The reform pantomime

Thursday, 4 November 2010 

This blogger could be mistaken, but haven’t we been watching the delicate, intricate ballet of a Liberal leadership tussle? Everyone’s been feeling sorry for Hockey being undermined by unknowns in the Shadow Cabinet, but Hockey seemed to be doing some pretty unilateral positioning against his leader. Certainly Howard felt it necessary to back Abbott and say he should stay on as leader until the next election, while gently slapping down Hockey at the same time, saying he was not as good as Costello (ouch!).

Abbott acted accordingly to the challenge, originally refusing to back Hockey’s call for action against the banks. Peter van Onselen thinks Abbott made a mistake (three times!) in not supporting Hockey, before realising his error when he went back to his office and so had to ring 2GB to make amends. On that reckoning, he must have forgotten his error again because by the afternoon of the same day he was again refusing to endorse Hockey’s plan at the unveiling of Howard’s portrait.

Van Onselen clearly didn’t recognise the classic Abbott three-step, do the damage, retract it and then muddy the waters again. Within a few days, Abbott was countering with his own economic reform, a flat tax, which appears to have died a death. Now the Treasurer has had to get in on the act after the CBA’s rate rise and start bashing the banks. So in a few days, driven almost entirely by internal needs, we have the closest we have come to an economic reform debate for a while.

Welcome to reform 2010-style. It’s not that there is any special problem with the banks at the moment, mortgage rates are not especially onerous by Australian standards. Rather this is a political class looking for something to bash to give themselves the appearance of vitality, and banks are an easy target.

Ironically bank bashing is also a big sport in Europe and the US, but at least there they can argue that the banks have deserved it, being responsible for all the economic woes of the west, rather than, say, their lack of competitiveness against Asian industry. No, it can’t be that. As usual in Australia, things are a bit more obvious and we can see the bank bashing for the obvious self-interested political stunt it is.

Reform is back on the agenda, helped by the brief return of the Old Huckster talking about the lack of reforms of the Rudd/Gillard government compared to all the reforms he did. Presumably he’s talking about that sales tax he brought in some time in the last century.

Yet there was a time when reform didn’t used to be such a fashionable word. When that last Great Reforming government, the Hawke/Keating one, began, reform meant Whitlam and Hawke very much didn’t want a repeat of that. Hawke’s entire case when he began was to present a steady pair of hands that was not going to frighten everyone like Whitlam nor annoy everyone like Fraser.

To read about the Hawke government now, you would think that floating the currency and lowering tariffs was a result of a deliberate program of reform. But if you looked around the world economies at that time everyone was doing it, in fact, having to do it. Hawke and Keating’s real ‘reform’ was to restrain wages and living standards to allow that opening up to occur as painlessly for Australian business as possible.

Restraining the living standards of your own supporter base is a messy business, and reform became an ad hoc description to justify what was a politically tricky act. On the Liberal side, reform became the mantra for the ‘drys’ to use against the ‘wets’ and the Fraser government. This was a pathetic debate since the Liberals were polarising in a parody of the wets and drys of the UK Conservatives. But whereas the Brits were arguing about how to do something, the Liberals were arguing about how to react to Labor doing essentially the same thing.

The phoney need to create a reform momentum became more urgent when Howard took over and found himself governing in a vacuum. With nothing that especially needing reform, Howard tried filling the gap, but ended up with an IR reform that even business didn’t need. So a word that was originally used to obscure something politically sensitive eventually took on a life of its own to be used by a government trying to justify its existence.

When Labor returned to Canberra, the real basis for any Labor reform, its relationship with the unions, was worthless. Rudd’s agenda was always more political than economic and, despite some half hearted attempts to pretend that he could do something about productivity, basically tried to lower expectations about what government could now achieve and to shift the debate about the economy to other directions.

