Rudd’s second year

The reform agenda Rudd Labor adopted in the lead up to the 2007 federal election was an extremely ambitious one. The Rudd Government would help lower fuel and grocery prices, fix the health system, solve the “housing crisis”, repair federalism, build lots of needed infrastructure, tackle climate change, ease the “skills shortage”, dramatically increase internet speeds nationally, introduce “a new era of transparency in government” and implement an “education revolution” - to name just a few of its commitments.

The expectation that all of these objectives would be accomplished efficiently was always unrealistic. After-all, these promises were made in order to persuade voters that Rudd Labor could do an even better job than the Howard government, which had presided over low unemployment, low inflation, relatively low interest rates and very strong wage growth. In actuality, any government which achieved most of these things would be rightly hailed as a great one.

In contrast, my article about the Rudd’s first year criticised the Rudd government for its lack of achievements in its first year. Unfortunately, that criticism stands.

While it will no doubt claim all the credit for the resilience of the Australian economy, the truth is that the economy’s resilience is due in large part to the microeconomic reforms of previous governments. Lower interest rates, a depreciating currency and an increase in demand for exports have also helped avoid an official recession, while the effect of the enormously expensive stimulus measures is unclear.

Meanwhile, the government’s “education revolution” is the biggest misnomer in Australian politics. Up to now it has only involved unremarkable measures such as money being given for computers, the upgrading of school halls and gymnasiums (plagued with waste and inefficiency) and more information being publicly available concerning the relative performance of schools. This is far from radical, particularly when many education experts advocate decentralised systems which involve schools being given far more autonomy under a rigorous national curriculum so that competition is introduced and real choice is available for students and their parents. These policies would constitute a revolution of sorts, but are not on the government’s agenda.

Meanwhile, no structural reforms to the health system have been enacted, with the Rudd government instead doing little more than giving more money to the states. The deadline to fix the health system or initiate a federal takeover passed some months ago yet no one claims the health system has improved. Meanwhile, all its failures are blamed on the previous federal government. When Kevin Rudd declared that he would “end the blame game”, he apparently wasn’t including blaming the Howard government.

The “fibre to the node” broadband plan has also failed to meet key deadlines and has now been replaced by a ridiculously expensive $43 billion “fibre to the home” scheme. No cost-benefit analysis has been made for this plan, yet this government of former bureaucrats and trade union officials with very little experience in private enterprise is nevertheless confident that it can do a better job at delivering broadband than the private sector. The fact that they are willing to gamble up to 5 per cent of this country’s gross national income on this idea should be the great political scandal in Australia of our times.

And the government is yet to reform the tax system or increase transparency despite the many announcements last year that it would.

My piece about Rudd’s first year also criticised the Rudd government for its preoccupation with frequent announcements, promises and spin with little or no follow through. Fortunately, the need for bi-weekly announcements appears to have waned, in a sign that the Prime Minister has grown up a little.

However, what has replaced it is our Prime Minister’s strange penchant for writing and publishing long-winded essays. These essays get basic facts wrong and even re-write economic history. The Prime Minister also blogs, is a frequent user of Twitter and appears on “soft” TV shows like Rove. His Deputy Julia Gillard has appeared on Are you Smarter than a 5th Grader on numerous occasions, while her education revolution and other policies stall. One wonders when one of them will appear on Celebrity Masterchef, like a certain state Premier recently did.

Meanwhile, the obsession with spin, public relations and playing politics continues.

The 2009-2010 budget was billed by Wayne Swan as a horror one, but in the end turned out to be anything but. The government’s war on unemployment has not stopped it from pursuing job-destroying policies such as industrial relations hyper-regulation, subsidising the car industry and its emissions trading scheme. Mr Rudd has claimed that climate change is “the greatest moral issue of our times”, but that hasn’t stopped him from playing political games on this issue.

It is difficult to avoid the conclusion that this preoccupation with spin and PR is coming at the expense of sound policy, particularly when one compares how much the government spins with how little it achieves. Like the Blair government in England, it seems the federal Labor government has mastered the art of permanent electioneering throughout the electoral cycle.

The Rudd government has also gone out of its way on nearly every single issue to not offend anyone. The result is that it is riding high in the polls and is yet to make a genuinely tough decision. But pleasing everyone now means short-changing all of us in the longer term.

On nearly every single political issue - health, education, the economy, climate change, broadband, the car industry and others - the government’s solution primarily involves spending lots of money with no guarantee that its expensive solutions will work.

This tendency, combined with the failure to undertake any deep expenditure cuts has left a massive budget deficit. The budget bottom line has been the victim of the government’s desire to keep everyone happy. We will all have to pay for this borrowed money with compound interest.

In case I risk sounding harsh in this assessment, let me give credit where its due - the Rudd government has done well in dumping Fuelwatch and Grocerywatch, delaying the ETS, means-testing the health insurance rebate and resisting some of the more ridiculous calls from the unions, such as the abolition of any watchdog in the construction industry and the enshrining of protectionist principles in government tenders. Diplomatic appointments have also generally been good, particularly those of Kim Beazley and Brendan Nelson.

Nevertheless, the Rudd government is unlikely to take bold reforms in the next year. In modern politics, the last year of a term in office involves focusing on winning the election and not upsetting sections of the electorate.

In years to come, Rudd’s first term is likely to be seen as a wasted opportunity. Here was a Prime Minister with record approval ratings who tried to be everyone’s mate instead of focusing on the big reform agenda he set for himself. A fellow who was more interested in being seen to be solving problems, rather than actually solving them.

In 2007, Rudd Labor’s slogan was “New Leadership”. The reform malaise since then indicates a lack of this promised leadership.

Nevertheless, given the Opposition’s chronic habit of making themselves the issue, the Rudd government’s lack of achievements is unlikely to be widely noticed. It could be that like the Carr government in New South Wales, federal Labor will keep getting re-elected while the lack of real policies only later become devastatingly clear after some years.

It’s fair to conclude that up to now, the Rudd government has promised everything but delivered next to nothing.