Cabinet: trashed by Rudd, misunderstood by the press

If there's an engine room of political power in Australia, it's cabinet. And like most engine rooms, it's hidden out of sight, its operations little understood by the rest of us.

It's not even mentioned in the constitution -- though nor, for that matter, is the prime minister. There are no hard and fast rules or law about how cabinet operates. It's a mixture of tradition, practicality and prime ministerial preference. But it's the key governmental decision-making forum that drives policy and how it is implemented.

Effectiveness in cabinet is a key skill in Australian politics. Australia was lumbered with a vertically-integrated telecommunications behemoth for 25 years because Kim Beazley, backed by public sector unions, convinced Bob Hawke's cabinet to accept his telecommunication reform package over the objections of Paul Keating and Treasury in 1988. Keating stormed out of cabinet over the decision. The economic damage is only now being repaired.

What makes an effective cabinet minister? It's not enough to be across your brief. For complex issues or major reforms, ministers need to be able to tell colleagues where the government will be at the end of the process and how it will get there. And the most important requirement is credibility with colleagues.

Ministers who consult widely with colleagues before going to cabinet are also likely to find cabinet more receptive to even controversial proposals. Greg Combet is regularly identified by colleagues as an effective minister. Bill Shorten increasingly is, too -- indeed, one of the few political positives for the government in the last 12 months has been Shorten's emergence as a strong player in the government. Jenny Macklin (a senior adviser to Bryan Howe in the Keating government) is also said to be good at taking colleagues through complex issues.

The point of the elaborate bureaucratic rigmarole of cabinet is so that it can be a genuine contest of ideas, with ministers as well informed as possible about the implications of proposals. When cabinet doesn't function this way, it hurts governments -- both in policy terms and politically.

By a second term, governments should be at their peak: quality junior ministers have shown their wares and been promoted; underachievers moved aside, and the experience of a first term translating into more mature consideration both of politics and policy. But the Gillard cabinet is still emerging from the trauma of the Rudd years.

The most spectacular example of cabinet breaking down was under Rudd. After the GFC, in which a series of emergency financial and economic decision were taken by a small group of senior ministers on advice from the most senior bureaucrats, Rudd came increasingly to rely on the Strategic Priorities and Budget Committee -- AKA the Gang of Four: himself, Wayne Swan, Julia Gillard and Lindsay Tanner -- to make key decisions, many of which never went before cabinet.

The government's decision to "delay" its carbon pollution reduction scheme in 2010 didn't go to cabinet. And neither, most notoriously, did the government's response to the Henry tax review, centred on the mining tax. Ministers weren't given the opportunity to even understand the complex policy, let alone scrutinise it, consider its political implications or, in the case of Resources Minister Martin Ferguson, discuss the likely reaction of the industry.

One of Gillard's key commitments the moment she replaced Rudd was to return to cabinet government -- although one of her worst policy proposals, the "citizens' assembly" on climate change that became Labor policy in the 2010 election, was crafted in her office and never put to cabinet or caucus. There remain even now complaints the government remains too willing to consider significant issues in cabinet "under the line" -- that is, without submission.

There were several reasons behind Rudd's downgrading of cabinet. A remorseless micro-manager and control obsessive, Rudd was less comfortable with a full-blown cabinet process than a tightly-controlled internal process with only the government's most senior figures involved.

And a number of senior advisers, and several ministers, as well as Rudd himself, came from state politics, where major policies are much more often dealt with between ministers via letter, or "under the line". Because only Simon Crean and John Faulkner had served in previous cabinets, there were few ministers who, initially, understood or were prepared to speak up about the sheer extent to which Rudd had moved away from traditional process.

Non-cabinet decision-making also minimised the risk of leaks -- a genuine risk given what later emerged about Treasury officials.

In May 2008, the Department of Resources, Energy and Tourism coordination comment on the government's Fuelwatch proposal was leaked. It was one of several leaks later linked to right-wing Treasury official Godwin Grech, who eventually took to forging documents as part of a campaign against Labor that, when revealed, badly undermined then-opposition leader Malcolm Turnbull.

What was more significant than the leak, however, was its reporting, which inevitably focused on "cabinet splits" and division.

"Splits" is how cabinet in fact is intended to work: ministers are supposed to have the opportunity to aggressively interrogate policy proposals from their colleagues and argue against them on policy and political grounds. From one perspective, the more argument and debate over proposals from different ministers, the better for the government and public policy.

But because the press gallery doesn't understand how the policy process works, and has no grasp of internal government processes, such debate is portrayed as evidence of dysfunction rather than effective functioning.

A similar dynamic plays out in reporting of shadow cabinet deliberations, when prompted by leaks: oppositions, which have greater freedom than governments to consider a range of policy options, are inevitably portrayed as racked with division when undertaking the sort of internal debate any intelligent, serious political party should consider standard process.

Merely to get an issue before cabinet is a tortuous process. Guidelines for documents are tight even by public service standards. An array of accompanying impact statements must be completed and any proposal with financial implications (assuming it is allowed "outside the budget process") is subject to a particularly tortuous process called "agreeing costings" with the Department of Finance, in which Finance officials insist the amount of money a minister wants in their cabinet submissions is an absurd ambit claim and could be done at a fraction of the cost. Or, better yet, not at all.

Then there's the other part of the process: coordination comment, whereby finalised cabinet submissions are distributed to other portfolios who might have an interest. Other portfolios might oppose proposals outright, or offer suggestions, or ignore them. Departments will then brief their ministers if they think it's important enough. Ministers have a responsibility for ensuring that either they've secured agreement with their colleagues before cabinet, or if they haven't, that everyone is clear where the differences are, so the discussion within cabinet can be reasonably fruitful.

There's also a complex web of cabinet committees, ranging from policy committees to budget process committees and a parliamentary business committee.

There's another instructive example of cabinet process breaking down. As it was under Rudd, the Health portfolio in the last term of the Howard government was virtually controlled by the prime minister's office, especially after Howard's handpicked secretary, Jane "children overboard" Halton was moved there. The minister, Tony Abbott, played minimal role in driving health policy and was notorious for the poor quality of his cabinet submissions among his colleagues, who believed he was indulged by the prime minister.

In the final months of the Howard government, it was not unusual for major health policies costing hundreds of millions of dollars per annum to be developed by bureaucrats at the request of Howard's office, with virtually no involvement from Abbott or his staff.

All this occurred while health became an issue inflicting major damage on the government, with voters increasingly blaming the Commonwealth for basic problems in state-run hospital services and opposition leader Kevin Rudd cannily exploiting the issue by promising to take over health if elected. The Howard government's response was shambolic, culminating in the disaster of the Mersey Hospital takeover that went off the rails during the 2007 election campaign.

In that case, poor cabinet process made for poor policy and poorer politics. You can be sure Coalition MPs, especially those who were colleagues of Tony Abbott under the Howard government, will understand the lesson.

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