Gillard was central to that political project. Her ‘super portfolio’ of industrial relations, productivity, education and social inclusion was designed to shift the economic debate away from the old ones defined by industrial relations; wages, inflation etc to one of the individual and responsibility.

But it was a project that was never completed. Despite claiming there were no silver bullets for anything, Rudd remained defensive on the issue of reform. He looked internationally, to the big reform project of changing the whole basis of the economy around climate change, and even trying a moral basis for an economic program from the GFC, but the lack of any coherent international response always let him down.

The nature of Gillard’s take-over and the dredging up of the Howard world-view, including on the importance of ‘reform’, has brought that project to an end. So we have the political class slanging each other off over their inability to reform when they can’t even work out what it is that they want to reform. The irony is that the more they go on about it, the less capable they have become of doing anything. So this pantomime could go on until Christmas.

Posted by The Piping Shrike on Thursday, 4 November 2010.

Filed under State of the parties

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21 responses to “The reform pantomime”

  1. john Willoughby on 4th November 2010 12:27 pm

    those banks were nationalised under Rudd.
    Guarantees all round for the big four and
    a taxpayer purchase of the overhanging mortgage
    They only exist at the expense of the taxpayers in their current form.
    Its the humpty dumpty banking model and the reserve is looking like all the kings men.

  2. Dr_Tad on 4th November 2010 1:30 pm

    According to the AFR earlier this week, the bank guarantee is up to almost $1 trillion.

    TPS, these are the two sentences which I think are most important from your post:

    “Restraining the living standards of your own supporter base is a messy business, and reform became an ad hoc description to justify what was a politically tricky act.”


    “Her ‘super portfolio’ of industrial relations, productivity, education and social inclusion was designed to shift the economic debate away from the old ones defined by industrial relations; wages, inflation etc to one of the individual and responsibility.”

    Keep up the good work.

  3. Riccardo on 4th November 2010 6:09 pm

    Another excellent TPS post that keeps me coming back.

    I also wonder why the Australian beats the ‘reform’ drum? Is it commitment to economic growth? Or merely to make themselves sound erudite and business-like, and play to their market, somewhat in competition with AFR for the waiting rooms of the big bosses.

  4. Dr_Tad on 4th November 2010 7:53 pm

    I recently read a thought-provoking article on “postneoliberalism”, which I’ve summarised here:

    I think the key issue the authors raise about reform mania is that neoliberalisation is a “hegemonic restructuring ethos” which results from its function as a crisis-displacement mechanism for capitalism. In that sense it is an inherently unfinished and unfinish-able dynamic, always having to drive more change because it cannot fundamentally resolve the crisis.

    In Gillard’s case all it does is expose the emptiness of her agenda, heavily plagiarized from Treasury’s Red Book, which peddles exactly this kind of thing. Yet every attempt at such “reform” will result in reactions like over the MDB plan. When politicians come talking “reform”, ordinary punters know to be afraid, be very afraid.

  5. The Piping Shrike on 4th November 2010 8:19 pm

    I think this more a political issue than a structural economic one. It is about the political class looking to justify themsleves and look in control through an obsession about ‘reform’ than that they are capable of doing anything or even know what to do.

    It is why I am always wary of the term neo-liberalism, given I think it’s the left and right’s accomodation to the end of old statist politcis than necessarily a real restructuring of the economy. It gives the right’s agenda too much credence for my taste.

    Anyone who thinks the last decade was the financial market run rampant must be unaware of the flood of regulation that hit the financial sector over the last decade. In fact the regulators have played a key role in systematising its instability. There’s a good article in the June Foreign Affairs on this.

  6. The Piping Shrike on 5th November 2010 12:21 am

    To pin it down then I think neo-liberalism is really trying to cobble together some ideas that attempt to justify the political class’s inability to reorganise society (by making a virtue of not being able to).

    Of course as we have seen when things go wrong, even a neo-liberal will throw money at it and try to regulate it.

