Literary triggers

Reading for pleasure should be a joy in itself. But to read a book and then be drawn into somewhat tangential (and even trivial) thoughts triggered by personal recollections is an added bonus.

That was partly my reaction when reading Jonathan Coe’s marvelous novel “Mr Wilder and Me”. Ostensibly a fictional account about the making of one of Billy Wilder’s final films, set in Greece and France in the mid-1970s, it manages to incorporate many themes – Hollywood, the creative process, migration, family, the Holocaust, ageing, travel – without selling any of them short. Happily, it’s now being made into a film itself, which confirms the strong narrative at the core of the book. I look forward to seeing it when it is released.

For myself, the novel prompted three travel-related memories:

1. Just like a key time in the novel, my first visit to Greece was also a few years after the collapse of the military junta – currency restrictions, banks only open a couple of hours a day, rationing of hot water in the hostel where I was staying, and construction projects abandoned unfinished because of their association with the military regime

2. The narrator’s love of cheese, stemming from an impromptu visit to a Brie maker, brought back memories of many trips to Paris in the 80s and 90s, and visits to bars like La Tartine, and trying the different types of crottin

3. On my first trip to California, I was fortunate enough to have drinks at the Hotel del Coronado, the setting for Billy Wilder’s most famous film, “Some Like It Hot”, and an iconic resort facility in San Diego Bay.

Seemingly unconnected, yet all evoked by a single work of fiction.

Next week: Let There Be Light

Mopping up after the LNP

The incoming Labor government in Australia is currently enjoying a post-election honeymoon period. And while the new Prime Minister has spent about as much time overseas as he has been at home, there is sense that domestically, something has changed under Mr Albanase.

First, the strident, discordant and caustic tone of federal politics is subtly being dialled down, even if much of the same partisan rhetoric remains. Second, it has been suggested that Mr Albanese is seeking to evoke the spirit of Bob Hawke rather than looking for inspiration from either of his immediate ALP predecessors. Both Kevin Rudd and Julia Gillard were technocrats (rather than being natural politicians) and neither of them enjoyed a solid or stable power base within their own party (hence, they were both rolled while in office). Third, there does not appear to be any radical departure from the previous LNP administration, apart from a commitment to an indigenous voice in Parliament, a plan to establish a federal anti-corruption commission, and a greater focus on renewable energy.

Of course, the new administration faces a number of challenges in the budget deficit and in key areas of economic activity, most of which they have inherited from the outgoing LNP government. Federal largesse (in the form of industry subsidies, public grants, welfare payments and pandemic handouts) is under pressure. The era of “cheap money” is coming to end as we witness higher inflation, lower unemployment, skills shortages, and a very mixed set of economic results. Interest rates are on the way up to try and prevent parts of the economy overheating, and are designed to reduce both borrowing and retail spending. But there is a risk that higher interest rates will result in a decline in house prices and an increase in mortgage stress; and reduced discretionary consumer spending may dent employee expectations of wage growth. Despite the low level of unemployment, there can be no reasonable hope of higher wages without an accompanying increase in productivity. Perhaps the issue is that too many people have fewer hours of employment than they want or need, while those already in full-time employment seek to maximise the amount of work they have. Or productivity gains are difficult to achieve in sectors where wages are the biggest input cost, or where operating margins are already very thin, or where investment in technology has been lacking.

Despite the increase in domestic travel and tourism during and since the height of the pandemic in 2019-21, we should remember that domestic borders were also closed for extended periods. As a result, local tourism was hit hard, and even as things started to open up again, the hospitality industry struggled to find staff or was unable to operate economically due to capacity limits – and a lot of small operators haven’t come back.

