Opinion
This week was all about signals. The prime minister’s formal national address on Wednesday night, as the war in Iran dragged on and a fuel crisis hove into view, had no announcements. We weren’t going to war or commencing rationing or entering a state of emergency. Instead, Anthony Albanese was using the power of his office at a time of widespread anxiety to focus the nation’s attention on what the government had already been saying. It was, frankly, not weighty enough for the forum; a national address that could have been an email, some quipped online. But as a signal, it was something an email couldn’t be: a projection of gravity, seriousness, and sober acknowledgment of an impending crisis.
On Monday, the Albanese government announced it would halve the fuel excise for three months, thereby dampening the surging cost of petrol, much as the opposition had been demanding for a few days. Economists were aghast, pointing out this is inflationary, will drive the Reserve Bank to hike the interest rate again, and takes a huge chunk out of a budget that was already searching far and wide for savings. It also encourages people to use more fuel at a time we’d really rather they used less. In short, it messes with the price signal that is meant to prevent fuel shortages.
The economic argument, though, quickly gets a little more complicated. Our demand for petrol is famously inelastic. Petrol is basically essential, most of us can’t store it, and we have precious few options to substitute for it in the short term. When the price goes up, we generally have to grit our teeth and absorb the pain. And when it falls, we tend not to buy more of it. Then there’s the fact that states such as Victoria and Tasmania have made public transport temporarily free, with the aim of helping people use less fuel.
The government is hoping that all this, combined with the fact that even a halved excise won’t return things to the prices of a month ago, means we’ll be buying less stuff on balance anyway; that the price signals across the economy will be strong enough to do a similar job to what an interest rate rise might. None of this means the economists are wrong. Just that the petrol price is only one signal among many. Even just in the economic realm, we’re drowning in them.
But in halving the fuel excise – and suspending the road user charges imposed on trucks – the government was sending other signals too; signals an economist’s lens simply isn’t designed to see. Some are nakedly political: signalling a government that understands you’re hurting, is on your side, and is going out of its way to reduce your cost of living in the most blunt way. This naturally invites the criticism that it is a populist move: good politics, but bad policy, appealing far more to our self-interest than any common good. But that tells only half the story, and misses half the signals.
Populist politics doesn’t seek a sacrifice from its audience. It doesn’t admit there are problems beyond the government’s control. And that is what Albanese has done here. “Think of others in your community, in the bush and in critical industries,” he pleaded. “If you can switch to catching the train or bus or tram to work, do so.” Then came the admission that framed this moment: “No government can promise to eliminate the pressures that this war is causing. I can promise we will do everything we can to protect Australia from the worst of it.”
In that context, cutting the fuel excise becomes less an appeal to self-interest than a gesture of goodwill. If the government is going to ask people to sacrifice, it must first extend to them the most obvious form of help it controls. Imagine the opposite: all taking and no giving. That would establish a one-way relationship, in which the government makes demands of its citizens from on high, having shown indifference. And once mandatory restrictions and rationing arrive, that relationship could fall apart completely, especially in the long shadow of COVID.
By forgoing tax dollars, the government signals a sacrifice of its own. The ultimate appeal, then, is very much to the common good, to which the government has made its contribution. That contribution might be wanting in textbook economic design and come with costs, but it is easy to grasp and is a society-wide response that doesn’t obviously pick favourites. That is, it fits the idea of this being a collective effort. That’s less a populist capitulation and more a securing a social licence for the hard things to come.
Whether this works is another question. There’s a danger in arresting the nation to tell them nothing terribly much, and that might come home to roost when the government has something more serious to say. And as for signals, the Albanese government is starting from behind, having begun this crisis appearing disdainful of those raising the issue of fuel shortages at the start of the war; a war it instantly supported, and which is now exacting its price from Australians. Now, even as it has become more serious about the fuel crisis, it has insisted we don’t yet have supply problems. All this runs interference across any signal that this is a time for community-minded sacrifice to preserve fuel for those who need it most.
Meanwhile, Albanese is trying to cultivate rapid solidarity at a time defined by social tensions and political disillusionment. His appeals rely on trust in government when such levels of trust are chronically low. Already, motorists are complaining that the excise cut won’t make enough of a difference, and when things start seriously biting, it might be forgotten completely. Perhaps that’s why Albanese opted for such an inflated forum this week, seeking to create a national moment. For three minutes, he had the nation’s ears. For the next three months, it comes down to whether or not he has its hearts.
Waleed Aly is a broadcaster, author, academic and regular columnist for The Age and The Sydney Morning Herald.
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Waleed Aly is a broadcaster, author, academic and regular columnist for The Age and The Sydney Morning Herald.