The egos of Kevin Rudd and Malcolm Turnbull – the two supermassive black holes at the centre of the Australian political galaxy – are tearing apart the political unity needed for Australia’s governing class to effectively address the financial crisis.

Two weeks ago, when he announced the unconditional banking guarantee – a bad policy made necessary by growing pressure on banks and the government – Rudd should have been more honest in describing what he was doing. It was a rushed decision, made in the midst of a global financial meltdown, and the chances that it was perfect were zero.

That’s the point of taking time to develop policy – to work out all the consequences that can’t be understood at first blush. Oh the irony of Kevin Rudd now being criticised for failing to do the thing that he’s been getting bagged for all year – taking his time to work out what to do.

But that would’ve been forgiven if Rudd has been upfront that the policy, as a massive intervention in the financial sector, would be likely to have teething problems and unforeseen consequences. But these could be dealt with with good will and patience in cooperation with the finance sector.

No one – with the possible exception of the Coalition cheerleaders at The Australian­ could’ve reasonably objected to that.

Instead Rudd wanted to look like he was perfectly in control, and that any negative consequences were mere matters of detail to be worked out by the regulators. And in Parliament in the week following, Opposition questions about the operation of the guarantee earned only claims about the Government’s decisiveness and how it was ahead of the curve – or demands that the Opposition “get behind our regulators.”

For his part, Malcolm Turnbull was happy to do anything to ensure he wasn’t sidelined by the crisis. An Opposition’s lot during a crisis is a not a happy one, but Turnbull was determined to do whatever it took to ensure Rudd wasn’t getting all the credit for managing the response. The Prime Minister was quite right in saying Turnbull wanted to have it both ways on the economic stimulus package. Turnbull said he supported and wouldn’t quibble with it, but in that very press conference said the Coalition would “obviously” have produced a different type of package, and his frontbenchers were happy to spend the rest of the week explaining exactly how it should have been different.

And a significant part of this week was spent on what increasingly looked like a vendetta by the Coalition against the Treasury Secretary. Reckon Don Randall would’ve been made to issue an apology if he had a crack at Ken Henry rather than Glenn Stevens?

It got personal yesterday in a rancorous end to the current Parliamentary session. Rudd saying Turnbull was out of control. Turnbull saying no control freak of a Prime Minister was going to silence the Opposition. A censure motion that ended any faint bipartisanship in relation to the financial crisis. Tony Abbott abusing Anthony Albanese en passant after a division. An exasperated Harry Jenkins telling everyone to take a deep breath and calm down. The good humour that is usually present even when proceedings turn cranky had vanished.

As a consequence what is in the scheme of things a minor consequence of the deposit guarantee has been beat up into a wasteful and pointless drama. So the likes of Andy Penn whinge about the effect of the guarantee on his French-owned insurance company. It’s not even clear how many of the redemptions are a consequence of the guarantee and how many reflect a crisis-induced flight to safety. No one has quantified the impact on business and household lending. And what about investors who’ve cashed out their shares and put the money in the bank because it’s safer? Where’s the hue and cry about companies affected by the flight from equity markets? What’s the difference?

Considerable time in Parliament and Estimates committees has been devoted to this issue, entirely without benefit to anyone. The dominance of the issue in Estimates was particularly wasteful. Given the crisis besetting the world economy, untrammelled access to Treasury officials for eight hours should have been used by senators of all persuasions to tease out the consequences for Australia. Instead we had senior officials being called liars and threatened for refusing to cooperate.

Our governing class has not exactly covered itself in glory this week. And at the centre of events are two men unwilling to countenance the possibility that they may be less than perfect, or, for that matter, that in politics perfection is pretty much impossible anyway, especially in an unprecedented crisis.

The whole lot of them should use the two week break to locate some much-needed maturity.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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