Inside the Gang of Four

• by: Lindsay Tanner
• From: The Australian
• September 26, 2012 12:00AM

THE comprehensive trashing of Kevin Rudd's management of government during the Labor leadership battle early this year struck me as extremely perverse. Inevitably, it was highly exaggerated; that's how politics works. 

The real surprise was the identity of the perpetrators. Key players in that government who are now leading figures in the current government rely heavily on their record of having protected Australia during the global financial crisis and having kept unemployment low when external economic threats were at their greatest. They are right to be proud of these achievements, but it's difficult to see how they can continue to lay claim to them when they publicly describe the government that presided over them as a dysfunctional shambles.

I have avoided contributing to these agitated retrospectives until now for several reasons. The main reason is my desire to avoid damaging the interests of the Labor Party, to which I owe so much. At some point in the future, an incumbent Liberal prime minister will use Labor's own words about its performance as a first-term government under Rudd as a good reason not to elect another Labor government. Previous Labor leaders like Gough Whitlam and Paul Keating have faced plenty of internal criticism about their style of leadership; but, largely, the most pointed commentary has remained private. Even the outpouring of bile in The Latham Diaries was greeted with calm forbearance by the Labor leadership group at the time. The attack on Rudd's legacy during the leadership challenge early this year was unprecedented.

 

Now that the circus has moved on, I feel it is important to reflect on the strengths and weaknesses of the Rudd regime, particularly surrounding the role of the fabled Gang of Four. For most of 2007, while in opposition, Rudd, Julia Gillard, Wayne Swan, and I met regularly as an informal group carrying the innocuous title of "leader's planning group". At the end of 2007, now in government, this group re-formed to sort through a vast array of savings options. As 2008 unfolded, prime minister Rudd began to use the group more broadly, and it was soon given official status as a cabinet committee: the strategic priorities and budget committee. Its central role was cemented by the famous all-weekend meeting in mid-October 2008 that designed the first stimulus package and bank guarantees.

In January 2009 we met almost continuously for two weeks, in almost every capital city, to craft the second stimulus package. We later moved on to conduct extensive deliberations on the National Broadband Network proposal, and on complex health reform and tax reform proposals.

As this new decision-making mechanism became entrenched, it became our preferred vehicle for dealing with the most complicated and difficult issues facing the government, as a result of which the role of cabinet shrank noticeably. The scheduling of regular cabinet meetings on Thursday evenings of sitting weeks contributed to this trend.

The Gang of Four didn't deal with everything: all defence, immigration, terrorism and foreign policy issues were still dealt with by the national security committee; the expenditure review committee continued to handle the nuts and bolts of budget decision-making; the climate change committee laboured for countless hours to produce the Carbon Pollution Reduction Scheme; and asylum-seeker issues were handled by an immigration subcommittee.

By the beginning of 2010, the SPBC process was deteriorating. Meetings were called, rescheduled and cancelled with great regularity, so that I lost the ability to schedule diary appointments any more than two or three days in advance with any confidence.

Individual matters of middling importance were left unresolved for extended periods, and ministers and public servants were sometimes kept waiting for hours before getting a chance to enter an SPBC meeting to discuss their particular issues. In some cases, the issues weren't even discussed because of the logjam in the agenda.

Late in 2009, concerns about our decision-making processes were raised in cabinet. Only a couple of ministers complained at the time, while several indicated that they were quite happy for others to spend half their lives in arduous meetings about matters outside their own portfolios. It wasn't until March or April 2010 that serious rumblings about the role of the Gang of Four began to emerge.

The SPBC was the crystallisation of an underlying reality of all governments: all decisions of any consequence need to be filtered through a very small group of people -- a handful of senior ministers and public servants. Other ministers will be involved in matters that are relevant to them; but, to pick just one example, the foreign minister is not likely to spend much time picking over the intricate details of health reform.

All governments have some kind of kitchen cabinet arrangements, and all governments sometimes employ flawed decision-making processes. Those criticising the Rudd government seem to have forgotten the gestation of John Howard's $10 billion water plan, which was announced with so little preparation that finance minister Nick Minchin later admitted that it hadn't even been costed by his department.

