Daniel Andrews has learned from Kirner - 31st May 2015

Victorian Premier Daniel Andrews has learned from Kirner’s errors

·       THEO THEOPHANOUS

·       HERALD SUN

·       MAY 31, 2015 9:00PM

A portrait of former premier Joan Elizabeth Kirner.

IS the Andrew’s Labor Government a 2015 incarnation of the Kirner government as some business and political leaders have claimed — and as some commentators have suggested?

Critics argue that because both Joan Kirner and Dan Andrews come from the Left of the Labor Party, we can assume they share a similar approach to politics and government. Based on that simplistic reading, they assert that Victoria is about to get a Kirner-like government.

But is that valid? As the only MP who served as a minister in the Kirner, Bracks and Brumby Labor governments and who also served in a Cabinet with Andrews, I believe the analysis is flawed.

The Cain Labor government struggled through the 1980s world economic recession and by the time Kirner became premier, Victoria faced an appalling financial outlook with massive debt including by state-owned enterprises such as the State Electricity Commission and the WorkCover Authority. Interest rates were about 18 per cent, state Budget deficits were huge, the State Bank was in trouble and Geelong was hit by the Pyramid Building Society collapse.

The Kirner government did make some tough decisions. It sold the State Bank, began the privatisation of the electricity industry, introduced gaming to try to increase revenue and started Sunday shopping to stimulate the retail sector. But it was too little too late and Labor was judged harshly by voters who saw them as economically inept. Jeff Kennett was elected in a landslide in 1992.

In 1995, with Labor in Opposition, I wrote a paper, Economic and Financial Management under Labor, whichpointed to the financial policy failures of the Cain and Kirner governments and urged Labor to adopt strict economic and financial principles that would bind all future Labor Governments. The paper led to the development of a set of principles that went through Labor policy forums and was eventually adopted as a blueprint for future Labor Governments.

The policy was supported by moderate sections of the Labor Left where, despite attempts to suggest otherwise, Andrews sat. It was an important shift.

New principles ensured a Labor government would control debt, spending and tax levels, would not draw down unfairly on government-owned enterprises and would maintain a minimum $100 million Budget surplus.

That approach was maintained throughout the Bracks and Brumby governments. The first Pallas/Andrews Budget delivered a surplus in excess of $1 billion while controlling debt, rebuilding our competitive strengths in education and health research and proposing an ambitious infrastructure agenda. It is wrong to point to the Andrews Government dumping of the East West Link as evidence of Kirner-like irresponsibility. The decision was an election promise and has been handled without affecting our AAA credit rating.

Premier Daniel Andrews. Picture: Ian Currie

In any case, there is sound argument that the East West project really was a dud. The completion of the missing link between EastLink and the Ring Road makes much more sense. Rather than channelling traffic into the city and up an overloaded Tullamarine Freeway via a $7 billion East West tunnel, completing the missing link would allow that traffic to go around the city. That, coupled with the proposed western distributor and the removal of 50 level crossings makes much more sense for Melbourne’s needs.

The Kirner government could not have possibly delivered such a massive infrastructure agenda. Whatever good things it did, the Kirner government could not maintain fiscal discipline, avoided necessary reform of government-owned enterprises, lost the support of business and investors and allowed state debt and deficits to blow out. It paid the electoral price.

BUT it is not just financial management, keeping promises or major infrastructure that separate the Kirner and Andrews. The Andrews Government has said it will work to gain the confidence of business and investors. Andrews wants his Government to be pro-business because it is business investment that will create new jobs and economic growth.

The so-called similarity with Kirner in being too close to the unions is also overstated. Things have changed since the 1980s. The influence of unions over Labor has been reduced — from 60 per cent to 50 per cent at ALP state conferences and through introduction of rank-and-file ballots for all seats to replace union-dominated panels.

The Victorian Labor Party learnt the hard lessons of the Kirner period. Among new Labor fundamentals are the adherence to principles of fiscal responsibility, keeping faith with the electorate by keeping promises, having a healthy relationship with business and respecting unions but not allowing them to dictate terms.

Andrews comes from a new era of smart politicians who know the importance of those fundamentals. As long as he sticks to them, his government will be very different from that of Kirner.

THEO THEOPHANOUS IS A FORMER STATE LABOR MINISTER