The historic Telco reform…

The announcement this morning of the formalisation of the separation of the wholesale and retail arms of Telstra is a momentious and very admirable micro-economic reform. After the government hands over the $12 billion in compensation to Telstra shareholders, we will have for the first time, all telcos in this country competing on a level playing field. This ranks with the tearing down of the tariff walls in the 1980’s, the deregulation of the banks, the reform of the labour and financial markets, as major economic reforms. Indeed, it may rank in the next 30 years as more important than any of them, but has been a government reform which has been unbelievably badly sold.

The fully connected NBN network has the potential to have as great an effect on the Australian economy and Australian society as the coming of the internet in the 1990’s. Once the society is fully connected to super-fast internet (only certain Scandinavian countries and South Korea has this now), it will produce a flowering of innovation not only in current enterprises but also will see totally new business models emerge. How about an Australia Google, Amazon or Ebay? They will not be the same – no-one knows what they will be – but we have the potential for this to happen because we will have the infrastructure which very few in the OECD will have (partly because they can not now afford it).

This is an historic opportunity. With Australia’s record as being one of the most technology savvy populations in the world, this is an unprecedented opportunity. The government needs to explain this, and get people excited about it. With our productivity performance going backwards over the last five years, this is an unparralled opportunity to reverse this.

What does Gillard do now?

With the leadership battle behind her, Julia Gillard now needs to assert herself, not only over her party, but also over Tony Abbott. One of Rudd’s greatest weaknesses was he appeared like the nerd in the playground versus the school yard bully Abbott. Perhaps it was his ambiguous background, but he certainly appeared to be intimidated by Abbott’s relentless populists attacks.

Over the last week or so Gillard seems to be showing she is made of sterner stuff. Not only has she comprehensively outmanoeuvred Rudd (probably a legacy of her labor roots), but she has bought time to re-assert herself in the minds of the electorate. The new assertiveness, and toughness, will need to be constantly displayed though.

When you think about Abbott, he should be nowhere in the polls. Not only is he outside the Australian mainstream in terms of social policy, but he also shows no competency in terms of economic or nation building policies. So why is he ahead?

Simply, Gillard’s Labor have been unbelievably bad in the business of politics. To get back from this, she needs to:

  1. shuffle her front bench. That does not mean “do nothing” as the Rudd apologists are advocating. Carr and McClelland would have been gone under any prime minister. Simply they are incompetent, and should go to the backbench. With chief headkicker Mark Abbib now gone (is this the first sign of Julia standing up to the “faceless men”?), it allows her to refresh her front bench. I’d move Swann to Foreign Affairs and put a good communicator like Combet into treasury. Pity Lindsay Tanner is not still around, as he had outstanding communication skills. She should take the opportunity to refresh the front bench with talented , young, competent individuals,
  2. she needs a competent Prime Ministerial staff. They frankly have been appallingly bad. It is interesting that when Gillard was painted into a corner while defending the attack from Rudd, she clearly took the reins of the campaign against him, and it was some of the most effective politics of her primeministership. She needs a hard head in there. She does not have it at the moment,
  3. she needs to take the Murdoch press head on. Far too often they get away with lies and distortions which are simply wrong. This needs to stop. The only way to do this is to every day challenge their distortion, however tedious that may be, and
  4. explain the government’s economic agenda. Not in terms of popularism, but in terms of the economic merits of the arguments. Keating in particular did this, and got major reforms through. To treat people as morons might look good in the popularist world of Tony Abbott, but it does not win elections in the long-term.
For all the goings on and instability in the last months, the ALP is only 47 – 53% points behind in the polls. Effectively, a 3% points deficit. A remarkable outcome in many ways, and should be able to be made up over the next 18 months provided the government concentrates on competent government and doesn’t descent into Abbott’s populist realm. Having said that though, all distortion needs to the challenged and repudiated whenever it arises.

Gillard’s changed persona..

I know there has been a lot made “of the real Julia” (largely of her own making), but has anyone else noticed that since she has been backed into a corner by the Rudd challenge, she is a different person. Decisive, resolute, strong, articulate and tough – all words that would not have been used to describe any of her primeministership up until now. And it is a change for the better.

With the average in current polls 46 to 54 in Abbott’s favour (ABC Insiders, 26/2/12), it puts the government in a stronger position than the Howard, Keating or Hawke governments at this stage in the election cycle. Given their strong story of legislative achievement in spite of their minority position, and the continued unpopularity of Tony Abbott with a significant section of the Australian community, it is not beyond the possibility that in 18 month’s time Gillard’s government might survive against all odds. If this happens within 12 months, watch for leadership speculation to shift from the ALP to the Liberals. There are a significant number of Liberal politicians and supporters who are as appalled as the rest of us at the prospect of a Tony Abbott government. A Malcolm Turnbull lead LCP sounds a lot more acceptable, which (hopefully) the parliamentary party will come to believe also.

