What is Modern Monetary Theory and will it help?


Modern Monetary Theory (MMT) is a macroeconomic theory for the current age in which governments have abandoned the gold standard and also floated their currencies. It is ‘macroeconomic’ and ‘monetary’ because many of its conclusions relate to the money supply in an economy. Does it offer scope for a new economic approach recognising people? Can it better assist responses to robotics and computerisation than current economic approaches?

Historically, gold was important because coins were minted from it (and silver). Even when coins were no longer minted in gold, the currency issued by governments was convertible to gold and governments needed to hold sufficient gold reserves to satisfy a potential demand from all holders of their currency — that was the gold standard. In that situation governments could not spend without first taking money from the economy (taxation) because the money supply was limited to match the quantity of gold. Following WW2, fixed exchange rates also meant that governments, through their central banks, had to defend the rate they had fixed by buying or selling their own currency in international money markets: that also affected the money supply in their home economy and also placed limitations on government spending. Floating currencies now allow central banks and governments to target domestic economic policy goals knowing that the floating exchange rate will resolve the currency imbalances arising from trade deficits or surpluses.

MMT points out that much economic thinking since the 1980s operates as though the gold standard is still in place — namely, that governments can only fund their spending by taxation and therefore deficits are bad — but some MMT proponents and supporters argue that this has ideological (neoliberal) rather than genuine economic underpinnings.

Since the abandonment of the gold standard, most countries, including Australia, now have a fiat currency — that is, it is created by government fiat (decree) — and it has no intrinsic value. My $50 note is not matched by $50 worth of gold any longer, nor is my plastic note worth $50 itself (in 2012 Australia’s polymer notes cost 34c each on average to produce irrespective of their face value). My note has value only because the government decrees it has and the government is the monopoly provider of currency: therefore it is the currency I need to participate in the economy and to pay taxes.

MMT places this new reality at the centre of its approach. A sovereign government issuing its own currency can never run out of money, never go bankrupt or default on its ‘debt’. That in a sense was Greece’s problem: as part of the Eurozone it was no longer an issuer of its own currency. In that circumstance, as for the states within a sovereign nation, the oft-used analogy of a household budget still applies but it does not apply to the sovereign issuer of a currency.

The ‘sovereign issuer of currency’ argument leads to probably the most well-known and sometimes controversial aspect of MMT, that a government can always ‘create’ money. The critics argue such printing of money — although these days it actually requires only a few keystrokes on a computer to create deposits in the private banking system — will lead to hyperinflation as in Zimbabwe or the Weimar Republic in post-WW1 Germany. MMT accepts that inflation is one factor that imposes a limit on government spending but that limit is not reached until all the ‘real’ resources of the economy are fully utilised — all human resources (full employment) using all available physical resources. If a government continues to spend after that, then dangerous inflation may result but, prior to that point, MMT argues that government spending to assist utilisation of available resources will not lead to uncontrolled inflation. For MMT, the issue is not just money but the real human and physical resources that are available to the economy and not currently being used:
If there are slack resources available to purchase then a fiscal stimulus has the capacity to ensure they are fully employed.
As a means to help control inflation, current mainstream economic thinking accepts the Non-Accelerating Inflation Rate of Unemployment (more commonly known by its acronym, NAIRU). The Australian Treasury uses NAIRU in its modelling as the basic foundation of longer-term stable inflation — currently the NAIRU in Australia is 5% unemployment. Before NAIRU, full employment was taken to mean there would be about 2% unemployment, allowing for people moving between jobs or unemployed short term for various reasons. In practice, NAIRU provides a ‘buffer stock’ of unemployed which basically means that having those extra unemployed, above the previously accepted 2%, provides downward pressure on wages growth because the unemployed are more willing to accept lower wages simply to have a job. The argument goes that if unemployment falls below the NAIRU level the competition for workers will mean employers accept demands for higher wages thus leading to higher inflation. (Despite the whole capitalist free market system being based on competition, whenever workers appear to have a competitive advantage it is decried as a threat to the economy!)

MMT rejects the NAIRU and instead proposes a Job Guarantee for the ‘unemployed’, sometimes referred to as ‘transitional employment’ which probably describes it better. As opposed to the NAIRU ‘buffer stock of unemployed’, MMT offers a ‘buffer stock of employed’ but this is done at a ‘fixed price’ — in Australia this would be the minimum wage, inclusive of standard employment conditions. It means the government supports employment until such time as a person obtains higher paying mainstream work and it will be in productive work using under-utilised resources:
What matters … is whether there are enough real resources available to produce goods and services that are equal in value to the government’s job-guarantee spending. If these resources are available — if they are not already being used to produce something else — then the increased demand that results from the payment of job-guarantee wages will not be inflationary, regardless of what they go to produce.
On broader monetary issues, MMT says that there can only be saving in the private sector, inclusive of banks, businesses and households, if the government spends more than it collects in taxes: that is, only when the government adds money into the economy can there be private sector saving as well as investment.

A good, simplified explanation of this was provided by John Carney at CNBC in 2012:
The MMT people aren’t actually referring to you and I saving. They aren’t even talking about the entire household sector saving financial assets. They are talking about the entire private sector spending less money than it earns.

You can easily see why this would be impossible without the government spending more than it collects. Every dollar someone is paid is a dollar someone else has spent. If we all — every single person and company — spend less than we are paid, very quickly we will find we have to be paid less. The aggregate effect of savings is to reduce the total amount people are being paid for things.

So this is what MMT people are talking about when they refer to a “private sector desire to net save.” They mean that if you add up all the earning, spending and savings of every person and company in the economy outside of the government, sometimes you find that the private sector is trying — nearly impossibly — to earn more than it spends.

The only thing that can make private-sector net savings possible is government spending. If the government spends more than it takes in taxes, the private sector can earn more than it spends. Remember, if everyone pays less than they earn, some outsider must be paying more than he earns.
The MMT equation for this is:

(G – T) = (S – I)

Or in words, government spending (G) minus taxes (T) equals private saving (S) minus gross private investment (I). This is so because in macroeconomic terms the two represent the entire amount of money in the economy. And the other key of this equation is that it shows that money does not come into being in the private sector unless the government has first spent it (over many years now).

MMT points out that when governments run surpluses it leads to an increase in private sector debt because, in that circumstance, if the private sector wishes to save and invest, it has to borrow from the existing pool of money (and the government surpluses are actually reducing the money supply). This is explained by the concept that transactions between banks, businesses and households are ‘horizontal’ transactions and cannot change the amount of money in the economy (liquidity). Only a ‘vertical’ transaction between the government and the private sector can change liquidity (MMT includes both the treasury and central bank when it talks of ‘government’).

In the USA, on all occasions when the government has run surpluses, and reduced debt for a few years, it has been followed by recessions or depressions. Arising from the indebtedness forced on the private sector by the government surpluses, there comes a point when the private sector reduces spending because it cannot afford to take on more debt, thus creating an economic slow-down. In such circumstances, only government spending can relieve the situation. (It is also of interest that since 1776 the US government has been in debt in every year except for the years 1835 to 1837.)

In a globalised world, however, national economies do not operate in isolation so one more aspect needs to be added to the equation: exports (X) and imports (M).

(G – T) = (S – I) ‒ (X – M) or

(G – T) + (X – M) = (S – I)

If a country has a trade surplus that adds to private savings. Many countries, however, as Australia, operate a trade deficit which means that private sector saving is reduced and more reliant on government spending. And at a global level the nett outcome of all countries’ trade must sum to zero, so it is impossible for every country to run a trade surplus — a surplus in one country necessarily requires a deficit in other countries. So a trade deficit or surplus is not bad in itself but does affect private sector saving and creates more need for government to adjust its spending appropriately.

Although even MMT still talks about deficits and surpluses, my reading is that those words are less relevant in MMT. If a government can create money it can never really be in deficit (except perhaps in a point-in-time accounting sense). Even claiming that the deficit represents spending more than collected as taxes is not relevant. MMT says that the government does not need taxes in order to spend — it can always create whatever money it needs. The real purpose of taxes is to take money from the economy or, in economic terms, to reduce liquidity, meaning there is less money to spend and thereby total demand across the economy is also reduced. What taxes can achieve is to create ‘space’ for government spending. If an economy is already running at capacity and the government continues to spend, that is increases liquidity and demand without first making space for that spending, then high levels of inflation may result because there is more money in the economy to buy the same amount of goods and services, meaning people competing for those goods and services are willing and able to pay higher prices to obtain them. So taxes can be important in allowing government spending without dangerous inflation but are not necessary in themselves for that spending.

Similarly MMT argues that the sale of government bonds is not necessary to fund government ‘debt’. So-called ‘debt’ can actually be met at any time because the government can ‘create’ the money to do so. But as always the limiting factor is controlling demand in relation to the capacity of the economy so as not to allow dangerous levels of inflation.

MMT’s explanation is that the sale of government bonds is primarily a means of controlling interest rates: this relates to the overnight commercial bank reserves placed with the central bank but I won’t attempt to explain how that works. (This interview with Bill Mitchell for the Harvard International Review provides an explanation and also a good summary of MMT.) A secondary reason is that banks, financial markets and the private sector generally, desire government bonds as a safe haven to park money. Here in Australia, that became obvious during the Howard/Costello years when the government paid down its debt and saw little need to make new bond issues but the private sector complained and the government had to issue more ‘debt’ even though it had no debt: that fact alone gives credence to the MMT argument.

Although the approach is called Modern Monetary Theory, it places more emphasis on fiscal policy. Bill Mitchell writing on the current economic problems said, ‘until we stop relying on monetary policy and restore fiscal policy to the top of the macroeconomic policy hierarchy, nothing much is going to change’. Mitchell argues that governments have been using the wrong approach to overcome the current economic stagnation affecting many countries:
It is not that they have run out of ammunition. They have been using the wrong ‘ammunition’. For example, trying to drive growth with low or negative interest rates failed to work because the lack of bank lending had nothing to do with the ‘cost’ of loans.

It had all to do with the dearth of borrowers. Households, carrying record levels of debt and facing the daily prospect of losing their jobs, were not going to [start] suddenly bingeing on credit again.

Business firms, facing slack sales and a very uncertain future, could satisfy all the current (low) levels of aggregate spending in their economies with the existing capital stock they had in place and therefore had no reason to risk adding to that capital stock.
In the MMT model, the remedy to many economic problems is fiscal stimulus not austerity which only exacerbates the problems. And as a sovereign issuer of currency the government always has the capacity to provide such a stimulus when there are under-utilised resources in the economy.

Using fiscal policy, and the knowledge that governments can spend as much as they wish, limited only by available real economic resources and inflationary impacts, MMT suggests that the real issues are social policy issues. The debate should not be about ‘debt and deficit’ but what we as a society wish to achieve, wish to become, and, within the limits mentioned, governments do have the capacity to meet those goals. For me that is an important outcome from MMT, not just that it offers a new economic approach but that it offers scope for a new policy and political approach. To that extent, it does allow space for people by creating an economic approach that recognises social policy goals are of critical importance and the ability to achieve them is not so limited or proscribed as it is by existing neoliberal economic theory. For that reason alone MMT deserves more attention.

Next week, in the last of this four-part series, I will consider whether governments are ready for the coming economic and social changes.

What do you think?
Can MMT really change government thinking and overcome current neo-liberal approaches, not just in government but in Treasury?

Will it take a new generation of economists before MMT is accepted? Will that be too late to help the people?

Let us know in comments below.


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At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

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At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

However, the same people who make sure they are kind to their staff, helpful for their friends and make sure they have a positive influence in their children’s lives can make the lives of people more distant from their immediate family absolutely horrific. It is history that Hitler and Goebbels were two of the leaders of a regime that murdered millions of people based on racial stereotypes, plunged the world into the second World War and left their country far worse off than when they came to power. It could be argued that there are leaders of a number of countries who are committing similar atrocities today. It is always good, however, to remember that one person’s ‘freedom fighter’ is another person’s ‘terrorist’.

A few months ago, SBS screened a documentary from the UK titled Troll Hunters. The narrator of the documentary is a young woman (Em Ford) who owns an internet beauty blog, giving other young women tips on how to dress according to the current trends and apply makeup. Like a lot of young people, Ford at times suffers from acne and part of the make-up tips she shares on the internet are methods to hide acne. Em Ford’s blog is located here. Unfortunately, and probably unsurprisingly, some of the comments Ford receives on her blog, YouTube videos and so on are less than complementary on her appearance, personality and taste in clothes and fashion. Some of those who comment are persistent, insulting and use copious amounts of foul language. So she sets out in this documentary to find her ‘nemesis’ and call that person to account.

So the search begins. Trolling is basically illegal, as it is using a ‘carriage service’ to harass and cause harm. As you would expect, most ‘professional’ trolls don’t leave much information behind to identify them, however there are people who can sometimes discover the identity of the ‘troller’.

Here’s the spoiler alert as the end of the documentary is the relevant section for the purposes of this article.

While Ford doesn’t find ‘her troll’, with help she locates a troll who was uploading pornography to the social media feeds of a woman who was a former British Conservative Party MP. Ford and the former MP confront the man outside his house and as you would expect the former MP has some interesting observations on the man’s behaviour and can express those views with an interesting variety of language. By arrangement, Ford interviews the ‘troller’ who is not sorry for what he’s done and, despite meeting his victim, doesn’t believe she is real. It appears there is a disconnect with the reality that every ‘cyber person’ with a social media account is somehow related to a real person with a right to be treated with courtesy and respect. He admits he uploads pornography to people’s social media accounts for the fun of it! He also gets a (perverse) victory out of being blocked from someone’s social media accounts.

Let’s put that into perspective. The ‘troller’ enjoys that he can apply increasing pressure to selected victims by use of words, pictures and so on which invokes potentially a police complaint (for which there is little or any evidence available for a conviction) and certainly blocking from the victim’s social media feeds. When this happens, the ‘troller’ believes they are victorious against a ‘cyber-person’ who has no basis in real life and probably moves on to harass someone else.

So how does this relate to Australian politics? Despite what you think of their policies, it is evident that Malcolm Turnbull loves his family (including the often mentioned and photographed grandson, Jack), as Tony Abbott loves his wife and daughters and Bill Shorten loves his ‘blended’ family. It’s probably fair to suggest that Scott Morrison, Peter Dutton, Sam Dastyari and George Brandis love their families as well. In each case, it would be pretty certain that each politician would do whatever it takes to look after their family and have a pretty good stab at teaching children not to steal or cheat, as well as giving them the skills to ‘play nicely with others’.

So why would the same people act so differently when it comes to running the country? Dutton, in response to leaked reports of over 2,000 cases of abuse and humiliation of refugees (supposedly) in our care on Nauru, claimed there was nothing new to see here when it was first reported; and subsequently claimed he was the victim because he was being verballed by the media. This is despite evidence showing that Dutton had been given extensive briefings about the actions of the contractors he employs on our behalf. Dutton was attempting to shift the blame to everyone but himself and the government for the problem caused by his government’s unbending harshness as discussed by The Guardian here a few weeks ago. Maybe it is a coping mechanism. Assuming Dutton’s claim of a ‘fit up’ are true, Dutton claims there are a number of exaggerated and made up claims (by inference not all the leaked claims are incorrect), and there are obviously some incidents that bring discredit to Australia and Australians. According to his website, Dutton has a family. Even one case where a person is treated less than well is one too many and diametrically different to the care and love Dutton probably shows to his family.

The Sam Dastyari donation issue is equally as instructive here. Fairfax media reported:
It is worth noting Dastyari had broken no law, no regulation, nor even a norm in Australian politics. Technically he had not even taken a donation, but a gift. He had even properly declared the gift. He was determined to ride out the scandal.

Last Friday though, the Prime Minister, Malcolm Turnbull, piled on, pointing to quotes in Chinese media suggesting that Dastyari had advocated China's position on the South China Sea dispute, a position contrary not only to Australia's stance, but that of our key ally, the United States.

‘Cash for comment’, said the PM.
The claimed difference between this ‘gift’ and other ‘gifts’ and donations is that Dastyari is supposed to have publicly contradicted the ALP’s policy on the current South China Sea issue where China is apparently attempting to exert more influence than it currently does.

Dastyari fell on his sword early in September and resigned from the position of Manager of Opposition Business in the Senate. Turnbull’s ‘cash for comment’ claim is full of faux outrage. If Turnbull is claiming that Dastyari’s opinion was changed by around $6,500 (in two individual ‘gifts’), it is worth asking why Turnbull and his Liberal Party colleagues’ opinions are not influenced by the 89.56% (or $9,315,505) of ‘non-individual’ donations above the reportable ‘cap’ received during 2014/5 by the Liberal Party. The Nationals seemingly are more resilient to being influenced by ‘non-individual’ donations — 100% of their donations (above the reportable ‘cap’) were not from individuals; the ALP comes in at 90.22% and the Greens rate the least affected, if you can call 89.19% of their donations coming from ‘non-individuals’ as significantly better than 100%, 90.22% or 89.56%! Fairfax reported:
There is still a large portion of donations in the system falling below the $12,800 threshold required for disclosure, many of which would be small contributions from individuals. Labor's figures include all donations above $1000 as they have put in practice their proposal to legislate a lower threshold.

For the purpose of this analysis, Fairfax Media also counted only the AEC "donation" category and not financial benefits reported as "other receipt".
So it is debatable if the million or so dollars in Liberal Party income from Parakeelia, the provider of the customer relationship software mandated for use by Liberal Party politicians, wholly owned by the Liberal Party and funded by parliamentary services electoral office budgets (aka your and my taxes) is included in these figures — it could have been listed as a dividend.

Dastyari has done some good by focussing the national headlines onto the donation issue for close to a week and weathering the storm of faux outrage generated by Turnbull and a few of his ministers. Should donation reform be on the agenda? Almost certainly, yes it should. But the major political parties are so reliant on the donations received from ‘non-individuals’ there is probably no real appetite by the politicians to really do anything as they rely on the funding to the political parties to gain and retain their seats.

It’s not the first time that political donations have undone a political career. Former Premier of New South Wales Barrie O’Farrell’s career fell apart over a bottle of (supposedly quite nice and definitely expensive) wine. O’Farrell did try to limit donations to individuals in New South Wales, but the law was overruled by the High Court.

The interest in political donations here is similar to the interest in refugees on Nauru as well as ‘trollers’ on the internet. There is a disconnect between our reality and theirs.

Em Ford’s interview with the ‘troller’ shocked her — not for what you would assume but for the reason that firstly the male ‘troller’ was an articulate person who seemed to be a normal member of society who just couldn’t understand that behind each website blog (such as this one), YouTube channel or social media account was a person who has probably tried their best, with feelings and an expectation that people should treat each other with respect, recognising that at times people have a right to express different experiences and values politely. The ‘troller’ just didn’t ‘get it’.

If you meet Peter Dutton (or Scott Morrison, the previous Immigration Minister responsible for the indefinite and proven — in PNG at least — illegal detention of refugees who asked Australia for protection and a safe home), you would probably find a person who treats you with respect. They both also have families and you would have to imagine they would do anything to protect their family from hurt and keep them safe. It seems they just don’t ‘get it’. Refugees are people who by circumstance have been forced to leave their homes and livelihood. They are families as well and deserve to be treated as well as the families of Dutton or Morrison.

Turnbull attacks Dastyari over donations of around $6,500, claiming that the cash influenced his opinion, while saying nothing about the almost $10million the Liberal and National Parties received from ‘non-individuals’ in 2014/15 (later figures are not available). It stands to reason that Turnbull just doesn’t ‘get it’. Somewhere around $10million would purchase a lot more influence than $6,500 or thereabouts. Is Turnbull upholding a principle or ‘playing the man’ for political gain?

The real problem here is that there is a disconnect. At what point do people just become numbers, or customers, political enemies or voters? It stands to reason that everyone has people they care about more than the person sitting in the car beside them in the traffic jam, however those who make the decisions in Australia seem to forget that they and their loved ones are a very small proportion of the 24 million plus people who live in Australia or the 7 billion plus people who inhabit the earth. While their job is not to ‘tuck each individual into bed each night’, those who are placed in positions of power need to remember that they are dealing with people’s lives, and act accordingly. Clearly, the Coalition government isn’t. Are they any better than the anonymous ‘troller’ who posts pornography to people’s social media accounts for the fun of it, or those past and present world leaders who carry out genocide for some warped idea of racial purity, without a care in the world about how the victims feel?

What do you think?
Let us know in comments below.
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Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs but for the broader economy.

The loss of jobs is not new. In Australia since the 1970s there has been an ongoing loss of un-skilled jobs, particularly for males. In 2006 Sue Richardson, with the National Institute of Labour Studies at Flinders University, wrote in Unemployment in Australia:
By 2001, at every age, at least 20 per cent of men with no post-school qualification were not in the labour force. These men have not withdrawn from the workforce because they have handsome alternatives that mean they do not have to work … Overwhelmingly, the reason they are not in the labour force is because they cannot find work and have given up looking.
And in 2004 Bob Gregory wrote in Between a Rock and a Hard Place: Economic Policy and the Employment Outlook for Indigenous Australians:
An exceptional feature of the Australian labour market over the last three and a half decades has been the loss of unskilled male full-time jobs. This loss has been so substantial that as a proportion of males 15‒64 years of age one full-time job in four has disappeared. Most of this job loss has fallen upon the unskilled …
At the same time there were skills shortages. In September 2004 the Australian Industry Group reported a shortfall of between 18,000 and 21,000 in the manufacturing sector for skilled tradespersons.

And a shift in the make-up of the workforce was already occurring. In 2006, the then Department of Employment and Workplace Relations (DEWR) reported that between 2001 and 2006, 78% of new jobs were created in the four most highly skilled occupational groups: Professionals (17.4% growth), Associate Professionals (18.3% growth), Managers and Administrators (28%) and Tradespersons (10%) but job growth for Labourers had been only 0.6% in that five-year period.

Skills shortages continue. In February this year the Department of Employment published its list of occupations in which there were shortages during 2015. Twenty-five occupations were experiencing national shortages, including higher level occupations like surveyors, optometrists and audiologists. The list included trades such as motor mechanics and automotive electricians, bricklayers, glaziers, roof tilers as well as wall and floor tilers, air conditioning and refrigeration mechanics, chefs, hairdressers and cabinet makers.

The department also released its jobs outlook, Australian Jobs 2016. Overall employment was projected to grow by 8.3% over the next five years which appears to be little more than matching population growth. Six industries were expected to grow by more than ten per cent: Accommodation and Food Services (12.0%); Arts and Recreation Services (10.8%); Education and Training (13.0%); Health Care and Social Assistance (16.4% and it is also the largest industry by employment numbers); Professional, Scientific and Technical Services (14.8%); and Rental, Hiring and Real Estate Services (11.9%). Employment in Mining will decline (‒14.1%) as will Manufacturing (‒5.3%) and Agriculture, Forestry and Fishing (‒3.1%).

When it comes down to occupations ‘Professionals’ provided 41% of new jobs from 2010 to 2015 and employment is expected to grow by 14.5% to the end of 2020. Seventy-four percent of professionals hold a university degree. Professionals are also more likely than other workers to work full-time.

