State politics, regional governance and Western Australia

by on 19 January, 2011

JS discusses the importance of strong state governments to continued economic prosperity.

Over the New Year period, sandgropers were treated to the farcical spectacle of the Western Australian Labor Party engaging in a flyweight tussle over the state opposition leadership.  On one side, there was current leader and former state treasurer, Eric Ripper pitted against shadow treasurer, Ben Wyatt, the 'man of the future'. 

Wyatt announced his challenge but within 48 hours, he'd withdrawn, not even getting his pitch into the party room.  It's hard to describe the battle as fierce.  There was no philosophical division between the two competing Labor tribes.  Ripper and Wyatt seem equally qualified.  Instead, the attempted decapitation emerged from perceptions among the Labor caucus as to which candidate possessed better presentation skills.  

But did this attempted and rather pathetic challenge actually matter?  Yes, unfortunately.

Broadly, what it showed is the policy and political vacuum that emerged under the State Labor Governments over the past ten years.  This vacuum has meant that State Labor lacks the policy resources to respond to economic and social change at the regional level.  This failure is nowhere more evident than in Western Australia, where State Labor is facing a historic test arising from fundamental economic and social changes taking place. 

The State Labor Governments of the 2000s

Since the Whitlam era, there has been a process of centralisation, which accelerated during the Hawke/Keating/Howard years.  This has had a combination of causes including the:

  • aggressively centralist policy prescriptions adopted by the Federal Government buttressed by the High Court’s expansive interpretations of the Commonwealth Constitution, culminating with the Workchoice decision;
  • willingness of State Governments to avoid their constitutional responsibilities through voluntary 'co-operative federalism agreements';
  • unchallenged consensus amongst 'policy professionals' and the Canberra Press Gallery that national approaches are preferable; and
  • intellectual and managerial weaknesses at the heart of the State Labor Governments that confronted the Howard governments in the late-1990s and early 2000s. 

The adoption of the so-called 'Carr Model' of state governance from the 1990s lead to state politics becoming concerned with 'twenty four hour news cycles', 'band aid solutions' and 'damage control'.

The stunning decline of New South Wales since the Sydney Olympics illustrates how poor regional government can damage a regional economy even though the national economy is broadly strong.  International examples such as Shanghai, Alberta and Texas provide similar albeit positive lessons of strong regional governance.  Chris Christie, the new, Tea Party-endorsed, Governor of New Jersey has demonstrated how a reformist regional government can reinvigorate a declining regional polity 

As a result, state opposition leadership struggles have become ritualistic quarrels over personalities not policies because the stakes have been seen as low.  A leader is elected, a new messiah promising salvation, but generally delivering more chaos, more division and certainly, nothing new. 

The Western Australian Liberals were not immune to the syndrome during their time in opposition (although the syndrome was cured by turning back to the talented Barnett).  But what distinguished Western Australian Labor's New Year outburst is that it arose in the broader context of potentially historic decline in its fortunes west of the Nullarbor Plain.

Labor’s defeat

Between 2001 and 2008, Labor dominated Western Australian politics, following a similar pattern to the east coast.  Although Western Australia has always had longer periods of conservative government, Labor maintained a formidable base in Perth's eastern and southern suburbs and in the Goldfields.  Brian Burke and then, Geoff Gallop, in particular, built on this base, appearing unassailable.  This period ended in 2008 with Gallop's successor, Alan Carpenter, calling an early election followed by the Liberals appointing Colin Barnett as leader at their last opportunity.  The Liberals ran a smart election campaign, emphasising that Western Australians had little to show for the massive resources boom. 

Despite four years of opposition disarray, Labor emerged with a hung parliament.  Barnett negotiated an alliance with the Western Australian Nationals leading to his eventual appointment as Premier.  Over the past two years, he has evolved a statesmanlike persona, completely dominating the state scene. 

This result could indicate that state Labor's troubles were 'only on paper' (especially as the numbers in Parliament are so close).  I suggest that the better view is that Labor's abysmal performance should be seen in the context of a weak opposition performance for the majority of Labor's final term in government.  In this respect, the outcome can only be explained as indicating structural changes to the composition of the Western Australian electorate. 

