The short happy life of the Gillard government

As the fog of Kevin Rudd's campaigning lifts, real policy is finding room to breathe. There's more carbon tax clarity and the large federal budget hole might finally get the attention it deserves.

In many respects, the term of the Gillard government – its chance to 'govern' – began early this week, when two almighty distractions disappeared from the national news cycle.

Policy stories have rushed in to fill the vacuum left by the absence of stories about 'the Rudd camp' – a small band of MPs which, we discovered last week, was likely outnumbered by Mr Rudd's teddy collection. 

And even the carbon fog of the past two years seems to be lifting as journos realise that it's not the main cause of energy price hikes, is not wrecking the economy and in fact reduces uncertainty in energy markets. As Mark Carnegie pointed out yesterday, it's the tearing up of this landmark reform that will do that. A storm in a carbon cup, if you will.

The carbon story is far from complete, however. Despite the ACCC noting that there had been a "massive drop" in carbon tax complaints, Fairfax papers reported survey results last week showing that half of Australians think it has pushed up petrol prices (which are excluded from the tax). The same survey showed most punters estimated the scheme was costing them $20 a week before compensation, when Treasury put that figure just under $10.

As these two stories lose momentum, bigger, better stories are refocusing the public debate.

Labor's 'raid' on superannuation is the present, and worthy, preoccupation.

The Howard-era cuts to the taxation of super earnings felt great at the peak of 'mining boom mark I' – but then didn't everything. Six years later, demography has done its work. We are all a little greyer about the temples, and the value of those tax cuts is surging from $30 billion today to about $45 billion by 2016. As Ross Garnaut put it yesterday, those quite forecastable outcomes made the policy "unrealistic" from the start.

Two weeks ago it seemed this major hole in the federal budget would never get the attention it deserved – and tax is but one issue in the super industry, with stoushes to be had over excessive fees from fund managers, the duping of workers with default fund arrangements and more.  But there it is, with room to move on front pages free of carbon and Kevin clutter.

If Labor really is looking at tackling this problem, it should be both praised and scolded – praised for tackling an issue that will not win it any votes, but which cannot go unaddressed; and slammed for fluffing tax reform over both the Rudd and Gillard periods of government.

The Henry Tax Review, published in early 2010, contained major errors. The design of the RSPT, in particular, left a lot to be desired – if it had become law, the government would now be paying billions to miners rather than collecting a few desultory millions.

Overall, however, the review presented Labor with a blueprint for wholesale reform of the tax base – a one-off shift to a more sustainable footing.

Labor's response was to cherry pick the bits it liked, and ignore the rest. The bit it liked most of all, the RSPT, proved to be the undoing of Prime Minister Rudd, sending Labor into a tailspin from which it is yet to recover.

That, plus the internal leaks during the 2010 election produced a weak minority government that has spent far too much time on the back foot fending off Tony Abbott's merciless attacks, and far too little time selling its substantial reform agenda.

It's doubtful now that it will be able to do much about its sagging primary vote in the few months of 'clear air' it has finally been given with the disbanding of Rudd's team of saboteurs, and with the slow abatement of carbon crap.

That's not to say Labor hasn't achieved a lot through the 400 pieces of legislation that, in the background, have passed both houses of parliament. But Labor's failure to sell its reforms mean an incoming Abbott government, which all polls suggest is a near certainty, will have a mandate to tear up most of the reforms of which Labor is most proud.

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