Isra-Mart srl: The death of the reform era

www.isra-mart.com

In less than four years, Australians have done a complete about-face on the merits of a carbon tax. How could this happen and what does it mean?

HOW did Australia get itself into this mess? Less than four years ago, the Liberals, the Labor Party and the Greens all went to a federal election advocating quick action to put a price on carbon. Together, they attracted 87 per cent of the primary vote. That's almost 11 million of the 12.4 million formal votes cast on November 24, 2007.

Less than two years ago, in accord with the public sentiment apparently expressed overwhelmingly at that election, the Labor and Liberal parties reached agreement on an emissions trading scheme. The lower house passed the agreement, but it fell at the last hurdle, in the Senate, failing to get Liberal or Green endorsement. The Liberal abandonment of the policy followed Tony Abbott's elevation to the leadership, and because the Greens weren't involved in the negotiations for the agreement, they opposed it.

A few months from now, both houses of Parliament will pass new carbon pricing legislation. The carbon tax will come into effect in July next year. At last, the wishes of the vast majority of voters in 2007 will be met: a carbon price will become law.
Advertisement: Story continues below

But in 2011 a solid majority of Australians - millions and millions of them the same people who voted for a carbon price in 2007 and again at the 2010 election - don't want a bar of it. This is beyond doubt. The Gillard government holds on to the hope that the financial compensation it is offering most households will moderate, perhaps even obviate, opposition to the carbon pricing scheme. When the money starts flowing from July 1, so the story goes, people will realise gradually that the whole thing hasn't been so bad.

The Labor people who predict this scenario cite the experiences of previous governments that survived difficult reforms after a rough patch. Exhibit A is the Howard government and the GST. Exhibit B is the Hawke government, which cut tariffs, floated the dollar and deregulated the arbitration system.

The flaw in the analysis is that it assumes that Australian society and the media have not fundamentally changed since the '80s and late '90s, that contemporary Australians have the time and the inclination to engage with complex policy, that the institutions such as unions that helped stimulate public discussion are still important, and that today's mass media feel obliged to trade in facts and information rather than emotions and drama.

During an appearance on Eddie McGuire's Triple M breakfast show yesterday morning, the Prime Minister was asked about the Herald Sun's aggressive campaigning against the carbon tax in its news pages. The question came in the context of the tabloid paper's owner, Rupert Murdoch's, record of getting ''right into'' politicians and his company's scandals in the UK: ''How do you view this in the world where the media [are] so important to everybody in this country?''

Gillard replied with the bewildering insouciance that has become one of her trademarks as Labor leader: ''I think people are bright enough to think about it themselves and work it out themselves. I don't think people will just pick up the newspaper and believe every word they read. They've got their own critical thought processes.'' What planet does the Prime Minister live on? Maybe they won't believe every word, but they'll be likely to believe enough of it if it stokes their sense of entitlement or personal insecurity.

When it comes to the crunch, there is barely any appetite for difficult reform in contemporary Australian society. A generation ago, there was a greater sense of trust between electors and elected, and there were more safety nets for governments that sought to pursue challenging policies.

Even allowing for all of the Labor Party's terrible, terrible errors in communication and delivery since 2007, the malaise is not all the Rudd/Gillard government's fault; voters have been wandering down the anti-reform path for almost 20 years. In the 1993 election campaign, Paul Keating coined the mantra for all anti-reform politicians as he fought John Hewson's GST policy: if you don't understand it, don't vote for it. Surely Tony Abbott sends a thank you to Keating for that one every evening along with his prayers. Paradoxically, it was Keating's well-earned reputation as a serious reformer that gave substance to the line.

Three years later, John Howard hooked into the zeitgeist by promising to end the Hawke-Keating reform era and thus began an 11-year stint as prime minister. His first try at reform, with the GST, almost killed his government and his only other big attempt - WorkChoices - did manage to do him in. From both sides, voters have been given permission to reject tough policies either on the basis that they might require sacrifice or be hard to comprehend. And yet, every tough policy meets those criteria.

During the past 20 years, Australians have become considerably more affluent. As the media profiles of householders reacting to the carbon tax plan this week have shown, most people feel hard done by whether they are on average incomes or various multiples of that. When it comes to money in today's Australia, too much is never enough. Many people on high incomes are incapable of seeing themselves as anything but battlers. They also persist in viewing their consumption and education decisions as exercises in basic rights, not choices.

The government can give them as much in tax trade-offs and extra welfare benefits as it likes; they are not programmed for gratitude. With a rising sense of entitlement come resentment and resistance. The cycle is well-established and bodes ill for all future reforming governments.