  7. HillbillySkeleton on 5th November 2010 9:40 am

    ‘Neo Populism’ more like. Politicians in search of a cause to fill up the endless void and maw of the 24/7 Opinionotainment political media, which they believe is a necessary adjunct to winning elections.

  8. Dr_Tad on 5th November 2010 12:12 pm

    But, TPS, the question is why the political class wants to “reorganise society” and in whose interests?

    Far from being the coherent ideological and practical project that some of its boosters and detractors have suggested, neoliberalism seems to me to be, in David Harvey’s words, about “the restoration of class power” in a period of relative economic instability and stagnation compared with the stability and sustained expansion of the post-WWII long boom.

    The state has been a central part of the neoliberal project, but behind an ideological pretense of laissez-faire and free markets. It is the class element of the project that is more important than such superficial features. The problem is that both sides of the political class have lost the ability to drive it through because it is so hated.

    I can agree that the business class weren’t super-enthused by Workchoices, but if Howard had gotten away with it they wouldn’t have been too unhappy with the outcome either, because it would have further strengthened their position vis-a-vis workers.

    The economic issue remains for the business elite. Even if Australia has done better than other rich nations during the GFC, the intensified international competition caused by the Great Recession can only create new demands to screw ever more out of the workforce. Whether the political class seeks to carry this through with talk of “markets” (too unpopular, but Gillard is trying it on anyhow) or via populist rhetoric, the practical outcome for most people is likely to mean more reform, more restructuring and therefore more pain.

    Whichever strategy they use, the political class are likely to be thrown into deeper crisis by the social polarisation such moves by the state will engender.

  9. Riccardo on 5th November 2010 12:50 pm

    Face it, Australia only exists for digging dirt and rocks out of now. If you want to see future instability – this is it.

    We are the Saudi Arabia of solid minerals – but without the burqas and the public floggings.

    And while the Saudis spend their money on having 4 wives and 20 kids and a few Rolls Royces, we spend it on having a banking and finance sector we likely don’t need – we could import all those services just as the Saudis import Rolls Royces.

    Just as productive in the long run.

  10. adrian on 5th November 2010 1:33 pm

    A great post!
    People have every reason to fear the word reform, used by middle managers, CEOs, politicians and others to justify their existence.
    It’s the same as all the other buzz words that our lazy media overuses until they mean nothing, or at least nothing like their original meaning. ‘Icon’ and ‘redemption’ are others that spring to mind.

    So in the endless clatter of the news as conflict media machine, it’s no longer good enough to simply govern – you must have a reform agenda.

  11. DM on 5th November 2010 5:23 pm

    Reform is a value neutral term. To reform something does not necessarily mean to make it better or suitable according to one ideology or other. It merely means ‘to change things’. In this current climate of reform-scepticism (whether it be from right or left) it seems that we are in for some more time wasting until things get really really ugly.

  12. HillbillySkeleton on 5th November 2010 10:59 pm
  13. Riccardo on 6th November 2010 7:12 pm

    Peter Harcher again

    Doesn’t dig deeper though into:

    1. Why the NSW Right?

    2. Why in NSW?

    I don’t like cute stories and myths – but I do wonder if NSW politics is always going to be Bligh and Macarthur, Macquarie and Bigge – a recent NSW Chief Justice seemed to think so. It was property developers and government tenders in the 1810s and it still is.

  14. john on 6th November 2010 9:37 pm

    Reform is quite a loaded term. Depending on if you’re talking to a Trot or an economist, it means either treachery against the revolution or the crippling of organised labour and the power of the state.

  15. Wood Duck on 8th November 2010 7:46 am

    I notice that with reform comes “getting the balance right”. Gillard and Swan are always striving to get the balance right; whatever that means. So is Tony Burke; although in his case it is somewhat easier to tag. For Burke, “getting the balance right” will mean giving less than the recommended minimal amount of water back to the rivers in the Murray-Darling Basin.

