The next federal Coalition government

In what is basically a job application for the Senate vacancy created by Helen Coonan, Arthur Sinodinos engages in a lot of blue-sky thinking about what the next Liberal government should look like. Any other newbie backbencher who tried this would get chewed out by Loser Loughnane, or by one of the timid and vacuous little bunnies who report to him or his wife.

The trouble with it is that the good stuff isn't realistic, and the realistic-sounding stuff is no good at all. The historical interpretation is tendentious at best and the stuff about the future is too ambitious to be sustainable in an environment where the Shadow Treasurer wants to cut $70b from the budget. The projection of the Howard government's record into some sort of sunlit upland future is ridiculous; someone of Sinodinos' reputation should know better.

THERE are eerie parallels between the present Labor malaise in Canberra and the final chapter of the Whitlam government.

No, there aren't.

Tony Abbott will be contemplating an early by-election or vote of no confidence in the government, citing reprehensible circumstances as Malcolm Fraser did in 1975.

He can contemplate all he likes, but Abbott's moment has passed:

• The Senate is not lineball like it was in 1975; as of 1 July it now has a majority of Labor and Green Senators, who cannot be assumed to be played for suckers like Reg Withers played Ken Wriedt in passing the 1975 Budget on the afternoon of 11 November that year;
• While he had his chance, The Situation could have won over the independent MPs - four of whom were conservative guys from rural electorates. Most of them have since hardened against him and become more confirmed in their decision for Gillard;
• While he had his chance, The Situation could have blocked or at least modified a piece of legislation - just one, any one, turning a full stop into a semi-colon or perhaps decreasing a nominated amount by $1 - anything. He has barely slowed down the Gillard government's legislative agenda, let alone stopped anything;
• Dobell 2011 aint Bass 1975, as I've said already;
• Abbott forfeits the moral high ground regarding Thomson on three counts: a) he should've gone in harder before the last election, when all this stuff was known; b) his record of caring about the working conditions of health sector workers, and what they do with their money, isn't strong; and c) he isn't going all old-school unctuous about Thomson renting a warm body to use as a masturbation aide, like the shock-jocks are; and
• A nine-year-old sex scandal? Is that the stuff that changes governments? Is The Situation seriously going to crawl into office over something like that? You'd have to hope it was all up from there, but I doubt it;

It's one thing for a new backbencher might want to praise his leader (especially given Sinodinos' role in shooting down Abbott's sillier proposals in the Howard government), but having squandered his main chance over the past year The Situation has much more past than future. If Labor develop a reputation for having delivered in the face of adversity, The Situation is finished. All those stunts and outlandish contradictions impress nobody but journalists.

Abbott's remarkable performance in effectively defeating Labor last year ...

At first blush it's easy to see the inherent flaw here: John Howard "effectively defeated" Labor in four elections, that's why he became Prime Minister. Who is Prime Minister today? How many Liberals and Nationals sit around the Federal Cabinet table (not counting COAG meetings)? Then how come Arthur says the Liberals effectively ... but there's a deeper problem here that no amount of snark can address.

By repeating this idea, here and elsewhere, that the Coalition pretty much won the last election - how does someone like Sinodinos expect Liberals to lift that extra bit necessary to actually win government? The smugness that comes from having "effectively defeated" Labor comes from the same toxic swamp as the resentment at having been actually defeated by Labor and Gillard, which leaves the Coalition in a sorry place from which to campaign. You can't gee up the believers and nor can you attract the uncommitted with this bipolar approach of smugness and resentment.

Regardless of whether he makes it to the Senate, Sinodinos is NSW State President of the Liberals. He's meant to have strategies about how the Liberals can get those extra votes, seats and donations necessary to improve on the last result. How can he do that if government is "effectively" in the bag?

Strap the seatbelts on for a sudden lunge into history:

The Fraser government of 1975 to 1983 was very active and implemented a variety of measures, including for the environment, but the perception within the Coalition was that it was an opportunity missed to push through more radical economic and social changes.

Whitlam was so on the nose that Fraser did not need a radically new policy manifesto for the purposes of political differentiation.

The subtext of Fraser's policy framework was the restoration of a sense of stability after the chaos of the Whitlam years.

For example, the Liberals' industry policy promised to give Australian industry the protection it needed.

Right there is the intellectual failure of the reactionary conservative approach, embodied by Gerard Henderson and others, which says that Liberals must never initiate policy but wait for Labor to do so and just knock that down.

