JACK WATERFORD. Frydenberg will pick up the election bill (Canberra Times 16.11.2018)

Nov 19, 2018

Of the Coalition’s big players of today, few have a future. But Labor should want to be sure that the one who does, the Treasurer who has yet to deliver a budget, should have a past by the time the election is over.

On the face of it, Morrison is gone for all money, not only as Prime Minister, but as any sort of Liberal leader after he has led the party to a defeat bigger than that which seemed likely with Malcolm Turnbull. His fate was sealed probably even before he took the top job. Most voters had made up their minds about the government before he moved from the Treasury to the Lodge. History will likely think that his efforts since to establish himself and retrieve the party’s fortunes worsened the government’s position.

If that is what happens, the person best placed to pick up the reins of a shattered and demoralised Liberal Party will be Josh Frydenberg. The next leader will almost certainly be someone of the next generation. It seems unlikely that Liberal survivors would judge any of that generation much better than Frydenberg. Frydenberg is not seen as having been intimately involved in the destructive wars of personality and ideology which might cost the coalition what could well be 25 seats, including those of some of those whose plotting drove the government down.

The image and reputation that Frydenberg will be bringing to the electorate, after electoral defeat, will be as Treasurer. Most voters have no reason to remember, favourably or unfavourably, anything he did for the environment, or cheap electricity, or for any of his stunts with the Abbott government’s deregulation agenda. It will be for perhaps eight months’ work as Treasurer, from August this year, that he will be remembered.

No doubt all his fundamental instincts and principles in economic management are sound, whether by the general Liberal Party canon or in neoliberal terms. He is not regarded as an ideologue, even if he has, over the years, faithfully and sincerely believed in each of the Abbott, then Turnbull, the Morrison slogans about debt and deficit disasters, the urgent need to reduce debt and government spending, particularly on health, education and social welfare.

It is not his fault that he has charge of the nation’s economic levers during what appear to be its last months in power, and at a time when a pragmatic and desperate prime minister is prepared to throw money at any problem or interest needing to be appeased. Morrison has seemed to make it clear that there is no limit to the amount of public money that will be thrown at any political problem if the spending of it might win a vote, retain a vote, or neutralise some criticism being made of the Prime Minister.

Inconvenient policy, even, to a degree containing sacred tenets about the maintenance of a cruel refugee policy, are up for argument and modification if they can appease a critical constituency. Decisions arrived at calmly, after consideration of all the competing arguments, can be junked in a minute if it might help slow the flood at a byelection. The Prime Minister is even prepared to trash the prestige, authority and dignity of his office, and to play a local, national and internationally embarrassing Aussie caricature in the hope that voters might like him, or at least pity him.

Not all of this will be at Frydenberg’s door, now or in opposition. But his role now in finding money, often in billion dollar lots, for unvetted impromptu projects can be and should be, because it involves the office of Treasurer. And it will not only be what he has permitted to be done, but the public words he has used to justify and rationalise the expenditures, as good and appropriate for the economic (as opposed to political) circumstances of the moment that will come to embarrass him. The public has a longer memory than one might think. More importantly, so do one’s political enemies, whether from the other side, or perhaps even one’s own.

There is a greater than usual risk of the development of policy proposals that are, frankly, bad.  Ken Henry to Treasury staff 2007

Peter Costello understands the problem. He seethed because Howard always put his personal political interests ahead of Costello’s. But he also, according to Costello, put his own interests ahead of the economy’s needs. Formally, of course, Howard was economically frugal and reform-oriented, as was Costello. Again and again during the Howard government Costello found himself taking most of the political hard knocks in improving the economic arithmetic, only to see Howard suddenly splurge savings which had been made. Or to see him retreat from hard-won victories if they came to be perceived by voters or commentators as mean and tricky. In his memoirs Costello told of how, asked by Howard, he prepared a list of potential affordable new spending initiatives which could be announced as election policy. He came up with an array of expensive, but he thought, potentially attractive, alternative proposals, any one of which might do and be manageable within a responsible budget.. To his horror, Howard announced the lot.

The fruits of economic rigour of the early Howard years, and of the political courage which saw the development of the GST and some other reforms found itself dissipated. The later Howard governments lived off the bounty of a mining boom, and, partly so as to reduce Labor’s options when it won government, gave an unsustainable proportion of the spoils back as personal income tax cuts.

Costello could do little more than make his frustration clear. But by then, at least, he had made his reputation as a model conservative treasurer, and he did not have to wear the obloquy of some of the seriously bad economic decisions, or promises, made as Howard sought to cling to power. Frydenberg, by contrast, has not acquired any reputation as any sort of guardian of the economy, protector of the economic bottom line, or person who has subjected every spending or revenue proposal to close and principled scrutiny. (Nor did Scott Morrison, under Turnbull)

Over most of the last year of Morrison’s treasurership, the economic triumvirate have been squirrelling away resources for a 2019 election campaign, and beginning the pork-barrelling announcements which, they hoped, would buy off bits of electorates, or party interests, so that the government could pull rabbits out of hats. Morrison still knows the strategy, and seems to have extended to himself an even bigger budget or election bonanza. But it is now Frydenberg who must make it happen. Josh has to make the books look good.

