Time for Rudd to look at big picture

With a change of government - even a de facto change like last week's - comes the possibility of policy change. Installing a new CEO in any organisation tends to mean a clearing of the decks and refocusing on different priorities as the new boss puts his or her stamp on the place.

There's a mixture of hints and hope that Kevin 2.0 will be doing just that, but so far it sounds more like tinkering than substantial change; a tidier broom rather than top-of-the-line Dyson. By all means move to an emissions trading scheme as soon as remotely possible after the outright stupidity of lifting the carbon price today and the threat of the Coalition's wacky "direct action" after the election - but that's only bringing forward something already programmed. What would be more interesting is a genuinely Big Idea.

Kevin 1.0 seemed to like a Big Idea, or even a summit of them that didn't come to much. Kevin 2.0 promises to be steadier, but he still might like a single Big Idea that would clearly set him apart from the narrowing and flawed orthodoxy of his predecessor and the Coalition.

He could do much worse than to take the advice of five present and former Reserve Bank board members and propose to build a better Australia, to turn the orthodoxy of "all government debt is bad" on its head with a lesson about what good debt can achieve: Borrow to build, de-risk and then privatise vital infrastructure, lifting our potential productivity in the process and helping to fill the gap created by resources construction peaking.

With the water poisoned by both sides through their simplistic "surplus good, deficit bad" chanting, it would take a very serious effort to explain the Big Idea to the electorate. However, done properly, there is a broad church from big business and organised labour to the social sector who could be enlisted. Wise infrastructure investments can pay lasting economic dividends.

Heather Ridout, John Edwards, Warwick McKibbin, Bob Gregory and Bernie Fraser aren't a particularly radical bunch in the usual left/right sense, but to a greater or lesser degree they've all said it could be a good time for the federal government to be borrowing more, not less. The caveat is what that borrowing is spent on: not recurrent expenditure at this stage, but on capital improvements.

Professor McKibbin has been the most radical, suggesting the government borrow big, in the hundreds of billions of dollars big, at low single-digit interest rates and use the money to build infrastructure that offers double-digit rates of return.

A refinement of that broad proposal that would require less borrowing is that the government builds the infrastructure, de-risks it by maintaining ownership for a while (as it turns out the private sector has no idea how many cars might want to go through a tunnel) and then flog it off to the private sector, using the money gained to build the next stage.

Encouragingly, the NSW state budget contained an element of that thinking in funding the $10 billion WestConnex toll road. The government will build the road, using its access to cheaper finance, and subsequently privatise it.

The NBN model goes part of the way along the Big Idea superhighway, even keeping the funding off the immediate government balance sheet, but it fails on one major test: demonstrable and independently adjudicated double-digit internal rate of return.

McKibbin admits the problem with his plan is that you couldn't trust any politician with the money - the temptation to cater for a vested interest here, marginal electorate there, some generous political donors everywhere, is too great.

Which is where the establishment of a genuinely independent, arm's-length body to supervise the process becomes paramount - a Reserve Bank of infrastructure. Infrastructure Australia is a step in that direction but not good enough, being more of a wish-list body than a ruthless taskmaster.

The Productivity Commission's rigours would need to be employed for a start. Those who have abused government programs in the past would need to be excluded - for example, the Victorian CFMEU after the desalination plant rorting.

It wouldn't be easy to reverse three years of surplus worship, particularly with the opposition sure to run the obvious lines about Labor just wanting to spend and go further into disastrous debt, but it could be done. I'd argue that the last politician with the ability to explain complex policy to the electorate was Lindsay Tanner - there's no sign of anyone on either side of politics with that talent.

But the combined efforts of the super industry, big business and the rational elements of the labour movement could help, with the former two perhaps capable of bringing some pressure to bear on the Liberal Party to put the nation's interests ahead of winning the keys to The Lodge. It's a little late to start this Big Idea, this investing in Australia, as the resources construction phase will peak quicker than solid projects will be shovel-ready, but that's not an excuse to rule it out. Our infrastructure backlog remains, whatever the timing.

The question is, are we still capable of grasping a big idea, or has the divisiveness of the past three years diminished our aspirations?