The spectacular descent of Kevin Rudd

Deposed Australian Labor Prime Minister Kevin Rudd choked back the tears in his press conference as he listed his achievements in government. It was confusing – if he had done so much, why was he being dumped?

This was unthinkable a year ago – Mr Rudd, a former diplomat and bureaucrat, enjoyed political rock star status and soaring polls – he could do no wrong. The central lesson in Rudd’s demise is that at some point, the polls have to take back seat to the policy.

Rudd was elected as a blank slate on which people could project their fears and aspirations. He marketed himself as a fiscal conservative, a devout Christian, a climate change evangelist, a friend of the workers, and someone who was going to make Australia a more socially just place. Essentially he claimed to be a more compassionate John Howard.

The problem since the beginning however, was a bureaucratic commitment to process. Mr Rudd wished to be across the tiny details of all sorts of decisions, and considered changing processes, and funding formulas and setting up commissions to be reforms, or fixing problems.

The Global financial Crisis offered Rudd a chance to be decisive – and he obliged by instituting Keynesian fiscal pump priming – this is where is problems seems to start. Cabinet was apparently marginalised and more power gathered close to centre. Unsurprisingly, such centralised control both within the bureaucracy, and the country led to all sorts of problems. The roll out of centralised, soviet style insulation and schools building schemes, as a stimulus measures, have been accompanied with widespread rorting, shonky practices and sadly, deaths.

This was Rudd’s central problem as a Prime Minister – his personal management style, and therefore policymaking of his government, by necessity repudiated 25 years of market–based economic management in Australia in favour of bureaucratic centralisation.

But it was after he backtracked on the emissions trading scheme (ETS) that Rudd began his marked descent in the polls. In late 2009, the Liberal opposition withdrew support for pricing carbon, and the subsequent Copenhagen climate conference was a well documented fiasco.

After spending two years proclaiming that climate change was the ‘greatest moral challenge of our time,’ Mr Rudd shelved his ETS when it got too unpopular and politically difficult. The Left went running for the Greens, and the blue–collar working class (so–called Howard battlers) began to wonder what Rudd actually stood for.

The electorate turned off, but the final and fatal miscalculation was the proposed resources super profits tax (RSPT). The 40% tax on ‘super profits’ is defined as any return above the government bond rate (6%). It would pay for a drop in company tax rates and fund superannuation concessions. It was purely a political calculation – that taking money off non–voters (mining companies) and giving it to voters (everyone with a super fund) would be a winner with the electorate.

He was drastically wrong. The public saw the surprise proposal for the cynical, redistributive and political ploy that it was – a tax on jobs and prosperity. Support melted away in marginal electorates while Mr Rudd refused to negotiate with the mining sector, which mounted an aggressive anti–tax campaign. This ultimately led to Labor rolling the once–popular leader.

The challenge for Mr Rudd’s successor, Julia Gillard, will be how she handles climate change and the RSPT. Ms Gillard indicated yesterday she will call an election within months and ask for a mandate to price carbon. In the meantime, however, she has opened the RSPT issue for full consultation with the industry.

Kevin Rudd’s leadership was ultimately lost because he didn’t understand the limitations of centralised power, mistook process for progress, and used overblown rhetoric for some pretty meagre policy changes. In the end, he sacrificed long–term policy integrity for short–term popularity. His is a lesson that should be learned by all those in New Zealand politics.

Luke Malpass is a policy analyst with The Centre for Independent Studies.