The three amigos and the glasshouse government

At long last, the three amigos [cue ambient, vaguely Mexican acoustic guitar arpeggio] have made their decision on the fate of Australia’s federal government, and Gillard Labor has been granted a reprieve.

The Three Caballeros

Having junked the idea of “sticking together” in order to consolidate their power, Tony Windsor and Rob Oakeshott have decided to support a Labor minority government, with Bob Katter pursuing the somewhat safer course of siding with the Coalition. Under the circumstances, this is probably the best outcome that could have been negotiated from a Labor point of view. It’s likely best for Bob Katter and his hat to be getting up to mischief outside the tent rather than inside.

There has been a lot of discussion in the media and in the blogosphere on whether having a minority government of the ilk that we have is, on balance, a good thing. A couple of days ago, Kim over at Larvatus Prodeo expressed her strong disagreement with the notion that the independents deciding who would form government was somehow undemocratic. In the papers of the “morning after”, George Megalogenis describes parliament as “a house more divided than ever before”, and Greg Craven has a thoughtful, if perhaps pessimistic piece in the SMH wondering just how long the “surreal” arrangements forged in the last twenty-four hours will last.

I think its quite possible to be optimistic about some of the good things that the Gillard minority government looks capable of delivering, whilst being critical of the realistic legitimacy of the outcome and the outlook for the stability of governance in Australia. To start with the positive points: the prospect that Australia will see some real, consensual reform to parliamentary structure and procedures is certainly a welcome one, and well overdue. Furthermore, at least for those of us of the centre-left, the possibility that an ALP/Greens alliance will bring some worthwhile policy dividends (e.g. particularly on climate change, human rights issues, and transport) is tantalising. There will be a clear imperative for Federal Labor to pursue a more progressive policy agenda, now that they are reliant on the Greens and Andrew Wilkie for support in the lower house and indeed to pass legislation through the Senate.

But is this really a reflection of what Australia wants? Let’s be clear – the way the numbers fell, with both major parties falling short of a majority and the Greens and a number of independents controlling the balance of power, was pot luck. A number of marginal seats could very easily have flipped to the other major party had circumstances been slightly different, resulting in a majority government. If voters knew that a hamstrung government condemned to twitch to the tune of a motley gang of independents was on the cards, many may well have voted differently. Realistically speaking, the majority of electors voted for a Labor Government or a Coalition Government, not something else. That we have neither today (at least in the normal sense) is not a function of the “all-seeing wisdom of the Australian people”, but really just a quirky twist of electoral fate. Indeed, assuming that there is at least some swing towards either the ALP or the Coalition at the next election, it seems highly unlikely that the current, delicately balanced situation in the House of Representatives will persist beyond the next three years. That is, of course, if it lasts even that long.

Let’s consider for just a moment the political reality that Julia Gillard’s incoming minority administration has to deal with. Firstly, it must negotiate in an effective manner with both Andrew Wilkie and the Greens, a party renowned for taking quite a hard line on issues on which it feels it morally attached to. I’m not being critical necessarily of the Greens (in some respects this approach is quite laudable), but one would fundamentally expect that in order to retain their and Wilkie’s support, Labor is going to have to tackle a number of issues in a manner that is hardwired to discourage or disgust large chunks of middle Australia – the same middle Australia that rejected Labor in swathes in Queensland and seats in the outer suburbs of Sydney at the polls two weeks ago. The same swinging, relatively non-partisan middle Australia that in recent electoral history, has decided who forms governments and who does not, by siding with either Labor or the Coalition.

Secondly, Labor must appease independents Tony Windsor and Rob Oakeshott. Clearly there are some policy areas on which the two rural independents may be amenable (e.g. climate change, the NBN), but there are a number of other areas in which they will clearly not be, particularly when one considers the need of Labor to satiate the Greens. Finally, Labor needs to do all of this whilst fending off a Coalition with a free run at the middle ground and a veritable of smorgasboard of weeping sores at which to pick; an array of inconsistencies between the various policy positions and beliefs of the various parties and independents who together make up the minority government.

Perhaps I am wrong, and things will go swimmingly for Prime Minister Julia Gillard and her really quite diverse team. But this looks to me like a very difficult situation in which to drive reform, and a very fragile working arrangement. It is a situation arrived at as much by dice-playing and the ego of a few bit players as it is democracy in the popular sense of the word.

The tax cuts we have to have

One question we will perhaps never truly know the answer to is how much Federal Labor really believes that the tax cut package it took the last election is truly the right way forward in a policy sense. Most readers will likely recall that Labor more or less just “stole” the lion’s share of the Howard Government’s proposed tax cuts for their own package, reducing the cuts slightly for those on high incomes to claim the “economic conservatism” high ground, and proposing some actual reform of the tax brackets for the nebulous future. The rationale for Labor’s approach would seem (at least for cynics like me) to have been born out of three brutally pragmatic political principles:

1) Beat or at least draw level with Howard in a contest of tax cuts. Despite the inflationary risk, people over the last decade have shown a keen desire to vote with their hip pocket.

2) Win the economic conservatism high ground. The Coalition’s merciless pursuit of Labor over the interest rates experienced during the Keating years was intellectually dubious but incredibly effective, so this was a must.

3) Don’t stuff it up – minimise risk. Going into the campaign proper, the Opposition had a sizable lead in the polls. The danger with proposing to do something daring and bold from Opposition on tax was that the Coalition would take the opportunity to do even better, or else find a flaw with Labor’s proposals. It’s hard for the Coalition to attack Labor’s tax policy if it is 90% theirs as well.

Thus far the Prime Minister and Treasurer Wayne Swan have repeated ad nauseam in the media that the tax package that they took to the election was the tax package they were going to deliver. This ensures that the government does not suffer the inevitable backlash should they deliver something different to what was promised, and also provides a degree of political cover should inflation continue to escalate. Sure, Labor may well be delivering an inflationary package of tax cuts to the electorate, but the majority of the electorate voted for it, so the average punter has some piecemeal responsibility for the state of the economy.

George Megalogenis takes a different critical tack in today’s The Australian, having a go at Wayne Swan over the Treasurer’s fairly muddled attempts to explain away why Labor thinks that its promised tax cuts amount to tax reform. The point he makes is technically correct, although in truth I think this column is somewhat on the pointless side, coming as it does after the government has already committed to the electorate that it will deliver the particular package of tax cuts that have already been outlined. Make no mistake, I don’t think Wayne Swan, Lindsay Tanner or indeed Kevin Rudd truly believe that the tax package they are planning to deliver to the electorate in May really amounts to tax reform; but when it comes to reform in the short-term, they are stuck between a rock and hard place. Their commitment to the tax cuts laid out during the election campaign has been mercilessly re-iterated. The implications of backing down now are all too clear and would give an almighty free kick to the Federal Opposition.

In short, Federal Labor is politically bound to the package that it proposed during the election campaign, and I don’t think Megalogenis or anyone else should be particularly surprised that the likes of Swan and Rudd talk up the package in the media. For the short-term, Labor have promised window dressing. That is what they are now politically obliged to deliver, regardless of the innumerable structural reforms that will go begging in the interim.