With the resources super tax it was politics, not policy, that ruled. Laura Tingle was gobsmacked at how some in the media swallowed the miners' line.
It was 1993. Paul Keating had surprised most people by winning the 1993 election. The economy was struggling out of its worst recession in half a century, and the government was embroiled in a battle over native title. Among those in the forefront of this battle was the mining industry.
The prime minister entered the lion’s den, addressing the miners’ annual dinner in Canberra.
This year, of course, the same dinner became a focal point for industry anger over the then Rudd government’s plans for a resources super profits tax. Controversially, Kevin Rudd was invited but didn’t go along.
But it is not the fact Paul Keating confronted his critics while Kevin Rudd didn’t that is the point of this story. It is the argument that Keating put to the miners, despite the bruising recession: it was Canberra that had got it right about where Australia should go next, not the business community.
“The great agent for change in the 1980s was not the private sector of Australia, but the public sector,” Keating said. “It took Australia from basically an industrial backwater to a modern country again, opening it up. That change has continued and much of it has benefited the mining industry.”
Keating’s argument encapsulates much of what has changed since 1993 in the way public debates about policy and politics are conducted. In the age of major reform in the 1980s and 1990s, it was policy that ruled. These days it is politics.
Then, the community assumed governments would act in the interests of the community as a whole while business would act in its own interest. A reforming government made policy the base from which its political performance was assessed.
The ramifications for the way the media worked, for the way lobby groups worked and, as a result, for the way politics worked, cannot be underestimated.
A policy issue would be put up and debated not primarily on the basis of whether it was good or bad for the government’s fortunes, or whether industry groups would like it, but whether it was good or bad policy.
Lobby groups were seen as rent seekers or, pragmatically, as groups seeking greater advantage from a policy outcome, not ‘potent political opponents’ or representatives of the national interest whose claims about the impact of policy could go unquestioned.
In such an environment, Keating was able to assert Canberra’s better grip on the country’s needs and get away with it despite the devastation of a savage policy-induced recession.
This started to change under the Howard government.
A lobbyist with long links to the Coalition observed to me that, in the Hawke/Keating days, you had to come to see ministers armed with microeconomic modelling to back your case, while in the Howard era you had to come armed with focus group polling and research.
It doesn’t mean the Howard government didn’t engage in significant reform, but the way it was measured had started to be seen in a different light.
The language of political interaction has changed, too. Bureaucrats and politicians now talk about lobby and interest groups as being ‘stakeholders’ in an issue or even ‘clients’. As a public service friend of mine commented, this puts them ‘in the tent’ and, as a result, holding a legitimate stake that must be appeased by government, rather than outside the tent just hoping for a hearing.
Perhaps this was one of the reasons for the criticism of the Rudd government – that it didn’t let anybody into the tent. Everybody now expects to be appeased before policy is even announced.
The fashionable view of the Rudd government might have been formed around notions of policy incompetence. But – particularly in the wake of the global financial crisis – why is it that in Australia these days we seem to give more automatic credibility to what the private sector says than the public sector?
Do perceptions of government incompetence at selling a message alone explain the way the resource rent tax debate unfolded?
From day one, the resource tax issue was seen through the political, rather than policy, prism. A government under pressure was presumed to have cynical, revenue-raising motives, and little chance of landing a difficult reform.
At the Canberra end, the story was only whether an embattled prime minister would backflip on the tax (as he was seen to have done on the emissions trading scheme and other election promises), or whether it was hurting the government in the polls.
The presumption was that a government desperate for revenue to meet a promised budget surplus was cornered without room to manoeuvre on the tax. Even senior figures in the government conceded the way it embarked on the public debate on the resources tax was inelegant to say the least. It let itself get caught with a reform it wanted to back, without the time to do it properly.
If the report had not been released within days of the Rudd government’s credibility being shredded by the decision to delay the emissions trading scheme, the prism through which people saw the reform plan may have been very different.
This doesn’t account for why the government didn’t think it could have an idea out in the public domain – like the very concept of a special tax for the resources sector that reflected the non-renewable nature of resources – in a sophisticated debate for months before the release of its response to the Henry taxation review.
Ministers have said Treasury secretary Ken Henry gave several speeches in 2008 and 2009 about the so-called ‘dutch disease’ – the economic phenomenon where massive growth in the resources sector hollows out and depletes the rest of the economy.