In that period of five years up to 2015 ‘community and personal service workers’ provided the second highest proportion of new jobs, 22% (they also make up about 10% of all employment). Their employment has grown by 16.3% since 2010 and is expected to grow by another 19% in the next five years. Nineteen percent hold a university qualification and 42% a VET Certificate III or higher but 55% are employed part-time. It includes child, aged and disability carers, waiters and bar attendants and baristas.

Technicians and trades work provided 11% of new jobs up to 2015 and employment grew by 5.2% in that time and is projected to grow 5.5% in the next five years. Most of these workers are employed full-time and 62% have a VET Certificate III or higher.

Among the lower-skilled occupations there were, late in 2015, 1.7 million clerical and administrative workers, 1.1 million sales workers, 1.1 million labourers and 740,000 machinery operators and drivers which is still about 40% of the Australian workforce. Their projected growth to the end of 2020 is 1.6%, 9.3%, ‒1.3% and 1.0% respectively. The groups include receptionists and office managers, checkout operators, real estate agents, truck drivers, forklift drivers, delivery drivers, cleaners, kitchenhands and packers, as well as labourers.

The more rapid projected expansion of highly qualified occupations appears consistent with the experience in America identified in 2013. But in America there had also been a loss of middle-ranking jobs, largely due to the automation of routine tasks, not only for manual labour (classified as routine manual work) but by the computerisation of office, sales and administrative work (classified as routine cognitive work). There had been an increase in the number of jobs for non-routine work, both cognitive and manual. The former (non-routine cognitive) requires higher levels of education and generally commands higher wages, but the latter (non-routine manual) involves work such as cleaning, food services, security services, home help, and so on. This is leading to a polarisation of the workforce in America, with more high-paid jobs, more low-paid jobs, and fewer in the middle.

The basic problem with those projections is that they are based on what has already occurred and do not take full account of the increasing pace of technological change nor the areas into which it might move in the coming decades (and the Australian projections are short-term, only for five years).

In January this year CSIRO (and Data 61) released Tomorrow’s Digitally Enabled Workforce in which it found that up to 44% of current Australian jobs were under threat of being replaced by robotics and other computerisation. It found that, as yet, there was no evidence of the ‘hollowing out of the middle’ in Australia but it did find:
… Australian men, particularly single men with less education, are becoming increasingly likely to drop out of the labour force. … Despite strong jobs growth in the service sector, it appears that for a growing number of men the labour market has little to offer unless they re-train.
That reflects the earlier findings of Sue Richardson and Bob Gregory. But it also found that in the future there will be a greater need for individuals to create their own jobs and even a need for higher skill sets to access entry-level positions. So a new flexible education will be required. Similarly, workplaces will need to be more flexible (which can also lead to greater casualisation and use of contract workers). Some changes, however, may lead to greater disparity in regional areas, particularly for older workers: past experience suggests that displaced older workers in regional areas do not relocate to find work but, if forced to, will relocate to cheaper housing in the same location. So new approaches to unemployment and transition to work will be required.

The difficulty with the emphasis on education and higher skills is that has already been happening in America but simply creating an oversupply. It was found that highly educated workers were being pushed down the employment ladder into lesser-skilled positions, pushing the low-skilled further down or out of the workforce altogether.

The CSIRO report did not go into the detail of individual jobs but its estimate of jobs at risk was based on a model used by Oxford University researchers who did a study of the US labour market: The Future of Employment: How susceptible are jobs to computerisation? That report found that 47% of US jobs are at high risk of computerisation. Given the work currently being undertaken on driverless cars, it is foreseen that in the next decade or two driverless trucks will become the standard form for movement of goods and many truck drivers will become redundant. Some have suggested that on major inter-state routes driverless trucks should actually have their own lane. So governments will also need to respond to those changes.

In Australia, Rio Tinto is already automating its Pilbara iron ore mines with driverless trucks and automated charge drilling and setting machines, and is also hoping to have driverless trains to deliver the ore to port (tests have been conducted but recent software glitches have delayed implementation). That is an example of even some skilled work being automated but the huge driverless trucks do require the worksite being ‘landscaped’ to suit.

As more data becomes available and can be stored, office and administrative support positions will be affected and further encroachment into manufacturing will take place. Even aspects of the construction industry could be affected as robotic prefabrication of parts takes place in factories, requiring fewer workers for the actual construction and even circumstances where robots can piece the prefabricated parts together on-site (as has already occurred in Japan).

The availability of ‘big data’ is important in expanding the reach of computerisation. For example, an American oncology centre is using computers to provide chronic care and cancer treatment diagnostics. This could be done because data from 600,000 medical evidence reports, 1.5 million patient records and clinical trials, and 2 million pages from medical journals were able to be stored and used for ‘benchmarking and pattern recognition purposes’. Examining such a vast amount of data would be impossible for a human but not a computer (if it is programmed correctly). As more ‘big data’ becomes available computers will expand their reach.

The report into the US workforce also found that automation will move into non-routine manual work in sales and services. A simple example is the increasing availability of robotic vacuum cleaners capable of replacing at least one task of a hired cleaner: how many other tasks will follow? This follows the historical pattern of technological change, namely breaking down apparently ‘skilled’ jobs into smaller unskilled components — the move from the traditional skilled ‘carriage builders’ approach to early car manufacture to Henry Ford’s production line manned mostly by unskilled workers. If this prediction proves correct, the growth in low-skilled service jobs that has been occurring in the US will actually begin to reverse during the next couple of decades.

This does not mean that all jobs in these areas will be lost but a significant proportion will be.

Jobs least affected will be those requiring creativity and social skills:
… generalist occupations requiring knowledge of human heuristics, and specialist occupations involving the development of novel ideas and artefacts, are the least susceptible to computerisation.
Others have since suggested that even some creative work can be done by computers: already there are computers capable of creating musical scores (no doubt based on ‘big data’). If that continues into the future, and AI becomes a reality, there will be almost no job that is not at risk.

This new world is giving rise to what is known as ‘the gig economy’. This means that, like a band of musicians, people will work ‘gigs’ for which they must search.

A study released in January this year by The Aspen Institute in the US found 45 million Americans (22% of adults) were working in the gig economy providing ride sharing, accommodation, food delivery and other platform-based services. For 14 million it was their main source of income and just over half, 23 million, were young, aged 18‒34.
However, most workers (72 percent) believe companies should be doing more to provide benefits, and more than two-thirds worry that as independent contractors and not employees, they don’t have a financial safety net.
Anecdotal evidence from participants suggests that many, but not all, see such ‘work’ as extra income to meet bills and so on, or as income in periods between mainstream permanent work. Or they are working many jobs to achieve a reasonable income and that can create problems — such as lack of sleep. Some examples:
[young woman in Turin]
I keep busy but I have to constantly juggle different gigs every day … What scares me most is that I have no guarantees, no steady pay, no stability. Everything could end overnight, so I can never make long-term plans.


[Uber driver in Los Angeles]
In the short term, this way of working works, but there is a long-term downside. It’s very difficult to build a future, to save for a downpayment on a house, say, or to save for [a] college fund, on a full-time Uber driver salary or even if you combine multiple freelance services.


[Airbnb host, charity worker and interior designer]
I definitely advocate this way of working, but it’s not for the faint-hearted — if you’re working three or four jobs in a day, you need to be very disciplined and have a keen sense of priority. You have to be a bit of a workaholic: finding the balance and boundaries to fit everything in can be a bit of a juggle. And obviously not having paid time off is a downside.
Some professionals can do better in the gig economy as the internet (and specific sites) allow them access to a much wider range of clients in a much wider range of locations. For some, whose work can be done over the internet, the location of the client no longer matters and, therefore, having access to a larger number of potential clients is an advantage. Conversely, the sites involved also permit potential clients to more closely match the skills of their selected professional to the work required.

Companies will rely less on full-time employees and will hire on a task or project basis. This will apply across many job categories, not just professionals. Companies will be able to hire the specific skills required for a single task, so the work could range from a few hours to a few days. People will be able to specialise and offer their skills to many clients. But this will also spread the problems described by people currently working in the gig economy.

Such an approach is already moving down the employment ladder to very mundane tasks, and to ‘micro-tasks’ such as tagging images, extracting keywords, checking address data, which sometimes may be no more than a few minutes work for each ‘job’. These are termed human intelligence tasks (HIT):
At the time of writing [August 2015] there were about 300,000 HITs on offer on AMT [Amazon Mechanical Turk]. An average Turker (as they are referred to by AMT) can expect to earn US$2 to US$5 per hour on a good day but there’s no guarantee in terms of regular work availability.
Not all of these jobs will remain. Uber, for example, is already investing in and preparing for driverless vehicles. And computers can already undertake some of the minor tasks currently available. Whether people can be prepared in time for the new jobs that may emerge, or there will simply be massive unemployment, will be the big question.

All of the above may prove to be wrong as we do not have a very good record predicting the future — some things change less than we foresee while we seem to completely miss other significant changes. In the 1960s some popular magazines were predicting that by the early 2000s we would have flying cars, or at least hover cars. I also recall a television program from that time, specifically looking at future change, that predicted we would be required to work only ten hours per week in the new millennium to maintain our lifestyle.

Cars have changed, being more luxurious and incorporating many more safety features than in the 1960s but they still have wheels and still require roads. And, in Australia prior to the GFC, individual work hours were increasing, not decreasing. Our lifestyle has changed: the average new house is now twice the size it was (as is the cost); more homes incorporate central heating and/or air conditioning; televisions have grown both larger and smaller and few households are now satisfied with only one. But the biggest change that few, if any, predicted was the explosion in digital technology; the rise of computers, the internet and the information age; and now the portable devices that allow us to access that information at any time and almost any place.

So do we have the rise of robotics and ‘the gig economy’ right? We cannot say with certainty. But to the extent that they are already happening we do need to plan for them and consider their ramifications both for people and the economy as a whole because so much work will no longer require people, or require them for only short durations. We may not get it quite right but we cannot ignore it.

Next week I will consider Modern Monetary Theory (MMT) and what it may offer to meet the challenges of the new economy.

What do you think?
How far can robotics and computerisation go in reducing the need for humans? Is there a limit?

Will unions themselves become redundant if more and more people do not have work or enter (or are forced into) ‘the gig economy’?

Let us know in comments below.


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2353NM, 11 September 2016
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Our Government is morally bankrupt


Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again.

To paraphrase a sacked host of an extremely popular BBC television program loosely based on cars when talking about their ‘tame‘ racing-driver; some say they reached a low with treatment of refugees, others might suggest that the blatant disregard of human rights was worse — all we know is that the government allowing these things to happen is morally bankrupt. How about we look at the claim of moral bankruptcy in the cold light of day. There are a host of examples that could be provided.

Example 1: Offshore detention

We’ll start with offshore detention. During August, The Guardian came into possession of over 2,000 claims of mistreatment and abuse perpetrated on refugees held at a Detention Centre on Nauru funded by the Australian government and staffed by contractors to the Australian government. A significant number of the subjects of the reports were children. The holding company currently contracted to provide management services to the offshore detention centres was recently bought out by Spanish interests and —
… has been warned by professors at Stanford Law School that its directors and employees risk prosecution under international law for supplying services to Australia’s camps on Nauru and Manus Island in Papua New Guinea.
“Based on our examination of the facts, it is possible that individual officers at Ferrovial might be exposed to criminal liability for crimes against humanity under the Rome Statute,” said Diala Shamas, a clinical supervising attorney at the International Human Rights and Conflict Resolution Clinic at Stanford Law School.
They will not be extending their contract arrangements.

Dutton seems to have no problem in continuing to justify the obscenity perpetrated on refugees immorally held on Manus Island in our name. Dutton’s response to the (embarrassing to the government) release of the documents was to downplay the seriousness of the accusations, suggesting ‘Most of this has been reported on before.’

While Dutton may be correct in his assertion that ‘asylum seekers are … setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia’, it is beyond comprehension to believe that every one of the 2,000 reports originally authored by Save the Children (who had a contract with the government to provide humanitarian services on Nauru) was false or exaggerated. When challenged, Dutton doubled down on the insults telling 7.30's Leigh Sales : ‘I think the situation is that people have paid people smugglers for a migration outcome.’

Dutton is a proxy for all Australians. We pay him to represent our standards, traditions and moral standards when the Coalition government is dealing with immigration matters. So his (as well as the actions of immigration ministers back to the days of the Keating government) actions are the actions of all of us because we elect the government. The current prime minister and most of the country were disgusted with the reports of abuse that occurred to children at the Don Dale Centre in Darwin. Yet the same government sees no problems with similar claims coming from children that this country put on Nauru on indefinite detention. At least those at Don Dale had a date they would be released.

Example 2: Changes to the Racial Discrimination Act

Senator Bernardi is canvassing support for a private members’ bill that will allow for discrimination to others based on race. While it could be argued that someone else’s opinion could be considered to be risible, their religion, gender, race or ancestry is not a determining factor in why their opinion or statement is what it is. Nevertheless, Bernardi claims every Liberal Party Senator bar one has signed a petition supporting the change.

Clearly we should not ‘offend’ or ‘insult’ anyone. Bernardi wants to legalise it, while not allowing intimidation and humiliation. That would be a fine line.

That the law was felt necessary in the first place is a sad indictment of Australian society as it demonstrates that a number of Australians believed they could insult and offend people based on their religion, race or ancestry. It is even a greater stain on our society that politicians are now actively campaigning to allow it to reoccur.

Example 3: The same sex marriage plebiscite

Since the election of the current parliament, there has been a continual debate about the necessity for a $160million plebiscite to ask Australian voters if the government should legislate to allow same gender marriage.

Let’s get something out of the way first up — there is no need for anyone outside parliament to do anything to make ‘same sex marriage’ legal in Australia. The Howard government inserted the ‘man and woman’ clause into the Marriage Act in 2004. According to Howard at the time:
(It should) not over time be subject to redefinition or change by courts, it is something that ought to be expressed through the elected representatives of the country.
So why can’t the elected representatives of the country change the law now?

According to The Monthly’s political editor Sean Kelly:
For a start, Turnbull accepted the plebiscite as a condition of becoming prime minister. We will never know if this was unavoidable or if, given the choice between losing government under Abbott and accepting a free vote under Turnbull rather than a plebiscite, the Nationals and the conservatives would have backed a strong-willed Turnbull anyway. Certainly Turnbull’s negotiating hand within the Coalition has never been stronger than it was then. But the lure of power can be hard to resist, and at the time the compromise would have seemed like a small thing to give away.
At the end of August, Fairfax’s Matthew Knott suggested that the brutal reality is there will be no free vote on marriage equity, although more recently apparently there have been discussions to make the plebiscite ‘self-executing’ (if the plebiscite is successful, it doesn’t need a vote in Parliament to become law).

The morally bankrupt issue here isn’t who sleeps with whom in the marital bedroom, it is the double standard that allows one conservative prime minister to engineer a change to an act of parliament to ensure that Courts do not have the powers to change or redefine the participants in a marriage, and when it comes time to reassess the action some 12 years later, the same process is determined to be insufficient by another Conservative government to make a change should it be deemed necessary. Instead the country will be forced to the polls in an exercise expected to cost over $160million (while we have a federal budget expenses problem) solely to shore up the credentials of the current and immediate past prime minister in the eyes of his own side of politics. To add insult to our injury here, one of the talking points with the ‘self-executing’ option would be:
… that no taxpayer money be given to either side. That would delight the "yes" camp but anger conservatives, given the Australian Christian Lobby has asked for $15 million in public funds.
Given that some of the same people that want no change to the Marriage Act want to change the Racial Discrimination Act Section 18C to allow offence and insults, opposition leader Shorten’s comment that the plebiscite will be ‘a taxpayer-funded platform for homophobia’ is probably closer to the truth than Turnbull’s claim that ‘Australia is capable of having a respectful debate on same-sex marriage’.

Example 4: Political donations

Senator Sam Dastyari resigned from the ALP ‘front bench’ last Wednesday night over the acceptance of an amount of around $1600 from a Chinese company to repay excess travel claims as well as around $5000 from another Chinese company to settle a legal case. While Dastyari was apparently compliant with federal law as both amounts were declared, he may have been in breach of ALP policy. Either way, why a Senator who receives around $200,000 in salary per annum needs assistance to pay his expenses is a matter for concern.

While the Coalition was claiming that he must go immediately, Deputy Prime Minister Joyce was far less damning regarding his own future last Tuesday night on ABC’s 7.30 current affairs program when asked why he received and kept donations from Mining Magnate Gina Reinhart. Is it splitting hairs to be able to justify some donations while decrying others?

The initial claim here is that our government is morally bankrupt. Surely the government’s treatment of refugees, changing legislation to allow offence to be legal, generating the conditions that will ensure homophobic behaviour is considered fair and reasonable as well as the splitting of hairs around political donations demonstrates the point.

Members of parliament are our employees. It is time for us to tell our politicians that we expect morals, ethics and consideration of the rights of others (regardless of their gender, religion, ancestry or sexual preference) to be more important than political point scoring, looking after mates (who probably donate to re-election campaigns) and the smell of ministerial leather in Canberra.

Jobs and growth as well as 100 positive policies are useless to Australia without the moral and ethical background that is necessary to implement these policies equitably.

What do you think?
Let us know in comments below.

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Ken Wolff, 7 September 2016
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Modern economics has lost sight of people


This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. I take the anthropological view that economics is about how a society uses and distributes its resources — that is any society, whether hunter-gatherer or a modern technological society. It is a view that raises some questions about our modern approach to economics.

Basically the ‘use’ of resources includes a social responsibility for sustainable use so that resources can be utilised by others when required and also be available for future generations. And ‘distribution’ of resources includes a social responsibility to ensure that everyone in a community gets a reasonable share to enable them to survive comfortably within the context of their society.

Classical Western economics, however, is based on the tenet of the rational self-interested individual: that people make rational choices in the market that best provide ‘utility’. ‘Utility’ is something that provides the user/purchaser with satisfaction and/or meets their desires in some way. Adam Smith also introduced the concept of the benevolent ‘invisible hand’ whereby decisions made in an individual’s self-interest actually prove beneficial for society.

In classical economics there are also the concepts of ‘perfect knowledge’, by which the individual makes rational decisions based on information about all the prices in the market, and ‘perfect competition’ by which a product reaches an equilibrium (supply matching demand), and its price also reaches an equilibrium for all suppliers of that product, meaning there is then no competition nor need for advertising of the product. Of course these do not exist in the real world. Neither are individuals always rational in making their decisions in the market. So what was classical economics actually describing?

Even the concept of the market needs exploring. Markets of course go back millennia but the concept of the market has changed over time. Early in human history people shared goods, then exchanged surplus goods for other desirable goods and, as villages and towns developed, for services. Money eventually became the medium of exchange for any good or service.

Markets were not always based exclusively on the individual. In medieval Europe if a merchant from town A left debts when he departed town B, the merchants from town B didn’t pursue that individual merchant directly but would detain the next merchant who arrived from town A and hold him until he, the original merchant, or anyone from town A paid the debts. In that sense, the role of the individual in the market wasn’t as important as it later became — at that time it was believed that the community from which the merchant came also had a responsibility for his behaviour (and his debts). Subsequently merchant guilds were formed in which debts could be settled and over time that grew towards individual responsibility for the settlement of debts.

The other concept relevant to the modern market is private property. While the idea of private property now dominates our economic and social thinking it was not always so. Even in medieval England when land was held by dukes, barons and the like, there was common land used by the serfs, so both common and private property co-existed. It is estimated that, although serfs had to provide labour to the rich landholders, by using the common and small plots around their own dwellings they were actually able to keep from 50% to 70% of the product of their own labour. An industrial labouring class was created during the industrial revolution with the enclosure of the commons (in modern parlance, the land was privatised) and poor farmers and rural labourers no longer had access to that land to supplement their incomes and so had little choice but to work in the factories.

In the market, the logic is that to exchange something I must own it in the first place and the other party must also own what they are exchanging. The logic of that seems apparent when one considers what a thief may offer for exchange: we undoubtedly consider that not to be a fair exchange because the thief does not actually own the item of exchange — or does he? The thief clearly has ‘possession’, so is there a logical difference between ‘ownership’ and ‘possession’ in the economic system?

The emphasis on private property as central to a market economy goes back at least to the 1700s in England. C B Macpherson, a political scientist also trained in economics, argued that political freedom came before economic freedom and was first obtained by the property-owning elites who then used their new political power in their own self-interest to entrench private property rights. And it also goes back in history in the sense that much modern ‘ownership’ is based on past dispossession of previous owners and yet the economic system is based on the modern possession not the historic ownership.

Now private property, whether physical or intellectual, is central to thinking in a modern market and in modern economics.

These concepts were put together by the philosophers Hobbes and Locke but Macpherson also argued that they were bound by the values of their time and hence developed their philosophies around the market, contractual obligations and property; and the concept that an individual is the sole proprietor of his or her skills and owes nothing to society for them — what Macpherson called ‘possessive individualism’.

In rejecting a social element to ownership, economists refer to the ‘tragedy of the commons’ to justify that individual ownership, that is private property, is superior to common or social ownership. Although the idea has a longer history, the phrase came from a paper by Garrett Hardin in 1968. It was suggested that, when people grazed their herds on a ‘common’, a self-interested individual could improve his situation by adding one animal to his herd. The individual would gain the benefit. But if each individual added an animal the common would quickly degrade. While the individuals retained the benefit of having an extra animal, the ‘cost’ (the degradation) was shared, leaving them with a self-interested benefit — before the failure of the system. Following this argument, and its corollary that Adam Smith’s benevolent ‘invisible hand’ of individual self-interest does not work for the commons, economists argue that private property, and the individual’s responsibility for that property, remedies the situation and that became central to modern economics.

That approach is based, however, on a misunderstanding of how commons worked. They were not ‘open access’ as the theory implies. Throughout the world where people shared resources there were usually social and cultural rules that controlled that sharing. In Iceland, for example, the common resource of the fisheries was traditionally controlled by kinship rules that allocated spaces on the beach, that were necessary for launching fishing boats, to individual families. In some communities in India the allocation of the common resource of water for farming was determined by community meetings. People accepted these approaches as essential for the well-being of their communities or, in other words, social responsibility was more important than individual self-interest.

The modern market idea of private property and individual self-interest has basically destroyed social responsibility and the concept of the common good and allowed polluters to pour their waste into the ‘commons’ of the rivers, oceans and atmosphere.

We now use GDP to measure the ‘success’ of our economy but the use of GDP to measure economic activity only arose after the Great Depression of the 1930s when the American government was concerned that it did not see the depression coming. The government asked economic experts for a model that would allow it to keep track of the economy and so have a chance of foreseeing such events in the future.

The use of GDP, however, was being questioned as early as the late 1950s. Even its creator, Simon Kuznets, said that ‘the welfare of a nation can scarcely be inferred from a measurement of national income’.

