Survey the entire media today and nobody has a clue what is driving the meltdown of Australian politics. All analysis is tactical, biased and short-sighted. Everybody contrasts our good fortune with our busted politicians and can’t make head or tail of it. There are conspiracy theories, ideologies, personal assassinations, psychiatric assessments and “he said, she said” drivel. You name it. It’s all wrong.
The truth of it is so simple yet so lost that it is hard to know where the nation goes next.
The inescapable reality is that Australia appears to be doing well but those within it are not. Australian living standards are falling. The people are angry about it. Pollies keep pretending that it isn’t happening and the bureaucracy keeps pumping out policy to make it worse.
This is a giant disconnect between the expectations of the polity and what pollies can deliver. That means no PM can hold his polling support for long. After that, base politics just takes over. Would this have been any different in any other era? I doubt it. Pollies can’t govern from opposition.
The only way a government can get traction with the polity is to lower expectations to the reality that they are experiencing day-to-day. This means acknowledging that the boom days are gone. For both housing and for mining. What lies ahead is a hard grind to compete in the global economy if we are sustain and grow our prosperity.
That’s it. That’s all there is.
Instead successive governments have inflated expectations, kicked the can and lied about their policies to cover it over. The outgoing Coalition did it with quantitative peopling. It used massive levels of immigration – completely out of step with the underlying reality of economic slack – to crush wages and support asset prices. It worked to sustain headline GDP. But it crush-loaded the lifestyle of the entire east coast and generated a severe backlash.
It’s not the best way to go about it but the Coalition might still have succeeded if it was honest about the plan. If it wanted to take the nation this way, it needed to argue the case for it. It needed to say, look, after the booms we must deflate the economy to keep ourselves competitive. We believe the best and most painless way to do it is grow the population. Then roll out policy to mitigate the worst of the fallout. That way, it becomes a national project. Not a lie to sustain interests.
Instead the government pretended its own key policy didn’t exist. It used transparent “bait and switch” tactics to try to shift public anger to refugees. It slashed infrastructure spending and did nothing as house prices adjusted to crazy rich Chinese incomes. The lies split its own base by giving rise to a conservative anti-immigration movement. The result was entirely predictable. Why would anybody be surprised today when the next leader’s only goal is to repair that split?
The previous Labor Government died of the same miscalculations. First it pretended that there was no GFC, that Australia was immune as it floated itself over the carnage with a policy-supported housing bubble. Then when an historic mining boom took its place, it was assumed it would last thirty years. Instead it lasted three. Authorities flattened households to make room for it only to then unleash mortgage debt again, this time along with Chinese real estate buyers, to cover the boom going bust, marginalising an entire generation from home ownership. Even the few attempts to better manage the booms were poorly handled, all about today’s political calculations, and never about a careful plan to stabilise the future.
Again, the policy settings were based upon exceptionalism, that Australia always wins, while underneath, the reality was that vast tracts of the polity were going backwards. Whingers and deplorables all.
The scary part for pollies is that this process of kick-the-can and claim good management has made the underlying structural problems worse. We now have both a housing and commodities bubble to deflate. Living standards have much further to fall before we can compete effectively again yet we’ve exhausted much of our policy firepower pretending everything was awesome. This has considerably raised the danger of an unruly adjustment that will shake the nation to its core.
No government will survive until it recognises that its key project is not to sustain Australian exceptionalism but to kill it stone dead.
