The contributors to the letters column and talk-back radio this week were utterly perplexed.
How is it, they asked, that the ACT Government could propose a Budget that cuts 39 schools yet leaves intact funding for a dragway and a visiting football team?
It was the classic stuff of politics.
The first rule is survival.
The ideal political world is like the economist’s perfect market – healthy competition of ideas or goods put to the choice before fully informed voters or consumers. In the ideal world the political leader aims at doing the best for the community as a whole and the fully informed voters see the obvious merit of the actions and votes the leader back into office.
But the ideal world, like the perfect market does not exist. The voters are not fully informed, and the leader may aim at producing the best policy for the community as a whole but the execution is bungled, or circumstances change so what might have been for the best yesterday proves a wasteful fiasco tomorrow.
Also, voters are often selfish. They often want policies which are best for them, even if they are not best for the community as a whole. And electoral systems are not perfectly suited to delivering the best result for the community as a whole.
Given the choice between a pre-school or a dragway or the choice between three extra nurses or the funding of a visiting football team, surely the former in each instance would win out. Not so. This is because the choice is not based on what is best for the community as a whole, but on political survival.
Now, Treasurer and Chief Minister Jon Stanhope would argue – probably disingenuously – in public that the dragway and the Kangaroos football are better for the community as a whole than a pre-school and three nurses. He might satisfy his conscience by saying that his survival politically is better for the community as a whole, therefore some realpolitik to ensure that is justified.
The only way to explain these decisions, particularly the dragway, is survival. They are best summed up in the bumper sticker which says: “I want a dragway and I vote.”
The dragway is a vote-changing issue; school-closures are not – bizzare as that might seem.
Proponents of public schooling have nowhere else to go but Labor and most will vote Labor because of other policies.
Dragway and football proponents are different. They are fanatical on their on issue. They will vote for the party that promises to deliver. Moreover, most are working class and would otherwise ordinarily vote Labor (at least at state level), so there is more for Stanhope to lose on these issues.
Stanhope would have had greater difficulty if the ACT had a single-member electoral system: local Labor members in seats where schools were to go would have been targetted and an opportunist Liberal Opposition would have allowed its candidates to promise the school would be saved.
Under the multi-member Hare-Clark system he better off, but still not out of the woods. It is possible that a Save Our Schools political party could emerge. Under Hare-Clark it might get enough votes to grab a seat. Even so, the new MLA as a public-sector advocate would still side with Labor on the floor of the House.
This Budget does not threaten Stanhope’s survival chance. In fact, in the long term, it improves it.
Stanhope knows the Government cannot keep spending more than it brings in. If it did it would go the way of Labor Government’s in South Australia and Victoria in the 1980s, and indeed, any other government that got on the wrong side of Micawber’s equation.
Stanhope, two and half years out from an election and with a fairly robust economy and public sector debt level, knows that a little non-survival-threatening pain now will avert a survival-threatening correction imposed later on.
The cuts to spending are well-timed politics, and needed given we spend 20 per cent more than the Australian state and territory average, all of which can be put down to inefficiency, frivolity or policy decisions to provide services not provided elsewhere.
The revenue side is different. We raise 11 per cent less than average, but that is not an excuse to put revenue up, as Stanhope asserts. This is because nearly all the 11 per cent can be put down to the disability of having the Commonwealth as our largest employer and property owner yet exempt from rates, land tax and payroll tax. And we are compensated for that under the Commonwealth Grants Commission provisions. The commission says with that disability taken into account we raise about average in revenue.
It means that the new imposts of more than $450 a household will make us an over-taxing jurisdiction. Inevitably that means a flight of some capital a people and therefore an even narrower tax base.
There may be more political pain in this than the school closures because it affects a wider range of people (not just public-school parents) and therefore affects more swinging voters.
It is a myth to think that Canberra is a natural Labor town with only rare dalliances with the Libs.
Canberra voters are like any others. Economic well-being is important. A Federal Labor Government boosts the town’s main industry – federal administration – and so is good for all. But a territory Labor government that taxes heavily is not and is vulnerable as any other.
That is why Stanhope got in now – while he has got an Opposition with a reluctant and untested leader and an ambitious potentially destabilising deputy. A perfect time to survive a tough Budget.