A major problem with GDP is that it measures only productive activity and takes no account of the losses or costs associated with the activity:
… it tends to go up after a natural disaster. Reconstruction and remediation spur intense activity that is registered by GDP, while the destruction, lives lost, suffering and disruption to families and communities in the wake of a flood, cyclone or bushfire are ignored.
Or as Robert Kennedy said in 1968:
… the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. [emphasis added]
Yet we still rely on GDP as a measure of a nation’s progress although it has nothing to say about the well-being of the people. Gross GDP per head is sometimes taken as a measure of the economic prosperity of individuals: if that is rising people are said to be better off but it does not tell us whether that prosperity has enhanced ‘happiness’.

There is a long history in which ‘happiness’, or well-being, was removed from economics. A chapter in the World Happiness Report 2013 provided a potted history of the changes in the Western view of happiness: from the Greek philosophers and early Christian church’s view that happiness was achieved by being virtuous, to the economic theory of ‘utility’ in which individualism and consumerism prevailed — the early economic theorists brought material goods into the happiness equation, suggesting that people purchased that which brought them pleasure or happiness (‘utility’). In the twentieth century, however, economics came to be dominated by mathematical formulae and the question of whether market consumption could increase happiness and well-being was no longer a consideration.

Economists claim their field is a science and value free but the economy depends on social values like trust. We cannot even have a ‘market’ unless we trust each other. In a shop, the shopkeeper trusts that I will hand over the money after he hands over the goods or I trust that he will hand me the goods after I give him my money — otherwise we could be there all day arguing over who should make the first move. It could be argued that the behaviour of large multi-national corporations is destroying that trust, as is the use of tax havens to avoid social responsibility. And are we now so distrusting that we require automated payment systems, including even when paying for our goods in supermarkets? — now we have to trust a machine! Human interaction is being removed from the basic market process of exchange.

As Jeffrey D Sachs wrote in the World Happiness Report:
A prosperous market economy depends on moral ballast for several fundamental reasons. There must be enough social cooperation to provide public goods. There must be enough honesty to underpin a stable financial system. There must be enough attention paid to future generations to attend responsibly to the natural resource base. There must be enough regard for the poor to meet basic needs and protect social and political stability.
After all the economy does not exist in its own right. The market and the economy is people, as producers and consumers, as it has always been. It is the approach to it that has changed.

In an article in The Monthly, Richard Denniss argued that we are being led to believe that governments, in making their decisions, have to be conscious of the reactions of ‘the markets’. He wrote that we should remember that ‘markets’ per se do not have feelings, do not have needs or demands. What we refer to as ‘markets’ is actually people buying and selling and attempting to manipulate trading for their own advantage.

So historically we have moved from social co-operation in economic activity to twentieth century economic theories that have reduced people almost to invisibility. We discuss economics in terms of markets, GDP and monetary and fiscal policy as though these are entities in their own right. There is no economy without people, no markets, no goods and services without people as producers and consumers but this now gets less attention. The economy is deemed to have its own ‘scientific’ rules that operate irrespective of people and, as mentioned earlier, can now be analysed simply in terms of mathematical formulae.

Until people are re-introduced into the equation (both metaphorically and literally), the economists will not be describing the real economy nor will those utilising economic theory, such as governments (and their advisers), pay enough attention to the needs of their people. When ‘markets’ and GDP come first, people come last.

We need to measure the well-being of the people rather than only production; we need to pay more attention to the sustainability of our use of resources, not only for future generations but to ensure that current generations have reasonable and continued access; we need to ensure a fair distribution of resources, not only within our own society, but for all people globally; and only then will we have an economic approach that is realistic rather than the narrow view of current economic theory.

Next time, continuing the economic theme, I will discuss ‘an economy without people’ as robotics and other changes reduce the size of the workforce.

What do you think?
Who benefits from economic theory if it does not pay enough attention to people?

Why have we accepted the propaganda that even social progress hinges on the economy?

Let us know in comments below.


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Toxic talk



Are you as offended, as disgusted as I am with the language used by our politicians day after day? Have you noted how mean-spirited, antagonistic and adversarial their words so often are?

They use words like poison arrows aimed at the heart of their political opponents and those in our society whom they despise.

They have no concern for the damage their arrows might inflict, or how injured or offended their targets might feel. Wounding, disabling, hurting, demeaning is their purpose. The more damage they can inflict, the more satisfied they are.

It’s akin to schoolyard bullying, but much worse. Can you recall language as ranting, as poisonous, as hurtful, as damaging, during your school days? I can’t.

Listen to them – try to pick their targets, and watch their reaction.

There is a group that conservatives loathe passionately – those at the bottom of the social scale who rely on welfare support: the unemployed, the job seekers, the homeless, the disabled, and the mentally ill. They are Joe Hockey’s ‘leaners’.

This derogatory language goes back a long while. Do you remember when Tony Abbott, as a minister in the Howard government coined the tag ‘job snobs’ to denote those who were too lazy to look for a job, or too fussy about what work they would do and where, or too demanding about terms and conditions? Those who eventually did get a job might then oversleep, or not turn up because the travel was too arduous or inconvenient or they had no transport, or they would leave work early or slack on the job – thus the tag ‘job snobs’. When job seekers moved onto Newstart, the term morphed into a peculiarly Aussie term: ‘dole bludgers’.

Joe Hockey upped the ante when he pushed his ‘end of entitlement’ message, first at a conference in Britain. Far from trying to conceal his theme, he proudly shouted it from an international pulpit. His point was that there were some, indeed too many, who felt entitled to welfare, entitled to support from the government, and of course the taxpayer, if they had no job. Not long after we heard his now-infamous descriptor – ‘leaners’ – to designate this despicable mob, who depended on Hockey’s ‘lifters’, the good guys who had a job or a business, who pay their taxes and support the idle leaners.

Hockey’s message did not go down well, especially when those castigatory tags were given effect in his punitive 2014 budget, in which he punished the leaners and the less well off. Even his own supporters recognized that his budget was unfair. Rudiments of it still languish in the Senate wistfully awaiting endorsement.

Then along came Scott Morrison, keen to transmit the same message but unwilling to use Hockey’s tags. So he coined some of his own, not as elegant as Joe’s, but replete with the same pejorative meaning. So now we have the ‘taxed’ and the ‘taxed-nots’. As keen as Hockey, and Abbott before him, to divide our nation into ‘them and us’, into ‘the deserving and the undeserving’, Morrison launched his unique tags at the Bloomberg Summit on the economy last week.



Here’s what he said:
“A generation has grown up not ever having known a recession, of seeing unemployment rates at more than 10% … On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the government than contributors – never paying more tax than they receive in government payments. There is a new divide – the taxed and the taxed-nots.”
Remember though that in his mind the ‘taxed-not’ cohort are the dole bludgers, the leaners, those who suck the welfare system dry because they don’t, won’t, or can’t work and therefore pay no taxes. Somehow, the almost 600 companies, major ones such as Qantas, Virgin Australia, General Motors, Vodafone, ExxonMobil, Warner Bros Entertainment, Lend Lease and Ten Network Holdings, who paid no tax last financial year, were not mentioned. Nor were international giants Apple, Microsoft and Google, who paid very little tax here on the large profits they earned in this country. Presumably Morrison does not categorize them as ‘taxed-not’. Why?

The reason behind Morrison’s apparent inconsistency is ingrained conservative ideology. Conservatives believe that we get what we deserve. Those who work hard, or are entrepreneurial enough to own a business, deserve the monetary reward they get, and what’s more deserve to keep that reward and not have governments take it away as taxes and give it to others, to those who do not work and earn. Thus we hear endlessly that Liberals want to reduce tax, and have seen them propose to do that, even for the wealthiest. The promised $48 billion tax cut to businesses awaits the verdict of the Senate.

Moreover, conservatives believe that those who have little deserve their impecunious state. They have not worked, or have not worked hard enough, or have not saved enough, and therefore deserve to be poor. These people ought not expect to get handouts from others, or from their government. They deserve their poverty-stricken situation, and should not expect the milk of human kindness to be offered to them. This view is consistent with George Lakoff’s model of politics. Using the metaphor of nation as family and government as parent, he argues that conservative politics corresponds to the strict father model that posits that people should not look to the government for assistance lest they become dependent. Conservatives regard the inequality that is a sequel to such an ideology as part of the natural order. There have always been lords and ladies, and serfs to bow to them and serve them. They see no need for egalitarianism in what they see as an inherently unequal world.

We ought therefore to not be surprised when we hear Scott Morrison or Mathias Cormann or Kelly O’Dwyer perpetuate ’the workers versus the bludgers’ way of thinking. Remember the fury Eric Abetz generated while he was Minister for Employment when he sought to introduce a rule that the unemployed must complete forty job applications a month. As far as he was concerned, they had nothing better to do. The impracticability of this soon mugged him, particularly when it became apparent that it was unlikely that forty jobs would be available in Tasmania close to where the job seeker lived. His object was not really to find a job for these people; it was to punish them with ‘homework’ for being unemployed.

Abetz reasoned:
"We undertook what we believed would be a fair consideration of an application of a job every morning and every afternoon should not be too onerous."

"There doesn't seem to be a community complaint with the cut-off of 20 job applications per month, so one assumes one might be able to increase that without too much extra community concern.”
Eventually, the idea was scrapped out of concern that employers would be ‘swamped with fake job applications’, rather than the imposition on job seekers of forty applications a month was unreasonable and stupid.

So long as conservatives are in power, we can expect this toxic talk to continue, directed as it is at what they see as a lesser grade of citizens, a poorer class of people. It is a reflection of their entrenched ideology, which they will not, indeed cannot change. It is in their DNA.

There is another variety of toxic talk, one that we witness, in fact suffer every day, many times a day. We see it whenever politicians are confronted with uncomfortable facts. Rarely prepared to say: ‘We messed up’, ‘We made a mistake’, or more benignly ‘We could have tried a different approach’, they barrage us with a deluge of disingenuous words to justify their actions, and just as deceitfully, to blame others for the situation.

All politicians are adept at this stratagem. Blame shifting, and aiming their poison arrows at their opponents, comes easy. But few do it as spitefully as our odious Minister for Immigration, the Honourable Peter Dutton.

Confronted recently with the shocking report by Save the Children about the impact prolonged detention was having on children held on Nauru, he quickly dismissed reports of sexual assault and abuse as ‘hype’ and ‘false allegations’. He went on to roundly condemn The Guardian and the ABC for promulgating the report and the ugly accusations it contained.

He accused those seeking to expose the awful occurrences on Nauru as maliciously denigrating the government’s effort. Never was there a concession that things were bad on Nauru, and needed urgent attention. To Dutton, this report was a storm in a teacup, exaggerated out of proportion. He maintained that protective systems were in place and operating effectively. He accused asylum seekers of setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia. He airily dismissed the reports of sexual assault, child abuse and self-harm written by detention centre staff, insisting: “Most of that’s been reported on before.”

To Dutton, whistleblowers are simply troublemakers hell bent on embarrassing him and the government.

He was quick to add that the genesis of this situation was Labor’s relaxation of ‘border control’, and the resultant arrival of thousands of boat people, with hundreds drowning on the way (he has always got his figures off pat). His argument is that if only Labor had continued the Howard border protection policies, this situation would not have arisen. Now poor Peter has to cope with Labor’s legacy of neglect and incompetence!

So he delivered the double whammy: nothing much was wrong on Nauru, and what was wrong was Labor’s fault anyway.

Perhaps more than most, it is those ministers who are tasked with managing the nation’s finances who most regularly engage in toxic talk. Never prepared to concede that they haven’t got all the answers, or that they might have achieved a better result with another approach, they continue to blame the previous Labor government for their fiscal woes. We are regularly reminded about Labor’s legacy of profligate spending, ‘debt and deficit’, and Labor’s determination always to raise taxes, and never to cut spending. It matters not that under the Coalition spending has increased, taxes have risen, and the deficit has ballooned; it is still all Labor’s fault. Labor continues to be condemned with this toxic talk, this disingenuous language, extravagantly embellished with straight-out lies.

I could go on for pages recounting this type of toxic talk that so infuriates us all day, every day. I wrote about it extensively on The Political Sword almost eight years ago in The curse of adversarial politics. It is still worth reading. The penultimate paragraph reads:
“Those who despise adversarial politics find it to be contemptible, a damaging affliction on our political system. They resent the stifling impediments it places on governing, on governments carrying out what they promised the electorate they would do. They see it as focused on ‘winning’, on gaining a political advantage, rather than telling or establishing the truth, or contributing usefully to the discourse.

“It sets the teeth of the electorate on edge, which ‘turns off’ in despair. Voters would prefer politicians to be open and upfront, more focussed on the good of the nation, less willing to corrupt the usually-worthy principles that brought them into politics in the first place. Adversarial politics may be an important reason the public has turned away from politics and has become cynical about the motivation and behaviour of politicians. The more adversarial politics becomes, the greater the erosion of voter engagement and threat to the democratic process.”
That was written eight years ago. What’s changed? Nothing!

The public loathes toxic talk as much as ever. Will politicians ever learn?




What do you think?
Let us know in comments below.

How do you feel about the way politicians use pejorative words to describe citizens they despise?

How do you feel about the adversarial language our politicians use against each other?

What do you feel about the way they use toxic talk to attack and berate each other?

How would you prefer them to behave?



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After a year of saying that he could get the Federal Budget back into surplus, seemingly by just cutting support to the less well off in our society, Treasurer Scott Morrison finally realised something any school child who has started business studies classes would be well aware of — a balance sheet comprises debits and credits.

Morrison was speaking to the Bloomberg Economic Summit in Sydney last week. Apart from the usual claims of deliberate obstruction from the Opposition, there was an acknowledgement that ‘Deficits have proven difficult to shift in recent years, despite applying significant expenditure controls’. Taxing more, which is apparently different from ‘protect[ing] the revenue base from structural weakness’, has been ruled out. That still allows measures such as enforcing GST payments on low value imports (such as the shopping you and I do over the internet), attempting (apparently again) to ensure that multi-nationals pay tax before shipping profits overseas and looking at ‘the way generous tax concessions are provided in the superannuation system’.

We even got a new (sort of) three-word slogan to illustrate how serious Morrison is: the ‘taxed and the taxed-nots’. Morrison correctly makes the claim that a lot of Australians have not experienced a recession in their adult lives or unemployment rates of over 10%. The jury is still out on the effectiveness of the ‘taxed and taxed-nots’. Probably the gold standard here is now Ambassador Joe Hockey’s ‘lifters and leaners’: while it was an effective slogan as people remember it, Hockey’s period as treasurer was noted only for an increase in the government’s debt and the infamous 2014 budget which still hasn’t passed parliament in its entirety.

Hockey and Morrison point the finger at the ALP for holding up savings measures in the Parliament. Most of the measures held up in the Parliament are spending measures because as Peter Martin reported:
As he [Morrison] puts it, "you don't encourage growth by taxing it more". Of course, withdrawing spending doesn't help much either, but to him it's a lesser evil.

Of the $40 billion in budget measures yet to be passed, more than 60 per cent constrain spending. Only a third, $15 billion, boost revenue.
The two big claims are that more Australians receive more in government benefits than they pay in tax and Australia (the government) will owe $1trillion to others in the near term should action not be taken immediately. Let’s look at the claims.

It’s probably a fair statement to suggest that about half of the population pay no nett tax. At least it was a couple of years ago. The architect of the current taxation and welfare systems, Howard era treasurer Peter Costello wrote an opinion piece in the Daily Telegraph a year or so ago which to an extent justifies his reasons:
Sometimes tax reforms involved lower income earners paying more — like the introduction of the GST — but we were always clear that the welfare system could be used to compensate for that. The welfare system is the way to redistribute income. That is not the role of the tax system. The tax system is there to raise revenue at the lowest cost in the most efficient way doing the least damage to the economy.

If you try to use both the tax and the welfare system to redistribute income you get punishing rates of income withdrawal as a person’s income rises. This is called the effective marginal tax rate (EMTR). As people lose benefits and pay higher taxes they can lose 60, 70 per cent, sometimes 100 per cent of every extra dollar they earn. This creates a huge disincentive to work. It creates poverty traps. And, it heightens the incentive to “hide” additional income.
And Costello has a point — the tax system is there to raise revenue at the lowest cost and do the least damage to the economy. If there is a need to return funds to a section of the community due to adverse circumstances, it is far easier to do so using targeted welfare, rather than arranging for exemptions and conditions in the taxation system. We could discuss the inequity in Costello’s targeting until next week if we wanted to but the professionals, such as The Australia Institute might have a better understanding.

According to The Australia Institute, Peter Costello’s actions during the ‘once in a lifetime’ mining boom was to:
… cut taxes so far and so fast that they forced the Reserve Bank of Australia to rapidly increase interest rates.

While countries like Norway took the benefits of resource price booms and banked them in their sovereign wealth fund, Peter Costello chose to cut taxes for the wealthy instead. He knew at the time that his populist generosity to the highest income earners would force future treasurers to choose between budget deficits or cutting spending on the sick, the poor and elderly. No prizes for guessing which our former treasurer prefers.

The only thing Peter Costello hates more than budget deficits is collecting the revenue needed to fix them. Just as his government did nothing about the long term challenge of climate change, his government did nothing to set up Australia's long term public finances.
If you want to, you can wade through the IMF’s report of government waste and profligacy released in January 2013 here or you can just take The Saturday Paper’s word for it that generally Australia was judged well except for four periods — the two largest under the stewardship of Howard as prime minister and Costello as treasurer (partial paywall). Howard and Costello were buying votes. It’s an easy sell to suggest that if you support my re-election campaign, I’ll give you money back in additional benefits or reduced taxes. As The Australia Institute suggests:
For the record, here are 5 of Treasurer Peter Costello’s most ‘profligate’ and inequitable decisions, which created the structural deficit inherited by his successors;

1. Income tax cuts, primarily for the rich, during the boom. Worth $37.6 billion or $26.4 billion if you exclude bracket creep in 2011-12

2. Capital gains tax discount. Worth $5.8 billion in 2014-15

3. Got rid of fuel excise indexation. Worth $5.5 billion in 2013-14

4. Superannuation tax cuts. Worth $2.5 billion in 2009-10

5. The decision to convert 'franking credits' into cash refunds for shareholders
They have given an explanation why each of the cuts has been incredibly bad value to the economy — go to the article to see them.

In some ways it is a delightful irony that the Coalition treasurers of the ‘twenty teens’ are having difficulty in politically justifying the spending cuts they believe are necessary to achieve their economic aim. Which leads us on to ‘message two’ as recently promoted by Morrison — Australia’s debt will hit a $1 trillion if nothing is done.

news.com.au breathlessly reported last week that Morrison’s statement to the Bloomberg Economic Summit would blow out to $1 trillion within the next 10 years if the government doesn’t get its budget savings through the parliament. Of course, according to Morrison anyway, this is the ALP’s fault and, while it is admitted that the figure is the ‘worst case scenario’, the implication is that Keating’s ‘Banana Republic’ would have nothing on the resulting recession.

Apparently, a trillion looks like this; 1,000,000,000,000. Australia’s annual GDP (our income before expenses) is currently around $893billion (or $893,000,000,000) according to the Parliament of Australia’s website. While all debt does have to be repaid at some point there is bad debt and good debt — a nuance that seems to be lacking in the current political debate.

Bad debt in the case of the government is where they are borrowing money to pay for recurrent items such as wages, the cost of stationery or similar items. To bring it back to a domestic level, if you were to go to the supermarket and petrol station each week and get your groceries and fuel on the credit card while only repaying the minimum amount due, two things would eventually happen: the first is that you would hit the credit limit of the card and the retailers would not accept any further charges; and two, the cost of the groceries and fuel you had already consumed would rise exorbitantly as the usually high interest on the purchases made on a credit card would continue until the debt was repaid in full (together with the interest).

Good debt is something else again. Governments borrow money for capital works and long term investments. Again bringing it down to a domestic level, if you borrow money to purchase a home to live in, depending where you live in Australia you are entering a contract with a financial institution for them to loan you considerably more than you can possibly earn in a year. Here’s an example using Westpac’s ‘How much can I borrow’ calculator for a couple with two dependent children.

Borrower 1 earns around $60,000 per annum and Borrower 2 earns around $45,000 per annum and they have some expenses. If you assume that they have a 20% deposit they would probably be in the market for a property priced around $800,000 to $900,000. To save time, we’ll leave the discussion on what they can/should buy and where to the property websites and TV shows. The point here is that between our two borrowers, their joint income is around $100,000 per annum. The Westpac borrowing calculation is really saying that to purchase a home, they can borrow about seven times their annual income and in parts of Australia, they will need every cent of it.

If our mythical borrowers were contemplating borrowing up to seven times their annual income no one would blink an eyelid, as buying a home is ‘good debt’ and the ratio of around 7 to 1 hasn’t changed for decades.

What we have yet to establish is if the potential government $1 trillion debt is good debt or bad debt. Last Sunday on our website we observed that of the $37 billion in additional debt Australia had placed in the 2016 budget, $36 billion of it was for capital works. Generally capital works are an improvement to a particular site that generates income in some way — either directly (say the construction of a new factory to house a production process) or indirectly (improving people’s quality of life by putting a roof over their head for the long term). Just like buying a home, capital works is generally good debt for government, provided we can meet the repayments, as it improves the amenity of our society through more efficient transport connections, better communications or increased services to the community.

Morrison’s recent speeches on debt and disaster therefore are duplicitous on two levels: while the ALP certainly didn’t clean up the overly generous welfare system, neither did they create it (if anything the ALP and the Greens are trying to inject some fairness into the changes blocked in the 2014 and subsequent budgets so the better off ‘feel the pain’ as well); and if a bank will lend our hypothetical ‘borrower 1’ and ‘borrower 2’ nearly seven times their annual income to purchase a capital item (a home to live in), why is there so much concern about Australia’s borrowings potentially getting to a value slightly over one year’s income or GDP (prior to deductions) in around 10 years’ time?

The problem with all this is that Morrison is claiming a debt of $1 trillion will send this country into a recession like we have never seen before. Who knows, it may — but the chances are pretty remote. The more probable alternative is that our society shares the output from the borrowing by our government and the resultant economic benefits. The economic benefits of the better road, rail line or telecommunications infrastructure makes money for the businesses and individuals who use it, who then earn more and pay more tax giving the government the resources to repay the original debt.

Morrison is half way on his ‘road to Damascus’ in that it recently seems to have ‘clicked’ that alterations to the revenue side of the Australian budget are just as necessary as his and his immediate predecessor’s fixation with the expense side of the ledger to the detriment to those on lower incomes. Now he just needs to understand that there are different types of debt; and some of them are actually good for our society.

What do you think?
Let us know in comments below.

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Some believe that those who purchase Lotto entries, play pokies or Keno or participate in other forms of gambling are effectively paying an idiot tax. On a purely rational level, they may be right as there is a significant chance that the few dollars you give to the Lotto machine operator or similar is wasted money — albeit a small proportion goes to the government in some form of wagering tax.

There are of course, many that disagree and happily put their money down to have a chance of winning considerably more than they started with. It doesn’t matter if it is pure luck or there is some skill involved in the wagering process; each time the money is gambled there is a small hope that the gamblers world will get much better financially very soon. Gambling companies have to publicise the chances of ‘winning big’ these days, and it’s on their website (albeit right down the bottom of a menu).

