The problem is … the arse looks like falling out of the world economy

JULIA GILLARD’S government is entering the new year with a kind of desperate optimism. After all, what’s the alternative? The Labor Party has to hope and believe that things can only get better.

2011 was indeed an annus horribilis, marked by ministers lurching from crisis to crisis, pausing only to occasionally shoot themselves (or sometimes each other) in the foot, and the chaos was reflected in the polls. But 2012 can’t possibly be as bad as 2011 was. Things have to improve, don’t they? Well, don’t they?

Sorry chaps, but here’s the bad news: no they don’t, and indeed they could actually get worse. The problem is that just as the government finally looks like pulling itself into some kind of shape, with the carbon tax and the mining tax through parliament and the beginnings of a genuine Gillard agenda emerging, the arse looks like falling out of the world economy. Europe is a basket case and the other industrial power houses – the United States and Japan – are in no position to rescue it, even if they had the desire to do. GFC Mark II looks all but inevitable; the only real questions are what form it will take, how severe it will be, and how long it will last.

Treasurer Wayne Swan comments bravely that the demand from China for our resources will insulate Australia from the worst of it, and it is true that our economy is better armoured than most to withstand a crash. But it would be sanguine to the point of nuttiness to imagine that with the world imploding around it, little Australia will remain untouched. At the very least the economy is certain to slow down considerably, and there is no longer the money available for the stimulus packages which protected both consumer demand and investor confidence last time. The Reserve Bank, unlike almost all its international counterparts, has a bit of room to play with interest rates, but that’s about the only tool left in the shed and it is unlikely to be sufficient.

Thus Gillard’s reform program will once again grind to a halt, bereft of the funds needed to grease the wheels. In particular the big ticket items foreshadowed in recent times, like a disabilities scheme, a universal dental service, or any serious tax reform, will be pushed back into the cupboard whence they emerged. And the government will have to devote much of its time and energy in not only trying to cushion the voters against the threat of recession, but in soothing, cajoling and comforting them to try and avoid a collapse of confidence – a task in communications for which both Gillard and Swan have proved themselves to be manifestly unsuited in the past.

At the same time they will continue to be haunted by their twin obsessions: the tyranny of the weekly opinion polls, an absurd distraction regarded as holy writ by politicians and commentators alike, and the ever present spectre of Kevin Rudd. The possibility of Rudd making a successful challenge for the leadership has always been miniscule and nothing that has happened in the last few months has made it more likely: he has mended few if any fences within the caucus and the powerbrokers would eat their own young before having him back.

But within the Gillard camp the foreign minister still has the status of an obsession: sooner or later, perhaps in the next few months, almost certainly by the end of the year, the matter of Rudd must be resolved one way or another. Such is the paranoia that there is even talk of a Gillard supporter moving for a spill before Rudd’s few followers have the opportunity to organise their numbers. The idea is lunacy: far from killing off the threat, it would give it credibility and split the caucus in the process. It would not be a show of strength but an admission of weakness.

Don’s View...

Look at the history of such moves. In 1971 John Gorton took on Billy McMahon by asking his part for a vote of confidence, and lost the prime ministership as a result. In 1982 Bill Hayden called a special party meeting to bring Bob Hawke’s challenge into the open; he won that round but he impetus it gave Hawke made him irresistible a few months later. And most notoriously of all in 1984 Andrew Peacock demanded that his party rid him of the menace of John Howard: the party room refused and Peacock was forced to resign the leadership – to Howard. In politics, as in commerce, you never give a sucker an even break, let alone an opponent.

Just ask Tony Abbott. It is probably too late to bring sense or logic back to the so-called debate over asylum seeker policy, but Abbott’s hypocrisy on the issue has reached truly Stygian depths. He objects to sending asylum seekers to Malaysia, because it hasn’t signed the refugees convention; well no, but nor had Nauru at the time of John Howard’s Pacific Solution, which Abbott now lauds as the acme of policy, and he still wants to turn the boats back to Indonesia, which hasn’t signed up either. The answer must be Nauru, which the professionals say would not work as a deterrent because when it was last used almost all the detainees ended up in Australia or New Zealand anyway.

Well, if it doesn’t, says Abbott, bring back temporary protection visas – the device of psychological torture by which even those accepted as refugees were not given the rights of residents, in particular the right to bring out their families. This actually resulted in more risks as the wives and children of TPV holders themselves had no alternative but to brave the boats themselves. But we’ll think of something – perhaps we could threaten to pull their fingernails out with red-hot pincers to save them from the people smugglers. All in the name of compassion, of course.

And we cannot start the New Year without congratulating John Howard for being made a member of the Royal Order of the Brown Nose by Her Majesty. He will no doubt keep it on his desk next to his boy scout woggle for Janette to dust every morning. And alarmingly, he claims it is a tribute not just to himself but to his country. No, Johnnie, it was just for you.

Most of us like our honours to be Australian.