I would expect to see bankruptcy numbers to rise – especially among sole-proprietors and SMEs (the latter of whom, in aggregate, account for the bulk of employment by headcount). This is always a lag economic indicator, given the time it takes for insolvencies and liquidations to work through the system. Despite the overall increase in the number of business in 2020-21 (see table below), 93.0% of businesses had turnover of less than $2 million, and 28.7% of businesses had turnover of less than $50,000. There was a 12.5% increase in businesses with turnover of less than $50,000, and only a 0.5% increase in businesses with turnover of $5 million to $10 million and $10 million or more. Given that 81.7% of exiting businesses had turnover of less than $200,000, there is a likelihood that more businesses will go under. This period is going to be especially challenging for sole traders and SME owners who typically mortgage their principal home to fund their business. The next ABS business entry/exit report in August will be very interesting.

Past stimulus packages have been spent on household goods (computers, mobile phones, HDTVs, etc.) that aren’t manufactured in Australia; or put towards the mortgage; or saved for a rainy day – and it’s highly likely a similar pattern emerged with the recent pandemic-related measures. All of which means their net effect on the domestic economy and the balance of payments was probably negligible. Sure, during the pandemic some consumer spending was diverted from things like overseas travel towards domestic purchases, but recent data suggests consumers are cancelling their internet streaming services and curbing their on-line shopping (in part because they are no longer working from home).

During the federal election campaign, one of the few areas of economic “policy” that both ALP and LNP ventured was the promise of financial incentives for first-time home buyers. The idea being, I suppose, helping people onto the property ladder enables them to establish long-term household wealth, while taking some pressure off the rental market. Although there has been a softening in city house prices, price increases in some regional areas have more than compensated for those recent declines (thanks to an urban exodus from cities like Melbourne and Sydney). If you’ve just paid at the top of those regional markets, and now face interest rate hikes (as well as coming off introductory fixed mortgage rates), I’m sure this will bring a new layer of mortgage stress.

Finally, it’s still not clear where the wage growth will come from (apart from a lift in the minimum wage?). Businesses (especially SMEs) that struggled during lock-down won’t easily be able to afford pay rises, and the skills shortages are in many areas where there is a lack of local talent, so increased skilled immigration quotas may actually depress salaries. Something of a vicious circle.

Next week: Literary triggers

Renzo Piano & the Centro Botín

In March this year, the Victorian Government unveiled the winning concept design for the NGV Contemporary, a new centre for art and design, forming part of the planned revamp of the Arts Precinct on Melbourne’s Southbank. Due to open in 2028, The Fox: NGV Contemporary (to give it’s full name, thanks to the benevolence of trucking magnate and close acquaintance of Premier Daniel Andrews, Lindsay Fox) is being heralded as an iconic, nation-defining statement in support of Melbourne’s claim to be the cultural centre of Australia. So far, so good – but I can’t help feeling the design competition has been conducted with some undue haste: Expressions of Interest were sought in March 2021, with a one-week registration deadline. The competition for Stage One of the project closed in August 2021, and Stage Two in November 2021, with the winning team announced in March 2022, barely 12 months from the EOI. Why the hurry (especially as Melbourne was in lockdown for much of that time), and up to now, there does not appear to have been any public consultation in the design process.

The Centro Botín, Santander, designed by Renzo Piano (image sourced from Wikimedia)

Contrast this with the design of the Centro Botín in Santander, Spain, by Italian architect Renzo Piano, whose story is told in an absorbing documentary, “Renzo Piano: The Architect of Light”. First, neither the architect nor the sponsoring Botín Foundation had any aspirations of creating an “iconic building”; instead, the goal was to have as minimal physical impact as possible, while reclaiming an area of land and returning it to public use. Second, there was a public consultation process, to overcome concerns expressed by some nearby residents. Third, while the documentary has no doubt been artfully edited, it does provide extensive “behind the scenes” access to the design and construction process over its 7-year development, which included a 3-year delay in completion. The fact that this was a private commission rather than a competition may account for this approach, but there was still a great deal of negotiation with municipal and community stakeholders.