Despite the miniscule chances of winning a life changing amount, we all at some point have wondered what it would be like to be able to afford anything we wanted to do. Well, Steve Colquhoun probably couldn’t afford it but he hasn’t had to wonder either. You see Colquhoun up until recently was a writer for Executive Style on the Fairfax Media websites and the list of what he has done to file his stories is awesome. Despite seemingly having it all (with the added bonus of not having to pay for it), he’s giving it up to spend valuable time with his ‘long suffering’ family. Maybe you can’t have it all.

Sadly, most of us will never win a substantial amount of money gambling or have a job reviewing ‘experiences’ for Executive Style. That’s why financial institutions were invented — to lend money.

Provided you meet some criteria, there are any number of financial institutions that will lend you money for all sorts of things. Running a bit short until next payday — there are organisations that will lend to ‘tide you over’. Is your TV too small? — there is a lender for that as well. It’s the same if you want to buy furniture, cars, holidays, houses or pretty well anything else that takes your fancy; ‘come in and talk to our friendly and helpful staff and you can walk out with the item of your dreams’. Lenders are there to sell money. Interest on the money they sell is the cost to the purchaser of buying the money now rather than waiting until the consumer can walk in and ‘write the cheque’ (which these days is usually ‘do a bank transfer’ — which is a completely separate can of worms to talk about another day). The lenders take a risk in lending for periods of up to 30 years (for a house) based on the financial affordability that you can demonstrate today and they price the risk in, making the loan according to the facts they have at their disposal. Financial institutions like to get their money back. If the loan is secured (you pledge that they can get something of equal or higher value if you choose not to pay the lender’s money back), the lender will price the money accordingly.

So, for example if you are looking for a few hundred to tide you over until payday, the facts a lender would consider include why you only need money for such a short term and the chances of you not being able to be found when it’s time to repay the debt; and charge you a high cost (interest rate) for the use of their money. Traditionally, people borrow money for a home, assets that appreciate in value or a tool of trade (a machine of some sort that generates more income than it consumes). Without trying to be flippant, it is the bread and butter business of the financial industry. Assuming you have the income and can demonstrate you fit the criteria for security and repayment capability, there are hundreds of lenders around Australia that will lend you the money now to fund your purchase if you promise to repay the debt over a specified period. Generally, houses increase in value, which means that while you are paying a fee to use someone’s money, the increase in value of the house will over time probably exceed the interest you pay. Tools of trade generate more income than they cost — a plumber would find it difficult to get to their next job with all their tools if they relied on public transport and a machine that can double the output of a product will generate cash for the business that buys it. You could say everyone’s a winner.

Some loans don’t make as much sense. If you borrow money to purchase a personal use car or consumer goods, you are paying a higher interest rate and generally the item you are purchasing doesn’t appreciate in value as a house does. A ten-year-old car is worth far less than a new one, while a house that you have lived in for ten years will probably be worth more than what you paid a decade ago. The car or other consumer item you are purchasing is also transportable, you can drive a car across the country; you can hide an expensive watch in your pocket and so on. Accordingly, the lender will charge you a higher fee for the privilege of using their money.

Borrowing to purchase a home, an asset that should appreciate in value or a tool used to produce income is an accepted part of Australian lifestyle, so much so that when the Commonwealth Bank recently announced a $9.45 billion profit claiming the bank's flagship retail business underpinned the profit growth, the media reports suggested:
Investors were underwhelmed by the result from a bank that trades at a premium to peers, with CBA shares falling 1.3 per cent to $77.40.
In fact, one of the points of difference between the two major political parties at the last federal election was the future treatment of ‘income losses’ produced by taxpayers negatively gearing investment borrowings. Neither party was suggesting that borrowing money to fund the purchase of income producing assets was a bad idea: the ALP claimed they were attempting to reduce the heat in the property market in some of Australia’s large cities (and gain revenue) while the Coalition wanted to keep the status quo.

Yet at the same time as the Coalition is suggesting to you and I that if we can demonstrate to a financial institution that we can afford the repayments we should be able to purchase all the houses we like (and the subsequent increase in prices pushing first home buyers out to areas where services such as shopping, transport and so on are either not provided or far more expensive), we have former Treasurer Peter Costello on ABC’s Four Corners claiming:
PETER COSTELLO: Superannuation changes aren't going to balance the budget; that's obvious. The only way you'll balance this budget is if you get spending below 25 percent of GDP, right? We're at about 25.8 percent now. Um you cannot balance a budget on that. Until such time as you get your expenditures below 25, and preferably well below 25, you won't balance a budget. Super won't do it.
Yes, this is the same Peter Costello who introduced a number of expenditure measures (tax relief to companies and subsidies to average and higher income earners) while Treasurer during the period that Australia was in the fortunate position of higher than traditional revenue due to the mining boom. His ‘profligacy’ has been a problem for all the governments that followed him. As The Saturday Paper observed in December 2014:
Profligate is not our word. It was the word used by the International Monetary Fund in a major report it released early last year, that examined 200 years of government financial records across 55 major economies, identifying periods of government prudence and profligacy in spending.

Overall, Australia was judged very favourably. For most of the country’s history, governments of both persuasions had been prudent economic managers. The IMF identified only four periods of profligacy. The two biggest were during the Howard–Costello years. They were in 2003 and then between 2005 and 2007, and they accompanied the mining boom.

On its face, the IMF assessment might seem harsh. After all, before they were voted out in 2007, Howard and Costello had delivered six budget surpluses in a row.

But they also seriously undermined the structural integrity of the budget by making big spending commitments and giving huge tax cuts, on the basis of a flood of revenue that would inevitably dry up.

“You can sum it up in four words,” says Chris Richardson of Deloitte Access Economics. “Temporary boom, permanent promises.”
Whether Costello or Treasury were responsible for the permanent spending caused by a temporary boom is not the issue. The issue is the consistent bashing over the head we receive with the claim that the budget must balance and government debt is bad. At the same time, the government of the day and Treasury are encouraging the Australian population to assume debt in the form of home loans, through processes such as the ‘First Home Owners Grants’, the ability to claim losses from investment properties as a deduction on tax returns, as well as the capital gain being halved prior to the tax calculation if the appreciating asset is held for a period in excess of one year, they are telling us that all government debt is bad. On a logical basis, it just doesn’t make sense.

While most Australians would prefer not to incur debt on recurrent expenditure, such as fuel for their vehicle or the weekly trip to the supermarket of their choice, it is probably fair to assume that governments would prefer not to pay for wages and subsidies from debt funding as the costs are recurrent in both cases. But, just as it makes sense for Australians to incur debt to purchase appreciating assets or tools of trade it is probably just as valid for the governments around Australia to incur debt for infrastructure that will either appreciate in value or produce income in excess of the costs of the debts (especially when interest costs are so low at the moment). After all, if there is benefit in a concept that benefit should accrue regardless of the corporate status (individual, company or government) of the ‘person’ that will benefit. When someone spends money, the whole economy benefits, through people receiving wages and then creating demand in the economy. Governments are the financial industry’s ultimate safe borrower — there is almost no chance that the government will renege on the agreement and they almost invariably repay their debts to the cent at the required time. Ross Gittens recently wrote in Fairfax media:
Treasury wants little old ladies to feel as guilty about borrowing to improve the Pacific Highway as they do about borrowing for "routine government expenses".

So, let's worry about getting the recurrent budget back to surplus (as most state governments did long ago), but not about borrowing for infrastructure. Agreed?

Except that when you read the budget papers carefully enough to find the info Treasury has hidden on page 6-17, you discover that the expected underlying cash deficit for this financial year of $37 billion includes capital spending of $36 billion.

Get it? We're already back to a balanced recurrent budget. So why so much hand-wringing? And why aren't we getting on with planning the infrastructure pipeline we could expedite "in the event that we were to need a big demand stimulus"?
So much for the debt and deficit disaster that Australia will inevitably face. It seems most of the debt that Australia is going to incur this year is for capital expenditure such as upgrading the Pacific Highway. Whatever happened to the country that completed the Snowy Mountains Scheme, the water pipeline from Perth to Kalgoorlie and the building of thousands of kilometres of railway lines, then roads, all paid for at least in part with borrowings?

Australia as a nation can’t wait until we get ‘lucky 7’ on the roulette wheel, the winner in the third at Moonie Valley or win the lotto to justify spending on improvements to our infrastructure that will improve our way of life well into the future.

And to prove you can’t have it all, it seems that winning the lotto is not all it is cracked up to be.

What do you think?
Let us know in comments below.

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The meaning of life
Ad astra, 24 August 2016
As you sit on your comfortable chair after a satisfying meal with a glass of your favourite drink in hand and view current affairs programmes on TV, do you reflect on the plethora of distressing images that assail viewers day after day? Do you ponder how you might feel if you were part of those images?

How did you feel when you saw the stunned, blackened, bloodied face of …
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The meaning of life

As you sit on your comfortable chair after a satisfying meal with a glass of your favourite drink in hand and view current affairs programmes on TV, do you reflect on the plethora of distressing images that assail viewers day after day? Do you ponder how you might feel if you were part of those images?



How did you feel when you saw the stunned, blackened, bloodied face of five-year-old Omran Daqneesh, sitting in an ambulance after being dragged from the rubble after another air attack on Aleppo? Did it bring back memories of Alan Kurdi, a three-year-old Syrian boy of Kurdish background drowned on a beach near the Turkish resort of Bodrum in September last year during his parents’ attempt to escape Syria for the Greek island of Kos. This image shocked the world, yet here we are a year later shocked again by the same conflict and the same awful outcomes for children. Now we hear that Omran’s ten-year-old brother Ali died in the same attack.



These images reminded us of a photo of a small, naked nine-year-old Vietnamese girl, Phan Thị Kim Phúc, also known as 'Napalm Girl' running away from a napalm raid on her village. The photograph is one of the most memorable of the 20th century. It may have changed attitudes to the Vietnam conflict, highlighting as it did the tragic legacy of war, but here we are again reliving the tragedies all over again, tragedies that afflict little children, innocents who suffer because of where they live, whose lives are forever scarred. These children have known nothing but war.


When you wake in the morning, do you ever ask: ‘What am I going to do today?” For older folk, now in retirement, this may be a regular question. Can you imagine what the answer might be if you were living in the rubble of Aleppo or any of hundreds of places ravished by war day after day? Can you picture what your answer might be if you were living in an overcrowded refugee camp in Turkey just over the border from Syria. The most likely answer might be simply ‘survival’, survival for another day – finding enough food, water and shelter for yourself and your family to keep body and soul together. What might your answer be if you were confined to Manus Island or Nauru, with virtually no prospect of ever settling where normal family life might be resumed?

As we enjoy our comfortable lives, how can we imagine what it must be like to suffer the torment, the danger, the uncertainty, the boredom and the endless weariness of living in limbo?

We struggle to contemplate these never-ending agonies, and feel helpless as we reflect on whether we can ever make a difference for those who live with this daily suffering. It is distressing even to think about it.

For these unfortunate people, what is the meaning of life?

When survival is their prime endeavour, how can they anticipate a secure life, a rewarding existence, and a healthy future?


Most who read this piece will have had a satisfying life. Not perfect, not lavish, not entirely free of stress, worry and ill health, but agreeable enough in this land of ours so gifted with natural resources and opportunity. Most will feel fulfilled, will feel that they have made a contribution to our multicultural society. Not all – there are always the disadvantaged, the sick, the disabled, the poor, the homeless, those who have been dealt a poor hand in the game of life. Our society recognizes these inequities and makes provision for some of them.

Most who live in this richly endowed country are likely to feel that they have been able to make a contribution to society and, to use a hackneyed phrase, will ‘leave it in better shape’. For some this has been relatively easy. Teachers, doctors, health care workers, neighbourhood workers, firefighters and police officers go to work each day feeling that what they do is valuable, indeed essential for the wellbeing of the community. Likewise, mothers know that giving life to children is crucial to the vitality of our community. Raising and nurturing a family gives meaning to life for parents around the world. Some find meaning in life by adherence to religion, or through support for charitable organizations. Some join movements protesting against injustice.

There are of course many other ways that we contribute, whether through manufacturing, commerce, industry, public service, the armed forces, or the myriad of services the community wants and needs. Some may feel that their occupation is humdrum and their contribution insignificant, but most can enjoy the satisfaction of doing something for others. For most in this lucky country, although sadly not all, there is meaning to life, and satisfaction with a life well lived.

But this does not relieve us from being concerned about those less well off, about the inequality that afflicts our Australian society, about those whom we as a nation treat poorly, or inhospitably, or cruelly, or indifferently.

How can we watch the images of war: destruction, displacement, despair and death, even of precious children, and not want to do something? All except those who have built a wall of indifference around them feel the anguish of conflict, dislocation, poverty, injustice, unfairness and inequality. Yet we so often feel powerless to effect any change. Too often, we lack the means. While life might be meaningful for us, we know it is not for so many others. How can we make a difference in the lives of the less fortunate? How can we help them to find meaning where there is so little?

The answer seems to rest largely with those whom we elect to represent us. Individually, we are unable to stop conflict, eliminate war, remedy the displacement of many millions around the world, and relieve the poverty, the injustice and the inequalities that afflict so many. But we do have our politicians and the public service that supports them.

Of all our citizens, politicians have more power than any of us to effect change. Politicians are able to assess the state of our world and our nation, to identify our problems, to evaluate our advantages, to take stock of our resources, to arrive at equitable solutions, and to put them into place. We elect them to do this. We want them to enact laws that give meaning to people’s lives, laws that give a helping hand to those who need it, that smooth out social inequities, that increase the prosperity of our nation and all who live in it, that enable all of us to make the most of our lives, to enjoy meaningful lives that enrich not just ourselves, but all those with whom we have contact.

Moreover, we want our politicians to reach out to those outside our country, to use their influence to lessen tensions, conflict and war. We want them to bring peace to our troubled world. And while they are doing so, we want them to give succour to the displaced, to the families and the children ravaged by conflict, destruction and death, to give them the opportunity of a meaningful life.

I know it reads like an impossible dream. Sadly we not only seem to be far from realizing the dream; we seem to be making the nightmare worse.

I could write reams about the inadequacies, the indifference and sheer incompetence of our federal government, but I need go no further than ask why our offshore detention arrangements continue to persecute the innocent – the men, women and children that languish without hope on Nauru and Manus Island. How in earth has it come to this?

We know the history pretty well. Look behind it though and we see the real reasons. John Howard saw a political advantage in opposing asylum seekers coming by boat. The ‘Tampa affair’, the ‘children overboard’ saga, and his words, indelibly written into our history; “We will decide who comes to this country and the circumstances in which they come”, all reinforced a view that these people were unwelcome intruders. Tony Abbott, never to miss a chance to wedge his opponents, ramped up the anti-asylum seeker rhetoric, demonized boat people, stirred up enmity, even hatred among some in marginal electorates, and used the slogan ‘Stop the Boats’ to successfully wedge his opponents. His hyper-partisan approach to boat arrivals set a pattern that exists to this day.

Labor became caught up in an unseemly race to the bottom; inhumanity, cruelty and hopelessness became the norm for boat people. It persists still. Scott Morrison and Peter Dutton became loyal foot soldiers for Abbott and his conservative admirers, and now for Turnbull, who despite his own feelings, has been dragooned into taking the same punitive, unyielding, unsympathetic, mean approach of his predecessor, all in pursuit of the spurious objective of ‘protecting our borders’ from what is represented as some sort of invasion. The truth is that he is protecting his back from the knives of Abbott’s conservatives.

Our federal government seems hell-bent on depriving those on Manus and Nauru of any real meaning in their lives. Every morning, as they ask what they are going to do today, the answer is the same – survive another day. They dare not hope for any improvement in their situation. And in addition to their overwhelming feelings of hopelessness and despair, they now suffer assaults, sexual abuse, rape, child abuse, and discrimination, about which reports Dutton is skeptical and indifferent.

What has our country come to? Our reputation as a decent people is tarnished daily. We are held up to the world community as cruel, indifferent to the norms of international behaviour towards asylum seekers, and thoroughly mean spirited. Is that the image we want?

So what is the answer? What can we do to change the state of the world, or closer to home the plight of asylum seekers in indefinite detention? How can we make life more meaningful for these almost-forgotten people? How can we enhance the meaning of life for ourselves?

The ballot box is one answer. But with both major parties using asylum seeker issues as a wedge, would a change of government make any difference, so entrenched in the electorate is the anti-asylum seeker feeling, now accentuated by Pauline Hanson’s One Nation Party?

There are protest movements: GetUp and 350.org are just two, but they are having little effect on the Turnbull government and its hardnosed Immigration Minister, the odious Dutton.

Blog sites and social media have a role to play; even writing something like this piece, and commenting on it, give a feeling of doing something, no matter how small.

We all seek meaning in our lives, but sadly many have few avenues of enriching it. Maybe contributing our small voices in this way is the best we can do to encourage, indeed pressure those whom we depend upon to speak out and act for us in this troubled world, to challenge, repudiate and defeat the alien forces we see operating around us everywhere, every day. But that would take fortitude and selflessness, rare attributes in today’s politicians, for whom self-interest prevails.

Oh for politicians of the calibre of William Wilberforce and Emmeline Pankhurst, whose courage, tenacity and unyielding persistence gave meaning to the lives of so many of the oppressed, so many of the disadvantaged!

Where have they gone?


What do you think?
Let us know in comments below.

What do you feel about the ongoing conflicts in the Middle East?

What do you feel about the way the government is managing offshore processing at Manus Island and Narau?

How would you prefer them to be managed?

Should those detained there be brought to Australia for assimilation?



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A number of commentators made the point after the election that almost a quarter of voters did not vote for the major parties in the House of Representatives. But that is misleading on two counts. It ignores the 5% informal vote and the 10% vote for the Greens who I think are now entitled to be considered a major party — they do contest every seat after all. That leaves about a 10% …
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A once and future Senate
Ken Wolff, 21 August 2016
We now know that the Senate elected at the July election comprises 30 Coalition members, 26 from the ALP, 9 Greens, 4 from One Nation, 3 from the Nick Xenophon Team (NXT) and one each from Family First, the Liberal Democrats, Derryn Hinch’s Justice Party and the Jacqui Lambie Network. Thirty-nine votes are required in the Senate to pass legislation, so the government will require either ALP or Green support, or otherwise support from nine of the eleven minor party members.
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A once and future Senate


We now know that the Senate elected at the July election comprises 30 Coalition members, 26 from the ALP, 9 Greens, 4 from One Nation, 3 from the Nick Xenophon Team (NXT) and one each from Family First, the Liberal Democrats, Derryn Hinch’s Justice Party and the Jacqui Lambie Network. Thirty-nine votes are required in the Senate to pass legislation, so the government will require either ALP or Green support, or otherwise support from nine of the eleven minor party members. Given that NXT has three Senators and One Nation has four, their support for every Bill opposed by the ALP and the Greens becomes essential. It will be a difficult situation for the government but there is another issue I wish to discuss.

Before the election, the Coalition and the Greens combined to introduce a new voting system for the Senate, the aim being to reduce the number of minor parties or people being elected despite starting with only a handful of first preference votes. It did not work this time, largely due to the election being a double dissolution, but will it achieve its aim in the future when we resume the cycle of half-Senate elections?

Senators are elected for six years but on a rotational basis so that half the Senate faces the electorate every three years. After a double dissolution a decision has to be made as to which of the newly elected Senators will serve a full six-year term and which will serve only three before facing an election. There are two ways of doing this.

The common approach has been to use the order in which Senators from each state are elected and give the first six the six-year term, with those elected from seventh to twelfth to serve three years. In a Senate election those with smaller votes are progressively ‘excluded’ and their preferences distributed and preferences from those who have an ‘excess’ quota are also distributed on a proportional basis: as that process unfolds a clear order of election emerges.

The other way, put in legislation by the Hawke government in 1984, allows the Australian Electoral Commission (AEC) to do a recount of the election as if it was a half-Senate election and those ‘elected’ under that count would be given the six-year term. The underlying idea supporting that approach was that using the ‘first six elected’ may have been fair when we had ‘first past the post’ voting but not when we have a proportional representation system: despite that, even after the 1987 double dissolution this method was not used.

Although those two methods are available, the Constitution states only that the Senate itself can decide who will serve six years and who three.

Derryn Hinch had suggested that if he did not get a six-year term he would challenge the decision in the High Court. I am not a lawyer but I don’t like his chances if he carries out that threat. When the Constitution states the Senate can decide, it would seem that it is not even bound to use either of the methods I have described.

It was reported on 12 August that the Coalition and Labor had agreed they would use the ‘traditional’ method of the ‘first six elected’ to determine the six-year Senators. That means the Coalition will have 16 six-year Senators, the ALP 13, the Greens 3 (Di Natale, Ludlam and Whish-Wilson), NXT 2 (Xenophon and Griff) and One Nation (Pauline Hanson) and Jacqui Lambie Network (Jacqui Lambie) one each. So that will be the starting point for a new Senate from 1 July 2019.

At a state level that translates as 3 each from the Coalition and the ALP in NSW; in Queensland, 3 Coalition, 2 ALP and Pauline Hanson; in SA, 2 each from the Coalition, ALP and NXT; in Tasmania, 2 each from the Coalition and ALP, and 1 Green and Jacqui Lambie; and in both Victoria and WA, 3 Coalition, 2 ALP and 1 Green.

I will basically ignore the Senators from the NT and ACT, except in discussing total numbers, because they face election every three years and the territories invariably return one Coalition and one ALP Senator, meaning that we just add two to each major party.

What becomes more important is who will face re-election in three years: 12 Coalition Senators, 11 from the ALP, 6 Greens, 3 One Nation, 1 NXT and Derryn Hinch (Derryn Hinch’s Justice Party), Bob Day (Family First) and David Leyonhjelm (Liberal Democrats). From that list you can see why the Coalition and the ALP agreed to the ‘first six elected’ method: their numbers for re-election are close and 13 of the 20 cross-benchers have to face re-election. In that regard, the government may be relatively content with the outcome from the new voting procedure and see the next half-Senate election as an opportunity to reduce the size of the cross-bench.

To be elected a Senator has to achieve a ‘quota’ which is determined by dividing the total number of votes in a state by the number of Senators facing election plus one. In the recent double dissolution that meant the vote was divided by 13, or in percentage terms a quota was about 7.69% of the vote. In a half-Senate election, the number is divided by 7 and so a quota becomes 14.29% of the vote. While preferences are important in determining who is elected, the quota achieved after first preference votes gives a reasonable indication of who will be elected, with those achieving at least 0.4 of a quota having a higher probability of achieving a full quota after preferences.

Given the results in the 2016 election who is likely to win re-election at a half-Senate election and what will that mean for the Senate from 2019?

Firstly, neither David Leyonhjelm, NSW, (Liberal Democrats) nor Bob Day, SA, (Family First), appear likely to be re-elected: their 2016 vote becomes only 0.2 of a quota at a half-Senate election. They would each require something close to a doubling of their vote and that is highly unlikely.

