The mythical $80,000


Some reading this would be able to remember the days when the urban dream was the quarter acre block in a ‘nice’ suburb, with a Holden, Falcon or, if you were a real radical, a Valiant parked in the driveway. If you’re younger, you’ve probably seen the concept on any one of a number of Australian history television shows over the years.

The reality is that for a lot of Australians, the dream was actuality. A lot of the now ‘middle ring’ suburbs around our larger cities were constructed during a post war housing boom and people didn’t have to be in receipt of a large income to support the lifestyle depicted in what are now grainy black and white images that pop up occasionally, sometimes accompanied by images of ‘that nice Mr Menzies’ giving a fatherly address to the nation from behind an imposing desk probably in Canberra.

In 2016, we substitute the government formed by Tony Abbott — until he was unceremoniously booted by his own colleagues — and Malcolm Turnbull for that of Bob Menzies and if either of them tried to do a fatherly address from behind a desk, the laughter and ridicule would be audible from the moon.

Turnbull really isn’t travelling that well. For a number of years, he has been seen as the moderate face of the Liberal Party in Canberra. In fact, Abbott originally became Opposition Leader after he rolled Turnbull, who was (amongst other things) going to allow Rudd to legislate a carbon pollution reduction strategy.

In September 2015, Turnbull returned the favour as Abbott was seen as being electoral poison. In the words of pollsters, ‘if an election was to be held’ towards the end of 2015 the ALP would have won convincingly. Turnbull became leader and the polls reverted to the Coalition government being streets ahead of the ALP. It didn’t last. At the time of writing, Roy Morgan has the ALP ahead at 51% to 49%.

Traditionally, if a political party isn’t travelling that well, it uses an element of surprise in calling an election and the timeframe for the election is the shortest period possible. The belief is that if the party machine is ready, it can be framing the election debate while the other side is still scrambling to nominate candidates, get the policies together and the advertising booked. Turnbull’s government (with the stratospheric popularity ratings in October last year) is falling to the ground fast. So Turnbull follows Gillard’s strategy of advising when the election is going to be months ahead of the actual timing and chooses to run a long campaign. Good luck with that — it’s worked well in the past!

Shorten and the ALP have also chosen an interesting strategy coming into this election by releasing policy for scrutiny and attempting to steer the political debate away from the 30 second sound bite. The polling numbers would suggest they have been reasonably successful and in a lot of cases the Coalition government has had to play catch up by either attempting to divert the discussion or releasing a ‘me too’ policy to counter the ALP’s demonstrated leadership in the particular area.

Turnbull’s centrepiece is the ‘jobs and growth’ budget. He is claiming that the 2016 budget frames what his government will do for the next 10 years. So let’s look at some of the initiatives included in the Turnbull/Morrison budget.

If we go back to February, Noel Whittaker (an author of personal finance publications) wrote an article for Fairfax discussing ‘Why bracket creep is no big deal’. Whittaker points out that ‘back in the day’, there was a serious issue with the income levels that triggered higher income tax payments; namely the levels were comparatively much lower and closer together and the tax rates were higher. Way back when (all of 15 years ago), the 43% tax rate cut in at $38,000 and the 47% rate cut in at $50,000. If you are fortunate enough in 2016 to earn $80,001 per annum, you have to get to $180,000 per annum to hit the top rate — and if you earn $180,001 or above you are paying the top rate — so how much extra you earn really doesn’t matter. So what would Whittaker know? His name is still used by a personal investment consultancy firm after selling his interest to Bankwest in 2007 and he has sold a considerable number of books on creating personal wealth.

Remember the Coalition discussions over the past few months putting various taxation options on the table and then withdrawing them soon after when some special interest group complained. At the end of the day, all Morrison really did was fiddle with the levels where income tax rate changes applied. The way the income tax system is structured taxpayers only pay a higher rate of tax on the value over the threshold rather than the perceived higher amount on all their income. For example, if you earn $84,000, you are paying the higher (37%) rate of tax on $4000, not the whole lot.

The real issue here is that Turnbull and Morrison are claiming that changing the effective taxation rates of those that earn over $80,000 affects those on average incomes. Well they are wrong. Peter Martin, writing for Fairfax, claims:
The average wage is $60,000. Most Australians don't get close to $80,000 and only around one quarter of them earn more than it. Put another way, the overwhelming majority of Australians, including those on average wages, won't be getting his reported tax cuts.

There's a logic to cutting tax for the highest-earning 25 per cent of Australians and not for the other 75 per cent. It's that $80,000 is where the second highest tax rate comes in.
When The Political Sword discussed negative gearing a month or so ago, the number of $80,000 as the claimed average income popped up again. Mathematically, an average is the ‘central’ value for a set of numbers. Martin points out that only a quarter of wage/salary earners receive over $80,000 per annum so if the full time employee average wage is $80,000 as Morrison suggests, there are some people earning considerably in excess of the chosen value — simply because three quarters of the population live on an income below the average.

Despite the framing, those who earn enough to be taxed at the highest and second highest tax rates are not ‘average’: they earn considerably more than the rest of us. The change to the tax thresholds is purely cosmetic as it really only affects the tax rates on a few thousand dollars around the new threshold points.

The Coalition has also taken the opportunity in the 2016 budget to restore some funding to the Australian Securities and Investments Commission (ASIC) that was ripped from it in the Coalition’s ‘famed’ 2014 budget. In 2014, $120 million was to be cut from the funding over the next five years under the justification of ‘repairing the budget’. Questioners at the time were advised that the government was of the impression that the banks could ‘self-regulate’. Either the restoration of funding demonstrates the government no longer believes the finance industry can regulate itself, or it is window dressing.

While the ALP is promising a Royal Commission into the banking and finance industry if it gains power, the government claims that ASIC already has the powers to investigate and prosecute to a greater level than any royal commission. While this is probably correct, the ability of ASIC to investigate and prosecute is largely determined by funding. As the Coalition government has made perfectly clear up until now, they are of the opinion that the banks can self-regulate and ASIC can exist on a significant funding reduction.

Turnbull was recently interviewed by the ABC’s Jon Faine on Melbourne Local Radio. Faine was attempting to discuss the real issue of young people trying to get sufficient funds to pay rent while saving for a deposit to enter the housing market — the point being the housing market is distorted by the number of investors taking advantage of the current negative gearing/capital gains taxation rules. Faine was using his own kids as an example.
“Well, are your kids locked out of the housing market, Jon?” the Prime Minister responded.
“Yes,” Mr Faine said.
“Well, you should shell out for them. You should support them, a wealthy man like you,” Mr Turnbull said.
While it was initially seen as a joke, the ALP argued that Turnbull was out of touch and the Coalition accused the ALP of a lack of aspiration for ‘hardworking Australians’, the reality is that Turnbull’s comment seems to suggest that he sees nothing wrong with people whose parents can afford to ‘contribute’ to a house for their kids doing so. It begs the question of how those kids whose parents can’t contribute achieve the same aim in what is supposed to be an egalitarian society. Disregarding the worth of the parents and the talk of aspiration, this is creating a class system within our society.

So we start the election campaign with the Turnbull/Morrison ‘jobs and growth’ budget which; in their words; promises to power Australia out of the mining economy into one that produces services the world wants. In reality, it helps those who could probably afford to give a bit to make our society as equitable as it seemed to be in the 1950’s, while those that have no chance of earning the average wage (regardless of the value being $60,000 or $80,000) get diddly squat. Greg Jericho, writing for The Guardian” discusses the issues around ‘average’ here using a wonderful interactive map that shows the percentage of people in each federal electorate that actually earn in excess of Morrison’s mythical $80,000 average. Probably not surprisingly, the value is almost always below 50%.

Helping the better off, reducing regulation in the finance industry and a host of other measures we don’t have room to go into here, such as changing the definition of a small business for taxation purposes, reducing funding to education, and freezing the rebate for a doctor’s visit, certainly isn’t helping our society become equal, let alone one where equality is the overarching principal. In fact, it all has a familiar ring to it. Some would call it the rich looking after themselves, others call it Reaganomics and some would suggest that in reality, it is the discredited ‘trickle-down effect’ writ large.

The Saturday Paper on 7 May 2016 reported a sponsored visit to Australia during 2015 by Arthur Laffer, the ‘genius’ who gave the world Reaganomics (the deregulation of large financial institutions under the Reagan Administration almost single-handedly caused the Global Financial Crisis of 2007). While in Australia, Laffer addressed the Australian Chamber of Commerce, IPA and Sydney Institute as well as ‘doing the rounds of government’. A cynic could suggest there is a connection.

What do you think?
Why the government’s obsession with the number 80,000?

How out of touch IS Malcolm Turnbull?

Let us know in comments below.

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Trickle down thinking breeds inequality



In a piece published on 13 April, I predicted that inequality would be a hot button issue in the upcoming election. Now that we have had both Scott Morrison’s budget speech and Bill Shorten’s speech in reply, we can see how this issue will play out in the election. Although the word ‘inequality’ has not assumed the repetitive status of the ‘jobs and growth’ mantra, it is subtly pervading the political discourse.

Every time the term ‘fairness’ is used, notions of equality are being canvassed. In his reply speech, Shorten made a point of emphasising equality for women: “championing the march of women to equality, closing the gender pay gap and properly funding childcare”. He spoke of fairness and integrity in superannuation, and asserted that “Australia should never accept the false choice between growth and fairness - each is essential to each other.”

By now most readers of political blogs will be familiar with the term: ‘trickle down economics’, but for those who are not, let me give a short history of this concept. It is not a formal economic theory so much as a catchphrase that captures a concept that permeates the thinking of many politicians, namely that benefits given to those at the top will trickle down to those at the bottom.

The concept goes back a long way. Economist John Kenneth Galbraith noted that ‘trickle-down economics’ had been tried in the United States in the 1890s under the name ‘horse and sparrow theory’: “If you feed the horse enough oats, some will pass through to the road for the sparrows.” Reaganomics was an example, and likewise Margaret Thatcher’s approach to economics.

In his book: Zombie Economics: How dead ideas still walk among us (Princeton University Press, 2010), John Quiggin, Australian Laureate Fellow in Economics at the University of Queensland, described several discredited economic theories that refuse to die, living on as zombies that politicians still use to suit their political purposes. Among the zombies he listed was ‘trickle-down economics’. Although discredited, Quiggin warned that as a zombie that will not die, the concept would still be used: “As long as there have been rich and poor people, or powerful and powerless people, there have been advocates to explain that it’s better for everyone if things stay that way.” This was elaborated upon in an April 2011 piece on The Political Sword: Joe Hockey should read John Quiggin’s Zombie Economics.

While great economists such as Adam Smith, John Stuart Mills and John Maynard Keynes have supported income re-distribution through progressive taxation, and most economists still do today, there are still some who argue that we should let the rich get richer and wait for the benefits to trickle down to the poor. One could be forgiven for thinking that is what Joe Hockey, Scott Morrison, Malcolm Turnbull, and today’s Coalition members believe, as they insist on giving tax relief to the wealthy, but not to the less well off. This trend was starkly portrayed in the 2014 budget, and continues in 2016.

Quiggin gives example after example to demonstrate that the trickle down hypothesis is false, and caps this with a telling graph of household income distribution in the US from 1965 to 2005 that shows that those on the 95th percentile for income steadily improved their position by over fifty percent, while those on the 20th percentile and below were static.

He pointed out that the biggest challenge of the failure of the ‘trickle-down hypothesis’ is to understand why and how inequality increased so much under market liberalism, and how it can be reversed. To Quiggin, restoring progressivity to the tax system is seen as an obvious move.

For the academically inclined, several varieties of inequality are recognized: Wikipedia says:
”Economic inequality is the difference found in various measures of economic well being among individuals in a group, among groups in a population, or among countries. Economic inequality is sometimes called income inequality, wealth inequality, or the wealth gap. Economists generally focus on economic disparity in three metrics: wealth, income, and consumption. The issue of economic inequality is relevant to notions of equity, equality of outcome, and equality of opportunity…There are various numerical indices for measuring economic inequality. A widely used index is the Gini coefficient, but there are also many other methods.

“Some studies show that economic inequality is a social problem; too much inequality can be destructive because it might hinder long-term growth. Others argue that too much income equality is also destructive since it decreases the incentive for productivity and the desire to take-on risks and create wealth”.
The latter is what conservatives believe.

A more familiar way of talking about inequality is to talk about ‘fairness’, a concept every Australian understands. The ‘fair go’ is valued by most of us. Who would argue against the idea that everyone should have a ‘fair go’?

Joseph Stiglitz is another who has been writing for years about the damaging effect of inequality. His book: The Price of Inequality is a classic. More recently, Thomas Piketty entered the arena with his Capital in the Twenty-First Century and hypothesized about the genesis of inequality. He asserted that the main driver of inequality, namely the tendency of returns on capital to exceed the rate of economic growth, today threatens to generate extreme inequalities that stir discontent and undermine democratic values. He reminded us that political action has curbed dangerous inequalities in the past and could do so again. But is the Coalition listening?

No matter who writes about inequality, the conclusion is the same: the gap between those at the top and those languishing at the bottom of the pile is widening in many countries, ours among them.

If you need any more evidence to convince you of the fallacy of the ‘trickle down’ concept, read: The embarrassing truth about trickle-down on the New Economics website, NEF, the outlet of a UK think tank promoting social, economic and environmental justice.

The 2014 article by Faiza Shaheen concludes:
”The trickle-down approach has been bad economics. Not only has it failed to deliver on its own terms but also it has actively damaged the health of our economy, society and political system. It has supported growing inequality which, rather than boosting economic performance, has deflated it. The UK grew more when we were a more equal country during the post-war, pre-Thatcher era than after. Its damaging social effects are also mounting. High levels of inequality are increasingly seen as harmful to individual well-being and health, social cohesion and social mobility.

“Obama’s attack on trickle-down economics, echoed by Labour Leader Ed Miliband offered hope that our leaders are finally engaging in the possibility of dethroning this damaging philosophy, but the recent response to a potential increase in income tax shows that the theory still festers. We must continue to counter an approach that has created a tide of inequality that lifts up the yachts while leaving the rest of us paddling harder. By pulling the rug out from under trickle-down economics other damaging myths can be exposed, such as the argument for high executive pay.”
Read too Elizabeth Warren demolishes the myth of “trickle-down”. “That is going to destroy our country, unless we take our country back” in Salon. She is an academic and Democrat senator.

For Liberal skeptics here is the coup de grace in United Fair Economics in an article Trickle-down economics: Four reasons why it just doesn’t work, written in 2003 during the Bush era:
  • Cutting the top tax rate does not lead to economic growth
  • Cutting the top tax rate does not lead to income growth
  • Cutting the top tax rate does not lead to wage growth
  • Cutting the top tax rate does not lead to job creation.
The article supports these assertions with graphic evidence, and concludes:
”Overall, data from the past 50 years strongly refutes any arguments that cutting taxes for the richest Americans will improve the economic standing of the lower and middle classes or the nation as a whole. To be sure, the economic indicators examined in this report are dependent on a variety of factors, not just tax policy.

“However, what this study does show is that any attempt to stimulate economic growth by cutting taxes for the rich will do nothing – it hasn't worked over the past 50 years, so why would it work in the future? To put it simply and bluntly, Bush's top-bracket tax cut is an ineffective attempt at stimulus that will not cause any growth - unless, of course, if you're talking about the size of the deficit.
If we now look at the Coalition’s 2016 budget, much of it is based on the trickle down concept that tax breaks or other economic benefits provided to businesses and upper income levels will inevitably benefit poorer members of society by improving the economy as a whole.

That is what is behind the monotonously repeated ‘jobs and growth’ mantra. Superficially appealing, the Coalition posits that to increase jobs those who employ people must be given tax breaks and other incentives. This is most flagrantly demonstrated by the Coalition’s plan, beginning on 1 July, to reduce company tax progressively from 28.5% now to 25% over the next decade, not just for small and medium businesses with a turnover of less than $2 million, but to extend eligibility to businesses with turnovers of up to $10m, and the lower rate will be gradually phased in for larger businesses until it covers all companies in 2023.

The Liberal manifesto Lowering company tax, boldly asserts:…if you are against cutting company tax, you are against economic growth. If you are against economic growth, then you are against jobs.” In other words, the benefits of cutting company tax will trickle down to the workers at the bottom. Arthur Sinodinos was the first confidently to expound this a few weeks back.

PM Turnbull and Treasurer Morrison were reluctant to admit the cost to revenue of this measure, but Treasurer Secretary John Fraser let the cat out of the bag during a Senate Estimates hearing with the figure of $48.2 billion over ten years. Clearly, the Coalition has such fervent belief in the stimulatory effects to ‘jobs and growth’ of giving a large tax break to businesses, even to multinationals, that it is prepared to forego over $48 billion in revenue!

Another manifestation of preferentially feeding the horses is the Coalition’s push for lower penalty rates on Sundays. Their belief is that if this were to occur, more businesses would open on Sundays, and employ more people. Trickle down again. That those depending on Sunday rates would suffer seems immaterial to them.

There are other instances in the 2016 budget of giving to the rich but not to the poor, such as a tax cut to those earning over $80,000 by raising the marginal tax threshold for this second top bracket from $80,000 to $87,000. But there is no tax break for those earning below this magic figure; indeed they will suffer cuts in entitlements. The horses will get the oats; the sparrows will need to fossick in the manure to get their share.

Progressives: Labor and the Greens, know the trickle down concept is a charade. They believe that to stimulate an economy that is slowing, and thereby drive jobs and growth, stimulatory measures are needed. Time and again, better wages have been shown to increase economic activity because people have more money in their pockets to buy the things other people make or do. Using government funds to support infrastructure development also has been shown to stimulate economic activity and increase jobs. This Keynesian approach has a long track record of success when applied where private economic activity is lagging, but the Coalition doesn’t want to know.

I need go on no further.

Almost every slogan, almost every utterance of the Coalition is premised on an entrenched, unshakeable belief in trickle down economics, despite this concept having been debunked for a century. Zombie-like though it is, the Coalition embraces it with fervour. Why? Because it suits their political purpose: to shore up the top end of town, to please those who fund and support it.

Don’t expect them to ever believe that trickle down thinking breeds inequality, because with all PM Turnbull’s talk of ‘fairness’, ‘equality’ is unimportant to them. They believe that inequality is simply part of the natural order of things, and should remain that way.


What do you think?
We are looking for your comments.

What do you think of the Turnbull/Morrison budget?

Do you see how trickle down thinking has permeated the budget, and how it will lead to more inequality?

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My innovation is bigger than your innovation


Malcolm Turnbull launched his ‘National Innovation and Science Agenda’ on 7 December last, three days after Labor had launched its ‘start ups’ policy, ‘Getting Australia Started’.

The launch dates for the policies mean little as obviously before such a launch there has been considerable background work and consultation — by both parties. So, if they have both done the work beforehand, do they come to the same conclusions and have they found and addressed the real issues facing us in our future ‘innovation economy’? It should be noted, however, that Bill Shorten had raised innovation, STEM, and ‘a nation of ideas’, and outlined some aspects of his innovation policy, in his Budget Reply in 2015, months before Turnbull became prime minister: so there is an argument that Turnbull was playing catch-up and that even the catch-phrase for his policy, ‘The Ideas Boom’, was born in Shorten’s speech.

It wasn’t, however, only the political parties doing the work or engaging in the debate. At Parliament House on 27 November the Australian Council of Learned Academies (ACOLA), which comprises the Australian Academy of the Humanities, the Australian Academy of Science, the Academy of the Social Sciences in Australia, and the Australian Academy of Technological Sciences and Engineering, launched its report, ‘Translating research for economic and social benefit: country comparisons’. Also at Parliament House, six days later — a day before Labor’s policy launch — the Senate Economics References Committee released a report, ‘Australia’s Innovation System.’ So in the space of ten days there was a lot happening about innovation.

