The opportunity cost of Rudd-love


Murray-DarlingAustralia came through the Global Financial Crisis with flying colours. This is attributed to the difficult economic reform begun during the Hawke and Keating era. The Rudd Government is the political beneficiary, and no doubt voters at the next election will thank Labor for saving them from much of the economic pain that afflicted other western economies.

It's fair to ask what reforms Kevin Rudd is putting in place to ensure quality of life for the next generation. Undoubtedly he will say that he has done his best to legislate for the ETS but the obstructionist opposition has been getting in the way. But surely his attempt to do the impossible and design a popular ETS would have rendered it barely effective. The Greens argued that no ETS would be better than being stuck with Labor's weakened ETS.

Last week, the Sydney Morning Herald's economics commentator Ross Gittins addressed the Annual Forecasting Conference of the Australian Business Economists. He spoke of Rudd's lack of commitment to reform. Gittins said it is Rudd's 'preoccupation with political objectives' that makes him reluctant to 'do anything that imposes pain on anyone and thus could threaten his popularity'.

'He's a weak leader, lacking ideology and conviction apart from his unquenchable desire to stay in power.'

Gittins told the economists that Rudd 'has no inherent conception of opportunity cost'.

If Hawke and Keating had failed to act on economic reform, the opportunity cost for our generation would have been devastating unemployment now. It is not difficult to imagine, or even calculate, the opportunity cost of the priority Rudd is giving to his own popularity over reform.

One outside observer effectively did this during a recent visit to Australia. He is Philippines-based Father Pedro Walpole, who is Coordinator for the Environment and Natural Resources with the Jesuit Conference of Asia Pacific.

Walpole singled out the Murray-Darling river system as an example of environmental mismanagement that has given Australians a false sense of lifetyle security.

'A river needs water, it affects the entire life of the system. Agricultural production shouldn't have priority over Australia's life,' he said. 'Your main river systems that have been ruined — people do seem to be aware of it, but don't seem to have the capacity to change it. The fundamental commitment doesn't seem to be there.'

Significantly he was not pointing the finger at Rudd or other political leaders, but rather all of us. Collectively, past and present generations of Australians have lacked a sense of stewardship over the Murray-Darling. The point of democracy is that politicians do what the people want them to do. Even the best reformers among them cannot get too far ahead of their popular mandate, or they will get voted out of office with the job half done.

But they do need to lead, strongly, with an eye for the quality of life of future Australians. They are aware of the future consequences of present actions in a way the people are not. A painless ETS and no ETS amount to the same thing, which is a failure to adequately address climate change. An ETS — or any other policy measure designed to respond to a crisis that threatens the lives of future generations — must be unpopular. Unpopularity is almost a measure of a policy's likely effectiveness. Paul Keating remains largely unloved by Australians who remember him. But all of us owe him the majority of our gratitude for Australia's continued economic prosperity during the Global Financial Crisis. 

Michael MullinsMichael Mullins is editor of Eureka Street.

Topic tags: rudd.weak leader, ross gittins, opportunity cost, murray-darling basin, father pedro walpole



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Existing comments

In his description of the sclerosis of Australian decision-making processes, Father Walpole's onto something here.

I'm not sure that Rudd is bound by a need to be popular, so much as by his background, as an insider. His diplomatic background, in particular, leaves him too constrained to be a "cut-through" reformer.

By comparison, Abbott and Joyce look good. A word to the wise, however: lose Minchin and Andrews, promote Bill Heffernan.
David Arthur | 14 December 2009

The sad fact is that Rudd is courting popularity with a select group to retain power while neglecting those who are marginalised and are the "grass roots" support of the ALP ideology.
nick agocs | 14 December 2009

Well said. It is just possible that our Prime Minister might have a bracing encounter with climate change reality in his days in Copenhagen, and come back with a new understanding of the need to take real, direct, government action to decarbonise Australia.

But I suspect Kevin Rudd will be caught up in the last-minute diplomatic gamesmanship and wordsmithing, and will be insulated from truth by his [in excess of 100] accompanying officials. For him, it will be an absorbing political game that he wants to win: but as he defines winning: i.e., securing an agreement which does not disturb the world economic status quo too much, and which leaves the Australian delegation with opportunities to sneak some special deals for Australia in at the last minute, when most other smaller delegations are exhausted and desperate for sleep. We'll just send in fresh teams. Australia will be ready to go on and on, till our negotiators get what they want.
tony kevin | 14 December 2009

The future of the Murray-Darling basin and inland Australia depends on water as you say. If we take a serious look ahead we should be actively studying the feasability of developing nuclear power to desalinise and pump water to the interior. Why? Because nuclear power is cleaner, cheaper and cleaner than the alternatives.
Bill Barry | 15 December 2009

Re Tony Kevin's comment on size of the Rudd delegation: A government statement quoted in The Age dated 14th December (No chef for Team Rudd) refutes the assertion of 114 accredited people taking part in the negotiations in Copenhagen. While 114 are accredited, there will be 60 officials involved in the actual negotiations. According to this article, those accredited include people who are on standby in case they are needed, most of the staff at the Australian embassy in Copenhagen who will be providing organisational backup, fifteen observers from state and local governments, and five Federal Police agents who are accredited to provide security.

Exaggeration rather than accuracy seems to be Greg Hunt's strong suit.
Patricia Russell | 16 December 2009


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