Originally published in The Australian Financial Review on February 5, 2018

The word “ideology” has a bad name these days but, as we are beginning to see, it is surprisingly hard to govern a country without one. Take, for example, the ideology of small government often associated with conservative governments like that of Mr Turnbull’s.

[First published by the Australian Financial Review – here]

Last week the Coalition announced $3.8 billion worth of taxpayer support for the defence industry. Apparently our national goal is now to be among the biggest arms exporters in the world. Who knew? While the idea of governments setting five-year goals is common in China and other centrally planned economies, such an approach was once anathema to “free market” politicians on the right of Australian politics. Times change.

Of course the defence industry isn’t alone in benefiting from assistance. Under John Howard and Peter Costello subsidies to private schools, private colleges and private hospitals ballooned and their cost has risen steadily ever since. They now cost tens of billions per year.

Needless to say economic arguments can be made to support each of the Coalition’s preferred subsidies, but that’s where the need for ideology comes in. Arguments can be made for subsidising renewable energy, public transport, public housing, car manufacturing or any other industry. Centre-right governments have spent decades saying those subsidies weren’t needed. Times change.

When the Coalition announced its package of soft loans and grants for the defence industry the conservative commentators and corporate activists who usually rage against governments for “picking winners” and “ignoring the deficit” were strangely silent. Such silence is, of course, their right, but when people choose to be strategically silent about subsidies to one industry, they can’t pretend that their hostility to subsidies for other industries is based on some form of principle.

Simplistic household analogies

The same inconsistency is playing out over budget deficits. For decades the centre-right used simplistic and flawed household analogies to convince the public that budget deficits are bad and budget surpluses are evidence of “good economic management”. But now, after running budget deficits in every one of their five years in office, the Coalition are proposing $65 billion worth of corporate tax cuts without spelling out $65 billion worth of spending cuts. Again the “deficit hawks” among the commentariat and business community are strategically silent.

The most extreme example of the lack of ideology on the centre-right of Australian politics is its response to the Trump tax cut. The Trump government will borrow nearly $US1 trillion this year, up 80 per cent on last year’s borrowings. But does Mr Turnbull or the BCA call him “fiscally reckless”? Do they bemoan the burden he will place on future generations? On the contrary, they praise the foresight of his tax cuts and say his fiscal policy is something Australia should emulate.

There is no doubt that the US economy is creating a lot of jobs, but there is also no doubt that this trend began well before Trump announced his enormous tax cuts. Indeed, if there is any clear lesson for Australia from the US it is that having an enormous budget deficit has absolutely no impact on the ability to create jobs and growth.

No ideology is perfect

But in an Australian political debate stripped of ideology the Trump tax cuts do not need to be analysed in the context of broader policy settings. Why bother looking at context when you can simply use the parts of the US platform you agree with to justify the parts of your own platform you are struggling to implement in Australia?

An ideology is simply a system of ideas and ideals. No ideology is perfect and all governments must compromise on their ideology at times. John Howard opposed regulating greenhouse gas emissions but supported regulating guns. Kevin Rudd said climate change was a great moral challenge but then admitted the political challenge of the fossil fuel industry was more pressing.

John Howard lost office for sticking to his ideological obsession with Work Choices, and Kevin Rudd lost office for not sticking to his stated climate change principles. Knowing when to stick to your principles and when to be pragmatic is harder than many realise.

Malcolm Turnbull is within his constitutional rights to bet billions of other people’s dollars on the defence industry, and voters are well within their rights to ask why he doesn’t bet on solar panels or electric cars instead. Whatever his answer might be, we know it won’t be based on principle.

Richard Denniss is the chief economist at The Australia Institute

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