How important is the
only being prime minister for around six weeks, Kevin Rudd called on the
Governor General to dissolve the Parliament for an election on September
7th. There is some great irony in this date as Rudd, although Prime
Minister is running an almost traditional opposition campaign, similar
to the one he ran against then Prime Minister Howard in 2007,
campaigning on the premise of 'a new way', even though the Labor
Government has had two terms in office.
It was only a short time ago that it appeared an almost foregone
conclusion the Tony Abbott led coalition would win the next election,
decimating Labor to just a handful of seats in the process. But upon
Rudd taking over the premiership from Julia Gillard, he very quickly
gave the Australian people a sense of change by scrapping the carbon
tax, and making an announcement that no asylum seeker arriving by boat
would ever be allowed to settle in Australia.
In addition, Rudd called the election on the on the same day that the
Victorian Government agreed to school funding reforms, which appeared as
a Liberal endorsement of Labor policy. On the first evening Labor
blasted the airwaves with a Sunday night media campaign and Rudd
challenged the opposition leader to a televised debate every week of the
campaign. Rudd forfeited the G20 meeting in St. Petersburg, a surprise
for many, trying to take the initiative and use it to his advantage.
There was a sense of feeling within the Labor camp that no more
electoral advantage could be gained by holding off the election any
Tony Abbott's immediate response was to let the Australian public know
that he would not enter into any negotiations with independents to form
a minority government, should there be a hung parliament. This signaled
that the campaign would be squarely focused on the two leaders which
their respective parties have put all their trust into. This could also
be seen as an attempt to neutralize the large array of potential
independents and minor parties that will participate in the election.
In this first week of the campaign the key issue has been that of
credibility. Both camps have extolled their prowess as competent and
responsible economic managers who are the best qualified to take
Australia into the future.
The world is in an economic mess, where trends in Europe, China, and the
US hint at another recession. And as Australia is a trading nation, it
cannot escape the consequences of any world economic downturn,
especially if China is also showing signs of a slowdown in growth. China
saved Australia from a recession last time round in 2008, but 2014 will
be different. With the mineral export boom gone and with potentially
much lower commodity prices in the future, the major driver of
Australia's economic prosperity will be gone.
There are also many competitive issues concerning the domestic economy.
Company operating costs are very high from a high tax regime and
cumbersome compliance procedures, high labor rates outside normal
working hours, labor shortages in some industries, a small domestic
market which itself is not truly competitive, being dominated by a few
major companies, and relatively low level of economic activity as
consumers aren't overly willing to spend in the current environment. In
addition, there is an increasing rate of unemployment, low economic
diversity, and a high level of debt. Couple this with an aging
population with growing funding requirements for aged care and health,
serious consideration is needed about what the future of Australia
should be like.
Australia may not just face a recession this time, but a deep structural
recession that cannot be solved by manipulating interest rates and
encouraging savings, spending, or investment through fiscal policies.
The fact is in the modern Australian economy of today that is open to
the world, where critical decisions are decentralized with the Reserve
Bank of Australia independently controlling monetary policy, and the
elected Government jointly with seven state or territory Governments
fiscal policy; Australia's ability to guide its own structural economic
evolution is very limited anyway.
Australia could be described as being up the proverbial river without
any rudder or oars for that matter, helpless in determining the way
ahead for the country. This is compounded with the transactional and
reactionary approach to solving economic issues in the country. We
accept the myth that budget deficits are undesirable, and that balanced
budgets are prudent, even if the country must suffer for this. This is
not advocating the reckless running of budget deficits, but rather
advocating that the budget deficit is as much and economic tool as
interest rates are. So are Australians looking at the symptoms of our
economic situation rather than looking at the underlying causes and
Abbott lowering company tax by 1.5% for firms trading under $5 million
per annum is not going to solve the structural problems. Is this going
to encourage new activities requiring new skills and forms of
competitiveness out in the world? Highly doubtful.
Although Abbott mentioned developing Northern Australia and Rudd
mentioned finding a replacement for mining began touching upon some of
the structural economic issues facing Australia, any new visions have
quickly disappeared in this early part of the campaign. Effectively, the
opportunity to put forward a new vision for the country has been
deferred perhaps to a time when it will be too late to talk about. What
has replaced this needed discussion is talk about who is better at
stopping boat arrivals, who can spend less, who can deliver solve the
climate change problem through 'book entries', and who can be trusted
with 'the job of government'.
There is less bipartisanism today than there was in the past, government
has less ability to manipulate the economy than ever before, and who
wins government will most probably be decided more on personalities than
any major policy choices.
So from this point of view the 2013 Federal election should be one of
the watershed elections to decide Australia's long term direction, but
the opportunity is being wasted to the point where this election is not
really very important at all.
Both leaders will tell the Australian people how well they can manage
the economy within the paradigm currently acceptable to the national
narrative of responsible fiscal and debt management. Both leaders will
tell the Australian people that they can best secure Australia's
borders. Both leaders will tell the Australian people they can best
manage aged care, education, and health. The narrative and catch phrases
may be different but the semantics are just the same. And this may be
why the parliament after the 2010 election was hung, and this time
around in 2013, the result may also be very close.
It looks like the decision of who will govern Australia after this
election will come down to some 20 seats. This further reduces the 2013
election to a tactical one, rather than one where new major visions are
expounded and leaders try and capture the imagination of the people.
Rudd's move to place popular ex-Queensland premier Peter Beattie as the
candidate for the marginal coalition seat of Forde shows that this is a
Watch the tally on election night in states like Victoria and the
results may be confused with uneven swings where seats cross over to
both parties, making any early result difficult to predict. Some states
are showing swings to the coalition like Victoria, while Queensland and
Western Australia are showing swings back to the Government. Both
leaders are playing for the same space and run the awful risk of
appearing too similar. This is where the preferences of the Greens may
actually determine the outcome of the election, although its most likely
that the coalition may just get in. It will really depend upon which
leader looks the most credible, so Rudd cannot not be written off by any
Perhaps the fact that major oil fields have been found in Australia will
allow the 'lucky country' to continue to stumble along without the need
to tackle any structural issues. Australia had the gold rushes, the wool
boom, the minerals boom, and may be the next boom will be an oil boom,
so there is no need of any vision.