Friday, September 06, 2013

Abbott will win support for reform

On Saturday night it will be obvious by how much the country's media and political class have underestimated Tony Abbott.  It will also be obvious how much that class underestimated the electorate.  The claim that Abbott was unelectable is just as much a statement about the electorate as it is about Abbott himself.  It won't be the first time that the keepers of elite opinion in this country have been wrong about the Australian people.  The Australian electorate is by and large conservative.  John Howard was a self-confessed conservative.  To get elected in 2007 Kevin Rudd pretended to be a conservative.  Tony Abbott is a conservative.  Maybe that's a pattern.  Julia Gillard was not a conservative and she failed to win a majority.  Howard's introduction of Work Choices was not the act of a conservative and it was a key factor in his defeat.  The same applies to Gillard's carbon tax.

Economics is going to be a key challenge for Abbott as prime minister, but not because of the reasons that are usually given.  It's simply not true that Abbott has no interest in economics.  In his book, Battlelines, for example, there's an extensive discussion not just of economics, but also of Australia's tax and welfare system.  If there's a reason Abbott sometimes comes across as not being interested in economics, it's because he's interested in so much more than just economics.  One of the few people in the federal parliament who comes close to being as well-read as Abbott is another Rhodes Scholar, Malcolm Turnbull.


Nor does Abbott's background with the Democratic Labor Party disqualify him from being an economic reformer.

It's true that Abbott is no Hayekian free-marketer.  But then again few of his colleagues are either (unfortunately).  Abbott's economic principles sit firmly in the middle of the spectrum of opinion across the Liberal Party.  The DLP's concerns were not primarily economic ones.  They were political.  The DLP was established in the 1950s as part of the fight against communism in the Australian trade union movement.  The DLP's economic policies were not very different from those of Menzies' Coalition.  A highly regulated mixed economy with a private sector supported by a substantial government sector was the mainstream economic orthodoxy.  Australian politicians and policymakers from the 1950s through to the 1970s knew of no other alternative.

Several decades on, we now know there is an alternative.  The alternative is a reform program of the size and scope of the 1980s.  Abbott is very aware of this.  But he's also seen the fate the Howard government suffered when it tried to reform industrial relations without adequately explaining to the electorate why reform was necessary.  That's one of the reasons why, as Abbott has said, he argued against Work Choices.


In an interview earlier this week, Abbott referred to the tension between the need for reform and the need to respect the popular will:  ''The challenge for every government is to keep faith with the people and one of the reasons why I have not, and will not, satisfied the harder-line people in the business world is because whatever the 'economic merits' of certain policies might be, any national leader worth his salt has got to be conscious of the importance of bringing the vast majority of people with you''.  Abbott understands that reform requires more than well-remunerated chief executives making speeches about the ''economic merits'' of a policy.  Business leaders can push for a harder line as much as they want but at the moment their credibility with the public and the likely next government isn't great.  The vast majority of CEOs supported the carbon tax and stood silent while the ALP re-regulated the labour market.

Abbott knows that if he is to be successful he will have to bring the majority of the people with him.  The problem is that years of economic prosperity have made the vast majority of people complacent about the need for change.  And that's the core of Tony Abbott's economic challenge — can Australia afford to delay the policy changes that need to made to ensure our future prosperity while he spends his first term preparing the public for what he's going to do in his second term.

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