There were positive aspects of the SPBC process. With key public servants and relevant ministers around the table, many hours of detailed examination of complex questions ensued in a way that would have been extremely difficult in a full cabinet context. This is because public servants only rarely present to cabinet meetings, and the weight of individual portfolio responsibilities is so heavy that ministers have very limited time to dedicate to major matters outside their portfolios.

I can recall days when I was in the cabinet room at various cabinet, SPBC and committee meetings from around 8am to almost midnight, with only minor breaks in the anteroom for lunch and dinner. It is difficult to see how the traditional cabinet process could have handled the endless meeting hours that were undertaken by the SPBC without rendering the government genuinely dysfunctional.

In hindsight, the central mistake that ultimately cost Rudd the prime ministership was his failure to change gear once the immediate threat of the global financial crisis had receded. In one sense, he was unlucky. New governments run by people who have been in opposition for a long time typically take quite a while to shed the habits and behaviours of opposition. Just around the time that this psychological transition would have occurred within the Labor government, the GFC hit. That drama entrenched the slightly manic habits that are bred in opposition, and we didn't change gears once the GFC had faded.

So, by early 2010, the problems were accumulating: too much was being dealt with by SPBC, in an increasingly erratic fashion, and there were too many major items on our agenda. The government was caught in a spiral of problems that it couldn't escape.

As I was contemplating retirement, I was relatively agnostic about the growing internal discontent about the Gang of Four. I understood why some ministers were disgruntled, and I did my best to ensure that the reasons for their unhappiness were minimised. But I also recognised the special pleading that was involved, and what I felt was the true cause of our problems -- which was that, with the aid of the GFC, we had put ourselves in a position where we were simply dealing with too many huge and challenging issues at the one time.

By the time our internal problems started to come to a head, I had already advised Rudd that I would not be recontesting my seat. Whatever capacity I may have had to play a key role in fixing the problem had dissolved. In retrospect, I wish I had done more; but, like the proverbial frog in gradually boiling water, it is difficult to recognise just how serious such problems really are until a crisis occurs. There are important questions about how governments are run that are involved in the Gang of Four story. There are no perfect administrative systems, and the challenges of dealing with the problems of an increasingly complex and volatile world keep mounting. As a mechanism for dealing with the global financial crisis, the SPBC worked extremely well.

But, once it began to usurp more and more of the ordinary business of government, its utility declined. The real lesson from this, I think, is that the traditional system of cabinet government is antiquated and is desperately in need of a complete overhaul.

When regimes are deposed by radical and extraordinary means, the new rulers invariably demonise those who have been unseated, in order to justify the enormity of their own behaviour. You can even see this in the way that historians are still unravelling the web of Tudor propaganda that painted a grotesque caricature of Richard III in order to justify Henry Tudor's seizure of the British crown in 1485. Closer to home, Australian conservatives have created an image of the Whitlam government that is almost fictional in order to justify the constitutional atrocity they perpetrated in 1975.

Removing a first-term elected Labor prime minister by a caucus vote, ostensibly because of his management style, is such an extreme thing to do that those involved have found it necessary to enormously exaggerate the deficiencies in Rudd's leadership. There were some deficiencies, it's true. In fact, I suspect I suffered their consequences more than most. The critical question, though, is whether they justified a leadership ambush of the kind that occurred on June 23, 2010. I think the answer is clearly "No", and that many people who supported that challenge would now privately concede it was wrong.

Labor is now caught in a trap of its own making, publicly impugning a government that remains central to its current identity: it is impossible to attack the Rudd government without undermining the Gillard government. The Labor Party is likely to live with the consequences of the 2010 challenge for a long time.

The sad thing about all this is that Labor is trashing its own great achievement. In spite of everything that has since happened, we should be very proud of our government's handling of the 2008-09 crisis. With the spectre of the Scullin government and the Great Depression looming over us, the fact that we kept unemployment so low is of immense significance.

And we should be proud of the fact that, when it really mattered, four leading Labor figures with a lengthy history of personal rivalries and conflicting ambitions were able to put tensions aside and act to protect Australia in a time of global turmoil.

No amount of criticism of Rudd's leadership style can change that, and Labor people would do well to remember it.

Exclusive extract of the chapter Inside the Gang of Four, from Politics with Purpose: Occasional Observations on Public and Private Life by former Labor finance minister Lindsay Tanner (Scribe, $32.95), out today.