Tag Archives: Government

Mopping up after the LNP

Posted on by
Reply

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

Is the Party over?

Posted on by
Reply

In the wake of allegations and revelations concerning election shenanigans, branch stacking, dodgy donations, and other improper behaviour by MPs, our trust in the democratic process is being severely challenged.

At the heart of the democratic process are the core principles of universal suffrage, and the open nomination and free election of individual candidates. However, in reality, it’s the party system that gets people elected, even though political parties are not mentioned in the Australian Constitution.

Thanks to factional disputes, evidence of corruption and general party machinations, I don’t believe voters are being well-served by their elected representatives. The highly partisan nature of party politics is making it increasingly difficult to build consensus or build inclusive, progressive and sustainable policy outcomes – even within the same party!

At the risk of making a huge generalisation, the problem I have with most politicians is that they have to play the party game in order to get selected, elected and re-elected. Thus they are overly beholden to the party that “backs” them (factional elements and all) rather than the electorates they purport to represent.

Look what happened to both Kevin Rudd and Malcolm Turnbull during their (brief) terms as Prime Minister: neither had a sufficient power base in their respective parties that they could rely on for support. (Both essentially came unstuck on energy and climate policies. And interesting to note that despite their differences whilst in office, they seem to have found a modicum of mutuality around media ownership – and I’m sure they agree on a whole lot more, they just aren’t allowed to admit it in public.)

Also, it’s a paradox that once elected (especially to leadership roles) most politicians seem to lose the power of natural speech. Instead, they feel compelled to use tortuous and convoluted verbiage to avoid saying what they actually think, because the internal logic and policy constraints of party-think over-rules common sense.

Over the years, I’ve heard various politicians speaking at first hand at non-party and non-Parliamentary events, including Keating, Hockey, Tanner, Turnbull, and Morrison. As a general observation, they are far more engaging, authentic and sincere when they are away from the hustings, pressers or dispatch boxes. It seems as if they all appear to lose a huge part of their humanity as a result of elected office, and the strictures of the party machine.

So has the political party had its day? Increasingly, that feels to be the case. Which is a dangerous thought, given the fundamental requirement to build policy platforms to take to the electorate, and the essential nature of Parliamentary democracy to have a functioning opposition to hold the Government accountable. Plus, we need a healthy democracy to ensure a pluralistic, inclusive, secular and liberal (small ‘L’) society. Dictatorships thrive in one party states, theocracies and autocracies alike.

Unfortunately, the media finds itself having to pander to the increasingly shrill, strident and destructive discourse of party politics. The press has to play along with “gallery briefings” and “doorstops” (i.e., selected disclosure at best, selected leaking at worst). I also hate the whole process of policy testing via party focus group soundbites rather than considered debate in Parliament.

I have seen some recent suggestions that political parties should be banned (dangerous precedents there…) or that election candidates shouldn’t reveal in advance their party affiliation. Whilst the latter idea has some appeal, how would we know where their backing comes from if they don’t disclose their party membership? Perhaps we should also ban all political donations, campaign funding and paid-for ads (and/or introduce stringent “truth in advertising” laws). Or, what if every candidate can only spend an equal amount, whose budget is drawn from Government funds, and only once they have secured the minimum amount of voter support to stand for election in the first place?

I don’t have the answers, and even with “non-party affiliation”, candidates would self-identify or be tagged as belonging to a particular vested interest. But the party system looks increasingly broken, and the nature of binary politics is not helping us to address or solve the enduring problems of our age.

Next week: Coming out of our shells

Fact v Fiction in Public Discourse

Posted on by
4

In an era of fake news, alternative facts, deep state conspiracy theories, absolutists and populists, “political truths” are wielded like linguistic weapons. Any form of dissent (or contrary evidence) is branded as “unpatriotic”, “undemocratic”, “unconstitutional”, “disloyal”, “treasonous”, “elitist”, or “subversive”.

“The Treachery of Images” (Painting by Rene Magritte, image sourced from Los Angeles County Museum of Art)

Experts are treated with scepticism, scientists with suspicion, relativists with disdain, pluralists with apoplexy. Anyone seen to be challenging the status quo is dismissed as an “enemy of the people”. The public is being co-opted/coerced into buying wholesale certain political claims and party agendas (often hidden), without any opportunity to subject them to independent scrutiny or fact-checking.

Facts and logic are often the first victims in this abuse of language in the exercise of public discourse. Political slogans don’t even bother to avoid or deny accusations of propaganda: “Yeah? So what?” is often the response.

With that in mind, let’s play semantics and semiotics! To begin with, some opening statements:

1. This is a red car. (Observation, and a Fact if we agree on what is “red”) *

2. Red is the most popular colour of car. (Statement of Fact, if proved statistically) **

3. Red cars hold their value more than green cars. (Opinion, but also a Fact if it can be proved statistically, and we agree on what “value” means in this context)

4. Red cars are better than green cars, but blue cars are better than red cars. (Judgement tending towards a display of bias and prejudice)

Depending on the positioning and messaging, #1-#4 could be used in various marketing and advertising campaigns to sell red cars (or in the case of #4, sell blue cars).

Now, here are two reasonably uncontroversial propositions:

  • “Traffic laws are important to the functioning of society.”
  • “Good government relies on the democratic will of the electorate, and adequate funding of public services via taxation.”

