KEY POINTS:
New governments always enjoy a honeymoon, and the Rudd Labor Government is no exception. The Newspoll this week suggested that Federal Labor was now considerably stronger than the result registered at the general election of November 24, having climbed to a two-party preferred vote of 58 per cent. And there are other signs that the new Labor Administration is enjoying unprecedented support across the political spectrum.
The Australian Chamber of Commerce and Industry is traditionally no friend of the Labor Party. Last year, on the controversial WorkChoices issue, the ACCI was outspokenly supportive of the Howard Government and equally vociferous in rejecting Labor's alternative industrial relations platform. But this week, as the new Prime Minister announced in Perth that the Federal Budget surplus was now projected at A$18 billion ($20.4 billion), or some 1.5 per cent of Australia's A$1.1 trillion gross domestic product, the ACCI was among the first to endorse the Government's fiscal conservatism.
Well it should. The previous Government had abandoned any claim to fiscal rectitude during its campaign. At his Brisbane campaign launch, John Howard appeared to promise more than A$10 billion in new spending in a 41-minute speech. When Kevin Rudd declined to follow his opponent down the burrow, the psychological turning point of the campaign was reached. Labor was perceived as the more responsible party on economic management. Symbolically, the Government changed hands at that point.
Currently, Rudd's claim to being an "economic conservative" is being reinforced with a vengeance. And the ACCI, the last soldier at the Coalition's gate, is applauding the policy prescription and the proposed Budget surplus. Times have changed, at least for now.
Perth was the host for the first Rudd Cabinet to meet the constituency outside Canberra. It was styled as a "Community Cabinet" and was convened in suburban Canning Vale. Part town hall meeting, part policy forum, part economic platform, it seemed to work.
True, the cartoonists had a field day, with one styling the new PM as Jerry Springer. But the public was sold on the idea, at least to judge by the response and the turnout.
Some 600 people, a reasonably representative sample of the constituency who had registered for their seats, turned up to talk to a PM who answered their questions and moved among the audience. Questions ranged from social security payments to Japanese whaling. Then the Cabinet sat down with 110 punters, all allocated 10 minutes each to talk to a minister about an issue of concern.
Western Australia was chosen not for the proximity of the third cricket test being played at the same time at the WACA, although Foreign Minister Stephen Smith undertook some useful diplomacy with visiting Indian officials.
Western Australia is at the heart of Australia's resources boom, which is fuelling economic growth. The state's own growth rate has been running at a staggering 12 per cent a year.
It is also the state where Federal Labor is weakest, with the Coalition holding 11 out of the 15 House seats.
The Government is already looking to 2010. Federal Labor strategists are confident and ambitious about winning seats from the Liberals next time. The Cabinet meeting opened a three-year campaign.
But it was great to see the Treasurer, Wayne Swan, among his colleagues talking economic management across the table with people directly affected by government decisions. His Treasury Secretary, Ken Henry, sat taking notes. Nothing like this has ever occurred in the history of the Commonwealth.
Rudd intends to make these "Community Cabinets" a regular feature of government, taking them to every state. It will certainly keep some ministerial feet on the ground and make it easier for Canberra to "stay in touch". The loss of engagement and empathy with average families was a charge constantly levelled against the previous Government. In some measure it was true, which is why the charge stuck.
To date, Rudd has shown a sure-footedness in decision-making which has impressed most of those watching. The sequence of events on the weekend of the Perth Cabinet is illustrative.
Two-thirds of Queensland, until recently ravaged by drought, is now declared as a flood area. The towns of Emerald and Charleville were endangered by rapidly rising waters. In particular, the Nogoa and Warrego rivers had become raging torrents, threatening to burst through the levee banks and inundate communities. The drama was as real as the threat which loomed.
And there, reassuringly in Emerald, was the PM, a son of rural Queensland, on hand to be briefed by Queensland Premier Anna Bligh and state emergency personnel. Then, after some words of commitment and support, across the continent to Perth.
All in a day's work, really. But of most significance was the Rudd speech to a Perth business audience on Monday morning.
It followed as a natural consequence of a visit to the Reserve Bank with his Treasurer some days earlier. It was the kind of visit noticed by everyone but one about which no one made comment.
The new Labor Government has identified inflation as its number one opponent. And driving the opponent down is its number one priority. It's not difficult to understand why. Inflation obviously pushes up interest rates, the third (electrified) rail in Australian politics.
Labor won its victory in the mortgage belts, especially in the capital cities, and intends to hold them for more than one term. And keeping down the cost of living, especially housing, is utterly critical.
The PM said: "We are embarking on a hard-line approach to fiscal discipline - aiming for a Budget surplus of at least 1.5 per cent of GDP in 2008-2009, provided growth prospects remain as currently anticipated.
"This is higher than the target outlined by the previous Government as recently as November.
"It won't be easy; in going to the election we announced A$10 billion in savings over the forward estimates. We will be looking to make savings beyond that through our razor gang."
Moreover, the Government is looking at incentives to boost private savings; lifting levels of skills training and addressing structural bottlenecks, especially in ports, road and rail, through the creation of Infrastructure Australia, which is to be governed by a board representing the Government and the private sector. It will look to eliminate the blockages in Australia's transport arteries through a programme of construction involving federal and state governments and private sector investment.
Again, business has reason to celebrate, for the Business Council of Australia has estimated that the infrastructure shortfall runs to A$90 billion. This backlog cannot be seriously challenged without the private sector, as the Government recognises, working through a consistent framework of national private-public partnership guidelines.
Tax cuts, however, will be delivered as promised, to the tune of A$31 billion. To do otherwise would destroy a new Government in its infancy.
With Wall St sending tremors through the global economy, the Australian Government is determined to send a message of fiscal discipline to the electorate and the markets at the right time.
The Budget will not be delivered until May but already its basic features are unmistakably clear. Expect the surplus to be every cent of 1.5 per cent of GDP, once the Razor Gang has finished. No honeymoon there.
* Stephen Loosley, a former federal president of the Labor Party and a senator, chairs business advocacy group Committee for Sydney.
