Kicking heads is not enough

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The new government has a problem. It’s not governing. Instead, its habit of adopting extreme contrarian positions as an opposition tactic have carried over into power.

The press is unkind to Tony Abbott today over his handling of the Indonesian spying affair. Newspapers Left and Right are critical.

Coalition apologist, Jennifer Hewitt is typical:

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So much for the Abbott government’s hopes of building on the benefits of quiet negotiation with Australia’s neighbours. The political promise was for an end to “megaphone diplomacy”. Instead, the rapidly fraying relationship with Indonesia is now being played out in the most public and damaging of ways.

…Now the promising new start of the Abbott government is foundering in dangerous political seas. Abbott needs to find a lifeline in a hurry. But a timely rescue seems unlikely.

Even Government mouthpiece, The Australian, struggles to put lippy on the pig. From Paul Kelly:

TONY Abbott has stood firm amid the political whirlwind from Jakarta. The Prime Minister offers no apology, no retreat, no cringing clarification – and the Abbott government will pay a price, almost certainly a fearful price. Australia-Indonesia ties have reached a fork in the road. They can now descend into escalating recriminations with disastrous consequences or cool heads can prevail and the situation stabilise after the current storm.

Abbott repudiates the apology strategy recommended by former foreign minister Bob Carr, who warns the intelligence revelations are “catastrophic”. Neither has Abbott embraced the advice from Opposition Leader Bill Shorten that he follow the Obama technique with Germany that saw the US say “it is not monitoring and will not monitor” (any more) the German Chancellor’s phone.

The risk for Abbott is that he hands Indonesia a double insult: it was spied against by Australia and when it complained Abbott turned an unsympathetic ear and refused an Obama-type recant.

Moreover, stop the boats is sinking this morning. From the SMH:

The Indonesian national police and immigration departments are readying themselves to stop all cooperation with Australia as soon as an order comes from President Susilo Bambang Yudhoyono.

Indonesia’s police chief General Sutarman said he was preparing to halt all joint programs including those addressing trans-national crime, people smuggling, trafficking in persons and terrorism if the president made the order in response to phone tapping revelations.

“I don’t get it” … Indonesian foreign minister Marty Natalegawa on Tony Abbott’s response to the spying scandal. Photo: Andrew Meares

And the Law and Human Rights ministry, which oversees Indonesia’s immigration department is also preparing to withdraw its support for people smuggling programs.

My own view is that Abbott has unnecessarily inflamed the situation with instinctive political rhetoric. Yes, we all know that spying goes on, but diplomacy is never about that. It’s about smiling politely and lying through your teeth, which is what the PM should have done when he reassured Indonesia.

But that is symptomatic of a larger issue. John Howard was perpetually under assault for megaphone diplomacy and it nearly always made him stronger.

The reason is that it fitted a cogent worldview and narrative. He saw Australia as “relaxed and comfortable” in its values, saw the nation prospering through individual aspiration, saw the nation at one with the US alliance, saw the nation embracing and defending global liberal capitalism, saw the nation as above the interference of do-gooder institutions. He admired Sir Robert Menzies and Donald Bradman. It was a formidable historically-based paradigm that comforted the nation through great change as it fused a deep and credible 50’s ethos with contemporary dynamics. In short, there was such a thing as Howardism.

But what is Abbottism? Mr Abbott only took three policies to the election – turn back the boats, return the Budget to surplus and cut the carbon tax – yet all three are facing immediate problems – and there is no narrative beyond them to carry the nation. The Coalition is still responding as if tactical communications are enough, and perhaps they are for now, but not for long.

The second of the Coalition’s tactical pillars is on display today in the AFR:

A grand deception was committed on the Australian public by the Labor Party at the last election over the future of the Australian Public Service.

In the weeks before the election was called, the government – in its desperation to fill a growing budget black hole – imposed a new 2.25 per cent efficiency dividend across the public service.