In Victoria, Derryn Hinch may be in with a chance of being re-elected if he can maintain his vote: his half-Senate quota would start at 0.42 rather than the 0.79 at the 2016 election. My guess is that at a half-Senate election Hinch, if he runs again, may even achieve a slightly higher vote, but even with a starting point of 0.4 of a quota I expect that he could be returned.

Jacqui Lambie was elected in Tasmania at the recent election but will not face re-election at the half-Senate election. The 2016 vote translates to 0.58 of a quota at a half-Senate election but because that vote was for Jacqui Lambie herself, it is unlikely to be repeated when she is not running. So even if she runs a Jacqui Lambie Network candidate, I would expect a very reduced vote and it is unlikely a second Network member would join her in the Senate.

Three One Nation Senators will face re-election with the NSW and WA Senators appearing unlikely to win as their starting quota would drop below 0.3. A Queensland win is possible based on the 2016 vote as it would become 0.64 of a quota at the half-Senate election. Hanson herself will not be running so that could reduce the One Nation vote but it may still be enough to secure a second One Nation member in the new Senate (unless there is a large drop in the vote, which is possible based on the past history of One Nation).

Based on the 2016 vote, NXT could pick up two more Senators in SA at a half-Senate election as it would have 1.52 quotas. As with Lambie and Hanson, however, Xenophon himself won’t be running and that may reduce NXT’s vote. Even so, it seems likely that at least one NXT member will be returned and two can’t be entirely ruled out. So NXT will maintain at least three Senators, and possibly increase that to four, in the new Senate from 2019.

One Green Senator from every state will face re-election. They are likely to have at least four and probably five returned. SA is most problematic for them largely because of the magnitude of the NXT vote. If the NXT vote drops, it may become a battle between the Greens and a second NXT candidate for the final Senate position. So that will not change the number on the cross-bench, just the composition.

So, on my estimation, it is possible that 9 of the 13 cross-benchers facing a half-Senate election could be returned, meaning there would still be 16 rather than the current 20. Counting the six-year Senators, the new cross-bench could comprise 8 (possibly 9) Greens, 4 (possibly 3) NXT, 2 One Nation, Jacqui Lambie and Derryn Hinch.

How the Coalition and the ALP fare at a half-Senate election depends very much on who wins government in the HoR because, obviously, the winning party would probably see an increased vote compared to the 2016 election. An increased vote for either party may also have some influence on the results for the minor parties, with Hinch in Victoria, the One Nation candidate in Queensland and possibly the second NXT candidate in SA being most at risk.

At best, the Coalition could win three seats in each state, although if NXT continues its success in SA it may only be two there. Even with an increased vote, and irrespective of the NXT vote, I suggest that 17 Senators is its very best outcome, for a total of 35 Senators (including the two Territory Senators) in the Senate from 2019, still four short of a majority.

The ALP’s best result, with an increased vote, appears to be 16 Senators for a new total of 31 (also including its two Territory Senators) so, as in the past, it would be reliant on the support of the Greens to pass legislation.

Those ‘best’ results for the Coalition and the ALP include the scenario that Hinch, One Nation and NXT do not win the extra seats I mentioned. If they do win, then the Coalition could expect to win 14 seats and the ALP 13, in which case the 2019 Senate would be 32 Coalition Senators, 28 from the ALP, 8 Greens, 4 NXT, 2 One Nation and Derryn Hinch and Jacqui Lambie.

In that scenario the Coalition would require ALP or Green support, or all but one of the minor party Senators to pass legislation, and the ALP would require the Greens and at least three of the other Senators, which most likely would mean gaining the support of NXT.

There are of course many permutations. Will there be a stronger vote for the Coalition or the ALP in 2019 and, if so, will it be strong enough to reduce the vote for minor parties? Will there be a resurgence in the Greens’ vote? Will the One Nation vote collapse as it has done in the past? Can NXT maintain the very high vote it achieved in SA in 2016? The answer to those questions can change what happens at the next half-Senate election and perhaps re-write my scenarios.

But unless the answer to those questions is ‘yes’, ‘no’, ‘yes’ and ‘no’, then it appears likely that the government’s Senate voting changes will not achieve its intention of significantly reducing the size of the Senate cross bench. It may have to wait until 2022, even 2025, and try, try again.

What do you think?
Let us know in comments below.


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Rudd and Abbott: saviour of their parties


Two of the three ex-prime ministers who were deposed by their own political party have been in the news in recent weeks. Kevin Rudd requested backing from the Coalition government to bid for the Secretary-General position at the United Nations and Tony Abbott claimed there are factional divisions in the NSW Liberal Party. On face value, both men are using the media to further their own ends. To observers of Australian politics, this really shouldn’t be a surprise.

While Rudd’s campaign was probably always going to be unsuccessful according to others, on the face of it he does offer the UN some demonstrated leadership ability in trying circumstances — such as the GFC when Australia was the only developed economy that continued to expand during the late 2000’s. Certainly he also has some less redeeming character traits as well — some of which were aired in public when the ALP deposed him as prime minister.

Abbott made a number of claims about factions and backroom lobbying in the NSW Liberal Party, despite Prime Minister Turnbull’s claim to the contrary.


In spite of Abbott probably airing the ‘dirty linen’ in public for his own perceived advantage, he is correct. In any organisation there is usually a difference of opinions on a host of issues, with some being convinced that policy and practice should change to reflect current society/meet differing expectations and so on, while others will suggest that if it ain’t broke, don’t fix it. Sometimes the discussion on a combined position is amicable; mostly it isn’t. It also stands to reason that if you can influence parliamentarians — a benefit of being a member of a political party — you could have a better chance of ensuring a particular law of the land reflects some advantage to your business or personal position — so the stakes can be pretty high. Abbott, to his credit, did ban lobbyists from holding organisational positions in the Liberal Party (suggesting there could be a conflict of interest) early in his prime ministership:
One of Mr Abbott's first acts as prime minister was to rule that party officials could not lobby his government, a move mirrored by then-NSW premier Barry O'Farrell.
Rudd too changed the rules of the ALP after he was brought back to the prime ministership in 2013. Effectively he ensured that there was only a small number of opportunities to change the leadership; the Daily Telegraph claimed at the time that it was an attempt to shore up Rudd’s leadership; probably a pretty good assumption.

In a similar way, Fairfax Media claims Abbott’s statement:
… comes as Mr Abbott's conservative-right faction struggles with increasing irrelevance in NSW, where the moderate faction has become dominant, led by key figures such as party president Trent Zimmerman and lobbyist Michael Photios.
So the rule changes orchestrated by both men could also be construed as attempts to maintain or increase their personal longevity and power within their respective political parties. On the face of it, there is nothing new to see here. However, lets dig a little deeper, there are almost certainly unintended consequences in play here. Rudd and Abbott really are pretty similar. Both men were ruthless as opposition leaders. Rudd was seen as being in touch with the majority of the population and an example of generational change from the days of John Howard and his long term government. ‘I’m Kevin from Queensland and I’m here to help’ went down in folklore and contrasted sharply with Prime Minister Howard’s last term where his ideological position on workplace rights lost him a lot of support.

Abbott became opposition leader during the initial debate around a mechanism for the pricing of carbon emissions. While later demonstrated to be completely false, visions of $100 lamb roasts and entire cities being shut down due to the impacts of the ‘carbon tax’ that Abbott would rescind on day one certainly grabbed the mind of the public.

On top of that, both men were ‘stop gap’ leaders. Rudd was ‘unaligned’ according to the ALP’s system of factions and took over from Kim Beasley who is often cited as the best prime minister Australia never had. Beasley accepted the position of ambassador to the United States when offered the positon by Rudd and survived the transition to an Abbott government seemingly unscathed. As he was ‘unaligned’, Rudd really didn’t have the support of any of the established factions of the ALP, having arrived in federal parliament via the Diplomatic Corps and some time as Queensland ALP premier Wayne Goss’ Chief of Staff. (Goss was the person who led the ALP to victory after a number of decades of predominately National Party rule by Bjelke-Petersen and others). Rudd’s time as prime minister commenced late in 2007; his popularity ratings sank to a position where the ALP decided to remove him from power in June 2010. Some of the reasons for his drop in popularity were supposed to be because of his management style, the actions he took during the Global Financial Crisis, refugee processing and the lack of progress on emissions trading legislation. The ALP reinstated Rudd into the prime ministerial role in 2013 and he lost the subsequent election to Abbott.

Abbott won a party room leadership showdown in 2009 by one vote over his predecessor Malcolm Turnbull. The leadership contest was opened due to differences over climate change policy — Turnbull was prepared to support the Rudd government’s Emissions Trading Scheme; Abbott wasn’t.

The Coalition under Abbott and the ALP under Gillard obtained 72 seats each in the 2010 election. According to contemporary media reports, Abbott begged the three independent cross-benchers to allow him to become prime minister – even his opposition to emissions trading was negotiable according to Tony Windsor, one of the independent MP’s involved in the discussions:
"But ... Tony Abbott on a number of occasions said that he would do absolutely anything to gain government - anything," Mr Windsor told Sky News.

"One could draw a conclusion from that that if we pulled a tight rein and said 'Well, you've got government if you put a carbon price on' he would agree with it - that was the inference from his statements."

Mr Windsor said he had made a "character judgment" about Mr Abbott after the discussions.

"He actually begged for the job ... (he said) 'I will do anything to get this job'," Mr Windsor said.
It seems both Rudd and Abbott are the personalities who will do anything to reach a goal or shore up a position. Now let’s look at why this is relevant in August 2016. When Rudd achieved victory over Howard and Abbott achieved victory over Rudd, they were in the pantheon of glory within their respective political parties. As the opinion polls went south (and the other side was suddenly looking like a winner), there was a reassessment of their capabilities; the respective party rooms came to the conclusion that their leadership was untenable in the long term.

Potentially a believer in the axiom to keep your friends close and your enemies closer, Rudd was kept in the Cabinet by his successor Julia Gillard. History suggests that Gillard didn’t keep Rudd close enough, leading to a challenge in 2013 where Rudd was re-installed as prime minister. One of the things Rudd did to the ALP rules subsequent to his re-installation was to institute a requirement that the parliamentary leader of the ALP be elected by polls of not only those in parliament, but the broader ALP membership. Rudd claimed he decided to: ‘
“. . .democratise the party for the future.

''Each of our members now gets to have a say, a real say in the future leadership of our party. Decisions can no longer simply be made by a factional few," he told reporters in Balmain.
While the statement is true enough — all ALP members now have a vote on the leadership of the Federal Parliamentary Party — subsequent to the 2013 election Anthony Albanese won the ‘ALP members’ vote and Bill Shorten won the ‘parliament’ vote which was held due to an election defeat. Obviously, while all ALP members are equal, Caucus has more say.

As we all know, Abbott was rolled by his party room in 2015 (it couldn’t be because it seemed to work so well when the ALP did it, could it?) and for a while Malcolm Turnbull and the Coalition’s approval figures, according to the opinion polls, were stratospheric. Accordingly, Shorten and the ALP’s polling figures went down by a similar level.

The benefit Shorten inherited from Rudd was that it would have taken his resignation, an election loss or a 75% vote of no confidence by the ALP Caucus to topple Shorten. If there were any ALP ‘bedwetters’ (to coin a phrase) in late 2015, they probably realised the hurdles required to change the opposition leader were almost insurmountable and decided (publicly anyway) to grin and bear it. It’s now also history that Shorten went on to lead the ALP to the 2016 election, suffering a narrow loss which was a better than expected result.

Abbott’s recent disclosure regarding factions in the Liberal Party probably didn’t surprise anyone. Turnbull’s claim last October that the Liberal Party in NSW was one big happy family was treated with the ridicule it probably deserved by those that should have some idea of the reality (the video above was published widely when it occurred). In the words of The Guardian:
“Tony Abbott has warned that lobbyists holding positions as power brokers in the Liberal party creates the potential for corruption.”
and
“Some of these factional warlords have a commercial interest in dealing with politicians whose preselections they can influence,” Abbott said.

He said this created a “potentially corrupt position”. “The best way to see off the factionalists is to open up the party — the more members we’ve got, the harder it is for the factional warlords to control.

“There are people not on the state executive who caucus regularly on the phone and face-to-face with people who are on the executive to try and get pre-cooked outcomes.”

Abbott said he wanted to empower the membership by letting them choose Liberal candidates for parliament. The call for more democratic preselection is likely to re-open a debate between moderates and conservatives over how candidates are chosen.
Abbott’s opinion seems to be that if the process of preselection within the Liberal Party is opened up, and dare we say made more ‘democratic’, the party will preselect those whose opinions are shared by the majority of the Liberal Party members in the electorate. He may believe that more ‘conservative’ people would be elected but there is no guarantee that outcome would occur, just as Rudd’s changes to the ALP rules didn’t save his leadership.

Rudd was probably trying to cement himself as the parliamentary leader of the ALP in 2013. Abbott is probably trying to ensure that more ‘conservative’ Liberal Party members are given a chance to enter parliament ensuring that he has a greater number of like-minded people around him, improving the chances of a second ‘Abbott era’.

Both interventions, however, have the effect of opening up both major political parties in areas where they have been accused of pandering to sectional interests. While Abbott obviously thinks he can influence ‘conservative’ Liberals to a greater extent than the more numerous ‘moderate’ faction, it is not a fait accompli that the ‘moderate’ majority would send more ‘conservatives’ to Canberra.

Rudd’s ‘reforms’ to the ALP leadership have made it more democratic (all members have some say) and made it easier for a new leader to develop and implement a strategy designed to improve the position of the ALP at the next election. As the leader is not judged on instant results (because the bar for changing leaders is set at a high level of discontent), a new leader and the party organisation have a reasonable expectation that the strategy will, if somewhere in the ballpark, be implemented in full. Shorten and the ALP’s opinion poll popularity certainly played a part in the demise of Abbott, who went from hero to zero in about two years. The election results also demonstrate the success of the ALP sticking to one leader and strategy for a considerable period of time.

Wouldn’t it be a delicious irony if Rudd and Abbott’s seemingly self-serving interventions into the operation of their respective political parties make the two major parties more democratic and ensure rank and file party members have a genuine say in their respective party’s destiny?

What do you think?
Let us know in comments below.

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Ad astra, 10 August 2016
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The election in numbers 2: minor parties and independents
Ken Wolff, 14 August 2016
A number of commentators made the point after the election that almost a quarter of voters did not vote for the major parties in the House of Representatives. But that is misleading on two counts. It ignores the 5% informal vote and the 10% vote for the Greens who I think are now entitled to be considered a major party — they do contest every seat after all. That leaves about a 10% …
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The election in numbers 2: minor parties and independents


A number of commentators made the point after the election that almost a quarter of voters did not vote for the major parties in the House of Representatives. But that is misleading on two counts. It ignores the 5% informal vote and the 10% vote for the Greens who I think are now entitled to be considered a major party — they do contest every seat after all. That leaves about a 10% first preference vote for other than major parties and, given that there were almost 150 smaller parties and independents, that is not a significant vote — an average of about 0.07% for each of them. Many of them garner only a few hundred votes: it is the sheer number of smaller parties and independents that contributes to the overall magnitude of their vote and that was not unique to this election.

We have heard most about the success of the Nick Xenophon Team (NXT) and One Nation but they contested only a limited number of seats. Two parties that contested more seats were Family First and Fred Nile’s Christian Democratic Party, which contested 65 and 55 seats respectively. Family First gained 1.5% of the vote nationally (just over 201,000 votes) and Fred Nile’s group 1.3% of the vote (about 178,000 votes). If we consider their vote against the number of seats they contested, then Family First averaged about 3,100 votes per seat and the Christian Democratic Party about 3,240. By way of comparison, the ALP averaged 31,350 votes per seat and the Liberal Party 36,300 in the 107 seats it contested (that is the Liberal Party only, not the full range of Coalition parties). And there are about 100,000 voters per seat, give or take 10%, except in Tasmania.

Nationally, NXT achieved 1.85% of the vote, or 250,400 votes, but it contested only 18 seats (11 in SA) giving it an average vote of 13,900 per seat. But NXT was not as successful outside of SA: for example, in Queensland in Moreton, it achieved 4.8% of the vote (4,072 first preference votes) and 7.6% in Groom (6,960 votes). While those Queensland results are reasonably good for an independent or minor party, they are not extraordinary. In the 11 SA seats, however, NXT averaged 21.3% of the vote or 20,120 votes. Xenophon has been an independent Senator for SA since 2007 and his high profile and popularity translated into votes for his Team but that did not extend to success beyond SA.

One Nation contested only 15 seats, of which 12 were in Queensland, to obtain 1.3% of the vote or 175,000 votes nationally, slightly less than Fred Nile’s Christian Democratic Party and significantly fewer than NXT, at an average of about 11,700 per seat. One Nation did marginally better in Queensland, averaging about 12,300 votes (13.9%) but this varied from 6,775 (7.6%) in Leichhardt (Warren Entsch’s seat) to 18,461 (20.9%) in Wright (a conservative seat that stretches west from the edge of the Gold Coast). Ironically one of the seats in which One Nation fell below its Queensland average was Pauline Hanson’s old seat of Oxley: it obtained just over 7,000 votes or 8.4% (admittedly the boundaries have changed since Hanson first won it).

So for NXT and One Nation, their ‘success’ largely came from targeting only a small number of seats, of which the majority were in their leader’s home state. At a seat level, they actually averaged more than the Greens who, in contesting all 150 seats, averaged 9,200 votes per seat.

There was also Bob Katter, who has his own party (Katter’s Australia Party) but is perhaps more like an independent. His party contested 12 seats in Queensland but obtained only 72,900 first preference votes of which Katter himself, in the seat of Kennedy, obtained 34,300. Katter is a sitting member with a high profile but his party did not fare so well averaging only 3,500 votes (a similar average to other minor parties) in the other 11 seats.

Also at a national level, over 100 independents, not linked to any party, achieved a total of 2.8% of the vote (about 381,000 votes), more than both NXT and One Nation but at an average of about 3,400 votes per independent candidate. Even that figure is inflated by high profile and successful independents like Andrew Wilkie and Cathy McGowan, and even the unsuccessful like Tony Windsor and Rob Oakeshott. Those four alone accounted for about 116,000 (or 30%) of the votes that went to independents: if they are removed, the vote for other independents was about 2,500 per candidate which does not suggest a major shift to independent candidates.

They are still independents I hear you say and that is true. But the more successful ones had a high profile in the seats they were contesting and two, of course, were sitting members (or three if we count Katter as an independent). A vote for Wilkie or McGowan was not a genuine shift away from major parties to independents but simply support for a sitting member (a rejection of the major parties could be said to have occurred in the year they first won their seat). And Windsor and Oakeshott, although not sitting members, were previous independent members in the regions they contested. The key to successful independents seems to be their public profile and/or a grass roots movement within an electorate, such as when McGowan won Indi from Sophie Mirabella in 2013 — she was drafted to run against Mirabella by a community organisation that felt Mirabella was not paying sufficient attention to the electorate. Once they do win a seat, as a sitting member they retain that advantage in subsequent elections. Another successful independent ploy is to move from a major party as Windsor, Oakeshott, Katter and Pauline Hanson the first time around, have done, often after having first been elected as a party candidate, so their profile has already been enhanced by party support (noting, however, that Hanson was selected as a candidate but lost party endorsement prior to the election).

In the Senate there are now 20 Senators (26%) not from ALP or L/NP: 9 Greens and 11 others from minor parties — and they are each minor parties although a few of them, like Katter in the HoR, are more like independents. That number would superficially seem to justify the argument that a quarter of voters did support non-major parties but, as I said in relation to the HoR vote, whether the Greens can still be considered a minor party is debatable. In the Senate the Greens secured 8.7% of the national first preference vote (almost 1.2 million votes) behind only the L/NP and ALP and double the vote of the next highest of the other parties — One Nation with 4.3% or 593,000 votes. The Senate, however, is determined at a state level and by a complicated preference distribution process, not by national first preference votes but the national figures give an indication of the actual support across the nation for the minor parties. In that regard, at the national level, NXT secured 456,000 first preference votes (3.3%), the Liberal Democrats (Leyonhjelm’s party) 299,000 votes (2.2%), and Family First and the Shooters, Fishers and Farmers Party each secured just over 190,000 votes (1.4%). I would describe most, but not all, of the minor parties as ‘niche’ parties because they focus on only one or two key issues and so can attract a small percentage of voters who feel strongly about those particular issues — they are often issues not picked up in the broader agenda of the major parties.

But we do need to consider how the minor parties fared at the state level and achieved the outcomes they did.

NXT won three Senate seats all in SA. A first preference vote in SA of 21.7% matched its SA vote in the HoR and gave it 2.8 quotas, so it did not require a high level of preferences to achieve its three seats. NXT did contest every other state but did no better than 2.2% of the first preference vote (0.28 of a quota) in WA. So despite the high profile of NXT, it is a profile and success limited to Nick Xenophon’s home state.

Similarly, Derryn Hinch’s Justice Party contested all states but had no success outside Hinch’s home state of Victoria — 6.1% of the vote and a starting quota of 0.79. Otherwise his party did no better than 0.7% of the vote in WA and was as low as 0.2% in SA.

The Jacqui Lambie Network ran candidates in four states but like Xenophon and Hinch had no success outside her home state of Tasmania, securing a highest vote of only 0.4% in Victoria.

So it is clear that some successful ‘independents’ and their associated parties do not have national appeal but rely solely on the profile and local popularity of their principal candidate in their home state. It would appear that they formed ‘parties’ only to secure the option of an ‘above the line’ vote.

Family First won one Senate seat in SA, for its sitting Senator Bob Day, but from a 2.9% first preference vote (0.37 of a quota). Its results in other states were significantly lower, ranging from 0.64% of first preference votes (0.08 of a quota) in WA to 1.97% (0.25 of a quota) in Tasmania.

One Nation is the party that is a little different to the other minor parties because it appears, on the surface, to have had success across the country, with two Senators from Queensland, one from NSW and one from WA. Because One Nation contested all states it was able to increase its national vote to 4.3% from the 1.3% it achieved in the HoR (where it contested only a small number of seats) but again it did best in Hanson’s home state of Queensland, securing 9.2% of votes (250,000 votes) and a quota on first preference votes alone. It gained a second Queensland seat although its provisional quota (from first preference votes) was only 1.2 — so somehow it managed to make up 0.8 of a quota from preferences. By comparison the ALP went from 3.4 quotas to four elected Senators and the Greens from 0.9 to achieve only one Senator. Beginning with 0.4 of a quota is often considered the lower base from which a full quota can be gained, so a second One Nation Senator from Queensland is not really an indication of the strength of the One Nation vote but arises from the lengthy and complicated preference distribution process. Similarly, its successful candidates in NSW and WA both came from an initial position of 0.5 of a quota to win their seats (4.1% and 4.0% of the vote respectively) — although they were the highest starting quotas among the non-major parties. In NSW, however, the ALP had almost eight times One Nation’s first preference vote and in WA was seven times higher but the seat ratio became only four to one. In the other states, One Nation received only 1.8% of the vote in Victoria, only marginally more than the Animal Justice Party; in SA it achieved 3.0% of the vote, only 0.1% more than Family First; and in Tasmania 2.6% — so, for whatever reason, it performed little or no better than other minor parties in those states.