The Senate Committee recommended:
  • adopting a target to lift investment in R&D to 3% of GDP
  • establishment of an independent body to administer and coordinate innovation policies and programs
  • measures to enhance collaboration between universities and the private sector
  • the commonwealth and state governments collaborate to support the role of local and regional innovation ecosystems
  • education be a central focus, recognising ‘the central importance of the interplay between the STEM subjects and the humanities, social sciences and creative industries’
Labor has committed to devoting 3% of GDP to R&D by the end of the next decade but I have not been able to find a similar commitment from the Liberals. R&D is central to innovation and adopting the target can help bolster R&D in Australia, particularly given, as shown later, that we are currently overly reliant on public sector research.

The Liberals’ address the second, third and fourth recommendations. Its approach to the fifth is more limited than recommended.

For Labor’s response there is a need to look at both ‘Getting Australia started’ and ‘Powering Innovation’. When both are considered Labor is also addressing the second, third and fourth recommendations and has a greater emphasis on the fifth recommendation, particularly if its approach is read in conjunction with its education policy, the second sentence of which reads:
Improving education is the key to opportunity, to innovation and to the future economic and social prosperity of our nation. [emphasis added]
The differences in detail reflect the differing philosophies of the parties. The Liberal approach basically builds on existing business capabilities it sees in the economy and proposes measures to unlock and leverage those capabilities. Labor’s approach builds from the ground up. That is clearly shown in the approach to start-ups and STEM education.

As regards start-ups, the Liberals offer a 20% tax break for early stage investors and some tax cuts through the existing Small Business and Jobs Package. Otherwise its approach is legislative, to support business through reforms to employee share schemes, removing rules relating to depreciation of non-tangible assets (such as patents), reforming insolvency laws and relaxing the ‘same business test’ for tax losses.

Labor offers a $500 million Smart Investment Fund from which government will co-invest, with venture capital and other investors, up to 50% of start-up capital but otherwise its focus is educational — supporting a ‘start-up’ year of accelerated study or involvement with a university for those involved in start-ups and providing HELP loans for those completing university degrees to undertake an additional business-focused year.

For STEM, the Liberals support reforming the Australian Curriculum to provide more teaching time for science, maths and English and will ensure that primary teachers graduate with a specialisation, with particular support for STEM subjects. It will also support coding and computing in schools.

Labor proposes a National Coding in Schools centre where business and industry can connect with teachers. It will also provide scholarships for 25,000 teachers over five years to be trained in STEM, and for 100,000 graduates in STEM, also over five years, who will have their HECS debt written off on graduation.

In a piece in The Conversation, Anand Kulkarni and Travers McLeod suggest that a ‘beyond STEM’ approach should be taken that recognises:
… the interdependencies of scientific research and non-research forms of innovation such as design and organisational systems, together with the social sciences pivotal role in driving prosperity within innovation ecosystems.
So simply addressing STEM may not be enough, although it is apparent that we do need more people skilled in these areas. In April, Matt Barrie, a tech entrepreneur, pointed out that the number of young Australians involved in the tech industry had fallen dramatically and there had been a reduction of between 40% and 60% in those studying IT in the past decade, yet this at a time of a boom in technology.

The parties have a similar approach to overseas recruitment with both offering new entrepreneurial visas with options of fast tracking permanent residency.

Questions have been raised about the emphasis both parties place on start-ups. ‘Stilgherrian’ writing on ZDnet in September last year asked for:
… a conversation about innovation and the future that isn’t solely about the kind of high-risk fast-growth business models run by youthful technophiles that venture capitalists prefer.
Labor’s Kim Carr, speaking at an engineers’ forum on 20 November last said:
In Germany, the innovation system integrates all sectors of the economy.

That is in contrast to, say, the US, where there is great emphasis on ICT start-ups and the provision of venture capital, but where old industries are too often allowed to die out.

Germany, however, aims to renew them through a broad view of innovation.
As is often the case, it seems we are following the US model of start-ups and venture capital when there are other approaches to innovation which may better suit our economy. One can only hope that Kim Carr’s approach has more influence when Labor gains government.

The Liberals’ approach to collaboration seems to put the pressure on universities to play the more active role in joining with businesses. Its policy suggests that it will refocus a greater proportion of block grant research funding to universities to require collaboration with business. The ACOLA report, however, found that in a number of overseas countries the process is reversed with the incentive provided to businesses through specific or additional R&D tax incentives to promote collaboration. It suggests:
The argument for providing incentives to business to seek out translatable university research is that business will apply the disciplines of the market that it hopes to address. This commercial approach to research collaboration provides a ‘reality check’ which is considered important in separating out research outcomes with real commercial prospects …
It is an issue because, as the ACOLA report shows, in Australia only 4.1% of small and medium enterprises (SMEs) collaborate with researchers and only 3.5% of large firms: that compares, for example, with 16.8% of SMEs and 31.3% of large firms in the UK, and 13.9% and 43.2% respectively in Germany.

Eighty percent of Australia’s researchers are in the public sector (universities, CSIRO, etc). That is the highest proportion in the OECD. The next closest are Chile and the UK with 62%.

Australia encourages R&D by businesses primarily through the R&D tax incentive — what is termed an indirect approach. Other countries make greater use of direct support through grants, loans and procurement contracts to encourage business R&D, including loans and grants for SMEs.

In another recent article on TPS, I quoted Tim Mazzarol from the University of Western Australia who noted from a Business Council of Australia forum he attended:
… there was also a recognition that many large firms, particularly foreign owned multinationals, do very little fundamental R&D in Australia. The pipeline for STEM graduates into industry and the willingness of many large firms to serve a “Keystone” role in local business ecosystems is currently missing.
None of those issues, recognised by business itself, are directly addressed in the current innovation policies.

The Liberal government, despite now expressing hope for greater business-research collaboration has, since 2013, overseen significant cuts in public research funding and even cut $1 billion from the business R&D tax incentive. Innovation requires R&D and there is little point espousing one when cutting the other.

If both parties support spending on STEM teaching, they may need to assist industry to create pathways for STEM graduates into businesses — but that has not been addressed, although the parties may claim that their proposed regional innovation hubs will provide a focus and such a pipeline but it is not clear as yet whether that will be enough.

The last point in Mazzarol’s comment is also supported by ACOLA. It reports that overseas experience shows innovation hubs require at least one large firm at their centre.

But that takes us back to Mazzarol’s first point. Does Australia have a problem because many of our largest firms are actually overseas multi-nationals who, as Mazzarol reports, do not undertake significant R&D in Australia and so do not really have a great interest in supporting other Australian businesses? They may have no interest in acting as the focus of an innovation hub because their focus is to return profit to their home country (or a tax haven). Do we have enough large Australian companies to fulfil that role?

Of course, innovation also requires adequate infrastructure. For the digital age, and for start-ups making use of digital technology, one would have thought the NBN would have been a crucial component. The original NBN may have been but not the second rate system now being rolled out: in 2013 Australia’s average peak connection speed placed us 30th in world rankings but by the end of 2015 we had dropped to 60th; our broadband connectivity above 4Mbps ranked us only 45th in 2013 but in 2015 that had also dropped to 56th place.

If Australia is to take advantage of innovations in the digital age then, at some point, there will need to be an upgrading of the NBN and elimination of the copper components that slow the current system. Both the Liberals and Labor mention the NBN in their policies but, as yet, without any details for a future upgrading.

Innovation requires risk taking, not merely by the innovators, but by businesses when they consider adopting the new technology — that does not appear to have been considered in the current policies which focus on high-tech start-ups and fail to provide assistance for other businesses to adopt new technology, other than, perhaps, in the innovation hubs. But surely, as Kim Carr said, genuine innovation should spread across all sectors of the economy, including established industries, if we are to be successful.

Elizabeth Webster on The Conversation, suggests we could learn from the Australian primary industries:
Each major agricultural product group has an R&D corporation, jointly funded by farmers and government. It identifies common industry problems, appoints experts to research these problems, translates their findings into practical solutions and then delivers the message to the farmer. The individual farmer does not have to bear the full risk of the innovation — this is shared by peers with joint problems. By the time a proposed innovation reaches the farmer, much of the risk has been removed.
She does not suggest that this model can automatically apply to other industries but it provides elements that should be considered: ‘The R&D corporation model is constituted under acts of parliament. This means their members can think long term with the (near) certainty that their plans will not be scuppered by a change of government or minister’.

Another writer, Gavin Moodie, however, suggests that we can no longer simply follow the linear ‘supply chain’ model of research leading to development and then application in production. He supports the development of innovation hubs with many businesses gathered together but, like ACOLA, he recognises that ‘almost every successful innovation hub involves the participation of big enterprises as hub champions’.

Elements of both approaches seem warranted but so far we have only a commitment to innovation hubs.

One factor that is raised by a number of writers on this topic is the need for patience and consistency (such as provided by the agricultural R&D corporations). Moodie writes that successful innovation can require public and private sector collaboration over periods of 15 years or more.

There are questions whether the focus by both parties on start-ups and STEM teaching will achieve the intended outcomes without other supporting measures and, against the other issues I have raised, the policies of both parties fall short to differing degrees. Plus, when one takes account of the current government’s funding cuts to scientific research and education and the downgrading of the NBN, we have already set the ‘innovation economy’ back a few steps and need to make up that distance again. Labor at least gives greater recognition to those broader issues.

Finally, there is one key issue raised by Kulkarni and McLeod in their article:
… to be credible, innovation policymaking must be located within a long term vision of the structure of the Australian economy we should aspire to.
Do we yet have a long term plan for the structure of the Australian economy? — I think not. And when governments can undo the changes introduced by previous governments every three years or so, we are a long way from achieving that ultimate vision. Without it, even the best intentions regarding innovation may not achieve their full potential. Or do we just sit back and hope ‘the market’ will get it right.

What do you think?
Will the policies put forward by the parties really achieve an ‘innovation economy’?

Or are the policies only going part of the way and leaving the rest to ‘the market’?


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Lords and Ladies: the world changes
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My Lords and my Ladies, I beseech your indulgence, here before your magnificent court, to present for your amusement and moral edification the fourth iteration of the tale of Tiny Napoleon O’penmouth and his rival Mal C’od-turn-a-bull. And a new rival emerges but you must await my tale for that revelation — forgive my teasing jest but I am here to tease, entertain and to charm.
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36 Faceless men


Let’s face it, the Australian political system is a winner take all arrangement. Either the ALP or the Coalition will win any given state or federal election and then proceed to implement some version of the policy that was voted on by the members of the political party at various conventions.

The winning party will claim that it has a mandate to pursue the policies it published prior to the election. But in the majority of cases the devil is in the detail and usually contained on some obscure page of a policy document or hidden beneath a number of mouse clicks on the party website.

Both parties will decry the ‘meddling’ of minor parties yet rely on their support when it suits them, as the Coalition recently showed us by relying on the Greens’ vote to legislate changes to the method of electing Senators while railing against the Greens over not supporting the ABCC legislation. The amazing thing is that either of the two major political parties can decry and accept the support of a minor party at the same time while nearly sounding logical and rational.

The standard of political debate in Australia is demonstrated by the actions of Tony Abbott over the past six years. First, as Opposition Leader, he opposed most of the government’s agenda for the sake of column inches and media sound bites. This and other blog sites have discussed over the years how Abbott at various times (let’s be nice here) argued passionately for both sides of a particular issue.

Then once Abbott got to form a government there was a single minded determination to implement his version of the platform of the Liberal Party (with considerable influence of ‘lobby’ groups such as the IPA and ACL). The 2014 federal budget is a good example. It should be noted that sections of the 2014 budget have never been voted on and are now being taken down the proverbial dark alley and shot by Abbott’s successor. Abbott’s end came about early last year when leadership positions were spilled, no one ran against Abbott and he still didn’t have the confidence of over 30 of his ‘colleagues’ in the party room. Turnbull finally finished him off in September.

The level of political debate in Australia is at a similar level. We have governments who cannot make rational policy changes because at some point in the past, the leader of the party or the minister responsible at the time opposed the measure. In the past, some allowance was given as quotes from five years ago were forgotten rather than being hidden is some corner of the internet waiting for a search engine to rediscover the item at some inopportune time.

Ironically Turnbull, as the one-time owner of an Internet service provider, is now finding out to his political cost the ability of people to turn up past positions on various issues such as the republic, same sex marriage, refugee policy and so on. Accordingly, Turnbull’s polling is tanking and despite an election being only weeks away, Kevin Andrews, another Liberal Party ‘conservative warrior’, is apparently not talking about mounting a leadership challenge.

Really, parliament is usually not being used as a place where legislation is debated and passed based on the perceived good for the country, rather it is the two major parties’ regular conferences and the wonderfully named ‘think tanks’ that have usurped the role. Then, when the relative party is finally elected to power (for it will eventually happen), the party policy will be rolled out as legislation and there is very little that the ‘average Australian’ can do about it, other that hope the worst excesses are rejected by the ‘feral’ Senate or someone looks at the polling numbers and joins the dots correctly.

Not a great way to run a country is it?

You know, it doesn’t have to be like this. The 2010 to 2013 federal government was, if you believed the commentators at the time, inevitably going to fail as Prime Minister Gillard did not have an absolute majority of the floor of parliament. Gillard relied on the votes of two independents in the event there was a vote on confidence or supply (money). Despite this, Gillard’s government managed to pass legislation on carbon pricing (since repealed but demonstrably more important now than even a few years ago), school funding, and funding for those with a disability. In Queensland, the Palaszczuk ALP government relies on the support of independents for power and despite some rocky patches seems to be more popular now than they were at the last state election. Absolute majorities are clearly not necessary for effective government in Australia.

In a number of ‘western democratic’ countries around the world, the election system is ‘rigged’ (for want of a better word) to actively discourage absolute majorities. To find an example, we only have to sit in a sardine can hurling through the sky at 30,000 feet for about three hours and hop ‘across the ditch’ to New Zealand. Since 1996, the Kiwis have had a voting system known as mixed member proportional (MMP) which replaced a first part the post system that was acknowledged as entrenching the influence of the two major parties — Nationals and Labour. Since 1996, neither of the two major parties have gained an absolute majority of seats in parliament, although John Keys and the National Party fell one seat short at the last election. The New Zealanders have two votes, one for an individual member and another for a party list. The New Zealand government has an explanation here which includes a cute video involving cherries, pears and bananas! While it won’t make you an expert, it clearly explains the concept.

The New Zealand system recognises that political parties have a level of support within the community, so if a party gains 10% support across the country, it is entitled to 10% of the seats in parliament. If the 10% of seats ‘earned’ by the party are not taken by candidates that have been directly elected, the ‘extra’ MPs’ come from the party list. It should also be noted that the candidates that are directly elected only have to get the highest number of ‘first past the post’ votes – not 50% plus 1 as in the Australian system.

To put it into an Australian context, say the ALP received 35% of the vote across the country, the Coalition (in its various forms) 30%, the Greens 10% and others received 25% (three minor parties receiving 8% each, another gets the final 1%). The ALP would gain 35% of the seats in Canberra, the Coalition 30% and so on. As there is a requirement for a party to gain 5% of the vote, the remaining one percent of the seats would go to others rather than the last ‘others’ party unless the last others party won a direct seat. The ALP would win in our example but to form government it would have to have some form of agreement with both the Greens and one of the ‘others’ parties to form a government that could be sure to get legislation through the parliament. Otherwise, the Coalition, Greens and two of the ‘other’ parties could determine that the legislation was to be amended or defeated. It means a government has to negotiate a compromise on occasions and while, potentially, it could make the Parliament less certain, it does eliminate the ‘winner take all’ mentality evident by both major parties in the Australian system, as well as ensuring the ideas of either of the two major parties (or the various lobby groups) that don’t have support outside the party don’t see the light of day.

It is probably worth noting here that provided the government is perceived by the country to be doing a good job, longevity is almost guaranteed. New Zealand has had four prime ministers since the introduction of MMP, rather than the potential six in six years Australia will have had by the end of 2016. Their current prime minister, John Keys, has been leader since 2008, Labour’s Helen Clark sat in the chair from December 1999 to November 2008. MMP is also used in Germany, Scotland and Wales.

If you want to sit in the flying sardine can a while longer, you can go to Iceland. Iceland uses a system of voting where voters in a particular electorate elect 10 or 11 people to their parliament (Althingi). They too have a system whereby people from a party list are elected in accordance with the proportion of the vote the political party receives across the country. Icelandic politics is not a regular talking point in Australia. It has recently been interesting due to the resignation of Prime Minister Gunnlaugsson after he walked out on a television interview while failing to explain satisfactorily his involvement with some companies mentioned in the Panama Papers. On April 13, Lateline’s Tony Jones interviewed one of the possible replacements for the Icelandic prime minister, Birgitta Jonsdottir, who leads the delightfully named Pirate Party. The Pirate Party currently holds three seats in the Althingi. Jonsdottir, who at one time lived in Australia, was also involved with WikiLeaks in a past life and when asked about the Panama Papers commented:
Well, we have only seen the tip of the iceberg. I think it is a very important leak and I really hope that more will come, because I have sort of been following the news about this.

And I think there is actually a question about why we haven't seen anything that is related to the corporate part of these leaks. And I'm hoping that will be coming soon. I know that it is coming in Iceland. So I think this is a very important leak in order to reframe our tax laws so that the tax haven option is out.

But I also want to stress, since I used to be a WikiLeaks volunteer and I'm talking to an Australian media and I have lived in Australia as well, that I feel a little bit surprised how little support Julian Assange has got from the Australian state.
Her Pirate Party is one of six parties holding seats in the Althingi. While they hold three seats, Icelandic polling currently suggests they would receive 43% of the vote ‘if an election was held tomorrow’. From the Interview:
We have been going up in the polls now for a full year, where we have been polling as gradually the biggest party in Iceland. And we've had more support than both the governmental parties put together for quite a while.

And I really don't think that we are going to get 43 per cent in next elections. And frankly, to be honest, I don't think it's healthy for any party to be so big, because it means that the will of the majority is going to be so overwhelming — and I'm a big lobbyist for that we have true democracy, where the will of the parliament is the dominant will, not the majority will. [emphasis added]

But if we get into a position to form a government — in Iceland we always have coalition governments — then we have been very clear about that. We have to implement a new constitution that was written in the wake of the crisis by and for the people of Iceland, in a beautiful process where the nation got to participate in creating this new social agreement on what sort of society we want reflected in the highest law: the constitution.

So that's one of the first things we will do and that will mean a short term. We also want to make sure that before elections it is absolutely clear what compromises the parties that are going to be working together will make if they get into governance.

And I'm the most excited about looking at, you know, who will be a great chairman in different committees in the parliament, rather than looking who will be great ministers. Because if you always look at the executive branch and the administrative body as the absolute power, then we will never change anything.
It is refreshing to see a politician who doesn’t want to grind others into the dust, is prepared to work with her opponents and look towards good government and the sharing of the power across a number of different political outlooks. This kind of thinking restores the power behind the government back to the parliament, rather than to Menzies’ ’36 faceless men’ concept which infects both sides of Australian politics.

Minority governments can and do work in Australia and in reality have to represent the electors better than say the Newman government in Queensland, the last term of the Howard Federal government or the Kennett Victorian government ever did. While the electors finally won the day, in all cases it took longer than it should have for a sense of representation of the community’s interests to be restored.

Power corrupts, and absolute power corrupts absolutely.

What do you think?
Are minority governments a desirable thing for Australia?

Should we be looking at a more representative system for electing our representatives which more closely resembles the electorate’s wishes?

Let us know in comments below.

