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The editor-at-large at The Australian, Paul Kelly, author of The End of Certainty and The March of the Patriots; Lenore Taylor of The Sydney Morning Herald, the sharpest public policy analyst in the print media who specializes in climate change; Judith Brett of La Trobe who has published a number of outstanding works on the liberal tradition in Australia; and political commentator Robert Manne of La Trobe discuss what has gone wrong with the Rudd government.

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Robert Manne - introduction

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Paul Kelly

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Lenore Taylor

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Judith Brett

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Questions

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Transcript

Robert Manne:

Welcome.  Thank you all very much for coming.  Can I alert everyone to the fact that television, including ABC TV is recording this, so apart from turning off your mobile phones, keep that in mind.

My name’s Robert Manne, I’m the convenor of what we call the Ideas and Society Program, something that’s been running for about a year and the idea is to have members of the university come together to listen and to discuss issues of significance, both Australian and international.  I’ve been very pleased with how things have started in this program.

The idea we’ve always had is to be able from time to time, to respond flexibly and quickly to developments in the areas of interest and a few weeks ago it was suggested to me that we should have a look at what’s happening with the Rudd Government.  The reason is that in my experience, there’s almost never been a government, not whose popularity has fallen so quickly but whose credibility has fallen so quickly.  In some ways the problems are almost obvious – the problem of a Prime Minister whose language is of moral grandiosity but who very quickly in the last while has decided that something else is to dominate and probably I think historians will find the decision over the ETS the moral turning point in this government.

Anyhow there’s that, but that’s been combined I think with clear bureaucratic ineptitude, something I think that was not associated with Mr Rudd over the insulation and the schools’ building program which I think public opinion now accepts there’s been pretty major bureaucratic incompetence and combined with something that when this was being planned I hadn’t thought about so much, which is pure party political incompetence, or political incompetence, seen with the way in which a major review of taxation, the Henry Review, was commissioned, most of it ignored, one bit acted upon, which has led to the opposite problem from the problem of the ETS, suddenly having a gigantic problem of taking on a very powerful vested interest, having a few weeks ago, or a few weeks before decided it was too risky to have a double dissolution election and to back the ETS which was the greatest moral challenge humanity faced. 

Anyhow it seemed to me I wanted then to bring together the people who I think would be most able to illuminate this sudden change of fortune and credibility in the government and the three people I asked I’m extremely pleased to say, the three people I most wanted to come here to discuss this issue have all agreed.  I’ll introduce them – they’re going to speak, because I couldn’t think of any reason beyond this – they’re going to speak in alphabetical order.

The first speaker will be someone who’s been at La Trobe almost as long as me, which goes back to the eighteenth century and that’s my colleague and friend, Judith Brett, who’s Professor of Politics and also at present the head of school of the School of Social Sciences.  Judy is the author of a number of very important books, two of which I’ll mention:  Robert Menzies’ Forgotten People an awarding winning book, and another award winning book Australian Liberals and the Moral Middle Class.  And I think one can say of her she’s one of the most incisive academic commentators on Australian politics and the clear authority on the long term liberal tradition in Australia, liberal with a small “l”.  She’s presently writing a book on Alfred Deakin.

The second speaker is going to be Paul Kelly.  It’s not that I’ve always agreed with what Paul Kelly has said, as he knows, but I have always regarded him as the most important political commentator, for me at least, since the period of the Whitlam government.  Paul was a very successful Editor-in-Chief of The Australian.  He is now Editor-at-Large.  I think in a university his most important contributions have been his books, one of which changed the way we looked at Australian politics The End of Certainty and another of which provides a really unusual interpretation of the relationship between Paul Keating and John Howard called March of Patriots published only a few months ago.  I’m really very pleased and honoured that Paul’s come here today and he’s just told me that it’s the first time he has visited this university, but I very much hope that it’s not the last.  That’s up to you.

And the final speaker is someone I’ve also admired enormously whose writing I haven’t known for as long as I’ve known Paul’s but Lenore Taylor was, with Paul Kelly, almost the only journalist that I enjoyed reading at The Australian for a very long time and I was particularly taken, not only with her profound understanding of Australian party politics, which was obvious, but something that was more unusual which is a real depth with public policy.  And Lenore was immensely important for many, many years as analysing policy not just the party political game.  She was at The Australian for a long time and she tells me she began at The Canberra Times, she spent some time with the Fin Review, she’s now with the Sydney Morning Herald.  I read her terrific work online, and she’s just about to publish a book with the polite title Shitstorm with David Uren, which is about the Rudd Government and its handling of the Global Financial Crisis.

So, with that, just to give you some idea of what’s happening, there will be three talks of about fifteen minutes each, then there’ll be a panel discussion in which I’ll ask everyone to comment on some general propositions to do with what’s happened to the Rudd Government, and then I hope there’ll be time for a few questions at the end.  So, with that, let me invite Judy to begin proceedings.

Judith Brett:

Thanks Robert, and thanks very much for asking me.  As Robert said, the big question for today is why Rudd is making such a mess of his first term of government.  Why, having been elected with such high hopes, his star is falling so fast.  Now I’ve been thinking hard about this, particularly since Robert asked me to do it, and it’s an incredibly puzzling question.  What I’m going to do today is present two lines of thinking about this because I wanted to think about things that wouldn’t be too repetitive.  The first focuses on the failure of policy implementation and the second on what I think is Rudd’s fundamental misunderstanding of the nature of political power in Australia.

So I’m going to begin with the failures of implementation.  Now the two spectacular failures which we all know about are the insulation scheme and Building the Education Revolution.  The insulation scheme which as we hear over and over again killed four young men, caused some hundred or more house fires, risked a further unknown number, making the pensioners of the nation anxious, and was widely rorted by enterprising small businesses, many of which sprang up overnight to meet the sudden demand from the government for home roofing insulation.  Some were just less than competent and others were frauds, billing the government for work that was never done.  Building the Education Revolution is delivering over-priced and inadequate buildings to schools in the State-run education system, whilst schools in the Catholic system are getting much more value for their dollar.  And The Australian has run a relentless and extremely informative campaign on this.  I think it’s really been fantastic on Building the Education Revolution in particular.  And it’s revealed shocking price gouging in the publicly delivered building programs as layers of managers and consultants extract fees before ever the shovel hits the ground and the tradies come in. 

Now these two schemes were part of the government’s response to the Global Financial Crisis, to stimulate the economy by the government going out on two massive buying sprees of goods and services from Australia’s home maintenance and construction industry.  The schemes were always adventurous, taking the federal government into areas controlled by State regulation in which it had very little experience.  And there is little to indicate that Rudd really understood the risks he was exposing his government to. 

So the question I really wanted to ask is, why didn’t they understand those risks?  Can we dig a little deeper down to try to understand what’s gone wrong here?  And what I think is one context at least which provides some insight into it is to go back to the decades of the 1980s and ‘90s to what I think is a fairly misunderstood aspect of the neo-liberal reforms of that era which go by the name of the New Public Management.  In Australia we used the general term “economic rationalism” in the ‘80s and ‘90s to cover neo-liberal reforms, which started to be introduced after Labor was elected in ’83.  Now the fundamental aims of these reforms was to increase the role of the market in the distribution of the nation’s resources and to decrease the role of the state.  The dollar was floated, tariffs reduced, restrictions on the financial sector and the flow of credit was significantly relaxed. Government enterprises such as the state-owned banks and transport and power utilities were privatised and I think in many people’s minds, that’s what they associate with neo-liberal… that period of neo-liberal economic reform. 

But as well as that and something that was much less visible I think to the general public – there was a revolution in much of the way the public service operated, particularly the service delivery agencies.  The idea of the new public management was to introduce competition into the delivery of government-provided services and so. the argument went, this would increase efficiency and hence value to the taxpayer.  But there was more to it than that.  The aim was also to break with the old one-size-fits-all uniform service delivery and to provide flexibility and choice for citizens.  And this is the point at which we as citizens who received government services got re-named as “customers” and “consumers” and I can remember being puzzled… those points where you are on Flinders Street Station when you stop being addressed as a passenger and got called a customer.  But this was part… it was like there was two different sets of motivation behind the new public management.  One was competition and better value for money, but the other was also to introduce flexibility and choice – given the much more complex society that a government now had to service.

