In the London Review of Books, Ferdinand Mount, describes the gaggle of opponents of the EU and the possible consequences if the UK votes to brexit (exit from the EU).
He highlights some of the risks: a risk of recession or at worst a slump; capital flight; impact on employment; a rumpus in Scotland and knock-on effect on the morale of the rump EU.
For full article, see link:
http://www.lrb.co.uk/v38/n10/ferdinand-mount/nigels-against-the-world
This article is the second in a series about transport infrastructure. Part 1 dealt with the Prime Minister’s focus on mass transit and 30-minute cities. This deals with other matters raised by the Prime Minister: value capture, city deals. A final article will deal with the Commonwealth’s role.[i]
Value capture – levying taxes on properties improved by infrastructure projects – is not novel in Australia; contributions to local infrastructure are made for some developments. But it is relatively new for major transport projects. (more…)
Longer term policy making in Australia.
Longer term policy making in Australia is in a parlous state. The scale and significance of this problem is totally unrecognised. For example, since 1996 almost no contested measure that required legislative approval has past the Australian parliament. Change to the Senate voting system was one – but it is hardly likely to weaken the influence of minor parties. The GST was another. As a result John Howard nearly lost the 1998 election. (more…)
Conventional wisdom holds that conservative politicians are more prudent stewards of the economy. These politicians are often happy to reinforce this view by citing their business acumen and denigrating the experience – or lack thereof – of their opponents.
Think of Mitt Romney as multi-millionaire businessman versus Barack Obama, former community leader. Donald Trump also highlights his business “experience”, although his track record suggests he’s done far worse at managing his father’s wealth than a monkey throwing darts at The Wall Street Journal.
In Australia, Prime Minister Malcolm Turnbull has positioned himself as a successful manager of economic transition in advance of the next election.
But what if we were to take the business metaphor seriously and hold politicians to account with a performance review in terms of “measurable outcomes”? Would there actually be any evidence for the view that conservatives are better managers of the economy?
The key performance indicators (KPIs) in this context are economic growth and, possibly, inflation. And you might think it obvious that conservatives outperform their progressive counterparts given their penchant for deregulation and tax cuts. Ronald Reagan’s “Morning in America” after Jimmy Carter’s era of “stagflation” would seem to settle the case.
Or perhaps the Reagan/Carter example is too carefully selected and the actual role of politicians in guiding the fortunes of the economy is far less significant than they tend to claim. That would have been my guess before looking at the data.
However, in a new paper, Princeton professors Alan Blinder and Mark Watson have actually looked at the data and they find a striking difference in the performance of the US economy under Democratic and Republican presidents. And the Democrats perform much better than their conservative counterparts.
Since the second world war, average annualised growth of US real GDP has been 4.33% for Democratic presidents and only 2.54% for Republican presidents. The difference is statistically significant and robust. Inflation has also been lower under Democrats, although the difference is not significant.
Now, you are probably thinking of a lot of possible explanations for this finding that don’t necessarily imply conservatives are worse managers of the economy. But Blinder and Watson have probably thought of even more possibilities and have addressed them thoroughly in their paper.
In terms of the KPI analogy, the first objection might be that the executive powers of the US president are more constrained by legislative checks and balances of Congress than a CEO is by a board of directors or shareholders, let alone a prime minister at the head of a loyal party. This is certainly plausible.
But it turns out that there is no relationship between congressional control and economic growth. Average growth was highest when Democrats controlled both houses at 3.47%, but the difference with growth when Republicans controlled both houses at 3.35% is small and insignificant.
So, perhaps, US presidents can be held accountable for what happened under their watch.
Now you might ask, who really cares about the real GDP? Probably only a few macroeconomists like myself, right?
But real GDP growth turns out to be correlated with a lot of other stuff that people do care about.
For example, and probably not surprisingly, the unemployment rate fell under Democrats and rose under Republicans.
Perhaps more surprisingly, labour productivity and real wages grew faster under Democrats than Republicans, although the statistical significance is mixed.
Definitely more surprisingly, fiscal conditions in terms of structural budget deficits were worse under Republicans than Democrats, although not significantly so.
Completely surprisingly, corporate profits (as a share of total income) were significantly higher under Democrats than Republicans. In the words of Blinder and Watson, “Though business votes Republican, it prospers more under Democrats.”
So, however one sets the KPIs, the Democratic presidents come out on top.
Why did conservatives do worse? This is the tricky question that Blinder and Watson only partially answer.
Republicans were in the White House for 41 of the 49 quarters since the second world war in which the US economy was classified as being in recession by the National Bureau of Economic Research.
So maybe Republican presidents just had to deal with the hangover from the profligate Keynesian policies of their Democratic predecessors.
But, again, there is no support for this in terms of any indicators of fiscal (or monetary) policy. Meanwhile, Republican presidents actually tended to benefit from more momentum in the economy at the start of their terms.
Blinder and Watson find that Democratic presidents mostly had the benefit of more benign oil shocks and international economic conditions, which were arguably beyond their direct control.
In fact, the only Keynesian story that has traction in the data is the fact that consumer confidence was higher when Democrats were elected (perhaps “Happy Days Are Here Again” after all). But, as Blinder and Watson acknowledge, sorting out causality from correlation is particularly difficult with measures of confidence.
It has long been thought that economic conditions have a major influence on electoral outcomes. Yet it seems the electoral outcomes can also influence economic conditions, at least with US presidents.
Looking at the Australian context, the difference in average real GDP growth across Liberal and Labor governments is not statistically significant, although the Liberals’ average has been somewhat higher at 3.58% compared to 3.18% for Labor since 1959 when quarterly data became available.
But a lack of significance means this could reflect just a few outliers rather than a systematic pattern. Notably, the comparison is even closer since 2008, with 2.43% for Labor in the face of the Global Financial Crisis versus 2.60% for the Liberals at the end of the mining boom.
No matter how one cuts the data, conservative politicians simply don’t perform so much better than their opponents as they would have us believe. At the same time, the reasons for their left-wing counterparts’ economic successes cannot be easily tied to better policies. Instead, it could simply be a “feelgood factor” that, alas, few of the current US presidential contenders seem to engender.
As for Turnbull, he might do best to focus less on his economic management skills and more on promoting confidence – or perhaps even chasing rainbows (coincidentally the name of the musical that first featured “Happy Days Are Here Again”).
According to press reports, the Queen believes that some Chinese were rude during President Xi Jinping’s visit to Britain last year. Apparently the Queen told Metropolitan Police Commander, Lucy d’Orsi that she had ‘bad luck’ in being responsible for security for the visit and that ‘they were very rude to the (UK) ambassador’.
‘Rude’ seems to be a frequent part of palace vocabulary.
In 1974 in Kingston, Jamaica, aboard her yacht The Britannia, the Queen told me that ‘your Prime Minister had been ‘rude’ to my family.’ I was the Secretary of the Department of Prime Minister and Cabinet at the time.
Forgive me for mentioning it but when you read down you will understand. (more…)
“Who do you trust to keep the economy strong and protect family living standards? Who do you trust to keep interest rates low? Who do you trust in the fight against international terrorism?”
Familiar words? Malcolm Turnbull’s opening pitch for the July 2 election? Actually, no. These were John Howard’s words, launching his campaign against the hapless Mark Latham in 2004. By my count, Howard used the mantra “Who do you trust?” more than a dozen times. (An old-fashioned pedant like me might have asked: Whom do you trust to use good English grammar? But let’s not quibble over trifles.) (more…)
The National Foundation for Australian Women has prepared an analysis of the Budget 2016-17 with what it calls a ‘gender lens’. An executive summary of this analysis follows. A link to the full document can be found on ‘the budget’ button: www.nfaw.org.
Budget 2016-17 fails to bring Australian women into the centre of the economy and pushes many further into poverty. Cuts to overseas aid hurt vulnerable women in our region.
The budget is far from fair, with just a touch of the white picket fence. It provides tax breaks for the wealthy, while low to middle income families are hit by ‘zombie’ savings from the Abbott-Hockey horror budgets. It is lacking in investments in education and training reforms which might drive innovation and jobs. (more…)
Thanks to Medicare introduced over 40 years ago, despite bitter conservative opposition, we have one of the best health systems in the world. It is sustainable but we waste over $20 b per annum. There are threats and problems that we must face.
What are they? (more…)
Last week, four days before the election was called, I received a “pre-election” letter from my “Parliamentary representative”. It began with the following disclaimer:
Dear Fellow Corangamite Resident: Soon there will be another election and I write to apologise for the fact that your letter boxes will be swamped with election material. However, it will be an opportunity for you to choose your representative – and yes, I will be standing and asking for your vote.
The sitting member obviously thinks we know what electioneering is all about. For the past two elections she, or rather her campaign “team”, have swamped the electorate’s letter-boxes with what they say is “election material”. Her advisors may recall that two elections ago, when she narrowly lost, the reigning opinion across the electorate was that had she not swamped our letter-boxes she would have probably got across the line.
We might now hope, having used the one-age letter to briefly tell us what she has done for us, and what she plans to do, that this modest communication is the summation of her letter boxing campaign. We will wait and see. We may not be “on the same page” politically, but we certainly are part of the same political environment in which she seeks to have her views heard, and her seat retained in Parliament, in the midst of a welter of publicly-funded election material. She, like the rest of us, knows that most of this printed material is wasteful and headed for the WPB. She tells us that…
This election is about voting for a local person who works hard all year round, not just at election time. This election is about voting for a local person who is not afraid to speak out to fix local problems…. During an election campaign it is easy to criticise and put down your opponents. I will vigorously challenge bad policy, but will not play dirty. My aim is to serve you well and honestly.
Here let me encourage readers to do as I have tried to do: spend at least some time in careful examination of the more readable “election material” that comes through the letter box or email in-tray. Cross-examine it. Think about its logic. Try to identify the questions it is suggesting that we, as voters, are already asking. In so doing, clarify which questions are being avoided. Such a strategy may well confirm the hypothesis I have been developing (see various posts at Nurturing Justice) for some time: our system of parliamentary democracy has shifted from “political debate” to “public relations”.
The shift to “public relations” can certainly be inferred from the above letter; it is devoid of any mention of the Candidate’s party or the party’s platform. The fact that this local member may be “Liberal” is almost incidental. In this letter of personal assurance the candidate announces her willingness to help residents and their families, being thoroughly committed to fixing local problems. Good. But there’s no indication from what she writes that this “help” is available from a Federal parliamentary representative, rather than one from the State or Local Government. Is this “help” also about helping us understand the kinds of political problems our country faces? Indeed, we get no sense of how she sees the different levels of government apart from her being here in a Federal electorate telling us she is always ready to “help”, and not just at election time. Are voter’s only responsible in a political sense at election time? Are not voter’s citizens with ongoing political responsibility for the justice (or otherwise) of our system of public governance?
So I’m left to imagine a raft of rather inconvenient questions I could ask at the “meet the candidates” meeting convened by our local Civic Association. Let me present these here with some evaluation of their relevance and/or impertinence.
When we view the Liberal-National coalition and Labor in terms of what they have become – “public relations firms” – we may give ourselves much needed “elbow room” for local “Meet the Candidates” meeting. Such questions as I have posed need further elaboration in order to suggest a comprehensive diagnosis of why politics has become so problematic. Such discussion will simply be too complex for most voters who attend such meetings expecting “relevance”, or guidance as to who they will “tick”. To be critical of the underlying political trends proves just too much.
My local member says she is not afraid to speak out in order to fix local problems. But her party, along with the parties of her political opponents, now compete in a media-ted environment tone-deaf to the structural problems for public governance that have been created by these parties-cum-public-relations-firms in cahoots with the mass media. Citizenship has thus been severely de-politicised, problematised, and effectively reduced to casting a “choice” for candidates propped up by dodgy operators. We might even say that the dominant neo-liberal ideology has been too successful in its “privatising” of citizenship.
What would be the response, I wonder, were the candidates to be asked to tell us more about the real problems they have faced within their own parties? These associations have for decades styled themselves in terms “winning the next election” – apparently that’s the problem they exist to solve. And so they have become dominated by their own public relations “drivers”. They have lost themselves as genuine political parties. So do not we, as voters, not need to know how the brave candidates have fared within these tightly managed elite-generating firms? Would not such stories now, before the election, tell us more of what we need to know in order to cast a responsible vote?
Could local “Meet the Candidates” meetings induce Candidates to tell their electors their political stories, more about the “inside” machinations of their compromised parties, and how they managed to engineer their own nomination? To ask the question is to already hear the echoes of dismissive ridicule. How unrealistic would that be? But that psychic echo is telling us why political life in Australia (as elsewhere) urgently needs to rediscover political parties as genuine, transparent associations of like-minded, like-committed, citizens, that are giving ongoing positive support, also parliamentary support, to just public governance. And without genuine political parties, the dominance of the public relations “firms” that fill our political vacuum will simply undermine public respect for public governance, for state-crafting, for our task as citizens to promote public justice, as well as for political parties themselves.
Bruce C Wearne is a former University lecturer who lives at the entrance to Port Phillip Bay. He continues to read and write in social theory and biblical studies.
There a couple of reasons to take little notice of what Labor, Liberals, Nationals, Greens and other assorted politicians say between now and 2 July.
The first is that election politics is rarely about telling the truth. Normally it is about telling people things that they think people want to hear. The skilful politician monitors public opinion, determines what people believe, packages the public’s best lines and sells them back to them. It will always be thus as the primary concern of a politician is winning.