  16. The Piping Shrike on 8th November 2010 6:25 pm

    NSW never had the problems that beset the other state Labor parties in the 1990s, so it is where the normal structures of the party are most intact. So I guess the tension between the ALP and its lack of political purpose is most evident. But it’s not looking too healthy elsewhere either.

    Dr T, I tend to see this issue of ‘neo Liberalism’ as two separate things; the state, and the political class’s relationship to it. This is especially clear in Australia where the institutions of the state are fairly healthy but the political class has historically been weak.

    On the state, I don’t think there has been that much change since the decline of organised labour as a social force over the last three decades. Welfare has shifted a bit from being universal to more individualised. Probably the biggest change is on the international level with less regulation between national financial markets but more regulation within it. Otherwise there has generally been an upward trend in state involvement in the economy. Far from ‘smashing’ employee institutions, there seems to be more attempt to try and replace it, such as with the FWA body.

    There has been much more change at the level of politics. The decline of political representation of organised labour has had a profound impact on Labor and the non-Labor parties against it. Declining influence of organised labour at the state level has matched by a declining interest of business as well.

    Part of the way the parties have managed this is to engage in hollow ‘ideological’ agendas that are increasingly detached from the needs of any particular section of society and the state.

    The Howard years, and the phoney culture wars of the time summed it up. Regulation increased, government spending increased while Howard banged on about doing the opposite. Workchoices was clearly not needed by employers (there was a post I wrote about the WRC survey done in 2007 highlighting this) and indeed Liberal party backers were reported to be demanding they drop it after 2007. Certainly some employers find what union rep there is useful for managing employee relations, rather than having to deal with them one by one. A different question if there is bargaining pressure, but generally there is not.

    I think for those who want things to progress, a useful start would be recognising that the political right do not really pose such a major barrier to it. The problem more lies elsewhere. I don’t mean a continuation of that tedious ‘whither the left’ debate, but maybe more questions about the nature of politics itself. Anti politics erupts with increasing frequency in Australia but tends to either be dismissed as racism, or in the case of the most popular political figure of the last few decades, one K Rudd, ignored completely. Unpicking that, and trying to go beyond the old left right ding dong, is a major interest of this blog.

  17. Nick on 9th November 2010 8:42 pm

    “Reform” is code for productivity.*

    Productivity growth is what we need to increase our wealth and thats where reform comes in.

    Whether it always increases our well being in a total sense also has to be considered.

    This is a failing of the national accounts and the economics profession in that these “reforms” typically only measure the dollar impact but the effect of “reforms” needs to be judged more broadly.

    Yes the jobs never done because we can always do with a bit more wealth – read productivity growth.

    And we also have a hell of a lot left to do on social reform, which has arguably lagged significantly behind the economic reforms we have managed to achieve in this country.

    *From a card carrying reformer.

  18. Riccardo on 9th November 2010 10:17 pm

    Good point TPS – there is a meme in the media that Rudd was this hated PM, forgetting he got the highest personal and party polling ever. You wouldn’t know it now by the way the press gallery carry on – I suspect it was more how he treated them, than what the people thought.

  19. The Piping Shrike on 9th November 2010 10:59 pm

    I agree reform has often been about productivity. Although we might disagree on how positive that is.

    Ricc, one must get priorities right. Who cares what the punters think?

  20. nick on 10th November 2010 5:29 am

    tps – I’m pro productivity enhancing reforms like everyone should be.

    I think we’ve been relatively successful in acheiving this but there’s room for improvement and plenty more that needs/should be done on the economic reform front.

    Our performance during the gfc is testament to this.

    As I said above though there is plenty more we need to do on the social reform front and in sharing the benefits of reform ….

  21. The Piping Shrike on 10th November 2010 9:01 am

    Productivity has been contentious in the past as it had usually been code for working longer for same pay or being replaced by technology. The fact that Gillard had the portfolio in a Labor government along with IR was significant.

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