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Lords and Ladies: the world changes
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My Lords and my Ladies, I beseech your indulgence, here before your magnificent court, to present for your amusement and moral edification the fourth iteration of the tale of Tiny Napoleon O’penmouth and his rival Mal C’od-turn-a-bull. And a new rival emerges but you must await my tale for that revelation — forgive my teasing jest but I am here to tease, entertain and to charm.
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Lords and Ladies: the world changes


The spruiker

My Lords and my Ladies, I beseech your indulgence, here before your magnificent court, as I present for your amusement and moral edification the fourth iteration of the tale of Tiny Napoleon O’penmouth and his rival Mal C’od-turn-a-bull. And a new rival emerges but you must await my tale for that revelation — forgive my teasing jest but I am here to tease, entertain and to charm.

I will, however, refresh your exalted ears and remind you of the rise of Mal C’od-turn-a-bull in my last tale, when the Lords and Ladies of Tiny Napoleon O’penmouth’s kingdom secretly plotted his downfall — he had vastly inflated his own importance which they could not abide. Mal C’od-turn-a-bull was their man, a man who understood their secret gold-making dealings behind the castle walls, as he had engaged in such dealings himself; a man who could calm rebellious peasants with his smile and mellifluous words; who could dupe the peasants into working longer and harder without them discerning a deception. Or so thought the Lords and Ladies of that glorious kingdom.

But, my, how the world changes!

The tale continues: the unedifying fall and improbable resurrection of Mal C’od-turn-a-bull

Mal C’od-turn-a-bull swept upon the kingdom with his smile. He beamed when he spoke to the peasants. He beamed when he spoke in the green great hall — once the bastion of Tiny Napoleon O’penmouth. He beamed when he dined discreetly in the great halls of the Lords and Ladies of the kingdom.

The peasants were beguiled by the smile but less so his endless words. Whereas Tiny Napoleon O’penmouth spoke in three words, Mal C’od-turn-a-bull spoke in three hundred. Peasants were soothed to sleep before he had finished or scurried back to their dank fields and cough-inducing forges rather than await the two hundredth, let alone the three hundredth word. Perhaps Tiny Napoleon O’penmouth’s three-word bombast was easier on the ear, simpler to grasp or ignore as fancy took — at least it was quickly over!

As forewarned at the end of my last tale, Tiny Napoleon O’penmouth and his coterie of goblins did not forsake their taste of power nor their lust to return to it. In gloomy nooks of the green great hall they chatter, they spit, they quietly, and sometimes less than quietly, mock Mal C’od-turn-a-bull, disparage his loquaciousness.

In truth, Mal C’od-turn-a-bull’s verbosity has withered in recent times. He is fortunate if he can stretch his thoughts to one hundred words and even such words as there are seem to bemuse the peasants, no longer pacifying or mollifying them.

‘What have you done?’ they jeer in unison.

Mal C’od-turn-a-bull is no longer confident he has an answer.

Bear with me my Lords and Ladies as I take you back a step. How did it come to this? How did Mal C’od-turn-a-bull lose the brilliant lustre of his sweeping arrival across the kingdom? How did his words lose their ability to calm the peasants? And how long will the Lords and Ladies of his kingdom leave him unfettered if he cannot deliver all that he promised them, all they require of him?

While the unending ebb of words may have left peasants scuttling away in any direction they could, they did glean enough to believe that Mal C’od-turn-a-bull understood their plight. Obscured within those words they thought they heard promises that this land, this kingdom in which they belonged (and despite their fallen state they did believe they belonged), would provide them with riches beyond their current struggles, never as rich as the Lords and Ladies mind, but an easier life, with less struggle, less torment. They believed they heard promises that Mal C’od-turn-a-bull could ease the raging fires, could turn back the rising waters inundating their fields. They thought somewhere in those words were promises that the smoke would lift, that their children would not cough so much, nor die so often. Somewhere between the endless smile and the endless words there seemed to the peasants a new world.

But in the silences now left by Mal C’od-turn-a-bull (in what is the emptiness between the hundredth and three hundredth words), the goblins and Tiny Napoleon O’penmouth slither their forked tongues over the land. Nothing will change, they insinuate. Mal C’od-turn-a-bull is no more than Tiny Napoleon O’penmouth with a broader smile, a few more words but uttering nothing new.

Peasants stop and ponder. Can that be true? At first, they answer no, it cannot be.

Even in the green great hall, from its murky corners, the goblins expectorate their venom. We cannot have wealth and riches, we cannot have labour for the peasants, without the smoke streaming upon the landscape from the forges. The death of a few children is but the price we must pay. We cannot have more ploughs, more axes, more swords or barrel hoops. We cannot have more barrels even for the peasants’ beer (nor the Lords and Ladies’ wine) without felling more trees. Why doesn’t Mal C’od-turn-a-bull tell you this? The words hang in the stillness, in the eddying but silent maelstrom of their denunciation.

The peasants ponder.

The tree monks preach, as they had presaged, that Mal C’od-turn-a-bull is doing naught to stem the rising waters nor the constantly returning fires.

The peasants ponder. They take more heed of Mal C’od-turn-a-bull’s words and of his silences.

With reborn clarity they see Mal C’od-turn-a-bull tarrying longer, secreted in the castles of the Lords and Ladies. When he emerges he carries words of grand new schemes for the kingdom, but schemes whereby the Lords and Ladies can shroud their riches in veils of uncertainty, schemes whereby they can shed their money in far kingdoms.

‘But if the money goes to far kingdoms, what money will we have left here?’ a peasant asks but not a soul answers. The question lingers in their pondering.

Now among themselves, the peasants ask more and ever more questions. Some make their way to the ears of Mal C’od-turn-a-bull but somehow his words, and now his silences, no longer answer them. A smile, the mellifluous flow of his words is no longer enough. His words grow shorter and so too does their meaning.

For the peasants, it seems the world he promised them is drifting away or being swept into a rising tide for the Lords and Ladies: it is their world that seems carried higher by the words and smile of Mal C’od-turn-a-bull, not that of the peasants which they thought had been his promise.

Behind their castle walls, the Lords and Ladies huddle, mutter disconcertingly at the apparent fall from grace of the man they had themselves selected. To topple Tiny Napoleon O’penmouth they resorted to whispers of revolting peasants and now those whispers grow more real with each passing day, with each day in the apparent demise of their man. The peasants grow alarmingly disenchanted with the world as they see it and that alarms the Lords and Ladies.

The paper castle that so long protected Tiny Napoleon O’penmouth rises phoenix-like and its protrusions enfold him. It does not yet lift Tiny Napoleon O’penmouth to renewed grandeur, although it offers enduring glimpses that such a renewal is possible. Despite his own fall, Tiny Napoleon O’penmouth again feels invincible as the paper castle once more cloaks him from harm.

The peasants ponder the news of the criers. They gather under the trees. They gather at their forges, halting their work.

‘What has Mal C’od-turn-a-bull done?’

‘Nothing.’

‘Nothing for us. But the Lords and Ladies are doing all right.’ If such rebellious words reach the Lords and Ladies, their founded fears will heighten, shuddering the tranquility of their nightly feasts.

‘Has he stopped the fires?’ a lurking tree monk interjects.

The heads of the peasants shake in unison.

‘Are we any better off?’

Wise heads shake again.

‘What can we do?’

The faces are puzzled. ‘What can we do?’ they quietly contemplate but cannot uncover an answer. The only beckoning alternative is the return of Tiny Napoleon O’penmouth and none are prepared for that.

‘He has stopped the yeomen riding against us,’ a milder voice intervenes.

A murmured ‘yes’ falters among the group. Yes, there are fewer missing peasants (the matches hidden in their pockets) being spirited away to far, secret dungeons; the yeomen and knights ride less often in the peasants’ villages and that is a good thing they concede.

‘O’penmouth would never have allowed that. Our people would yet be living in fear.’

The heads nod, a muffled yes accompanying the movement. Yes, they understand deep within their beings that the return of Tiny Napoleon O’penmouth would revisit dark days, vengeful nights and dread.

The groups resume cutting the forests, firing up the forges, tilling the muddied fields. What else can they do? Mal C’od-turn-a-bull no longer inspires them, no longer offers a gleaming future. But if the only alternative is O’penmouth, what can they do? What can they do? constantly repeats in peasant minds across the kingdom.

But in the green great hall, among the peasants convened there for the diversion and amusement of the goblins, clowns and jesters, is one called William the Short’un and his name is spreading. Occasionally from the floor of the green great hall, he advocates another way, dares offer a path that involves neither O’penmouth nor C’od-turn-a-bull. His words run like flames between the workplaces and hovels of the peasants. How can that be? the peasants wonder. How can that be? they ask of their neighbours by the dim light of their evening fires.

William the Short’un says he can be master of the green great hall. At first no one believes that someone barely a rung above the peasants can do that but William the Short’un keeps repeating he can, he can do it, he can. Perhaps, they reflect.

Mal C’od-turn-a-bull recoils at the thought: ‘How can such a lowly upstart threaten me. Me!’ he muses. O’penmouth dismisses it: ‘William the Short’un is a man of straw,’ he darkly declares and his goblins splutter and hiss their agreement.

The Lords and Ladies tremble hesitantly beside their fires. Their worst fears are looming nightmare-like. The peasants are revolting but not in a way readily suppressed. There is no destruction, no storming of castle walls but still they affright at the prospect. The peasants are rallying behind William the Short’un, heeding his words, daring believe he can lead them into the green great hall.

Never! the Lords and Ladies think almost as one, from castle to castle across the kingdom. Such a peasant leader is unthinkable!

Emissaries ride between their castles. Lords and Ladies congregate. They dine and wine sumptuously, debating (perhaps slurring) what ought be done, who can be their saviour, and all so slowly and all so reluctantly they come to only one conclusion. Despite his failing glimmer, only Mal C’od-turn-a-bull can repel the affront. Only Mal C’od-turn-a-bull can shield their influence and ensure the Lords and Ladies are left to continue their nefarious business. Like the peasants, they cannot countenance the return of Tiny Napoleon O’penmouth.

Mal C’od-turn-a-bull is summoned. The Ladies depart the great hall. The Lords turn their icy gaze upon him. Before a word is spoken, Mal C’od-turn-a-bull feels the frostiness settling in the vastness of that resplendent space. There is no gain in speaking and he simply awaits the words of the Lords to weigh upon him.

‘You cannot allow William the Short’un to usurp you. You cannot allow Tiny Napoleon O’penmouth to manipulate you or meddle in our … er … your plans. You cannot allow our ventures to be diminished. The kingdom depends upon them, upon us. And now you! Do what you must.’

They say no more and Mal C’od-turn-a-bull, like Tiny Napoleon O’penmouth before him, is summarily dismissed, escorted to the doors by four surly guards. The world is descended on his shoulders. Now he must find a way to vanquish William the Short’un.

In the seclusion of his own grand castle, Mal C’od-turn-a-bull contemplates his future, agitates his ample mind on fulfilling his destiny — how he can bring down the upstart Short’un? As he sips another fine wine from another far kingdom, he glowingly foresees his place back among the Lords and Ladies and realises that can, in a perverse manner, also be his redemption. He will regale the peasants with tales that William the Short’un is dealing with the Lords and Ladies; that William the Short’un is feasting at their tables, drinking their wine and doing their bidding. That he is not the peasants’ man at all but only feigns to be.

And he can also preach the opposite, he smirks contentedly, that William the Short’un will frighten the Lords and Ladies to abandon their benevolence to the peasants toiling on their land, or to abandon their land altogether leaving no work for the peasants. How will you survive then? he will ask of them. He is convinced the peasants have no nose for inconsistency — in his own splendour, he is self-assured they have not the wit to notice, that some will believe one tale and some the other. Yes, his plan is well crafted, mendacious and built upon the peasants’ ignorance. He strides more confidently when he returns to the green great hall, with even a hint of his former smile.

‘Only I, Mal C’od-turn-a-bull, offer the safety and surety of life continuing as normal, no threats of change, no threats of uncertainty. Only I, Mal C’od-turn-a-bull can ensure our kingdom achieves new riches.’ More duplicity that he is positive will elude the dull peasants.

Yes, Mal C’od-turn-a-bull believes again he can win favour with the Lords and Ladies and continue as master of the green great hall just as it should be, just it was ordained.

Who will emerge victorious in the coming jousts? Who will prosper in the clashes between Mal C’od-turn-a-bull, Tiny Napoleon O’penmouth and his goblins, and William the Short’un?

My Lords and Ladies, journey with me when next I come before your glorious court to continue this tale and reveal to you the grand battle and who may be vanquished.

What do you think?
Who will emerge victorious?

Can Mal C’od-turn-a-bull keep Tiny Napoleon O’penmouth and his goblins at bay?

Can William the Short’un convince the peasants there is a place for them in his new world or will Mal C’od-turn-a-bull beguile them with his mendacity that William the Short’un cannot be trusted?

Will the peasants notice Mal C’od-turn-a-bull’s contradictions? Are they really as ignorant as Mal C’od-turn-a-bull believes?

So many questions. Please leave your answers in a comment.




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[Scott Morrison, Malcolm Turnbull and Martin Parkinson]

Any good public servant will tell you that policy is determined by government ministers. In Senate Estimates, and other committees, you will often hear public servants say they cannot comment on policy issues, that such questions should be directed to the minister. That is the way our system works in theory but does it actually operate that way in practice?

Recently in my piece ‘What can we expect in the coming election?’ I suggested that Turnbull’s proposal that the states and territories should be allowed to reintroduce their own income tax was a ‘thought bubble’. Now I am not so sure. Now I think it probable that it forms part of a continuing campaign by the Department of Prime Minister and Cabinet (PM&C) and Treasury relating to reform of the federation.

At least one journalist, Simon Benson in the Daily Telegraph, seems to have spotted this:
Most of Turnbull’s colleagues agree with the principle. It is the politics of it that are diabolical. It was for this reason alone that Tony Abbott roared down the idea when Treasurer Joe Hockey — after badgering by the then Treasury boss Martin Parkinson — took it to the Expenditure Review Committee.

Parkinson is now Turnbull’s top bureaucrat as head of the department of Prime Minister and Cabinet. No prizes for guessing who might be pushing it.
Ideas for reforming our federation go back a long time. Even before formal establishment of the federation Henry Parkes was suggesting that double the number of states may be better than the then existing six colonies. In 1920 Labor proposed 31 provinces to replace the states. At other times new states have been proposed.

The current approach to reform appears to go back to 1996. We have temporarily dropped the idea of changing the structure of the federation but issues about responsibility and funding are now central to the discussion. Howard’s Commission of Audit in 1996 commented on how to reduce duplication, overlap and cost-shifting between the states and the commonwealth:
Ideally, responsibility for the delivery of all services and the collection of revenue to meet costs should be with one level of government. In practice, however, there would be inefficiencies if this were located at the Commonwealth level when more appropriate decisions could be made at the local level; whereas if it were to be at the State level the Commonwealth would have to relinquish some tax powers or collect earmarked revenue on behalf of the States. [emphasis added]
The Commission noted that such reforms were beyond its terms of reference but I think you will recognise the highlighted part from the current debate. The idea obviously did not die but lived on in the bureaucracy.

In 2006 the Council for the Australian Federation (CAF) was formed. It comprises the state and territory leaders and has two major objectives:
  • work toward common understanding of the States’ and Territories’ positions in relation to policy issues involving the Commonwealth Government
  • take a leadership role on key policy issues, including the Federation, that are not addressed by the Commonwealth Government
In 2007 CAF proposed convening a Constitutional Convention in 2008. It didn’t happen but Rudd did hold his 2020 Summit. The summit’s idea for federation was:
Reinvigorate the federation to enhance Australian democracy and make it work for all Australians by reviewing the roles, responsibilities, functions, structures and financial arrangements at all levels of governance (including courts and the non-profit sector) by 2020.

A three-stage process was proposed with:
  • an expert commission to propose a new mix of responsibilities
  • a convention of the people, informed by the commission and a process of deliberative democracy
  • implementation by intergovernmental cooperation or referendum
As with most of the summit’s ideas, not much happened but it was another step to be considered and hung on to within the bureaucracy even if the bureaucracy would keep more of the process to itself.

I will jump ahead to 2014 when Abbott also conducted a National Commission of Audit and agreed to the development of White Papers on the reform of the federation and tax. The Audit was able to say:
  • The White Paper on the Reform of Federation has a broad remit aimed at clarifying roles and responsibilities between all levels of government to ensure that, as far as possible, each level of government is sovereign in its own sphere. [emphasis added]
  • However, in order to meet this goal, funding capacity is a key driver.
In April 2015 COAG ‘agreed the goal of federation reform is to improve the standard of living and wellbeing of Australians’. It also agreed that any reallocation of responsibilities between governments should aim to:
  • deliver better services
  • drive economic growth
  • be fair
  • provide clear responsibility — people should be clear which level of government is responsible for services so they can hold them to account [emphasis added]
  • be durable
Among the objectives for the White Paper were:
  • reduce and end, as far as possible, the waste, duplication and second guessing between different levels of government
  • ensure our federal system … enhances governments’ autonomy, flexibility and political accountability [emphasis added]
And in the ‘issues to be considered’, what about this?
  • the practicalities of limiting Commonwealth policies and funding to core national interest matters, as typified by the matters in section 51 of the Constitution
Section 51 of the Constitution includes:
  • trade and commerce with other countries, and among the States
  • postal, telegraph, telephonic, and other like services
  • lighthouses, lightships, beacons and buoys
  • astronomical and meteorological observations
  • quarantine
  • census and statistics
  • currency
  • banking, other than State banking; also State banking extending beyond the limits of the State concerned
  • weights and measures
  • bankruptcy and insolvency
  • copyrights, patents and trade marks
  • naturalisation and aliens
  • marriage
Ideally, they want an old style federation with the states exercising much more independence — but I thought we abandoned that in the name of a national economy and national consistency in services like education and health.

Vertical fiscal imbalance (VFI) is considered a major problem. VFI is simply that the commonwealth collects most of the money but the states deliver most of the services and so become reliant on transfers from the commonwealth. The Issues Paper on federal financial relations states:
The existence of VFI is not necessarily a problem in itself, but a high degree of VFI creates perverse incentives for both levels of government. It allows the Commonwealth to act in ways which can compromise the autonomy of States and Territories in their own sphere, thus creating confusion about democratic accountability … A high degree of VFI also creates incentives for the States and Territories to blame the level of Commonwealth funding for problems in State-delivered services, rather than to make the case to their own electorates for raising more funding from their own revenue sources. [emphases added]
From what I can glean, Turnbull has a proclivity for the number ‘2’. His approach to schools and taxation both appear to come from options 2 in the relevant sections of the reform of federation Discussion Paper.

For schools option 2 is:
States and Territories responsible for funding government schools and the Commonwealth responsible for funding non-government schools.
In considering this option, the paper blandly states that the states and territories ‘would need to consider how they could manage the issues relating to funding and regulating their own government schools’. [emphasis added] Despite that somewhat casual dismissal, funding is the key issue.

And on financial relations, option 2 is:
Increase State and Territory access to tax revenue
This could be by:
  1. reducing personal income tax rates by a certain amount and allowing the states to apply a ‘surcharge’ of an equivalent amount; or
  2. transferring a fixed percentage share of personal income tax collections to the states. (In both of these approaches, as regards the areas funded by the approach, such as schools, ‘it would need to be clear that the Commonwealth would not re-enter these areas of responsibility in the future’.) [emphasis added]
  3. expansion of the GST
We know that 1 and 3 have now been floated and rejected and only 2 remains on the table and is still being considered by Morrison.

