It is certainly something of a rarity that governments change hands at the federal level in Australia, so the convincing win of the Liberal-National Coalition, under Tony Abbott, was truly a politically momentous occasion that will undoubtedly be warmly welcomed by many Australians (including, I presume, many readers of this blog).
In this post, I would like to jot down some of my own reflections of the election outcome, and the implications of it from an economic reform perspective:
(a) The Abbott victory could not have come soon enough for many, who wish to see a modicum of stability and competence in political management. Some very helpful, albeit small-step, reforms are also on the way, including abolition of energy and resource taxes, small reduction in public sector employment, and some marginal cuts to spending especially in the climate change area.
Obviously, much more will need to be done, and in addition to policies already announced, to impose a corrective upon the growth in the size and scope of government.
A “return to surplus in a decade” objective is insufficient, given the detrimental long run effects of persistent deficits, growing debts and an inflated size of government upon capital accumulation and private economic activities. As my IPA colleague Alan Moran stated last week, the irregular parliamentary sessions on red-tape reduction will be a welcome first step, however the general inclination of sound government, surely, would have to rest upon active deregulation (i.e., the regular rescinding of legislative edicts).
Could a new Senate, as of next year, push the government to reform more vigorously? Only time will tell.
(b) If the early post-mortem by remaining Labor personnel is any guide, the ALP will probably be in a state of denial, at least for quite some time, about the reasons for its sizeable defeat, to its continuing detriment.
Any careful observer of the political scene will have already noted, with some interest, the dismissal of the fact of extensive policy failure by the Rudd-Gillard-Rudd government. Reflecting this were soundings to the effect the despised carbon tax and the ETS will be defended with vigour by Labor, in the coming term of parliament.
The Labor Party, in Opposition, will also scrap and fight to preserve almost every other vestige of larger government it introduced over the past six years. This stance would, I think, backfire, reinforcing in the minds of electors Labor’s position as the ‘guilty party’ on deficits, debt, and inflated costs of living and doing business.
(c) There seems to a certain sense of hand-wringing among the mainstream political media, and even by some supporters of the new government, about the prospective changes to the balance of power in the Senate. I think the hand-wringing is misplaced.
In fact, I would feel rather optimistic the changing Senate, particularly with a Liberal Democratic and possibly Family First (Bob Day, South Australia) presence, could prove rather helpful in reducing the political roadblocks to economic reform.
It seems to me that the new Senate would be much more amenable to pro-market economic reforms than the previous configuration of the Senate, with the anti-reform Greens Party holding the balance of power. It will be fascinating to witness, in particular, which political fights the LDP will choose to pick with the government, consistent with its philosophical pursuit of greater economic and social freedoms.
The cut and thrust of political negotiations aside, I suspect that Abbott and the LNP will find they can work reasonably well with the new Senate crossbenchers. This, then, opens the prospect of achieving some useful reform outcomes over the next few years.