I am basically a risk analyst. As such, I spend much of my time identifying patterns that lead to threat and opportunity. I am very good at pattern detection and patterns are my friend. They enable me to quantify the odds of this risk or that upside. That provides both comfort and wealth.
When I can’t find a pattern I am most ill at ease. That is the riskiest of situations; to be without a compass altogether, at the whim of the unknown unknowns, which is where I’m at this morning.
The weekend press is filled with criticism of the Abbott Government’s recent performance. What is most striking is how wide is the range of views on what has driven the string of decisions that has the Government fighting fires on many fronts.
Some see the Indonesian and Chinese issues as evidence that the Abbott Government has spine. Others see both as evidence that Australia is embarking on a new round of “values” based foreign policy. Still more see it as an ABC conspiracy or immaturity in foreign policy.
Some see the Gonski debacle as a consequence of a rogue Christopher Pyne. Others see it as the heavy hand of a vindictive Coalition keen to exact vengeance upon those states that signed up.
Some see the Graincorp and Qantas decisions as the rise of protectionism. Others see agrarian socialism at work. Still others see it as Joe Hockey spinelessness.
Some see the echoing silence from the top of the Government around all of these decisions as freedom of Ministerial discourse. Others see it as the iron hand of a ruling clique of prime ministerial advisors, most notable Peta Credlin, Abbott’s chief of staff.
What I look for in making my assessment is the system at work. What’s the frame of reference giving rise to decisions, not what does any one decision mean. On that score, the Abbott Government’s recent performance can be seen to flow from philosophies attributable to John Howard and Bob Santamaria, it can be interpreted as politicised, populist, nationalist, socialist, neo-conservative, realist, fiscally responsible and irresponsible, reformist, random, honest and mendacious, all at once.
That’s the problem. I see no pattern at all. No identifiable talisman of leadership.
The chaos is most clearly brought home by what it is doing to the delivery of the Abbott policy platform. We weren’t offered much at the election but three clear commitments were made. Abbott would “stop the boats”, he would cut taxes and be “open for business” and he would “return the surplus”.
Instead “stop the boats” has been sunk by the handling of the Indonesian scandal. “Open for business” has morphed into protection for special interests, and the China FTA to strategic chest-thumping. The “return to surplus” promise has descended into a farce of politicisation and giveaways for yet more rentiers. Coalition chaos is destroying its own agenda at astonishing speed.
If that were the end of it and Australia’s good luck of past decades held, it wouldn’t matter much. Tony Abbott would learn from his early mistakes and a bullet-proof budget would enable him to deliver stability over the stretch. The old hands are already coming to the fore with Arthur Sinodinos appearing on the weekend to take the heat out of the Qantas issue. But we find ourselves in a wider political economy maelstrom than the Coalition’s debutante eddy.
The vortex is stirred by one overriding truth: the Australian economy is under intense competitive strain. Australian businesses in tradeable sectors like Qantas and Graincorp will continue to fail as our cost base is now too high to sustain our standards of living. Tensions within the Budget will keep rising as the nation moves beyond the mining boom and the terms of trade fall further. Climate change will steadily ratchet up pressure on both companies and reform-directed public spending and the demographic challenges recently outlined by the RBA and Treasury will pinch everything a little more each year.
So far the Government has acknowledged very little of this. Mostly it has done the opposite, endorsing the old economic growth model of rising house prices and wealth effects as the path to prosperity. It plans to support this with public investment in infrastructure which appear rushed rather than productivity focused. These two approaches make the underlying problem of a bloated real exchange rate worse.
More difficult again, the Abbott Government has come to power by rallying popular and business anger against the two taxes that do actually address the underlying issue. The carbon price it has sworn in blood to destroy boosts the Budget by billions per year and ensures a smooth as well as cheap as possible transition to a lower carbon output economy. In the short run Abbott can point the finger at the carbon tax as to blame for competitiveness (it is is minor factor) but in the medium and long run Direct Action will make it far worse.
As inadequate as it is, the mining tax also improves competitiveness to the extent that it reduces Dutch disease factors like the Rybczynski effect, and it funds cuts to wider corporate taxes and increases local saving, decreasing the need for foreign capital.
In short, the Abbott Government is trying to be all things to Australiana at a time when common sacrifice is what is needed. Contrary to the reality of its situation, it is egging on a political economy in which Australians kick-back in inflated houses and shake their fist at an imported widescreen telly that reports leaner and meaner foreign businesses are taking over Australia’s hobbled national champions. We are at least enjoying a boom in irony.
Meanwhile, the eye of the widening gyre is a Parliament of utter strangeness. The man most responsible for Labor’s self-destruction around the no-brainer carbon and mining taxes has inexplicably ascended to the leadership of the Opposition. The prospective Senate is controlled by an extraordinarily conflicted mining overlord who stands to benefit personally from repeal of the taxes that would help the rest of us. We have an unsettled Senate election in WA in the offing and polls are clearly signalling that although the polity doesn’t want a carbon tax it does want a carbon price. Any forthcoming vote (or God forbid double-dissolution) will add even more confusion.
The election was supposed to bring calm to our political turbulence and return adults to our capital. On the contrary, it has thrown open the door to plutocrats, further undermined appropriate divisions between government and business, marched the polity in precisely the wrong direction and set policy on a chaotic course in which a hot line to Canberra is the only guarantee of survival.
Who is left to breach the event horizon of Australia’s governance black hole?
