Thursday, 24 June 2010

Wayne's skillful evasion - rewarded for government failures

Behind the downfall of Kevin Rudd there were clearly some issues about his style and technique of governing - his presidential, almost dictatorial, dominance of decision making with the concentration of power in his Prime Ministerial office; a fascination with playing as a world leader on an international stage; an almost pedantic concern at home about the process that led to innumerable reports and enquiries. Yet there were as well matters of policy substance behind his decline from being Labor's election winning leader to the man his colleagues decided could not win again and therefore needed to be replaced.
To me the one that stands out was the failure to convince Australians that the global financial crisis really was a crisis and that the actions the government took really were necessary. Labor thus suffered the downside of public concern about a growing budget deficit and the disapproval of waste and poor administration in stimulus projects without gaining the benefits of being among the world's most successful governments in avoiding an economic recession.
This poor salesmanship was not the fault of Kevin Rudd alone. Treasurer Wayne Swan must carry a large part of the blame which makes it somewhat surprising that he is one of this week's winners within the Labor Party. In Swan's defence it does have to be acknowledged that when the crisis struck there was a fear of frightening people into panic mode by telling them the truth. Nevertheless it is now clear that in electoral terms what should have been seen as a positive achievement became a negative.
Treasurer Swan must also share the blame for the extraordinary decision to make a review of the national taxation system a key first term goal. Changes to taxation can never be vote winners. Losers complain loudly and are likely to change their vote because of it while winners rarely express their gratitude by a similar action. Compounding this inherent problem was timing the review by Treasury Secretary Ken Henry so that a tax debate was ignited right at the beginning of an election year. To make matters even worse the government chose to cherry pick one major new tax proposal - an excess profits tax on mining ventures - and declare that all the other Henry recommendations were not even being considered.
Once again the salesmanship went badly wrong. With hindsight it is clear that the best approach to taking more money off miners was to say that reducing the budget deficit meant that money had to be raised from somewhere. Better for them to pay than you.Instead the decision was made to try and disguise this new tax by spelling out new things on which the money would be spent. The mining industry losers complained loudly and the masses were completely unimpressed by a compensating lowering of general company tax, increased infrastructure spending and talk of more money being compulsorily saved in superannuation accounts. Another Swan failure for which Rudd has paid the price.
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