Kevin Rudd told parliament that there had been plenty of references for those who were paying attention to the direction the Henry review was moving. (Why didn’t we all take more notice of those couple of paragraphs on page 27 of the report on the architecture of the tax system?)
But under Rudd we did not have the debate about what the booming resources sector was doing to the rest of the economy, and whether we needed to do something about it.
The underlying policy questions surrounding the new tax were rich and complex ones, including: do we really want to have another uncontrolled commodity boom and are we prepared to slow its progress?
This is a political heresy in a country with a history of spectacular booms and busts, where voters hate the busts but are even more determined to enjoy the booms without constraint. The idea of deliberately restraining the speed of a boom runs the risk of being seen of depriving Australia of its one and only chance for economic greatness.
This point emerged in a recent interview with the Western Australian premier Colin Barnett on Lateline.
Asked whether he was suggesting resources would simply be left in the ground if the resource super profits tax was introduced, Barnett gave an honest but illuminating response.
“No, they won't,” he said, “but if I take the West Australian example, I believe there is a realistic $170 billion worth of mining and petroleum projects that could get underway in the next five to seven years.
“Now my estimate is that the state will lose about a quarter of those. In other words, Western Australia’s not going to go into recession. It will continue to grow strongly, but the spin-off benefits will not be as great as they could have been. And that’s a tragedy for Australia.”
Yet consider the contentious issues on the other side of the boom equation. The downside of a commodities boom is very fast growth that pushes up the exchange rate, interest rates and inflation; sucks in high levels of immigration; swallows slabs of the skilled workforce; and puts pressure on our cities, infrastructure and water, whether we are ready for those pressures or not.
These are issues that are exercising the minds in the Reserve Bank and the Treasury, for starters. We are simply not managing to keep up with the demands of the resources boom on the economy as they currently stand, let alone if they escalate.
But these sorts of issues never got a go in this debate. This is perhaps a result of the speed of spin. The news cycle has sped up, the agenda has exploded and, with it, the time in which journalists can devote to really getting in to any particular issue has shrunk. Most issues in politics these days are one-day wonders.
In the case of the resources tax, it has been easy for the media – and useful for both the Opposition and the mining sector – to concentrate the debate on the processes of discussion, rather than on the tax itself.
After all, the tax was unbelievably complex; its exact impact on individual companies was unclear for the very reason that many issues did remain open for negotiation with the government.
Jonathan Holmes wrote on the ABC’s The Drum website recently, that it’s been too easy for the media to engage in what has been called ‘he said, she said’ journalism on this issue rather than work out what it all means for themselves or, more importantly, provide any authoritative independent guide to what the tax was all about and a way of assessing the various claims made about it. This job should only become MORE important when the government, as the proponent of the idea, dismally fails to explain it.
Without a doubt, a government regarded as being too obsessed with the short-term news and spin cycle had been floundering under the weight of a sustained argument for which it was not well equipped. Equally, the mining industry – boosted by some key strategists from the previous Howard government – had run an exceptionally smooth spin campaign.
As my Australian Financial Review colleague Louise Dodson documented, the miners adopted much of the working style of a political campaign office. During a daily early morning phone hook-up of minerals industry insiders, “the media message is polished, focus group polling is dissected and advertising is planned for radio, television and print” she wrote.
The miners managed to deflect attention from the fact they didn’t want to pay more tax by talking glibly about their desire for tax reform (and only making it apparent on background that ‘reform’ to them meant paying less tax).
While they complained bitterly about attacks on their honesty by the Rudd government, they also engaged in a ruthless campaign to ensure smaller miners did not break away from the larger miners’ political attack.
They also used the small, interwoven network of company directors in Australia to ensure other business sectors did not come out to support either the resource rent tax, or the proposals to cut company tax and make other tax reforms funded by the resource tax.
As a member of the Canberra press gallery, which is always being criticised for being too ‘up’ one government or another, or too focused on politics as a game, I was depressed at the way the political end of this story was reported, but truly gobsmacked by the proselytising nature of the copy churned out by mining and business writers.
For example, while the government’s preparedness to ‘consult’ with the industry was dismissed as a fiction, a joke and a chimera, the industry’s refusal to concede any ground was seen as a perfectly legitimate position.
Whatever the government’s significant flaws, the mining industry was treated in this debate without the degree of scepticism which might be applied to a rent seeker, and instead with the respect applied to a ‘stakeholder’.
And the media did not serve its readers and viewers particularly well.
Laura Tingle is the political editor of the Australian Financial Review.
Cartoon by Ron Tandberg, The Age