This though depends greatly on Julia continuing to be her new decisive, and resolute self. it remains to be seen…

Gillard’s political deficiencies……

There is no doubt that the Gillard government has been one of the most incompetent federal governments in living memory at the business of politics. Time and time again they seem to be unable to capitalise on their good  government outcomes .

Just take the news over the last couple of weeks on unemployment figures. If you listen to Tony Abbott, and watch him in his magical mystery tour around the factories of the nation, you would think the country is going to hell in a hand basket. This is backed up by what seems to be an almost daily occurrence of announcements of layoffs from a variety of different enterprises in a variety of different industries. But in spite of all this, last week when the latest unemployment figures came out there was in fact a drop in unemployment numbers by 47000. If you add up all the publicly announced layoffs this year, they amount to less than 10,000 job losses nationally. This means there was, a net increase for January 2012 of some 57,000 jobs.

Don’t you think this should have given Gillard and her ministers the opportunity to explain there is nothing wrong with the Australian economy, and what we are going through is a market driven adjustment process where resources are being re-distributed from inefficient to more competitive industries, which protects people wages, and leads to an increase in productivity and wealth in the long run. “What our job is, is to help this adjustment along by providing assistance both to industry and individuals to get this done…..etc etc etc” It is not rocket science in communications terms, and yet the government was almost totally silent on the issue.

They could also use past experience of these types of adjustments where those affected have come out the other side in a so much better position than they were before. One of the most outstanding example is Newcastle on the central coast of NSW. When BHP closed their steelworks there, there was massive outcry and a protest asking for subsidies to keep it open, much like there accompanying so many of these layoff announcements in the present day.

Fortunately the government of the day did no such thing. Today, the smoke-stack industries are gone, but Newcastle has never been so prosperous. Situated as it is as the gateway to the Hunter Valley, with its very fast growing mining and primary industries, it has become a hub for service industries and is one of the more prosperous economies in Australia.

Surely it is not beyond the federal government to get some clever PR company to tell this story as relevant to what is going on at the moment.

The case against Kevin is very compelling

For all Kevin Rudd’s charm in public, there is no doubt he was a dysfunctional Prime Minister. What a pity Julia Gillard and her ministers did not explain this to the Australian people when she came to power. They would not be in the muddle they are in now. I know they wanted to pay due respect to an ex-PM, but there are sometimes when truth is the best policy, even in politics.

It is not as though the knowledge about Rudd was not in the public domain. David Marr in his quarterly essay “Power Trip – the political journey of Kevin Rudd” (http://www.quarterlyessay.com/issue/power-trip-political-journey-kevin-rudd) set it all out in all its dysfunctional glory in June 2010 and he followed it up last week with “Total Candor is the only way to stop him” in the SMH (http://www.smh.com.au/opinion/politics/total-candour-was-only-way-to-stop-him-20120223-1tqs9.html. In fact, as all pollies read the Quarterly Essay, many insiders consider this article so devastating to KRudd, that they believe it to be THE thing that prompted the move for his removal. It is a very interesting article to read in the historical context.

In the Fairfax press this weekend were several devastating articles from insiders, particularly James Button (http://www.smh.com.au/entertainment/we-have-to-talk-about-kevin-20100602-wxi0.html) who as well as being the son of John Button, the ex Labor Senator and Industry Minister in the Hawke Government, was also on Rudd’s staff for a year or so. All outline a compelling case against Rudd,, and why he had to go.

Maybe after Monday, the government may, just may, be able to get down to the business of government at last…

Malcolm Turnbull as next Labor Prime Minister

With the current state of Australian politics where we have two party leaders at historically low popularity ratings, it is time to think of a new approach to our future political leadership. Tony Abbott’s LNP is well ahead in the polls, but Abbott himself is even less popular than the Prime Minister. Why is that?

Basically, Abbott is outside the mainstream of Australian political thought. Historically, Australian PM’s are generally builders of consensus, not deliberately divisive characters like Abbott. Abbott also has huge weaknesses as a leader: he is an ultra=conservative Catholic with social views well to the right of even mainstream Catholics, especially when it comes to the treatment of “women’s issues”, socially progressive policies, and contentious public policy issues like immigration, the treatment of refugees, and indigenous rights. He has seemingly no ability (or wish) to build a set of policies on which he can be judged by the electorate. He is relentlessly negative, putting into practice his maxim “that he will do ANYTHING to become PM” (espoused to the independents when they were negotiating their position after the hung parliament was elected at the last election). He is breathtakingly unscrupulous as shown by his rigging of the policy costings at the last election, and then seeking to blame treasury when they were shown, by the independent umpire, to be rigged . As the highly respected political editor of the Australian Financial Review, Laura Tingle, said at the time about Abbott’s behaviour and that of his party:

“There are two possible explanations for how an opposition presenting itself as an alternative government could end up with an $11 billion hole in the cost of its election commitments. One is that they are liars, the other is that they are clunkheads. Actually, there is a third explanation: they are liars and clunkheads. But whatever the combination, they are not fit to govern.”  (AFR, 3 September, 2010)

Abbott has done nothing since to suggest he has changed his stripes. In fact, his behaviour has got even more bazaar.

