A few quick comments on Kevin Rudd’s Budget Reply speech.
1. The text was very well crafted, full of clear undertakings and strong metaphors, and Rudd delivered it with a nice balance between enthusiasm and calm authority. There was none of Beazley’s verbosity or Latham’s transparently focus-group-tested catch phrases. Rudd’s team obviously made up their mind that the best way to deal with Costello’s budget was to barely mention it. He didn’t discuss any of the government’s specific spending or revenue measures at all, except to make the obligatory accusation that the budget is designed to win votes in the election. He talked exclusively about Labor’s alternative, far-sighted plans, inviting listeners to see the contrast for themselves.
2. It was an oddly unbalanced statement. We were told that three themes would be covered: education and other measures to raise productivity growth; plans to deal with global warming; and industrial relations. But Rudd devoted about twenty minutes to the first topic, at most three or four minutes to climate issues, and one or two to industrial relations. For some reason Rudd never mentioned global warming without coupling it with the water shortage, as if this was the only manisfestation of global warming that voters could take seriously. Does this mean that Rudd’s team thinks the Coallition has succeeded in depicting broader climate anxiety as the province of zealots? Apart from a very modest proposal about fixing leaky pipes, there were no further details at all about energy policy. Given that Labor is trying to distinguish itself as the party that (a) takes global warming seriously and (b) will not contemplate domestic nuclear power generation, one would have expected that some dramatic plans would be announced for investment and/or research in clean coal and renewable energy generation. But there was nothing.
3. The basic argument was sound, namely that the mining boom will not last for ever, that continued productivity growth is the only guarantee of rising living standards, and that education and skills are in turn the key to high productivity. The rationale for some of the particular meausures was not obvious. Why, for example, should we develop technical training by outfitting schools, rather than expanding TAFE? Restoration of Asian language programs is a good idea in its own right, but the connection with productivity is tenuous. The need for broadband is clear enough, but a critic who believes that government efforts would be better directed at removing the obstacles to private-sector provision, would not have been won over to Labor’s policy tonight. I’ll leave it for people like Nicholas to assess the proposals to promote funds management and reduce red tape for small business.
4. One very concrete promise that may come back to haunt Rudd was the undertaking not to increase tax as a proportion of GDP. This may be feasible in the span of a single parliament, but not in the long term, and not if the trend to federal control over state responsibilties continues, as it shows every sign of doing under Rudd. Health expenditure is sure to rise as a fraction of national expenditure, and so will education if labor is serious about its human capital agenda. The only way to prevent the tax burden rising would be through privatisation or higher fees for education and health services, neither of which Rudd has shown any interest in pursuing.
5. Even stranger than the sketchy energy policy was the cursory attention to industrial relations policy. Since it is not really a budget matter, there was no point in mentioning it at all if it could not be linked to the the other major economic priorities. But of course it could have been linked. Why not tell voters that future prosperity lies not just in endlessly rising material consumption, nor even in preserving a healthy biosphere, but also in job security, good employment conditions, dignity for employees and so on? By not explictly making these integral to the vision, Rudd left it open for someone like Chris Richardson, an accountant who masquerades as an economist, to write Labor a ‘mixed report card’ on the 7.30 Report. Richardson made the dubious claim that the Opposition’s IR policy undermines its goal of higher productivity growth. Rudd and Gillard could refute this with facts and figures. But a more effective strategy would be to highlight the benefits of empowering workers, and point out that a measure of productivity that can be increased by terrorising workers, is not a worthwhile goal anyway.