CANBERRA OBSERVED: by national correspondentNews Weekly
Labor promises grandiose schemes it can't deliver
, September 15, 2012
In October 1992 Julia Gillard’s political mentor, former Victorian Labor Premier Joan Kirner, went to the polls and was defeated in a landslide by Liberal Jeff Kennett.
There are a couple of things worth remembering about that election, during which the Liberal Party successfully prosecuted its opponents as members of “The Guilty Party”.
First, after extraordinary financial mismanagement — including presiding over the collapse of banking institutions, such as the State Bank, the Pyramid Building Society and Tricontinental merchant bank — Mrs Kirner, Victoria’s first female premier, was unable to turn around the budget deficit and cut back on government spending.
The unions and other vested interests simply wouldn’t let her, resulting in an even harsher reality check when Kennett eventually assumed power.
Eventually, Mrs Kirner went to the polls with a Budget she knew would never be delivered.
The other point about that election was that, for the entire period before the poll, Mrs Kirner was personally more popular than Mr Kennett, despite the serious unpopularity of her government.
Julia Gillard, apparently more unpopular than her opponent Tony Abbott, now appears to be taking a leaf out of her old friend’s playbook.
Ignore the polls and announce spending measures as if there is no day of reckoning — the reckoning being the election due in the latter part of next year.
In short succession, Ms Gillard has announced a national disability support scheme, a national dental scheme, and a school-funding plan that somehow means not one school will be worse off, but hundreds of schools in poorer areas, or with large numbers of migrant or indigenous students, will be better off.
It is classic Whitlamite Labor — the party of the bold reformers, the party of the great policy innovators. The party that brought you Medibank and the Pharmaceutical Benefits Scheme now brings you the National Disability Insurance Scheme (NDIS) and the Gonski godsend.
The problem is that this time there is no money to pay for the schemes.
Having stripped the budget coffers of everything to “stave off” the global financial crisis (GFC), the federal government has no money left to support any more grandiose ideas.
And the situation appears to be getting worse by the month with China’s economy slowing, commodity prices falling, mining projects being mothballed and consumer confidence starting to wane.
Two things are clear — first, Labor will go to the election towards Christmas of next year, promising a monster hamper of visionary Labor projects; and second, Ms Gillard will not be in power to deliver on them.
Evidence that the Gillard government has abandoned any attempt at balancing future budgets came with the decision to axe its policy of putting a floor price on carbon (dioxide) from 2015, linking it instead to the European Union’s carbon-trading scheme.
The decision to abandon the $15 floor price means the European carbon price will set the carbon price in Australia.
While the Government talks about joining a “market” on carbon of 500 million people, effectively this means handing over a significant proportion of Australia’s taxation decisions to the bureaucrats of Brussels.
Budget papers are forecasting $9.4 billion in revenue from carbon dioxide emissions permits in 2015-16, based on a predicted $29 a unit carbon price. Such a price is dependent on the European Union economies recovering dramatically and the carbon price rising from its current unit market price, which is below $10.
The government’s announcement is designed to take some of the sting out of the carbon tax for business. However, it will most likely mean a huge shortfall for its budget — but long after it leaves office.
Most commentators simply accepted the government’s switch on carbon as being neither here nor there, even though it was another fundamental policy volte face — after the policy’s mere two months of existence!
The Greens accepted the change without a whimper, and the conclusion of most of the media was that this was a political masterstroke by the government.
This view was not universal, however, with News Limited business commentator Terry McCrann concluding: “We are linking the collective insanity of our carbon tax to the collective insanity of Europe’s.”
He said: “The whole European project, built around the euro and collective and hugely punishing fantasies like the Emissions Trading Scheme, is crumbling … but we will be literally paying foreigners for the right to keep our power stations operating.”
The main object of the changes is to make it even harder for Tony Abbott to unravel them when his team assumes control of the Treasury benches.
Labor’s strategy is predicated on Tony Abbott not being able to deliver on his promises to dismantle the carbon tax, or to deliver any of the good things that Labor is promising, and the people realising that Labor is the only party that can deliver on the important “reforms”.
It is likely, though, that these policy changes are about writing Labor mythology rather than a serious re-election strategy and that Ms Gillard will follow the path of Mrs Kirner into political oblivion.