In the light of all that has been written by public servants in the federation reform discussion papers, noting that even papers prepared by so-called Commissions are written by public servants who also assist and advise such bodies, take account of this statement by Turnbull after COAG rejected the state income tax idea:
If they’re not prepared to make the case to their citizens, through their Parliament, for higher taxes, they cannot seriously or credibly ask us to raise taxes to give money for them to spend.
Yes, echoes of the argument regarding the perverse incentives of VFI and the need for political accountability. So Turnbull did not pluck the ideas for state taxation, nor the commonwealth abandoning funding of schools, from out of the air. They were not ‘thought bubbles’ as I previously described them — so perhaps I owe Turnbull an apology for that — but no doubt a result of briefings he received and/or his own reading of some of the reform documents. As Simon Benson suggested, there are senior public servants strongly pursuing certain aspects of the reform papers (while ignoring other options actually mentioned in them).

Morrison supported Turnbull in his interview on AM on 4 April:
… what was basically put out there was the opportunity for them to have greater autonomy over these issues. They decided that they, they didn’t want to do that.

… the question really put to the states was a question about what level of sovereignty and autonomy they wanted to have over the revenue side of their budgets and the Prime Minister called that bluff last Friday.
Even the words ‘sovereignty’ and ‘autonomy’ feature prominently in the federation reform papers. So where do these words come from? — not from ministers’ own thoughts but from the influence of advice coming from their public servants (or advisers who have been briefed by public servants).

So who is really influencing policy? The ministers may still ‘determine’ policy, and do have to take account of the political implications (which public servants do not), but it seems many of the ideas actually arise in the public service. In the various reports and papers I have quoted, I think you will notice that the same concepts, phrases and even words recur which is a clear sign that the influence is coming from the public service.

And if we go back a little in history, the GST can be shown to be another idea from the public service. Ever since the late 1970s the treasury boffins were concerned about what would happen to government revenues when the baby boomers left the workforce and income tax revenue fell. Their answer was a broad-based consumption tax so that even when they retired the baby boomers would continue to contribute to government revenue. It appears it was first tried when Howard was treasurer in the Fraser government. Howard took the idea to cabinet in 1981 but it was rejected. When a new government was elected in 1983, and a new treasurer appointed, Paul Keating, they rolled out their next attempt to get it through. Keating supported treasury’s advice but had to take it into Hawke’s 1985 Tax Summit in the hope of getting consensus. He didn’t and the idea was dead, at least so far as the government was concerned, but not in treasury. In 1996, 13 years later, along came another new government and another new treasurer, Peter Costello, so treasury rolled out the idea again, despite the political fact that John Hewson had lost the ‘unlosable’ 1993 election with a consumption tax as the central plank of his policy. Howard had promised there would ‘never, ever’ be a GST under his government but by the time of the 1998 election, treasury had gotten its way and that consumption tax became part of the government’s platform. When it won the election (on seats, not overall votes) the government negotiated a deal with the Democrats to get the GST through the senate and it came into effect on 1 July 2000.

Treasury didn’t get everything it wanted in that deal but it had won a battle (if not yet the war) it had fought for 20 years. Treasury would have liked a higher GST on a broader range of goods and services but politicians have to negotiate what is possible, which is what Howard did at the time.

But as we have seen in the past 12 months, the GST was placed back on the agenda, this time on pretence that it would assist the states and territories and help fund hospitals and schools. For treasury that doesn’t matter, as any increase in that way in state revenue allows for the reduction of other commonwealth payments to the states. So the issue, almost 40 years after it was first conceived, is still burning within the public service and, although it has been laid aside for now, will no doubt raise its head again.

Similarly, I have no doubt that, although Turnbull has had the idea of state income tax rejected, the idea is not dead in the public service. It may be two or three governments into the future (perhaps ten years) but it will also raise its head again. In the meantime, there will be continuing efforts by Treasury and PM&C to transfer more powers to the states so as to reduce commonwealth expenditure. They will find other ways in the short term but as the fiscal pressure builds on the states expect another round of discussion on state levied income tax.

Governments come and go and the public service is effective in providing continuity. It is meant to be continuity in administration but I think my two examples in this piece also suggest that it plays a significant role in the continuity of policy, despite the fact that public servants will continually tell you that policy is a matter for the minister.

What do you think?
Is policy ‘a matter for the minister?’

Is reform of the federation needed?

Let us know your thoughts in comments below.


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One of the points of difference between the Turnbull government and the Shorten opposition is negative gearing. We would all still be here next week if the current regime and the proposals were discussed in full, so how about we attempt to do the ‘helicopter’ version. Just keep in mind that this article is general in nature and doesn’t consider your financial situation.

Broadly speaking negative gearing is a method of reducing your taxable income. You do this by purchasing an asset where the expenses from the asset are greater than the income you gain from the asset. As the asset is ‘income producing’ and you lose money on it, you can take the loss from other taxable income when it comes time to doing your tax return.

To negative gear effectively, you need to purchase something that will remain steady or increase in value. So buying a car and leasing it to an Uber operator wouldn’t be a good idea because the car is almost certain to decrease in value, regardless of the use it gets. By contrast, property and shares are excellent choices as both asset classes can produce an income (income producing) and frequently the expenses incurred in the purchase and maintenance of the asset (interest, fees and in the case of property, rates, maintenance, body corporate and leasing fees and so on) can easily and quite legitimately outweigh the income received from the asset. When you add up the costs, take away the income and then subtract it from your income from other sources such as your job, if you’ve done it correctly, your income for taxation purposes reduces to something under $80,000 per annum and voila, you qualify for one of the lower levels of income taxation.

Traditionally property and shares rise in value over time, so as well as writing off your losses you can usually sell for more money than you paid when the time comes. This is known as a capital gain. Capital Gains Tax is where you make a profit on the sale of an asset and the government of the day puts their hand out for some of the profit. Simplistically, the tax is calculated by adding the purchase price to the price of any capital improvements (say a new kitchen and carport), then subtracting that number from the sale price less the costs of the sale (real estate fees, legal fees and so on). If you hold the asset for more than 12 months, the current practice is for the tax to be calculated on only half the profit. If you hold a property for say four years and make $50,000 in capital gains, the government will only tax you at your marginal rate as if the profit was only $25,000.

On Easter Monday, Fairfax titles around Australia were reporting one of the strange outcomes of the current negative gearing policy settings. To be blunt
Sydney's housing affordability crisis is being artificially inflated by up to 90,000 properties standing empty in some of the city's most desirable suburbs, experts say.
While there is always some variation in rental returns, it seems that property in areas with higher capital growth are statistically more likely to be empty. And we’re not just talking ‘margin of error’ stuff here: in Sydney City, Haymarket and The Rocks, one in seven dwellings (somewhere where people are allowed to live) is vacant. If you go way out west, areas around Casula and Green Valley have a vacancy rate of around one in forty-two. Melbourne isn’t immune to the empty property trend with an estimated 82,724 or 4.8% of properties across the city being empty.

Admittedly, some of the empty dwellings in Sydney City and Melbourne may be on the market, undergoing major renovation or people are on extended holidays — but certainly not all of them. Those that look at the real estate advertising, either on line or in the ‘dead tree’ format, would be well aware of articles discussing the current capital gains that can be made in real estate with barely a mention of rental returns. Late in March, the question was whether Hobart or Brisbane were the places to buy now as housing prices were likely to increase substantially in the short term.
While the Sydney market peters out, Brisbane and Hobart are warming up with the Australian Bureau of Statistics Residential Property Price Index rising 2.5 per cent in Hobart and 1.6 per cent in Brisbane over the December quarter.

Domain Group data for the 12 months to January 2016 also showed Brisbane’s median house price increased 2.5 per cent to $485,000, while its median unit price was flat at $410,000. Hobart’s median house price grew by 2.4 per cent to $340,000 and its unit price jumped 9.7 per cent to $290,000.
There are a few fundamental problems with property investment. While those who already own property in one of the ‘hot spots’ are laughing all the way to the bank — sometimes to get the equity loan for the overseas trip, the massive renovation or the fancy car — those that grew up or rent in the locality can’t afford to purchase a first property in the area they are familiar with. In addition, those who purchase properties for investment can’t carve off $50,000 worth of the property should they have a requirement for the cash in a hurry.

The real problem here is that people are buying property for the wrong reason. A property is a place for people to live. It should be noted that a property only has to be available for rental before the ATO will allow negative gearing, there is no requirement that the property be rented, the property be advertised for rental if it is vacant or the rent value be appropriate for the market. The cynical could suggest that the way to maximise your negative income from a property is to leave it vacant as no income less expenses adds up to a greater tax loss than some income less expenses. The short term pain is alleviated by the increase in value of the property when the property is sold due to favourable capital gains taxation treatment where you keep something over 75% of the profit.

Like property, there are a number of factors that usually indicate if a share purchase should be made. In contrast to the oft repeated mantra of property sales “location, location, location”, the intrinsic worth of a share to an investor is usually calculated using a number of ratios. They are Price/Earnings Ratio; Earnings Yield; Return on Equity and Dividend Yield. This Fairfax article discusses what each of these terms actually means, should you wish to know more. For the moment let’s just consider one point; most of the share indicators are based on the price of the share in relation to the dividend (payment of a small proportion of the profit from the company’s operations).

Property prices and affordability are currently based on what capital gain is likely to be made over the short to medium term, not what rental income is received should the inner city unit you have purchased as an investment be actually used for its intended purpose. To be fair, some of the demand for property is generated by overseas residents attempting to purchase assets in Australia but this is estimated to be about 15% of the market, rising to 20% by 2020.

The point to all of this is that investors have manipulated the property market with the co-operation of the government. They have artificially increased the value of property, diminished the ability of your and my kids ever owning a place to call home, created the potential for a housing bubble and potentially reduced the number of ‘real’ properties available for rental or purchase which has caused a housing shortage.

There is also a waste of resources in having one in seven properties in Sydney City empty. The electricity and water supply organisations have to assume the property will be used for the intended purpose when calculating the potential demand for electricity, water and other services. This causes an overbuilding of infrastructure to service the affected areas — capital that could better be used to reduce utilities prices.

It seems that if you buy a property you can game the negative gearing/capital gains tax systems better than if you buy shares. If your property is empty, there is no income to account for when ‘losing’ money on the rates and taxes incurred when owing a property. Most Company Boards wouldn’t consider a request that they don’t pay a dividend this year solely to assist you in maximising your potential for reducing your taxable income.

Surely any investment decision should be made on the return expected on the investment, as well as the potential for profit on the sale? Most are, but for some reason the potential rent that could be earned on property is discarded. Some are happy to only accept the potential future capital gain assuming that someone in the future wants to buy a five-year-old property that no one has ever lived in. It’s too bad if the market does crash for some reason or other. Ironically, the rental income per square metre in inner city Sydney would be significantly greater than the rent you could expect to receive at Casula or Green Valley, so the ‘price/earnings ratio’ of an inner city property would be more attractive than the ratio for a property in the outer suburbs where vacant properties are statistically fewer.

Turnbull and the Coalition want to keep the existing policy settings; probably a good thing if you need to reduce your taxable income to under $80,000 and can’t use other tax management practices such as companies, splitting income etc. Shorten and the ALP don’t. Shorten wants to remove the ability to negative gear property unless the particular property is a ‘new build’. While the first owner of a property could negative gear the property regardless of whether a tenant was in place, logically a long standing tenant in a property paying a realistic rent per week would become the preferred situation if the property was onsold.

Shorten also claims that considerable research, time and effort has gone into the ALP’s proposed policy, that will go part way to addressing issues such as tax avoidance, housing availability and housing prices being out of reach if you are unfortunate enough to be trying to purchase your first property somewhere close to services like shopping, education, transport and health care in one of our larger cities.

It is probable that investors will return to the fundamentals of investment should the ALP scheme be implemented leading to a stabilisation of housing prices, an increase in property available for rental and slower rates of housing price growth. This will come about because investors won’t be pushing first home buyers out of the market and properties won’t remain empty for years.

There is also significant upside when it comes to eliminating the budget deficit (we’ll leave the inevitable discussion on Modern Money Theory for another time). The Balanced Budget Commission, established by the Committee for the Economic Development of Australia, believes the budget deficit can be eliminated by 2019.
The Commission finds that in order to eliminate the budget deficit by 2018‒19, spending should fall by $2 billion and revenue should climb by $15 billion.

It sets out five options for achieving that goal, all of which include a cut in the discount applied to the capital gains tax along the lines proposed by Labor.
In response to Turnbull’s claim that removing negative gearing and increasing capital gains tax will reduce investment, Commission Chair Mr McClintock said:
It doesn't mean it is a bad activity, but you can say there is too many billions of dollars going into that activity and we cannot afford that. With things like negative gearing, the inflation rates are lower, there is a strong argument to suggest you can lower that and still produce an environment where people are willing to invest. Our judgment call is that, yes, of course, it will have some marginal impact, so will everything, but it's a manageable impact.
Really, it doesn’t take the skills, research and knowledge of the CEDA to suggest future affordability of housing and availability of properties for rent or purchase outweighs the perceived right of others to reduce their contribution towards the provision of services to the entire community — aka minimisation or avoidance of taxes. Unfortunately, only one of the two major political parties has demonstrated that they see the connection.

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Apart from the obvious statements, we can also tell there is an election in the air as, after six months of inactivity, the Turnbull government has engaged in a flurry of policy announcements — or in some cases what should be termed policy ‘thought bubbles’. That is not to mention the concomitant increase in television advertising for existing government programs and policies.
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The shifting risk of superannuation


Since the 1980s, Australia has changed the way we prepare for our retirement. Rather than depending on an aged pension from the government and some personal savings, greater emphasis has been given to superannuation and building retirement incomes in that way. All three remain in play for retirement but for most employees superannuation has become the major component.

As part of the Prices and Incomes Accord, used throughout the Hawke-Keating years, compulsory award superannuation was introduced in 1986. At that time, it involved only a 3% contribution and was aimed more at helping control wages and inflation by having an effective wage rise paid into superannuation. It was legislated for all employees in 1992, as the Superannuation Guarantee, and the level of contribution has been progressively increased.

Treasury had already foreseen that the retirement of the ‘baby boomers’ generation would place a prohibitive cost on government if that generation was primarily reliant on the old age pension for its retirement income. In that regard, the mandatory superannuation contribution was a way of reducing government expenditure into the future: there was not enough time to make the baby boomers entirely independent of the government pension but it would at least reduce the amount of pension to which they were entitled.

Another issue for the Treasury, later addressed by Howard and Costello, was the superannuation liability the government was accruing for its own employees. At the time, the government made no forward commitment for that liability, anticipating that it would simply meet its superannuation liabilities from consolidated revenue in the year they fell due. Treasury, however, began pointing out that the amount was growing exponentially and could have serious budget implications in future years. Hence, the Future Fund was created to help meet those costs.

Superannuation for government employees, both state and federal, was traditionally a ‘defined benefits’ model, meaning the amount of superannuation to be received at retirement was predetermined by a formula. (Some large corporations, and other public bodies, both here and overseas, also used ‘defined benefits’ models.) In such schemes, it could be said that the employer bears the risk. Although the government did not put money away towards its future liability, if it had invested such funds there would have been years where its income from investments exceeded the accrued superannuation liability and years where it fell below: whether an employer ends up ahead or behind overall is entirely dependent on the success, or otherwise, of the investments.

Over the years there have been a number of significant changes: firstly, in the amount mandated to be paid into superannuation. Before his defeat in the 1996 election, Keating was discussing raising the contribution to 15% of a person’s income, through a combination of both employer and employee contributions. That never made it into law but during the first Rudd government it was decided that the amount should be increased to 12% by 2018 — that was considered the bare minimum to achieve a moderate level of retirement income over a person’s working life. It was legislated by the Gillard government to be achieved by July 2019. The Abbott government, however, when rescinding the Mining Tax in 2014 also extended the period over which the 12% would be achieved — instead of July 2019, it would now be 2025. The change was opposed by Labor and the unions, but also by the Financial Services Council and Industry Super Australia, but supported by business as it reduced its contribution for the immediate future, keeping it at 9.5% until 2021.

The Abbott government may have supported business with its decision but it did nothing to help the government’s long term budget problems. Delaying the increase only served to reduce the amount of superannuation workers would accrue, therefore leaving an entitlement to a larger part-pension from the government, whereas the real aim of the Superannuation Guarantee and the increased contributions was to reduce the government’s contribution to retirement income. Given the Abbott government at that time was carrying on about the ‘debt and deficit’ disaster, such a decision was contrary to the rhetoric and merely created additional budget expenditure in future years.

The taxation treatment of superannuation has also changed over the years. From 1 July 1988, the Hawke government introduced a tax on superannuation contributions but reduced the tax on superannuation benefits. Before that there was no tax on either contributions or fund earnings and people paid normal personal tax rates on their superannuation income stream.

The Howard government’s ‘simplification’ of superannuation included the abolition of tax on superannuation income for those aged over 60. Although some seem to believe that this applies to all superannuation, it applies only to benefits that have already been taxed at the contribution and earnings stage. A personal example involves my wife and I. We both paid additional income into our public service superannuation scheme but my wife did so via salary sacrifice and I simply paid into my superannuation from my after-tax income. Now my wife pays tax on that portion of her superannuation which comes from her additional contributions but I do not because my contributions were already fully taxed: without that concession I would effectively be paying something over 50 cents in the dollar, as the money would be taxed twice. It is the same principle that applies to ‘fully franked dividends’: if a company pays its dividends from its after-tax profit then those dividends are tax free for the shareholders.

The Superannuation Guarantee has been effective in drawing people into superannuation. In February 1974, only 29% of employed persons were covered by superannuation and the majority of those were in the government sector. That had reached 90% in November 1995 and 93% in August 2002. While the proportion has varied slightly in recent years, it has remained around 90% of all employed workers.

It has also given rise to a huge amount of ‘savings’ held in superannuation funds. It started slowly. At the end of 1991, before the Superannuation Guarantee was implemented, there was $146 billion in superannuation savings — equivalent to 38% of the nation’s then total GDP. That rose to $1.2 trillion by the end of 2007: equivalent to 110% of GDP. Again there have been fluctuations in recent years but superannuation savings have remained at a level of about 90‒100% of GDP.

As superannuation became more widespread, the cost to government revenue of superannuation tax concessions increased. The Hawke decision in 1988 to tax contributions was a way of bringing forward government revenue — previously government had to wait until a superannuation benefit was paid to gain any tax revenue. Despite that, Treasury figures for the 2014-15 Budget show that tax concessions on contributions cost the government $16.3 billion in foregone revenue, and a further $13.4 billion for concessions on superannuation funds’ earnings. The evidence is that these concessions benefit most those on higher incomes. The top income decile actually receive something like 37% of the benefits of superannuation tax concessions and the top 20% receive about 60% of the benefits. It was also found that there were 475 people with super balances in excess of $10 million who were earning tax-free income of about $1.5 million each year. Labor has proposed a policy that partly addresses this but the emphasis is on ‘partly’. It really captures only the top 2% and will raise revenue by only $1.4 billion a year (on average) which is only a fraction of the total value of revenue forgone but it is better than nothing — it is perhaps a ‘gentle’ approach in an election year.

In 2012, in a 20-year review, the CPA raised some other concerns about the impact of the Superannuation Guarantee:
The greater accumulated superannuation has allowed households to become more accepting of risk and debt in the knowledge that a payout is coming on retirement. The increased debt has allowed households to enjoy a higher standard of living during their working lives than their actual income could support. This higher standard of living has produced increased expectations for retirement. Against these expectations is the reality that they cannot pay for the higher expectations, as the superannuation is required to repay debt.

… It is now twenty years after the SG was introduced, and superannuation savings minus household debt effectively equals zero. [emphasis added]
The risk is magnified because nearly all new superannuation is an ‘accumulation’ model. Even new commonwealth public servants, since the Howard years, have been placed in accumulation funds (or can select the fund of their choice). That basically means that the amount of superannuation accrued over a person’s working life is entirely dependent on the investment choices made by both the individual and the superannuation fund.

