Vanstone makes an unlikely auditor

On Tuesday, Treasurer Joe Hockey and Finance minister Mathias “Terminator” Cormann unveiled the Abbott government’s plans for a new National Commission of Audit, the first  contemplated independent look at the Commonwealth’s operations since the Howard government came to office in March 1996.

Hockey and Cormann’s 2013 version has sweeping and – given the less than three months allowed for the first phase report to be submitted – highly ambitious Terms of Reference.  Everything is on the table, from the very shape of  the Federation to who pays for what individual service.  The terms of reference rightly focus on making the Commonwealth live within its means, paying down debt and eliminating wasteful expenditure.  This is all good, and vitally important.  After all, the eventual reports of the Commission of Audit will be blueprints for budgetary pain that will hoover up much of the political capital that Prime Minister Tony Abbott (the joy of writing that still hasn’t faded!) and his Coalition team has accumulated through the Rudd-Gillard years and their handsome election win.

The personnel of the Commission of Audit generally are very impressive.  Giving the chair to Tony Shepherd of the Business Council of Australia involves, as Laura Tingle has pointed out in The Australian Financial Review, the big end of town in the process, making it harder for business to complain that the their interests are not taken into consideration.  Entrusting the Commission secretariat to the BCA’s policy director and former senior economic adviser to PM John Howard. Peter Crone, is a brilliant move. “Cronie’s” grasp of policy, economics, politics and the ways of both federal and state governments, coupled with his amiable unflappability, will give the Commission process the best possible chance of meeting its impossible deadlines.  Similarly, appointing ex-Treasury and Finance heads Tony Cole and Peter Boxall (the latter also a distinguished chief of staff to former Treasurer Peter Costello) gives the Commission a wealth of experience, economic savvy and gravitas.

It’s puzzling, however, that Former Minister For A Lot Of Things Amanda Vanstone was appointed to give a ministerial perspective.  Not everyone sees it this way: Laura Tingle even hyperbolised that “the inclusion of Amanda Vanstone is the real touch of genius. Vanstone’s ministerial career covered portfolios such as families, education and customs. Few people understand the service delivery side of government like she does. There are even fewer sensible political heads with that experience to influence how the Commission presents its findings.”

Presumably, the reason that Vanstone has been appointed is that she is a much-loved mother figure in the Coalition family and has acquired a belated reputation as a retail politician.  It can’t be that she was a wise minister when it came to budgets.

Let’s go back to 1996 and the first Howard budget.  Vanstone was the newly-minted Minister for Education, Employment, Training and Youth Affairs, inheriting the vast bureaucratic empire established by Labor’s John Dawkins.  The new Howard government was confronted by an appalling fiscal situation: despite the Labor Opposition’s protestations, there was absolutely no doubt on Treasury and Finance figures that “Beazley’s Black Hole” of $92 billion (oh, those were the days!) was all too real.  Armed with the first Commission of Audit report, the Coalition’s Expenditure Review Committee set ministers harsh spending reduction targets to achieve the sort of savings that sadly were necessary to get the budget blowout under initial control.

Most ministers accepted the need for restraint and entrenchment.  Not so Amanda Vanstone.  She chose to go the opposite tack, bidding for large increases in portfolio expenditure and resisting defiantly all pressure to rein in her department.  Her budget submission (that is, the submission by her department that she signed off), was little more than a long, despairing whinge against the injustice of it all, trotting out every cliché in the Yes, Minister manual to head off the fiscal barbarians at the gate.  So histrionic was the DEETYA submission that it was contemptuously derided around the traps as “Amanda’s political suicide note”.

There’s no question that Vanstone was a very inexperienced minister in 1996, and she received appalling strategic and tactical advice from her personal staff and bureaucrats.  No doubt she learned from her budgetary misadventure.  But for the 1996 Budget all her protests and resistance managed to do was to have ERC take a far greater interest in her portfolio than otherwise it would have done.  Other than implementing election commitments, the portfolio received virtually no new funding, but its programme and operating budgets were slashed.  It also became a big factor in Vanstone eventually being dropped from Howard’s Cabinet before the 1998 election, to redeem herself in the junior Justice portfolio.

Vanstone’s spectacular failure contrasted with the success of another spending minister, Health minister Michael Wooldridge.  Wooldridge was shrewd and wily that Budget.  Having become aligned with Howard during the moves to return him to the Liberal leadership in late 1994, Wooldridge not only won his coveted health portfolio, but also a seat on ERC.  When the government took office in 1996, Wooldridge not only had a seat at the ERC table, but access to the Department of Finance’s highly confidential ERC briefs, including Finance’s so-called bottom drawer savings proposals including some very politically unpalatable options.

Like all other ministers, Wooldridge was given a savings target.  But unlike Vanstone, he took the ERC process very seriously, and realised that playing smart beat being done over.  Consequently, Wooldridge drove his department twice as hard in the quest for savings, shaking out hollow logs throughout the length and breadth of his portfolio, and using the Commission of Audit report and other advice to look again when the first combing was done.  As a result, the savings offered up by Wooldridge far exceeded ERC’s target, and he was then in a powerful position to trade away programmes and functions that he felt were expendable in order to keep his portfolio focused on what he saw as its priorities.  This he succeeded in doing. Wooldridge made saving a virtue, and even if they hated him for doing it he set a parsimonious precedent for his Cabinet colleagues that was very hard to ignore.

It’s disappointing that Wooldridge is not fashionable these days amongst leading Liberals.  His rigorous and positive approach to a hostile budget process, coupled with his experience as a Cabinet minister, would have given the Commission of Audit a strong and valuable ministerial perspective.  Hopefully, though, Vanstone will approach her task on the Commission as ensuring that her 2013 successors do everything in their power to avoid her 1996 Budget disaster.  Given that he was Vanstone’s parliamentary secretary in 1996, and would at least have observed what was going on if not much drawn into it, hopefully that was Abbott’s idea too when he agreed to her appointment.  One hopes so at any rate.

Terry Barnes advised health minister Michael Wooldridge in 1996, and worked with him on the first Howard Budget. He blogs at Cormorant