David Leyonhjelm (of the Liberal Democrats) was also re-elected to the Senate from NSW and he came from a lower starting position than the One Nation candidate in that state, with only 0.4 of a quota (139,000 votes or 3.1%) after first preference votes.

The number of Senators from the minor parties is largely a result of Turnbull calling a double dissolution election. For example, if it had been a half-Senate election, the votes received by the parties in Victoria suggest that the outcome would have been 3 L/NP, 2 ALP and 1 Green — no Derryn Hinch. And in NSW, there would also likely have been 3 L/NP, 2 ALP and 1 Green (although there could have been a battle for two spots between the third L/NP candidate, the Greens and One Nation) — so no Leyonhjelm and possibly no One Nation. For the mess the Senate seems to have become Turnbull has no-one to blame but himself. Some of the new Senators appear as if they will be more difficult to negotiate with than the likes of Glen Lazarus and Ricky Muir as they have stronger personal agendas.

In the HoR, I expect that independents like Wilkie, McGowan and Katter will continue to have success as sitting members. Whether more independents are elected in future appears to depend very much on the quality of the candidates of the major parties: the example of the reaction against Mirabella when voters perceived she was not paying sufficient attention to her electorate is instructive in that regard, as is the fact that when she recontested at this election she suffered the biggest swing against the L/NP of any seat in the country. So major parties cannot ignore independents but neither can they ignore the response of the electorate to their own candidates or they will see more independents elected.

The ALP almost shot itself in the foot in Tasmania when it moved sitting Senator Lisa Singh to the almost ‘unwinnable’ sixth position on the ballot paper but Tasmanian voters chose to vote ‘below the line’ and gave her 20,741 first preference votes in her own right: she became the fourth ALP Senator to be elected with the candidate in the fifth position being earlier excluded and the other candidate above her, in fourth position on the ballot, winning the fifth Senate place for the ALP. Although not an independent, I give that as another example of the electorate’s response to individual candidates. If she had run as an independent, after being moved down the ballot the way she was by the ALP power brokers, there is a strong possibility that she would still have won a place. That is often how successful independents are ‘born’ and if the major parties wish to keep the number of independents and minor parties as low as possible they need to heed such examples of electoral responses to their candidates.

Although minor parties and independents had some success, in both the HoR and the Senate, the overall ‘best’ average seems to remain around a 3‒4% vote for minor parties except in the home states of the key principal candidates (Xenophon, Hanson, Hinch, Lambie) and for sitting members. So it seems to come down to the local public profiles of individuals and can also be influenced by the quality of individual candidates put forward by the major parties, not simply a reaction against the major parties.

What do you think?
Is Ken right in suggesting that it is the public profile of ‘independents’ that has most influence?

Is the Senate system ‘fair’, if people can win a seat starting with only 3‒4% of the vote?

Let us know in comments below.


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Why are Abbott’s conservatives destroying our PM?



To those of you who dispute the assertion embedded in the title, let me provide you with supporting evidence.

First some questions for you to answer:

Is Malcolm Turnbull the man you thought he was when he rolled Tony Abbott almost a year ago?

Has he fulfilled your initial expectations?

Is he as secure in his position as PM as he was initially?

Has he been limply acting as a proxy for Abbott and his policies?

Has he disappointed you?

Has he disappointed many voters, even LNP supporters?

Has he disappointed many in his party?

Has he disappointed/angered politicians in other parties?

If you answered ‘No’ for the first three and ‘Yes’ for the others, you will be in tune with the thinking in this piece.

But the crucial question is a Julius Sumner Miller favourite: ‘Why is it so?’

This piece addresses this central question.

It is apparent to all that elements within the LNP distrust, dislike and even despise our PM. This dates back to when he was Leader of the Opposition at the time Kevin Rudd was PM. Many in his party, particularly the conservative clique, believe he is more suited to be in a progressive party – several have suggested he would be more comfortable with Labor.

For some, it was the last straw when he sided with Rudd in proposing an Emissions Trading Scheme to ameliorate global warming, a move that led to a party revolt and his removal, by just one vote, in favour of Tony Abbott. That a majority of the party regarded Abbott as preferable to him shows how deeply the antipathy towards him ran within the Liberal Party!

Initially, after he returned the compliment by toppling Abbott in 2015, Turnbull’s personal popularity soared, and the awful two-party preferred polling under Abbott that had persisted month after agonizing month (the LNP had lost 30 Newspolls in a row) reversed into positive territory. The LNP was then able temporarily to put aside its doubts and outright antagonism to Turnbull. If Turnbull could win the upcoming election that Abbott looked certain to lose, the conservatives would be able to swallow their enmity. There was nothing sweeter than the anticipation of victory to make the bitter Turnbull pill go down. The doubts persisted, but were pushed underground – an uneasy rapprochement was achieved. But it was not long though before the doubts resurfaced.

Everyone realized that Turnbull had sacrificed several of his strongly held principles to obtain the endorsement of the conservative clique that gave him the leadership.

The man who said he would not lead a government that did not take climate change seriously, folded when the conservatives insisted he stick to the highly suspect Abbott/Hunt ‘Direct Action Plan’, which he then defended as if it was Holy Writ. During the election campaign there was no mention of the Coalition’s cut of $1.3 billion from the Australian Renewable Energy Agency or the disgraceful censorship of the UNESCO report on climate impacts on the Great Barrier Reef, even as recent reports highlighted the frightening damage already caused to the reef.

Turnbull said he had paid a ‘high price’ for his previous stand on climate change; clearly he was unprepared to pay it again!

The man who insisted that the marriage equality matter ought to be settled by a parliamentary vote gave in to the conservatives’ demand that it be settled via Abbott’s plebiscite, despite the government's $66 million price tag (and Price Waterhouse Coopers calculated ultimate cost of $525 million), and the risk of community discord arising from the toxic debate that the ACL and their ilk would initiate.

The man who promoted the concept of a republic so vigorously in his earlier years, quietly put it on the back burner.

The tech-savvy man who was prominent in initiating one of the early email services – OzEmail – was dragooned by Abbott into scrapping Labor’s superior fibre-to-the-premises model, and inserting the inferior, slower, multi-technology, fibre-to-the-node model with boxes on the street corner and ageing copper wire connections to the premises. Despite all his talk about innovation and competitiveness he was prepared to give us a lesser service so as to meet the demands of the conservatives. Innovation, competitiveness, nimbleness and agility took a back seat.

With every passing week, we see a diminished Turnbull pandering to the conservatives, looking weaker by the day.

Just when he wanted to look decisive and show leadership after the Four Corners exposé on youth justice in the NT, he jumped quickly, but with little consultation with indigenous leaders, and appointed a ‘law and order’ judge to be the Royal Commissioner into juvenile justice in the Northern Territory. Having been involved in judgments as Chief Justice there, it was not surprising that a protest eventuated that saw the Royal Commissioner as potentially biased. Judge Brian Martin, showing better judgement than Turnbull and Attorney General Brandis, decided to step down on the grounds of ‘apprehended bias’, which ought to have been obvious from the outset.

This, and the pressure from indigenous groups who wanted a co-commissioner with an indigenous background, caused Turnbull and Brandis to turn turtle and appoint high-profile Indigenous figure Mick Gooda, Aboriginal and Torres Strait Islander Social Justice Commissioner, and former Queensland Supreme Court judge Margaret White as co-commissioners.

How much pressure came from his cabinet we will likely never know.

On the issue of supporting Kevin Rudd’s bid to be Secretary General of the United Nations, how much influence the conservatives had in the cabinet discussion is a matter of conjecture. We do know that Julie Bishop supported Rudd and that more spoke for Rudd than against. But conservatives Scott Morrison and Peter Dutton were strongly opposed to nominating Rudd, and the meeting ended with Turnbull and Joyce being left to make a decision.

Clearly, Turnbull, more concerned with propping up his leadership among the conservatives than doing what many, even from a Liberal background, thought was correct protocol – supporting a previous prime minister on the international stage – squibbed making this decision, told Rudd he was unsuitable, leaving him fuming, and in the process attracted strong criticism from many quarters for not supporting an Australian for this post.

And most recently we see Turnbull ‘slapping the banks on the wrist with a feather’ with his threat to force their CEOs before the Coalition-dominated House Economics Committee to explain their reasons for not passing on RBA interest rate cuts. It is his way of avoiding a Royal Commission into Banking, which his conservative colleagues are intent on avoiding.

There are enough examples of Turnbull making decisions that bewilder, enough to ask: ‘Why is it so?’ Enough to evoke the suggestion that it is to placate Abbott’s conservative forces in the LNP that threaten to upend him if he does not comply. We see ‘the three As’: Abbott, Abetz and Andrews poking their heads above the parapet in their own subtle way expressing their dissatisfaction with Turnbull, as we witnessed in this week's episode of Four Corners. And we have seen George Christensen threatening to cross the floor unless the superannuation legislation is altered to his satisfaction!

With the balance of power so delicately balanced with a majority of just one in the House, and a polyglot and quite unpredictable Senate, one might have expected tight unity within the LNP to hold onto its tenuous grip on power. Instead we see actions that threaten that unity. Why is it so?

I can’t explain why some LNP members feel as they do, but it looks as if some would sooner see the leader turfed out if he does not support the party line on climate change, on marriage equality, on the NBN, and on proposed Royal Commissions. They seem hell-bent on tightly controlling their leader, and if they can’t, destroying him. They are well on the way already.

It seems more logical to do what’s necessary to retain power, even if at times uncomfortable, than to destroy the leader and the party with it. Have they got another more acceptable leader lined up? Do they want Abbott back as leader? Do they think that is possible? Insider Gerard Henderson doesn’t think so.

I can’t explain such aberrant behaviour except to offer the suggestion that sometimes, entrenched ideology, the desire for personal power, and feelings of hurt and rejection, are more powerful than the desire for self-preservation and political power. John Howard was easily able to decide which principles ‘he would die for in a ditch’, and for which he wouldn’t. Abbott’s conservatives seem to not have that gift.

Expect therefore that some will continue to say and do things that threaten their leader, and that in the end they may unexpectedly upend him.

Can you offer any other explanation for the Abbott conservatives’ anti-Turnbull behaviour? Has Turnbull the strength to counter them? What will happen when parliament resumes?


What do you think?
Can any of you give a plausible explanation of the behaviour of Abbott's conservatives, especially with just a one seat majority in the House and a likely hostile Senate?

Please comment below.


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The democratisation of opinion


With the rise of the internet and social media almost anyone can express their opinion to an audience in the thousands, even hundreds of thousands, no longer just to a circle of people who are physically present to hear the opinion. While that provides the democratisation of opinion, it also has a more sinister side. It has led to a widespread view that in this new democratic world all opinions are equally valid.

There is no doubt that all opinions are valid but only as personal opinions. It does not make an opinion true (that is, matching the evidence) nor does it mean that the opinion has any validity beyond its expression as a personal point of view. And yet in this democratisation of opinion, we see people maintaining that not only do they have a right to their opinion but they have a right for their opinion to be considered valid in all circumstances, even when a range of evidence refutes it. It is much like saying my opinion that 2 + 2 = 3 is as valid as the alternative that 2 + 2 = 4. No-one would argue that proposition would they? — these days the answer to that question is not so clear.

What is the opposite of opinion? — probably truth or facts. Without getting into a philosophical argument about what is ‘truth’, it is possible to employ scientific method to arrive at conclusions that are true, or most likely true. That is because scientific method is based on observations and drawing conclusions that explain the observations and that has been done for hundreds of years. It is possible to say that science still forms opinions, or what are called theories or hypotheses, based on those observations but science will change its theories when observed facts do not match the current theory.

For a long time people thought that the sun went around the earth — and why not? After all, even though we are spinning at 1670km/h (at the equator), travelling around the sun at 107,000km/h and spiralling with the sun around the Milky Way at 792,000km/h, we feel nothing but we do see the sun rise in the east every day and set in the west. Based on that latter observation alone, it is logical to assume that it is the sun that is moving not the earth. But astronomers watching the stars and planets saw something which that model could not explain: at certain times the other planets appeared to go backwards in the heavens. Eventually that, and other observations, made it clear that it was the earth moving about the sun that explained what the astronomers were observing. And so we have advanced our knowledge using that model. It is not as though science plucks its theories out of the air. They explain what has already been observed until a new observation suggests it is time for a new explanation.

And it is not just scientists who use this method. There are many anecdotal stories of farmers knowing more than scientists in particular situations and proving scientists wrong. But that is not based on some random opinion of the farmers but their own observations over many years of local weather, soil, and crop and livestock results in varying situations. Their opinion is often proved right because their set of observations is over a much longer period than those of experts who arrive for a field trip that may last no longer than a few weeks. Even though the experts are trained in their discipline they do not have the range of observations that the farmers have that are relevant to the local circumstances. The farmers’ observations may not be recorded but retained in memory, or even family tradition for observations over longer periods, but their opinions are based on long term observations. Scientists are acknowledging that history of observation and drawing it into the scientific process, just as they are now recognising Aboriginal knowledge in the management of fire, flora and fauna is based on thousands of years of observation, even if that knowledge is expressed in a different way. These days the scientists are trained so that they can apply their knowledge over a range of circumstances, whereas the farmers and Aboriginal and Torres Strait Islander people have more detailed knowledge and opinions based on decades or millennia of observation but it has most relevance only to their local conditions.

Opinions have some commonality with the scientific use of observation. Almost all opinions are based on some level of observation but the real difference between the quality of opinions is probably the extent of observations drawn upon to form the opinion. In the recent Brexit campaign in the UK, some experts were warning of the economic consequences of the UK leaving the European Union but Michael Gove, campaigning for the ‘leave’ side, suggested that people were tired of experts and, by implication, would ignore such advice. The observation that led many people to that conclusion concerned the rules coming from the EU technocrats in Brussels which many Britains saw as undermining their traditions and control of their own country. Based on that observation alone, they could validly form an opinion that questioned the experts but it should only have been the experts issuing those rules. Instead, one observation can become a wider dismissal of expert opinion.

Thus we have the questioning of the science underpinning anthropogenic climate change or even questioning climate change itself. People are perfectly entitled to have an opinion rejecting climate change but that does not make their opinion true. For their opinion to be true it would also have to be based on a set of factual observations and some of the observations used by the deniers have been shown to be false or, at best, built on a foundation of quick-sand. When by far the majority of observations support the occurrence of climate change and the probability of it being ‘man-made’ is 90% or more, then some very strong alternative observations would be required to change the current scientific consensus. The deniers have not presented such observations but still insist their opinions are not only valid but true.

I worked in Aboriginal and Torres Strait Islander affairs for many years and so I often came across people who held negative stereotypes of Aboriginal and Torres Strait Islander people. I would be asked why should they have houses when they only break them down for firewood. I knew there had been such instances, although rare, so I would not deny their opinion based on that observation but answer with a broader and more positive range of observations: all of the people who did not burn their houses but lived normal lives in them; the range of Aboriginal and Torres Strait Islander businesses; or even that many problems in housing arose not from Aboriginal and Torres Strait Islander misuse of the dwelling but from shoddy workmanship by the original construction contractors. I don’t know how many opinions I managed to change but at least I had presented a new range of observations for them to consider.

Politicians hoping to run the country shouldn’t operate from a limited range of observations but many do. They play up to their audience or constituency by presenting views based on a limited range of observations and ignoring those observations that run counter to that opinion — just as the church rejected Copernicus’s observations that the earth went around the sun. The Trumps and Hansons of the world are masters of this approach. While it may have some electoral appeal, it is not a basis on which to run a country. A government, almost by definition, must take account of a wide range of opinions (and the observations on which they are based) and either determine which are true or balance the conflicting views to come to a policy decision in the best interest of the country.

Governments often express an intention to follow ‘evidence-based’ policy, but we also have lobbying which is an attempt to convince policy makers to pay more heed to one set of opinions or observations rather than another. The big and unanswered question is whether members of government are well-placed to assess the varying observations supporting different opinions or whether they are also personally influenced by a limited range of observations. It is perhaps a belief that the latter is true that leads to public opinion that politicians are ’out of touch’ or, in other words, are not considering a broad range of observations but are overly influenced by lobbyists, a small number of interest groups, or personal opinions — each of which is focused on a limited range of observations.

Yes, we all have personal opinions that are valid as personal opinions no matter how few the number of observations on which they are based. If, however, I am willing to listen to, consider and perhaps accept a wider range of observations, then we can have a rational discussion, debate the observations (evidence) and perhaps reach a conclusion that changes my opinion or that of my interlocutor. Or we may mutually agree a different opinion that is new for both of us. If that was the way of the world, then opinions would be in their rightful place and open to change based on a wider range of observations.

Of course, there are some whose opinion will not change, who see all other observations through the prism of their own opinion or believe that the observations supporting their opinion are ‘true’ and therefore all other observations must be ‘false’. That has always been the case but with this so-called democratisation of opinion many more people now feel that their opinion must be valued as it stands. When all opinions are considered valued and valid, people defend them with vehemence as we see on blog sites and social media and do not open their minds to a broader range of observations. Instead of taking the new observations as something to be considered, they take them as a personal attack on their ‘valued’ opinion and attack in return. If this is democratic, it is a negative form of democracy — to use an old cliché it is ‘playing the man, not the ball’ and that is not truly democratic for it fails to recognise the democratic rights of your fellow citizen. Yes, all opinions are valid but only if our minds are open to consider a broader range of possibilities that may change our opinion.

And yes, this entire piece is my opinion. So now over to you for your opinion and revelation of broader observations for my consideration.

What do you think?
Do people form opinions based on only one or two observations because that is easier than considering the implications of a broader range of observations?

Or do we have different opinions because people draw different conclusions from the same set of observations?

And if so, how can all opinions be valid?

Let us know in comments below.


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A couple of weeks ago, our esteemed blogmaster Ad Astra published a piece asking ‘Why is there so much anger?’ It’s a good question.

Sociologists will tell us that whatever position a person takes on a particular subject, there will be some who agree, some who disagree and some who don’t have a strong opinion either way; they’re ‘sitting on the fence’. …
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Make laugh – not war


A couple of weeks ago, our esteemed blogmaster Ad Astra published a piece asking ‘Why is there so much anger?’ It’s a good question.

Sociologists will tell us that whatever position a person takes on a particular subject, there will be some who agree, some who disagree and some who don’t have a strong opinion either way; they’re ‘sitting on the fence’. Some of those who disagree would listen to an argument designed to change their mind; for others, successfully changing their viewpoint would be impossible.

This played out for all to see in the recent federal election. Out of the 150 House of Representative seats, by the end of the election night there were only a dozen or so that were still in play. The (never-ending) election campaign wasn’t to convince the voters in the 130 odd seats that were almost certain to fall to the red or blue teams, the millions of electrons and litres of advertising ink were all expended to convince a handful of voters to change their votes. Out of the 90,000 people in these marginal (or swinging) electorates, the advertising was designed to convince a small number of voters to support the red, blue, green, orange or other party on 2 July rather than their previous allegiance.

How about we look at this another way. Uncle Toby’s Oats products are available all year round on the shelves of most supermarkets so there is clearly a year round demand. As it is winter in Australia, the sales of this and similar products would currently be higher as people choose to have something warm for breakfast instead of their normal cereal with cold milk. Some people will always purchase Uncle Toby’s Oats regardless of the price or difficulty in sourcing them because of some perceived benefit of the product over other similar products. Others would purchase oats in winter based on the cost or some other criteria without caring about the brand. There are also some who would never buy oats in general or Uncle Toby’s Oats in particular due to any number of reasons from they just don’t like oats through to some perceived shortfall in the Uncle Toby’s product.

In a similar way, some people will always purchase a Ford vehicle, some will buy a vehicle regardless of the brand due to the perceived needs of the consumer being matched as closely as possible by the vehicle they are considering and others would never buy a Ford due to past poor experience, they have a tribal loyalty to another brand or some other reason.

Advertising is designed to move people from the ‘undecided’ column to the ‘always purchase’ column. The belief is that if you convince someone to consider your product, the obvious benefits of your product once they have tried it will convert the consumer to an ‘always’ purchaser of that brand. There are a lot of ways to do this: Uncle Toby’s may hand out free samples at little athletics carnivals or major transport interchanges; Ford might display a car at or sponsor a pop culture festival or perhaps loan vehicles from their range of light commercials to the Gympie Music Muster in South East Queensland; a luxury consumer goods supplier might choose to associate themselves with the Australian Ballet or a series of performances at the Sydney Opera House.

At the same time, other manufacturers of similar products such as Kelloggs and Toyota are attempting to convince the undecided consumer that their products are better for each individual consumer than Uncle Toby’s or Ford. You need something to make your advertising memorable. Comedy seems to be frequently used, such as in this Specsavers advertisement.

PJ O’Rourke is an American political satirist and journalist. He is, by his own account, a conservative Republican who is in Australia for the next month or so on a speaking tour that includes the Byron Bay Writers Festival and a number of ‘think tank’ events in the southern capitals. O’Rourke’s writing skills can be demonstrated by his ‘fawning’ endorsement of Hillary Clinton in the 2016 US Presidential Race - ‘She is the second-worst thing that could happen to America’. O’Rourke was interviewed by Matt Wordsworth on ABCTV’s Lateline. (Slightly off topic, the interview is worth reading solely for O’Rourke’s opinion of Trump.) O’Rourke and Wordsworth discussed the crossover between comedy and commentating:
MATT WORDSWORTH: You and your colleagues at Lampoon — you're editor of Lampoon, obviously — now, comedians are the go-to commentators.
P.J. O'ROURKE: Isn't that stupid?
MATT WORDSWORTH: Did you see that coming?
P.J. O'ROURKE: No, no. Who could possibly have seen that coming? I mean, it's absolutely ridiculous. The role in — if humour has any positive role in covering politics, it's simply to keep people's attention for long enough that they will actually look at the serious issues that are ...
MATT WORDSWORTH: But they're increasingly becoming the primary source of news for some people — your Colberts and your John Stewarts and whatnot.
P.J. O'ROURKE: (Laughs) Yes, yes. And I object. That's not where one is supposed to be getting one's news. We are and should remain a sideshow. If we can get some more people to go to the big top, great.
The reality is that comedy has been used as a ‘cover’ for making pointed comments since the middle ages. Former Liberal Party Senator Chris Puplick was talking about court jesters in an ’Ockham’s Razor’ interview on ABC’s RN radio network in 2003:
Their job was to give what used to be called 'frank and fearless' advice to the monarch. They were the reality check to the absolute rulers of their day. They were the utter reverse of today's spin doctors. They told the governors what the people needed them to hear, they took the views of the masses to the masters rather than being employed to tell the masses the lies the rulers think they ought to be fed.
It wasn’t just a mediaeval thing, the UK has a long and proud history of comedic comment on ‘sacred cows” such as this Dave Allen clip on his first experience of religion.



Australia also has a rich history of using comedy to comment on the news, from The Mavis Bramston Show, through The Gillies Report in the 1980’s (worth watching the whole 9 minutes for the very young John Clarke at the start and the ‘cover’ of the song ‘Shout’ at the end)



to today where Waleed Aly who presents The Project on Network 10



and Charlie Pickering who presents ABC’s The Weekly



both offer razor sharp commentary on current events.