Australian industry didn't "need" protection in the 1970s. Protection from what, from whom? In 1975 Mao Zedong was implementing policies directly opposite to those that have made China such an economic powerhouse. Fraser could never have delivered economic stability with protectionism. It offered no defence against oil price instability, which had a similar impact to the economy then as the riptides hitting our floating currency exchange rates do today (and no, this isn't being smart after the event; the oil shocks of 1973 should have seen at least one Liberal MP or candidate, just one, rise above the storms over Junie Morosi's knickers or Al Grassby's ties and give some serious thought about the sorts of issues that Paul Keating worked out a decade later).

The frenetic pace of that era, culminating in the dismissal of Whitlam in 1975, was not conducive to new policy development or thought leadership. The result was that the Fraser government never settled on a clear philosophical direction.

Sounds like a pre-emptive excuse for the vacuity of the Abbott frontbench.

The struggle over the policy direction of the Coalition continued in opposition but was largely resolved in favour of the market as reflected in the Coalition's economic policies at the 1993 and 1996 elections. This consistency of approach served the Liberals well in government and while Work Choices may now be seen as a bridge too far for the punters, it is fitting that Howard went down fighting for another significant economic reform.

Workchoices made bugger-all difference as economic reform. It was too legalistic to enable nimble responses by Australian business to changing market conditions - and the fact that Arthur refers again to his fellow Australians and would-be constituents as "punters" shows how silly the assumptions behind it were politically.

Firstly, workplace relations reform was not accompanied by an upsurge in skills training; the absence of skilled workers bit us hard in 2007-08 (and when I refer to "us", I mean all involved in the Australian economy - not those Liberal MPs and staffers forced into alternative employment after Kevin 07).

Secondly, take an Australian company like Bluescope: Chinese steelmakers have been emerging as a competitors since before Howard came to office. As recently as 2006 they faced the prospect that China would become a net exporter of steel. If the good people of Port Kembla volunteered to work for Bluescope for free, like they do at school tuckshops or community sporting matches, then there would still be no saving a company so badly managed.

In the face of another Whitlam scenario, the Coalition should not waste the opportunity for policy boldness.

But it has already: its only policy is to cut $70b from the budget, a scorched-earth approach from which no policy initiatives can survive.

If the punters have stopped listening to Julia Gillard, then surely her scare campaigns against Coalition plans will not wash with them.

If you keep calling us punters, Arthur, maybe she's worth a listen - particularly after she seems to be delivering the goods now. Read that sentence again: a lot rides on that first word, hardly a vote of confidence in the more rabid Coalition boosters at The Australian.

This is not a counsel to reproduce a radical economic blueprint such as the 1993 Fightback platform but the economy has reached a tipping point. Costs are rising relative to overseas and some industry sectors are in recessionary conditions.

... Once voters no longer feared for their jobs, they were free to jump on the government for wasteful spending. Labor's economic credentials have not recovered.

The public is ripe for a different approach in which government harnesses market forces while setting strategic direction.

The Coalition can't deliver this strategic direction.

Sinodinos is right about the politics of Rudd's neo-Keynesian approach: Labor gets no credit. He overestimates massively the ability of today's Liberals to come up with any sort of coherent direction, and is wrong to assume (and represent to others) that it is baked into Liberal DNA and that it can or will just be trotted out at the next election.

For example: does our country need a steel industry, and if so why? Labor have an answer to that, borne from its history and the hold that relevant unions have over it. What is the Liberal answer to this question (never mind what the Liberal answer to Labor might be. Reaction is no good)?

Higher productivity growth will follow a more flexible industrial relations system and address the No 1 issue in the country: the cost of living.

This was why Workchoices failed politically, Arthur. Any workplace relations system that depresses wages and increases job insecurity makes cost of living concerns worse, not better, and counts against parties promoting reform in this area.

The test of government measures today must be whether they increase supply relative to demand, reduce the costs of doing business, incentivise work and investment and encourage exports and import substitution.

Nothing about skills. Nothing about the sorts of onshore processing mandates promoted by people like Paul Howes. Trimming a bit of red tape is not going to help, for example, lazy Australian retailers who have wilfully neglected online sales, marketing and delivery channels. This guy has been asleep since 2007.

Rather than adding new taxes, we need across-the-board tax cuts financed by lower spending to improve labour supply, augmenting skilled immigration.

That's why the US and UK economies are in such rude health.

The federal government should also move to review the pricing and investment plans of statutory authorities and utilities, in consultation with affected state governments. Following the practice of the new government in NSW, limits should be placed on dividends extracted by treasuries and the consequent pressure to raise prices.

At some stage Canberra should contemplate a package to buy out state taxes and charges that inflate business and infrastructure costs.