At the time the now leader of the opposition Bill Shorten said, “We believe that the necessary savings should not impact unduly on the overall number of APS (Australian Public Service) jobs.”

To appease the unions, he claimed those savings could largely be achieved through non-staff savings such as travel and procurement and then struck a deal to limit cuts to 2000 staff.

But Labor told nobody about the real breadth of their staff cuts – not Parliament, not the Independent Budget Office and not the agencies it affected.

What he, and the then prime minister, Treasurer and finance minister would not, and did not, disclose, was that Labor’s cuts would leave the Public Service with 14,500 fewer people than it would otherwise have had. It was deliberately hidden.

Hockey was very disappointing in the election campaign, preferring bluster over policy at most points, and it continues here. Why bother twisting yourself in knots over who is the more austere? Where is the national interest in all of this? Where is the explanation for where the economy is at? How the budget strategy fits into that vision? What is the narrative that will carry Australia through the next three years, facing the challenges of reform and competitiveness? Where are the values that will persuade the polity to make the sacrifices required?

The third of the Coalition’s three pillar’s, repealing the carbon tax, is also under popular assault with the Sydney fires and Typhoon Haiyan adding to fears about the effects of climate change. Alan Mitchell of the AFR is also sensible about carbon policy:

Tony Abbott started with a defensible policy on climate change.

He would oppose Labor’s emissions trading scheme, which he quite reasonably dubbed a carbon tax, but said he would re-consider the case for an ETS if the rest of the world established similar schemes.

But now the mantle of reasonableness is shifting to Bill Shorten.

…Shorten is prepared to support the abolition of the $24-a-tonne carbon tax, but is committed to an emissions trading scheme. If the emissions trading scheme was linked to the EU scheme, as proposed by Kevin Rudd, the price of carbon would fall to about $5 a tonne.

That would have a number of advantages over Abbott’s emissions purchasing scheme.

First, any significant emissions reduction will be achieved at less cost to the economy if the government uses the price mechanism of a broadly based emissions trading scheme or carbon tax.

A newly released Organisation for Economic Co-operation and Development study shows the lowest costs per tonne abated were for trading systems.

Business knows the limitations of the Abbott scheme and it can imagine the regulatory horrors that are likely to be inflicted on it if domestic or international opinion demand larger emission cuts than Abbott’s scheme is able to supply.

Alan Kohler adds his skepticism:

The LNG export boom will make it virtually impossible for Australia to meet the government’s carbon emissions reduction target.

The high price of gas in Australia has made replacing coal-fired power stations with gas uneconomic and “fugitive emissions” from the LNG plants mean that reducing overall emissions within Australia by 5 per cent by 2020, as government policy states, will require much bigger cuts in other industries.

Tony Abbott will have to either drop the promise to cut emissions by 5 per cent or the promise the repeal the carbon tax – both together will be impossible without massive government spending under the proposed “direct action” policy of paying companies to reduce emissions.

…Anyway, not trying to reduce carbon emissions at all would put Australia at odds with the rest of the world, including China and the US, and endanger trade agreements, so the prime minister and Treasurer Joe Hockey will be, or at least should be, desperately hoping that the Senate never allows the repeal of the emission trading scheme legislation, so it’s not exactly a broken promise – at least they tried.

I’m no doubt being too hard on Mr Abbott. The values and vision that underpin a persuasive narrative may come to light with experience. But they had better. Challenge made Howard stronger because it only highlighted his core strengths. This Coalition so far has none of that ballast. Indeed, it has come to power largely by repudiating its own values as it sought the political middle ground and to gain power by populist resistance. Tony Abbott appears fearful of his own core values. His Catholic world-view is not mainstream and he resorts to electoral bribes to encourage women to forget it.

Sticking rigidly to three narrow election promises will not be enough to carry the nation. A bigger and much more persuasive national narrative will be required before long. Does Tony Abbott have it in him?

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.