Now much of this reform was taking place at the level of the states and in Victoria Jeff Kennett was a great advocate of what is the new public management.  The basic idea was simple.  Governments should not be in the business of providing services that can be provided more efficiently, more flexibly and with more consumer choice by the private sector.  Governments, the slogan went, should steer, not row.  That is, they should make the policy decisions like – Australia should increase the number of houses with roofing insulation – but they shouldn’t themselves take on the task of insulating all those rooves with a government-employed workforce.  Instead they should contract these services out to private providers who would process a competitive tendering and contract to ensure quality and efficiency of the product that was delivered.  One of the central arguments was that this would reduce the bloated workforce of the public enterprises which were insulated from the rigours of the market.  And, though this was never trumpeted so loudly, it would reduce the power of the public sector unions.  But there was always here the image of the lazy public servant, or the lazy council worker, or the lazy road worker.  The result was a massive shifting of resources from the public to the private sector as a huge range of services which were previously delivered by government employees were out-sourced, from prisons to employment services, to cleaning and maintenance work.  New businesses were started to do this work, such as Thérèse Rein’s business to provide employment services to people with disabilities and lots of businesses like Thérèse Rein’s have made fortunes, if you like, out of this shift of resources.

Other businesses expanded and the state public works departments shrank or closed down with construction companies filling the gap.  They would now build the schools, hospitals and other buildings the government needed.  The result was that the government became a major buyer of goods and services provided by the public sector.  However, as the government enterprises and service departments shrank, governments lost a great number of experienced staff, many of whom re-established themselves in the private sector, selling their services to government as private contractors that they once provided as paid employees.  And as part of this process, I know this sounds like a lecture, which it is a bit, but as part of this process, government lost a great deal of technical expertise.  To give just one example, a report that the Institution of Engineers Australia did in 2000, after these two decades of reform, estimated that during the 1990s there was a decline in the number of engineers employed by governments at all levels by between twenty and forty per cent.  And the same report sounded the warning as to potential consequences of what it called the de-engineering of the public sector and the parallel loss in other areas of technical expertise.  It was interested in engineers, but it said, you can see similar things with lawyers, accountants, economists, scientists, IT professionals, urban planners – a whole range of people if you like who provided expert knowledge inside of governments.  It made it harder, it argued, for the government to be an informed purchaser.  Two distinct sets of skills are needed to be an informed buyer – contracting expertise, and subject matter expertise, that is, you need to know something about what you’re buying.

As this decline within the public service agencies that were out in the market place then the report warned there was a significant increase in the risk of uninformed purchasing decisions by government, leading to significant financial loss, and that seems to me to be in a nutshell the process, the major factor of what we’ve seen in the cost blowout of the Building Education Revolution.  A significant decrease in actually informed purchasing people who know what they’re doing with building, leading to this massive financial loss.

But even worse than this, I think, the cost blowout has been without one of the major benefits the new public management was meant to deliver.  Flexibility and choice.  Instead, DEWA and Julia Gillard, in the interests of equity, imposed standardised contracts, guidelines and decisions, which according to the report of the Australian National Audit Office made it very difficult for the differing needs of schools to be taken into account, and as we’ve seen from all those principals and heads of school councils, schools were given no choice.  So it was back to the old one-size-fits-all model of delivery.  They were given no choice which the new public management was meant to displace, but it was delivered by giant constructions firms who inflated their prices with some spectacular price gouging and in some cases they weren’t even put to competitive tender.  So it seems to me it’s been this sort of half-arsed new public management which has not delivered what it was meant to do but in which the public sector has to some extent lost control of the process.

So I think these two schemes, the house insulation scheme and the BER show us something else about what’s gone on in the last couple of decades with the new public management and that’s been a shift in the location of moral hazard, from the public sector and its lazy, time-serving unadventurous, unenterprising public servants, and if you can remember back to Jeff Kennett’s days, you know, he regarded public servants as people who weren’t brave enough to take a risk, that it was the place of the morally lazy and deficient people who ended up in the public sector, like us, and so there’s been a shift from the moral hazard being there, to the greedy profiteers and cowboy chancers in the private sector.  And as well with the potential for collusive, cosy relationships to develop between the key government purchasing agents and their preferred providers, so that after a decade or more of this having been set up it’s clear when you drill down into the reports that are coming out from the State Education Departments that there’s been quite cosy collusive relationships at work there. It’s hard, it seems to me, otherwise to explain the cost differences between the provision of buildings to the public and to the Catholic school sector. 

OK.  Now, the failure of the home insulation scheme however seems to me to need a little bit more to explain it.  For we know the government received a good deal of advice about the problems it was likely to encounter.  And we know that the Minister, Peter Garrett, was under pressure from Rudd for a quick roll-out and that he ignored the advice.  Or that Rudd ignored the advice.  So there’s more to the Rudd Government’s spectacular failures of policy implementation in the new public management and I think this brings us to Rudd and the nature of his office.

Rudd keeps telling us that the buck stops here.  That is, the buck stops with him.  And he took responsibility for the failures of the home insulation scheme and he promised to fix the nation’s hospitals.  You know, we all expect the nation’s hospitals to work, and I’m the Prime Minister, so I should make them work.  Rudd began his maiden speech in federal politics with the words “politics is about power”.  That sort of sounds unobjectionable, but as people who do first year Australian Politics, Politics 101, this is too simple by half, and I think it’s the crux of Rudd’s problems.  It seems to me he doesn’t understand the complexity and the limits of the exercise of public power.  Power is not only complex with fundamental differences between coercive power relying on threats of sanctions and legitimate authority but power in political systems is limited.  David Marr has written the June Quarterly Essay on Rudd and it’s called Power Trip and I think it’s going to be out in a week or so and it’s got all the sharp observations and unexpected angles which makes Marr such a fine interpreter of Australian political life, and in it he quotes a shrewd old bureaucrat who’s worked with a few Prime Ministers who wonders if Rudd really understands the way power works at the top.  He isn’t afraid to pick a fight but doesn’t then behave like a Prime Minister.  He involves himself so much, he puts himself on the line so quickly, he doesn’t exercise authority by keeping at a distance.  This is the Rudd of the “buck stops with me” who presents himself as the fixer of last resort of all the nation’s problems.  It’s the Rudd who rushed in to take the blame for the problems of insulation and who whisked out his notebook from his top pocket to take the names of the worried insulators, reassuring them that there would be another phase of government largesse once the problems were sorted out.  Why did he think he had to take all the blame?  There were other candidates: shonky small business operators for example, who never got mentioned, and no-one really expects the PM to act as everybody’s local member, sorting out their problems for them with this and that government scheme.

So there’s a failure of judgement here I think in Rudd as he promises too much and delivers too little, both in small things like the promise to the insulators and in large policy reversals like the ETS.  And I’m sure if they go ahead with trying to fix the nation’s hospitals we’ll see a similar pattern.  So implicit in these failures of judgement is a fantasy of the concentration of power in the office of the Prime Minister.  Bucks stop or not in many places in liberal parliamentary democracies like ours.  They stop with individual ministers, with State Premiers, and behind the scenes, with senior public servants.

Now as with most Prime Ministers, Rudd is focused on power and so the question becomes, what sort of power and what it means to him.  He’s clearly got a deeply held commitment to making Australia a decent place for children to grow up again, and a commitment forged in the hard days and years after his father died.  But he shows that he’s a man for whom power seems to be a brittle exercise in control and who’s got little understanding of the limits of what one man can do, even when he holds the highest office in the land.  Power is also exercised through persuasion and here it seems to me Rudd’s got a major blind spot.  Persuasion doesn’t seem to be in his concepts of power.  Because he thinks power is concentrated in the office of the PM, he puts little effort into consulting with or attempting to persuade stakeholders in particular policy areas.  We know he’s very sensitive to voter opinion but he seems to me to have shown little interest in stakeholder opinion.  And to just give I suppose the example that’s on everybody’s minds at the moment – it’s mindboggling to me that his government decided to introduce the Mining Resources Tax in an election year without consultation with the industry.  To take on one of Australia’s most powerful interests in an election year is like Sicily taking on the banks. Doesn’t Rudd remember what the Australian Mining Industry Council’s advertising campaign did to the Hawke government’s commitment to national land rights legislation that it was elected on in 1983.  And for those of you too young to remember, basically it killed it.  They ran a very sophisticated advertising campaign.  By the end of the ‘80s Hawke said, public opinion’s changed so we’re not going ahead with the national land rights legislation.  And the change of public opinion is pretty much the result of the advertising campaign run by the Australian Mining Industries Council.