The documentary itself is notable not only for the degree of transparency (we observe meetings between architect, client and project managers throughout the process), but also for the simplicity of its narrative, and the wise decision to dispense with any voiceover commentary – the subjects are allowed to speak for themselves. There are also references to cultural icons such as novelist Italo Calvino and film-maker Roberto Rossellini. The use of Mahler’s ‘Symphony No. 5’ in the soundtrack underlines Renzo Piano’s fascination with light as a construction material, as important to him as glass, concrete and steel – the music is most famously associated with the film of ‘Death in Venice’, a city renowned for its light.

If the primary inspiration for the design of the Centro Botín is light (and lightness of construction), I’m struggling, based on the available evidence, to see what the inspiration is for the NGV Contemporary. Despite being a statement about “art and design”, I fear that this project is as much about political statements and lasting personal legacies. Much has been made about the potential job creation during its construction, but much less about the design principles and aesthetic objectives. I hope this project does not turn into a municipal white elephant.

The original NGV (now referred to as NGV International) is a landmark building and one of the most popular destinations in Melbourne. I have known it most of my life, having first visited it aged 10, when it left an indelible impression on me. Having lived in Melbourne the past 20 years, I have been a regular visitor since it was extensively refurbished in 2003. As part of the Arts Precinct, the NGV is a focal point for the city’s cultural activities, and is a major draw card for local and international visitors. Any enhancement of the NGV and the surrounding facilities is generally to be welcomed, and certainly there are parts of the precinct that could do with upgrading. However, I’m not sure the design for the NGV Contemporary is the right decision.

Aside from the hastiness shown by the NGV Contemporary’s design phase, I’m surprised that the winning design team, Angelo Candalepas and Associates, do not appear to have built any comparable projects, despite winning multiple awards for their past work. The Candalepas studio has designed many residential buildings (and I lived very happily in one of their first competition successes, ‘The Point’ in Sydney’s inner city suburb of Pyrmont), but as far as I can see, nothing on the scale, significance or importance as NGV Contemporary. The proposed design looks very “blocky”, notwithstanding the internal “spherical hall”, which is highly reminiscent of New York’s Guggenheim Museum. It’s also not clear what the spacial relationship will be with the existing NGV and other neighbouring buildings, nor whether any of them will need to be remodelled or demolished to make way for this latest addition. I’ve tried, without success, to find a map or ground plan of the proposed development, or any details on how the NGV Contemporary will be accessed from adjacent streets, other than via a new garden that appears to envelop the NGV International – so what existing land will this garden occupy, and what current facilities might be lost in the process?

In conclusion, since its opening in 2017, the Centro Botín appears to have been enthusiastically embraced by the residents of Santander, and manages to be both utterly modern and easily accessible, unlike so many other examples of “statement” architecture. I hope we will see a similar outcome for NGV Contemporary.

Next week: Mopping up after the LNP

New Labor?

At the time of writing, ballot papers in the recent Australian Federal Election are still being counted. Although it is clear that the Australian Labor Party (ALP) has secured more seats in the House of Representatives than any other party, and its leader, Anthony Albanese has already been sworn in as the new Prime Minister, the ALP is yet to establish an overall Parliamentary majority – although it is highly likely they will.

While the final results are still to be tallied, it’s fair to say that this Election has been like no other, and the ALP will need to find a new style of Government, given the following facts:

  • Albanese is only the fourth Labor leader since WWII to lead the ALP to Government from Opposition – given the fixed three-year terms of Australian Parliaments, this is an achievement in itself;
  • The ALP secured less than 33% of the national primary vote (compared to the outgoing LNP Government’s 36%); this means nearly one-third of first preference votes were divided between the Greens, Independents, and other minor parties, and in theory breaks the two-party stranglehold on Federal politics;
  • The two-party preferred tally shows a remarkable similarity to the Brexit Vote: ALP 51.7% vs LNP 48.3% (Brexit: Leave 51.9% vs Remain 48.1%) – which might suggest a less than an overwhelming mandate for the ALP;
  • Candidates for the so-called “Teal Independents” secured more new seats than perhaps even they expected, and will form the largest group on the expanded cross-bench;
  • The Greens won three new seats, all in Queensland, which is surprising given the party’s stand on the mining, coal and gas industries;
  • Although Katter’s Australian Party retained its solitary member in the House of Representatives, neither of the other Queensland-based, right-wing parties (One Nation and the United Australia Party) picked up any lower house seats.

