Would you like wedges with that?

Here’s this week’s effort. Another lamentation on our national loss of vigor in economic reform. I argue that recently its been displaced by the much abhorred ‘wedge politics’. I try to downplay the idea that ‘wedge politics’ is anything special or limited to the Howard Government. Splitting off your opponents supporters and providing them with dilemmas has to be one of the oldest tricks in the political book, and must surely be in any politicians stock in trade.

Still, though I try to convey that, I also suggest that it is possible to rule without focusing on division. I’m a fan of those who try to rule by appealing to unity, (providing this is an appeal to the political centre and not an authoritarian play. I also think that appealing to unity in this way is a more successful strategy for staying in power and getting things done. Then again, we’ll never really know. The sample size isn’t large enough and there’s so much luck in the game.

For the record I think Bob Hawke has been the only PM in my lifetime who didn’t rule by division. Going back before then perhaps Gorton was similar, but it’s a bit before my time.

The contrast that I draw with competition policy at the end of the piece (which occured to me as I wrote it) seems to me to be a very telling one. We are simply drifting round without much idea of where our real economic priorities are. It was one of the features of the Hawke period that there was a really fierce focus on a few economic variables that really mattered at the time.

There is also several mentions of a three toed sloth.

Anyway, here’s the piece.
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‘Wedge politics’ didn’t begin with John Howard. It’s the stock in trade of politics itself. The Romans even had a saying for it when applied to military matters divide and conquer. But some politicians have a stronger instinct for it than others.

Unlike Bob Hawke for instance, Paul Keating, was a divisive politician and a master of the wedge. His initiation of the republican debate was an act of vision and political courage, but he and his party could hardly contain their glee once its success had been demonstrated. It enabled them to wedge their opponents between the traditionalist monarchists and the progressive republicans.

While taking credit for the economic miracle produced by a generation of economic reform, this Government’s own commitment to the difficult process of reform seems to have run pretty much into the sand, no longer assisted by wedge politics but somehow supplanted by it.

The Government’s economic achievements can be counted on one hand of a three toed sloth:

But guess what? All these reforms were first announced during the very first Howard Government. And tax reform was implemented half a decade ago. No-one would accuse the Government of making tough decisions to shore up its revenue base these days.

Recently, to fill the awkward silence on economic reform, our Treasurer has developed a special new faux reformism. I was astonished to hear recently that the States were welshing on a deal they’d made to abolish five state taxes.

These taxes were well worth abolishing, but the idea that the States were ‘welshing on a deal? Well, to put it bluntly I’d call it a big lie. To put it politely I’d call it . . . well a small lie. The states had done nothing more than help undertake to review these taxes in words that assisted the Federal Government save face and get its revised GST deal through the Senate.

This was also economic reform by wedge. The exercise meets these three objectives (I guess our friendly three toed sloth now has his hands full and is plummeting earthward even as we speak!).

All the while the Commonwealth barely lifted a finger to use its own revenue bonanza from the past economic miracle to invest in the next one. It was too busy disgorging cash.

This technique of reform by buck-passing is replicated deep inside Budget Paper One. Whether its inspired by the Government or just a bit of innocent Treasury Department sermonising, there’s a lecture on reform that calls for “sound cost-benefit analysis” in planning government delivered infrastructure. Well, for State infrastructure anyway. The Federal pork-barelling of the Alice to Darwin Railway is politely ignored cost-benefit analysis predicted it to be the white elephant it has become.

The document then praises “congestion pricing for infrastructure services”. This would have you paying more to drive through Brisbane or commute to the Sunshine or Gold coasts, especially at peak hour. And if commonsense and overseas experience is anything to go by, congestion would be cut, saving your precious time and temper in traffic jams and generating revenue from which could be funded reduced imposts on car registration or better infrastructure.

I’ve been advocating this for decades so it’s music to my ears. As well as improving our environment, it would slash our infrastructure shortfall both by increasing its supply and reducing demands on it. After its successful trial in London, Tony Blair has just promised this for Britain’s roads helping Britain move into the position we once proudly occupied as one of the world’s preeminent economic reformers.

However, though congestion charging is electorally popular, that’s only after it’s implemented. Beforehand people think of it about as favourably as a few unexplained kilos of luggage on their way through customs at Bali.

So, through the Budget Papers, the Federal Government endorses a bold new approach to reform. But it’s floated, safe in the knowledge that other governments would have to implement it.

The contrast with previous ‘infrastructure reform’ could hardly be starker. With National Competition Policy, the Federal Government took policy leadership, most of the political flak and added substantial bribes to get the States on board.

Those bribes were summarily removed by the Howard Government to fund its water reform during the last election campaign. I think the technical term for that is ‘welshing on a deal’. More to the point, to reinvigorate reform throughout our wide brown, infrastructure, skill, and export starved land, we need national leadership not passing the buck.