While old-style industry policies may be de rigueur, removing barriers to manufacturing in Australia should be examined. The Australian-born head of Dow Chemical, Andrew Liveris, has drawn up a blueprint for advanced manufacturing in Western economies. It does not rely on protective devices such as tariffs but deploys innovation and research and development to underpin smart manufacturing.

The first two paragraphs are trimming, high-intensity but low-impact stuff. The next paragraph relies on intensive investments in education, which requires the sort of multi-generational investments we've seen from countries like Germany or South Korea. Australia can't just turn it on, and with a policy to cut $70b from the budget, the Coalition won't.

Dow Chemical is hardly making lemonade with the lemons besetting the US economy and western chemical industries. Liveris may have some ideas as to how the taxpayer might spend or forgo money that he considers belongs in his company, but he should stick to his knitting before wowing easily-impressed punters like Arthur.

Another priority is to formally recognise and support the role of the artistic and creative industries, including higher education, in underpinning the rise of world-class cities that dictate the pattern of global economic activity. One important piece of unfinished business is to improve the framework for commercialising public sector research, including through better gainsharing between institutions and researchers.

Research does not need to go overseas to have access to a world market.

What? Who does he think he is, Chris Puplick?

Didn't this guy say the Liberals should emulate the Howard government? Nobody seriously believes that a government led by Tony Abbott (of Sydney and Oxford Universities, a man so populist he would happily kick down the ladders up which he has climbed) - a wannabe government looking to cut $70b from the budget - would be any good at all for creative industries, education and research.

Australia has the potential to be the Saudi Arabia of alternative energy.

And is this more likely without a carbon tax, Arthur; or much, much less likely?

In the absence of a global framework on climate change, Australia should not squander its fossil fuel advantage but energy security dictates investing in alternatives through exploitation of new research into commercial-scale technologies. This will also facilitate the transition to alternative fuels at lower cost.

Remember the Fraser Government's re-election slogan in 1983: "We're not waiting for the world". Can't happen without a shift in carbon price that wipes out rubbish like Victoria's brown coal from the options for Australia's future.

Abbott is now the default prime minister, he appeals to a broad spectrum of voters in the suburbs and the bush.

Well, he doesn't need any votes from anyone who didn't vote for him last year, does he. He's about as popular as Gillard and is holding people back from voting Liberal: he has to go.

His challenge is to harness the frustration of business in the service of a comprehensive set of policies to create certainty and confidence in the economic future.

He can't do it. There is no proof that he can turn the sow's ear of dissatisfaction into the silk purse of government-winning policies. It's wrong to think that he has either the capacity or the inclination, and wrong to misrepresent him otherwise to "punters". People like Hockey and Robb have taken it upon themselves to develop serious policy because they understand that it is important. This is not to say that they will necessarily come out with good policy, but if it was left to the leadership of The Situation there would be no policy at all.

Arthur Sinodinos and Peter Reith are the only Liberals engaging in the sort of root-and-branch rethink of policy and general direction for the Liberal Party. These are men who will be gone from active politics in a decade, and given flawed inadequate offerings like that it may be no bad thing. Years ago I would have placed great faith and hope in respected party figures like Sinodinos pointing to higher education and research as the way forward, but not under these circumstances, not with a record of which Sinodinos bears some responsibility.

Mind you, nobody a decade or so younger than Abbott (let alone Sinodinos) is taking up the challenge of considering issues as broadly as Sinodinos does. Hockey, Tony Smith, Greg Hunt, Chris Pyne, Michael Keenan, Peter Dutton: none of them show any evidence of giving any thought to the general direction of the party and the nation. Scott Morrison offers a rehash of old policies, including accepting notions such as the imaginary "queue", and has not so much as uttered a word about skilled migration (time to start scouting in Europe and the US, perhaps?). The once-highly regarded Jamie Briggs flirts with Hansonism in his own electorate. Josh Frydenberg puffs his fluff into the void of Coalition foreign policy, which doesn't make his contributions any less vacuous for their lack of comparison to those of his peers. I thought that Stephen Ciobo or Kelly O'Dwyer, free from frontbench 'responsibilities' (if you can assign any gravitas at all to the Coalition frontbench), might come out with some considerations of the broader issues before us; I was wrong about that, too.

Sinodinos shows that the next Liberal government might promise much but will be able to deliver little, and that's why it goes into the next election at a far-reaching, crippling and probably inescapable strategic disadvantage. You can only reap dissatisfaction with the incumbents if you can persuade punters people that you'd do a better job: the Coalition can't make that case, and they won't be able to blame the media for turning against them either. The hint Sinodinos offers about the next federal Coalition government is that it will not take office for many years yet.