As an example of how that may work, I will base the following on the premise that, on average, the superannuation grows at the rate of the stock exchange index for the All Ordinaries. If I had $100,000 in superannuation as at December 2004, when the index was 4053, it would have grown to $167,300 by October 2007 when the index reached 6779. However, the GFC then hit and by February 2009 the index was down to 3297 meaning my superannuation was then worth $81,350. The market index has still not reached the highs of 2007. At the end of January this year the index was 5059 (superannuation value of $124,800) and at the end of February 4948 (superannuation value of $122,000). So while my super may be above the original $100,000 in 2004 it is still $40,000 below the peak of growth in 2007 and has grown only slightly over $20,000 in 12 years, or on average about 2% per year (rounded). There are other factors that influence the growth of superannuation and it should be noted that total market capitalisation is now almost as high as it was in 2007 although the index is lower.

The point, however, is that in an accumulation fund all the risk is borne by the individual. The employer no longer has an interest in what happens to the money once it has been paid into an employee’s nominated fund, whereas in defined benefits schemes the employer bears the risk and therefore maintains a real interest in the growth of superannuation investments.

The volatility of the stock market is a double-edged sword. It may occasionally offer higher returns but it can also crash, wiping out millions in superannuation savings, and since the GFC the market recovery has been extremely slow — after over eight years the index is still 25% lower than its October 2007 peak. There is some evidence that since 2000, superannuation invested in fixed interest deposits (including government bonds) would have provided a slightly better return than investment on the stock market. But the default superannuation fund, which a majority of people do not bother to change, is what is called a ‘balanced fund’, which is meant to include elements of stock investments, fixed term deposits and sometimes commercial real estate. Many Australian superannuation funds have a higher proportion of stocks in their balanced funds than European superannuation/pension funds which have been reducing their exposure to stocks since the GFC.

So where does that leave the employee now largely reliant on his or her superannuation investment for retirement? — between a rock and hard place!

Some European countries had pension systems more akin to a defined benefits scheme where retirees were guaranteed a fixed proportion of their final working income — it was an expensive model which some countries are now trying to change and it was partly funded by a ‘pension’ or social security levy that all employees paid during their working lives but government picked up the balance.

Australia, however, began with a government guaranteed and funded pension, which is now guaranteed at 41.76% of Male Total Average Weekly Earnings (MTAWE) for a couple or about 27.7% for a single pensioner but that provides a modest standard of living, not much more than a safety net.

I don’t see why we can’t have a government defined benefits model for all workers, funded, as in the present superannuation model, by a combination of government, employee and employer contributions. Such a model would remove the risk from the individual and place it back with government and to a lesser extent employers. After all, the government, more than any other institution, is able to bear risk.

But no political party is going to change this. Markets now rule. Our retirement income is now determined by market manipulators who are seeking nothing more than making a profit from their share and bond trading. The effect that has on superannuation funds is not a consideration. Superannuation funds (and individuals) can change their investment choices but in most cases that tends to come after the event, so to speak, when losses have already been incurred. It is not a model that guarantees an adequate retirement income and, to that extent, will not reduce government outlays in providing pensions and part-pensions. If it is not achieving the aim of significantly reducing government outlays, why not use that funding to contribute to a genuinely adequate retirement income?

In my view, it is time to reconsider the model for our retirement incomes, not fiddle while the markets burn!

What do you think?
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What can we expect in the coming election?


[Saint Malcolm?]

Apart from the obvious statements, we can also tell there is an election in the air as, after six months of inactivity, the Turnbull government has engaged in a flurry of policy announcements — or in some cases what should be termed policy ‘thought bubbles’. That is not to mention the concomitant increase in television advertising for existing government programs and policies.

Until recent times, the government had made few major announcements. Early on there were funding packages for domestic violence and the purchase of army vehicles but those were obviously developed prior to Turnbull becoming prime minister. His major announcement was the innovation package on 7 December, long on rhetoric and promises but short on substantive actions and new funding. Many of its proposed actions required no direct funding whatsoever, such as legislative changes for venture capital investments, employee share schemes and changes to bankruptcy and insolvency laws. Some had a potential impact on government revenue into the future, such as the tax incentives for early stage investors that will cost $51 million in each of 2017‒18 and 2018‒19. There was some direct funding for certain aspects of the package but it seems much of this was also funding redirected or rebadged from existing related programs. Essentially the strategy focuses on innovative business start-ups, improved collaboration between business and research institutions, a small investment in STEM teaching and digital literacy in schools, and the government itself setting an example in adopting new digital technology.

In The Conversation, Tim Mazzarol, Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at the University of Western Australia, suggested that it was a start and was implementing some changes that had been sought since 2008. He quoted another professor, Mark Dodgson, that the money announced for the strategy did little more than ‘get us back to square one’. Mazzarol pointed out that successful start-ups were a very small percentage of businesses and many do not grow beyond ten employees. He referred to his attendance at a Business Council of Australia round-table regarding enhancing industry-research collaboration:
‘… there was also a recognition that many large firms, particularly foreign owned multinationals, do very little fundamental R&D in Australia. The pipeline for STEM graduates into industry and the willingness of many large firms to serve a “Keystone” role in local business ecosystems is currently missing.
So is the Turnbull plan missing the real issues?

On 29 February, Turnbull told Cabinet:
The challenge for us this year is to ensure we lead Australia in a way that delivers a successful transition from an economy that has been buoyed by a mining construction boom to the new economy.

That transition is the big challenge and the big opportunity for us and so in this election year we know that the choice will be who is best able to lead Australia through that transition, who is best able to deliver the innovation, the investment, the infrastructure, the jobs that are going to ensure that our children and our grandchildren have the great, high paying jobs of the 21st century.
Turnbull may be telling his Cabinet that but it is not exactly inspiring stuff for the electorate: probably the explanation for so many television advertisements now trying to sell it as important for our economy and for our children — the latter a deliberate advertising ploy.

There have been more uninspiring announcements but announcements that fit with Turnbull’s background in merchant banking. On 16 March, it was announced that, in accord with the Harper Review, Section 46 of the Competition and Consumer Act, regarding the misuse of market power, would be changed to prohibit those ‘with substantial market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition’. On 21 March, Morrison announced changes to support financial technology. He said:
FinTech is going to revolutionise how consumers and businesses, as the drivers of economic activity, interact. This is going to have big implications for demand in the future. We need to be part of these changes and we have got to work out the best way to engage with FinTech and prepare for the financial system and economy of the future.
And on 30 March, Morrison announced that the ASX would lose its monopoly on share clearing, ‘a move by the Federal Government to encourage competition’.

On issues that may gain more voter attention, there was an announcement to create ‘Health Care Homes’ to coordinate treatment of those with multiple chronic conditions (note, however, that this is only for multiple conditions, not a single chronic condition). And on 23 March, a $1 billion Clean Energy Innovation Fund was announced. This at last abandoned Abbott’s attempts to do away with the Clean Energy Finance Corporation (CEFC) as the fund would be administered jointly by it and the Australian Renewable Energy Agency (ARENA). However, whereas ARENA was previously able to make grants, the new arrangements will operate on a debt and equity basis.

And there was Turnbull’s promise on taxation reform where he initially said ‘everything was on the table’ but has subsequently taken the GST, negative gearing and superannuation changes off the table. They ran the idea of corporate tax cuts ‘up the flag pole’ but it remains to be seen whether they will make their way into the budget. Personal tax cuts seem to have disappeared, as too expensive, despite Morrison earlier having emphasised the need for such cuts to overcome bracket creep.

At the COAG on 1 April, Turnbull took another ‘thought bubble’ to the table: the idea that states could re-introduce their own income tax but it was firmly rejected by the Premiers and Chief Ministers. The idea was underpinned by the concept that states and territories would take over complete responsibility for education in government schools (and eventually hospitals), something which was also being pursued by Abbott and Hockey. I warned that this was likely in my piece ‘A smile is not enough’ early in February:
The Turnbull government is still pursuing the Abbott government policy of a transfer of powers to the states. Morrison has floated the idea that the states should receive a guaranteed share of income tax. The underlying idea is that the states become solely responsible for schools and hospitals and the commonwealth covers Medicare, the PBS and universities. Given that education and health are issues which the electorate sees Labor as better able to manage, the cynic in me suggests that this is also a political strategy to take away one of Labor’s strengths at the federal level.
State income tax was abandoned in 1942 and the idea that we could have different tax regimes between states runs counter to the concept of a national economy and would add to the complexity for businesses that operated in more than one state, whereas Turnbull and Morrison keep proclaiming the need to reduce red tape for businesses. We will now have to await the budget to see whether the Turnbull government can achieve any form of taxation reform to take to the election: the prospects do not look bright.

So far, very few of the government’s policies appear likely to inspire the voters. Perhaps Turnbull has a ‘vision’ with his innovative, agile economy but there is little substantive to talk about, little to grab the imagination of the voters.

Labor on the other hand has been releasing detailed policies for over twelve months, a strategy that has not been followed by Oppositions for twenty years. In that time, Oppositions have taken a low-profile approach and offered little in the way of major policy or have made such announcements only in the last week or so of an election campaign. The reasoning behind that approach was that the early release of policies allowed time for the government to refer them to the public service, or external consultants, to pull them apart and pick holes in them. The fact that the government has done little damage to Labor policies so far may suggest that the ‘holes’ are few and far between.

The government response to Labor’s proposed changes to negative gearing brought not an attack on the detail but a ‘fear campaign’ and it could not even get that right with contrary claims that house prices would fall and house prices would rise.

Labor is also proposing changes to the tax treatment of high income superannuation, changes to the tax concessions for capital gains, an increase in tobacco excise and a target of 50% renewable energy by 2030.

Abbott, following his classical three-word pattern (he seems to have no other) has labelled these as ‘five new taxes’: a housing tax, a seniors’ tax, a wealth tax, a workers’ tax and a carbon tax. He ignores, of course, that, for example, an increase in tobacco excise will help reduce future health costs as more people give up smoking and that the so-called ‘carbon tax’ will actually promote and invigorate the renewable energy industry in Australia, thus creating more jobs and boosting the economy.

In the absence of inspiring Turnbull policies, I would not rule out Turnbull adopting a similar approach. As a matter of principle he would not use Abbott’s phraseology but he may well attack Labor’s ‘new taxes’ — or perhaps he will give Abbott his head and allow him to run such a campaign while Turnbull himself can remain aloof from such tactics. Don’t rule out anything!

Underpinning the Turnbull approach is the report of Trade Union Royal Commission (TURC) and the legislation for the reintroduction of the Australian Building and Construction Commission (ABCC). Turnbull has recalled parliament with the aim of passing the ABCC legislation and has threatened to use it as a double dissolution trigger if it is not passed (that, of course, after having already achieved changes to Senate voting). In other words, union ‘corruption’ will be a key election issue although Turnbull is trying to cloak it as an economic necessity, claiming it will improve productivity in the construction industry (although the Productivity Commission found no significant improvement in productivity when it previously operated).

Probably more importantly, Turnbull can use the idea of union corruption and the TURC report to attack Shorten personally. Although Shorten was cleared of any wrongdoing by TURC, the Liberals earlier showed their hand by suggesting that Shorten had sold out the members of his union in sweetheart deals with businesses — despite the fact that the deals Shorten negotiated appeared to achieve successful outcomes for both his members and the projects in which they were involved. Surely the Liberals should be supporting successful business outcomes! No, not if it impedes an attack on Shorten. I think we can expect a lot more of this during the election campaign.

Unless the government pulls a rabbit out of the hat in its budget — and so far most of its rabbits appear to have been DOA — it appears to have little to take to an election. Its policies do not match those already put out by Labor, although there is some overlap as in, for example, support for STEM subjects in schools. Its grand vision may be a vision but it is not an inspiring one for the electorate as it consists mostly of words and legislative changes which will not impact most people — what interest do people have in ‘FinTech’, the removal of the ASX’s monopoly or changes to laws relating to venture capital?

Polls consistently show issues like education and health are major concerns for the electorate — they are issues which Labor is usually seen as better able to manage. Turnbull and the neo-liberals have not yet achieved their aim of transferring education and health to the states, so they will remain in play for the coming election and the government is not looking strong on them at the moment.

The economy is also ranked highly by voters as an election issue and Turnbull will claim that only he can take Australia towards the new economy of the 21st century (as he told his Cabinet) but that somewhat misses the point. When people say they are influenced by the economy, they usually mean issues like unemployment, wage rises and inflation, not some grand vision of an agile economy. At present wages growth is the slowest it has been in twenty years and that is the sort of issue voters will look at when assessing the health of the economy.

At the moment, I believe the policy issues are mostly in favour of the Labor party so don’t expect policy to be the major battle ground in the coming election. It may play a part but Turnbull is more likely to focus on union corruption. Expect a dirt campaign aligning Shorten and Labor with the ‘corrupt’ unions. Expect personal attacks on Shorten regarding his time as a union leader. Expect some suggestions that it is the unions that are holding us back from the golden age of an agile, innovative economy. Expect attacks on Labor as the party of high taxes and high spending (although that is traditional Liberal fare).

And, of course, expect Turnbull to present himself as the saviour, the only one capable of leading our country into the new golden age.

What do you think?
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Inequality will be a hot button election issue



‘Inequality’ is a term used by economists. Joseph Stiglitz has been writing for years about its damaging effect. His book: The Price of Inequality is a classic. More recently, Thomas Piketty entered the arena with his Capital in the Twenty-First Century and hypothesised about the genesis of inequality. He asserted that the main driver of inequality, namely the tendency of returns on capital to exceed the rate of economic growth, today threatens to generate extreme inequalities that stir discontent and undermine democratic values. He reminded us that political action has curbed dangerous inequalities in the past and could do so again. But is anyone listening?

No matter who writes about inequality, the conclusion is the same: the gap between those at the top and those languishing at the bottom of the pile is widening in many countries, ours among them.

A more familiar way of talking about inequality is to talk about ‘fairness’, a concept every Aussie understands. The ‘fair go’ is valued by most of us. Who would argue against the idea that everyone should have a ‘fair go’?

So look out for emphasis on fairness during the election campaign. You will hear it from Bill Shorten and Labor people; you might not hear much about it from LNP people, although PM Turnbull has often insisted that whatever changes his government makes to the tax system, they must be ‘fair’. We are still waiting to see his version of fairness. Although aware of the angry reaction of the people to the unfair 2014 Abbott/Hockey Budget, he is still seeking approval of many of the elements of it in the Senate. Treasurer Morrison does not seem to have 'fair' in his vocabulary.

Have you noticed that ordinary people are becoming increasingly fed up with the inequality we see day after day where those at the top of the pile gain advantages over those at the bottom? In the past few weeks we have seethed as we saw instance after instance of this. More of this later!

If you question whether inequality really is a problem in this country, take a look at these statistics, which are based on a 2015 ACOSS study: Inequality in Australia: a nation divided:

• Inequality in Australia is higher than the OECD average.
• A person in the top 20% income group has around five times as much income as someone in the bottom 20%.
• There is an urban and regional pattern to income inequality, with people in capital cities more likely to be in the top 20%, while those outside capital cities are more likely to be in the bottom 20%.
• Wealth is far more unequally distributed than income. A person in the top 20% has around 70 times more wealth than a person in the bottom 20%.
• The top 10% of households own 45% of all wealth, most of the remainder of wealth is owned by the next 50% of households, while the bottom 40% of households own just 5% of all wealth.
• The average wealth of a person in the top 20% increased by 28% over the past 8 years while for the bottom 20% it increased by only 3%.

In other words inequality is steadily increasing.

If you need more evidence, read the 2014 study by The Australia Institute: Income and Wealth Inequality in Australia by David Richardson and Richard Denniss.

While everyone concedes that the rich are steadily getting richer, conservatives salve their consciences by insisting that ‘all boats rise with the tide’ as prosperity increases, a convenient but false metaphor that implies that as those at the top get richer, so do those at the bottom, and at the same rate. Whilst it is true that all boats rise equally with the tide, it is not true that the poor get richer at the same rate as the rich. Study after study over many years show that while in good times the poorer do get richer, they do so at a much slower rate than the rich. Thereby the gap between rich and poor widens and inequality rises. Conservatives still believe in the old trickle down effect, although it’s long since been debunked as fiction.

It has always been the case that while the rich get richer, the poorest have lagged at the back of the pack wallowing in poverty. Many of the revolutions over the centuries have been the tragic outcome of this inequality. Les Miserables tells this story poignantly.



Inequality results in social unrest, social disruption, and in the end, if unresolved, in revolution. It is a risky state of affairs. And the people are revolting against it.

Read what Nick Hanauer had to say in 2014 about the dangers of increasing inequality in: Politico: The Pitchforks Are Coming… For Us Plutocrats

In the US, Bernie Sanders has attracted massive grassroots support by railing against income inequality. In contrast, conservatives embrace inequality. A 2014 article in newmatilda.com by clinical psychologist Lissa Johnson What Makes Them Tick: Inside The Mind Of The Abbott Government concludes: “The two ideals most dear to our Government’s extremist ideological heart could be exposed for what they are: change-aversion and inequality.

Inequality comes in many guises. Some are obvious to all; some are subtle.

Let’s take a contemporary example. The purpose of the Gonski schools reforms is to iron out inequality. Inequality of opportunity exists in schools that have many children from poorer postcodes or disadvantaged homes, where the children have disabilities or are of other than Anglo-Saxon ethnicity. These schools need extra resources. Despite the oft-repeated LNP mantra that the problem of inequality in schools cannot be solved ‘by throwing money at it’, the undeniable fact is that money is needed for the extra teachers and teaching resources required. Notwithstanding that, the latest LNP ploy is to suggest that poorer outcomes might result when funding is increased! It’s all about avoiding properly funding years five and six of Gonski. Add to this the Turnbull suggestion that the federal government might focus on funding private schools and leave states to find the funds for public schools, and you have a recipe for deepening inequality. The well-funded private schools where the wealthy send their kids will leave the poorer schools further behind.

Voters are sick and tired of the LNP attitude to Gonski, which Abbott gave the impression he endorsed (we are on a unity ticket with Labor on education) before the 2013 election, only to walk away from properly funding it afterwards. They are sick and tired of the inequality of opportunity at public schools and the politicisation of school funding. It’s not fair and they want it fixed.

In the last few days we heard that in the tertiary sector student loans debt in Australia will likely top $185 billion in the next decade, much of it irrecoverable because graduates will not reach the income threshold where repayment of their loans begins. The reason they will not earn enough is that the courses they took did not qualify them sufficiently. Why? Because they were shonky courses, run by shonky operators, whose prime objective was to line their own pockets. They had no concern for course quality or outcome. Making money was their aim. They are crooks that have accentuated inequality. They prospered from students’ fees, which were borrowed from HELP. The students have nothing to show at the end except a massive debt, which the LNP is now threatening to retrieve from the student’s family, and even from deceased estates.

Education will be a hot issue at this election.

If you’re interested in seeing how good education might be delivered, in how excellent healthcare might be provided, in how women might contribute to good governance, be sure to see Michael Moore’s most recent brilliant film: Where to Invade Next. You will be astonished.

Next, take the recent scandal revealed by the leak of the Panama Papers. Here we have a flagrant example of the rich and powerful ferreting away their wealth in tax havens to avoid paying their fair share of tax. Presidents, prime ministers, politicians, sheiks, and thousands of wealthy individuals and businesses are implicated, 800 from this country. Some may have legitimate reasons for having assets overseas, but many are deeply suspect. Why does, for example, Wilson Security, which guards the ATO, have a need to open an account with Mossack Fonesca?



PAYE workers have no option but to pay their legal share of tax: the wealthy have the means of minimising it, or avoiding it altogether. The ATO reported recently that almost 600 of the largest companies operating in Australia did not pay income tax in the 2013-14 financial year. Many are household names: Qantas, Virgin Australia, General Motors, Vodafone, ExxonMobil, Warner Bros Entertainment, Lend Lease and Ten Network Holdings. Others made huge profits but paid miniscule tax: Apple, Microsoft, Google, VW and Spotless.

