MPs believe Malcolm Turnbull would be a more pugilistic and forceful Opposition Leader, but whether his "café latte" inner-city agenda will appeal to the voters who matter in the suburbs and the regions is another matter.

Meanwhile, Peter Costello is playing a typical role on the sidelines — waiting for his party to come to him and to plead with him to lead them back to power.

After the November election Mr Costello gave every indication that he intended to quit politics altogether and seek out a career in the corporate sector.

Mr Costello returned to the backbench where he has said nothing while busily penning his memoirs , with the assistance of former Quadrant editor, Peter Coleman.

However, the lucrative position that Mr Costello had hoped for has apparently failed to materialise.

Over recent weeks, various reports suggest he is tiptoeing back to a position where he may be open to staying in parliament — but no one knows whether this means to lead or to wait.

Liberal colleagues say Mr Costello is still most likely to quit politics, perhaps to resume a job as barrister.

In short, the Government is still finding its feet, and the Opposition is in a state of confusion over who will lead it to the next election.

If nothing were to change at all, the Rudd Government would certainly be re-elected regardless of who led the Opposition and whether or not Mr Rudd is able straighten out his ministers, smarten up his office and reform his "control freak" tendencies.

The problem for Mr Rudd and his team is this: if there are signs of panic and chaos now, when things are going swimmingly, how is the Government going to cope when it has a real crisis on its hands?

The two big unknowns for the Government — and both have potentially massive ramifications — are the economy and the proposal to introduce a carbon tax.

The international economy is in a particularly unpredictable state.

Problems include rising world inflation. The US economy is dealing with the greatest credit crisis since the 1930s Great Depression. The Chinese and Indian stock-markets have experienced significant falls pointing to a downturn in their real economies. And the world is adjusting to the biggest oil shock since the 1970s.

If there is a sudden reversal in the Chinese economy or a currency panic leading to the Australian dollar collapsing, the Reserve Bank of Australia and the Rudd Government would have to make a series of unpopular decisions.

Foreign debt

Australia still suffers from a rapidly growing foreign debt, despite the longest boom since the gold rush. How then will it cope if overseas demand for our resources suddenly dries up?

The second unknown is how the Rudd Government will implement its carbon tax following the recommendations of Professor Ross Garnaut.

The transition to a "low carbon" economy has the potential to cause the biggest fundamental shake-up to business and households since the lowering of tariffs in the 1980s and the introduction of the GST in the 1990s.

So far, the Rudd Government is trying to convince Australians that the pain must be taken now to avoid worse pain (caused by climate change) in the future.

But Australians are likely to remain highly sceptical about a "policy pure" proposal which will actually have negligible impact on climate change but which will burn the hip pocket at the worst possible time.

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