The game is not back on

Monday, 22 September 2008 

Whether it’s the three-point improvement recorded by AC Nielsen, or the one-point ‘bounce’ recorded by Newspoll, neither seems to suggest that Turnbull’s accession to the Liberal leadership has done much for the party’s standing. Such a movement for a new leader looks modest by historical standards. That doesn’t seem to matter to the nation’s political analysts, however, who seem desperate for a return to politics-as-usual and are grimly determined to see Turnbull’s take-over as a sign the ‘game is back on’.

They might be disappointed. It’s important to start by recognising what Turnbull’s win represents for the Liberals. Some interesting ideas in a piece by Dennis Shanahan comparing the unity following Turnbull’s win and that following Latham’s and Rudd’s respective winning of the Labor leadership.

The comparison has some validity. The victories of Latham, Rudd (and Crean) all represented stages in the party trying to break from the past as the political representatives of the unions and find a new role. It wasn’t till Rudd (combined with Gillard) that the final break was made by cobbling together a new technocratic agenda spiced up with a little bit of Rudd’s personal values and anti-politics gestures. For the party, Rudd’s win meant the decline in the power of the factions and, even if not formally, a dismissal of the interests of the union movement. The latter best summed up by Labor’s new IR laws (that as one writer accurately said, were more about making Workchoices efficient), which would only be a surprise to those who never bothered listening to the minister who brought them in.

Such a change never happens in a straight line and as each attempt made some progress, it then lapsed back to the past, represented by Beazley’s return to leadership, before moving on again. The ‘unity’ behind each new leader that Shanahan talks about was never quite what it seemed. It was less support for the new leader but the power of the factions and unions weakening, still openly undermining in the case of Crean, more behind the scenes for Latham but then fatally weakened and pinned down by an alliance with the left under Rudd. It doesn’t mean there isn’t still some surprisingly deep personal hatred of Rudd from some influential sections in the party, it just has no political basis to do anything with it.

There are some parallels with what is happening with the Liberals. Dealing with the question of what to do when there was no need for an anti-union party was suspended during the Howard period, although started to emerge with the drift in the government and the leadership implosion near the end. The old leadership was damaged by the November loss forcing a compromise with Nelson, until it fell apart with Nelson’s failed gamble to deal with Turnbull last week.

Turnbull’s problem is that he has won the leadership before having given the Liberals any sign of somewhere new to go. Just as with the Labor leaders, the ‘unity’ behind Turnbull is less support around him than the vacuum left by the old leadership. While Labor had the corporeal presence of Beazley to remind them of the past, the Liberals have the less tangible Great Hypothetical who can overshadow the leadership from the back bench without even having to say a word.

This leaves Turnbull quite vulnerable at the moment. Remember that some big power brokers, like Minchin, preferred Nelson. Turnbull’s unwillingness to change Nelson’s positions, some of which he openly opposed, is one sign of how carefully he must move. The delay and wrangles over choosing the front bench is probably another. This might be less of a problem if Turnbull could consolidate himself by finding an agenda that can unite the party while putting pressure on the government. But conditions don’t look right for him to do so. Social issues and the republic will only cause him trouble, so it would seem to leave him the economy. However, events aren’t favourable for this as they seem.

Of course Turnbull was absolutely right that the RBA’s use of ‘light years’ to describe the distance between Australian banks and those of the US wasn’t accurate. But politically what was the purpose of pointing it out? The reality nowadays is that the political class has handed over authority in economic debate to an independent body and that means not being allowed to have any opinions that can differ from that independent body during a crisis. If you can’t discuss the economy at times like this, it shows that the entire economic debate has lost its meaning.

The financial crisis has not just reconfirmed the power of the regulators and independent bodies over the political class in this country, it has also firmly stamped the power of global markets over any pretence of domestic economic policy. Even compared to just a few months ago, any domestic angles to the economic debate over interest rates, productivity etc. have been swept away by international events. Rudd will only need a few photo-calls with US Treasury officials to justify his trip overseas since that is where the attention is wholly focussed.

In current conditions, there is only one thing for governments to do, build up a surplus to protect from economic conditions over which it has no control. Turnbull’s weakness in the party has left him still blocking revenue-raising measures proposals in the Senate on weak political grounds that he can’t justify. Indeed, he believes in it so little that he is now undermining the whole point of it by saying it is ‘only’ $6bn and has a minimal impact on revenues anyway (which is true).

There would be one issue that Turnbull could push that he does stand for and would cohere the party, tax. It is probably why some in the press may be so excited. Just like they were when Hewson was going to slash taxes fifteen years ago. Things hardly look better to try that on now.

Posted by The Piping Shrike on Monday, 22 September 2008.

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