That’s not fair. That’s inequitable. The voters are sick and tired of unfairness. And yet the Turnbull government is contemplating giving business a company tax break!

As if that’s not enough to turn our stomachs, we now have our most prestigious banks behaving like shonky back room operators. We have our most prominent bank, the Commonwealth Bank, employing loans traders who put their bonuses ahead of their clients’ welfare, invested clients’ funds in dubious schemes, thereby losing their life’s savings. We heard about claims managers in CommInsure who refused or unreasonably held up legitimate claims in order to bolster their bonuses. Then we heard that ANZ and Westpac harbour BBSW traders who have knowingly rorted the bank bill swap rates to make massive profits for their banks.

It’s wrong, it’s unfair, and we are fed up. What sort of unethical behaviour, what kind of culture allows such shonky practices in our most prestigious institutions? Yet when this unseemly culture was questioned, we heard a very senior banker, David Murray, ex-CEO of CBA, angrily castigating those who questioned it. Take a look.



And while the top brass in the banks allow this toxic culture to develop and thrive, they are pocketing millions in salaries, bonuses and shares.

There are now calls for a Royal Commission into Banking, from Labor and the Greens, and even some Nationals who are angry about how some of their rural constituents have been treated by the banks. But there has been a noticeable lack of enthusiasm shown by the Liberals, who insist that ASIC can deal properly with the rorts, the corruption, the unfair behaviour. Yet they haven’t. Some regard it as useless!

Some Liberals have labelled calls for a Royal Commission as a ‘stunt’, and the bankers are up in arms – they’ve had enough enquiries they say! What a contrast this is to the relish with which the LNP pursued the unions via the Heydon Royal Commission into Union Governance and Corruption? Maybe the growing community sentiment will pressure government to establish a Royal Commission into Banking Governance and Corruption. Wouldn't that be nice!

Not long ago we heard of the corruption in NSW through its Independent Commission Against Corruption, ICAC. Countless politicians were shown to have their noses in the trough, ruthlessly exploiting the advantages of their positions. Many were forced to resign. The people are angry and fed up.

Only a week or two ago it was revealed that an elaborate mechanism had been set up to funnel donations from banned donors to the Liberal Party in NSW via the ‘Free Enterprise Foundation’. Key figures feigned ignorance, but the Liberals, having been caught out, were embarrassed. Key figures feigned ignorance, but the Liberals, having been caught out, were embarrassed. The NSW Electoral Commission is withholding some $4 million due to the NSW Liberal Party until it reveals its list of donors.

Reflect now on housing affordability. Young people, (and their parents), despair of ever owning their own home because competition from investors and the well-off using negative gearing to acquire a second or third dwelling are pushing house prices ever upward, so that now in Australia and particularly Sydney we arguably have the most unaffordable housing in the world.
The people want something done about negative gearing and the associated capital gains tax concessions. Labor has promised to do so and save the billions of revenue lost. The LNP, after talking about it, seems to have backed off.

Think too about the superannuation tax concessions enjoyed particularly by the very wealthy, who are able to deposit large sums into their fund for their retirement with minimal tax implications, a privilege not enjoyed by the poorer. Inequality again. Ordinary people want to see these perks for the wealthy, which cost the government billions in lost revenue, reduced or removed.

All these examples illustrate how those with wealth and those who have influence, those enjoying the view from the top of the tree, put themselves ahead of those beneath them, those they are supposed to serve. They prosper and profit while the rest languish and the inequality gap widens and widens.

Whichever way we turn we see this. More than ever the ordinary people are waking up to the reality of inequality, are angry about it, and are incensed by the reluctance of politicians to acknowledge and address it. They are fed up with unfairness, and want something done about it now.

They want the crooks, the shonky operators, the corrupt, and those responsible for the inequality brought to heel and punished. They have had enough. They want the system cleaned up. They want change!

Any politician guaranteeing to do so will get their support at the ballot box; those who don’t or won’t will be ignored.

Inequality will be a hot button issue at the upcoming election.




What do you think?
What are your views about inequality in this country?

What do you want done about it? What party is likely to act?

We look forward to reading your views and your comments.

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The calamitous Abbott lies in wait



You may wonder why anyone would waste time writing about this man, erased from the top job by his own party, and discredited in multiple ways by commentator after commentator. For me, the reason is twofold. First, he is still confronting us day after day in the media, and just as importantly his successor is doing so poorly that some want Abbott to return.

He lies in wait hoping to do so. All the while his appalling legacy hangs like a dark cloud over his party.

I looked for an adjective to place in the title. Some of you might have chosen: catastrophic or disastrous or dreadful or tragic or devastating or destructive or ruinous or shocking or scandalous or appalling or dreadful or outrageous or deplorable or shameful or contemptible or despicable or disgraceful or woeful or even loathsome. While any or all might be applicable, ‘calamitous’ seemed to me to be the most appropriate. The Free Dictionary defines ‘calamitous’ as “having extremely unfortunate or dire consequences; causing ruin or destruction”. That description seemed to me to fit Abbott better than any of the others.

Abbott’s calamitous legacy is everywhere to be seen.

We need go no further back than the recent COAG meeting to feel the drag of the Abbott legacy on deliberations at that forum. PM Turnbull and Treasurer Morrison are encumbered by the ball and chain of Abbott’s decision, at the time of the 2014 Budget, to cut around $80 billion of funding to the states: $30 billion from schools and $50 billion from hospitals. I will not burden you with the convoluted arguments around this except to say that Labor claimed $80 billion was removed, while the LNP claimed it was never in Julia Gillard’s budget anyway. Despite denying the Budget had been cut, Abbott claimed he would achieve $80 billion in ‘savings’ over 10 years by reducing forward spending on schools and hospitals. Work that out if you can. If you want to probe deeper into this sorry tale, read the ABC’s Fact check: Does the federal budget cut $80 billion from hospitals and schools?, and look at the conclusion: The debate over the $80 billion figure - whether a cut or a saving - is hot air.”

Hot air or not, the premiers and first ministers are livid that this money, needed to run their schools and hospitals in the coming years, will not be forthcoming from the federal government, leaving them in a dire situation. Turnbull decided on the risky strategy of offering them the capacity to raise tax themselves to fund these essential services, announced it just a few days before COAG, provided no documentation for this momentous change before or at the meeting, and received the anticipated thumbs down. Now Morrison is out declaring that the PM ‘called the premiers’ bluff’, and they chickened out! Believe that if you can. The premiers are insulted and furious. What a way to encourage consensus!

All this serves to reinforce the sad fact that Abbott’s calamitous budgetary legacy hangs like a rotting albatross around the government’s neck.

And it’s not as if Abbott regrets any of his actions; indeed he is out and about insisting that he was right in his decisions, all of them, and that Turnbull is now following his policies and taking them to the election. This has forced Turnbull onto the back foot, declaring that his government is all about ‘Continuity and Change’on which subject 2353NM has written such cutting satire.

Let’s look deeper into budgetary matters.

Abbott’s fiscal legacy is the aftermath of his 2014 Budget, which is still causing anguish for the Turnbull government. Several measures designed to reduce spending are still held up in the Senate and are unlikely to be passed. The unfairness of that budget still hangs like a bad smell around the Coalition, even among its supporters. Hockey’s bluster about ‘ending the age of entitlement’ for those on ‘welfare’, while puffing Cuban cigars, still sticks in people’s craw.

Yet Abbott tells an audience in Japan that he wears that budget as ‘a badge of honour’! He is unrepentant; he would do the same budgetary damage again.

And he lies in wait to do so.

This week we saw the re-emergence of the Hockey/Abbott ‘we must live within our means’ mantra. Turnbull and Morrison, hoping this homely metaphor would resonate with voters, didn’t bother to explain how that applies to the federal budget. Perhaps they hope it will remind voters of the old virtue of saving before buying, or of using old-fashioned lay–by, notwithstanding the fact that homeowners certainly do not use this approach to purchase the new home. They borrow heavily and pay it off of later, just as governments ought to do.



The LNP wants voters to believe ‘living within our means’ equates with cutting expenditure, assiduously avoiding any hint that ‘means’ = income = revenue, and that increasing revenue would have the same result.

In last week’s Crikey Bernard Keane points out: “
…there's been no talk at all of ‘living within your means’ while government spending as a proportion of GDP went from 24.1% of GDP in Labor's last full year to 25.6% of GDP in 2013-14 and 2014-15 and then to 25.9% this year. Nor was there talk of ‘living within your means’ when the Abbott repealed the carbon price (cost: $6.2 billion over four years), the mining tax (cost: $3.4 billion over four years) or tax and superannuation changes announced by Labor but abandoned in December 2013 ($3.6 billion over four years, and much more over the long term), significantly exacerbating not merely the government's short-term fiscal position but crimping long-term revenue growth as well.”
It’s simply rhetorical claptrap designed to frighten voters into believing that Coalition members are prudent and ever-reliable stewards of the economy who will not waste taxpayers’ money, while Labor members are profligate spenders determined to tax us to the hilt to give the community the healthcare and education it needs: “Every time Bill Shorten opens his mouth it will be to tax you more”. Obviously, this will be an election slogan.

Since we began with the COAG skirmish on healthcare and schools funding, let’s look at Abbott’s legacy there. It still blights the Coalition.

New health minister Sussan Ley is still grappling with Abbott’s intention to emasculate Medicare, to introduce a co-payment, and to reduce spending in an area that inevitably will demand more as the population ages and as medicine offers more treatment options. Her introduction of ‘health care homes’ has puzzled doctors. Professor Brian Owler commented: “I’m president of the AMA, I’m a brain surgeon with a PhD, but I can’t keep up with the government’s planning process”.

In response to Bill Shorten’s promise to improve and properly fund healthcare, Ley is sounding desperate as she shouts at him telling him that he must “put up or shut up”.



The cost of the NDIS frightens the LNP, so their response is to restrict its development, always looking for ‘savings’ instead of doing what is required: raising more revenue to support this essential service that the people want and need.

After assuring us that he was on the same page as Labor over the Gonski reforms, Abbott’s legacy has been to obfuscate about the funding of years five and six, a position recently adopted by Turnbull, who is now talking about abandoning the funding of public schools and focusing federal funding on private schools!

Abbott’s legacy lingers, and he lies in wait.

Let’s look now at Abbott’s calamitous legacy in the vexed area of immigration policy.

Abbott (or was it Peta Credlin) thought that political capital could be accrued by demonising asylum seekers who came uninvited by boat. He learned that from John Howard. ‘Stop the boats’ became one of his infamous three word slogans, with which he flogged Labor mercilessly, claiming throughout that this would solve the problem of boat arrivals created by Labor. Not wanting to be seen as encouraging the arrivals, Labor allowed itself to become entangled in a web of derogatory dialogue about people smugglers and ‘illegals’, as Abbott termed boat people.

Abbott’s legacy is continuing antagonism towards asylum seekers among a significant proportion of the electorate. This has spilled over into anti-Muslim sentiment and the formation of Anti-Muslim groups such as the far right-wing United Patriots Front, who unveiled a “Stop the mosques” banner at the Collingwood AFL game last weekend, and a political group calling themselves Party For Freedom, which is opposed to multiculturalism and open borders, which was responsible for picketing and riots at the Halal expo in Melbourne this week.

Abbott’s extravagant language directed at Islamic State, his incendiary use of the term ‘Team Australia’ to divide Australians into them and us, and his provocative stance towards Muslim leaders accentuated the antagonism. He set a fire of hatred that still burns in the heart of many Australians. He could have taken an accommodating line, as did Malcolm Fraser who had to manage thousands of boat people from Vietnam. Fraser’s approach resulted in the cheerful integration of these Vietnamese immigrants into our society. Instead, Abbott preferred hostility, antagonism and the divisiveness this entails.

This is Abbott’s calamitous legacy. Yet he lies in wait.

He not only defends his divisive ‘stop the boats’ immigration policy, he has been abroad promoting it to anyone in the Eurozone who will listen as the way to solve the immigration crisis in Europe and the Middle East. The misery that so many asylum seekers suffer in detention is testimony to Abbott’s hard-hearted, punitive policies, but politics keep him on this hateful track.

Take now his calamitous attitude to climate change.

At times climate change skeptic, sometimes outright denier, always coal and oil advocate and renewables opponent, Abbott has gifted his do-nothing-to-curb-the-use-of-fossil-fuels legacy to Turnbull, who accepts the reality of anthropogenic global warming and knows what ought to be done about it, but is lumbered with the Abbott/Hunt Direct Action Plan that holds little promise of reducing our carbon footprint or meeting our emissions targets. Yet there is Turnbull lamely advocating it. Meanwhile, one thousand kilometres of the Great Barrier Reef has already been bleached, and more is threatened.

Turnbull knows that if he puts a foot wrong, Abbott is lying in wait, aided and abetted by a coterie of deniers, who would have this man back in a flash.

Abbott’s calamitous legacy in the field of communications is legend.

Look at what he’s done to the NBN. ‘Demolish the NBN’ was his command to Turnbull, not given because we did not need fast broadband for a myriad of reasons, commerce and health care to name but two, but because it was a Labor initiative.

Excruciatingly, Turnbull put himself through fiery hoops to placate Abbott but still save the NBN. As a result we now have a substandard multi-technology FTTN system that uses outdated equipment and ageing copper wire, that is not as fast as promised, is rolling out slower, and looks like being more expensive than Labor’s FTTP system, which experts insist should have been the target from the beginning.

Abbot’s destructive NBN legacy is still playing out, and is inhibiting what Liberals repeatedly insist our economy needs: ‘jobs and growth’.

I could go on for many more pages, so let’s conclude with Abbott’s legacy on two social issues: marriage equality and the Safe Schools program. He remains opposed to them both.

Although in favour of marriage equality, Turnbull has meekly gone along with Abbott’s delaying tactic of a post-election plebiscite, which he knows is Abbott’s way of maiming it, and perhaps killing it off altogether.

Abbott, always lurking in the background, has announced that Safe Schools, which is already doing so much to reduce gender-related bullying, should be defunded.

Abbott’s calamitous legacy on social issues haunts Turnbull. Abbott lurks on the backbench where he lies in wait.

When he’s not sitting on the backbench, he’s overseas soliciting photo-ops with such celebrities as Japan’s Shinzo Abe, Britian’s David Cameron, President Poroshenko of the Ukraine, US Secretary of State John Kerry, and even Henry Kissinger. Back home, he’s all over the place, never averse to a pic with group after group, and now he’s on his annual Pollie Pedal. He’s not sitting back like a vanquished leader: he’s promoting Abbott wherever he can! Take a look at his Facebook page.

>

Among the conservative clique that still supports Abbott, he talks about ‘the second Abbott government’, which he insists ‘will be better than the first’!

Although an Abbott comeback still seems fanciful, he certainly believes in it, notwithstanding the recent ReachTel poll of 743 voters in his Warringah electorate, where almost two-thirds of respondents, including half of all LNP voters, said he should quit parliament at the coming election.

The calamitous Abbott lies in wait, ready to attack. His storm troopers are ready. They know that a winning strategy is to first weaken the enemy, then mount a surprise attack.

The commercial shock jocks, incensed by PM Turnbull’s refusal to appear on their programs, are spreading adverse publicity about him, which is weakening him. Several of the LNP’s traditional supporters in the media are writing columns critical of Turnbull. Softening him for an attack is proceeding apace.



Close to Abbott is a group of offended conservatives. These men meet in the so-called ‘monkey pod room’. They are urging his return and planning for it. Eric Abetz is still angry about his demotion. He says he has so much to offer. Kevin Andrews is angry and again has offered to stand should the party wish to replace Turnbull. Cory Bernardi is so angry about how the conservative clique is being treated by Turnbull that he is talking of forming a new conservative party. George Christensen is angry about the Safe Schools program and is echoing Abbott’s hostility. Government House Whip Andrew Nikolic remains a fervent Abbott supporter. Although Turnbull won the leadership contest 44 to 34, when Andrews stood against Julie Bishop for deputy, he garnered 30 votes, an indication of the strength of the conservatives in the Liberal party.

Following a discordant week for Turnbull and with the latest Newspoll of 51/49 TPP to Labor reflecting voter discontent with the LNP, the troops are contemplating an attack on Turnbull.

Meanwhile, Abbott lies in wait, believing he is the man for the top job, while still mouthing sanctimonious words of support for his adversary.

Nobody knows what the weeks ahead will bring. Despite the improbability of a second Abbott government, in the crazy and unpredictable world that federal politics has become, nothing is impossible. The vengeful wrecker intends to show that this is so.

All the time the calamitous Abbott lies in wait.



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Continuity and change


Malcolm Turnbull’s re-election campaign started well. He tried out ‘continuity and change’ as a slogan when announcing the potential election date of July 2. While it might have been accidental, pinching the ‘meaningless’ election slogan from a US political satire could be seen as an indicator of the standard of the research and advice Turnbull is getting. When the star of the TV show tweets
and one of the show’s writers comments
maybe it’s time to suggest the execution of the plan lacked something!

While the comparison to Veep and the US TV show House of Cards Twitter account sending up Turnbull’s recall of parliament is pretty funny and certainly embarrassing on day one of the really long election campaign, there is a serious issue with the pseudo-electioneering and the rationale for the recall of parliament in April.

Turnbull’s rationale for the recall of parliament is that it is time to stop playing games and pass the ABCC and Registered Organisations Bill through the Senate. The ABCC legislation, if passed, will re-create the Howard era Building and Construction Commission that had the right under law to investigate alleged corruption in the building and related industries. Despite the demonstration of not asking the question until you know how it is going to be answered, the Heydon Royal Commission did find some issues of apparent concern in the building industry. It is also worth noting that the same Royal Commission found nothing against either current Opposition Leader Bill Shorten and former Prime Minister Julia Gillard (not that small details like that will stop the whispering campaign from the ultra-conservative elements of the media and politics).

In the words of Turnbull, the 2013 Senate election results were an embarrassment. To ‘fix’ the problem, the Coalition and the Greens passed a bill through the parliament that (until they work out a way around the legislation) eliminates the ability of ‘preference whisperers’ to be elected through ‘back room deals’. Understandably, most of the crossbenchers in the Senate (who voted against the Senate voting bill by the way) object to the characterisation. Funnily enough, the same crossbench Senators are not all that interested in passing the ABCC legislation, because they claim, it has fundamental flaws. Fresh from working with the government to pass the Senate voting legislation, Greens leader Richard Di Natale claims Turnbull ‘is adopting the same tactics that people in the construction industry — he says — are using. That is, bullying tactics, that is using a piece of legislation to bludgeon his way through the Senate.’ The views of Di Natale and the other crossbench Senators can be read here.

Apparently a lot of the concern from the crossbenchers isn’t around the actual prospect of an anti-corruption body ‘supervising’ the construction industry, but the lack of a federal corruption body across other areas of federal influence. Queensland Senator Glenn Lazarus is quoted as saying ‘I said to Malcolm I’m happy to vote for the ABCC if he makes it an ICAC or equivalent’.

Actually, it’s a pretty good argument. The Coalition government wants to re-establish the ABCC to minimise the ill effects of corruption in the building industry (conservative political code for the building unions). Most if not all states in Australia have an ‘anti-corruption watchdog’ that will investigate alleged corruption across government, politics, workplaces and so on. The federal government doesn’t have a similar body.

What Turnbull is now saying (as Abbott was saying when he set up the Heydon Royal Commission) is that there is corruption in the building unions. Abbott was very careful with the powers he gave Dyson Heydon to ensure that the Commission didn’t stumble across another ‘bottom of the harbour’ where the Costigan [building industry] Royal Commission in 1982 followed a paper trail and found a tax avoidance scheme that was estimated to have cost the country billion dollars in unpaid revenue. (By the way, a 1982 billion is worth a lot more than a 2016 billion dollars.)