Canberra journalist, lobbyist and raconteur Richard Farmer has told tales of having worked as an adviser to NSW Labor premier, Barry Unsworth, before the 1988 elections (which were to see Nick Greiner elected in a landslide). Farmer was writing the policy speech, and preparing the list of promises to voters. It was clear, and many said it, that the commitments and promises were at the height of fiscal and economic irresponsibility, and that the state could simply not afford to deliver on them if Labor were, contrary to the opinion polls, re-elected.

But Labor knew that it had no chance of winning the election, and so there was no chance at all that it would ever be called upon to deliver on the promises, or to find the resources to do so. It was simply seeking to “save the furniture” – to attempt to limit the size of the swing so that the party would have the members, the staff and the resources with which to regroup.

Today’s voters are probably harder to fool. The coalition’s position is deteriorating. Morrison is now leader only because the Liberals see him as least worst. None of his colleagues judge him to be wise or agile enough to bring the coalition back into contention, or even more clever, pragmatic and flexible than Peter Dutton. If any did, once, they are already disappointed but have to live with the consequences. All his colleagues, or a majority of them, hoped and expected that the rout would be more containable under Morrison, and that, as a result, the coalition could limp to Canberra with perhaps 50 members of the House of Representatives – in ordinary circumstances, with a bit of luck, with a chance of being back in power by 2025.

Frydenberg may be personable , likeable and (perhaps) socially liberal enough to be marketable to both the survivors living under the Liberal umbrella and the broader electorate. But his potential will be sapped if Labor is hammering him, now, and after the election, for his role in allowing the Coalition to trash its reputation, such as it is, for economic management and fiscal prudence in a desperate attempt to save a doomed government.

Even many Liberals will think it will have earned defeat (and time in the corner) for its disunity, disloyalty, lack of discipline and pure bastardry and sabotage it involved. All Liberals, naturally, want the coalition to win, perhaps with an increased majority. Only a few would seriously claim that it deserved to, even after contemplating the horrors that they say will come as a consequence of election of a Shorten government.

The now hip and twittering Frydenberg is now, ex officio, one of the demonisers-in-chief of the risks of a Shorten government. He twittered this week for example, that

“If you own your own property – under Labor’s plan, it will be worth less. If you rent your own home – under Labor’s policy, you will pay more. Only the Coalition can be trusted to keep your taxes low and keep the economy strong. “

That might be the basis of a good set of campaign slogans – but only if he and the Liberals are seen to have any cred. The way the Morrison government is going, spending like drunken sailors as they try to stave off defeat, that cred – and the next opposition’s moral credit at the bank – could become a shrinking commodity.

It will not be only the performance of the Treasurer which will be closely scrutinised. So too will his department. In August, Treasury got a new secretary, Philip Gaetjens, a career public servant but one who was, before this appointment, chief of staff to Scott Morrison. Though I should be surprised if there were to be a night of the long knives with departmental secretaries if Labor is to be elected, it would be fair to say that Gaetjens is probably the secretary regarded with most suspicion by Labor.

It reminds of the speech made to Treasury officers in 2007 at about the same time of the election cycle before Howard was swept from power. Ken Henry, another Treasury Secretary once held in suspicion by the Liberals because he had worked in Paul Keating’s office, reminded his troops that the election season always put to the test any department’s “capacity to ensure that our work is ‘responsible’, and not just ‘responsive’.”

How successful we are will impact on our integrity as public servants and our long-term effectiveness. Divisions will be under pressure to respond to the growing number of policy proposals leading up to the calling of an election and once the election is called.

At this time, there is a greater than usual risk of the development of policy proposals that are, frankly, bad.

More so than at other times, we need to be mindful of the high opportunity cost of proposed policy actions, to advocate sound and wellbeing-enhancing policy action — capacity building measures, better functioning markets, less system complexity and greater fiscal discipline — and to educate others on the full implications of policy interventions in the current economic circumstances.

We will confront uncommon policy challenges this year. But keep in mind that in every challenge there is an opportunity.

Let me draw together some of the strands:

  • both the probability and the cost of policy error in the current environment is especially high;
  • this election year will increase our workload, responsibilities and risks; but

we can make a difference to the wellbeing of Australians by our rigorous analysis and taking advantage of the opportunity to pursue further reform.

Wise words. But they cost Henry his performance bonus that year, after someone leaked the speech, and the government was embarrassed.

It is not, of course, only about Frydenberg’s ambitions, or his capacity to find opportunity for himself in a disaster for his party. It’s about the nation’s welfare, and its sound finances and the public interest. It’s about the long term rather than the short term. The public rather than the private good. The politician who cannot juggle that in the public interest is not fit for higher office. Frydenberg has yet to show that he has what it takes.

Jack Waterford is a former editor of The Canberra Times.

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