So why are some people always angry? Some people are always going to find something to be angry about. Regardless of what argument you present on a particular issue, some people are going to absolutely disagree with you. In today’s winner take all society, some of those who will never be convinced to change their mind on their ideas will actively attack you (in an attempt to either change your opinion or challenge your right to have a different opinion) rather than just agree to disagree.

Others will be open to having their opinions changed by discussion. Currently the discussion on a number of issues around the world is being led by those who preach anger, hate and isolation, such as Trump, Christensen, Bernardi, Hanson and so on. While they claim that their argument is sound and consistent, don’t forget that Hanson’s initial speeches referred to the Chinese who were going to take over Australia 20 years ago, showing similar consistency to those who were around in the 60’s and 70’s suggesting that the Greeks and Italians were going to take all our jobs while claiming unemployment benefits (and other farcical stretches of logic). The problem is that if there is no other argument that sticks in people’s minds to reinforce positive attitudes over the carefully calculated scare campaign, the hate preachers gain more converts.

Mark Twain is alleged to have said “A lie can travel half way around the world while the truth is putting on its shoes”. Advertisers use comedy to attract attention and ensure that the sponsored product is kept top of mind. Perhaps the Colbert’s, John Stewart’s, Waleed Aly’s and Charlie Pickering’s have worked out how to produce discussion in respect to sensitive issues, keeping them top of people’s minds (hopefully turning a number of ‘undecideds’ into people with positive opinions on the way), by appealing to those who are looking for relevant information and using comedy as a tool to deliver the message.

Fairfax recently ran an article in The Brisbane Times that demonstrated how the Islamic Council of Queensland is managing trolls who contact them by social media. Instead of getting upset, they use humour to disarm the situation. It’s an example we could all follow.

A little way up the screen is a Dave Allen clip relating to religion. While he was probably best known for his religious jokes, he also frequently told stories about other issues — such as how he lost the top of one of his fingers. If only we could all tell stories like this the ‘hate’ preachers would have nowhere to go.



Dave Allen, Waleed Aly, Max Gillies, PJ O’Rourke and Charlie Pickering are all good story tellers and frequently discuss subjects where others are too afraid to go. While there is the need for decorum and consideration of others feelings, those who wish to provide positive arguments to people who are undecided about a whole range of subjects including religion, drug use, responsible behaviour and so on need to use tools that those looking for information will relate to. Unfortunately, the argument for positive behaviour is usually more nuanced than the alternative, so the message can’t be communicated in a 10 second soundbite that you watch while scrolling through your Facebook feed. Rather than using ‘fire and brimstone’, perhaps a little humour during the explanation of the positive view will delay scrolling long enough to discuss some facts, helping to disarm the hate and anger. It’s fine to disagree — anger and hate is another matter entirely.

What do you think?
Let us know in comments below.

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Johno goes to heaven


Johno was (as they say in the classics) a good and decent man. When he dies, he goes to heaven, and St Peter shows him around. They go past one room, and Johno asks: ‘Who are all those people in there?’ ‘They are the Methodists,’ says St Peter. They pass another room, and Johno asks the same question. ‘They are the Anglicans,’ says St Peter. As they're approaching the next room, St Peter says: ‘Take your shoes off and tiptoe by as quietly as you can.’ ‘Why, who's in there?’ asks Johno. ‘The Catholics,’ says St Peter, ‘and they think that they're the only ones up here.’.

Yes, it’s basically an old Dave Allen joke about religious difference (and would have been much funnier if you saw him tell it rather than read it). In contrast, Nick Earls recently wrote an article that discussed Australia’s seemingly never-ending preoccupation with ‘religious difference’ in The Guardian that shows wit and humour as well as having a good point. Earls claims:
I arrived in Australia in 1972 at the age of eight in the middle of an apparent Irish joke boom, and spent much of my lunchtimes over the next couple of years being dragged aside and read pages of Irish jokes. As fun goes, it had its limits.

But it wasn’t as bad as being the kid from the Italian family who had his “wog” lunch thrown in the bin most days, only to watch the perpetrators spend $10 in cafes 20 years later for the exact same food — focaccia and prosciutto — with no recollection of what they’d done.
Earls noticed a difference when travelling after the ‘9/11’ attacks in the US when those born in Northern Ireland were no longer ‘randomly selected’ for ‘special clearance procedures’ yet again. He also relates the history of Australia where the first Catholic Priest, a convict, was transported to Australia in 1798, then allowed to conduct masses from 1803 only until there was a rebellion of Irish convicts in 1804. The claim was that the rebellion was plotted during the mass (it would have been in Latin and the guards probably weren’t the smartest people in the room). The next Catholic mass in Australia wasn’t held until 1820.

Earls argues that the current discrimination against Muslims is equally as silly as the many decades of discrimination against the Irish around the world. While some Irish did belong to the IRA and were willing to do anything to ‘further their cause’, there were a hell of a lot of Irish people around the world that really didn’t care that much about the ‘free Ireland’ the IRA proposed. A lot of the Irish weren’t even Catholic! It would be nice to record here that discrimination and profiling by assumed religious characteristics died in the early years of this century when the world finally realised that every person with an Irish name or place of birth wasn’t a religious nutter with a bomb hiding in their luggage, but to believe that would be delusional.

As Earls mentions, early this century the focus switched from some Irish person going to blow you up to some Muslim person going to blow you up. While there have been some horrible atrocities around the world in the past 15 years caused by those claiming to further the Muslim cause (despite the mainstream Muslim religion abhorring violence), let’s look at some facts.

In September 2014, Crikey looked at various facts around terrorism. Between the Sydney Hilton Bombing in 1978 and September 2014, 113 Australians were victims of terrorism. While each life lost is a tragedy, Crikey points out that from 2003 to 2012, there were 2617 homicides, something like 8500 victims of car accidents and 22,800 suicides. The number of terror related deaths in 35 years is even eclipsed by the number of people who died from falling off a ladder (230), electrocution (206) and, surprisingly in a first world country, more died of shingles (228) as well as gastro and diarrhoea (168) in the 10-year period between 2003 and 2012.

So, is terrorism a problem? Of course it is — but is it an issue so all-encompassing that politicians like Pauline Hanson are correct in demanding CCTV cameras be installed in mosques? Of course it isn’t. Going back to numbers again, Hanson claims that she has a right to free speech and while there is no such clause regarding freedom of speech in Australia’s constitution, there is an implied right for anyone in this country to say what they want provided it doesn’t injure the reputation of others. Hanson also claims that she speaks for the majority of ordinary Australians. This too is debatable as her political party received around 500,000 first preference votes from the 16 million or so that were entitled to vote in the 2016 Federal Election. Mathematically, that means that around 15,500,000 Australian voters specifically decided that Hanson did not speak for them.

One of those who determined that Hanson didn’t speak for him is Barnaby Joyce (Deputy Prime Minister and Leader of the National Party). Joyce countered Hanson’s suggestion of CCTV being installed in mosques by stating that every religion has ratbags and suggesting that if all Muslims were terrorists, all Catholics were members of the IRA. Joyce is also correct in suggesting that:
… the democratic process which saw Pauline Hanson elected to the Senate should be respected and he did not want to start the new parliament with a “fight”.

“I am happy to have a cogent debate where nobody is insulted but I am happy to argue these things on the facts and on the reality of the nation I live in,” he said.
Last weekend, a teenager shot and killed 10 people in Munich, 27 other people were injured. It appears that the person with the gun had mental issues and thought highly of Anders Behring Breivik who murdered 77 young people on the Norwegian island of Utoya in 2011. Yet the same ABC online news report that reports all this in the first paragraph goes on to identify the perpetrator as a German-Iranian. Since when is the ancestry of a mass murderer relevant to the crime?

Earlier this year, Omar Marteen walked into the Pulse nightclub in Orlando, Florida, and shot 102 people (49 of whom subsequently died). According to the US authorities, while Marteen acted alone, he had mental health issues and was inspired by radical material he found online. On December 14, 2012, Adam Lanza killed his mother, then drove to the Sandy Hook Elementary School in Newtown, Connecticut, and shot 28 people, including 20 children. Lanza had mental health issues.

All mass murders are horrific, but the ancestry and/or religious beliefs of Lanza were not discussed in the reporting of the events that occurred. See the difference?

Locally, most will remember the siege at the Lindt Café in Sydney which was initially claimed to be a terrorist attack — including this breathless reporting:
At 10.30am, the seriousness of the ISIS threat forced the remaining TV production staff to leave the premises, throwing to the network’s Melbourne news crew, anchored by Nick Etchells and Laurel Irving.

TV executive producer Max Uechtriz tweeted confirmation of the terror scenario, with hostages forced to hold up the sinister black flag of the Islamic terror group.
The reality was Man Haron Monis, who perpetrated the crime, had a long history of borderline criminality and certainly ‘was known to authorities’. And the ISIS flag at the Lindt Café that proved the connection with terrorism — well apparently it wasn’t the ISIS flag and didn’t prove a thing.

Curtis Chang was a NSW Police Service accountant, shot and killed by a teenager while leaving work in Parramatta in October 2015. The claim at the time was the teenager had been ‘radicalised’. Senator-elect Hanson recently cited incidents such as the Lindt Café siege and Chang’s murder as reasons for a Royal Commission into religion on the ABC’s Q & A program telecast on July 18. Chang’s son has written an open letter to Hanson requesting that an entire religion is not blamed for the actions of a 15-year-old boy. From the letter:
As a high school teacher, I have Muslim students and I have met their parents and family. They have the same hopes and dreams of all Australians; to be successful in their lives and enjoy the freedoms we enjoy. I have not changed my hope for them to be successful members of Australian society.

This fearmongering directed at minorities is not a new phenomenon in history. Nor is it new with me personally. When I first arrived to Australia, I remember being a victim of the hateful and fearful attitudes that the One Nation Party promoted. I remember being told I will be sent back to where I came from because I was Asian and, therefore, not Australian. I remember feeling ostracised and isolated from the country and identity with which I had adopted — in harmony with my cultural heritage.
If anyone has the ‘right’ to ‘hate’ in Australia, surely it is Chang — not Hanson.

The Federal Member for Moreton, Graham Perrett recently reported in an opinion piece published by Fairfax:
At Eid Down Under earlier this month I had some halal lamb and cevapi and they tasted exactly like Australia. Despite being raised a Catholic in country Queensland I felt right at home at a Muslim celebration on Brisbane's southside. It wasn't a tradition from my childhood or my culture or my religion, but it was enjoyable — and the food was delicious!

Some politicians have mistakenly suggested that, in order to protect "our" culture and "our" way of life, the parliament should curtail the freedom of Australians to practise any religion that is not Christianity. As well as being offensive to around nine out of 20 Australians, such a restriction is contrary to our own Constitution.
And he’s right. Section 116 of Australia’s Constitution allows all those who live here freedom to practice their own religion. As Perrett points out, the Constitution was written by a number of ‘white blokes’. Those ‘white blokes’ apparently could tell the difference between an Irish Catholic and a member of the IRA. It’s a pity that those who attempt to victimise people based on some tenuous link between their appearance or name and a religious group over one hundred years later don’t have the same ability.

What do you think?
How is Australia less safe now than it was 50 years ago?

Have there always been religious ‘nutters’?

Let us know in comments below.

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Why is there so much anger?



No matter when we listen to the news, watch TV, or browse social media, the pervading emotion in so many items is anger, unremitting anger.

We see it in the wars in the Middle East and among terrorist organizations. We are told it is what motivates individual terrorists.

Social commentators insist it is what motivates gangs of youths to invade homes, terrorize families and steal luxury cars in our big cities. It is prevalent within our indigenous communities.

We see it among the protesters in US cities where police officers have gunned down black people, and affronted citizens have retaliated by shooting police.

We see it in America where support for the mavericks Donald Trump and Bernie Sanders is attributed by political commentators to intense anger within the electorate directed towards the political establishment, which is seen as not listening to voters’ pleas, unaware of their plight, indifferent to their needs, out of touch with ordinary people, simply focused on its own agenda and power struggles.

People support Trump and Sanders because they are angry with Washington, angry about the way it goes about its business, angry that they languish while politicians and their wealthy backers prosper, angry because the politicians don’t seem to care. They want a voice, and they want the politicians to listen. It’s Trump’s and Sanders’ anti-establishment stance that attracts people to them. They promise to change the prevailing culture, which is what the voters want, now more than ever. In his acceptance speech at the recent Republican Convention in Cleveland, tellingly Trump shouted: “I am your voice”.

George Lakoff has penned a fascinating piece: Understanding Trump. Addressing the question of how Trump has managed to become the Republican nominee for president, he says: “There are various theories: People are angry and he speaks to their anger. People don’t think much of Congress and want a non-politician. Both may be true. But why? What are the details? And Why Trump?” Lakoff goes on, in the words of a linguist and cognitive scientist, to elucidate. His long article is well worth a read. Using the language of framing, he develops his argument around his ‘Strict Father’ model of parenting, which he demonstrates Trump is using to appeal to conservatives.

We see anger in our cities here in Australia. Some are angry about immigration, particularly Muslim immigrants; others are angry about racism. Some are angry about 457 visa workers taking Australian jobs. Others are angry about politics, policies and politicians.

We see anger in our parliaments too. Political opponents attack one another venomously. What the opponent suggests or does is always wrong, stupid, self-serving, or poorly thought through. Adversarial discourse overwhelms any talk of cooperation; indeed, an offer to collaborate, such as was made post-election by Bill Shorten, makes it into the breaking-news headlines!

We see anger in our institutions where conflict too often despoils the worthy agendas they are pursuing.

We see it among disadvantaged groups: the homeless, the poor, the unemployed, young people unable to afford a house, parents of students at underprivileged schools, the LGBTI community, indigenous people and communities, all of whom feel left behind, excluded from the privileges and bounty this rich country affords so many others, disenfranchised with no voice to protest, with no power to effect change.

It is social injustice that is the root of all of this. Inequity, unfairness, disadvantage, the over-abundance of have-nots in our wealthy society, and the experience of marginalisation that induces anger, and in extreme cases radicalisation and violence..

In April I wrote Inequality will be a hot button issue at this election. It was not apparent as a strident issue during the campaign; instead it manifested itself as simmering anger about the emptiness of the Coalition’s policy of ‘Jobs and Growth’, predicated as it was on giving a tax break to big business. The ordinary folk were sceptical that any benefit would trickle down to them.

They were angry that the beneficiaries of the corporate tax cut included the big banks, whose unethical behaviour is well known to us all, and the multinationals, whose tax avoidance is legendary. They remembered the ‘Panama Papers’ that exposed the tax havens so many use.

They were angry that the big boys were to get the breaks they did not need or deserve, while the little man in the street had to wait, hoping some of the oats the horses were to be fed would eventually end up in the manure on the street, from which they might take their pickings.

They realised the ‘Jobs and Growth’ mantra was a fraud. They were angry that PM Turnbull, Treasurer Morrison, Finance Minister Cormann, and all the ‘little Sir Echoes’ in the Coalition, were selling them a pup.

They showed their anger by voting for other parties and independents to the point that the LNP just scraped over the line ahead of the others; unable to legitimately claim it had a mandate for the tax breaks. In all likelihood the best the LNP will achieve is a tax cut for genuinely small businesses.

The rush to support independents, particularly in the Senate, was another sign of the voters’ anger with the major parties. They were determined to put roadblocks in the way of the unfair legislation proposed by the Coalition. Even Coalition members were angry with some of it - the superannuation changes – that they saw as unfair to their constituency. They are threatening to force amendments on a PM and Treasurer unwilling to forego the revenue the changes would generate.

The anger among Coalition members extended to the marriage equality issue, which the arch conservatives want to abort and defeat, and also to what they saw as under-representation of the conservative clique in the ministry.

Anger is everywhere. It derives from a sense of injustice, a feeling of unfairness, a perception of inequity.

We saw hard evidence of inequality last week in the ’HILDA’ report The Household, Income and Labour Dynamics in Australia Survey: (2016). The data-rich report in pdf format can be accessed here.

It showed that the wealth of the over-65 year olds had increased over the last decade while that of the young had remained static. The wealth gap has widened. Here’s what it said:
“Wealth typically accumulates over the lifecycle (at least up until retirement), so it is unsurprising that there are large differences in median wealth by age group. In all four years in which wealth data has been collected, median wealth is lowest for the youngest age group, and increases in age up to the 55–64 age group. Prior to 2014, the median wealth of people aged 65 years and over was less than that of those aged 45–54, but in 2014 the median wealth of the 65 and over age group had overtaken the median wealth of those aged 45–54.

"This reflects the very strong growth in median wealth between 2002 and 2014 for the 65 and over age group, with the median increasing by 61.2%. Growth was also strong for the 55–64 age group (39.1%), but much weaker for the younger age groups.”
In recent times, fewer young people have been able to acquire a home. It is predicted that soon less than half of Australian families will own a home. Here are the details:
“…the decline in home ownership has been concentrated on those aged under 55. Home ownership among persons aged 25–34 declined from 38.7% in 2002 to 29.2% in 2014, with much of the decline occurring between 2010 and 2014. Among persons aged 35–44, home ownership declined from 63.2% to 52.4%, and among persons aged 45–54, it declined from 75.6% to 67.4%. There was also a slight decline in home ownership among persons aged 55–64, from 75.1% in 2002 to 72.9% in 2014. There was essentially no change in home ownership among those aged 65 and over.”
When it came to investment housing, the statistics were stark:
“… owners of investment housing are predominately in the top two income quintiles… In 2006, 70.3% of owners were in the top two quintiles and a further 14.5% were in the middle quintile… Over 50% of owners are in the top wealth quintile, and over three-quarters are in the top two quintiles. Thus, the evidence from the HILDA Survey is that owners of investment housing are relatively affluent from both an income and a wealth perspective.”
Increasing inequality is a cancer in the body of our society. Unless it is reduced, anger and dissatisfaction continues to grow. Like cancer, it spreads. Joseph Stiglitz has written about inequality for years. His book The Price of Inequality is a classic. He advances hard evidence that increasing inequality breeds anger and social disruption.

Much of the anger and aggression, much of the terrorist activity we see abroad, and sadly much of the antisocial behaviour we see in our own country, is a direct result of feelings of inequity – about income, wealth, housing, unemployment, opportunity, and social justice.

Here is what the HILDA study reported:
“There is a clear and unsurprising ordering of deprivation by labour force status, with the unemployed faring worst and the full-time employed faring best. Likewise, deprivation is strongly ordered by income quintile and is strongly connected with receipt of income support.

“Indigenous people have very high rates of deprivation...and…there is a very strong relationship between disability and deprivation, which is highest for individuals with a severe work restriction and lowest for individuals with no disability…”
Those who are unemployed, disabled, or feel deprived and dispossessed, who feel left behind, who feel they are swimming against the tide and getting nowhere or going backwards while others get the goodies and prosper, justifiably feel angry and seek to reverse their disadvantage.

Too often the system thwarts their best endeavours. Eventually they revolt as anger and frustration boils over. Then the ‘authorities’ come down on them heavily, thereby exacerbating their anguish. The ‘law and order’ advocates see more punishment as the solution, whereas what is really needed is more equity, greater fairness, better opportunities, more empathy, and consistent encouragement and uplifting. It is telling that Trump now styles himself as ‘the law and order’ presidential candidate!

How can we achieve equity and fairness in our Australian society, one so blessed with riches and opportunity?

Not through legislation that advantages those who have the most at the expense of those who have the least, not by bolstering the top end of town, not by keeping the poor and disadvantaged in their inferior position.

Only when the needs of all our citizens are acknowledged, only when income, wealth and housing are more evenly distributed, only when opportunity is available to all who can benefit, only when inequality is minimised, will the anger gradually ease, and its effects become less violent.

If we want to live in a tranquil tolerant society, free from the fear of unrest, social disruption, violence and terrorism, where we can feel secure and cared for, our governments will need to abandon ideologies that promote disparity and division, and adopt those that foster equality and a fair go for all. They will need to create an agenda that takes care of all our citizens; they will need to focus on values and show empathy for all. Lakoff puts it well in his conclusion: “Values come first, facts and policies follow in the service of values. They matter, but they always support values: empathy, devotion, love, pride in our country’s values…

With the world in the turmoil it is in, is this a vain hope? Maybe, but only we, the ordinary folk, can make a difference. The establishment is a formidable barrier, but it cannot oppress us indefinitely. It is up to us.

What do you think?
What do you think is making people so angry, here and abroad?

How can this anger be assuaged?

Let us know in comments below.

Someone’s gotta pay


According to the Coalition government, the ALP’s campaign over the privatisation of Medicare was somewhere between dishonest and outright lies. While it is true that the Coalition has frozen some Medicare rebates and eliminated others, attempted to introduce a $7 co-payment to see a doctor in the 2014 budget and set up a task force to examine the outsourcing of payments to Australians, the Coalition claims that these measures were nothing to do with the privatisation of the Medicare entity. Really, if the payment system was privatised, the Medicare rebate would still appear in your bank account at some point after the doctor’s visit. The election is over and Turnbull has promised not to outsource the payment services of the Medicare entity. We’ll see if his promises have more validity than Abbott’s did over time but at this stage let’s take him at his word.

There is a larger issue here — privatisation. Despite the rhetoric of governments around the world that they are trying to emulate business operations, the prime purpose of government is to provide the services that the society requires and can afford. The ultimate aim of business is, frankly, to make a buck (or pound or euro or rouble) for the owners of the business. The business could be the school-aged boy walking dogs after the homework is done or as large as Wesfarmers, Microsoft or General Motors — the profit margin is what any business is looking for. New walking shoes cost; just like employment of engineers, purchases of inputs to the production process and marketing people.

Ross Gittens observed recently that one of the reasons Turnbull’s government was considering the outsourcing of Medicare payments was:
… the department's computer system is old and clunky and needing to be replaced — a prospect that always seems to frighten governments, especially those trying to keep their budget deficit low by postponing needed asset replacement.
A large computer system takes a considerable amount of time and money to replace. It’s not like you can go to your local ‘big box’ retailer, pay the money, take it home and plug it in. As Gittens observes:
For instance, one of the ways federal and state governments seek to retain their AAA credit ratings is by using "public/private partnership" agreements to have the borrowing for motorways and other big projects done by some private enterprise. This way, the debt appears on its balance sheet rather than the government's.

Small problem: hiding the government's debt in this way ends up being far more costly to taxpayers. The oh-so-holy credit rating agencies turn a blind eye.
So while the government doesn’t have the development and operational costs for the system on its books, it is locked into paying for the development, operation, staffing and depreciation over a period of many years.

In some ways it is like people who are moving into their first home away from their family. Rental of a new refrigerator is sometimes seen as an alternative to the only other affordable option — purchase of a second hand unit where the paint isn’t as shiny, there may be a few dents and a shelf or two might be missing. On the face of it, a few dollars a week is more affordable than a couple of hundred for the second hand one, but sooner or later the rental payments will exceed the cost of both the second hand fridge or even a new one. And that’s where the rental company makes its profit (which for the rental company is the major objective of the entire exercise).