We’ve seen above that Senator Lazarus for one will vote for the ABCC if the scope of the proposed anti-corruption powers is not limited to just the building industry. Turnbull’s not budging and Attorney General Brandis has stated the government wants to pass the legislation in its current form. The position is rather illogical. What Turnbull and Brandis are saying is that while they want to eliminate potential corruption in the building industry, there is no corruption (or even worse, no corruption they want to eliminate) in other areas of society where federal legislation rather than state legislation applies.

Claims of corruption do to an extent besmirch a reputation, regardless of the veracity of the claim. In the recent Queensland Local Government elections, a number of councillors (and potential councillors) were reported to the Queensland Crime and Corruption Commission. The Commission eventually warned political operatives that false reporting was wasting time and money as well as asking the Queensland parliament for a new criminal offence in regard to false reporting used to injure someone’s reputation. If there is nothing to hide, surely a prime minister would welcome an independent body to investigate and determine the accuracy of corruption claims.

In the same week that Turnbull made his ‘decisive’ call telling the crossbench it was his way or the highway, the NSW Electoral Commission released a report advising the NSW Liberal Party that it was not going to pay $4.4million in public funding until the Liberal Party disclosed who donated around $700,000 to the party via the use of a Trust Fund before the 2011 NSW state election.

The treasurer of the NSW Liberal Party at the time was Arthur Sinodinos, Turnbull’s current Cabinet Secretary, who claims that he had no personal knowledge of the donations. Sinodinos has also instructed his lawyers to write to the NSW Electoral Commission ‘inviting’ them to remove references to him from the report and publish a correction on their website. The ALP are calling for Sinodinos to stand aside again, (he was forced to do so as assistant treasurer when Abbott was prime minister over some allegations regarding his employment with Australian Water Holdings between stints in parliament), the Liberals are suggesting it’s time to move on. As they say in the classics, the matter is far from over.

The NSW Electoral Commission believes that the NSW Liberal Party is hiding the names of political donors. Regardless of who did or didn’t know about it, the danger in hiding political donations is that you or I don’t know if the legislation passed is the best outcome for the country rather than the best outcome for the specific interests of a donor to a trust that ends up in political party coffers prior to an election. This is no better than collusion on a building site. Turnbull could be arguing for the elimination of collusion on the building site but not the hiding of political donations, or dubious decisions made by federal politicians or employees. Glenn Lazarus is right — if the federal government is to have a corruption body, why limit it to a specific industry (that conservative governments have used as a whipping boy for generations)?

You would have to wonder if the strategy was put together by the same crew that decided ‘Continuity and Change’ was firstly meaningful and secondly hadn’t already been used by someone — and a satire no less. Apart from the reference to HBO series Veep, which airs on Foxtel in Australia (and if Turnbull’s staff knew about it, did they think that no political journalist in Australia would watch a US political satire — really!), Continuity and Change is also an academic peer reviewed historical journal published by Cambridge University Press. Turnbull was one of the Internet Company pioneers in Australia and you would think his staff would have the ability to search the internet as search is your friend.

Continuity and change was an explanation for Abbott’s claim from the other side of the world that of course he would support Turnbull — the policies are the same (and hasn’t he been doing a great job supporting him so far!). Maybe the Coalition looked at the ALP’s 2013 election campaign when Rudd didn’t mention anything done by that person with the ‘G’ name (Gillard), or the 2010 campaign when Gillard did the same thing with the ‘R’ name; and decided that this strategy effectively tied the ALP’s hands behind its back, as both Rudd and Gillard had made some valuable contributions to the financial and social wealth of Australia. So they decided to at least acknowledge Abbott’s existence. It is of course debatable if Abbott did do anything worthwhile while prime minister — we might go there another day.

The thing is that the Coalition voted twice on Abbott’s prime ministership. The first time in February 2015 when 39 out of the 100 MP’s and Senators decided that an empty chair was a better option as no one ran against Abbott in the leadership spill. The second time, Abbott was trounced (remembering he originally only won the leadership by one vote anyway). Turnbull is asking us to believe that he and the ultra-conservatives led by Abbott are on the same page, and the continuity is what we need; in which case why go through the hassle of replacing Abbott? We’re also supposed to believe that corruption in the building industry is rife; yet there is absolutely no corruption elsewhere in the federal sphere. Both arguments have holes large enough to drive the mythical Selina Meyer’s campaign bus through.



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The small government myth


Politicians are a strange breed. They will spend millions at election time attempting to convince you that their side is better than the other because they will better manage the country. They will also tell you that they have irreconcilable differences with their opponents and in essence, it’s their way or the highway.

Of course the reality is somewhat different. In the past few weeks the Australian public have observed the farce of an overnight Senate sitting when the Greens and the LNP had already come to a deal to pass the legislation at the root of the so called angst. Sure, the politicians ‘signed up’ for this childlike behaviour to prove political points and lay down a perception of what they and other parties are alleged to stand for.

The people who staff the Senate chamber, the Comcar drivers and so on would not be in a mood to appreciate the political and ‘image’ benefits of this action - they were missing their kids’ bedtime, a dinner date, coaching the Under 14’s sporting team - because they were hanging around all night just in case the Senators came to a realisation at 2am that bed was really a better idea than reinforcing the ‘narrative’ that they were better than ‘the other guy’ to a really small group of people, as most really didn’t care.

Let’s call the farce for what it is – marketing. Somehow the behaviour in the Senate was supposed to convince you to change your vote – just like a toothpaste advertisement on TV is supposed to convince you that Brand X will clean your teeth so well, you’ll exceed your wildest dreams. Was it successful – probably not in any meaningful way. But the entire cohort of Senators contributed. You could suggest that they are all the same.

There is however a difference between the respective mindsets of the two major political parties in Australia. In the 1980s, the Hawke Government hosted a summit in Parliament House. The outcome was a consensus decision that for Australia to grow holistically, all sections of the community must make some of the changes and reap some of the rewards for the changes made. Part of the success of the package – known as the Accord was the agreement between industry, unions and the government to pursue economic and cultural growth.

The Accord lasted most of the Hawke and Keating government era and to be fair a lot of the work undertaken by Hawke and his treasurer Keating set the country up for the impressive run of economic growth that has occurred since – even during the tech wreck and GFC that pulled a lot of other similar economies into recession in the past 20 years.

Keating’s ALP lost to Howard’s Liberal/National Coalition in 1996. The Hawke Accord had at its heart the concept that if the economy grew, all should receive some direct benefit from the growth. Howard tried a different tack:
Official statistics show that between the time Howard came to power in March 1996 and the time he lost office in December 2007, per person household incomes grew by about 25 per cent in real terms. But when you dig a little deeper, things look less rosy, for the rising economic tide did not lift all boats by the same amount.

Economic inequality grew through that period, as did relative income poverty, says Professor Peter Whiteford of the ANU’s Crawford School of Public Policy.

Household income for the top 10 per cent went up 60 per cent.

“It was the highest for any OECD country for the period,” says Whiteford.
For the median household, it went up about 53 per cent. For the poorest 10 per cent, it went up about 37 per cent.

So the story is that everyone did better, but the rich did much better. It was the economic boom that drove incomes higher, but it was primarily the government’s approach to tax and welfare policy that caused the inequality.
One example of Howard’s methods was the replacement of the federally operated Commonwealth Employment Service (CES) with the ‘Job Network’. Whiteford in the article linked above claims:
The introduction of the Job Network saw the stripping out of about $1 billion of assistance for people unemployed long term.

There was the welfare-to-work policy that shifted single parents and people with disability off to the lower Newstart allowance.

They redirected money away from those on working-age benefits towards older people generally, and particularly the upper middle class.
Apparently Howard also wanted to introduce income splitting (where the earner of the majority of household income could gift some of it to the lesser earner and reduce both party’s income tax liability) but didn’t win the argument within the Government. It fits with his traditional views of the husband being in the workforce and the wife staying at home and ‘homemaking’.

To be fair Hawke and Keating also enthusiastically privatised some functions of Government. However, generally the businesses that Hawke/Keating privatised were stand alone operations where the public were encouraged to (re)purchase some of the equity in the business. Howard’s concept was to invite existing private enterprises and some non-profit organisations to initially compete with and then completely take over the operation of government services – such as the CES or the current proposal for the privatisation of the payment of benefits incurred by Medicare.

This brings about a fundamental question of government in general – what is it there for? Should government take an active role in society to attempt to equalise as far as possible the expectations of those in the society (sometimes termed ‘big government’), or should it be a body that enables private enterprise to provide services while providing some oversight (sometimes known as ‘small government’)?

While both concepts will certainly increase the wealth of parts of the community, which one is fairer to all those who live in a society? Clearly the Howard era Coalition government were firm believers in enabling private enterprise – as those who had the financial and intellectual capital to become part of say the Job Network couldn’t set themselves up in business on a ‘wing and a prayer’ – rather they needed sufficient staff, business systems and so on to meet the government’s Key Performance Indicators (KPIs).

While the theory that once those who had the financial and intellectual capital would support those on lesser incomes and innovate to ensure that the service was provided at a lesser cost than the Government could do it, the reality was somewhat different. If you think about it for a minute, the number of people that apply, choose not to apply, choose to actively seek work or those that don’t really doesn’t matter. So it really doesn’t matter how job ready people are, how many job applications they have prepared in the past week, or if they have completed a thousand how to get a job courses, unless an employer really wants to offer anyone a job, the job isn’t available.

Because is it admittedly difficult to measure if a local business has an opening for another worker or Woollies is opening a new store in Upper Timbucktoo West in nine months’ time, the Government has to justify the decision and demonstrate that the system works in another way. So we again look at KPIs – only the indicator this time is how many jobs people have applied for, how many contact hours they have with their job councillor and so on which ultimately is meaningless.

Rather than attempting to measure how we as a nation are increasing the common wealth of all citizens which will lead to jobs being created for those who need them, we pay the Job Network providers to produce courses and measure success rates of those who are, in a lot of cases, victims of their own circumstance. Most people who are unemployed really do want to do meaningful work – even if it is at the local Meals on Wheels or other volunteer organisation. In fact, you could argue that if government was actually looking after its citizens effectively, organisations such as Meals on Wheels would not be necessary.

Really, there is a whole new bureaucracy formed, but because none of them are public servants, the Coalition government claims they don’t interfere in business, they don’t have a bloated bureaucracy and they are driving a small government agenda. If members of the Job Network can demonstrate that people are job ready, they get paid – regardless of the actual success in getting people into work. A 2007 report discussed the problems of the Job Network providers being motivated by profit rather than an objective of finding a job for all who want one.

Small government seems to be a mantra of the conservative chattering classes. The gold standard in middle and upper income support from Government is the Howard Costello years with the generous family benefits, frequent tax cuts and so on. It’s all very well for the government to support the better off, but if the government looks at applying stimulus to an entire community there is hell to pay.

You may remember that one of the Rudd government’s targeted measures to ensure Australia didn’t become a victim of the late noughties Global Financial Crisis was the delivery of a means tested $950 to most taxpayers in Australia. The theory being that regardless of how the money was spent (as opposed to saved), there would be a benefit and demand generation in the economy. Stories abounded of large screen televisions being out of stock, or the increased takings at the local TAB or pokies palace. Thinking about it for a minute, the electronics stores and pokie places also employ people who get to keep their job and pay as a result of the continual revenue created in their place of work – and the staff then buy such luxuries as food, petrol, tyres and maybe a night out at the movies themselves. Then the people who work at the food and petrol shops then get to keep a job and spend money and the process continues.

If anything Rudd’s $950 no strings attached cheques favoured those on a lower income as $900 is a greater proportion of someone’s annual income if they are on $50,000 per annum than it would be for someone on $100,000 per annum. However, the criticism was effectively suggesting those on a lower income didn’t have the right to make expenditure decisions.

It seems the fundamental question does have an answer. If we want to allow those who already have considerable financial resources and influence to further increase their wealth, we support the actions of conservative governments, as the Howard era statistics above demonstrate. The small government mantra is as much of a myth as the concept of trickle down economics that has been previously discussed here on The Political Sword.

When the Republican Governor in Utah can understand that direct assistance to those in need (in this case giving them a roof over their head) is a good use of public funds as discussed in this article we published last May, why does our federal government choose to continue to believe that company tax cuts, seeking bids to run government services and not considering any change to benefits enjoyed by the better off is an acceptable practice in 2016?

Let’s finish with the words of Tim Dunlop writing on the ABC’s The Drum website
In other words, by hiding behind the rhetoric of "small government" the right has managed to co-opt the functions of the state and bend them to the benefit of private firms and individuals at the expense of the majority of citizens.

We are told government has to cut back on health, education, childcare, infrastructure and other public services, while public money is funnelled to private businesses. All under the guise of "small government".

It is the ultimate democratic sucker punch.


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Where are the crooks?



Ask Tony Abbott where the crooks are and he would repeat what he said when he set up the Royal Commission into Union Governance and Corruption: the crooks are clustered in the unions, particularly the construction unions, and most of all in the CFMEU. The last two words of the Commission’s title capture Abbott’s diagnosis. Unions are corrupt; the Commission’s task was to ascertain how corrupt.

Abbott contended that union officials were stand-over thugs who bullied and bribed construction firms to get what they wanted. He cited their behaviour as criminal, immoral, and reprehensible. No one is denying malfeasance in the union movement, yet there have been only 20 referrals from the Royal Commission, and so far no charge has been laid against any union official. Time will reveal how many crooks there really are.

Although Abbott has been ignominiously pushed into the background where no sensible person takes him seriously anymore, the diagnosis of corrupt behaviour in unions has been endorsed by his successor. Malcolm Turnbull has enlarged the extent of their ‘unlawful behaviour’ by asserting that it is a drag on productivity. He wants the Australian Building and Construction Commission reinstated in order to increase the productivity, competitiveness and profitability of the construction industry. He has added an economic twist to his pro-ABCC argument. If the ABCC bill is rejected again by the Senate, he will use that as a double dissolution election trigger.

The 2014 Productivity Commission report said that the evidence for aggregate productivity increases and cost savings was weak during the time of the ABCC. ACTU Secretary, Dave Oliver said: "Since the ABCC was abolished productivity has in fact increased and industrial disputes have decreased; the only thing that's increased…is the incidence of workplace accidents, injuries and unfortunately fatalities as well." But that has not inhibited Turnbull in pressing his economic case. After all, facts are irrelevant when making political points, especially at election time.


The point of this piece though is not to argue a contrary position on the ABCC, but to look around to check whether the crooks are confined to unions.

Where are the crooks?

Liberals need look no further than their own party. In recent days the Electoral Commission has refused to pay the Liberal party’s NSW branch more than $4.4m until the party reveals the secret donors who poured about $700,000 into its coffers before the 2011 state election. Now it happens that at the time Arthur Sinodinos (previously Chief of Staff to John Howard and now a Senator) was the party’s treasurer and finance director. He has indignantly denied any knowledge of the secret donors and the refusal to reveal them, has threatened to sool his lawyers onto the Commission, and has demanded a retraction of the statements that implicate him. The truth of the matter may emerge, but in the meantime Sinodinos is suspect, and is being pursued by Labor. As Tanya Plibersek said:“It beggars belief that the treasurer and finance director of the Liberal party of NSW didn’t know about an elaborate arrangement to channel hundreds of thousands of dollars of illegal donations to the Liberal party.” Many will agree with her.

Of course Sinodinos has form in amnesia. You will remember his lapses of memory when he faced the NSW Independent Commission Against Corruption inquiry to defend what he did to earn an alleged $200,000 salary from Australian Water Holdings after he left the public service. He seemed to be doing almost nothing to warrant that huge salary. The commission also heard that Sinodinos, a former AWH director and NSW Liberal Party treasurer, stood to make up to $20 million if AWH won a lucrative contract with the state-owned Sydney Water company. He denied any knowledge of donations from AWH to the Liberal Party although he was a key player in both. Even the ever-loyal Abbott was concerned enough to have him stand down from parliamentary duties temporarily. No charges have been laid regarding this matter, but suspicion remains in the minds of many who wonder how anyone so involved in both sides of a huge money transfer could not know about it.

Sinodinos comes across as a plausible fellow, so no one is calling him a crook. But how many more inexplicable lapses of memory will people tolerate before doubt about his integrity gives way to certainty about his lack of it?

Anyway, we know there are crooks in the Liberal Party. Former Victorian state director Damien Mantach embezzled $1.5 million of party funds and is now behind bars.



How many crooks does it take for the NSW state branch to accept large donations from banned donors, hide these donations from the Electoral Commission, and be prepared to forgo $4.4 million due to it from the Commission rather than reveal the donors? There is much more to come out about this ugly matter; perhaps in time we will be able to identify the crooks.

Let’s cast our net wider. Where are the crooks?

Look at the banks. We need go no further than the CBA.

How many crooks did it have in its financial planning arm? How many financial advisers were there who invested clients’ money in ventures where they earned fat commissions but which failed because they did not carry out due diligence, where they put their personal gain so far ahead of clients’ interests that they lost their clients' life’s savings? CBA chief Ian Narev has apologized profusely, but many are still awaiting the promised compensation.

How many crooks have they still got in the claims division of Comminsure, where scores of clients have been denied their legitimate insurance claims because the fewer the claims the bigger the bonuses that flow to the claims managers?

How bad is the culture of our premier bank when it enabled such behaviour to flourish? Are there more crooks there hoping not to be exposed?

Other banks are not entirely blameless.

Where are the crooks?

Looking further afield at industry, how many crooks were there at Volkswagen when it ‘engineered’ false emissions data to mislead the public and the regulatory authorities? What did VW CEO Martin Wintercom know? Was the culprit Falko Rudolph, head of diesel engineering, or Burkhard Veldten, head of software design, or Heinz-Jakob Neusser, head of development at VW, or Wolfgang Hatz, head of research at Porsche, all now suspended or left? Plenty of suspected crooks to choose from there!

Where are the crooks?

Closer to home, there was 7-Eleven where for years franchisees cruelly underpaid their workers, particularly students on temporary visas. It was later revealed that this was with the knowledge of the chairman of 7-Eleven, Russ Withers, who was forced to admit liability and offer recompense. He and chief executive Warren Wilmon have both announced their resignation from the company.

Where are the crooks?

Let’s look at the wider scene where the ATO reported recently that almost 600 of the largest companies operating in Australia did not pay income tax in the 2013-14 financial year. We are entitled to ask how many crooks there are out there avoiding paying their proper share of tax. They all insist that what they do is legal, and perhaps in the formal sense it is, but how moral is it to make huge profits in this country but contribute nothing via taxes to support the services the community needs, and ought to have? Many are household names: Qantas, Virgin Australia, General Motors, Vodafone, ExxonMobil, Warner Bros Entertainment, Lend Lease and Ten Network Holdings. Others made huge profits but paid miniscule tax: Apple, Microsoft, Google, VW and Spotless.

How many crooks does it take to achieve these immoral outcomes?

This piece is long enough already. To expose all the crooks out there would take ten times as many words. I hope though that this piece does demonstrate that to imply that the crooks are clustered in the unions, and insinuate that by comparison big business is populated with blameless individuals who are as pure as the driven snow, is entirely fictional.

Where are the crooks? They are everywhere. So why is the Turnbull government so ruthlessly targeting unions, and specifically the construction industry and the dreaded CFMEU?

It's political of course! To appease the Abbottites, Turnbull feels compelled to adopt Abbott policies, use Abbott catchphrases, even recite his appalling slogans that demean and condemn the whole union movement and unionists with it, knowing full well that only a tiny fraction likely deserve the condemnation he heaps upon them.

