Tag Archives: #politics

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

New Labor?

Posted on by
Reply

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

 

 

Doctrine vs Doctrinaire

Posted on by
Reply

The recent “debate” surrounding the Federal Government’s proposed Religious Discrimination Bill was a staggering example of political overreach combined with poor policy management. It was also a stark reminder that although we live in a secular, pluralistic and liberal democracy, some politicians cannot refrain from bringing religion into the Parliament and on to the Statute Books, even where there was neither a strong mandate nor an overbearing need to change the existing law in the way the Government attempted.

As far as I can tell, the Bill was originally intended to give people of faith additional protection against discrimination on the basis of their religion. But when linked to related Sex Discrimination legislation, it would likely have given religious institutions some degree of protection against claims of discrimination in the areas of gender and sexual orientation, particularly in respect of children’s access to education and in relation to employment by faith-based organisations.

If that wasn’t worrying enough, the Bill was underpinned by a controversial “statements of belief” provision. As drafted, this would have granted a person immunity from prosecution for the consequences of their words or actions if such deeds were based on a “genuine” religious belief. I find this particularly troublesome, not because I think people should be vulnerable to persecution for their faith; rather, it sets a dangerous precedent for what religiously-motivated people may feel emboldened to do in the name of their particular faith, especially where their actions cause actual or genuine apprehension of harm (the “God told me to do it” defence).

The shift from doctrine to doctrinaire is all too palpable. It’s one thing to believe in Transubstination, yet another to use a public platform (including social media) to proclaim that “gays will burn in hell”  unless they renounce their ways. The problem with a very literal application of ancient religious texts (most of which are open to wide and sometimes contradictory interpretation) is that this approach does not allow for any concept of progress (scientific, cultural, societal). It also gives rise to extreme forms of fundamentalism, such as banning music or refusing to ordain women priests. History has also shown us that people purportedly adhering to the same religion frequently disagree, leading to turbulent schisms, violent sectarianism and untold bloodshed. Then there are the religious death cults that kill themselves and their children for the sake of achieving their own “beliefs” (in which their offspring surely couldn’t have been compliant or willing participants).

As Luke Beck wrote recently in The Conversation, “There is broad agreement a person should not be discriminated against on the basis of their faith or lack of faith. However, the extent to which religion should be a licence to discriminate against others remains enormously contentious.”

This putative “license” may be an unintended consequence of the Bill, but the implications, should it be enacted, could be far-reaching: archeologists being sacked for saying the earth is older than 6,000 years; anthropologists for saying that the first humans were living 2 million years ago; astronomers for saying the earth orbits around the sun…. And that’s just in the area of science.

I understand that a person of faith may have a deep-seated belief against birth control, or pre-marital sex, or alcohol, or tattoos, or marriage equality – but that doesn’t mean their faith should impose their choices on the rest of the population. (Just as people of faith aren’t being forced to consume booze or get inked against their will.) As it is, religious institutions enjoy significant tax benefits, public funding and legal exemptions, and this current “debate” is bringing some of these discrepancies into sharp focus.

The last time I looked, here in Australia we aren’t living in a theocracy, people of faith aren’t being fired from their jobs because of their religion, and secularists, agnostics and atheists aren’t calling for places of worship to be demolished. What the latter do expect is people of faith not to use their beliefs either as a pretext to justify any form of discriminatory, pejorative or harmful acts or statements, or as a protection against being accountable for their words and deeds.

Next week: When is a print not a print?

Federation. Is. Broken. Surely?

Posted on by
Reply

Why don’t we celebrate the Australian Federation? Logically, it would make more sense to mark the formation of the Commonwealth of Australia (January 1, 1901), rather than the highly contentious Australia Day (January 26). The former offers the notion of nationhood and a sense of progress; the latter is tainted with invasion and colonization.

Part of the problem is that we don’t really believe in the Federation (or more likely, we don’t understand or know enough about it). Queensland and New South Wales were initially cold to lukewarm about joining the Federation, and Western Australia only came around once the Constitution Act was passed in 1900. (There’s even a argument to suggest that New Zealand may have joined the Federation before or instead of Western Australia, but I’ll leave that to the historians.)

More significant is the fact that the past two years have revealed considerable cracks in the Federation. States have been taking very different approaches to the current pandemic, with both Western Australia and Queensland at times acting as if they had already seceded. We’ve seen huge inconsistencies in how each State and Territory has responded to Covid – there was little to no national consensus on defining “hot spots”, “red zones”, “clusters”, “complex cases”, “mystery cases” or “close contact”. The respective public health measures and administrative responses were also very different, leading to confusion, frustration and anger over external and internal border controls, hotel quarantine, home isolation, track’n’trace, density limits, social distancing and vaccine roll-out. Overlay that with cack-handed management by the Commonwealth itself, and it’s easy to see why many people feel no love for Federation.