So what’s happening now is that having not consulted, the discussions that should have taken place before the policy was announced, publicly are now being had in a sort of public advertising war in which again the government’s twisted away from a prior commitment not to use public money for partisan advertising and in which the government’s credibility, even if it happens to sort of win the war, had taken another major dent.  

My answer to what’s gone wrong is, firstly there’s been in these major failures of implementation as the federal government ventures into the delivery of services in which it has very little experience, and second, that Rudd’s narrow and brittle understanding of the nature of the public power and the need for broad consultation in policy formation is also behind it.  Despite all this, I actually think Labor will win the election in the main because Abbott’s so problematic and because the Labor front bench looks much more plausible as a government than the Liberal shadow cabinet.

So now we’ll hear what the experts say.

Robert Manne:

Paul, I won’t introduce you again.

Paul Kelly:

I’d like to thank Robert Manne for the invitation to La Trobe University.  It’s an honour to share this platform with Robert, Judy Brett and Lenore Taylor.  Analysing the Rudd government is a daunting challenge because the government is still discovering itself.  It’s riddled with contradictions that will only be resolved over time, so the judgements I make today will surely require revision a few years down the track.

I don’t want to give a score card.  I want to look at the character of the Rudd government and make three general observations and three specific observations. 

The first general observation.  This is a new generation Labor government.  Neither Kevin Rudd nor Julia Gillard were MPs when Hawke and Keating were in the parliament.  They were not in the parliament when John Howard was elected in 1996.  They are not part of the 1980s Hawke-Keating reform generation that was overwhelmingly shaped by the failures of the Whitlam government and the sense that the Australian economy was in a profound crisis, which then went on to engage in the audacity of pro-market reforms.

The Rudd-Gillard generation is fashioned overwhelmingly by Labor’s long agonising struggle against John Howard.  They understood that Australian voters are conservative and that Labor had to meet the test of conservatism.  Rudd was the perfect leader because he was a fiscal conservative, a pro-US champion of national security, who projected as reliable on the economy, foreign policy and border protection.  But the Rudd-Gillard generation saw Howard’s weakness and they nailed him.  They ran aggressively on climate change, Kyoto ratification, a fairer IR system against Work Choices, the aboriginal apology, better education and health, fixing the Federation and restoring integrity to government.  So they understood the Coalition’s weakness and their policy orientation was designed to keep exploiting its weakness and entrench a Labor ascendency.

Finally they reconciled themselves to a strategy of internal unity, sealed in the Rudd-Gillard deal, where Gillard settled for deputy, not leader, a decision that defined a party sentiment for sacrifice, hard work and unity as the necessary means to conquer Howard.  These techniques of Labor unity and exploiting Coalition weakness were displayed brilliantly by Labor against Howard, Brendan Nelson and Malcolm Turnbull.  Rudd has devoured his Liberal leaders.

The second general observation I want to make about the government is that it’s not just a new generation government, it’s defined by the peculiar phenomenon of what I call “Ruddism”.  All leaders define their governments.  Ruddism is a method of government unique to this Prime Minister.  It’s about ceaseless and excessive activity.  A failure to determine priorities since the priorities’ whatever is currently occupying Rudd himself.  It is about tight control of decision-making, and centralisation of power.  Yet it is control with chaos.  Constant changes of appointment, constant alterations of the administrative timetable.  Snap decisions without adequate consideration or consultation or internal agreement.  The Caucus has been marginalised, the Cabinet is hardly a genuine decision-making forum.  It seems power lies in the Gang of Four – Rudd, Gillard, Swan and Tanner, but even this is deceptive, because government is largely a function of Rudd’s personality, style and outlook.  The paradox of Ruddism however, is that Rudd is not the figure of strength that he seems.  Claims that he is Labor’s most powerful ever Prime Minister are to me nonsense.  The issue with Rudd in a sense is not his strength but his weakness.  Rudd does not seek to fundamentally re-cast Labor policy, belief or philosophy.  Perhaps this is no longer possible.  His real claim is more vague, to modernise Labor.  Rudd however remains a mystery to many of his own ministers, let alone the public.  His pre-political career as a diplomat and bureaucrat made him keen on policy but weak on conviction.  He has no tribal roots in the party or wider movement.  He came to leadership via foreign affairs, an unlikely route.  He won the Labor leadership as a brilliant opportunist, without a power base, unlike Hawke or Keating, who had the right wing as their fundamental foundation and source of strength.  Rudd won the leadership on a unity ticket with Gillard in which he presented himself as ideologically acceptable to both left and right wings.  His Cabinet, unlike Hawke’s, is equally balanced between the left and the right.  He strikes the appropriate ideological posture according to need.  So Rudd, during the Global Financial Crisis, said he stood for social democratic realism against greedy neo-liberalism.  On other occasions he stands in the pro-market tradition of Hawke and Keating.  His faith in government invites comparisons with Whitlam.  Rudd is very clever, but to me he’s not a policy innovator.  He’s a very conventional thinker, unlike Keating.  His domestic and foreign policies reflect many time-honoured ideas.  He talks incessantly of evidence-based policy as though he’s still a bureaucrat but he invariably delivers highly political, untested outcomes.

Rudd is obsessed with targets, goals and lists, in ways that resemble Whitlam.  Closing the indigenous gulf, halving the number of homeless, making Australia the most Asia-literate western nation, leading the world on climate change mitigation; yet the gap between his promise and delivery is already wide and this is only his first term.  His ambitions are vast yet too often they seem disconnected from reality.  He positions himself on both sides of virtually every debate.  He’s pro-business, but he’s also delivering for the unions.  He’s a tough border protectionist, but humane towards asylum seekers.  He’ll reduce greenhouse gases but won’t hurt business or households in the process.  He’s a fiscal conservative but has led a Keynesian revival.  He wants a big Australia but will deliver on a better urban environment.  The list is endless.  I don’t think Rudd has deep views about making policy choices that eliminate alternative options precisely because you might believe such policies are right.

Rudd’s modernisation project is a collection of all-inclusive old and new Labor faiths that just don’t pin together.  Belief in State power, the fiscal stimulus, a surplus budget, more nation-building, a competitive market economy, a better deal for working families, a re-regulated labour market, more emphasis on health and education, and a long run climate change agenda.  The true organising principle of Ruddism is opinion poll validation.  But Rudd lacks the popularity of Hawke or the credentials of Howard.  His lack of empathy with Australians is starting to show.  Ruddism is a phenomenon undermined by too many contradictions because ultimately it is too egocentric.

My third general observation: the Rudd government constitutes the application at the national level of the political model applied with success at State level over the past generation.  Labor culture has absorbed this technique.  It is rooted in managing prosperity arising from the great economic growth cycle running unbroken from the 1990s.  It’s about cautious government, sustained media management, control of the 24-hour news cycle, a credible leader who is salesman and fixer in the Bob Hawke, Peter Beattie, Steve Bracks, Mike Rann tradition.  Exploitation of incumbency to weaken already weak Liberal oppositions and a public downgrading of Labor’s ideological character, while still pandering to Labor goals, networks, sectional interests and public sector unions.

So the Rudd government is obsessed by spin, political tactics, market research, short term calculations and exploitation of incumbency.  Its transparent use of these techniques, so successful at the State level, has started to become a negative.  In my view, these techniques don’t work nearly so well at the national level.

