EDITORIAL: After the landslide: the challenges ahead
by Peter Westmore
News Weekly, December 8, 2007
So far, Kevin Rudd has offered no vision for rebuilding Australia's fractured manufacturing and agricultural industries.
The landslide victory for Kevin Rudd over John Howard inaugurates a new era in Australia, for both Labor and the demoralised Liberal and National parties, out of office federally and in every state and territory of Australia.
For the incoming Labor Government, public expectations are high. Mr Rudd has announced that he will make a number of symbolic gestures to fulfil his electoral commitments: sign the Kyoto Protocol (which is shortly to expire), say "sorry" to Australia's Aboriginal people for past wrongs, and put in place his plan to give every secondary student a school computer.
Every one of these gestures could end up costing Australian taxpayers a lot of money: in costly but futile efforts to play King Canute to stop climate change, in tokenism to Aboriginal people without addressing the underlying crises in Aboriginal health and welfare dependency, and in a technological "fix" for the country's education problems.
Mr Howard's defeat was due to a combination of factors: principally, the desire for change after nearly 12 years of Coalition Government , rejection of Mr Howard's heir-apparent, Peter Costello, Kevin Rudd's clever policy of copying Coalition promises while offering "new leadership", and Mr Howard's WorkChoices policy.
The WorkChoices legislation to deregulate the labour market and force people onto Australian Workplace Agreements (AWAs) had a major affect in all outer metropolitan and provincial seats, especially among voters in the 25 to 50 age bracket.
Interestingly, the two states which are experiencing the full resources boom, Western Australia and Queensland, went in opposite directions. There was a swing to the Coalition in WA, due in part to widespread hostility to the Alan Carpenter state Labor Government, and particularly Jim McGinty, who is Minister for Health, Attorney-General and Minister for Electoral Affairs.
In Queensland, Australia's most decentralised state with 40 per cent of the population living outside the metropolitan areas, the huge swing against the Coalition reflected the above factors, coupled with the Nationals' failure to overcome the real problems in rural and regional Australia caused by drought, National Competition Policy, privatisation of public utilities such as Telstra, and free-trade policies.
The sugar seats of Dawson and Leichhardt swung decisively away from the Coalition, by 13.5 per cent and 15.1 per cent respectively, due in part to the Coalition taking the voters for granted. Even effective, local nembers who supported the party line were defeated.
The inability of the Coalition to listen to its supporters and adopt reasonable policies which would support the sugar industry through mandating ethanol only went to prove what many farmers and others were saying: that the Government was in the oil companies' back pocket.
Additionally, the Opposition tactic of using the state Labor governments to blame the Federal Government for cutting federal funds to health, state education, road, rail and port infrastructure was successful.
The principal challenge for Mr Rudd and his new Treasurer, Wayne Swan, will be to prove that Labor is a better economic manager than the Liberals.
This will be no easy task. The global economy (on which Australia's prosperity depends) is facing unprecedented challenges as a result of the sub-prime lending crisis in America, which some economists believe could push the US economy into recession in 2008, the reappearance of inflation after many years, and Australia's rapidly escalating foreign debt, now $544 billion, compared to $183 billion when John Howard was first elected PM in 1996.
Even if this nightmare scenario does not eventuate, interest rates are rising around the world as a result of the weakness of the US dollar and a flight of capital out of risky assets. The result of higher interest rates internationally will be to push up the cost of debt servicing for Australia. This will consume a greater proportion of our export income, making Australia even more dependent on foreign lenders.
The lack of a diverse manufacturing base in Australia capable of import substitution could be exposed painfully in the next few years.
Kevin Rudd is clearly aware of the problem. In a speech in Adelaide during the election campaign, he attacked the Liberals' trade record saying, "In the absence of any industry policy on the part of the Howard Government, all the eggs have gone into the one basket, the resources sector." (The Age, November 10, 2007).
However, Mr Rudd's solutions - to "energise" the currently stalled global free-trade negotiations, and to expand exports of education and financial services, as well as clean energy technology - are quite inadequate.
He has offered no prospect of rebuilding Australia's fractured manufacturing and agricultural industries which over the past 20 years have been sacrificed on the high altar of free trade.
There is an urgent need for policies to address these issues.
- Peter Westmore is national president of the National Civic Council.