If you can’t dazzle with brilliance, waffle about the Federation

When you can’t win an argument on merit, talk about process or structure. It’s the tried and true method for deflecting attention from whatever the substantive issue happens to be.

The latest example was prime minister Tony Abbott’s Sir Henry Parkes Oration in Tenterfield, NSW, on 25 October. Distributing wealth from the working class to the ruling class, which underlines almost every major federal government policy, was almost entirely absent from the speech – even though that was what the speech was really about. Abbott began by associating himself and his project with the sensible and visionary father of federation. “He launched from this hall the federation that was right for those times”, Abbott said. “Let us relaunch the federation tonight in a way that is right for these times.”

Sounds sensible. Parkes in 1889 urged the formation of a commonwealth to unify under a federal government six largely independent colonies. He reasoned that the continent needed a national army – an indication that a significant section of the colonial elite already had imperial aspirations – and that the inter-colony train gauges needed to be standardised to build a national economy. In those years, travel from Perth to Brisbane required changing trains six times.

“That was then – these days are different … and yet we have an unsatisfactory system of governance, because all too often wherever you look – whether it be the roads, the schools, the hospitals – it’s hard to know who is in charge”, he said. “That is what bedevils modern Australia in so many areas of our national life – who is really in charge.”

It’s all about structure and accountability between the federal and state governments. This was a calculated appeal to the reasoning of many people: the main problems of government often appear to be the endless pass-the-buck squabbles of politicians. Everything really should be a lot easier and simpler. And nobody likes “politics”. Politics is tainted, corrupted. It’s what politicians do to us; they “politicise” things.

Ironically, politicians themselves often find this line of argument useful. So Abbott couldn’t agree more: he wants to depoliticise things – make everything about administration. Arguing this way allows him to evade the politics of the budget, among other things. Hospital bed shortages, intolerable ambulance response times and crumbling portables in secondary schools – these are related to basic failures of administration, he argued. Chronic underfunding, which is the result of the political decisions of elected representatives, rather than demarcation disputes between state and federal governments, doesn’t get a look in.

He underlined the case with reference to that old chestnut of rationalism. “I hope tonight that we might start a process that will give us a more rational system of government.” Abbott used that word five times in the speech. People started talking about rationalism in economics when Whitlam was PM in the early 1970s as debate intensified over whether markets should be under some level of human control, or whether society should be regulated by them.

Those advocating the latter argued that, due to their efficiency in distributing resources via price signals, markets are more capable judges of the world than any human being. Governments therefore can’t adjudicate effectively over billions of competing and intersecting economic claims; intervention, planning and democratic control are all doomed to failure. Worse, they create rather than solve problems.

Similarly, the aim of “rational government”, said the PM on Saturday, is to realise “the self-evident benefits of less waste, less overlap, less duplication … it’s to harvest the multi-billion dollar benefits in better services and lower costs that would come from successful reform”. It sounds like the sensible, no-nonsense stuff the world has been waiting for.

But as the collapse of the North Atlantic financial system in 2008 showed, the straightforward arguments about efficiency are not simply wrong. (And even former US Federal Reserve chair Alan Greenspan admitted that, telling a congressional committee: “I have found a flaw … I have been very distressed by that fact.”) They conceal, using seemingly common sense logic, the reactionary political project being undertaken: subordinating democratic government to technocratic administration, enforcing market regulation of the latter and transferring wealth from the working class to the ruling class – which has privileged access to markets and a degree of influence over them because it controls society’s most powerful economic institutions.

When he finally got to the issue of what is being proposed in the name of reforming the relationships between governments, Abbott threw up a series of possibilities that disclosed the real Liberal project.

“Is it inevitable that commonwealth spending restraint will produce more user-pays arrangements in state institutions?”, he asked. How about funding services “through an individual entitlement supplied through a market”?

“Alternatively, the commonwealth could stop funding programmes in areas of state responsibility and stop using its financial power to influence how the states deliver services.”

It’s all such a rational adult discussion, marked with measured questions. “Who knows what might work?” we’re encouraged to think. But the substance of his argument here finally trickled down: either create more user-pays health and education services or starve the states of funding and force them to raise a greater share of revenue. (The states raise about $130 billion, but collectively spend around $100 billion more than that. The shortfall is made up by the commonwealth.)

Or do both, as was foreshadowed in the May budget, which proposed the GP co-payment and changes to the indexing of federal funding to state-provided health and education services. The budget papers estimated that the latter would result in cumulative savings of $80 billion over 10 years.

In the latter case, how could states make up the revenue shortfalls that accrue if cost increases outpace the rate of inflation? “[T]he commonwealth would be ready to work with states on a range of tax reforms that could permanently improve the states’ tax base – including changes to the indirect tax base with compensating reductions in income tax”, Abbott said. That means: increase the GST or institute other consumption-based taxes.

User-pays or indirect taxation increases are both ways of generating more revenue from those with the least resources. That’s the project. It could have been articulated in five seconds. But it’s easier to sell when you first talk bullshit for half an hour or so about structures and processes, rationality and accountability.