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John Quiggin

A lot hangs in the balance

John Quiggin Australian Financial Review

27 September 2007

A couple of images from the last few weeks have shown the extent to which global political alignments have come to dominate Australian politics. As the APEC leaders assembled in their Drizabones, George Bush was doing everything he could to help his friend and ally John Howard.

At the weekend Al Gore returned the favour, giving an equally clear endorsement to Kevin Rudd and his promise to ratify the Kyoto protocol. Dismissing Howard’s ‘Sydney Declaration’, Gore argued that ratification would have an electrifying effect on the international negotiations at Bali in December

Until recently, the differences between Democrats and Republicans had no resonance in Australian politics. The dominant policy position was that of bipartisan support for alliance with the US. To the extent that Australian political alignments mirrored those of any other country, it was the UK.

The position has changed quite radically since the Bush-Gore election of 2000. Conservatives in Australia have become Republican partisans, drawing their ideas from Washington thinktanks and rightwing US blogs. Alexander Downer draws support for his worldview from Fox News and from rightwing commentator Mark Steyn. (a Canadian whose primary political allegiance is to Bush).

The left has followed suit more gradually. Opposition to Bush and his Administration has gradually turned into acceptance of the Democrats as the lesser of evils and then into outright support, particularly manifested in nostalgia for the Clinton Administration and hope for a new one.

It is not surprising then .that Australian political leaders should seek, and obtain, endorsements from their political allies in the US. In taking sides between Howard and Rudd, we are also making a judgement about Bush and Gore.

The forthcoming election may be seen a rerun of Bush-Gore in 2000 in other respects. Looking on at the time, most observers (including me) thought that the outcome of the close-run race would not make much difference. Gore was a Southern Democrat, prominently associated with the centrist Democratic Leadership Council. Bush was running as a ‘compassionate conservative’ and an exemplar of consensus politics. The differences between the two were just about invisible.

In retrospect, though the 2000 election has been the pivotal event of the 21st century. Gore might not have been able to prevent the September 11 terrorist attacks, but he would surely have responded very differently, ignoring the distraction of Iraq and focusing on the fight against Al Qaeda. With the full power of the United States directed against him, and without Iraq as a recruiting tool, it seems unlikely that bin Laden could have survived so long.

The impact of the election was equally dramatic in other respects. Having campaigned on a promise to control carbon emissions, Bush promptly repudiated the Kyoto protocol after his election. And his electorally convenient compassion turned out, in practice, to be reserved for the wealthy beneficiaries of his massive tax cuts.

The similarities with the forthcoming contest between Howard and Rudd are obvious. Both leaders have made a rush for the centre, to the extent that, on many issues, they appear indistinguishable. And yet, on a whole range of issues, a Labor victory would make a huge difference.

Kyoto is one example. Iraq is another. Until now, Australian forces have been allocated mainly to relatively low-risk roles, with the remarkable result that we have suffered no combat fatalities. It is now clear that the war will outlast the Bush Administration, and that the scarcity of troops will become acute by mid-2008 as Britain and others pull out. If Australia stays, the pressure to take on a frontline role will become irresistible.

Even more significant will be the long-run effects on the labour market. While both sides have sought to soften the edges of their policies, the resulting compromises are unsustainable. Labor will surely come under pressure to remove more of the restrictions on unions embodied in the system.

On the other hand, the government’s expanded fairness test has proved unworkable, as indicated by the decision of the retailer Spotlight to return to the award system. If re-elected the government will surely feel justified in simplifying the system and stripping away many of the additional protections. The end result, inevitably, will be the kind of labour market exemplified by the US under Bush. Great opportunities for skilled and educated workers coexist with a low-wage sector, encompassing around half the workforce, where, with the exception of a brief upturn under Clinton, real wages have been stagnant for decades.

The political divide opened up by the Bush-Gore election will not close any time soon. In a couple of months, Australian voters will have to choose where they stand.

John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.

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