Let me now move to my three particular issues.  First of all, the Global Financial Crisis.  It has a dual role for the Rudd government – a challenge and a seduction.  Rudd’s finest policy-making has been his macro-response to the crisis, helped by astute advice from Ken Henry and Glenn Stevens.  Our fiscal stimulus was strong and quick.  Our interest rate cuts were decisive, Australia got through in better shape than virtually anybody else.  Much credit goes to Rudd’s predecessors, but much credit also goes to Rudd.  His instinct was to be bold, and he was right.  The crisis cemented the alliance between Rudd and Ken Henry, it was Rudd’s coming-of-age as Prime Minister, it empowered the government against the Coalition, but it also caught the government out.  Because Labor was slow to grasp the magnitude of the defects in the insulation program and the Building the Education Revolution.  It was slow to see these defects would shatter its reputation for competence.  Rudd never comprehended that putting 42 billion dollars into the economy very quickly could not be accomplished consistent with value for money.  And finally the government clung to the politics of saving Australia from the global recession for too long. 

The Keynesian revival however played to the instincts of Rudd Labor.  Devoid of any new ideological investments, Labor has reverted to habit and presides over a new era of government intervention.  Rudd is Whitlamite in his faith in State power announcements and targets exemplified by the National Broadband Network, unjustified on financial grounds, the car industry plan, labour market re-regulation and an array of environmental interventions most of which don’t work, a pervasive nation-building mindset, a submarine building industry plan and a new resources tax.  The crisis however has severely limited Rudd’s policy options.  His pledge to return to surplus, to restrain government spending to two per cent in real terms annually means funds won’t be available now or in coming years, for many of Labor’s reform agendas.

The second specific item is Rudd’s climate change retreat.  It is, I believe, his biggest and most revealing mistake so far.  I won’t say a lot about this except that it may be seen as the beginning of the end for Rudd.  I said at the time I believed this was the most abject retreat on a legislative issue by a Prime Minister in the past half century.  I see no reason to change this assessment.  It repudiated virtually everything Rudd had previously said about climate change as a moral imperative and as an economic reform.  It was damaging in particular for two reasons:  first, it suggested that Rudd had no real convictions; second, it exposed him as a safety-first leader, unable to grasp that great politicians become great by risking and winning.  When Rudd said he couldn’t continue to champion the ETS because Tony Abbott wouldn’t vote for it, he advertised his own weakness.  He was led into this blunder by his political advisors who felt getting rid of the ETS was smart politics.  I note that several respected press gallery journalists agreed, saying it was the right move.  This was a brand of tactical politics that could terminate a Prime Ministership. 

Finally, the third specific measure I want to focus on is tax.  Labor’s mishandling of the tax issue recently is revealing.  Rudd created the Henry Review to improve the optics of the 20-20 Summit.  It was an announcement effect.  When Paul Keating did his 1985 tax review and John Howard did his 1998 tax review, they knew what they wanted to achieve.  Keating and Howard knew the tax reform they wanted and the report they got was designed to enable them to achieve their tax reform.  Rudd didn’t know what he wanted.  It’s incredible.  In terms of the decision, he’s taken up only a small handful of about 140 recommendations from Ken Henry, but his main response is a resources tax.  So Labor has defined tax reform as meaning a new tax.  It testifies to Rudd’s undiscerning faith in Henry and the Treasury.  While the adverse reaction is greater than Labor anticipated, the truth is clear.  Rudd believed that this resources tax would work for him politically in an election year.  He believed it would work.  I think it’s inconceivable that Hawke or Keating would have done anything like this.  Rudd could have had a genuine consultation about the tax.  He decided to go for an ambush instead. 

To conclude – I believe Rudd will win the election, that the Coalition is unready to govern, that this may be a long-run Labor government, but that its performance so far raised disturbing questions about the character of modern Labor.  Thanks very much.

Lenore Taylor:

It appears one of the disadvantages of having a name starting with “T” is that at least some of what I wanted to say has already been said.  I guess the starting point of why we’re here is that some time in April something seemed to snap in the voters’ perception of this government and its credibility and in my view in the credibility of the Prime Minister himself.  It’s difficult to prove that proposition because both the Prime Minister’s personal ratings and Labor’s primary vote both plummeted at that point, but it seems to me that if Labor Party polling wasn’t showing that… well, it seems to me that Labor Party polling must be showing that because we’re seeing less of the Prime Minister in the government’s sales pitch, and it seems that Liberal Party polling must be showing that because they put out an advertisement on Friday, I’m not sure if you saw it, which is utterly disrespectful of the Prime Minister.  It’s really a piss-take, it’s a making fun of the Prime Minister, and it seems to me that if their polling was showing that a good number of voters still had respect for their Prime Minister, it would be a very risky tactic for them to use advertising like that.

To look at how we got to this situation I’d like to look at a couple of case studies which touch on things that have been said before but look at them in a slightly different way.  The first is the decision on the insulation scheme, which is clearly the thing that had eroded voters’ faith in the government’s ability as actual managers of policy.  I think that Judith’s absolutely right in the points she made about the hollowing out of public service expertise, but I think with the insulation scheme in particular, the problem happened way before the public service ever started rolling it out.  It was… the whole design of the thing… the very idea that you could set up a scheme which allowed people to run a business effectively giving stuff away for free.  Now, to most people it would seem pretty obvious that that would bring every shonk out from over rock in Australia.  But the government for some reason didn’t see that and I think to understand why they didn’t see it you have to put yourself back in their shoes when they were making these decisions.  It was at the height of the Global Financial Crisis, they were convinced that their legacy, their duty was to avoid the rise in unemployment that was at that point predicted, and they wanted a scheme that was… all of their stimulus spending was judged against the benchmark of how many jobs it would create and where it would create those jobs and how well those jobs could be dispersed through the community.  The Environment Department actually proposed a top-down tender, so that they tender out to a couple of big companies to roll out the insulation program that they had envisaged.  The SPBC, the Strategic Priorities and Budget Committee which Paul mentioned, which has really made pretty much every important decision for this government that hasn’t been made in Rudd’s office by themselves, decided that that top-down model wasn’t appropriate because they were afraid it wouldn’t disperse the jobs through the community.  The whole focus at that time was on employment creation and it was a sort of myopic focus that meant that a lot of other things weren’t seen.

It’s my view and you can’t really prove this, but I think that the other speakers had been right, that if Cabinet had been involved in that decision-making process, there would have been people around the table who had been Ministers or advisors to Ministers in previous Labor administrations and someone might have figured that the giving stuff away for free model wasn’t actually a very good idea and the thing could have been managed before it really got out of control, because after that, all the warnings and things that we’ve heard about were really trying to manage a runaway train.  It was the design decision-taking at the outset that was the problem.  So with that case study the problem comes back to decisions that were made during the financial crisis which really ate up most of the eighteen months that a government has in a three-year term to really do stuff, for this government was the financial crisis and the stimulus packages and the way they were looking at things then and the dysfunctional nature of decision-making in this government when it concentrated in Rudd’s office and the SPBC.

The worst political mistake they made undoubtedly I think was the deferral of the Emissions Trading Scheme.  This was a disaster in policy terms because it means that we’re now going into an election campaign with both political parties promising us the inefficient, expensive, stupid way to reduce emissions rather than the efficient, effective way.  And a disaster politically, because the government is now under attack from both those who don’t agree with climate change and those that do.  How this was ever considered to be a good idea is just astonishing to me and in fact when I first heard about the fact that the government had taken this decision, I didn’t write the story for four days because I just… I couldn’t believe that it could be right.  I kept going around and asking more people and yep, it was right.

Again, I think, some of the start of the problem was back in the financial crisis because again it was a decision that where the fundamental political decisions were taken back right at the height of the GFC, late 2008, the government took the fundamental political decision that it would design and ETS with a view of getting it through the Senate with the support of the Coalition.  Now that wasn’t an unreasonable decision in that it was Coalition policy at the time.  And there’s also the fact that the Greens couldn’t deliver Senate numbers on their own.  But I still think that if you look at how Steve Fielding has conducted himself in the Senate most of the time, he usually takes a position to maximise his political exposure and if the government had taken a more middle of the road design decision at the outset, I think Fielding would have been brought into the negotiation at some point.  I think his later sort of extreme climate scepticism was because that was at that time the one part of the debate that wasn’t covered and ensured him some publicity.