The former Premier of NSW let the cat out of the bag when she referred to “our New South Wales citizens”. Last time I looked, Australian citizenship is conferred at the Federal level, not by individual States or Territories. This Freudian slip just confirms the many fault lines that exist as between the Commonwealth and the States, and as between the States themselves. About the only thing that unites Australians is when a national sports team is competing at international level…

In fact, there are many areas of public policy, administration and infrastructure where the States and Territories adopt different standards and models – for example, we don’t yet have a fully integrated national energy grid, daylight savings results in five different time zones during summer (as opposed to the three during winter), and there are differences in parliamentary structures (bicameral vs unicameral) and election cycles.

The issue of Federation is also fraught from a financial and budgetary perspective. States and Territories have limited options for raising their own revenue, namely payroll tax, land tax, stamp duty and licenses. While they can generate revenue from commercial ventures such as public-private infrastructure projects (and from mining and resources royalties), the bulk of their funding comes from the distribution of Federal income tax and GST (sales tax). (Or they borrow in the public debt markets.) And of course, there is always some aggro on these allocations at COAG meetings (now known as National Cabinet….).

It might also be the case that just as we have too many professional football codes (none of which are truly “national”), we have too many layers of government for a population of just 25 million people (Federal, State, Local). Given that Local Government is not actually provided for in the Constitution, and given the antagonism between States, perhaps there is a case to be made for change. Most people live within a few coastal conurbations. Moreover, many people identify closely with their city, region or rural locality, even more so than their State. Think of border twin towns such as Albury-Wodonga on the River Murray and Tweed Heads-Coolangata on the East Coast. So, why not abolish the States and Territories (as well as dismantling the current local government structure), and instead establish functional municipal, regional and rural governments that are more representative of their local communities, and which are charged with distributing resources and coordinating public services on behalf of the Commonwealth (especially in the areas of health, education, welfare and transport).

One thing is certain: Australia needs to sort out the Constitution before it can re-visit the idea of becoming a Republic. Apart from the issue of a Treaty for indigenous recognition and native title land rights (and resolving the anomaly that is Local Government), the structure of our political institutions also needs reforming. Having Federal elections every three years reinforces short-term policies. Consider also the negative impact the current state of the party political system has on the quality of policy debate and implementation. Look also at the wonky versions of proportional representation we have in the form of single transferable votes and dodgy preference deals, plus Senate party slates and “Captain’s picks”.

This all means that even though we may think we are voting for individual candidates to represent our interests in Parliament, we are in fact voting for party machines. Those party structures are rife with factional warfare, internecine disputes, branch stacking and shady backroom deals – hence, we don’t directly vote for the Prime Minister (who can be rolled by their own parties, as we know to our cost), and we can’t hold our constituent representatives accountable except at the next Federal election.

Even if we acknowledge that we are voting for a candidate based on their stated party allegiance, there is no guarantee that they will vote (or even stay) with that party, so we don’t get the representation we voted for. Add to the mix the continued problems with party donations, campaign funding, Parliamentary lobbying and electoral pork barrelling, and it’s no wonder we have given up on the party political system and have lost all respect for our elected representatives and their party leaders. Plus, the perpetual rent-seeking from entrenched vested interests (coupled with monopolistic institutions and cozy industry duopolies) means there is inertia in favour of this status quo.

The proposed model for a Republic seems to be predicated on having a President as the Head of State (to replace the British monarch and their local representative in the form of the Governor-General). Beyond that there seems to be little agreement on how the the President will be appointed, or what Constitutional and/or political powers will be vested in them. Recent proposals for a nomination and election process have been met with both support and opposition from former Prime Ministers. But until we define what role the President will perform, we can’t begin to think about the process for their elevation to the position.

For example, is the Presidency going to be a mere figurehead, with no decision-making authority apart from confirming the Will of Parliament? Should the President be directly elected via universal suffrage, under a single, popular vote and “first past the post” method (rather than via a fudged proportional representation model? If we have an electoral college system (as in the USA), who gets to participate, how are they appointed and how do they get to cast their votes? How long should the President hold office? Is the Office of President designed to “keep the bastards honest” in Parliament, or to intervene when the Parliamentary party system breaks down, or to sue the Commonwealth on behalf of affected citizens when the Constitution is breached? Will the President have any role in forming public policy, or negotiating international treaties? Or will the President be voted in under a popularity contest, and as a reward for past public service, kind of like a plebiscite for Australian of the Year?

Another thing may also be certain: the timing (and likelihood) of Australia becoming a Republic will depend on the politicians of the day, how they advocate for it, and the model they propose. Because wrongly or rightly, the form and substance of the Republic will be linked to the character of the Prime Minister who has to invoke the necessary Constitutional reforms, and the nature of the Government they lead to implement it. Which is a large reason why the Referendum on the Republic failed last time – the proposed model was not clear enough to the electorate, and Australian voters may have feared the outcome would result in a President who did not represent them, or who did not reflect the choice of the people. A bit like our recent run of Prime Ministers, and the revolving door at the Lodge!

Next week: Gratitude and the Great Recharge