The dramatic pace of reform in Queensland under the government of Premier Campbell Newman, which received a hearty ‘no thanks’ from voters in the Redcliffe by-election over the weekend, should set alarm bells ringing for the Abbott Coalition government.
A 17 per cent swing in Redcliffe against the Coalition’s Kerri-Anne Dooley handed the state seat to Labor’s Yvette D’Ath, whose success was due in no small part to the scandalous tenure of previous member of Redcliffe, Scott Driscoll.
While it’s common to respond to such electoral disasters by saying the problem was localised – and certainly nothing to do with the issues of federal politics – the result will see some frayed nerves in Canberra in the current national economic and political landscape.
There is nothing unusual in the basic reform plans of the Abbott government to overhaul fiscal policy and industry policy, plus make a significant start on tax and IR reforms. It’s obviously best to get the unpopular changes through as early as possible. That leaves a year or two to massage voters back to a winning position for the 2016 election.
However, there is much to disturb this familiar strategy at the current time.
If the growing nationwide jobs crisis was a structural problem, it would be simple enough to spin as a positive before 2016.
That is, if allowing subsidised industries to die off were happening with all other economic factors being equal, the Abbott government’s economic narrative would be a strong one going into the election.
‘Yes, we chased away the auto-makers, nearly canned SPC, and cut public service contracts,’ they could say. ‘But that all just freed up workers to staff our other growing industries.’
The trouble is, there are cyclical factors at work to derail this process. For now, the Australian dollar is far stronger than the government would like. There is also the risk of some wild gyrations or falls next year when US tapering of quantitative easing gathers pace.
And business investors are still frozen with fear. Will capital fly off to seek out better returns in the resurgent US, or even the eurozone? Will we have that long fabled ‘banana republic’ moment? Will commodity prices pull the rug from under the economy? Will the over-bought residential property markets crack? Despite all the spin, there are many important fear factors at work beyond Abbott’s favourites: the carbon tax, mining tax, red tape, and crooked unionists.
So the years 2013 to 2016 are a tricky time for structural reforms, particularly when Abbott wants to do something of a ‘Newman’: rapid change, supposedly leading to rapid jobs growth.
That did, in fact, work for Newman in the early part of his government’s life. While his infamous public service jobs cuts pushed state unemployment up by around 1 percentage point, private sector job creation did indeed accelerate as the state’s economy topped the nation’s growth league tables.
However, the giant swing in Redcliffe was also due to public servants, or publicly funded professionals (particularly firefighters and healthcare workers) being very vocal about how fiscal restraint would damage services to voters. (Your house will burn down, you won’t get a hospital bed, and so on.)
The political message is really: ‘give us reform, but do it slowly please’. To date, the Abbott government has said it wants to do it all very quickly.
The Tony Shepherd-led Commission of Audit has handed its first report to Abbott. Just how ‘savage’ its recommended cuts will be won’t be known for a while, and will not codified until the budget is handed down in May.
More immediately, the government’s aggressive stance on industry assistance has sent a clear message that ‘deadwood’ industries will be allowed to crumble, though farmers and Qantas are still in line for assistance.
So if all this reform is going to happen at break-neck speed, what will be the political consequences? Today’s Newpoll data give us a clue. Abbott would, on today’s figures, lose an election to Bill Shorten’s Labor 54 per cent to 46 per cent on two-party preferred terms.
Moreover, the WA senate by-election is a huge opportunity for voters there to send a similar message to that seen in Redcliffe: ‘Reform please, but more gently.’
All of this is complicated by the abhorrent ‘boats’ policy cobbled together by Kevin Rudd in his desperate last grab for power in 2013.
By the time WA votes for its six new senators in a month or two, the crisis on Manus Island is likely to be even bigger. The fact Rudd created the PNG problem will not obscure the fact that Abbott embraced a ludicrous and cruel policy. Like Rudd, Abbott was courting some unworthy attitudes to migrants in key western Sydney electorates.
Put together, these political and economic challenges will give the Abbott leadership team pause for thought. They clearly believe in rapid structural change to create a better Australia with more jobs and prosperity. But whether ‘doing a Newman’ in the current economic and political environment is possible (or wise) will surely be causing their resolve to waver.