The second reason is that even a political leader clearly winning the House of Representatives can guarantee nothing. The Australian bicameral system of government means that an elected Prime Minister is subject to the whims of a Senate his party almost certainly will not control. The best Malcolm Turnbull and Bill Shorten can promise us in 2016 are the things they they will do if the Greens, Nick Xenophon and whoever else gets a Senate guernsey, will allow it.
Already in this campaign Messrs Turnbull and Shorten are asserting that they will not be entering into any form of coalition with the Greens should the parliament be hung. That’s a meaningless statement if ever I’ve heard one. Whether there’s a formal agreement or not, deals will be done in the unlikely event of no one having a House of Representatives majority. In the case of the Senate, the government can either make an arrangement with a selection of crossbenchers, as Julia Gillard did with the Greens, or suffer the frustrations of defeated legislation as was chosen by Tony Abbott and Turnbull.
The shape of legislation over the next three years will depend on the exact composition of the Senate crossbench. Until that result is known election promises should be regarded as nothing more than a broad statement of possible intentions. Neither the Liberal-Nationals nor Labor can guarantee anything. And that’s before all those bold assumptions in the economic forecasts that supposedly underpin those promises meet the reality of an uncertain world.
The retiring Senate had 33 Coalition senators, 25 Labor, 10 Greens and eight others – three independents and one each representing the Xenophon Group, the Palmer United Party, the Liberal Democrat Party, Family First and the Australian Motorist Enthusiast Party. The rationale behind changes to the Senate voting system sponsored by the Coalition and supported by the Greens and Xenophon, was to cull most of those minor parties and independents.
At an election for half the Senate that theory probably works but this ballot is for the lot with only half the normal quota required in the six states. The final position in each state will go to someone with five per cent of the vote or less. Some of the odds and sods will disappear but some will not and new ones might yet appear.
Nick Xenophon looks certain to drag at least one colleague in behind him in South Australia. Tasmania has a long history of liking Senate mavericks from Reg “Spot” Turnbull elected in 1961 to Brian Harradine who was in the Senate for 30 years from 1975. Jacqui Lambi would fit in nicely with that duo for unconventionality. If name recognition counts for anything – and in politics it probably does – then Glenn Lazarus must be in with a chance in Queensland even if he did once play State of Origin for New South Wales.
It really is something of a lottery but on my ticket I’ll buy 31 Liberals (2 less than now), Labor 30 (an increase of 5), the Greens down one on 9, with the Xenophon group and others making up the balance with 6 (a couple less than the number retiring). Any result close to that and predictions about what a government will achieve become difficult indeed.
Little wonder that the political pundits pontificate more about who will win the election horse race than analysing options about unknowable policy outcomes. Depressing it might be but inevitable when the two major runners feel obliged to belittle almost all of their opponent’s proposals and the minor starters refuse to accept the idea of a winner having a mandate.
How much better it would be if Don Chipp’s Democrats were still the holders of the balance of power with their mantra of “keeping the bastards honest” and a commitment to ensuring that an elected government kept its promises. Or that there was a major party leader with the daring of a Paul Keating who warned voters before an election that Labor would not vote in the Senate to defeat a Coalition’s proposals for a GST.
Alas the likelihood of those in opposition accepting again any view of there being a mandate disappeared when the Democrats actually did what their founding father Chipp promised when founding them. Voting for another version of a GST promised by a John Howard led government was the prelude to the Democrats fading away.
Richard Farmer is a journalist and businessman.
We should have known it would come to this. For years both Labor and the Coalition have ducked and weaved while the education sector battled to ensure that at least the Gonski funding hope was kept alive. Labor recast Gonski’s recommendations into a form that the Gonski panel would hardly recognize, and the Coalition was never committed – in fact it is only a few months since they announced that extra Gonski funding wasn’t going to happen.
But the agitation wouldn’t go away and the May budget included a further $1.2 billion. It comes with certain obligations imposed on the States, somewhat of a backflip from previous Minister Pyne’s rejection of any such “command and control”. It also comes with various other conditions, including performance pay for teachers, something which was amongst the shortest-lived of Labor’s previous initiatives.
Labor’s current Gonski commitment is $4.5 billion over 2018-19 – a much bigger ‘Gonski’. Labor Leader Bill Shorten has released a state-by-state and electorate-by-electorate breakdown of where the money will go. In effect Labor is promising what it sees as the full Gonski. It certainly isn’t and I’m not referring to money.
In response, Education Minister Birmingham – in the new Coalition regulatory mode – was quick to point out that Labor will continue a model riddled with inconsistencies in funding between the states, territories and non-government systems.
He could have added his own government as a contributor to such inconsistencies – but his response does raise significant questions. How will the funding be targeted, will it get there and under what forms of accountability? Even bigger questions include: what will be the purpose of this funding, how will it target need and what steps will be taken to ensure efficiency, consistency and efficacy?
These are the same questions that Gonski asked, and to which he provided answers, several years ago – but his solutions were never taken up. Funding was to be focused on need and bring schools up to a resource standard to improve student outcomes. It was to be coordinated by a federal/state schools resourcing body to create some logic in the way schools were funded by the two levels of government.
What has happened in the post-Gonski years is that the way we fund schools from both levels of government, has achieved almost farcical dimensions. Everyone seems to believe in equity and boosting the struggling schools – but the evidence shows that we have not been doing that. Recurrent funding increases (per student) for schools have been at the same rate for the advantaged and disadvantaged for the last six years. When it comes to school sectors, increases for non-government schools are running at double the rate of increases to government schools, the ones which enrol more of the strugglers. As I have previously shown, the differences between the states defy explanation.
The Prime Minister and Leader of the Opposition don’t have to go too far to see what has happened in the absence of efforts to achieve better coordination. Instead of visiting their local schools for the inevitable photo ops they could dig into what the funding data is showing about these same schools. What would they find?
Let’s start with Bill Shorten’s electorate of Maribyrnong. It includes a variety of government and non-government schools, funded in ways that must have escaped the notice of the local member. A couple of Catholic secondary schools are very well funded, in part because they enrol students with a below-average level of socio-educational advantage (SEA). The Catholic Regional College receives $15,320 per student in combined government funding – but this is over $3000 more than goes to nearby Braybrook College, a government school with an even lower SEA. It is also well ahead of Pascoe Vale Girls Secondary College and St Albans Secondary. Caroline Chisholm Catholic College, also in the electorate, is funded, by governments, at levels ahead of two of these government schools. There are also some inconsistencies between the government schools.
In effect the Catholic schools have become more public than the government schools – but only in terms of their funding. In their operation they are private schools. Only the government schools must be available to every local student, from every family and under every circumstance. Not only that, there is a raft of quite different obligations, accountabilities, policies and practices impacting on the two sectors. The school playing field is anything but level. Go figure!
So let’s visit the Prime Minister’s electorate in Sydney’s eastern suburbs. There aren’t too many government schools there because previous governments, in their wisdom, closed them down and the current government is scrambling to meet the new demand for public school places. In NSW public funding of non-government schools seems to have been at more sustainable levels. But Yeshiva College and St Clare’s College, in the Wentworth electorate, manage to receive more public funding than the not too distant Rose Bay Secondary College and Randwick Girls High School. Yeshiva College has just 69 students, so diseconomies of scale apply, something which raises other questions. All these schools have a similar SEA level.
The electorate of Wentworth reveals more. The level of student achievement, as measured by NAPLAN, doesn’t significantly vary between schools which enrol similar students. But the total level of investment which goes into these similarly high achieving schools varies wildly, from around $12 000 per student in the public schools to double, and in some cases triple, that amount in the local private schools. With his background in business the Prime Minister would know about the need for investments to pay a dividend. It seems that the public investment of around $65 million each year in the private schools isn’t making much difference to student achievement. When he next wants to show that money doesn’t improve results he has the evidence on his doorstep. In the meantime, Bill Shorten might like to think about where the $15 million Gonski money he has earmarked for the electorate should not go.
In the past, to point to this sort of thing would raise the usual accusations of the politics of envy. There is not envy behind these figures, just dysfunction. Gonski’s sector-blind solution would have avoided this happening. But both parties have avoided most of Gonski’s important solutions, and now have to give urgent attention to resolving the consequences. They either have to reduce funding to the non-government schools or level the playing field in the ways they operate. Doing nothing isn’t an option.
But nothing is precisely what they will do.
Chris Bonnor AM FACE is a retired Australian principal, education writer and Fellow of the Centre for Policy Development. He is a previous president of the NSW Secondary Principals’ Council and author of several books including The Stupid Country and What Makes a Good School, both written with Jane Caro.
Our economic plan for jobs and growth … jobs and growth…jobs and growth… jobs and growth … sobs of mirth … Hobson’s Choice … blobs and froth .. …
The trouble with endlessly repeating slogans is that they become meaningless babble. Just what the Turnbull/Morrison mantra will sound like in another eight weeks beggars the imagination.
And while we’re at it, the transition away from the mining boom is bad enough, but its ugly and illiterate derivative, transitioning the economy, is downright horrible, guaranteed to drive the sensitive listener mad within a fortnight.
But the irritating terminology is not the real problem with the budget. Turnbull and Morrison insist that it is not an ordinary budget – not a budget at all. It is a PLAN, and a plan not for a mere budget, but for an election campaign – perhaps for a decade.
But the immediate reaction was not to admire and analyse this solemn document, but to ask one simple question: can the government sell this manifesto, at least for long enough to win the forthcoming election? And, fortunately for the government, the answer seems to be a qualified yes – if only because there isn’t much to sell.
It hasn’t produced a lot of winners, but it hasn’t produced a lot of losers either. And that, in the somewhat parlous circumstances in which Malcolm Turnbull finds himself, is just about the best that can be hoped for.
They will also hope that the electorate will fail to see the inherent contradiction in the stitch up. Even as Morrison was taking his first, tentative steps into the budget lock-up, to recite another of his depressing slogans – living within our means — the Reserve Bank was cutting interest rates to an all time low in a completely opposite signal.
What Glenn Stevens and his fellow governors were telling the nation was that the economy is sluggish to the point of deflation and what is needed is not restraint but stimulus: borrow, invest, spend! Just what the voters will make of all that is best forgotten, and it undoubtedly will be in the days – no, weeks – ahead.
When it was already clear just 24 hours after the budget was brought down that it had become something of an anti climax, the government’s spin doctors tried to bring it together into six succinct dot points. But if anything, these only revealed the piecemeal nature of the document.
Point one: The great innovation strategy. But that was last year, and in any case, it never really explained just what, if anything, was actually proposed.
Point two: The colossal defence announcement, setting to high-tech spending throughout Australia. But that too was old news – last month, and widely regarded as an a electoral fix for South Australia with the rest way over the horizon.
Point three: The various free trade deals. But, yet again, not new, and in any case Turnbull and Morrison had very little to do with them. It is likely that the unilateral deals with South Korea, Japan, China and perhaps India will eventually prove fruitful, and just last week Singapore was brought into the mix. But the Trans Pacific Partnership Turnbull boosts so extravagantly is much more dubious: it appears to favour American corporations rather than Australian consumers.
So on to point four: tax. Attacking the dreaded multinational avoiders while reducing Australian corporate rates. The government argues that this is in sharp contrast to Labor’s schedule for tax increases: but hang on. Labor has no plans for major tax increases – it is just intending to withhold the tax cuts the government proposes. This is not an increase – it is in fact a saving from revenue; it is government that plans to spend them. But not, alas, on Turnbull’s plan – on its own.
And Labor would maintain the Temporary Deficit Levy, on the obvious ground that the deficit has not been reduced – it has multiplied threefold. Surely the need for the levy is greater than ever. Not much joy there.
Point five is superannuation: the retrospective tax you are having when you are not having a retrospective tax. And then point six: the clumsy acronym PATH, to reduce youth unemployment. Well, it might be worth a try – nothing else has worked. But it at least counts as a positive. The rest, unfortunately, appears very wishy washy for an eight week election campaign. Perhaps, just perhaps, Turnbull really does not get politics.
In the meantime, in spite of Morrison’s fervent plea that the voters are now past the stage of finding winners and losers, they, with the help of an enthusiastic media, will get on with doing just that.
Morrison announced, in the tones of one proclaiming the Second Coming, that the class war is over. This, of course, is the constant assertion of the rich and powerful; what they actually mean is that the poor and underprivileged should bloody well shut up and accept their fate.
As the old hymn puts it, The rich man in his castle, the poor man at his gate: God made them high and lowly, He ordered their estate.
Way back in 1945 the founder of the modern Liberal Party, Robert Menzies, delivered his edict: “We believe that the class war is a false war…” But it wasn’t then and it isn’t now. And Bill Shorten has sought to capitalise on this old and simple truth.
Shorten, it may be said, is trying too hard; but Turnbull risks being positively smug. By asserting his superiority over Shorten and everyone else, he is making what should be a straightforward election campaign a debate whose complexity threatens to unravel.
Let’s just keep it simple: jobs and growth … jobs and growth … jobs and growth … The Grapes of Wrath … Smokers’ Cough … The Glugs of Ghosh …
Mungo MacCallam is a political commentator and former senior correspondent in the Canberra Press Gallery.
If words were deeds – or even credible policies – Malcolm Turnbull might already have joined the company of Australia’s pre-eminent Prime Ministers.
All three of Malcolm’s pre-politics callings, journalism, law and banking, have involved the extensive used of the words medium. But none of these also involved the commitment, the enduring exposure, or the threat of damaging public refutation as mere words do, coming at a critical political time, from the country’s most senior political figure.