Assuming Gittens is correct, the concept seems to be that a private company develops a computer system to handle the millions of payments that Medicare makes every week. They then get the right to operate the system on behalf of the Australian government for a number of years. While the government doesn’t pay up front for the development of the system (which will take considerable time, resources and intellectual property), included in the monthly payment for the processing of the claims would be the value of the claims made, the operational costs of the system (lights, power, staff, maintenance and so on), a proportion of the development costs as well as a profit for the company that operates the system. Assuming the system is large and complex it would be difficult for the government to change providers at the end of the contract as the initial provider would own the systems, processes and intellectual property associated with the system. If there was a clause to hand the equipment and intellectual property to the government, we’re back at square one with an obsolete computer system that needs to be redeveloped at the end of the contracted period.

A-ha, you say, governments have a lot of clever people who will ensure that they don’t get sucked into a scheme this simple to transfer public money into private profit. Well, they might not. In 1999, Coalition Premier Jeff Kennett privatised the provision of public transport in Victoria. The claim was that the granting of licences to operate trains, trams and buses in Melbourne and across regional Victoria would make the government $28.05 million per year in 2013 and more thereafter. The reality is somewhat different. The Victorian government paid the public transport operators around $2 billion in 2013.

The public elects governments to provide services. A lot of governments around the world provide subsidies to public transport services. Those that support public transport would argue that the subsidy is worth it as there doesn’t need to be as much ground covered in asphalt, space allocated for parking, oil consumed, traffic management costs and so on. Others would suggest that it is a waste of money as there should be more ground covered in asphalt, or they don’t get a direct benefit from the subsidy and so on. Regardless, governments around the world either provide or support public transport in larger towns and cities for the perception of benefit it provides to the communities serviced.

Brisbane’s Airtrain is not subsidised by the Queensland government and from the Brisbane Airport to just south of Toombul Station runs on a track constructed and owned by a private company. The cost for a trip from Brisbane Central Station to the airport is $17.50 one way (peak period on a weekday) with a trip time of 24 minutes. For comparison, a 24-minute trip from Brisbane Central to suburban Geebung, which uses similar rolling stock and the same tracks from near Toombul to the CBD as the Airtrain is a subsidised $4.66 (peak hour with a ‘Gocard’. Airtrain makes a profit on the $17.50 it charges to take an adult to the airport. The operator has to pay for the train (operated by Queensland Rail under contract), maintenance, staff and all the other business expenses. While Queensland Rail may have a different formula for cost recovery on its own services rather than as a contractor to Airtrain, it’s hard to believe that the formula is so vastly different that the $4.66 charged to travel to the delightfully named Geebung is profitable to the operator.

Medicare is also a government service that subsidises Australian residents who need medical attention. While Australians theoretically pay a levy on top of their income tax for the service, not all Australian residents are taxpayers. As Turnbull admitted soon after the election, the ALP’s Medicare campaign was successful because Coalition governments over the years had provided evidence that they were not averse to disadvantaging those without private health insurance on top of the universal ‘free’ Medicare coverage.

Should the outsourcing of Medicare rebates go ahead (and Turnbull reneges on a promise) the Australian public will again be accepting the conversion of public money into private profits for a considerable period of time into the future. While it’s a cheap shot to suggest that this process is broadly supported by the Coalition and its business backers, the rest of us are paying considerably more than we should for the provision of a service the Australian public demands for years into the future.

Problems with outsourcing are not solely related to computer systems. Apart from the failure of outsourcing of Victorian public transport discussed above there are the considerable costs that the Tasmanian, Australian and New Zealand governments incurred to restore the Tasmanian and New Zealand rail freight networks after the sale and operation of the networks by private enterprise. ABC Learning is an example of what happens when a private service provider (childcare in this case), reliant on a business model involving considerable government subsidies and taking the place of the various government and non-profit service providers, fails. The current problems with a number of private providers permitted to replace the state-owned vocational education and training providers is fast becoming a case in point where the ‘make a buck’ ethos outweighed the requirement for appropriate costs and services to ensure the education of a considerable number of young Australians in trades, which will potentially lead to those caught up in the scam not being able to repay training debt (they can’t get a job if the training wasn’t delivered to the appropriate level) and for the rest of us, a shortage of qualified tradespeople for the next few decades leading to poor service and higher prices.

Governments argue that passing the risk and potential for profit to private enterprise is more efficient — as well as running government like a business. The problem here is that government is not a business, as a government should be providing services, not making a buck. For a start, one of the main reasons that business will contract out ‘non-essential’ services (transport and refund payments to name two) is that the cost of the service is an operational cost, written off the cost of producing their major products and therefore tax deductable. The cost of new assets (such as new computer systems) is deemed under taxation rules for business to be a capital expense and depreciated (the cost is recouped) over a number of years. There is a debt on the financial books of the business for the cost of the capital asset until it is depreciated in full, which is considered to be a poor leverage of available capital. The fundamental problem with the logic is that governments do not pay income tax — and therefore don’t need to maximise their operational expenses or leverage their capital.

It is also a fallacy that the private sector is always able to do the work cheaper over the long term (look at the Tasmanian and New Zealand rail systems where government intervention and rehabilitation was required after only a few years). Private enterprise has to do the work paying similar rates of pay and cost of overheads effectively for less to ensure they make a buck and will probably take shortcuts to achieve this apparently contradictory task.

Governments raise taxes and charges to facilitate the services they provide. In the case of state governments (which do not issue currency), they have to have a conversation around raising taxes to pay for the requirements of the society that they are supposed to be supporting. The federal government is in a slightly better position in that it can issue currency: however, this is not politically attractive at present.

If ‘big ticket’ items, such as the computer system owned by Department of Human Services is obsolete, one has to ask how many other major government assets across Australia are well beyond their use by date and there are no funds available to replace them?

In 1983, then Prime Minister Hawke called employers, unions, non-profit groups and state governments into a room and explained the need to restructure our economy. As a result, some taxes were increased, there was wage restraint and employees and governments co-operated to work together for the benefit of all. Hawke remained prime minister for nearly a decade.

If Turnbull is the smart politician he claims to be, maybe he should sit down and have the conversation with Australia about why there is a need to find a different way to fund the services required by our society (in part due to the extravagance of the Howard/Costello years) and ensure that Australia can continue to support these services into the future. Who knows business and employees sitting in the same room as government may come up with a better plan than cutting services and converting public funds to private profit. It worked for Hawke.

What do you think?
Would a Turnbull Economic Summit be as successful as the Hawke summit?

Would the Coalition’s conservatives and big business co-operate with a summit?

Let us know in comments below.

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On Sunday morning 10 July, before Shorten conceded defeat in the election, Arthur Sinodinos appeared on the ABC’s Insiders. He claimed the Coalition had a ‘mandate’ for its 2016 budget and its company tax cuts. Sinodinos’s view takes no account of the reality of the new parliament.

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We know the Liberals lost 13 seats, or in other words Labor gained 13 seats, with one seat, Herbert, still in the balance at the time of writing. (Labor actually won 14 but gave one back which I will come to later.) The Liberals claimed a win because they did at least manage to hang on to government, thanks to the Nationals, and Labor claimed success because of the number of seats …
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Mr Turnbull, where are your verbs?
Ad astra, 20 July 2016
It was one of The Political Sword’s regular contributors, Casablanca, who drew my attention to the absence of a verb in the Coalition’s prime slogan ‘Jobs and Growth’. She had been alerted by an article in The Guardian by Van Badham in May: Good slogan, Malcolm Turnbull, but growth in what kind of jobs?

The absence of verbs
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Mr Turnbull, where are your verbs?



It was one of The Political Sword’s regular contributors, Casablanca, who drew my attention to the absence of a verb in the Coalition’s prime slogan ‘Jobs and Growth’. She had been alerted by an article in The Guardian by Van Badham in May: Good slogan, Malcolm Turnbull, but growth in what kind of jobs?  

The absence of verbs is diagnostic of the malaise that afflicts PM Turnbull, Treasurer Morrison, Finance Minister Cormann and most of the Coalition ministry.

Casablanca reminds us that we learned that verbs are 'doing' words when we were kids in Primary School. Yet here we are in 2016 finding that it is the intention to do something, to take action, that is missing from the centerpiece of the Coalition’s election strategy, its much-vaunted ‘economic plan’ for 'Jobs and Growth'; indeed it is missing from many of the Turnbull government’s so-called ‘plans’.


While it repeated ad nauseam its three word ‘Jobs and Growth’ mantra, it avoided saying how it would achieve this ethereal aspiration. We were left to deduce that somehow giving a tax cut to business would magically stimulate investment, expand business activity, improve productivity, create jobs, and increase wages. It was left to Arthur Sinodinos to confidently assure us that workers would be the main beneficiaries of a tax break for business – good old trickle down all over again! It seems the electorate did not give that assurance much credence; nor did it believe the insistent declarations about Jobs and Growth that emanated from Turnbull, Morrison and Cormann. No less than Victorian Liberal powerbroker Michael Kroger castigated Turnbull and Morrison for selling the ‘Jobs and Growth’ story so poorly; in truth the slogan was never saleable as it had no substance, it had no verb.

Whatever else we thought of the calamitous Tony Abbott, we have to acknowledge that his three-word slogans at least had verbs: ‘Stop the Boats’, ‘Axe the Tax’, ‘Stop the Waste’ and ‘Repay the debt’. We could see his intentions, even if we disagreed with them. The intentions of Turnbull et al are vague, lacking in action words, sans verbs.

Now that he has his majority, we will see how he intends to action his promises.

Writing in The Sydney Morning Herald in an article titled: Federal election 2016: Malcolm Turnbull is a man with no plan, just a lot of flimflam, economics writer Ross Gittins said:
“Malcolm Turnbull went to the election offering a "national plan for jobs and growth" that was supposed to secure our future. Trouble is, it now looks unlikely he'll be able to implement the centrepiece of that plan, the phased reduction over 10 years of the rate of company tax, from 30 per cent to 25 per cent.

“Unsurprisingly, the proposed cut in company tax did not impress the voters, who think companies are paying too little tax, not too much. Labor opposed the cut, save for the immediate reduction to 27.5 per cent for genuinely small business.

“With the government now facing an even more hostile Senate, it's unlikely Turnbull will get any more than that.

“This would be no great loss in the quest for jobs and growth. The government's own modelling suggested the tax cut would do virtually nothing to create jobs, and the boost to growth in Australians' incomes would be tiny and come only after a decade or three.”
So ‘Jobs and Growth’ not only had no verb, it had no substance. Asked what ‘the plan’ was to achieve ‘Jobs and Growth’, the stock answer was: “The plan is the Budget”. The people saw through this answer, picked it as a fraud, an attempt to deceive. It nearly lost Turnbull the election.

What is this aversion to using verbs, to stating what action will be taken, to saying how promises will be kept?

Gittins continued:
“But what about the other parts of Turnbull's ‘five-point plan’? It's a muddle of things that will be done, things already done and…what the plan will achieve.”
Apart from the planned company tax cut, Gittins mentioned "an innovation and science program bringing Australian ideas to market" that’s already done with benefits likely to be modest; "a new defence industry plan that will secure an advanced defence manufacturing industry in Australia"…a highly protectionist and costly way of buying votes in South Australia, of debatable defence value; "export trade deals that will generate more than 19,000 export opportunities", which refers to preferential trade deals already made with Japan, Korea and China, which Gittins’ colleague Peter Martin demonstrated usually add more to our imports than our exports; and "a strong new economy with more than 200,000 jobs to be created in 2016-17", based on Treasury's budget forecasts for growth in employment, but few of those extra jobs would have been ‘created’ by anything the government did.

Gittins continued:
“Get it? The "plan for jobs and growth" is a (now-thwarted) plan to cut company tax, plus a lot of packaging. That is, Malcolm Turnbull has no plan.

“And, as we've been reminded by noises coming from one of the credit rating agencies, nor does he have a plan to get the government's budget back to surplus anytime soon.”
In his election announcement speech, Turnbull used the words 'plan' and 'tax' 21 times, 'jobs' 14 times, 'economic' 11 times and 'investment' 10 times. There was no mention of climate change. Verbs were sparse; the predominant one by far was ‘will’. Take a look at his May 8 ‘word cloud'.



Isn’t it laughable that as the long election campaign progressed, the focal point in his platform: ‘Jobs and Growth’ became the object of derision among journalists and commentators, some of whom mockingly personified it as: ‘Mr Jobson Grothe’.

Malcolm Turnbull turns out to be a man without verbs. He has nouns, plenty of adjectives: ‘nimble’, ‘agile’, ‘innovative’, and ‘exciting’, and an abundance of stock phrases that he, Morrison and Cormann spout whenever they get a chance, as portrayed in The tale of two Daleks.

How will he proceed with his bare minimum of seats in the House and a likely uncooperative, or even hostile Senate?

His spurious raison d'être for calling a double dissolution election: the desire to reinstate the Australian Building and Construction Commission, if necessary at a joint sitting of both Houses, seems doomed to failure. His exaggerated rhetoric about the imperative of cleansing the CFMEU and other construction unions of corruption and strong-arm behaviour has lost its zing. Nobody is listening any more. Even the Coalition-leaning Bob Katter has warned that he will not vote for what he terms ‘union-bashing’ legislation. With his slim majority in the House and the lack of a majority in the Senate, how can Turnbull muster the votes he needs? The one occasion where his intended action was spelt out, looks like being a non-event. He might have had a verb in mind, but an adjective – ‘impossible’ – will likely operate to thwart him.

How will he get his company tax cuts through the Senate? Even without the cross benches, it is likely that Labor and the Greens will not approve his full package. The best he can anticipate is a tax cut for genuinely small businesses, which Labor seems inclined to support. That will help small business, but will do nothing much for ‘Jobs and Growth’.

Except among Coalition members there is negligible support for giving the tax avoiders, the big banks and the multinationals still more tax relief. What is likely is substantial support for a Royal Commission into Banking, which will put intense pressure on Turnbull’s slender majority. The verb ‘oppose’ will be in his mind, but he might be forced to consider some nouns: compromise, conciliation, negotiation, concession, and cooperation. On top of this comes the revelation that four of our most prominent accounting firms are complicit in tax avoidance, advising big business and multinationals how to avoid paying their fair share of tax. Will there be a move to include them in the banking inquiry. What verb will Turnbull use to block that?

How will Turnbull handle the marriage equality plebiscite? If Labor or the Greens put forward legislation for a parliamentary vote, will he be able to muster his troops to oppose, or will he give way and compromise. He has to choose between a verb and a noun.

His distaste for verbs may leave him dangling indecisively, just as he has been for months now.

The behaviours that voters seek in those they elect are honesty, openness, transparency, lucid and appealing plans for advancing our nation and its citizens, decisiveness in implementation, and fidelity in keeping promises.

Voters want action, verbs that they understand, plans that have substance and 'doing' words, and nouns that indicate collaboration with other parties and cooperation that will bring benefits to us all, not just the top end of town.

Voters are tired of waffle, empty nouns, implausible adjectives, deceptive platitudes, a paucity of verbs, indecisiveness, dishonesty, self-interest and special pleading by rent-seekers. They want honest actions that lead to equitable outcomes for all of us.

Verbs are important Mr Turnbull. Verbs tell us that you intend to act - that you are going to do something. Where are your policy verbs Prime Minister?


What do you think?
What verbs would you like PM Turnbull to use?

Let us know in comments below.

The Liberals are dreaming


On Sunday morning 10 July, before Shorten conceded defeat in the election, Arthur Sinodinos appeared on the ABC’s Insiders. He claimed the Coalition had a ‘mandate’ for its 2016 budget and its company tax cuts. Sinodinos’s view takes no account of the reality of the new parliament.

Although the final count is not yet complete, it appears the LNP will win 76 or 77 seats in the House of Representatives and Labor 68 or 69 (the uncertainty at the time of writing being the seat of Herbert in Queensland). So Turnbull will form a majority government but also has to provide a Speaker. If the LNP final total is 76, which means 75 after a Speaker is elected, then the government will be reliant on one of Bob Katter, Cathie McGowan, Andrew Wilkie, Rebekha Sharkie or Adam Bandt to pass legislation that is opposed by Labor. It will also need an effective pairing agreement for those times when parliamentarians are absent for legitimate reasons.

The Senate will be more complicated. At this stage its result is less clear but we already know there will be at least six Greens (possibly three more at the final count), Pauline Hanson (and possibly another one or two One Nation members), Jacquie Lambie, Derryn Hinch, three of the Nick Xenophon Team and probably another minor party member. These represent a great diversity of views but the Coalition could require all of the non-Green Senators to pass legislation opposed by Labor and the Greens.

These independents and minor parties have their own agendas which they would no doubt wish to pursue in any negotiations in which their support was needed for specific legislation — or, in some cases, their position would not allow them to vote for some of the government’s current policies. For example, in the lower house:
  • on tax, Katter wants to remove the Fringe Benefits Tax for FIFO miners; NXT wants to limit tax cuts to those businesses earning up to $10 million and wants the temporary deficit levy to be extended; the Greens want a progressive tax rate on superannuation and want to end negative gearing.
  • on a federal ICAC, it is supported by the Greens, McGowan, Wilkie and NXT
  • on carbon emissions, McGowan wants a price on carbon (and did vote against repealing the ‘carbon tax’); NXT would like an emissions trading scheme; and Wilkie previously supported Gillard’s carbon pricing.
In the upper house, as well as the Greens and NXT, the views of Lambie, Hinch and One Nation come into play:
  • on tax, Lambie wants a financial transaction tax on high-speed share traders; One Nation wants to get rid of the Double Taxation Agreement which stops companies being taxed both in Australia and another country for the same product (that would breach many of Australia’s tax treaties and free trade deals); only Hinch is likely to support the full extent of the government’s corporate tax cuts.
  • on carbon pricing, Hinch, Lambie and One Nation all oppose an emissions trading scheme (or climate science itself).
  • on immigration, One Nation’s views are well known; Hinch supports multiculturalism and opposes the views of One Nation; Lambie wants immigrants to be screened on the basis of whether they support Sharia law.
They each want Royal Commissions into different subjects:
  • One Nation seeks an inquiry on Islam
  • Lambie and NXT want an inquiry on defence abuse and veterans’ welfare
  • NXT also supports the Labor proposal for an inquiry into banking
  • Hinch wants an inquiry into the Family Court and child protection agencies
Put that together and it is difficult to see how the government will get all its budget measures through the Senate as it is unlikely to agree to some of those positions.

Josh Frydenberg has come out and said that the government should not change its immigration policies nor support for multiculturalism which would seem to rule out horse-trading for One Nation’s vote but without those votes it becomes less likely it will get measures through the Senate.

The easiest way for the government to get legislation through the Senate will be to win Labor or Green support but that will also require compromise to meet the views of those parties.

I heard a radio report that there had been consideration of government policies in terms of which were supported by Labor or the Greens, including which of the so-called ‘zombie’ measures Labor had indicated during the election campaign that it would use in its own budget calculations, those which may be supported with amendments, and which were opposed — it was claimed that the ‘opposed’ column was quite small. (I have not, however, been able to find a written or on-line confirmation of that report.)

One measure that was mentioned was the reduction in R&D tax incentives. During the campaign Labor did announce in its savings measures that it would support the reductions. A proposal to reduce R&D tax incentives goes back to the Gillard government but was opposed by the then Abbott-led Opposition — the details have changed each time it has been resurrected. The Abbott government brought it forward again thinking, as Labor had introduced the idea, that it would gain Labor support but Labor opposed it because the Abbott government did not intend to use the savings in the way Labor had proposed. So even if the Turnbull government brings it into parliament again, it cannot take Labor support for granted unless a significant part of the savings are used for other purposes supported by Labor and that appears unlikely.

The government is also unlikely to get its company tax cuts through parliament in their current form — that over a period of ten years all companies are included. Labor only supports the cut for companies with a turnover of up to $2 million and NXT for companies with a turnover of up to $10 million. So it will be impossible for the government to pass the legislation required in the Senate without a significant compromise that limits the size of the companies to which the cut will apply. So the question for Turnbull will be whether to abandon the idea altogether (thus making significant savings in the budget) or to accept it in a more limited form.

Ironically, even the legislation for the reintroduction of the Australian Building and Construction Commission (ABCC) which was the formal trigger for the double dissolution is unlikely to pass the new parliament, even at a joint sitting. Even Bob Katter opposes it as he supports the CFMEU — despite his ‘redneck’ reputation, Katter is in many ways more like old conservative Labor.

The new Turnbull government’s problems don’t end with the new parliament. It has internal problems that will also affect its legislative agenda.

For a start, the coalition agreement with the Nationals will be renegotiated and Barnaby Joyce, as Nationals’ leader, has already indicated that he will be seeking greater power as the Nationals have improved their position while the Liberals lost ground. Such ‘power’ may require the inclusion of more National policies but whether or not we ever find that out is unclear. Joyce maintains that the agreement, even though set out in writing, must remain confidential. Labor is already mounting a campaign that it should be public and transparent because voters have a right to know what deals are being done to form their government.

Turnbull and Morrison may also face opposition to the government’s superannuation policy. The government’s own conservative members, such as Peter Dutton and Eric Abetz, have already blamed the policy for the loss of votes from the Liberal’s ‘base’. Sinodinos in his Insiders’ interview refuted that. It will no doubt come up for discussion in the party room and we will have to await the outcome. Labor will certainly oppose it in its current form although Labor’s spokesperson on superannuation, Jim Chalmers, has suggested an independent inquiry to determine whether or not it is retrospective — then Labor may support changes that are ‘workable and fair’ and not retrospective.

Turnbull may also lose some power within his own cabinet as there are increasing demands for more conservative members to be included on the front bench. In the election Turnbull appears to have lost at least three ministers and junior ministers who supported his ascension last September. What influence that will have on future government policy also remains to be seen but it is likely to be in directions that cannot be supported by Labor or the Greens.

Members of the government, including Turnbull, have conceded that they did themselves create the fertile ground for Labor’s so-called ‘Mediscare’ campaign and that they need to regain the public’s trust on health issues prior to the next election. What they will do is an unknown. Morrison has already suggested that if they were to ‘unfreeze’ the Medicare scheduled fees, then savings would need to be found elsewhere. I think they will have trouble selling that to the parliament partly because Labor takes the view that rather than just making savings, revenue needs to be raised.

So despite Sinodinos’s optimism that the government has a ‘mandate’ for its budget and policies, there appears very little chance of its key policies passing the parliament unchanged. Labor is unlikely to support even those measures it agreed with during the election if the government does not use some of the savings for Labor-supported social measures.

Many of the cross benchers have their own agenda which will also force changes in the government’s policies.

Its own conservative wing appears to have increased its influence and will no doubt use that influence in policy deliberations.

And the Nationals have also improved their relative position and will demand more of their own policies.

If the Liberals think they have a ‘mandate’ and can really implement their budget, tax and economic policies in their current form, then they are dreaming!

What do you think?
If the Liberals are saying they have a mandate, are they just creating a new lie?

How long can Turnbull survive when he has lost control of the parliament and his party?

Let us know in comments below.


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