Monday, November 19, 2007

Tuesday Column: Don't doubt it, Labor is ready to govern

Don’t for one minute swallow the line that the incoming Labor government isn't ready because it knows nothing about economics or management.

It is far better qualified than the government it will replace.

A quick check of the parliamentary website reveals that eight of the incoming Labor ministers have degrees in economics. One of them, Craig Emerson, has a PhD in the subject.

By contrast only three Coalition ministers have economics degrees.

Several, including the Deputy Prime Minister, have no academic qualifications whatsoever.

Of course qualifications do not necessarily lead to competence...

Experience helps as well. Until shortly before entering parliament Kevin Rudd was Director General of the Queensland Cabinet Office. He has had an impressive record in government administration, more than has any other Labor leader elected to office in living memory.

With only five days to go until the change of government, its worthwhile examining what we’re about to see.

The campaign suggests it’ll be discipline.

Kevin Rudd has grabbed the right to appoint his own ministers, dispensing with the party room’s messy history of democracy and factional deals.

Anyone who speaks out of turn without having their statements cleared through a central office will get slapped down. We saw it time and time again during the campaign as Peter Garrett and Mike Kelly discovered to their cost.

Ask a Labor shadow minister to interpret one of his or her own policies and the shadow will defer, saying that everything, even if not obviously related to expenditure, has to be cleared through a central Expenditure Review Committee.

But discipline won’t mean inaction. The policy details submitted to the Treasury for costing suggest we are in for an extraordinary burst of activity.

The new government will close Australia’s offshore detention centres on Nauru and Manus Island on January 1. It’ll cost $3 million to decommission them and save $27 million each year.

Also from January 1 it’ll slash the budget of the National Capital Authority (to stop its “heavy-handed interventions” in our affairs), it’ll take away one staff member from every Senator and MP and begin installing solar panels in 9,600 Australian schools.

The solar panels idea is one of Labor’s silliest. As a means of directing money to education it is poor value – solar cells are an expensive means of powering schools, and as a means of fighting climate change it is tokenistic. If the spread of solar panels is really a good idea, why limit it to schools?

One of the justifications for the program is among Labor’s most stupid: “the generation of jobs”. As anyone who has tried to get a solar panel or heater installed knows, suppliers are run off their feet. The last thing they need is more work. The head of the Treasury Ken Henry had it right when he slagged this sort of talk in March.

Other Labor schemes are similarly silly. Most Australians who want broadband can already get it, yet one of Labor’s biggest spending items will be $4.7 billion sunk into a new broadband network to duplicate those services. Wayne Swan’s claim that this would bring on “productivity gains of up to $30 billion per year” was embarrassing and indefensible. Perhaps tellingly, in the seven months since the Canberra Times exposed the flawed nature of that calculation Labor has been unable to come up with another.

The Education Tax Rebate is another idea owing more to symbolism than filling a need. It is essentially a tax cut dressed up as a means of getting laptops to children. The children most in need of help won’t get laptops as a result of the program – their parents still won’t be able to afford them. The parents who can afford them and most likely already buy computing equipment will simply pocket the refund cheque.

Labor’s tax cuts are promises it may wish it had never made. Early next week the heads of the Treasury and the Reserve Bank are likely to tell it that with things the way they are every extra tax cut will feed into spending and put extra pressure on inflation. Unless Labor wants three more years of rate hikes taking mortgage rates heaven knows how high it’ll be wise to scale back, postpone or find some way of turning its three years of promised tax cuts into something else.

Other Labor commitments look more promising.

Intending first homebuyers will be offered tax breaks on savings that are locked away for four years. It is a better way of helping them than grants that would simply push up the price of a fairly fixed stock of housing. Delaying their spending for four years should give the industry time to build houses before they are needed slowing the rate at which prices rise.

Appointing a minister for housing is another good idea. The problems aren’t easy to solve but Labor’s summit in parliament House was a good start.

Labor’s commitment to get each student in years 9 to 12 a classroom computer will probably do no harm either. It certainly won’t be money largely wasted, as will be the money spent on education tax credits and the duplication of broadband.

Much of Labor’s program is very similar to the Coalition’s, including interestingly the two alleged key points of difference – climate change and industrial relations.

What will be important in implementing the differences that do exist will be an understanding of economics and public administration, something Labor appears to have in spades.

Behind the scenes Labor frontbenchers including Wayne Swan and Lindsay Tanner have already been discussing the implementation of their commitments with their future departmental heads Ken Henry and Ian Watt. They are allowed such meetings under rules designed to ensure a “smooth transition”.

Kevin Rudd told the Financial Review on Monday that all of the existing departmental heads would keep their jobs, at least until their contracts expired. He said he wanted “absolute minimum change, because if we are elected I don't want a bureaucracy so internally preoccupied that it would be incapable of acting early on the implementation of the government's program”.

Part of that program will be a razor gang overseen by Lindsay Tanner to remove “bloating” in the public service. Few in Canberra doubt that it is time for one, and few believe that the present government has made any serious attempt to restrain its spending as the minerals boom has showered it with wealth.

Labor’s policies are not all good ones. But it is very well equipped to govern. Even the incoming union bogyman Bill Shorten has an MBA.