A Battle of Ideas for Australia's Vote

By Paul Kelly

The ideas, old and new, vented in this election by Julia Gillard and Tony Abbott have the potential both to enhance and diminish Australia.

Elections are turning points more apparent in retrospect. Gillard began the campaign with her new idea of a smaller sustainable Australia and Abbott in his press club speech yesterday promoted Noel Pearson's idea of transforming Australia from "a welfare state to an opportunity state", the proposal Pearson put to John Howard in his historic letter of September 17, 2007, but which Howard declined to embrace.

In 2007 Kevin Rudd won on three ideas: climate change as a moral imperative, the slaying of Work Choices and the Education Revolution. The results three years later are mixed.

Labor failed on climate change and that now haunts Gillard; it dismantled Work Choices but in the long-run the more regulated labour market Labor delivered will deny Australia's essential transition in a globalised world to greater labour-market flexibility; and the Education Revolution is incomplete at best, with universities still struggling while Gillard has delivered funds and better policy for schools and training.

Labor remains on an endless quest to find new ideas to nourish its near lost social democratic soul. In a world where economic and social policy struggle to produce the grand idea, the environment and technology offer both fresh openings and traps.

With spending constrained in the next three years because of the budget deficit, Labor has seized the idea of a broadband-connected nation to highlight the difference between the sides. At an estimated cost of $43 billion, with government contributing $26bn, its National Broadband Network is the most expensive project in Australia's history. In money and ideological terms the broadband gulf between Labor and Coalition is immense. This idea mocks the notion of a modest campaign.

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Given Labor's climate change credentials are so damaged, the NBN is recruited by Gillard to become Labor's 2010 symbol of the future. In her policy speech she asked people to imagine the power of the technology and pledged new programs for internet medical treatment. The NBN is costly because it offers fibre to the home regardless of demand. It constitutes a monopoly operator backed by a huge public investment that bets on one technology, raising serious questions about the public investment, rate of return, competition policy and customer price.

If Gillard believed her own words about close scrutiny of public investment she would require probably from the Productivity Commission an independent evaluation of Labor's NBN scheme. Of course, that will not happen. Labor is now pledged. An election victory will equate to a mandate for the NBN.

On the other hand, the Coalition's policy is underdone. Abbott failed to master this area and was left exposed. Most of the Coalition's $6.3bn is spent in its second term. The risk under the Coalition is that Australia will not be competitive in the global market.

The other potentially big idea creeping on to the stage at campaign 2010 is the bipartisan emphasis on the value of work and the need to tackle entrenched poverty. What is the real meaning of Gillard's repeated invocation about hard work? It is the first virtue she nominates. For Gillard, it is practical and it is moral, essential to a functional family and society.

Her policy speech endorsed the philosophy of her parents: they wanted the fair go, never the free ride. By this logic, Gillard will run public policy to eliminate the free ride and elevate the fair go. If so, Gillard is providing the moral platform for a much tougher Labor approach to welfare. The Rudd government's extension of welfare quarantining, strongly backed by Gillard, and opposed by most welfare groups, is a significant symbol. In this campaign she has unveiled fresh welfare-to-work incentives.

Abbott told the National Press Club yesterday that he had changed. He was no longer a disciple of B.A. Santamaria but now channelled Peter Costello and Noel Pearson.

It is a sound choice. If he wins, Abbott as PM should consider how to best use Costello in a vital role. With his campaign emphasis to purge debt and deficits Abbott inherits the Costello mantle. With his endorsement yesterday of Pearson's vision of turning Australia from a welfare to opportunity state, Abbott hovers on the verge of a great yet risky idea for the next Coalition government.

If he wins, Abbott will recruit Pearson somehow, someway. Abbott pledged yesterday a new incentive policy to get the young long-term jobless back to work, a $2500 bonus if such people remain in a new job for 12 months and a further $4000 bonus for making 24 months. There is a sting: those who drop out of such a commitment will suffer a six-month loss of benefits.

The explicit idea of greater workforce participation gains more traction in this election. Gillard and Abbott push this concept for older and younger Australians.

It is tied to Abbott's single most surprising idea: his paid parental leave scheme at normal salary up to $150,000 annual income financed by a business levy that Abbott is in no hurry to abolish. It is a Damascus Road conversion and Abbott champions his idea with a convert's passion. It is the most conspicuous manifestation of an instinct deep within Abbott: the selective elevation of certain social policy goals over economic policy.

Of all campaign ideas, the most potentially significant and fraudulent is that of a smaller, sustainable Australia. This newspaper published Treasury advice yesterday warning the resources boom will demand more skilled migrants. As the economy faces capacity constraints the fallout from denying such migrants are obvious: ongoing shortages, wage pressures and higher interest rates.

The migrant intake has been driven by economic and labour-market needs. The fatuous notion, cultivated in this campaign, that governments have run a strong immigration program for ideological reasons is false. Squeezing immigration on the sustainability pretext will have adverse economic consequences and will impinge on households. Will Gillard and Abbott take responsibility for the consequences of slowing growth in the cause of a smaller Australia? The contest is fascinating because Gillard and Abbott are inexperienced in economic policy. They are new leaders who never served as treasurers and their economic thinking is fluid and capable of rapid change. Post-election they need the ability to discern the best from the worst in their agendas.

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