However, in the short journey Turnbull’s eight-week election campaign has travelled so far, it seems that, from his side at least, words only will provide his and his Government’s principal armament. Perhaps this is because his Government has little else, either in terms of political stability, or actual political accomplishment to serve the purpose.
While Labor has been noticeably slow in picking apart Turnbull’s maiden campaign efforts in early days, Malcolm would be optimistic indeed to expect this neglect by the opposition to last for the near-record 56 days of the current campaign.
In the writer’s experience, long electoral campaigns have not been kind to incumbent Prime Ministers who initiate them.
In 1969, for example, a super-confident John Gorton, sitting on a then record parliamentary majority, set a 60+ day campaign which he hoped would see the end of the up-and-coming new-style Labor leader, Gough Whitlam. Whitlam whittled away the record majority to within 5,000 votes in critical seats, of an improbable victory. Ministers’ seats were among 18 lost across the country.
Again in 1984 another over-confident Prime Minister, Bob Hawke, deliberately chose a long campaign during which, he assured colleagues, the longer it went the further ahead of this opponent, Andrew Peacock, he would be. Hawke’s soporific campaign speeches over the long period again saw significant reversals – and again not for his opponent.
Malcolm therefore seems to be taking a considerable risk seeking to see out successfully an eight-week campaign armed principally only with his eloquence.
During his return trip to the top of the Liberal Party, Turnbull was critical of Tony Abbott’s seeming attempts to govern in slogans. “Kill the taxes”, “Stop the boats”, “Lifters and Leaners”, “Team Australia”, “Death Cult” and a handful of others did not serve Tony well. Remember the polls and his ultimate fate.
Malcolm has chosen to start his campaign with a flurry of loud self-laudatory promises and assessments – and a slogan. And the slogan it seems has already been forced on most of his team. So far those exposed in the infant campaign like Malcolm himself, Mathias Cormann, Julie Bishop and others are peppering their electoral offerings with the boring repeated chants of “Jobs and Growth’.
Noble objectives unquestionably. But it would be remarkable if, over the eight weeks it is not pointed out that nothing in his recent budget – virtually his election manifesto – is likely to guarantee either – nothing other than something to talk about.
In his war of words Turnbull has already found it convenient, even attractive, to refer to the economic problems he says were created by the preceding Rudd-Gillard-Rudd Governments. Indeed, the shouts of “Debt and Deficit Emergency” from his side of politics helped propel him and his colleagues into Government.
By election day , July 2, Turnbull’s Liberals will have been in office nearly half as long as Labor, 2007-13.
In that time his government has increased debt beyond $150 billion. The deficit has trebled. His party has not had to grapple with the worst global financial crisis since the Great Depression that plagued more then three of Labor’s six years in office. Strangely, with these inflated problems, there is now no longer an emergency. Given the performance so far, there is, however, surely some risk in doing, as Malcolm urged addressing the media to announce the election last Sunday, “Keep your commitment to our economic plan”. Can this exhortation, given his Government’s performance so far, possibly last eight weeks with both Opposition and media on the job.
There are several other areas where it would take a rather profound optimism to believe there will not be, at least, further intense scrutiny.
Malcolm refers repeatedly to previous Labor Governments, particularly the last three, comparing them unfavourably with his own. If he is really upset by the internal disruption, which helped destroy that show, he does not need to go back even that far. Tony Abbott lasted as Prime Minister a shorter period than either Rudd or Gillard whose sackings Turnbull continually derides. And supposed Liberal stability in the first term has been additionally racked by ministerial scandals involving Ministers Robert, Brough, Sinodinis, Briggs, and speaker Bronwyn Bishop. Labor never matched that. Again Turnbull is surely limited in talking much more about this, one of his favourite topics, over another 50+ days.
In one of the few areas of positive thinking – rather than merely reflecting on Labor’s inadequacies – Turnbull urges support for his party on the grounds of national security as if there was some historic backing for the claim. His party committed Australia to involvement in the Vietnam War and in 1967 double the commitment with a loss of more than 500 young Australian lives. No one anywhere now argues the wisdom of those decisions.
Far more recently John Howard blindly followed Dick Cheney and George W. Bush in a futile bid to “sow seeds of democracy” in the Middle East. The picture throughout the whole region attests the error of that judgment. A similar decision to outsource Australia’s defence and foreign policy to one of the universally acknowledged worst-ever presidents, George Bush, in entering Afghanistan is yet to be evaluated as anything but a failure (not yet the disaster of Iraq) – but a failure nonetheless. Again, if words are your only weapon a focus on his party’s security record would hardly seem to be a winning campaign topic.
Malcolm, speaking to the press in his electoral announcement last Sunday, spoke of the excellence and importance of Australian science. As a senior Cabinet Minister he sat in mute support as Tony Abbott ripped $120 million from Australia’s world-class scientific organisation, the CSIRO – most of it coming from the climate research section. Despite his claims, Malcolm has done little to repair the damage. Eminent scientists, locally and around the world, have condemned and lamented the wanton destruction of this organisation. The propositions on which Malcolm seems anxious to build his marathon election campaign are beginning to look flimsy.
On an earlier day Malcolm, as opposition leader in 2009 declared that he did not want to lead a party, that did not want action on the world’s No1 problem, climate change. He again watched silently as Tony Abbott tried to damage or destroy every single government agency with any direct involvement in climate science. And, he produced a budget (election manifesto) without a single reference to climate change – another issue best avoided over a long coming eight weeks.
To the media on Sunday he described his proposed tax arrangements as ‘the best in the world’. Unless he’s at the Australia Club or the Melbourne Club, he might be wise to keep this also off his electoral agenda.
And on another popular Liberal line against Labor leader Shorten regarding his alleged role in the downfall of both Rudd and Gillard, Malcolm might also be more than somewhat restricted. Whatever Shorten’s involvement in either or both, immediate benefit to himself was nil. Malcolm’s own role in plotting the destruction of his leader, Tony Abbott, for his own considerable benefit has now been well documented and uncontested not only in the popular media but in several books.
Having chosen (or been compelled) to fight this election campaign largely on words rather than performance, Turnbull faces a long and hopefully not too inquisitorial media and more importantly Labor Opposition.
If he wanted a guide as to how it might play out, last Sunday’s meeting with the media at Parliament House after his visit to the Governor General at Yarralumla was hardly encouraging.
Questions largely ignored the issues Malcolm sought to promote. The first four questions were inquisitive – Malcolm might have deemed them hostile – they were certainly disregarding his hopeful message.
Malcolm – not his press officer called a halt to the conference.
He faces another eight weeks of this. While current figures in national polls indicate a win for his Liberals, Malcolm does not have the comfortable poll margins that Gorton and Bob Hawke enjoyed when they last sought to demolish opponents with a long election campaign.
There are risks involved – BE CAREFUL MALCOLM. Slogans and questionable assertions can be made to appear dangerously fragile to the electorate over a full-on eight week political stoush.
Warwick Elsche, Canberra correspondent.
Are conservatives better economic managers? Part 1
In my blog of 3 May 2016, I queried the claim by Malcolm Turnbull and apparently supported by many media commentators and also by the public, that conservatives are better economic managers. The evidence and the record do not show that.
In last week’s budget and in the public relations selling afterwards, Scott Morrison fell back on slogans again. In this case the slogans were ‘jobs and growth’, ‘jobs and growth’. This was quickly followed by ‘we have a plan’, ‘we have a plan’. But as Ross Gittins in the SMH has pointed out, there is really no economic plan to get the budget back into surplus. The surplus is now pushed out again for years. With no real economic plan, the government again resorts to slogans at it did at the last election – ‘stop the boats’ ‘eliminate the deficit’ and ‘reduce the debt’. But we know from experience that the Abbott and Morrison activities did not stop the boats. It was a myth, but still believed by many. And the deficit and debt are much worse.
In this blog Ian McAuley pointed out that in the post-war years only Labor Treasurers, Paul Keating and Wayne Swan have won the prestigious Euromoney Finance Minister of the Year award. Peter Costello and Joe Hockey didn’t make it.
In The Guardian on 2 May, economist Stephen Koukoulis said
‘In terms of jobs, the ABS data show that average quarterly GDP growth and average monthly increases in employment are stronger when Labor has been in government compared with the Coalition. … GDP and employment growth both rise at a faster pace when Labor is in government.’
In this blog, Ian McAuley has set out three reasons why we might be misled into believing that conservatives are better economic managers. The first is that Labor has been in office at the wrong time. Coalition governments held office in the long boom years from 1949 to 1972 and from 1996 to 2007. Both Robert Menzies and John Howard were very lucky. By contrast the Whitlam government, which made many mistakes, encountered the biggest economic shocks of the post-war era – the 1973 oil embargo, the end of the Bretton Woods exchange rate arrangement and severe contraction in the US economy after the end of the Vietnam War. The Rudd government was also unfortunate in that it was confronted by the Global Financial Crisis, the other major post-war shock.
Ian McAuley argues that conservatives have successfully persuaded many, including themselves that government spending is inevitably wasteful and Labor is all about taxes and spending. Yet there is much more to a successful economy than budget balance and public debt. In world terms, Australia does not have a large government sector and Australian government revenue is modest in global terms. The most successfully managed economies in the western world are the Nordics that have high taxation levels and high government spending.
As Ian McAuley also points out, there is thirdly an assumption that rich people are clever and therefore better managers. Some clever people may be good managers but many rich people have the benefit of inheritance. Other rich people like developers, are able to manipulate governments to obtain concessions, but they don’t show much ability to compete in an open market without government support. As John Maynard Keynes reminded us we need to distinguish between speculators and business persons who really make things. He might have had people like Malcolm Turnbull in mind. When Malcolm really had a business management job, the NBN, he failed badly.
My view is that the big and beneficial changes that have set the Australian economy up in the post war years were initiated by Labor governments – the Curtin and Chifley governments, and the Hawke and Keating governments.
The former guided Australia out of the depression of the 30s and the destruction of WWII into full employment and economic growth. The Hawke and Keating governments laid the basis for almost three decades of uninterrupted economic growth.
The Whitlam government clearly had problems, some of which I saw at first hand…too much spending and too many government supported wage claims. There was a poisonous relationship between the Government and Treasury. Both sides were at fault The Whitlam Government did however set Australia on the path to freer trade with a 25% across the board cut in tariffs. It refused to bow to the Department of Defence and knocked back the Navy’s plan for locally designed and built light destroyers. It chose instead to buy off-the-shelf frigates from the US. The Department of Defence went into quite a sulk. Bill Hayden was getting the budget back into shape in 1975 but the improved economic performance was cut short by the Dismissal.
The Fraser government’s economies performance was poor as both John Howard and John Hewson have told us. The Fraser Government was the most protectionists in history although Malcolm Turnbull may surpass him with the extraordinary French submarine deal. Malcolm Fraser said ‘we will give industry the protection it needs’. The effective rate of protection of the car industry rose from a high of 54% in 1974-75 to a peak of 143% ten years later. The effective rate of protection for the textile clothing and footwear industries peaked in 1984-85 at 250%.
The Hawke and Keating governments were undoubtedly the most successful economic managers we have had. Amongst other things, they floated the dollar, reduced protection, broke the wage spiral with a wages accord, introduced the concept of a social wage and broke down a centralised wage-fixing system. The political problem for the government at the time was the ‘recession we had to have’ and record high interest rates. But successful economic management reform was the hall mark of the Hawke-Keating governments.
The Howard-Costello government’s economic performance was poor despite John Howard grasping the nettle of the GST. The world economy and the mining boom gave the Howard-Costello governments an easy ride. But Peter Costello left us with more serious structural problems like no other Treasurer has bequeathed. He was described by the IMF as ‘the most profligate Treasurer in 50 years’. This view was shared by the Australian Treasury and the Reserve Bank. Peter Costello did achieve a brief budget surplus, but he squandered the mining boom with locked in and permanent tax cuts in response to a temporary increase in revenue There were eight tax cuts in a row.. He cut tax on capital gains by half. He made income from superannuation entirely tax free. With John Howard he handed out billions of dollars in middle class welfare. Money was being shovelled out both the front and back door as if there was no tomorrow.
Costello was true to his ideological bent. For ideological reasons he wanted to reshape the Australian economy by shrinking the public sector. The best way to ‘starve the government beast’ he believed was to reduce government revenue so that in future governments would have to contract government spending in areas such as health and education. We are still paying for the Costello legacy and profligacy.
The Rudd-Swan government, at a critical junction with the Global Financial Crisis, handled it extremely well. Australia was about the only advanced economy that avoided recession. Wayne Swann received international plaudits but was unable to explain his success at home. That success was obscured by the campaign of Tony Abbott with his slogans and the Murdoch media who picked holes in programs such as pink batts and the capital funding of schools. The success was blanketed out by the joint efforts of the Murdoch media and Tony Abbott. That economic success was also obscured by the political division between Rudd and Gillard. Swan also failed in his latter years to effectively bring the budget back into surplus. The Mining Super Profits Tax was good policy but in the face of a media blitz by the mining industry, mainly foreign owned the government failed to communicate the case for such a tax.
Are conservatives better economic managers? Part 2
In Part 1 I argued the best governments in economic management since WW2 were the Curtin/Chifley and the Hawke/Keating governments.
More recently we have had the Abbott-Hockey team which won an election through the default of Labor and by persuading us that we had a debt and deficit emergency. It was an artifice. In fact both debt and deficit have worsened under Coalition management. The last Swann budget forecast a deficit of $ 10 .6b .It is now $ $37b. In each year the budget prospects have got worse. Our budget deficit is now in the top third of of 39 advanced economies. Debt will grow from $ 450b last year to $ 497b this year.
