The Libs have been handed a golden opportunity. Now watch them stuff it up

One of the great entertainments of political commentary in Australia over the past decade and a bit has been speculating on what new and inventive way the Liberal Party will find to comprehensively bugger itself up. I can’t help thinking this must have crossed Treasurer Jim Chalmers’ mind as he fronted the National Press Club this week to announce that he will undertake a process to develop a new productivity agenda.

Chalmers’ speech was solid, but so it should be after so many have said the same things so often to so little avail. His words and aspirations have been written for him many times over, sometimes with hope, other times with emotions ranging from dull rage to despair. Sometimes even by the Coalition. We need productivity reform, politicians all know we need it, the media all know they know we need it, yet no one ever does it. There’s a simple reason for that: it’s hard.

The treasurer dwelt in his speech on why it’s hard. Reforming an economic system requires trade-offs. Some choices will cost some people. They may or may not be recompensed in the rejig. Chalmers doesn’t want the media to simplify economic reform by explaining it in terms of “winners and losers”, as they do after each budget, but there will be winners and losers in the short, medium or long term as a result of any new tax system.

And, naturally, the opposition will do what the name says on the tin. It will oppose. Given the last years of Liberal shenanigans, the real question is how it chooses to do that.

In one scenario, Sussan Ley leads a team which analyses and criticises the government’s productivity proposals to ensure the best outcome for Australia and Australians. Should they choose this version of their own adventure, there will be plenty of material to tackle.

The prime minister has already shown that he has no instinct for making business more efficient or even any understanding that a healthy economy relies on the private sector, creating new wealth instead of just shifting existing money around. In the first term of the Albanese government, the size of the public sector grew relative to the size of the private sector, so now each private employee is supporting more public sector salaries.

Then-employment minister Tony Burke passed through an industrial relations bill which makes it harder for businesses to scale up without locking themselves into costly arrangements. Meanwhile, the “Future Made in Australia” slush fund has been “picking winners” (code for government making decisions on industries it poorly understands) by investing in bringing in an overseas quantum technology firm rather than backing existing quantum technology firms – ahem – made in Australia. Labor is even trashing its own legacy by changing rules on the superannuation system it forced people to contribute to, undermining trust that the money you lock away for retirement is really yours for later.

It’s hard to see how a government which made policies of this sort a priority and prefers the public to the private sector will back a productivity agenda which turns Australia around. But one of the great paradoxes of politics is that sometimes you need the party which is seen to be the touchy-feely side to deliver hard-nosed decisions. Think Labour prime minister Tony Blair in the UK, Democrat president Bill Clinton in the USA, or chancellor Gerhard Schroeder in Germany, all of whom delivered welfare reform in the face of their countries’ badly designed benefits systems which were creating disincentives to work.

There are different ways the Coalition might approach this set of circumstances.

In the first scenario, the opposition could avoid doing the sort of the political harm it did to itself when it rejected the small tax cut Chalmers announced ahead of the election and demonstrate a strength in this all-important area by supporting the fundamental principle of a reform agenda. It would take on each of the proposals the government comes up with and propose evidence-based improvements or replacements for each. If Chalmers can incorporate improvements proposed by the government, there could be wins all round – most importantly for Australia.

Yes, it sounds unlikely. But imagine for a moment that Chalmers could celebrate productivity reforms successfully delivered, the Coalition could point to the fact that the critical insights and work came from it, and Australians could reap the benefits. Or Chalmers could refuse the improvements and the Coalition could go to the next election on the platform of doing reform right. Not a bad outcome one way or another.

In the other scenario, which has more of a historical precedent, the Liberal Party could split along factional lines over whether to be constructive in contributing to a necessary reform agenda, with one faction preferring to oppose the whole reform agenda indiscriminately. Perhaps Ley prefers the first approach I’ve described and is challenged for the leadership by an opponent who favours going hard against the productivity process as a whole. The Liberal Party starts to tear itself apart – again – over an issue which should be its core strength.

There will be plenty of temptation to go down this path. Change is scary. Confirming voters’ fears is the best hope the thrashed and demoralised Coalition has right now of putting itself quickly back into a competitive position.

But the cost of taking that path can be assessed in advance of its action. The Liberal Party may have learnt to rip itself apart from the virtuoso performance of Rudd-Gillard-Rudd, but in subsequent years, it has outshone its teacher. It needs to do the hard work to put together a coherent set of policies and a vision for the country, following its campaign cluster-cock-up. Used right, Chalmers’ agenda is a golden opportunity.

This is not to say that the Libs and the Nats will take it. If they don’t, I expect Prime Minister Chalmers will one day be gracious enough to thank them.

Parnell Palme McGuinness is managing director at campaigns firm Agenda C. She has done work for the Liberal Party and the German Greens.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.