In policy terms (as far as we can make them out) Abbott is probably closest to the previous Liberal PM John Howard, but Howard rarely made the mistake of being deliberately divisive, and when he did (such as his utterances about Asian immigration in the 1980?s), he did have the political insight to realise if he ever were to become PM he had to be seen to be a consensus builder rather than a divider  Although it didn’t stop Howard from occasionally “dog whistling” on race (Tampa, indigenous apology, the history wars) when he was in power, he re-invented himself (Richard Nixon like) before he was re-elected opposition leader in 1995 prior to winning the election in 1996, subsequently describing himself as “Lazarus with a triple by-pass”. Abbott shows no such self-reflection.

Abbott also has serious gaps in his policy knowledge. He says himself he is not an economist (obvious to anyone with a rudimentary knowledge of the “dismal science”) which is a major gap for a would-be PM. He also says he has no understanding of technology, which he then demonstrates when he talks so dogmatically about such policy areas the NBN network, technology induced productivity improvements, climate change science, and even in Health, an area he should know since he was Health Minister for over a year.

He would be a disaster as Prime Minister.

So why is his party so far ahead in the polls? In short: Julia Gillard. Unfortunately, she has been a huge disappointment as PM and has proven herself to not be up to the job. She is accident prone, flip-flops on policy, is unable to argue a case, is dominated by, and beholden to, Union apparatchiks who put her in the job in the first place.  She appears unable to mount the political strategy which could neutralise Abbott. Although more principled than Abbott, Gillard does not have the gravitas needed from a national leader. The electorate has clearly made up their mind about her, and if she were to stay in the job up until the next election, Labor would be left with a football team of MPs.

Those inside the Labor Party seem to think their solution is to bring back Kevin Rudd. The problem with this is that the flaws in Rudd’s personality identified leading up to his demise in mid 2010 are still there. His character flaws, his inability to get on with people, his leadership shortcomings, his excessive secrecy, his treatment of staff, his ridiculously long hours, his arrogance, are still there. His inability to deal with Abbott (nerdy Kevin to Abbott’s school yard bully) was painful to watch last time, and will be again. Like Abbott, he shows no signs of a Howard-like self-reflection that may suggest he might behave differently if given another chance. He might, just might, beat Abbott at the next election, but the limitations of his first term will still be there.

So what is the solution to this “plague on both their houses”. In two words: Malcolm Turnbull. Turnbull will never be re-elected Liberal Party leader. He is too honest, too aware of good policy development, and too principled. In short, too liberal. The Liberal Party has had a taste of bully-boy Abbott and they seem to like what they see. The intellectual wing has been sidelined, the liberals have mostly not been pre-selected, and the relentless negative campaigning, road tested by the US Republicans, is here to stay.

In these circumstances, what is in it for Turnbull to stay around? To serve under Abbott and be expected to argue populist policies in which he clearly does not believe?  I don’t think so. He is too smart, too much of a policy wonk and much too liberal to have much in common with Abbott, Hockey, the Bishops (Bronwyn and Julie), Mirabella, and Morrison, just to name a few. He is also too knowledgeable about economics and business to have to argue for Abbott’s populist economic policies.

The best solution for Australia is to install Malcolm Turnbull leader of the Labor Party. It will have a number of effects: ensure Federal Labor easily wins the next election; keeps Tony Abbott from ever becoming Prime Minister; pushes the Liberal Party more to the political centre; partially disenfranchises the backroom factional heavyweights controlled by the powerful unions in Federal Labor; and provides a much better, more sophisticated, and progressive government than we have had any time since the Hawke/Keating years.

Many in the Liberal Party will hate the idea because of course they know under these circumstances they would have no hope of obtaining government for at least another two terms (and of course they would lose Turnbull’s marginal inner city Sydney seat); many in Labor would hate it too because it will upset the planned progression of many of the machine men such as Shorten and Combet, but at the end of the day, power does tend to change people’s perspective, and this move would just about guarantee power federally for Labor for several more terms. It will also bring to the end Tony Abbott’s destructive form of confrontational politics, hopefully forever in Australia.

And that, everyone should cheer about.