From a budget and deficit emergency three years ago, the government has moved to denial that we have ever had a problem. It is abdication of economic responsibility.
Joe Hockey used to tell us that interest rate reductions by the Reserve Bank were the sign of a struggling economy. Yet on the day of Scott Morrison’s budget, the Reserve Bank cut interest rates again. Morrison told us that it was due to lower inflation. But the Reserve Bank refuted this by pointing out that the ‘prospects for sustainable growth’ were of concern. The Bank is clearly worried about the ‘growth and jobs’ that Scott Morrison tells us will occur under his watch. Economic commentators have similar doubts.
Joe Hockey blamed the problem of housing affordability on low income people who weren’t working hard enough and saving enough to buy a home. Malcolm Turnbull gives a variation on that theme by telling parents, presumably wealthy parents, that they should ‘shell out’ more to help their children get into the housing market.
In any event, Joe Hockey’s performance and particularly his 2014 budget meant that Washington couldn’t come fast enough.
Scott Morrison talks about the importance of transitioning our mining based economy to a more broadly based economy. But his budget made no mention of the importance of developing a sustainable economy based on renewable energy .That would make environmental, economic and business sense. But there was no mention of it in Scott Morrison’s ‘economic plan’.
For years, the Business Council of Australia has been urging repair of the budget. But has now been seduced by a large reduction in company tax. Corporate Australia was the real winner in the budget.
There is no credible evidence that a reduction in company tax or reduced taxes on the wealthy increases jobs and growth. As Michael Keating has pointed out in this blog that ‘where ever the tax rate has been changed it has never made a perceptive difference to investment, either here in Australia or anywhere else’. The ‘trickle down ‘theory does not really help ‘jobs and growth’
And after almost three years of Coalition Government the story on business investment is disturbing. The budget is framed around business investment falling by 11% in 2015/16, falling 5 % in 2016/17 and with no growth in 2017/18. The Treasury figures also show unemployment is expected to remain at 5.5% until at least the middle oy 2018.
The budget figures do not show much ‘growth and jobs’ in the years ahead despite what the Treasurer says. Ross Gittins in the SMH on May7/8, 2016 said ‘…there is no evidence to support Morrison’s claim that the budget will do great things for ‘growth and jobs’.
The Supply side’ economics of Ronald Regan, cutting taxes for companies and wealthy individuals that Scott Morrison is pursuing, left the US with record deficits and debt and dramatically increased inequality. This inequality is described by the OECD as ’harmful for long term economic growth. As Nobel winning Joseph Stiglitz put it ‘the world faces a deficiency of aggregate demand brought on by a combination of growing inequality and a mindless wave of fiscal austerity. Those at the top spend far less than those at the bottom. So that as money moves up, demand moves down’.
We are learning at last that growing inequality is not only bad for society but it is also damaging for the economy. This is the path that the Turnbull government wants to take us down.
Malcolm Turnbull has told us many times that the Free Trade Agreements with several countries are ‘massive building blocks’ for our economy. However the Productivity Commission has warned us that there is more hype than benefits in these FTA’s. ‘Pebbles’ would be a better description than massive building blocks.
For a government that presumably has some regard for markets and free trade, its decision on a $50 billion submarine and naval build in Adelaide is remarkable. Christopher Pyne must really be a national treasure if the government needs to spend so much money to help keep him in public life. This submarine decision by the Turnbull government will surpass by far the protection ways of the Fraser government.
In this blog on 29 April, Jon Stanford and Mike Keating pointed to
‘The implications for industry policy constitute a particularly egregious element in the [submarine] procurement decision. … We need to remember that the Abbott government showed the door to the car industry. The end of the ‘age of entitlement’ meant that around $500 m. a year, not high by international standards, was too much to pay to support a high technology(car) industry that, directly and indirectly, employed around 200,000 people. Now the government is keen to support a (shipbuilding) industry with a cost disability, according to the Rand Corporation, of up to 40%. Given the likely moderate local value-added in an industry where all sophisticated hardware is important, the effective rate of protection (assistance to value added) will be much higher than this. Indeed a leaked paper from Defence suggested an effective rate of protection of 500% would be required to build the submarines in Adelaide. Even at the height of the Fraser government’s protection excesses … the effective rate reached only 143% for the car industry. … On the Prime Minister’s figures, 2,800 jobs will be created directly and indirectly, a far cry from the 200,000 jobs that are related to the car industry. Some early estimates suggest we are looking at a cost of around $4 m. for every job created.’
It is hardly good economic or business management.
In his interview with Laurie Oakes, Scott Morrison acknowledged that the contract with the French submarine builder had not been signed and the design and specifications were open-ended even though we have apparently agreed on a price. It sounds like a thorough business mess.
The crack down on high income earners who mis use the superannuation system is welcome but as Saul Eslake and others have warned these same people are likely to now transfer their surplus funds into negative gearing of property, a problem which the government refuses to tackle. In its cautious way the Reserve Bank has warned about the risks of negative gearing. ’Any change which discourages negative gearing may be a good thing from a (financial stability) perspective. The concessional rate of taxation of capital gains might encourage leverage speculation, particularly in combination with negative gearing provisions’
We are likely to see even more wasteful infrastructure spending, particularly on roads. As Michael Keating has pointed out in this blog we must have’ proper pricing signals and evaluation’ for infrastructure investment. A government that professes to understand business, markets and pricing should know this. Unfortunately it doesn’t and allows so much of road spending to be influenced by powerful motoring organisations and construction companies.
There is no credible plan to bring the budget back into surplus or secure ‘jobs and growth’. But we will have plenty of slogans in the coming weeks as we had at the last election.
And the budget is quite silent on the two most important issues of our time climate change and growing inequality. Ideology has been put ahead of good economic management
The case that conservatives are better economic managers does not stand up to serious examination.
John Menadue said in the NSW Health Council Report of 2000, “Services should be based where patients and consumers live. The autonomy and dignity of each patient is best serviced by providing services wherever possible outside hospital. So a shift to community multi-disciplinary health teams is a major issue still ahead of us.” He returned to this theme in a recent blog, “A major aim of good health policy for Australia must be to keep people out of expensive hospitals.”
Two South African physicians, Sidney and Emily Kark, working in poor communities started community-based primary health care – community medicine – in 1940. In each community their approach started with community diagnosis, working out the health needs in the community.
In 1973 the Whitlam Government set up the Community Health Program for Australia. It was led by an ex-South African, Dr Sidney Sax, who knew the Kark’s approach very well. His committee recommended that the community health program should be based on primary health care. (1)
One aim was to influence the doctors of the future and so, for the first time, chairs of community practice were funded by the Government in all medical schools. At the time, medical schools were narrowly focused on biomedicine and disciplines concerned with the body’s organ systems. Every medical student could tell you about Virchow’s contribution to pathology in the 19th century, but few knew anything about his statement about the social causes of disease, “Medicine is a social science, and politics nothing but medicine on a grand scale.” (2)
Outside the medical school, the general public were becoming more interested in the way doctors were trained. They were concerned about the neglect of disability, chronic diseases, mental health, addiction, Aboriginal health and other troubling health problems. And preventive medicine was missing from the GP’s repertoire.
I came to community medicine at the UNSW after working in Whyalla, South Australia and Sheffield, England. Sheffield was once the “blackest city” in Europe. Coal dust, smog, untreated childhood infections and tobacco smoking caused the lung diseases I treated at the city’s only respiratory clinic. And the impoverished and dank suburbs where I worked as a GP showed me how the social world played out in people’s health. This convinced me of the importance of social medicine.
These problems of health in the community were seen as lost causes in the medical schools of the day but over time, and to a varying extent, they have been picked up in contemporary undergraduate teaching.
Public health was a Cinderella discipline. It was regarded by most medical students as boring stuff about drains, sewerage, unimaginative health promotion interspersed with dry statistics. But with the capacity to collect large datasets and the increasing power of commuters to analyse and interrogate data there was an explosion in enthusiasm for public health. Important questions could now be answered and integrated into the guidelines for medical practice. Epidemiology now makes enormous contributions to the thinking and practice of day-to-day medicine.
But these technical developments – seeing the world through a computer screen – marginalised the messy business of dealing with the day-to-day lives of troubled people, working alongside others to deal at the grass roots with their predicaments.
In the recommendations of the Community Health Program for Australia was the central role of the GP in multidisciplinary community health teams. And progressively, but slowly, medical schools have come to accept general practice as a legitimate academic discipline and area for postgraduate training and specialisation.
In parallel with the academy, the Commonwealth aimed to support general practice through creating networks of GPs. These were known as Divisions of General Practice during the Howard government. They were renamed Medicare Locals in the health reforms of the Rudd government, giving them increased responsibilities and funding.
The current government is funding Primary Health Networks across Australia.
“Primary Health Networks (PHNs) have been established with the key objectives of increasing the efficiency and effectiveness of medical services for patients, particularly those at risk of poor health outcomes, and improving coordination of care to ensure patients receive the right care in the right place at the right time.” (3)
PHNs will have increased responsibilities for the populations in their geographical footprints. For example, in meeting local and regional needs for mental health and drug and alcohol problems, and managing the burgeoning problems of chronic disease as well as preventing and treating the common illnesses and injuries seen by GPs.
Community medicine is not dead, it is there in the principles which will inform the new PHNs with their defined responsibilities for communities and “community diagnosis” in their localities.
References:
Ian Webster is Emeritus professor of Public Health and Community Medicine, University of New South Wales.
Despite lobbying from many groups, the May federal budget for 2016-2017 is hacking another $224 million from Australia’s overseas aid, reducing our aid to $3.8 billion, and as a percentage of our national income to just 0.23%, our lowest level ever. The Coalition had already cut $1.1 billion off our aid, reducing spending in Africa and the Middle East by 63%, and in Asia by 36-38%.
According to the national coordinator for Micah Challenge, the coalition of church networks, this latest cut comes ‘on top of $11 billion in cuts to aid’ over ten years, and is the fourth time the Coalition government has cut aid levels.
Australia’s overseas aid had dropped from 0.45% of our Gross National Income in 1971-72, but a bi-partisan attempt to raise our aid to 0.5% GNI by 2015 was initially deferred by Labor in 2012-2013, at a saving to the government of $5.7 billion; the Coalition later cut much further. As Beth Sargent from the Australian Council for International Development said, Australia is no longer pulling its weight in international development efforts.
Why are we so mean on overseas aid?
Surprisingly there was very little commentary on these cuts in the media, or about their significance in terms of our national interest. Partly this is explained by budget pressures, but also by the failure of politicians and opinion-makers to educate the Australian public about the urgency of overseas aid.
Public opinion vastly overestimates the extent of Australian aid. According to a recent national poll of 1528 adults on behalf of Campaign for Australian Aid, the average of responses estimated that our overseas aid amounted to 13.28% of the federal budget, about 14 times more than the actual figure of 0.9%. Less than one-in-five people estimated the aid budget as less than 1%.
Australia has committed to supporting the UN Sustainable Development Goals, the global effort to greatly reduce extreme poverty and hunger, and lift living standards in poorer countries especially, while all countries act urgently to sustain the environment and reign in dangerous green-house gases. Yet we are being seen as laggards in this effort, as ‘leaners, not lifters’, in the famous words of an earlier Australian Treasurer.
As the Chief Executive of the Australian Council for International Development, Marc Purcell said, our cuts to overseas aid, including many life-saving programs, are hurting some of the poorest people.
Avoiding failed states in our region
Consider what reductions in aid mean in our region. Papua New Guinea has a population of 7.76 million, and is growing quickly. How is PNG to manage such an enormous process of change? It already has acute problems with providing education and healthcare, not to mention unemployment, extraordinarily difficult transport problems, issues around law and order, political stability and growing challenges from climate change and drought.
It is vital that PNG make steady progress in all these areas, but it cannot without significant international support, especially from Australia. What would a failed state in PNG look like?
We had the example of the Solomon Islands where in 2003 Australia led a coalition of countries and sent police and armed forces to restore order. In the next ten years until withdrawn, 7,270 Australian personnel served in the Solomons, at a cost to Australia of $2.6 billion.
We hope for a much better future for PNG, but other countries beyond the Pacific are fragile as well and need our sustained aid and development support. Some other countries may want to fill any vacuum we leave, including China.
The climate change imperative
As if humanitarian reasons were not compelling enough for reasonable levels of overseas aid, climate change adds extra urgency. With our expertise in agriculture, health care and education among many other areas, Australia can contribute greatly to help other countries adjust to climate change.
Australian know-how in dry-land farming and water management could be very important in parts of Africa and Asia. Our agricultural scientists are continually working to improve strains in crops that yield more, using less water, and are more resistant to insect pests and diseases.
Development specialists are working to ensure our world can manage this transition to a sustainable global economy and life-style, but this will not happen unless countries like Australia recognise that it is in our own national interests to support these efforts strenuously.
Despite serious economic difficulties, along with five other OECD countries, the British government has committed to maintain its overseas aid at 0.7% of GNI, the international target recommended by the United Nations and accepted by Australia in the early 1970s. Such is the urgency about promoting international development at this crucial time that 22 out of the 28 OECD donor countries increased their foreign aid this year.
In the view of Paul O’Callaghan, CEO of Caritas Australia, Australia has ‘given up its shared leadership role in combatting poverty’, despite being one of the wealthiest OECD countries. Cuts to our aid have damaged Australia’s reputation internationally and set back efforts to create a more equitable and sustainable world in line with the UN Sustainable Development Goals.
