It would be understandable to be sceptical about the prospects for serious economic reform in Australia.
A decade of a revolving-door prime ministership and stop-start policy arguments has led many people to conclude the reform machine is broken and the political class has let us down. Fair enough, but I am much more optimistic about the prospects of reform, if it is done right.
And reform is essential. Our 26 years of uninterrupted economic growth didnt happen by accident and changes will be necessary to keep them going. Our budget wont return to balance without tough decisions, and social mobility and economic equality wont magically improve just by wishing it so.
So what is reform done right? What lessons are there from reforms that have succeeded and failed in recent years? I think there are three principles to seeing good reform through and they are the principles that have underpinned federal Labors approach to policy change since 2013.
- Get a mandate. If a reform is good for the country, you should be able to win an argument for it at an election. The people (and the Senate) are more than entitled to be sceptical that a change is such a good idea if a political party didnt bother to take the people into their confidence before implementing it. In 2013, before the election, Tony Abbott said no cuts to health, no cuts to education, no changes to the pension and no cuts to the ABC and SBS. He then wondered why the 2014 budget, which did all of these things, was received so badly. Campbell Newman promised not to sack any public servants and then got rid of 20,000.
By contrast, a government that has the courage to seek a mandate also has the moral authority to proceed with its plans. Daniel Andrews went to the people with his plan to privatise the ports, as Mike Baird did with electricity privatisation. Katy Gallagher and Andrew Barr have fought several elections with their controversial but positive plan to replace stamp duty with land tax. And likewise, we have outlined in Opposition our plans on negative gearing, capital gains tax, family trusts and many more. Were determined to get a mandate and have the moral authority to do big things.
- Get it right and stick to it. Good reforms are argued and won over months and years, not days and weeks. We spent a lot of time preparing our negative gearing policy before we announced it. Two years of meetings, options, consultations. And weve argued for it now for two more years. Over that period, the Turnbull government has embraced and then dropped: state income taxes, withdrawing from public education, increasing the GST, large personal income tax cuts instead of corporate tax cuts. You cant run from reform at the first sign of a gunshot. You have to accept that you are not going to win the media cycle every day. But with courage and tenacity, youll win the debate.
- Fairness counts. Being fair doesnt mean creating losers from reform. But Australians will quickly recoil from changes that dont pass the test of fairness. The most successful period of economic reform in our history was the Hawke-Keating era. Restraint with equity was the ethos. As they opened the economy, floated the dollar and reformed industrial relations they also introduced Medicare, superannuation and increased school retention rates. The reform patchwork was embroidered with measures that were pro-growth and also fairness enhancing. This model is as relevant today as it was then.
There are plenty of things blamed for the lack of reform success in recent years. The rise of social media and the accelerated media cycle foremost among them. This is a complete cop out. A politician complaining about too much media is like a professional swimmer complaining there is too much water in the pool. We need to utilise new forms of media to argue the case for good policy, not shy away from it or use it as an alibi for inaction.
Just as I am an optimist about reform, Im also an optimist about our economic future. But only if we get the reforms right. And only if we have the courage to see them through.
This piece was first published in The Sydney Morning Herald on Wednesday, 14 February 2018.
