How hubristic Rudd lost the car keys

Tony Abbott has distanced himself from WorkChoices. Photo: Pat Scala
Tony Abbott has distanced himself from WorkChoices. Photo: Pat Scala
"We don't support statutory individual contracts" ... Tony Abbott has distanced himself from WorkChoices. Photo: Justin McManus

"We don't support statutory individual contracts" ... Tony Abbott has distanced himself from WorkChoices. Photo: Justin McManus

In May 2007, John Howard rang press gallery correspondents to explain the reinstatement of a fairness test in his signature Work Choices laws.

He knew he had let control of both houses go to his head on industrial relations - precisely why, incidentally, Tony Abbott talks of swinging the pendulum back to the ''sensible centre'' and no further.

Anyway, Howard's handbrake turn, subsequently became known (among irreverent journalists) as the ''Vaseline phase'' of Work Choices: the moment the Coalition conceded the effect of its laws and offered workers some, well, you get the picture.

Howard was bundled out a few months later, his belated repair of Work Choices viewed by many as ''a Band-Aid on a bullet wound'', to borrow a recent gibe from Joe Hockey.

Hockey was talking about $200 million in political hush-money recently ordered up by this government to salve the inadvertent harm it had inflicted on the local car industry.

After years of shovelling billions into car makers to keep jobs alive against the international odds, Labor had decided to crack down on a fringe benefits tax ''loophole'' on privately driven work cars and salary-packaged vehicles. Looking for cash to fill a $3.8 billion hole created by the early dumping of the carbon tax, the FBT rule tightening offered $1.8 billion in savings over four years. It was easy money.

Yet alarm bells should have rung. The saving had been floated by Treasury before but rejected each time by then treasurer Wayne Swan because of what it would mean for the automotive sector. Swan knew the FBT perk had engendered a thriving lease sector and was in effect operating as an element of automotive assistance because it facilitated the regular turnover of new fleet and private business vehicles - many of them Australian made. It now seems likely that this was the moment when the bubble burst on Rudd's second prime ministership.

The Fairfax Nielsen poll published on July 15, the day before the FBT announcement, was the first to show that Rudd's return had dragged Labor's share of the vote up to 50 per cent - dead-even with the Coalition. It was a remarkable rise. His personal approval rating was in positive territory to the tune of 8 per cent while Abbott's remained firmly in the basement on minus 15. Rudd recorded a preferred prime minister rating of 55 per cent, to Abbott's at 41.

It was all going so well. Perhaps that was the problem. Just as Howard had overreached on IR after gaining control of the Senate, Rudd and his confident new Treasurer, Chris Bowen, succumbed to the hubris of viewing their recovery as structural - a function of their innate genius being recognised by voters. If there was a downside to the announcement, they would weather it, ride it out.

In fact, the FBT decision would have wider implications than the potential $1400 average hit to up to 320,000 Australians accessing the concession. It would serve to remind voters of what they did not like about Rudd the first time around: hastily designed policy, announced without consultation, poorly argued, and eventually scarred by the emergence of harsh unintended consequences.

One novated lease firm, NLC, sacked more than 70 people, or about half its sales team, citing collapsing orders. Another had its share trading suspended as large companies such as the Qantas group froze car purchases. Numerous car yards reported sharp dropoffs in orders.

The latest polls tell a very different story to the effervescent days of mid-July. Rudd now trails Abbott on the crucial index of trust. And while Abbott's poorly designed paid parental leave scheme is unaffordable, and his refusal to release costings should alarm voters a lot more than it has (he once said it was better to ask forgiveness than seek permission), Labor may have surrendered the election before it even called it.

Mark Kenny is chief political correspondent.

This story How hubristic Rudd lost the car keys first appeared on The Sydney Morning Herald.