Prime Minister Turnbull made a splash on urban transport recently. He sketched a vision of ‘30 minute cities’ where residents spend on average just one hour a day travelling to regular activities like work and shopping. He also considered mass transit solutions rather than just more motorways.
This article is the first of three raising questions about where politics and bureaucracy find themselves in transport and its infrastructure – and where they might head next. In a subsequent post, more on funding and the role of the Commonwealth. For now, the PM’s focus on mass transit and 30 minute cities:
Mass transit
There is a case for favouring mass transit systems over motorways. In this, the current Rhodes Scholar distinguishes himself from the previous PM, who was more of a roads scholar (guided, one suspects, by Margaret Thatcher’s famous views on the emasculating shame of public transport ([i])). If PM Abbott’s objective was reducing travel time to power the city economy, he had it wrong: new motorways can appear liberating, but when ‘aimed’ at major centres in cities can induce more and more cars to use them – until they soon become full again ([ii]). You can’t bust congestion just by building more motorways.
30-minute capital cities
There is a theory, based on historical record, of long-term constant average travel times in some major cities of around half an hour. But these places mostly aren’t Australian capital cities. Our cities have around 200 years of development to consider; most evolved intensively only after the advent of the motor car; they spread out and luxuriated in wide spaces. Many Australians, especially in the biggest cities, already spend considerably more than 30 minutes commuting each way every day. Data for Sydney shows total average daily travel time to exceed 40 minutes, 35 minutes on work trips alone ([iii]).
Little wonder that a 30-minute city is an attractive political stance. Even less wonder that sections of Sydney and Melbourne’s media dismissed the Prime Minister’s proposal as ludicrously ambitious ([iv]).
What can the PM do about this? Will spending enough billions on big projects break the mould and reduce Sydney or Melbourne commutes to 30 minutes? Settled economic theory around equilibriums would say no. Whether the travel time is 30, 40, or 50 minutes, attempting to change these numbers could hazard many scarce billions for little long term gain: it is difficult to drop travel times sustainably through infrastructure, least of all by roads, and by inference through housing. Naturally, this view won’t be popular with the infrastructure industry that stands to profit most directly from massive spending. But in this respect, as someone or other said recently, Canberra is not an ATM – not for the states, not for civil engineering firms either.
So is it all hot air? No. But Prime Ministerial effort will benefit most from avoiding blank-cheque public transport evangelists and instead playing a strong and focussed hand in the game, with an eye on creating a robust Commonwealth legacy:
So, lots to be done – and none of it even remotely attended to by Canberra to date. Plenty of ideas for a Prime Minister who wants to take cities seriously. But to set up a real legacy, any Prime Minister, whether Turnbull or Shorten, must ensure their Government’s actions align with a proper and sustainable role for the Commonwealth.
John Austen is a happily retired former official. He was Director of Economic Policy for Infrastructure Australia from its inception in 2008 to his retirement in 2014. Further background is at: thejadebeagle.com.
Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive and provided advisory services to Infrastructure Australia. He recently authored a tax-rebate-based road pricing reform model for the SA government. The views expressed here are his own.
[i] Worth quoting, a reminiscence, albeit from the other side, from UK Hansard (2 July 2003, Column 407): ‘The hon. Member for Wolverhampton, South-West (Rob Marris) said that the Conservatives had no policy on buses, but that is hardly surprising in view of the most famous quote of all time about the buses, delivered by Margaret Thatcher …in 1986:
“A man who, beyond the age of 26, finds himself on a bus can count himself as a failure”.’
[ii] http://www.citymetric.com/transport/does-building-more-roads-create-more-traffic-934
[iii] 2012-13 Household Travel Survey at http://www.bts.nsw.gov.au/Statistics/Household-Travel-Survey/default.aspx#top
[iv] http://www.smh.com.au/comment/the-30-minute-city-is-a-silly-idea-but-malcolm-turnbulls-cities-policy-isnt-as-hollow-as-it-seems-20160502-gokk5e.html
[v] https://publish.pearlsandirritations.com/blog/?p=3834
At the first Brian Johns Annual Lecture, Julianne Schultz spoke of the challenge to Australian culture by the global tech giants. In the summary of ‘what can be done’ she said:
So what can be done to join the dots in the Age of Fang?
We need to become better advocates of the value of cultural investment. We need to find new ways to put the case so we can win political and bureaucratic supporters with hard headed and sustainable arguments.
We need to find ways to embrace the particularity of being Australian in a global context and find new ways to express that.
We need to be willing to challenge the market if it is not delivering – adding our voices to those demanding that the Fangs pay their taxes, and not allowing them to unfairly distort the market.
We need to be prepared to use the legal and other means at our disposal to demand that laws are not broken.
We need to use the leverage we have as the generators of 2% of global GDP to get returns and opportunities to participate that are our due – a digital news initiative here for instance, or a major contribution to the digitisation of cultural assets without giving up the copyright.
We need to leverage 50 years of cultural investment to ensure our stories are told not only to ourselves, but the world.
If, as the scholars have identified, the dominant companies in the Age of Fang have the power to command attention, communicate news, give voice, enable collective action, hold power to account and influence votes, we need that to be done on our terms.
This power needs to be institutionalised so that it is civically accountable. The smartest Fangs understand that playing a civic role brings extra kudos and wealth, but there is a need for vigilance to sustain this.
Getting the settings of this institutionalisation will be challenge of the next decade. It will require a carrot and a stick.
Some Americans are suggesting a royalty should be paid on data mining of personal information, as is done with the mining of minerals, and returned to the country of origin.
Europeans are challenging antitrust and privacy. G20 is renewing attention on tax to examine ways to ensure that the wealth generated is spread appropriately, and not left to a few rich dudes to distribute to suit personal philanthropic ambitions.
The market alone won’t do this. We know from the process of creating cultural institutions that there is a role for the state – a place where in the words of Robert Menzies, the future and past can connect in the present.
Even in this rapidly globalising age, the nation state remains the best organising principle we have. I am not alone in feeling uneasy about the proposition we should give it over to a new oligopoly that is present every moment of our lives.
The purpose of cultural investment in the Age of Fang needs to be reiterated and maintained. As a nation, we need to take this seriously now if we are not to become an asterisk. The purpose of cultural investment in the Age of Fang needs to be restated, funding maintained and opportunities to innovate and export enhanced.
Otherwise we will become invisible at best and tribal at worst. If that happens we will be reduced as citizens and countries to passive consumers in a digital marketplace that values us only for our ability to pay.
The Brian Johns lecture was presented by the Centre for Media History at Macquarie University and the Copyright Agency.
A fuller version of Julianne Schultz’ address can be found at:
Julianne Schultz is Editor and Professor, Griffith Review.
Scott Morrison’s Commonwealth budget aims to be politically balanced but, like the Hockey budgets, neglects struggle street. The budget still labours under the neoliberal belief in minimal taxes, small government and maximum freedom for private enterprise.
Morrison’s mantra is that cutting taxes on businesses and the wealthy will increase investment, growth and jobs. The trouble is, this is not the case, in part because the meagre income of much of the population reduces demand. It appears also that tax cuts for the wealthy make little difference to the growth rate.
In addition, the unfairness of the economic system builds up popular resentment against elites groups who often make the rules to benefit themselves. This explains much of the disenchantment with politics that we see in Australia. We haven’t reached the situation of the United States, where anger and resentment is very evident in the widespread support for Donald Trump and Bernie Sanders. Consider also the rise of populist movements in parts of Europe with very high unemployment. Youth unemployment in Greece is at 48 per cent. How long can nations manage such social distress without turning to extremes?
Trickle-down economics & inequality
The trickle-down assumptions of supply-side economics have been proven bogus, but they supply a rationale for rich individuals and corporations to justify the inequitable division of wealth.
Joseph Stiglitz and many other economists have highlighted how inequality has grown to astonishing levels in the United States and elsewhere. Mike Secombe in The Saturday Paper pointed out that in Australia, the top 20 per cent have 70 times more wealth than the bottom 20 percent. While 10 per cent of households own 40 per cent of the wealth, the bottom 40 per cent of households own just 5 per cent. Secombe quoted an OECD study that ‘growing inequality is harmful for long-term economic growth.’
This is certainly the view of Pope Francis and other religious leaders. The Pope’s recent social encyclical, Laudato Si’, identified inequality and climate change as two of the greatest challenges to human wellbeing today. Francis highlights greater equity as a key to sustainable growth and prosperity.
Scott Morrison declared an end to class warfare, yet it would seem that the very rich have been waging class warfare for years, largely unhindered.
Major budget problems
The 2016-17 budget makes superannuation somewhat fairer for low-income people, but three-quarters of the benefit goes to the top 10 per cent of taxpayers. In addition, few of the steep cuts to services and programs made by the Abbott government have been restored. Indeed, there are more cuts to health and aged care in particular, and some Medicare benefits.
Despite strong support from business groups to lift unemployment benefits, the government curiously refused to increase them. For people going on to Newstart, the benefit will actually drop because they will not receive the small carbon tax compensation benefit. Unemployment benefits remain under $530 a fortnight for a single adult without children, not enough to pay for board at a backpacker’s and for food, medication, clothing and a phone card. Many walk the streets by day, and at times sleep rough. Increasing numbers of people are relying on charitable agencies for emergency support, and you may have seen more people begging in the streets of major cities.
The budget does little for the homeless or those in housing stress. And what of the 600,000 children living in poverty? Instead the budget cuts 810 jobs from the Department of Human Services, and a further 344 from the Department of Social Services. There was little new for Indigenous programs either. The budget did not restore earlier cuts, and there were further cuts to Indigenous legal services and higher education participation programs.
The extraordinary cost of housing is raising great concern in the community, as it is pricing many young couples out of the housing market, or saddling them with crippling debts. The housing bubble is also socially damaging, a source of considerable stress and delaying family formation. The budget completely resiled from any attempt to tackle the problems arising from negative gearing, as well as from capital gains taxes.
Perhaps most surprising, the budget ignored the looming crises from global warming. At a time when Australia could be a world leader in sustainable energy, and developing ways to adjust to climate change with new technologies and know-how in farming, fishing, housing, health care etc., the Coalition seems diffident, despite the Prime Minister’s own personal views. The cuts to funding for our world-famous CSIRO, and for research on climate change, are emblematic of the blinkered thinking of the Coalition government.
As for the budget’s centrepiece, the ‘enterprise tax plan’ to cut company tax from 30 per cent to 25 per cent over ten years, Stephen Long called it a ‘con’, and Tim Colebatch considered it ‘breathtaking’ and ‘courageous’, in Sir Humphrey’s famous phrase. Will the tax cuts produce growth and jobs? Not for years, according to Stephen Long. Small companies will likely retain profits in the business rather than risk new investment. The lower tax rate will encourage investors from overseas, but that will take years to eventuate. ‘The gains for jobs and wages are so small they are trivial’, comments Long. Malcolm Turnbull eventually confirmed that the program could eventually cost nearly $50 billion.
One of the few bright spots in the budget is an effort to tighten multinationals’ tax avoidance and capital flight. Voters are naturally outraged at such systemic tax avoidance and governments themselves are suffering from this massive haemorrhage of capital into tax havens. All the political parties broadly support curtailing this tax avoidance.
Yet because the Coalition had reduced its funding, the Australian Tax Office cut its workforce from 22,000 to about 18,500. In a major about-face, Treasurer Morrison announced that the ATO would now gain an extra 1000 staff, with 390 of them joining a taskforce of 1300 to ensure tax compliance by multinationals. Better late than never.
In short, what we urgently need in Australia is stronger support for those on struggle street, and policies to restore a fairer distribution of wealth and opportunity.
Bruce Duncan is a Redemptorist priest lecturing in social ethics at Yarra Theological Union in Melbourne. He is one of the founders of the advocacy organisation Social Policy Connections.
One of the many disappointments of Malcolm Turnbull’s prime ministership is that he reappointed Peter Dutton as Minister for Immigration and Border Protection. This disappointment is reinforced by his attempt to blame refugee advocates rather than his own policies for the self-harm of asylum seekers. Sarah Smith, a supporter of refugees, tells of the heartbreak she feels at the pain inflicted by Peter Dutton. But he blames others.
See link to article by Sarah Smith in The Guardian of 5 May 2016. John Menadue.
My friend Evan Hughes, art historian and former law student is standing for Parliament at the next election. And in many ways he’s the model of a modern Labor candidate – clean-cut good looks, easy charm, natural speaking skills and a first-rate mind vouchsafed by a Cambridge University degree. At a fund-raising dinner in Sydney the other night he was doing the rounds of the room with his baby son cradled in his arms. Great photo ops for the local paper. In any marginal seat you’d have to say Evan was a shoo-in. But there’s a problem: his opponent in the blue-ribbon Liberal seat of Wentworth is none other than Prime Minister Malcolm Turnbull. And as we all know from experience, Malcolm’s no slouch himself when it comes to intelligence and charm.
Even so, the fund-raiser at the Rose Bay RSL Club was a cheerful occasion. A solid turnout, a happy crowd, and an underlying mood of quiet optimism – if not exactly confidence. There were some good lapel buttons (“Let’s Make Point Piper Great Again”), and Chris Bowen, the shadow treasurer, made a powerful speech in which he described Malcolm Turnbull as a Marxist. No, not your dreaded Karl Marx, the father of communism, but the much more likable Groucho, who is credited with the line: “I have my principles, and if you don’t like them I’ve got some others.” Next day I happened to be reading Pamela Hansford Johnson’s 1970 novel The Honours Board, in which a character has this to say: “The whole point of having principles is that they can be changed. A man who never learns enough to change his principles is a silly clot” (p. 189 in Scribner’s New York edition, if you’re interested).
