By Peter Hartcher
The youthful leader of Australia's biggest blue-collar union, Paul Howes of the Australian Workers Union, has emerged as a forceful public advocate for the Rudd government, in part because he thinks it may be about to lose this year's election.
“The fact that no government in 70 years has lost after just one term in office isn't a historical norm, it's a historical accident,” Howes told me yesterday. “This is anyone's game. Labor could lose, and there's a lot at stake if we do lose.”
Why does he think the Rudd government is in electoral danger? “I think the government has difficulty selling its achievements.”
Labor is in trouble in the polls, some marginal seat-holders are fighting a rising panic, and Labor fund-raisers are having serious difficulty replenishing the party treasure-chest.
Rudd's strife is one of the reasons Howes agreed to a televised debate this week against the billionaire iron ore miner Clive Palmer, executive chairman of Mineralogy, about the proposed resources super profits tax.
As leader of the second-biggest Labor-affiliated union in the country, Howes is seeking to shore up a Labor government he thinks can't defend itself.
Most media adjudicators called the debate at the National Press Club a draw, though I thought that Palmer lost the argument the moment he implied that the Rudd government is communist, much as the first person to invoke Adolf Hitler in a debate is disqualifying himself from sensible discourse by resorting to desperate extremes.
The Rudd government has cut personal income taxes for three years in a row and now proposes cutting Australia's corporate tax rate, currently 30 per cent, to 28 per cent. Does that sound communist to you?
Palmer's wild hyperbole is exactly the sort of thing that is damaging the miners' credibility, like the claim that several have made that they face an effective new tax rate of 70 per cent under Rudd's proposed tax.
Palmer summed up his case in the Press Club debate by saying: “We need to return to parliamentary democracy. This tax will rob our children of their future.”
Consider these two ideas. First, he's implying that Rudd is trying to pull some sort of extra-constitutional, authoritarian outrage on the country, whereas in reality it could not be more ordinary – a prime minister campaigning for support to legislate a bill in the Parliament.
Second, Palmer hinted at a ruinous Peronist economic future, whereas Rudd is proposing the tax to finance new spending measures so that the government does not increase the deficit. And if that weren't enough to make you wonder about the miners' campaign, consider the research published this week by the miners themselves.
On the same day as the Howes-Palmer debate, the Minerals Council of Australia released research it commissioned from the international consulting firm KPMG that purports to show the “disastrous consequences” of the proposed tax.
How disastrous, exactly? The effective tax rate on profits from iron ore would increase from the current 43.6 per cent to 54.7 per cent, according to the miners. On profits from black coal, the effective tax rate would go up from 41.1 to 55 per cent. And so on. Again, these are the numbers commissioned by the miners themselves.
Curiously enough, another arm of KPMG, its Econtech economic modelling office, researched the same subject for the government and found the opposite. When the government was the paying client, hey presto! The world turned upside down. This second KPMG firm came to the conclusion that the new tax regime would actually boost mining and help the economy.
But just for a moment, let's suspend disbelief and take the miners' claim on face value. An increase in the effective tax rate of 10 to 15 percentage points on minerals profits would be a fairly aggressive new impost.
But that's about all. Democracy would continue to operate, and our children would still have shoes to wear and expect one day to find paid work. And in the face of all the hyperbole, the numbers look relatively modest.
And what of that most discerning of adjudicators, Mr Market? Investors carefully considered the super profits tax as well as everything else in the economic outlook, and we saw the market value of the 200 companies included in the ASX resources index fall by 6.2 per cent for the month of May.
That might seem bad, until you realise that the overall market actually fared worse, with the All Ordinaries index down by 7.9 per cent for the month. In other words, Mr Market has looked at the proposed tax, yawned mightily and said, so what?
To sum up, the miners have a modest complaint on their own numbers, a hugely overblown complaint on their own rhetoric, and nothing serious to complain about, according to the court of investor sentiment.
Yet the Rudd government is in enough trouble to get Paul Howes into campaign mode: “I don't think the government's been effective in explaining itself. I don't think the electorate understands what this government has achieved.
“There are 200,000 more people in work today solely because of the fast, effective measures this government took during the global financial crisis, and I don't think we talk about that so much.
“In the government's defence, we have had a hopeless opposition for the first two years. The government wasn't used to being criticised so harshly.”
But it's more than that. Although Howes is too polite to say so, the serious damage to the Rudd government has been self-inflicted. Rudd built a political persona for the 2007 election, and it carried him to sustained heights of popularity unseen in the 40 years of the Nielsen poll.
But then he detonated that persona. By shelving the emissions trading scheme, by suspending processing of asylum seekers, Rudd actively and deliberately blew up the political identity he had spent years in creating. He is now walking away from the rubble of that facade a much diminished leader. It's not so much about the policies themselves, but his readiness to abandon them, that has startled the Australian public.
Until that moment, Rudd had the admiration of the centre-left progressive vote. Now Rudd has so disillusioned and disgusted these voters that they prefer a conservative politician, Malcolm Turnbull, over the Labor Prime Minister, according to new polling released yesterday by the progressive grassroots outfit GetUp!
“For the first time since the Prime Minister was elected, the past two months have seen the Prime Minister's unfavourability rating amongst GetUp! members exceed his favourability rating” 43 per cent to 57 per cent, the polling found. Turnbull's approval rating among these left-of-centre voters was 47 per cent.
The political purpose of the super profits tax is to allow Rudd to build a new political persona, after so wantonly and stupidly demolishing his old one. A mere four months from an election campaign, the Prime Minister is constructing a new political identity for himself, defining himself as the battler's friend against the bluster and complaints of the mining companies. That's what this is really about.
As part of his re-identification campaign, Rudd this week sought to slip into the political clothes of a Labor hero, Andrew Fisher, who was the first leader of a Labor-majority government anywhere in the world when he became Australia's fifth prime minister 100 years ago. Cancelling an appearance at the annual mining industry dinner in Canberra, Rudd turned up to borrow some of Andrew Fisher's Labor cred and spoke at his centenary dinner instead. Claiming to share his values, Rudd said: “Andrew Fisher was above all a nation-builder. He took on a colossal program of work, and he left the legacy of a strong, effective national government.
“He knew that nationhood required national leadership, national infrastructure, national institutions, uniform standards and a sense of collective national identity and shared progress.”
What did Fisher's biographer, David Day, of La Trobe University, think of the comparison? Not much.
“Fisher was big on creating emblems of nationhood – he took the king's head from stamps and put the map of Australia on instead – but a century on we still have the Queen's head on our coins," Day said.
“Fisher set up the Australian army and the Australian navy, he built the railway to Perth, he called the national capital Canberra instead of Shakespeare, and while Mr Rudd talked about nationhood and nation-building he's done a few things, but he'll have to try harder if he wants to be like Andrew Fisher.”
This sort of real change will take years, and Rudd has only a few months. The Rudd government has not succeeded in explaining its accomplishments, and Rudd has destroyed the political identity which carried him into office. That's why being attacked by overblown miners is his best hope for a new, quick-drying political persona.
Peter Hartcher is the Political Editor.