The Federal angle

The signs of Labor's decline in Western Australia were already present at the Federal level.  Western Australia bucked the national trend in the 2007 Federal Election, being the only state where the Liberals gained seats.  Labor lost a key marginal seat, Cowan.  This seat, which the Liberal hierarchy had written off in 2004, had always been a classic marginal outer metropolitan seat, embracing semi-rural and newer suburbs.  It emerged from the 2007 election as a fairly safe Liberal seat.  Overall, Labor returned a mere four lower house members out of fifteen.  In 2010, Western Australian Labor lost a further seat to the Liberals and its candidate, Ken Wyatt

What has happened is that voters are not distinguishing between Federal Labor, which is seen as essentially hostile to the state's long term interests, and Western Australian Labor, which is seen as hopeless at best and complicit at worst. 

It is trite to observe now that the proposed mining tax and carbon trading scheme appear to have alienated Western Australian voters, perhaps fatally.  Earlier, Labor's 'rollback' of the Workchoices legislation aligned with a public perception that Labor is hostile to the west's interests as this legislation was seen as necessary and popular in a 'boom state' which continues to endure labour scarcity. 

The growing awareness that Western Australia is disproportionately carrying the burden of propping up the 'debtor' eastern states while Western Australia struggles with stretched infrastructure also assists the conservative side (The celebrated 'Cash Cow' advertisement from the 2010 Federal election played to this theme).  Labor's asylum seeker policies, its unionised leadership and the ancient mistrust of 't'othersiders', create a picture of a distant and over-mighty Federal Government which does not understand the west.  Labor's capture by the trade unions, public sector and electorate officer class further undermine its ability to credibly respond to changing economic conditions. 

Structural change

But there is a longer term story too of economic, political and social evolution which pre-dates the acts of the first term of the Rudd/Gillard government. 

When my family first moved to Western Australia in 1986, Perth was a city of around 800,000 people.  It was insular, there were few major corporations, China and India were just beginning their marketisation policies and it still took ten minutes to travel anywhere.  The workplace, especially the mining sector, was heavily unionised.  It was the city of Alan Bond and Brian Burke, propped up by transfer payments from New South Wales and Victoria.  It was derided as a 'backwater'. 

In the twenty five years that passed, Western Australia has become one of the major economic centres in East Asia and the Indian Ocean region, powered by the insatiable demand for its natural resources.  Perth is identified in the same league as Houston and Dubai as a major resources and infrastructure centre.  Nowadays, its skyline is dominated by Rio Tinto, BHP Billiton and the other big mining houses, the four major banks, Wesfarmers and so on. 

Around the resources industry, a dynamic service centre has grown up.  Mining services companies, global law firms, shipbuilders, scientists, engineers and the largest number of publicly listed corporations in the country now call Perth home.  Outside the city, the southwest coast is second to the Gold Coast as the fastest growing region in Australia.  George Megalogenis and Simon Jackman have previously noted that Western Australia's housing prices have risen higher than the rest of the country.  Population growth is the highest in the country (2.2%) and the highest growth amongst the working age population.  Western Australia has the highest percentage of residents born overseas.  

Where does this leave Western Australian politics?

The political consequences of Federal Labor’s policies coupled with demographic changes are that Labor is seen as a real threat to the prosperity of the most dynamic regional economy in Australia. 

The challenge for Western Australia's Liberal-National government is to preside over the continuing development of the local economy, removing restrictions on business so it can diversify the sources of prosperity and open up new parts of the state for development. 

The problem for Labor is that its model of big government economic management has no reverberation in a region whose voters perceive economic activity as deriving from a pioneering private sector, strong links to Asia and visionary entrepreneurs. 

Western Australians have too much invested in the success and growth of this regional economy.  As Megalogenis first argued, the demographic story of the 2010 Federal election is that Australia has three political zones: conservative, progressive and in between.  According to Megalogenis, the bedrock of Liberal support at the 2010 election is 'super-majorities' in Western Australia and Queensland.  Unlike the so-called 'progressive' states of South Australia or Tasmania, Western Australian families cannot afford any deterioration in the state's economic position as their economic security now depends on high wages, rising property prices, foreign investment and Asian demand for resources instead of government hand-outs

Strong state governments do matter and ensuring that these governments are competent, honest, functional and small ought to be high on the conservative policy agenda.  The bottom line is that Labor has left the field so conservatives need to occupy this space.

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