The idea that principles are expendable, or at least replaceable, would appeal to Malcolm Turnbull. The question is not so much what his principles are, but whether he has any. With most prime ministers, we know pretty well what they stand for when they take office. Curtin for the war effort, Hawke for consensus, Keating for the republic, Menzies for free enterprise after all those Chifley years of welfare-state-building and nationalisation. When John Gorton took office in 1968, he made no secret of his centralist tendencies from the outset, and it took a couple of old-style Liberal premiers (Askin and Bolte) to pull him into line for the greater good of the party. With Malcolm it’s a different story. We all thought we knew what he stood for – action on climate change, affordable housing, marriage equality, the republic, generous foreign aid, and an end to Tony Abbott’s three-word slogans. What we’ve got now are two-word slogans – hard-working Australians, battling families, innovation and creativity, jobs and growth – and precious little action on any of them.
How do we account for Turnbull’s inactivity, his government’s timidity and inertia? There’s a widespread belief, especially among his supporters, that Malcolm is playing a shrewd political game. As a pragmatist and realist, he can’t afford to alienate the right-wing zealots in his party. But wait for it: as soon as he wins an election in his own right, the real Malcolm will emerge in all his messianic glory – bold, agile, innovative, a true reforming spirit. Malcolm’s big mistake – so the theory goes – was not to call an election last year and claim a mandate (just as Kevin Rudd missed his chance by squibbing a double-dissolution after the defeat of his emissions trading scheme).
Well, I don’t believe it. For one thing, I don’t think Turnbull had any policies he wanted to implement – apart from getting himself into the top job. And if he did have genuine ambitions, and convictions he didn’t need another election before he could proceed with them. In September 2015 he was riding a wave of public goodwill, and the malcontents in his party room wouldn’t have dared bring on another leadership challenge so soon after the last one. It’s a myth, too, that he needed their support in the first place. He had the numbers in the party to win, and there nothing the Abbott loyalists could do about it.
Instead of action, we’ve had a string of thought-bubbles, trial balloons, and things that go on and off the table (if I may mix metaphors for the moment). A rise in the GST was mooted and quickly knocked on the head. Tax-dodging multi-nationals were targeted, but we’ve heard no more about them (except from Bill Shorten). Small businesses were given a boost in the budget by the simple device of redefining big businesses as small ones. And out of a clear blue sky at a suburban sports field one April afternoon came the biggest Big Idea of all – transfer taxing powers to the States to pay for health and education. Predicably this got nowhere with the premiers, and I don’t think Turnbull was in the least surprised. If he was really an old-fashioned Malcolm Fraser-style states-righter we’d have known about it already. There’s a simple explanation: stung by accusations that he led a dithering, indecisive government bereft of ideas, he needed at least one big, flashy gesture to prove his critics wrong. Any big gesture would do – but preferably one that was doomed to fail.
There are few more powerful emotions in political life than disappointment. Most people can forgive governments for mistakes and incompetence – but disappointment is something else. They feel betrayed. Gough Whitlam stuffed a few things up, but we were ready to forgive him. Paul Hasluck, in his memoir The Chance of Politics (1997), was charitable to Whitlam, though he still considered him a smarty-pants: “When he became prime minister I welcomed the change and predicted he would be one of our great prime ministers and certainly the first leader of distinction and capacity since Menzies.” Many felt the same about Malcolm. Many saw in him the makings of a great prime minister – a man with presence, style, courage, a way with words. To quote Hasluck again (on Gough), foreign leaders saw him at his best – “a large, urbane and well-posed leader who was interested in ideas and could understand what other people said to him.”
I’ve never met Turnbull or talked to him, and I don’t like making sweeping judgments about people I hardly know. But rightly or wrongly, politicians are fair game. It’s the nature of the sport. I’ve no doubt that Malcolm can be a lovely bloke when he tries. But I keep hearing disparaging stories about him. Read Paddy Manning’s “unauthorised” biography of Malcolm, Born to Rule, published last year, and the picture emerges of a devious and calculating money-trader for whom financial wheeling and dealing was second-nature (and indeed his only skill). My contacts in the business world (admittedly few) speak of a guy who could only be trusted to look after himself. John Menadue recalls a conversation with a very senior figure in the Liberal Party, whose advice he sought on whether Malcolm Turnbull might assist on refugee issues. He replied, “John, Malcolm is never there when you need him.”
Whether he’s here when Australia need him is a question still to be answered. Will he bring his formidable talents to bear on the issues that matter – issues unmentioned or downplayed in the recent Budget – climate change, housing, social inequity, the republic, the status of women – or will he settle for the prestige and perks and comforts of office? How long before the electorate tires of the glib phrases, the practised charm, the phony displays of emotion? On the 30th anniversary of the Port Arthur massacre, there was Malcolm in Tasmania laying a wreath on the tomb of the victims – a duty more properly left to John Howard, who was relegated to background status at the ceremony. At the same time Malcolm was telling us we shouldn’t be “misty-eyed” about the plight of asylum-seekers. A tear for the Port Arthur victims is okay, but misty eyes for homeless and desperate refugees aren’t called for.
Preparing this piece, I was trying to think of the last time we had a prime minister in the Turnbull mould. Which of his predecessors in the modern era does he most resemble? Not, of course, in manner or appearance, but in the expectations people had of him and the outcomes he left behind. Not Menzies, not Whitlam, not Gorton, not Fraser. Then it came to me. A rich, well-connected Eastern suburbs socialite with a prominent wife, skilled in financial affairs and economic management, and hailed by his party as a pillar of stability after a rocky ride with a discredited predecessor. Of course, Billy McMahon! Perhaps, like Billy McMahon, Malcolm Turnbull will lead his party to a well-deserved defeat. Perhaps he will earn the epitaph that he bestowed on John Howard: “The prime minister that broke Australia’s heart.” I wish Malcolm well, but somehow I’m hoping history will repeat itself.
Evan Williams is a former newspaper editor and Walkley Award-winning journalist. He wrote speeches for Prime Minister Gough Whitlam and a succession of NSW premiers. He headed the NSW Government’s cultural sector from 1977 to 2001, and for 33 years wrote regular film reviews for The Australian. He is a Member of the Order of Australia.
Blaming instances of self-harm by refugees and asylum seekers on ‘refugee advocates’ or the undeserving asylum seekers is not a new political tactic. Back in 2001 then Minister Ruddock was interviewed by Four Corners about the problems of self-harm by asylum seekers in detention, especially in Curtain, Woomera and Port Hedland detention centres. Journalist Debbie Whitmont asked the Minister Philip Ruddock how he explained the number of cases of self-mutilation in Australian detention centres.
PHILIP RUDDOCK: I think there are a variety of explanations, and I think the principle explanation is that there are some people who do not accept the umpire’s decision, and believe that inappropriate behaviour will influence people like you and me, who have certain values, who have certain views about human rights, who do believe in the sanctity of life, and are concerned when people say, “If you don’t give me what I want, I’m going to cut my wrists.”
DEBBIE WHITMONT: Are you saying they’re doing it to attract attention?
PHILIP RUDDOCK: I’m saying that there are some people who believe that they will influence decisions by behaving that way. …the difficult question for me is, “How do I respond?”
Because I think if I respond by saying, “All you’ve got to do is slit your wrist, “even if it’s a safety razor — ” — which is what happens in most cases — “..you’ll get what you want.”
DEBBIE WHITMONT: Do you accept that these people are showing a certain desperation?
PHILIP RUDDOCK: Well, I mean, you say it’s desperation, I say that in many parts of the world, people believe that they get outcomes by behaving in that way.” (http://www.abc.net.au/4corners/stories/s344246.htm)
More recently in 2014 then Minister Morrison was quick to blame the Save the Children workers for self-harm incidents in Nauru:
“They are employed to do a job, not to be political activists. Making false claims, and worse allegedly coaching self-harm and using children in protests is unacceptable, whatever their political views or agendas,”
“The public don’t want to be played for mugs with allegations being used as some sort of political tactic in all of this.” (http://www.smh.com.au/federal-politics/political-news/scott-morrison-rejects-call-for-apology-to-save-the-children-staff-deported-from-nauru-20150323-1m5eao.html)
After the Moss report cleared the Save the Children workers in 2015, the Minister refused to apologise to workers who were forced to leave Nauru because of allegations, which he broadcast, but were later found to be without merit.
Then we have the self-immolation of two refugees from Nauru, and the response of the Minister:
“I have previously expressed my frustration and anger at advocates and others who are in contact with those in regional processing centres and who are encouraging some of these people to behave in a certain way, believing that that pressure exerted on the Australian government will see a change in our policy,” (http://www.smh.com.au/federal-politics/political-news/scott-morrison-rejects-call-for-apology-to-save-the-children-staff-deported-from-nauru-20150323-1m5eao.html)
Many reports of psychiatrists and psychologists have confirmed that mandatory detention and temporary protection visas acerbate and may even be causative of post traumatic stress disorders (PTSD). In a 2006 report, Dr Steel and Dr Silove and others noted in the British Journal of Psychiatry:
The present study suggests that both prolonged detention and temporary protection contribute substantially to the risk of ongoing depression, PTSD and mental health-related disability in refugees. The independent influence of these two risk factors remained robust after controlling for other variables previously identified as risk factors , including female gender, greater age, extent of past traumas, length of residency and family separation. (BRITISH JOURNAL OF P SYCHIATRY ( 2 0 0 6 ) , 1 8 8 , 5 8 – 6 4)
After the self-immolation of a refugee in Manus in April 2016, UNHCR was also been critical of such policies:
“There is no doubt that the current policy of offshore processing and prolonged detention is immensely harmful. There are approximately 2000 very vulnerable refugees and asylum-seekers on Manus Island and Nauru. These people have already been through a great deal, many have fled war and persecution, some have already suffered trauma. Despite efforts by the Governments of Papua New Guinea and Nauru, arrangements in both countries have proved completely untenable.
The situation of these people has deteriorated progressively over time, as UNHCR has witnessed firsthand over numerous visits since the opening of the centres. The consensus among medical experts is that conditions of detention and offshore processing do immense damage to physical and mental health. UNHCR’s principal concern today is that these refugees and asylum-seekers are immediately moved to humane conditions with adequate support and services. (http://unhcr.org.au/news/unhcr-calls-immediate-movement-refugees-asylum-seekers-humane-conditions/)
How does the Government respond to such reports and criticism? It is ignored because to do otherwise means the people smugglers are back in business and people die at sea. This is the default mantra that is repeated, as if that trumps all sensible analysis and debate.
Maybe we should listen more to the health and international experts, and also to the refugees themselves. Our policies are stuck in the ‘Stop the Boats’ slogan and fail to look at the consequences of harsh and punitive policies. These policies are punishing people who are not just awaiting a decision on their case, but are found to be refugees and therefore legally entitled to international protection.
Before he set himself alight, the Iranian refugee Omid Masoumali reportedly said to those nearby:
“This is how tired we are,” “This action will prove how exhausted we are. I cannot take it any more.”
Kerry Murphy is solicitor specialising in immigration and refugee cases.
The hardline Buddhist Arakan National Party (ANP) that holds a majority of seats in Myanmar’s religiously divided Rakhine State has promised to fight any attempts to grant up to 1 million stateless ethic Rohingya citizenship.
For the new National League for Democracy (NLD) government in Myanmar, the first civilian administration in the country in more than five decades, the issue of Rohingya Muslims in Rakhine poses one of its most formidable challenge.
While the NLD’s landslide win in the November 2015 election has brought optimism to the Rohingya community, its leader Aung San Suu Kyi has been silent on the issue.
International rights groups have criticized her for failing to speak out for the Rohingya, even as local NLD lawmakers have admitted they must tread carefully.
Yanghee Lee, United Nation’s special rapporteur on Myanmar, in her annual report submitted to the UN in March, has given the NLD-led government 100 days to improve conditions for Rohingya Muslims.
But the government, which officially took office in April, is yet to reveal its policy on the Rakhine state issue publicly.
Pe Than, a lower house parliament member from ANP in Rakhine, said that they will cooperate with the NLD-led government for the state’s development but will stand for the people’s desire on nationalism and on Bengalis — the name given to the Rohingya by many people in Myanmar including government lawmakers.
“We have much concern that ethnic Rakhine people would be overwhelmed by rapid population growth of Bengalis,” Pe Than told ucanews.com.
“The NLD-led government doesn’t need to bow down to international pressure on prevailing human rights in Rakhine as we have lived with our own sovereignty for decades,” Pe Than who has been twice elected from Rakhine State told ucanews.com on April 28.
Awaiting ‘right timing’
The recent boat tragedy, where at least 21 people died, shows a restriction on the freedom of movement by Rohingya despite the state of emergency issued by the previous government in 2012 being lifted on March 29.
Win Naing, an NLD lawmaker in Rakhine State parliament said that that the central government will eventually decide on how to tackle the Rakhine crisis.
“It is a very delicate and sensitive issue for the new government and especially a big challenge for Rakhine’s chief minister,” Win Naing said.
“If we move on right now, unexpected problems may occur and engender further opposition as nationalism is growing,” he said adding that the ANP is “closely monitoring” the steps the NLD is taking in this regard.
