This is really part two to my assessment of Joe Hockey’s task this morning. In it, I reasonably surmised that a program of nation building deploying deficits of 2% of GDP (1% on automatic stabilisers and 1% on productivity directed infrastructure) and and an actively lowered dollar could be enough to support Australian GDP growth at 2.5% or so until 2017.
This is also the key to how Kevin Rudd could claim an unlikely victory in September. Hear me out!
The LNP has painted itself into a corner on budget deficits. Whether or not it could change its spots post-election is irrelevant. It cannot do so now. If Kevin Rudd were to assume the leadership and immediately reframe Australia’s economy as struggling into a post-China boom period, with the full explanation of the unexpected change in Chinese growth, the resulting unexpected falls in the terms of trade and the mining investment cliff, then public investment becomes central to the case for good government in the term ahead.
This would wedge the LNP on its core asset, tight budget management, making them appear (perhaps rightly), ideological and out of touch. Winning elections is not about being all things to all people. It is about occupying the middle ground and forcing your opponent off it. This can come down to one single issue if it is big enough (like the economy). At the moment, the one big issue is Labor credibility. Gillard’s illegitimacy is fed by her RSPT backflip, support for the carbon tax and the backstabbing of Kevin Rudd. Reinstalling Rudd doesn’t cure Labor’s brand but it goes a long way to providing a square up, which will appeal to Australians, especially Queenslanders.
Fundamentally I do not believe Australians wish to remove the carbon tax and it’s been neutered anyway. Certainly I don’t think that the body politic has any interest in a double-dissolution election. The same applies to the nobbling of the NBN, especially in the deteriorating economic climate. The sense of continuity that Rudd would bring to these major policies makes more fundamental sense than Tony Abbott’s trash it all approach, if you can remove the Labor stigma.
But that is just the beginning. Rudd could not be timid and could not afford to go back to his GFC nanny state rhetoric. He would need to clean out the Labor Party of recalcitrant union hacks (to the extent that that’s possible) and immediately adopt a policy platform similar to that espoused recently by Ross Garnaut. That would mean:
- reframing the Australian economy in the post-China boom period
- dedicating a new Labor government to productivity reform built on the successes of the Hawke/Keating model
- as said, a new productivity based infrastructure program, managed independently
- a new wages accord with unions
- active measures to lower the Australian dollar
- tax reform aimed squarely at boosting tradable investment
That’s obviously a lot to do. It’s foolhardy to suggest it’s even possible. Wayne Swan would have to go and there is no obvious prominent replacement. The currently in control union hacks would need to toe the line. The communications challenge would be awesome, not least for the new Treasurer. And it’s quite possible that Labor credibility would still be the dominant issue at the election.
But in theory it would wedge the LNP and outflank its greatest strengths, as well as expose their policy vacuum. It would actually be more business friendly than current LNP policies and would be difficult for the LNP biased business press to not support, at least in part. And, mirable dictu, it would actually be in the national interest.