In any event, that decision was taken at the height of the crisis because the Cabinet did not see that they could risk doing too radical a scheme, putting too onerous requirements on business at that economic time, and it kind of set them down the path that ended in the ultimate disaster.  And of course the financial crisis also lent weight to the demands of industry during that whole tortuous negotiation process.  And it also lent weight to the people within the Coalition who were arguing the anti-ETS, anti-everything, anti-climate change argument for some of them.  Even so, even after the disaster of Copenhagen, even after the support for the Coalition had crumbled after the changed leader, it was still open to the government to say, look, we’ll try again in the next term.  We will seek to get a consensus around some form of carbon price index next term.  They could have done many things short of what they have done which is effectively defer any form of carbon pricing off until a third term of a Labor government, if there is one.

The decision was argued about within government for months and months and months.   The New South Wales right, some key figures there were saying, just drop it altogether, just drop it, get it off the agenda, it was seen as an expendable piece of policy like any other.  Some others in the government were arguing that the Prime Minister should go to a double dissolution election on the issue, and if he did give that, as we understand, some considerable thought through until earlier this year, again, in the end, the decision to come up with this sort of odd configuration of decision that they’ve made which in my view is the worst of all worlds, was made in Rudd’s office itself.  And so again, it comes down to the point that’s come up again and again, this centralisation of decision-making in an office which hasn’t got a great record of political decision-making. 

The result is that there is a degree of dissolution within the government itself which is unprecedented in my memory of covering politics for twenty-two years.  And the interesting thing was that… those who think the decision was ultimately the right one blame its bad reception on the fact that it was leaked before it could be managed.  In other words, a failure of spin. 

And that brings me to the final issue of what I think is causing the fundamental problems with the Rudd government at the moment.  And that is that although governments always use marketing tools to conduct their conversation with the electorate, they always focus groups, text messages, everyone does that, that’s usually combined with some sort of genuine conversation, a genuine effort to explain to people what you’re doing, why you’re doing it, that’s always in previous governments been part of it.  It’s as if that genuine conversation bit of the equation is put to one side with this government and they only do the marketing based spin and I think people see through it, and are fed up with it.  It leads to the kind of extraordinary hyperbole which I thought the greatest example of which was, after the first policy response to the greatest moral and economic challenge of our time was seen as expendable, the Prime Minister, within days, promised us the greatest ever roll-out of renewable programs in our time.  You know, like there was no lesson learned from the bad impact of the previous hyperbole.  He just sort of wandered directly into another form of hyperbole.  I think that it could be partly because the Prime Minister isn’t a natural communicator, he doesn’t have a natural communication style, but I do think it is also for some of the reasons that Paul alluded to that there’s this sort of State government style spin and messaging being brought into a federal level and I think communication at a federal level has to be a little more sophisticated than that.  And the very idea that you could have spun that ETS decision so that it turned out to be a good thing is incredible.

So, I guess my conclusion after thinking about all of this is that even though most people in the electorate, most voters express some form of cynicism about politics, at a very core level they trust their governments to get things right.  They have a kind of a base level of trust in politicians and in their government, and I think the ETS decision as the last in a long line of come-downs, coming  after a bunch of policy disasters like the insulation scheme, kind of snapped, kind of broke that trust for many voters.  And that I think makes it very difficult for a government led by Kevin Rudd to communicate anything else.  And even as it was happening, the same problems started manifesting themselves again with the resource super profits tax, which the government initially began selling as an exercise of spin.  At the beginning, instead of actually trying to sort of lay the ground work, explain why the mining sector didn’t pay a fair share of tax and why a profits based tax might be the best way to go after that, it was laid down as a fait accompli, ambush the mining companies and then sold to the voters as a class war, bosses versus workers, you know, rich mining bosses, you know, they get too much, you don’t get enough.  I do think that in the community where most people are superannuates and shareholders and have a more sophisticated understanding of economics than that, it just didn’t wash.  Now they’re just trying to back pedal and explain what I think at its essence is probably a good idea, in a more sophisticated way, but they have this fundamental problem now with everything that they do, that people don’t trust them any more.  And that’s going to make it incredibly difficult for them to sell all their messaging in the lead-up to this election.  And the only saving grace from the point of view of Labor I guess is that I think the Coalition is the least prepared opposition for government that I’ve ever seen.  So, you know, voters will be faced with a least of all evils choice and that may be their saving grace at the end of the day.  Thank you.

Robert Manne:

Well, I think everyone here will know why I was pleased that these three people agreed to the invitation.  I’m going to try and draw some of the threads of the talks together by asking some questions which I hope all of you will respond to bits of, and to have what Rudd said not to have, a conversation, between the four of us.

I have to say, I have to admit shamefacedly that I was the enthusiast for all sorts of reasons for the first couple of years of the Rudd government, for reasons not unconnected to my relationship to Mr Howard.  And I think I’ve made really a terrible misjudgement of Kevin Rudd, I have to say.  But there are bits about him which I genuinely don’t understand, and his government and his Prime Ministership, and his character.  Maybe Judy, this one I can ask of you because you’ve written in the area of political psychology.  See what happens.  I first realised noticed Rudd when he wrote a piece for the Monthly magazine called Faith in Politics and there he… it was a time actually when The Australian newspaper to some extent… it was very hard to discuss certain issues without being ridiculed, to do with asylum seekers, stolen generations or whatever.  And he wrote in a high moral language… anyhow the bit that I now think is very strange is that he said that his great hero was Dietrich Bonhoeffer who stands for the greatest kind of act of moral and political courage in the twentieth century for Rudd.  And then, in the last few months, it’s been said by almost everyone, I’ve never seen such cowardice over the ETS.  Both cowardly and mis-judged.  But the cowardice is what I want to concentrate on.  How can one put together a person whose moral hero is Dietrich Bonhoeffer and whose actions make Graeme Richardson seem to be principled?  And who has acted on the greatest moral challenge of the twentieth century for humankind in such a cowardly way.  I can’t put it together.

Judith Brett:

Well, I don’t actually have much of a psychological take on Rudd because I find him so incredibly unappealing.  So I find him very unempathetic.  I thought what Lenore was saying about this moment things snapped because I can bear almost… I can’t bear to listen to him any more except that I have a professional commitment to hearing what he says.  So I think that he’s now at the point where people leave the room.  You know, you turn him off.  So whatever… it  seems to me that that sort of gap between high moral stands and practical implementation is very common.  It’s the theorist saying what people should do and that Rudd’s failings are all in terms of an incredible lack of understanding of what politics is about and his inexperience.  It’s the difficulties of actually delivering on morally challenging questions in terms of what Labor says about politics is hard boring, too hard bored.  So I think he didn’t understand that this was part of the political process.  So I don’t see it so much as a psychological issue with him, although there obviously are ones, but as if he didn’t understand what the nature of political power was.

Robert Manne:

Paul…

Paul Kelly:

I’d say a few things about it.  I think this new generation is quite important.  I think Rudd is an important psychological break from if you like the old-style politicians of Howard on the conservative side and Keating on the Labor side.  I think Keating and Howard are much more genuinely conviction politicians than Rudd.  I think the record here is quite clear, whether you agree or disagree with what they did, and I think in a sense Rudd is a product of a new more modern style of politics, with a much greater emphasis on short-term tactics and media management.  I think that’s important.  And I think in that sense there’s a bit of a disconnect.  In my presentation I referred to a disconnect in Rudd between his, if you like, aspirations on the one hand and delivering on the other.  It’s almost as though he is obsessed about announcements, vision, lists, deadlines, timetables, but not so good at all on the delivery, but of course this fits in to the wider theory because the announcements and the timetable and the ambitions all relate to media management and the announcement effect.

Robert Manne:

Someone mentioned David Marr’s Quarterly Essay and something in it.  One of the things that struck me, even at the time, as sort of fanciful and it’s what Paul’s saying, Rudd announced that he was going to re-design the Asia-Pacific, which is a relatively major enterprise.  And I thought at the time – it’s strange, all he’s done is appointed a retired diplomat, Richard Woolcott, to do it, which again struck me as a bit unlikely that Richard would be able to do that.  But it turns out in David Marr’s Quarterly Essay that Richard Woolcott is complaining that he hardly gets to see Rudd.  So the man who’s going to re-shape the Asia-Pacific can’t even get an interview.  I suppose what I’m asking is how is this grandiosity… it’s like Walter Mitty… there’s some sort of absolute fantasy life that seems to be going on.