Still, Win Naing said he understands that confining more than 150,00 people to refugee camps for almost five years is not appropriate nor good for the development of Rakhine State — besides tarnishing the image of the state and country.
“It is the legacy of the previous governments that failed to solve the issue but the new civilian government can’t neglect and delay this,” Win Naing added.
Nationalism versus human rights
The Rohingyas remain in often squalid internal displacement camps –with little access to healthcare, education and employment since deadly violence between Rakhine Buddhists and Rohingya Muslims in 2012.
Aung Win, a Muslim elder from Bume village near the camps, was hopeful that the government had considered the Rohingya issue and drawn up a plan already.
“But they are waiting for the right time to move on their plan as they might face strong opposition from nationalist groups and the Buddhist hardline party,” he said.
“I think the view of Rakhine people would also need to be considered, so the new government, military and Rakhine people need to discuss tackling the issue together,” he told ucanews.com.
Win Naing, the NLD lawmaker, pointed out that “if we emphasis on nationalism too much, the development of our Rakhine State may be delayed.”
Hatred and bigotry toward the minority Rohingya have been deeply rooted in Rakhine.
In recent years there has been growing nationalism spearheaded by hardline groups such as the Ma Ba Tha that is led by senior Buddhist monks.
Hundreds of Buddhist nationalists, including monks protested at the US embassy in Yangon on April 28 denouncing the word “Rohingya” which was used by the embassy’s statement of condolences for those who died in the recent boat tragedy.
By not recognizing ‘Rohingya’ and referring to them as “Bengalis,” Myanmar’s governments have implied that they are illegal immigrants from neighboring Bangladesh, despite vast numbers of them having lived in Myanmar for decades.
The controversial 1982 citizenship law denies citizenship for Rohingya and so rights groups have repeatedly called for amending the law.
Pe Than said that Rohingya would need to be scrutinized by the 1982 law and those deemed to be citizens get the right to move freely in the country.
For those who are not deemed as citizens, it is the responsibility of the government on where they were to be lodged. “We would strongly oppose and fight against any NLD plan to amend the citizenship law,” Pe Than said.
This article was first published in UCANews.com
The Great War. What we fought for and why were peace initiatives resisted for so long.
Many of those promoting the Anzac Centenary appear to believe that there are certain essentials the Australian people must learn about the Great War: that Australians fought exceedingly well; that they fought even better when led by Australians; that in fighting so well they gave birth to our national consciousness; that we owe them so much because they fought for our freedom; that in serving our country they displayed the values of the Anzac Spirit that define the Australian character – a fierce egalitarianism, contempt for privilege, democratic instincts, and mateship, that is, a generous solidarity inspiring a collective spirit, never shrinking from support for each other through thick and thin. Sadly, it must be said, many of those rhapsodising upon this Anzac Spirit show not the remotest faith in this kind of egalitarianism or solidarity in their public policy.
Much of this may serve to distract the Australian people from deeply significant questions arising from our plunge into the Great War. How did Australia get into this catastrophe? For what objectives, precisely, did the Australian government commit our forces to the fighting? And why were they still fighting there in 1918?
Some see the Anzac Centenary as a stand-tall moment. It is milked as an opportunity to tell see-how-great-we-are stories, and to raise our national self-esteem. Surely the centenary of a cataclysm such as the Great War, that took tens of millions of lives across the world, by acts of state policy, is not a moment to blow our own small trumpet. This is unworthy and provincial. It is the acts of state policy that led to and prolonged the disaster of war that should focus our attention, not just the courageous acts of one small fragment of the men caught up in the quagmire.
What are the real lessons of the Great War, for Australians, and for all? That war is a blunt instrument, unleashing all manner of evil. That unqualified loyalty to big and powerful friends means being trapped in their misjudgements. That the war aims declared to the people, and the war aims for which wars are prolonged, are seldom the same thing. That war is never a simple choice between victory and defeat. That peace by negotiation is the live, innovative and often the most courageous alternative to gambling again and again with the blood of the young. That wars are so destructive that victory itself can be impotent, providing no lasting peace and no vindication for the mechanised killing.
The articles linked below are an attempt to sketch out these neglected aspects of Anzac. What did we fight for? What opportunities for a negotiated peace were lost along the way? They are an attempt to interleave two real stories of Australia’s Great War that took place largely behind the scenes – the escalation of war aims by those to whom the lives of Australia’s men were entrusted, and the choices that were made to shun peace by negotiation and keep Australia’s men in the firing line. Those who perished there demand respect. True respect demands a deep inquiry into why they died.
Douglas Newton. What we fought for from Gallipoli to Fromelles, 1914-1916.
Douglas Newton. What we fought for from Bullecourt to the Armistice 1917-1918.
Private health insurer Medibank has worked with the Royal Australasian College of Surgeons to produce a report that shows enormous variation in fees charged by surgeons for similar procedures.
The Surgical Variance Report for General Surgery reviewed thousands of procedures performed on Medibank members in eight common operations – gallbladder removal, gastric band procedures, bowel resection procedures, hernia procedures, gastroscopy and colonoscopy.
The data shows that some surgeons working in private hospitals are charging 15 times the amount charged by their peers for the same procedure. For example, surgeons performing gastric sleeve operations for weight loss charged average private fees (in addition to what the insurer and Medicare covered) ranging from $231 in South Australia to $3593 in Queensland. The average fee in NSW was $3160 and in Victoria it was $1874. For gall bladder removals, fees charged ranged from $369 in Tasmania to $1166 in NSW. In Victoria, the average fee was $387.
It is important to emphasise that fees in the Medibank/College report are those charged privately to patients after Medicare and Medibank have made their contribution to the cost of the patient’s treatment.
The report also provided information on complication rates for these operations. These rates also varied very substantially. For example, complication rates for bowel resection procedures varied from 0 per 1,000 procedures for some surgeons, to 571 per 1,000 for others.
President of the College, Professor David Watters said, “These reports will provide surgeons with information that may help them gain a better understanding of, and learn from, variations, for the benefit of the service they provide to their patients and the community,” he said.
There are two important conclusions that arise from this work. First, it emphasises the lack of financial control on health costs when there is a reliance on private health insurance. In Australia, there are 33 private health insurers registered under the Private Health Insurance (Prudential Supervision) Act 2015. While Medibank’s initiative is to be welcomed, it illustrates the problem of a crowded and fragmented market where the numerous competing insurers are unable to act collectively to influence the suppliers of health services. A single insurer provides the opportunity to develop the necessary financial control on ever increasing costs of health services. As a national insurer, Medicare, is also a far more efficient and equitable operation than the 33 disparate insurers competing with each other, all with their substantial administrative and marketing costs. As Ian McAuley (University of Canberra) wrote in 2014, “Norway and Sweden remind us of a vision we have lost: the economic benefit of a strong, single national health insurer.
The second conclusion from the report is derived from Professor Waters’ comment above. This report, Professor Waters states, is aimed at providing information to the supplier of the service, not the purchaser. For more effective financial control of these important services, the client should have the information on costs and performance of surgeons so that he/she can make a rational consumer’s decision on price and quality. As Medibank’s Chief Medical Officer Dr Linda Swan said at the release of the report: “Information sharing is key to improving the delivery of healthcare, and ultimately to improving patient outcomes.” Agreed, but it is important that the patient also shares the information. A single insurer could also perform this function more efficiently.
John Thompson is an economist with experience in primary health.
Good news on Gitmo. There are just 80 prisoners left in their cramped, high security cells in a small, far off, scrubby peninsula on Cuba.
That’s about 160 fewer than when Barack Obama became president in early 2009 promising to close Guantanomo within a year.
So not exactly Mission Accomplished! as President Bush trumpeted after the invasion of Iraq in 2003. Obama’s presidential promise won’t be fulfilled and amounts to another big political failure.
Having filmed at Guantanomo two years ago, under strict military censorship, for the ABC’s Foreign Correspondent program, reported by Lisa Millar, www.abc.net.au/foreign/content/2014/s3991385.htm I’ve been keen to see what would happen to the prisoners, many of whom having been interrogated numerous times, were cleared for “transfer” (Pentagon code for release) years ago.
The Yemenis have been dispatched to Saudi Arabia, where all have family connections. None were charged with any crime let alone attacking New York or Washington. All have called Guantanomo home since 2002.
You’ll remember the shackled, shambling orange-suited inmates of Camp X-ray which proved such a US public relations disaster; bent over, sometimes hooded, being frog-marched along the wire.
We were assured by Vice President Dick Cheney they were the “worst in the world”. Some were but the truth was that many just happened to be the wrong place at the wrong time.
One of the more notorious of the men and boys swept up in Afghanistan and Pakistan in the post 9/11 period – like many he says he was “sold” to the Americans by Pakistani police – and labelled an “enemy combatant” is Tariq Ba Odah. He was 23.
Ba Odah, now 37, is notorious not for any alleged crime but for his extraordinary persistence as a Guantanomo hunger striker.
He’s been refusing solid foods since 2007. Being strapped down twice a day and force fed by a tube up his nose seemingly failed to quench his spirit even when by last year he had lost close to half his normal body weight and was down to 36 kg.
His lawyer Omar Farah quoted Ba Odah in an essay for Rolling Stone, saying, “My method of delivering my message is through hunger strike. You can cut me to pieces, but I will not break it. I will stop on one of two conditions: I die, or I am freed and allowed to return to my family.”
One can only imagine Ba Odah’s feelings, now aged 36 and having been incarcerated for more than a third of his life.
Along with the other former prisoners his confinement is not yet over. Saudi Arabia, waging a largely hidden but bloody insurrection, has a “rehabilitation” program for alleged jihadis and the Guantanomo 9 will have to enter it. A few months, maybe longer, but ultimately most will be free.
The Saudis have taken their time; they were first approached close to a decade ago to take Yemeni prisoners, some who had been born in the Saudi kingdom or had been long term residents.
Obama’s rhetoric on Guantanomo is familiar. And so again in February, this year, Obama launched a new effort to persuade Congress to close Guantanamo saying, “It’s counterproductive to our fight against terrorists, because they use it as propaganda in their efforts to recruit…Guantanamo harms our partnerships with allies and other countries whose cooperation we need against terrorists.
“Americans, we pride ourselves on being a beacon to other nations, a model of the rule of law. But 15 years after 9/11 – 15 years after the worst terrorist attack in American history – we’re still having to defend the existence of a facility and a process where not a single verdict has been reached in those attacks – not a single one.” *
Congress wasn’t convinced. For many Republicans and some Democrats, the political downside to allowing non-convicted “terrorists” to be relocated to mainland American prisons is too high.
Or put it another way there’s more political kudos in proclaiming the dangers of bringing “terrorists” to maximum security prisons on the mainland than worrying about whether some innocent men languishing at Guantanomo will remain there indefinitely without trial – until they die.
Of the 80 men left at Guantanomo the bulk are from Yemen. The US maintains that the civil war raging there, in which Saudi Arabia is an active participant, using US supplied weapons, makes it impossible to return them, particularly given the growing power base of AQAP (Al Qaeda in the Arabian Peninsula).
And yet it’s vital to remember that of the remaining 80, 26 were cleared for release years ago. In any conventional US judicial system they would have been enjoyed years of freedom by now.
Of the rest 49 are categorized as “forever” prisoners – labelled so dangerous they can’t be freed – and 10 are on trial before the stop/start military commissions held at the military base; which as Obama noted acerbically haven’t yet handed down a single verdict.
These figures were compiled by the remarkable Carol Rosenberg of the Miami Herald who has been reporting Guantanomo intensively since January 11, 2002 when she watched the first 20 prisoners arriving.
Without her constant probing over the past 14 years – and an outstanding commitment to the story by her newspaper – the military censorship cloaking Gitmo would have been much more effective.
Rosenberg’s editor in 2002 asked her to cover the Guantanomo beat until it was over. It isn’t over.
Greg Wilesmith is a freelance journalist and was an ABC foreign correspondent and producer.
The Turnbull Government’s Budget for 2016-17 reflects an essentially ‘steady as she goes’ fiscal strategy. Not that that is a fault – indeed it can be a virtue, especially when matched against the give-aways in other previous pre-election budgets.
Furthermore, we could not have realistically expected any other sort of Budget, given the extent to which the Government had narrowed its options before Budget day. In addition, a policy of matching every new spending initiative by a saving, is bound to produce minimal change; not least because cutting existing programs typically generates more opposition than the support for the new initiatives. But that said there are a few interesting and useful initiatives in this Budget.
First, the changes to superannuation go further than just about anybody expected. While the big super funds will not welcome the consequent reduction in the funds that they have to manage, the changes should be widely supported by all but the top 4 per cent of superannuants, as better targeting the tax concessions and improving equity. In particular, I welcome the changes that should help women with broken work patterns. I think, however, that it would have been better to have reduced the threshold for the increased 30% tax on superannuation contributions to $180,000 rather than the proposed $250,000 per annum; the lower $180,000 threshold would then correspond with the threshold for the maximum income tax bracket.
Second, the other useful initiative is the new approach to assisting young unemployed people make the transition into employment. This represents a marked improvement on the Abbott Government’s harassment of these young people, as if their unemployment was purely their own personal fault. Of course, there are risks that the new approach might be exploited by unscrupulous employers – and that has happened in the past – but this approach does seem worth trying. My main concern is that governments tend to spread the funding too thinly with labour market programs, in favour of assisting more people with the limited funds available, but at the risk of dropping the quality of the assistance to the point where it loses effectiveness.