These election results have also highlighted (even exacerbated?) the differences that exist between regional, metropolitan, and suburban areas (both within each State and nationally) that represent significant fault lines across the Federal electorate.

Even if the ALP manages to secure a majority in the House of Representatives, the incoming Prime Minister has acknowledged the need to engage more with the cross-bench than previous administrations – in particular on climate policy and the establishment of a Federal independent commission against corruption. (And in the Senate, the ALP will likely be reliant upon the Greens to pass legislation.)

On climate policy, the main debate is on achieving lower targets for carbon emissions, how to do it, how soon, and at what cost. The biggest challenge will be on transitioning the mining, coal and gas industries (especially in Queensland and Western Australia), and on tackling the heavy polluters (in particular, energy generation, construction and agriculture). Given that both Queensland and Western Australia are under Labor Governments, and that these industries are heavily unionized compared to most other sectors of the economy, perhaps the Prime Minister will find it comparatively easy to sell his Government’s policies – but bringing the rest of the population with him will be key, and there needs to be a clearer path to decarbonizing the economy, including incentives for change.

Regarding a Federal anti-corruption body, the challenge will be to draw up practical and consistent terms of reference (especially given that such bodies already exist in some form or other at State level). For example, in addition to elected representatives and civil servants, should a new Commission have oversight of political parties, charities, unions, non-for-profits, industry associations, professional sporting codes, non-government bodies and anyone else that receives any sort of public funding? And what about whistle-blower protections and the public’s right to submit a complaint or other matter for investigation? How will it deal with freedom of information requests that appear to be denied on political grounds, or manage the transaction of investigations that may involve multiple parties? And should such a body have oversight of truth in political advertising or deliberate misinformation campaigns by those running for public office?

A glaring omission from the Federal election campaign was any meaningful debate on the need for structural economic reforms. Many of the published policies were heavy on how much funding would be allocated to favoured industries and pet projects, but they were very light on evaluating expected outcomes or measuring the quality of results. The only financial topics to get regularly aired were wage growth, inflation, interest rates, and incentives for first-time home buyers – all of which may be important, but they are largely “more of the same” that we have seen for the past 20 years of tax-based tinkering. Not since the introduction of GST (sales tax) in 2000 have we seen any significant policy implementation, and certainly nothing like the major economic reforms introduced by the Hawke/Keating administration. To be fair to the Greens, they did advocate new taxes to fund some of their carbon-related policies (including nationalising part of the renewable energy sector) but I don’t recall seeing a specific cost analysis or balance sheet on how they would achieve their goals. There are also tensions emerging between the need to bolster wage growth (off the back of improved productivity, which hopefully includes removing archaic restrictive practices and encouraging further competition?) and the need to address growing skills shortage (to be partly offset by increased immigration, without risking wage deflation?). Any discussion of the economy must also recognise the realities of the changing work environment, including new technology, remote working, casual employment and the need to encourage innovation and sustain the small business and start-up ecosystem.

Finally, if the Prime Minister is going to be successful in selling his vision of “New Labor” (my term) then he will need to:

  • ensure that the ALP does not again disintegrate into factional party warfare and rolling incumbent leaders that plagued the previous Labor administration (and which was adopted with equal gusto by the outgoing Coalition);
  • steer a renewed path to economic modernisation begun by his predecessors in the 1980s and 1990s;
  • embrace new technology and change the way public sector IT procurement is conducted;
  • acknowledge that the Government (featuring, as ever, so many career politicians who lack direct experience of working in industry or running commercial businesses) doesn’t know all the answers – but they know how and where to find them;

And while it’s not the Prime Minister’s job to actually “hold the hose”, he does need to make sure those who do are competent to do so, and that he and his Government will hold themselves, their appointees and their representatives directly accountable to the electorate.

Next week: Renzo Piano & the Centro Botín