Paul Kelly:

This is actually a really good example because what happened, I was there the night Rudd made this announcement at this big dinner in Sydney and Dick Woolcott was in the audience at the next table… and this has all been published, it was published the next morning.  Rudd called Woolcott at about 5.30 that afternoon and had a very short phone conversation with him asking him whether he would do this diplomatic job of recasting and redesigning the Asia-Pacific.  And they had a very short conversation and that was it.  And this tells you so much about the sort of snap decisions, the lack of proper preparation, no other country was sounded out about it, most ministers knew nothing about it and the chosen envoy was only contacted two hours before the announcement. 

Robert Manne:

And a similar thing.  Rudd was going to bring about the end of nuclear armaments and for that he appointed Gareth Evans.  Recently Barak Obama had a major international conference on the question of  nuclear disarmament and because of some local problem, which probably all of us have forgotten – there was something going on in Australian domestic politics, health, sorry, it was important – but Rudd didn’t turn up.  So the thing that he had said at a certain point he was going commit his moral energy towards.

Lenore Taylor:

I just want to make one point on the climate change issue which runs slightly counter to the debate but I do think it’s worth saying, that while I’ve made it very clear that I think the ultimate decision was utterly unwise for both policy and political reasons, I think it is a bit unfair to suggest that Rudd wasn’t committed to the policy on the way through.  I think the evidence shows that he did put an enormous amount of work into trying to craft some sort of policy that could get through the Senate, that could be implemented, and I know from watching the lead-up to Copenhagen and from watching him at Copenhagen, that he invested an enormous amount of time and effort into trying to get some sort of workable outcome from that, and I just think it’s important to say that while he’s abandoned it for reasons that I struggle to understand, but which I think are more to do with him not being able to see a way through, so he feared that if he stayed committed to the CPRS, some other things could happen internationally to the Bill in the US Senate, to other… you know, in international fora which would further undercut him.  And he’d already been so undercut by both the domestic and the international outcome.  Also because when people then started to look into the continued commitment to the CPRS in the longer term, if there’s no international consensus then the CPRS is entirely reliant on international purchase, you start to run into all sorts of trouble.  So I think the ultimate decision to abandon it was largely political but also in his mind, because he has this kind of incredibly methodical way of working through things, he could see so many other places where he was going to run into problems if he stuck to it that he decided to abandon but then did it in this way that I think everyone’s agreed is quite…

Robert Manne:

Can I ask you about that?  It seemed to me – everyone’s said this – and this is an open question to the three of you.  As soon as it was said that the person who had described this as the greatest moral challenge, and I believe that he believes that to be true, I don’t think he’s making that up.  As soon as he decided to abandon it, everyone is kind of shocked.  I was shocked and astonished and I think that was, like the political class, that was generally true, no matter what position you took on the issue.  I just don’t understand this.  Why could he or his advisors not see that this would shock people?  Shock the political class, shock everyone who cared about the issue, but also everyone who thinks there has to be a connection between one’s beliefs and what one does.

Lenore Taylor:

I think that, from what I can tell, there was an enormously ferocious debate within the government.  I think they misjudged the extent to which people were shocked but they knew that there would be an astonishment at the decision, but in their minds all the other alternative courses of action were more fraught than the decision that they made.  I don’t agree with it, but that…

Paul Kelly:

I think this goes again to the character of the government and this point about political tactics.  This is a classic example of the State government mentality.  This policy is now a bit of a problem for us.  It was a plus earlier on – now it’s a problem – how do we respond?  Get it off the agenda.  There’s this sort of elemental simplicity.  In essence, that’s what it was and that really diminished the government because it diminished the true significance of this policy and I think this is the obvious point that is overlooked in this sort of State government style approach to political tactics.  And another very good example I think is the resources tax.  The idea again was, we isolate this to one industry, it’s a new tax, we can sell the tax, it’s just a tax on one industry.  Again this is a classic example of this sort of mentality.  Without recognising that it’s going to go to the heart of the government’s economic standing. 

Judith Brett:

Why don’t they have a stand that isn’t State and federal politics?  Because federal politics is subjected to a degree of scrutiny that State governments don’t have and people pay attention.  With State governments you notice things and you don’t. There’s nothing like the degree of scrutiny and so I don’t understand how they could make this sort of category mistake.

Paul Kelly:

Well I don’t think it’s just so much… I mean, I’m using the example of State politics to try and describe what I see as a change in Labor’s…

Judith Brett:

Like a more general style?

Paul Kelly:

… this political culture.  And I think that’s what we have seen.  I think that it’s a more cautious approach to government, they are risk averse, they don’t have a lot of confidence in their capacity to persuade people.  It’s tied into as I said the twenty-four hour media cycle and the demands of modern politics.  And the question it really raises is, what does Labor stand for these days and to what extent is it really prepared to make a substantial commitment to prevail?

Lenore Taylor:

I was going to say, I mean, is it that they’re risk averse or is it that when they take risks they don’t manage them all that well?  I mean, the CPRS was a risk.  It was a risk to try and re-engineer the Australian economy in that way and it was mismanaged.  The RSPT is a risk and an enormous risk in an election year but a risk they considered that they believed they could manage and which I think we’ve all said they’re not managing well. So I don’t see that they’re completely risk averse, they don’t manage the risks that they can take all that well.

Paul Kelly:

I think they misjudge them. 

Robert Manne:

One of the ways… I was going to ask the same thing that Lenore’s just raised.  I’ll put it in a different way.  Those who know about horse riding, my wife does, when you fall off a horse you get on quickly to show that you’re really not afraid.  So I took from the decision on the ETS that it was a government of massive risk averseness, risk aversion, and then suddenly two or three weeks later, an incredible risk, to take on… it was Judy wasn’t it who pointed out how powerful the mineral lobby was in the ‘80s over national land rights.  To take on a lobby like that, to not prepare them, to do it a few months before an election.  It’s like risk madness. 

Paul Kelly:

But I think they misjudged that. 

Robert Manne:

That becomes the issue then, doesn’t it?

Paul Kelly:

They went into that thinking that they would be able to manage the politics of this and it may well be a net gain for them. 

Lenore Taylor:

But how could they make that misjudgement?  That’s what I don’t understand.

Robert Manne:

They seem to have met a conceptual brick wall.  That actually leads to something… very few statements of this year will stick but I have a feeling Nick Zenophon’s statement that they couldn’t sell heaters to Eskimos will be one that we might remember.  Again, for ordinary citizens, I don’t think they had a chance of really understanding the ins and outs of the ETS and now the mining tax.  There’s no doubt that these are really very difficult matters to explain – before selling something, you’ve got to explain it.  Again, what’s gone wrong with the communication capacity?

Lenore Taylor:

With the ETS there was never any attempt made to explain it.  The government’s political strategy was to get it through with the support of the Coalition but they never actually went out and explained the impact on households, the fact that it would have a real but relatively small economic impact on all Australians. The point of re-engineering – all those concepts around it were never really communicated because they put all their eggs in the basket of just getting it through with bi-partisan support.  I think with the mining tax they figured that ambushing the mining industry would mean that people would just really side with our government against the big bad bosses and when that didn’t straight up, they then kind of back pedalled to try to explain the merits of the tax on its own.  I think that not exactly this design, but a profits-based mining tax does have merit, there’s validity to the idea.  They’ve just made such a complete hash of it.

Robert Manne:

So is this under estimating the intelligence of the electorate by thinking that electorates don’t want to be spun to but explained to.

Lenore Taylor:

I think so.

Paul Kelly:

Well, you’ve got to look at the way they approach reform.  I think that you’ve got to prepare the ground for reform.  These are big reforms.  If you’re talking about the Carbon Pollution Reduction Scheme, you’re talking about a new resources tax, you really need to prepare the electorate for it over a period of time, and I think they haven’t done that properly.

Lenore Taylor:

Recently we were having the debate about what effective rate of tax the mining industry does actually pay, whether it’s sufficient or insufficient, whether a profits-based tax is the right way of dealing with it, and the specifics of the design of this profit, all at the same time, all combined into one week, nobody’s going to be able to communicate that.