Nevertheless, overall, and in stark contrast to the 2014 Budget, this Budget does seem to generally pass the test of ‘fairness’. Perhaps the biggest future concern for fairness is that the Government clearly intends to increase the fees paid by university students to cover an average of 50% of course costs, instead of the present average of 40% of course costs. So far as I am aware there is no evidence that the private benefit from a university education is as high as 50% of the course costs, in which case this change will be unfair and it will very likely particularly impact on enrolments by disadvantaged students.
I also think that it would have been fairer if the Government had kept the deficit repair levy in place which affects the people in the top tax bracket. After all the deficit is as far as ever from being repaired, and lower income people have been called upon to make bigger sacrifices to help repair the deficit in the past, and they are not now going to get any relief.
The major criticism of this Budget, however, is that it does not really represent any further progress towards achieving fiscal repair and a return to surplus. On the relatively optimistic Budget projections we are being promised that a surplus will be achieved by 2021. But we have heard that one before, and many have ceased to believe such projections.
Of course, some will say why should we worry? Certainly Australian Government debt is not high. Even at its projected peak in 2017-18 it will still represent only 19.2 per cent of GDP, much less than half the ratio for the US. And as for the rating agencies they lost all credibility after their incredibly optimistic ratings leading up to the Global Financial Crisis, and they still seem happy to give the US Government a AAA rating.
Instead, the real concern about continuing budget deficits is that they have already greatly reduced Australia’s capacity to respond to the next external shock to our economy. Furthermore, these deficits are continuing even after twenty-five years of uninterrupted economic growth in Australia. While on the other hand, the risks of an external shock are if anything increasing as the world economy continues to be highly volatile and uncertain, with the outlook for China – our most important trading partner – being perhaps especially problematic.
Frankly Australia needs a more ambitious medium-term approach to Budget Repair. The Government, however, continues to proclaim that this repair must come from more restraint on the expenditure side, and rules out increases in taxation; even if this is achieved by reductions in tax concessions, which really are an alternative form of expenditure.
The reality is that on the evidence in this Budget, this Government is running out of options to further reduce expenditure. The Government has made great virtue of its claim that since the 2015-16 MYEFO all policy decisions have been more than fully offset, resulting in a small surplus over the four years of $1.7 billion. But this claim is itself suspect. The claimed surplus of $1.7 billion over the next four years is dependent on a projected net surplus from policy decisions of $5.9 billion in the final year, 2019-20. In the other years, policy decisions have in fact added to the budget deficit, including as much as $3 billion in the forthcoming financial year. While the likelihood of the net $5.9 billion saving being achieved in the last year is highly problematic.
In addition, this budget is continuing to factor in $13 billion of previous expenditure savings and $1.5 billion worth of revenue increases that have not passed the Parliament. Maybe that will change after the election, and maybe it won’t. In fact, the likelihood seems to be that following the election even if the Government is returned it will not have a majority in the Senate, in which case it really needs a better fiscal strategy to repair the Budget.
Instead of continuing to remove funding from a lot of small programs, with a loss of services – especially cultural and welfare services – the Government needs to refocus on achieving improvements to the efficiency and effectiveness of the big spending areas such as education, health, infrastructure and defence (as discussed in my article “Fixing the Budget – Part Two” and published in Fairness, Opportunity and Security). But even if the rate of growth in the Forward Estimates for these expenditure functions were reduced by as much as a feasible two percentage points per annum, it is doubtful that would be enough to restore a Budget surplus equivalent to around 1 per cent of GDP which is the medium term target.
Furthermore, this pre-election Budget strongly suggests that this Government does not envisage that the majority of Australians actually want smaller government. Thus the overall Budget outcome according to the Government’s own figuring is that, even in four years’ time, in 2019-20, total receipts will still represent 25.1 per cent of GDP and payments will represent 25.2 per cent of GDP – both higher than under Labor’s last year in office in 2012-13 when they were 23.0 and 24.1 per cent respectively.
As the Balanced Budget Commission of experts, appointed by the Committee for the Economic Development of Australia, found Australia has a revenue problem rather than just an expenditure problem. Furthermore, that Commission identified sufficient revenue options that had a reasonable chance of gaining majority support to play the major role in restoring the Budget to a satisfactory surplus (see my post 29 March 2016).
In sum, sooner or later politicians will find that they have to talk about the revenue options if we want to maintain the present nature of our society and the social obligations that involves. And frankly the sooner that conversation begins the better. But unfortunately don’t expect that conversation to happen over the next two months of this election campaign.
On Tuesday night the Treasurer announced that this year’s Budget was like none other – this Budget represents the Government’s Plan for Jobs and Growth. Presumably the Government hopes that its Plan will represent such a compelling narrative that it can then sail to victory in the forthcoming election. Accordingly, in this article I propose to assess how the Government’s Plan measures up in terms of its probable impact on jobs and growth.
As stated in the Budget the Government’s Plan for jobs and growth is based on:
According to the Government’s own Budget forecasts, however, the growth in output over the next four years is expected to be relatively poor, and notwithstanding its Plan. In fact the forecast growth in GDP has been revised down yet again, and is now expected to continue growing by less than its potential in the next 2016-17 financial year. Indeed it is precisely because of this weak economic outlook, that the Reserve Bank took its decision on Budget Day to reduce interest rates to the lowest level ever for the cash rate of 1.75%. Of course, the Bank and the Government attributed the timing of this decision to the recent low inflation numbers, but those numbers only provided the opportunity to reduce interest rates. The need to reduce them was occasioned by the inadequate level of aggregate demand, and especially the poor rate of business investment in the economy.
The good news, as the Government keeps reminding us, is that around 300,000 jobs have been created in the last year or so. But these new jobs are predominantly due to the very low rates of wage increase that have pertained in the last few years. Furthermore, according to the Budget these low rates are expected to continue, with nominal wages forecast to increase by only 2½ per cent and 2¾ per cent in the next two financial years, representing a forecast real annual increase in wage rates of only ½ per cent each year.
No wonder employment is growing rapidly, but this has little to do with the Government’s strategy for growth and jobs. Rather what we are experiencing is how, following the reforms of the labour market by the Keating Government, the labour market is now much more flexible and how the price of labour is now much more responsive to economic conditions. But the counterpart of this success in creating jobs is that the rate of productivity increase has dropped to around only ½ per cent in each of the last two years, and is not expected to increase by much more in 2016-17.
In that context, what is surprising and disappointing about this year’s Budget Statement on the Economic Outlook is that there is no section dealing with productivity, and this despite productivity having been at the centre of all discussion about economic reform for the past couple of decades.
In addition to our poor productivity performance, what is also worrying about the economic outlook is that non-mining investment is projected in the Budget to continue to remain sluggish. To some extent both phenomena may be related. But this non-mining investment is precisely the area that one would expect the Government’s Plan and especially its innovation agenda to have an impact on if that Plan is to succeed.
So what is the problem with the Government’s Plan, that its own forecasts do not seem to provide much evidence that it will be successful?
First, one would have to be extremely sceptical about the claim that ‘the tax and superannuation plan can be expected to lift the level of GDP by just over one percent in the long term’. Frankly it is difficult to see how this claim could be modelled given the shortage of empirical evidence. Furthermore, it is most curious that this modelling was not done by the Treasury, but by private consultants, who too often assume what they have to prove. Perhaps it is therefore no accident that it is still not possible to find out how this modelling was done. But what we do know is that whenever the company tax rate has been changed, it has never made a perceptible difference to investment, either here in Australia, or anywhere else. And even if we were to accept this dubious self-described “modelling”, a one percent difference over twenty years is next to imperceptible, and Australia needs a much faster pick-up in non-mining investment than that.
Instead the required pickup in investment will mainly depend upon the demand for each firm’s products. The profit share and the rate of return on investment is high enough, but the lack of demand is why so many firms are engaging in share buy-backs and acquisitions of existing assets, rather than expanding through new investments to create new assets. In this regard a credible path to accelerate the restoration of a sustainable budget surplus would make more difference than these tax cuts. A Budget surplus would reduce the relatively high real interest rates in Australia and would probably also lead to some further reduction in the exchange rate over time. Therefore the ten-year funding for the tax plan should be progressively re-deployed to bring the Budget back into surplus quicker.
Second, there is the issue of what can realistically be expected from the innovation and science package. The most important elements of this package aim to improve:
These are worthy aims, but how much difference can government make, especially when the funding largely comes from a re-arrangement of existing programs, and overall the funding has been cut for business assistance, and cut significantly.
The third leg of the Plan is the support for an advanced local defence industry. Readers of this blog will have seen previous articles querying the suitability of the submarines to meet our defence needs and their cost. (The mistaken decision on submarines and A more efficient submarine solution.) In brief, building the wrong boats at a cost at least a third higher than purchasing them off the shelf, is not the future for a competitive manufacturing industry. Australia does need to, and I believe can, have a future in advanced manufacturing which produces high value added products based on technological leadership. On the evidence, however, building these submarines in Australia does not meet these criteria and cannot be expected to ensure our industrial future.
The other legs of the Government’s Plan identified above – opening up exports through trade agreements and the plan to get 100,000 young people – are also worthy endeavours, but again cannot realistically be expected to have a large impact on the economy as a whole.
Instead having a comparative advantage in skills is the most critical element if Australia wants to pursue high value added industries based on technological leadership. The Prime Minister’s Innovation Statement did in fact recognise the importance of skills, but unfortunately his words haven’t been matched by action. Instead the funding for education and training, along with research, has been cut.
A second critical element in improving Australia’s comparative advantage in high value industries is to make better use of the skills that are available. This is also the key to enhancing future productivity growth. But unfortunately there is considerable evidence that most firms in Australia are not at the frontier of best practice when it comes to making the best use of the skills of their workforce. What is needed is a renewed management focus on achieving improvements in the organisation of work, a principle source of innovation, and less focus on cost cutting, which at worst can lead to lower productivity.
Closely related to this second element, and its focus on improving the organisation of work, is the scope to improve the effectiveness of education and health services, and consequently their productivity, by re-organising how they are delivered. This means breaking down some of the silos, developing teams, and particularly in the case of health it will require changes in the payments systems and consequent incentive structures.
Finally, a good plan for jobs and growth would require much more carefully targeted infrastructure investment, based on the introduction of proper pricing signals and proper evaluation. While the use of infrastructure continues for the most part to be free, we should not be surprised if there is over-demand. Instead in future infrastructure investment (which is a huge drain on the Budget) should be guided by what will deliver the greatest economic returns, having regard to the value that users are prepared to pay for, and not in response to political whims.
In sum, one can applaud the Prime Minister’s enthusiasm for innovation and his efforts to encourage the embrace of new technology. However, the agenda for jobs and growth needs to broadened as there is much more to do, and the funding is inadequate to support many of what the Prime Minister himself has identified as priorities.
A response to Richard Broinowski.
While the government might emphasise the roles for the new submarine that may be regarded as defensive – “intelligence, surveillance and reconnaissance” – Richard Broinowski ignores perhaps the most important role, namely power projection in the East and South China Seas.
This role was perhaps most graphically illustrated the Rudd government’s 2009 White Paper, which first made the case for 12 powerful new submarines. Rather extraordinarily, that White Paper mooted the possibility of unilateral action by Australia against a ‘major adversary’:
“But we do assume that, except in the case of nuclear attack, Australia has to provide for its own local defence needs without relying on the combat forces of other countries. The Government considered such contingencies because although they are unlikely, they are not so remote as to be beyond contemplation. …In such circumstances, in order to defend ourselves we might also have to selectively project military power beyond the primary operational environment described in this White Paper, for instance in maritime Southeast Asia.” (Page 65)
Lest there be any doubt, the 2009 White Paper (Page 59) suggested that “we will use strategic strike if we have to”. (Page 59) It stated that:
“The Government places a priority on broadening our strategic strike options, which will occur through the acquisition of maritime-based land-attack cruise missiles. These missiles will be fitted to the AWD, Future Frigate and Future Submarine. …The incorporation of a land-attack cruise missile capability will be integral to the design and construction of the Future Frigate and Future Submarine.” (Pages 70 and 81.)
Although the 2016 White Paper dropped all references to strategic strike, this does not mean that the aspiration has been discarded. Certainly, the requirement for 12 powerful, long range submarines has not changed since 2009. This is not the first time that Australia’s defence strategy has required the acquisition of a unique military platform. In 1963, the Menzies government ordered a special version of the American F-111 aircraft with the range extended so as to allow it to reach Jakarta.
In any case, it seems clear that one of the reasons that Australia requires a unique conventional submarine is so that the RAN could undertake operations that most navies would leave to nuclear submarines, namely power projection against a ‘major adversary’ in contested waters far from home. For example, Rear Admiral Ray Griggs, former Chief of Navy (2011-14), defined the most significant operational task for the future submarine as “sinking hostile ships and submarines” and said that the area of most interest is the South China Sea. [1] Also, the new submarine will have the ability to launch either American or French cruise missiles through its torpedo tubes.
It is difficult to build a logical strategic case for the acquisition of twelve large submarines with a very long range unless this power projection role plays a central part. Yet, as Australian Strategic Policy Institute has pointed out, it is not clear that the Americans would welcome Australian submarines playing such a role in the case of a conflict in which we were part of a US-led coalition. We can only hope that any Australian aspirations to take on a ‘major adversary’ unilaterally have, like a former sabre-rattling American general, “simply faded away”.
[1] Peter Layton (2015), “Australia’s next submarine – will it be the Soryu”, Defence Today, Vol 11, No 4, page 8.