The best of times; the worst of times
Despite delivering a budget surplus in advance of any rich-world economy, labour are suffering at the hands of an angry, populist opposition
For the centre-left in Australia and the Gillard Labor government, Tuesday 8 May should have been a halcyon day. This was the day the Labor government confirmed the budget’s return to surplus next year, on time and in advance of any rich-world economy. When the government borrowed to stimulate the economy during the global financial crisis, it promised it would restore the surplus by the 2012-13 budget, a commitment it restated during the last election campaign.
On May 8, it delivered. Thanks to Labor's economic management, Australia survived the crisis in good shape. Today growth is strong and unemployment low, even if weakness in the non-mining sectors is dragging on confidence.
Not only is the wider economy strong, but the budget contains landmark initiatives of which any progressive government would be proud. A new national disability insurance scheme. A price on carbon emissions. Reform of the aged care sector. The removal of one million low-paid workers from the tax system. To achieve the surplus, cuts have been made in a progressive way. Welfare benefits have been means-tested, albeit at generous incomes of over A$150,000. Taxes on voluntary pension contributions of the wealthy have been lifted from 15% to 30%.
Why then, with such impressive achievements, is it the worst of times? A clue can be found in the headlines of major newspapers on May 8. None featured the budget. Instead they dedicated lead stories to the latest crisis engulfing the government. A Labor parliamentarian, Craig Thomson, has been under investigation for misusing funds to pay for escort services in his former role as a trade union leader. The prime minister oversaw Thomson's suspension from the Labor Party last month, but given the scandal had dragged on for years, this seemed too little too late.
It’s the latest in a long line of dramas to engulf the government. Last November it engineered the replacement of the house speaker to give it an extra vote on the floor. This allowed it to walk away from its politically unpopular promise to restrict use of poker machines by problem gamblers. As it turned out, this move was too clever by half.
Just five months later, the new speaker has been forced to step aside in the face of fraud and sexual harassment allegations, leaving the government once more dependent on the cross-bench MP whose gambling reforms it scuttled.
This follows the mishandling of asylum seeker deals with Malaysia and East Timor, unedifying internal brawls over same-sex marriage, uranium sales to India, and, most controversially, the reversal of the promise not to introduce a carbon tax. There is no doubt that with a majority of just one vote in a hung parliament, Julia Gillard has been dealt a tough hand but she has compounded the degree of difficulty with misjudgements on big issues like these.
The result is that Labor now sits at a dismal 28% in the opinion polls, well behind the populist centre-right opposition. The critical question is whether voters have simply stopped listening to Labor. The reaction to the budget will be critical - it may well be Gillard's last, best chance to turn the tide. If she can't, speculation over the Labor leadership will reignite, just months after she saw off Kevin Rudd's latest challenge. If that happens, it will be too late and the impressive achievements of the 2012 budget will be left for history to judge.
For Australian Labor, it is the best of times; it is the worst of times.
A contribution to State of the Left, a monthly insight report from Policy Network's Social Democracy Observatory
David Hetherington is executive director at Per Capita, a progressive thinktank based in Sydney
State of the left