We can see from the way language and truth are mangled in the service of current political debate and social commentary, that “statements of fact” can be easily positioned as “expressions of opinion” (and from there manipulated into pejorative and derogatory accusations or subtexts):

1. Red cars are involved in more road accidents than any other colour of vehicle
(Anyone who drives a red car is more likely to drive recklessly.)

2. People who drive red cars don’t observe the speed limit.
(Anyone who drives a red car is either a libertarian or an anarchist.)

3. People who drive red cars fail to pay their taxes.
(Anyone who drives a red car is anti-government.)

4. People who drive red cars are subversives.
(Anyone who drives a red car is a terrorist.)

5. People who drive red cars are law-abiding citizens.
(Anyone who drives a red car is a conservative. OR: Anyone who doesn’t drive a red car is a criminal.)

6. People who drive red cars give to charity but people who drive blue cars give more.
(Anyone who drives a red car is a better person than someone who drives a green car but not as good as someone who drives a blue car.)

The combination of sweeping generalisations and over-simplification in public discourse can obviously distort meaning and generate distrust. For example:

1. What if all taxis are red? That might mean they spend more time on the road, and therefore are more prone to be involved in traffic accidents.

2. What if more sports cars are red than any other colour? That might mean their drivers are more likely to speed. Or that their owners have more money. Or they are status conscious.

3. What if people who drive red cars come from a specific socio-economic, sectarian or ethnic demographic? Even then, they won’t all agree on the same issues, and they will likely display a similar range of divergent, opposing and contradictory views as the drivers of any other colour of car.

Unfortunately, the current environment for political debate and public commentary is being reduced to a binary state, where nuanced and subtle argument is being sidelined in favour of polarised and partisan politics, where facts are not allowed to get in the way of some convenient diatribe. If only politicians were accountable to voters under the Trade Practices Act – although we may soon see election campaigns subject to misleading and deceptive conduct legislation.

* Colour can also depend on context, as these experiments demonstrate: https://www.youtube.com/watch?v=FFC7EyR1lhU

** It’s not actually true: https://www.whichcar.com.au/car-news/most-popular-car-colours

Next week: Business as Unusual  

Can we come out now?

Posted on by
Reply

At the time of writing, the Victorian government has just announced the State’s very own measures as part of the “3 Steps to Recovery”, designed to ease the Covid-19 lockdown restrictions, in a controlled and manageable way. This follows last week’s meeting of the National Cabinet, where broad agreement was reached on a plan to help “prepare Australians to go back to work in a COVID-19 safe environment and getting the economy back to a more sustainable level“.

Even at the MCG, the advice is stay safe, stay home, and think of others

The biggest “winners” in Victoria will be our immediate friends and families (groups of up to 5 people can gather at each others’ homes), outdoor activities (groups of up to 10 people), wedding organisers and funeral directors (more people can attend ceremonies)…. oh, and the AFL (training can resume!).

But Premier Andrews has stressed that this is neither an excuse to host dinner parties every night, nor a reason to ignore established protocols and best practice on personal hygiene and social distancing. So no overnight raves or camping trips. And no dining-in at restaurants or cafes, and definitely no pubs, bars or clubs.

For some people, the continued Stage 3 restrictions seem too much to bear, with a few fringe elements (along with the anti-vaxxers and the anti-5Gers) being more vocal and more physical in their views. But they probably fail to see that no-one actually enjoys living under this regime, and nobody would do it if they had a choice or other safe options.

Thankfully, the majority of the population are willing to comply with the restrictions, however uncomfortable or inconvenient, because they realise the consequences of a second wave of infections (especially as we come into winter) would be worse than some temporary limitations on their freedom of movement. There is also a renewed albeit grudging respect for and trust in our political leadership (if not always felt towards individual ministers), and here in Australia we can also consider the political decisions and public advice in light of scientific data and medical evidence.

A large proportion of Covid-19 infections in Australia came via overseas travellers (cruise ships and ski trips), while some of thee first community infections came from gatherings such as weddings and religious services. And then there have been “hubs” within sectors such as aged care, meat processing and airport baggage handling.

There are still questions over plans to re-open schools, and sectors such as aviation, tourism and hospitality have a long way to go before “normal” service resumes. Parts of the retail sector have managed to survive thanks to on-line shopping and e-commerce solutions (supply chain logistics and delivery) but we should expect some businesses will never bounce back. Every employer will probably need to have a “Covid-19 Safe” operating plan before bringing staff back to work in significant numbers, whether as part of their best practices on risk management, or as a prerequisite to satisfy workplace health and safety obligations.

The apparent rush to get professional sport back on the field feels like a misplaced priority – especially given the controversy around NRL and AFL players who apparently lacked the self-discipline to comply with the social-distancing measures; and those players who are refusing the flu vaccine as a condition of rejoining their clubs. On this point, I rather admire the comments by Chelsea manager, Frank Lampard, who expressed his unease at the thought of professional footballers getting priority for Covid-19 testing, ahead of essential and front-line workers, simply to fast-track the resumption of the EPL.

Even with the various safety plans and gradual easing of restrictions, it’s up to each of us individually to be responsible for our own actions, and maintain a personal duty of care to each other so as not to risk spreading the infection, nor risk exposing others as a result of something we do or omit to do.

Next week: The Bitcoin halving – what happened?