Robert Manne:

What flows from this and you were saying things earlier when we were sitting out in the adjacent room… about the quality of two things, the Kitchen Cabinet which is clearly very important, but also the quality of the private office which is run by a number of young persons.  Can I get you to talk a bit about the people surrounding Rudd in his daily work? 

Paul Kelly:

I think it’s tricky.  I think the front bench, the Cabinet, is pretty talented.  If you look at individual Ministers, they tend, with a couple of exceptions, but they tend to be competent, diligent, hard-working, capable, on top of their portfolios, and able to manage their policy issues pretty effectively in public.  And what I say about the Rudd government is that the total you see is less than the sum of the parts.  When you put it all together, something’s gone wrong. What’s gone wrong?  Well, I think the answer to this is, what’s gone wrong is the centralised coordination from the Prime Minister and the Prime Minister’s office.  And the government is not performing as well as it ought to be performing because the central system is dysfunctional.  This goes to the heart of the way the Prime Minister conducts himself as Prime Minister and the way he runs his government and the quality of his office.  And I guess it’s unfair, but I mean, in my lifetime, the outstanding Prime Minister was unquestionably Bob Hawke.  And he got a very good balance between delegating to his ministers and reserving to himself central dominant authority.  He got that balance very effective and he had a very high quality office and I think Kevin Rudd suffers from those comparisons.

Lenore Taylor:

I would agree that he has insufficient political experience in his office.  He has a lot of young advisors, many of them very bright young people, but he doesn’t have senior people with political longevity and political memory to add to that.  The reputation of the office within the government is dysfunctional and they make all the decisions, but particularly decisions about when policies will be announced, and ministers are often frustrated because they have an announcement for all sorts of reasons in their portfolio, it needs to be announced, and it waits for sometimes months until, you know, the grid in the PMO says it’s time for it to go.  And the Cabinet Minister, who is supposed to be responsible for the policy seems to have very little say over that.  I find it kind of shocking that the SPBC makes many decisions and ministers get to go in to put a case to SPBC but they don’t always even get to stay until the decision is made.  They oftentimes get sent out again while the decision about their subject matter, which they’re across, which they’ve worked up, is made by other people, and I think that’s not a recipe for a functioning, a well-functioning government.  And as for Cabinet, well they just kind of rubber stamp what SPBC’s already done.

Robert Manne:

Cabinet is not working.

Lenore Taylor:

No.

Robert Manne:

Can I ask one more question?  And then I’ll open it up to the floor.  The question is this… and I think it was Paul who said he’s not a conviction politician unlike previous… on the other hand, there’s another paradox which I don’t understand.  He almost began his Prime Ministership, he spent his summer on writing a piece on what was wrong with neo-liberalism.  It was the most sort of ideological statement that I think any Prime Minister has ever made. 

Lenore Taylor:

Wasn’t that just in order to use the Global Financial Crisis to do the Opposition in the eye.

Robert Manne:

Well that’s what I’m asking.  I took it as if he meant it and I thought actually that Andrew Charlton, who was a student of Joseph Stiglitz, had convinced Rudd that there was a case to be made about international architecture and the folly of the deregulatory philosophy  and so on…

Lenore Taylor:

I’ve got no doubt that both Charlton and Rudd believe in that and that was true but the way that that essay was written was in such sort of cartoonish terms, in such black and white, I thought you could only really read it as a political document to politicise the economic crisis that we were in at the time, rather than a treatise about the policy positions that they were prosecuting in the international arena at the time.

Judith Brett:

And I would just add to that.  I took Paul to mean when he was talking about a conviction politician, not just that somebody’s got beliefs, but that they’ve got the commitment and courage to follow those through in a reasonably dogged way and they’re prepared to wear the costs of them.

Robert Manne:

You have convictions but you also have…

Judith Brett:

Well, conviction is not just about what’s in your head.  It’s also about what you enact, and one of the things that seems to me to be a characteristic,… when Paul was talking about these different contradictions, all these different things that Rudd believes, it’s like he’s not prepared to see that some policies are going to be winners and losers, and as soon as a loser pops up their head, he says, don’t worry, I’m not going… nothing’s going to happen, you’ll be all right.  So that the not selling the ETS essentially was partly because they didn’t actually want to point out that there was going to be some real costs being borne by certain sections of the community.  So it seemed to me there was almost a deliberate deceptiveness there, because once costs appear, Rudd doesn’t seem to be able to stare them down.  In comparison with… and I think it might have even been Paul I read on the weekend, when the tariffs were being pushed as being reduced, there’s victims all over the place in the manufacturing sector and the Keating-Hawke government had the conviction to wear that for long term goals, so that’s… I think that conviction is not just about believing something, it’s actually got to be something that’s enacted across a number of years.

Robert Manne:

Yes, that’s very interesting.  Time for you.  Di, how do we manage the…  there’s a microphone here if you don’t mind.  We’ve only got about five, ten minutes at the most.

Question:

I’m just wondering if there’s another factor in these backflips, the ETS backflip and the policy announcements etc… that the government really, after their big spend that put us in some sort of solid position after the economic meltdown, were then hounded by the Opposition into accusations of irresponsible spending etc.  And the budget bottom line became the big issue, and the ETS could not be afforded and money had to be found to be able to make a claim that they would balance their budget in a minimum period of time.  So a lot of the Education Revolution concepts etc are probably gone now.  You know, they were long term programs, but they’re not going to continue beyond now because basically the big concentration is getting the budget back in balance in two years.

Robert Manne:

It’s more a comment I think.

Question:

Given that Australia is a post-colonial settler society, has a real superogatory moral obligation to its indigenous aboriginal community, particularly vis-à-vis environmental questions, when we have such an appalling record of species extinction etc in the face of the climate change crisis, and given that the IPCC is even starting to predict that indigenous societies across Africa could be subject to a virtual ecological holocaust in times to come, surely if we have a truly reformist innovative Labor Prime Minister, we should be investing much more heavily in ecological modernisation.  What does the panel think about Rudd’s record on real innovation in terms of sustainable technology?

Lenore Taylor:

Not good.  I think at the moment it’s fraught with contradictions because we have a whole bunch of policies designed to prove up renewal energy sources for example, but we don’t know if we’ll ever have the cost on carbon which will make them competitive with coal so we don’t know if there’s any point in doing it anyway.  We have a renewable energy target which only makes sense as a bridging mechanism to an economy-wide cost on carbon, which we don’t know if we’ll ever have anyway, so at the moment it’s kind of confusing.

Paul Kelly:

I think the point I’d make, just quickly on this, which is tangential to the question – but Rudd’s kept the targets.  The targets remain and they’re bi-partisan and it’s absolutely clear there is no policy instrument  which will allow us to get anywhere near those targets. 

Lenore Taylor:

From either side…

Paul Kelly:

So, at the moment we’ve got a total disconnect between the targets on the one hand and the policy instruments on the other, the point being that you can only get near the targets if you price carbon, and they’re decided they want to defer the pricing of carbon.  There’s a whole debate about the renewable energy target.  It’s very, very fraught.  This is a very marginal proposition likely to be riddled with all sorts of abuses and problems.

Judith Brett:

I’m not sure if you’d agree Paul, but I don’t think either side of politics has policies that could get to the targets…

Paul Kelly:

Agree totally.

Judith Brett:

So, you know, they’re both going into an election campaign with targets they can’t meet.

Question:

A lot of the comments today I think have focused on the way that Rudd has ruled over the last few years, and I think a lot’s been said on that and it’s quite interesting, but the thing that I wanted to look at is the content of a lot of the positions that Rudd has taken.  And I think that’s where his real issues lie.  And I think he’s quite indistinguishable in a lot of ways from the conservatives, in content if not in form.  And there’s a couple of examples I want to draw on to illustrate that.  And the first is the refugee issue, asylum seekers.  I just think, in the last couple of months, we have seen the Rudd government endorse the same basic logic that the Howard government took – mandatory detention, off-shore detention, and then the most recent decision to suspend the processing of applications from asylum seekers from Afghanistan and Sri Lanka.  And I think that is the same kind of, effectively inhuman policy, that the Howard government so cynically used to win votes in elections.

Robert Manne:

Can I ask you to stop there so we have time to respond to that one.  Just because there’s a limited amount of time – is that all right?

Question:

Yes that’s fine.

Robert Manne:

Because we haven’t discussed the asylum seeker thing and it’s going to be a very big issue in the coming election I think.

Lenore Taylor:

I think that if the Rudd government had wanted to differentiate itself or had been a government of conviction, it needed to actually make a political case to the electorate as to why the arrival of whatever the number is, 2,600 or whatever, since the last election, is not a pressing issue of national security, yes, it’s an issue we have to manage, and yes, it’s an issue with a whole lot of policy consequences, but no, it is not an invasion, it is not a tsunami, it’s not a national security threat and someone has to say it because this is seen in the community as a really big thing.  It’s thrown up in everybody’s polling.  I was listening to Alan Jones the other day, and I mean it doesn’t seem related, but in the minds of Alan Jones’ listeners it was related – they all were linking asylum with, in their minds, the imminent arrival in Australia of sharia law, which they believed was a proposition that was afoot and about to happen.  I mean, the degree of misinformation in the community is astonishing and it won’t be changed unless someone makes the counter-case and at the moment, nobody’s making the counter-case and in that equation, Labor will lose because they can never be as touch on asylum as the Coalition can.

Robert Manne:

Yes, I saw a Bryan Dore/John Clarke thing a couple of weeks and one was asking the other, it was a quiz on the Rudd government, it said “What’s your policy on asylum seekers” and he said “Keep them out and let them in.”  Right.  Paul?

Paul Kelly:

We’ve got to ask ourselves, why the counter-case that Lenore’s talking about is not embraced by government and argued.  That is the key question.  And the answer to that question is, it is not, because people have no confidence the Australian public would accept the proposition.  Now that is the reality here in terms of the politics.  Everything depends in this issue in terms of the boats.  Now what Rudd tried to do and I’m sympathetic with him here, he came in and attempted to strike a compromise after Howard, when he tried to say “I will safeguard the borders but I will also have a much more humane policy.”  And he introduced a series of reforms which made it clear that there was substance to that.  It’s true he kept detention so he wasn’t completely reversing Howard’s position.  He was actually trying to find a compromise and a middle ground.  That’s what he was genuinely trying to do.  Now to a certain extent that effort to find a compromise has been destroyed because of the number of boats that are arriving and I think the reality here is that every Australian Prime Minister, including Malcolm Fraser, has been a border protectionist.  Whitlam was, Hawke was, Rudd is, Rudd’s successor, whether it’s Gillard or Tony Abbott will be, and the reason they will be, is because they are not prepared to say at the end of the day, that as the Australian government, we will accept the arrival of boats, rather than attempt to take action to dissuade the arrival of boats.  That’s the core reality here.

Robert Manne:

I’m very tempted to begin an argument.  I’m not exactly disagreeing but… one of the things I would say is, the left is sort of culpable here as well in that it has pretended that the attempt Rudd made to find a more moderate policy has no connection to the recent arrival of boats.  It seems to me clearly that as soon as the policy was changed, they were banking on the fact that the old Pacific Solution would keep on deterring just through memory, but that clearly didn’t work and I think, again I think it’s important not to treat the electorate as fools.  The electorate understands that if you have a more humane policy, you will have to then expect that desperate people will come here by boat and they’ll pretend that it’s just push and pull factors and the rest of it.  So, I’ve found the whole debate from many angles frustrating, but…  Now, you’ve had a go.

Question:

I’ll keep my question brief.  I just wondered in the light… we’ve talked about Kevin Rudd.  Tony Abbott presents quite a stark contrast, one might argue to Abbott in terms of personality, maybe.  How do you see that playing out over the next few months leading up to the election, and why is that you feel that the Liberal Party doesn’t have its act together?  I was under the impression that generally most Oppositions in the lead-up to an election, they don’t look like they’ve got their act together and everyone’s saying that the government looks good…

Lenore Taylor:

Well, that was my comment, so I think that the Coalition hasn’t done the work that an Opposition has to do in opposition to re-group after defeat, to work out what exactly it stands for, what its policy program is to repair or to figure out the differences of opinion within their own grouping and those differences of opinion were pretty evident last December, November and December, and it wasn’t only on climate change.  That was the issue that came to the fore but the differences with Malcolm Turnbull ran much deeper than that.  Now, they haven’t been resolved.  They’re still sitting there but they’ve been papered over because the government is doing so extraordinarily badly, and Abbott is a very effective leader of the Opposition, and he’s been taking the fight to the government, as he should, as is his job, but that doesn’t mean that he’s fixed his internal issues and I think that is an enormous potential problem.  I also don’t think he has laid out any clear policy prescription of his own.  He’s announced a number of policies but even on the policies he’s announced, they’ve changed in the space of months. The green core policy, the parental leave policy and whether the tax to pay for it would be permanent or not permanent.  You can go through all of them and they all sort of slid around a bit, so I think they’re in a difficult position with the resources of Opposition, which are minimal, and a big attack task against the government, which they’re performing well, but when it comes to an election campaign, the scrutiny will be on them as an alternative government, particularly when the polls are closed and I think there’s an awful lot that the Coalition needs to do to show that they’ve got both their internal house in order sufficiently, and a sufficient policy program to be credible in that sense.

Paul Kelly:

I think that Abbott had a great insight.  He understood that the Rudd government was much weaker than it appeared.  And when he turned the heat up on it, the government started to melt.  Now, that surprised everybody.  That surprised a lot of people in the government, the Opposition, the media, but that was a very deep insight.  Abbott felt… he stepped up and he started to mug Rudd and he got runs on the board.  And Rudd was in total control.  He was in total control of the political environment --  he loved it – when Brendan Nelson and Malcolm Turnbull were Opposition leader he had them all worked out, he was playing them on a break, he was in total control, Labor was a master of the political domain, and Abbott came in and just shook everything up, and it disorientated the government and it’s taken them a long time to try and get a fix on Abbott.  And the fix they’ve got on Abbott I think is the right one.  Their argument is that Abbott is too unsettling for the Australian community in terms of being a reliable Prime Minister.  And I think they’ll focus a lot on that and finally, we shouldn’t forget how effective Rudd was as a campaigner against Howard in 2007.  If Rudd’s got a script, if it’s the right script, during a non-governing campaign period, Rudd’s capacity to come across as a plausible and credible Prime Minister against Abbott should not be underestimated.

Robert Manne:

A final question and then we’ll cease.

Question:

Both Paul Kelly and Lenore spoke about the centralisation of decision-making within the Prime Minister’s office.  One, when imaging the Prime Minister’s office keeps getting the imagery of the ABC series The Hollow Men.  Perhaps you could… you know the office better than us…could offer us some insight there.  But my question is, do you think the essential shunting of many of the Cabinet Ministers in the cupboard and keeping them away from the public light has led to media speculation, ridiculous media speculation albeit, about Julia Gillard as a potential leader of the Labor Party and do you think that’s a big mistake of the Rudd government?

Paul Kelly:

All right.  Well I don’t think the Cabinet Ministers are being hidden from the public light.  I mean, they’re out there selling the government’s wares on the media.  And I think some of them, particularly Gillard and Tanner, do it very effectively.  One of the interesting features of the government is, there is an accepted successor to Rudd, that’s Gillard, which could make the second term particularly interesting.

Lenore Taylor:

I would agree with that.  I think one of the extraordinary things about the first term is how effectively Gillard has used her position to very calmly and methodically establish that pecking order without ever really engendering any serious leadership speculation or tension. I think it’s an extraordinary thing.

Robert Manne:

Well, it’s my sad pleasure to have to conclude.  One thing, Ideas and Society is not entirely serious, or it is serious but in different ways.  The next event is on August 5th and it’s going to be on football.  Andrew Demetriou, who is a very distinguished former student at this university is going to come and be interviewed by Tim Lane on the place of football in the culture of Victoria and Australia.  So I do hope you come to that.

I have to say that I thank Judy, Paul and Lenore very much for what I have found an incredibly interesting conversation and presentation.  Thank you very much.

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