How obscene, how outrageous is it to revile just one small part of industry, the construction industry, when we know that crooks abound all through industry and commerce, even in our most prestigious institutions, the banks; when we see corruption in the Liberal party itself? And all this Turnbull does to gain political advantage.

When might we see him launching a Royal Commission into Banking, or a Royal Commission into Tax Avoidance, or perhaps a Royal Commission into the Liberal Party? Don’t hold your breath!

Where are the crooks? We know!

What do you think?
What are your views about PM Turnbull’s attack on unions?

Please comment on other instances of corruption.

Expose other crooks.

We look forward to reading your views and your comments.

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May your god go with you


It seems that the Australian Christian Lobby (ACL) is the keeper of the morals and ethics of a number of conservative politicians in this country. So does the ACL really represent the views of Christian Australia, or is it an attempt to enforce the views of a small group of people upon the majority?

To look at the views of the ACL, we need to do a bit of bible study. Those who will tell you that the bible is an accurate historical document have a fundamental problem in that the New Testament (the bit about Christianity) was written sometime after the events occurred. If we assume for a minute that the subject of the New Testament was actually born on 25 December 0AD, he died somewhere around March or April 33AD – despite the Gregorian calendar that we follow today not being developed until well after the 1000AD mark. While the common claim is that the New Testament was written hundreds of years after the event, this link to the Christian Apologetics and Research Institute argues that the various sections of the New Testament were all written by those who had direct knowledge of the events (or those who knew those with the direct knowledge) so were basically complete by 100AD.

Considering that we are now in 2016AD, it’s likely that in the previous 1900 or so years, various changes have occurred either through the length of time taken to commit the events to a permanent record, translation, intent or error. The Christian Apologetics website argues that while error is possible, the intent of the text remains the same. Given that most of us can’t remember what we had for lunch a month ago, or the exact circumstances and timelines behind an important event that occurred a year ago, the position that the bible text is an exact report of events that occurred years prior to the recording of them is as ‘pure’ today as it was when it was written is a leap of faith (sorry!) that is difficult to justify on a logical level.

For those who believe in a religion, be it Christian, Muslim, Buddhist or anything else for that matter, the book of faith for their particular brand of religion certainly suggests a way to live that is moral and ethical. However, it is doubtful if the books should be taken as an absolute truth. For example, the old testament of the bible, shared between the Jewish and Christian religions, prohibits the eating of products from pigs as it is ‘unclean’. Is there a deep spiritual meaning here or is it something as basic as that unless pig meat is cooked or cured properly, some pathogens survive? Science and modern technology do have their uses.

The ACL’s website will tell you that their work is to ‘see Christian principles influencing the way we are governed, do business and relate to each other as a community’. They also claim to be non-party political or aligned to any denomination of Christianity. It seems that principles in this case is a selected cherry picking of the bits they like out of the Christian holy book, the bible.

The ACL is currently in the news for it’s obsessive opposition to anything to do with acceptance of people who identify as LGBTIQ and by inference, same sex marriage. In their view, even the Safe Schools program, designed to prevent bullying across the spectrum of school students is claimed to be promoting sexual experimentation rather than being a valid response to a number of bullying issues – most of which have nothing to do with gender.

Continuing the biblical theme of this article, the Huffington Post religion site notes:
‘there are really only seven passages in the Bible that refer directly to homosexual behaviour, and none of them are associated with Jesus’

Compare that to the more than 250 verses on the proper use of wealth or more than 300 on our responsibility to care for the poor and work for justice, and you appreciate quickly that homosexuality was not exactly a major theme of the Bible.
The article in Huffington Post goes on to list the passages of the bible as well as discussing how the scholars see the relevance of the passages to the 21st Century interpretation placed on them by conservative commentators.

Jeff Sparrow discussed the historical roots of organisations such as the ACL in The Guardian. He makes these points:
Specifically, the ACL’s distinctive tradition comes not from the Holy Land but from the United States, where the American religious right first took shape in the early 1970s.

As Randall Balmer explains in Politico, Christian conservatism became a political force in the US at tail end of the civil rights era. Indeed, the religious right emerged initially to oppose desegregation – that is, to defend institutionalised racism against African Americans.

In 1971, the US government decided to withdraw tax exemptions from racially discriminatory schools. That included Bob Jones University, a fundamentalist college in South Carolina that claimed a scriptural basis for segregation. The university did not admit black students at all; later, it enrolled married black students but promised to expel any student who engaged in interracial dating (or who even supported an organisation that advocated interracial relationships).

The conservative political activist Paul Weyrich, working closely with the Reverend Jerry Falwell, rallied Christians in support of Bob Jones University’s right to receive tax breaks. Crucially, the campaign was pitched less as a defense of the college’s racism than as a matter of religious freedom: Weyrich roused a Christian constituency by warning evangelical leaders that the government was taking control their institutions. It was only later that Weyrich and Falwell redirected the anger at federal interference in Christian schooling into campaigns around “values” issues such as abortion and pornography.

The Australian Christian Lobby was founded in 1995, in fairly direct imitation of the Christian Coalition of America. There’s no suggestion that the ACL ever embraced the segregationist politics of Bob Jones. Nevertheless, you can still detect traces of that early history in the ACL’s persistent invocation of “religious freedom” when making its case against same-sex marriage.
See the contradiction? Note the number of references in the bible to proper use of wealth and responsibility to care for the poor and work for justice that the Christian conservative movements seem to routinely ignore when you look at their history of supporting segregation, racism and the framing of their arguments as religious freedom or values issues. Certainly conservative Christians have a right to be heard, but you wonder how the ACL can justify their request for exemption from the Discrimination legislation during the lead up to the same sex marriage plebiscite as caring for the poor and working for justice. As The Saturday Paper rightly comments:
This is an outrageous nonsense. If Shelton’s [Managing Director of ACL] arguments depend on vilification, they are scarcely arguments. They are bigotry. They are hate.
While a number of LNP politicians seem to be on the same wavelength as the ACL, others in the commercial world have a greater sense of morals. Mark Allaby, a senior executive with Price Waterhouse Coopers was recently instructed to resign from his seat on the board of ACL.
A spokesperson for PwC said that one in 10 of the company’s staff participate in board or advisory roles outside of PwC, but they’re not given a free pass to join any board they want:
“When it comes to employee participation on external boards, if a conflict arises between an employee’s board role and the best interests of PwC, we would request that they step down from that board”
Interestingly, Allaby continues his directorship at the Lachlan Macquarie Institute. The Institute’s vision includes the following text:
What we seek to achieve by this programme is the transformation of the nature of politics and governance in Australia. By helping develop the character and intellectual foundations of future politicians, journalists, advisors and public policy influencers before they step into public life, we will begin to see more decisions made based on a solid understanding of what is good, true and beautiful in light of the revelation of Jesus Christ.
You have to ask if it is the ‘true’ revelation, or the ‘conservative’ revelation where apparently bullying and vilification of children and adults in our society are considered to be acceptable.

Back in 2014, Eureka Street looked at the rise of the ACL and identified a few reasons why the Lobby has continued to grow. Among the conclusions:
Like most other pressure groups, the ACL, founded in 1995, boosts itself shamelessly in its search for donations and members. It claims to be a 'Voice for Values' and boasts 30,000 members. It reckons it has become 'one of the premier political lobbies in the country' and that it is 'growing in size and influence'. These are big claims, but measured by its growth and positioning ACL has been successful.

First it has effectively taken over the term ‘Christian’ in politics, though it does not claim to be the peak Christian voice. The name says it all. The major churches are fading by comparison, their image blighted by child sex abuse and falling attendances.

It is a sleight of hand, of course, to infer that the 64 per cent of Australians who are Census Christians subscribe to the ACL agenda. Half of them are Christian only in name and the other half includes many progressive Christians who do not accept at all any purported representation by the conservative ACL. But church leaders, like the new Catholic Archbishop of Sydney, Anthony Fisher, also on this year’s program, have enhanced ACL’s image.
Eureka Street is published by the Jesuits, a Catholic religious order.

If your takeout from Eureka Street is that not all Christian groups identify with the ACL, you’d be right. Forty religious leaders, most of them Christian, have written an open letter to the prime minister asking for him to arrange a vote on same sex marriage in parliament in the term of this government. Turnbull has so far refused.

There is evidence that ACL is far from the moral and ethical Christian organisation it claims to be. These people claim to be the interpreters of the Christian faith in today’s Australia yet seem to have completely forgotten the many references to proper use of wealth and responsibility to care for the poor and work for justice while skating around the scholarly interpretation of the few references to homosexual behaviour found in their source document – the bible. Readers of the bible are reminded far more of the responsibility to care for the poor and work for justice as well as use wealth properly than any reference to the material the ACL is so concerned about. We have also seen that as the bible was not written until some time after the event, it is hardly likely to be an accurate record of events as they occurred. In addition, some of the prohibitions in the bible seem to be there for purely physical reasons – such as the prohibition on eating pig meat (routinely ignored by even the most conservative Christians).

Perhaps the real reasons ACL is against same sex marriage is shown in a recent debate on Sky News. Lyle Shelton, the Managing Director of ACL, was asked:
how does, on this Valentine’s Day, my marriage and my relationship with Adrian of 18 years affect your marriage?
The response beggars belief.
“Well,” Shelton replied, “if the definition of marriage is changed, it’s no longer assumed that millions of people like myself who are married… that I’m married to a woman. So that affects me straight away! People no longer assume that I’m married to a woman, I’d have to explain myself.”
So the almighty scare campaign, including a request to exempt the no case from discrimination legislation, is a response to one person’s concerns that he might have to one day explain that he is married to a woman (if that matters anyway). For Pete’s sake!

How about we leave this sordid example of framing a debate so the actual issue is clouded in layers of waffle and misinformation to John Faulkner, a 65-year-old gentleman who asked this question on the ABCTV’s QandA in late February.
“I’m a 65-year-old Australian Christian. At least I try to be,” Faulkner started.

“There are many Australian Christians who support marriage equality but they don’t remember appointing [Managing Director] Lyle Shelton and the ACL to speak on their behalf. The example of Christ is completely contrary to what the ACL is promulgating with its hate campaign.”

Who gave Mr Shelton and the ACL the right to speak for all Christians on the matter of marriage equality?” [bold added]
The response was:
“Yes, our name is Australian Christian Lobby but just as the Australian Labor Party, they wouldn’t claim to speak for all workers.”
If that is the case – they represent a small proportion of a small and declining percentage of the Australian population. Isn’t it time the majority of Australians told the conservative rump that while we understand they have a problem with some issues – it’s their problem, not ours?

What do you think?
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The Peter Principle again – has the GOVERNMENT reached its level of incompetence?



It is not often that we see The Peter Principle played out before our very eyes. We saw it recently with ex-PM Tony Abbott and his Chief of Staff, Peta Credlin as they were promoted from opposition where they were deemed to be competent, to government where they were manifestly incompetent. This calamity has been described in The Peta Principle – how Abbott rose to the level of his incompetence.

In describing his management principle, Laurence J Peter asserted that as managers are promoted, they rise to the level of their incompetence because the selection of a candidate for a position is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. We have written about The Peter Principle before.

In illustrating his principle, Peter used the example of a head gardener in a botanical garden. He was a genius at gardening. He knew his botanicals, where to place them, and their needs for sunshine, shade, water, drainage, nutrients and pruning. He had ‘green fingers’. So good was he that when the position of manager of the garden became vacant, he was considered an obvious choice. He accepted it, albeit regretful that he would be leaving the garden for an office. He failed. He was all at sea with budgeting, ordering supplies, and managing staff and the payroll, and he missed the outdoor life. He had been promoted to the level of his incompetence. He exemplified the Peter Principle: ”managers rise to the level of their incompetence”.

If we begin with the premise that in opposition the LNP was competent in as far as it was able to effectively mount a case for election, and was successful at the ballot box, let’s examine whether that competence has been sustained after its promotion to government. Let’s not get diverted by its tactics, reprehensible though many of them were.

This piece opens for discussion several, but not all areas of government. A verdict about the government’s competence in each is offered. You are invited to make your own assessment, something you will soon do at the ballot box, now that Malcolm Turnbull has made his momentous announcement about the election. In Howard-like style he asks: “Who is best able to lead Australia in the transition from the mining and construction boom to the ‘new economy’?” You will soon have your say.

Bill Clinton said: “It’s the economy, stupid”. That seems like a good place to start.

The national economy
Malcolm Turnbull cited Tony Abbott’s lack of economic leadership as one of the prime reasons for his leadership challenge. There was good reason for this. The first Abbott/Hockey Budget, ideologically driven as it was, turned out to be a disaster. The electorate, even Coalition supporters, rejected it as unfair, and key elements are still stuck in the Senate. It was incompetently handled, but Abbott still wears it as ‘a badge of honour’. The 2015 Budget was a pathetic attempt to square the ledger, but it failed too; business groups criticized it, as it did nothing to reduce the deficit, which Joe Hockey had promised would be eliminated in the government’s first term.

Just a few days ago, the Australian Office of Financial Management stated that gross government debt is now $413.7 billion, up $140 billion since the 2013 election.

The fact that the deficit is ballooning is a measure of the government’s incompetence in financial management. Its attempts at reducing expenditure have been offset by an almost equivalent amount of new expenditure. It has turned a messy puddle into a quagmire, with no obvious exit. LNP supporters blame the economic headwinds: falling commodity prices, the end of the mining boom and the volatile dollar, but these are the realities managers of the economy have to face. Hockey and Abbott were hypercritical of Wayne Swan when he faced similar conditions, but sought to make these conditions as excuses for their own failures. A further sign of its incompetence is that as yet the Coalition has been unable to come up with a plan to correct the deficit. We are still in limbo as we wait for the Green Paper on Tax Reform, now months overdue. Conflicting statements from LNP members have confused the situation. Nobody seems to know what’s going on. Can we expect any clarity now that the election has been announced?

What about the players?

Hockey was incompetent as Shadow Treasurer. Full of loud-mouthed criticisms and arrogant promises, he offered no cogent plan for fiscal management; he just said he’d fix the problems, and quickly. In government he was patently incompetent, so much so that his colleagues, and even past PM John Howard, advised Abbott to remove him. Abbott didn’t, and Hockey was swept away with Abbott on 15 September 2015.



Hockey’s sidekick, Mathias Cormann, survived, but whether or not he is competent is impossible to say. Whenever he appears on TV, no matter what the questions, he responds like an automaton programmed with clichéd answers that have marginal relevance to them. As he departs each interview with a self-satisfied smile, can anyone understand what he has been on about? He may know his stuff, but who knows whether he does?

The new Treasurer, Scott Morrison, got a tick of approval from his supporters for ‘stopping the boats’ and when he became Minister for Social Services, he got a tick for being tough on welfare recipients. He was seen as a rising star in the LNP firmament; there were whispers that he was prime ministerial material. What a disappointment he has been. Has he been promoted to the level of his incompetence?

In his typical rumbunctious style, he was quick to pronounce the government’s fiscal problem as a spending problem, not a revenue problem. This reflected his aversion to increasing taxes, and his penchant for reducing them. Economists were astonished. They despaired that he would ever understand Economics 101. Now he tells us that his much vaunted promise to lower personal income tax is 'off the table' because the Budget can't afford it! But lower company taxes might be affordable! Is it Morrison’s ineptitude that is holding back the long-awaited tax reform package? His inconsistent communication to the electorate bespeaks uncertainty. He has shown no evidence that he can do the job to which he has been promoted. He seems to have risen to the level of his incompetence.



The new Assistant Treasurer, Kelly O'Dwyer, holds little promise either. Her attempt to transmit a message on house prices should negative gearing be changed was inconsistent with her leader’s message. She looked incompetent. In fact between them, Morrison, O'Dwyer and Turnbull predicted house prices would go up and down. Then Peter Dutton, way outside his portfolio, chimed in that changing negative gearing, Labor style, would "bring the economy to a shuddering halt". They can’t all be right; the question is: ‘who has the most incompetent position on this issue?’

For his part, Malcolm Turnbull has done nothing to reassure the electorate that the economy is now in good hands after the Abbott/Hockey calamity. He has shown no signs that he has a grasp of economic management, that he has a cogent plan for tax reform, that he sees a way forward towards a balanced budget, that he has practical plans to realize his grandiose concept of an exciting 'new economy' based on our agility in seizing opportunities, and that he can manage the transition from the mining and construction boom to this new economy. He may be competent, but leaves us with the uncomfortable feeling that perhaps he's not up to his job either.

Verdict: The government looks incompetent in economic management. It has yet to prove otherwise.

Industrial relations
Turnbull mouths strong words about the need for IR reform, talks often about ‘union corruption’, but although there have been 20 referrals from the Heydon Royal Commission into Union Corruption and Governance, no charge has been laid against any union official. He wants Sunday penalty rates reduced to Saturday rates, wants to restore the Australian Building and Construction Commission, and wants the 'Registered Organizations' Bill passed. He threatens that if these are resisted in the Senate when it is recalled for three days on 18 April, that will bring about a double dissolution election on 2 July. Like his colleagues, he is afraid of a ‘WorkChoices’ – style campaign by the unions, but seems prepared to risk it.

Whether or not Turnbull’s threats are hollow, and whether he is competent in IR, will soon be obvious.

With Michaelia Cash as his bellowing Minister for Employment to assist him, the prospect of a balanced outcome in the IR arena seems remote. Is she competent? How can we tell? Her utterances are so strident, so exaggerated, so aggressive, so ocker, it’s hard to dissect away the rhetoric to find the substance, if indeed there is any.

Verdict: Turnbull and Cash are probably incompetent in IR, but prepared to take a risky gamble in this gladiatorial arena.



Climate Change
From past history we know that Turnbull has a grasp of the science of global warming and its sequelae. He is competent in as far as he understands the problem, the risks and the solutions. He also understands the inadequacies of the Coalition’s Direct Action Plan to abate carbon emissions, and has berated it in disparaging terms.

His fault is in embracing Direct Action as a reasonable approach to planet-threatening global warming. That is reprehensible rather than incompetent.

Turnbull’s advocacy for renewables seemed to have blown away by the fossil fuel advocates in his own party, but he has now announced he is dumping Coalition plans to scrap the Clean Energy Finance Corporation, and has heralded plans to essentially de-fund the Australian Renewable Energy Agency and replace it with a new 'Clean Energy Innovation Fund'. In view of his past utterances, who knows how much to expect from him on climate change? Bill Shorten believes he has Turnbull's measure in a debate on renewables.

When it comes to his Environment Minister, it is impossible to tell whether or not Greg Hunt is incompetent. I suspect that he does understand climate science, but that in the pursuit of the LNP’s conservative ideological position of climate skepticism, if not denial, he is prepared to abandon science and inflict his gobbledygook on the electorate to give the impression he knows what he’s doing and is protecting us all from environmental harm. For the first time this week though Hunt at last did seem concerned about the degraded state of the Great Barrier Reef. But is there anyone who really believes what this man says? Is he incompetent or simply deceitful?

Verdict: Turnbull and Hunt look incompetent. More likely they are just devious.

Education policy
Here is an area of government where there has been vacillation, indecision and ambivalence. Turnbull knows the value of education, but enslaved by LNP attitudes to the Gonski reforms, has beaten a retreat from the funding that is needed in years five and six. The previous minister, Christopher Pyne, exhibited his incompetence in both the Gonski reforms and the university reforms he tried to implement. He fashioned the mantra: “You can’t solve the schools problem by throwing money at it” as an excuse for doing nothing, and managed to alienate the university student population with his ‘user-pays’ style reforms of the university sector. Having ripped billions of dollars from university funding, the university Vice Chancellors were willing to accept Pyne’s funding model, simply to survive. The matter has not yet been resolved.

Despite styling himself ‘Mr Fixit’, Pyne proved to be incompetent.

Now a nasty row has blown up over the Safe Schools program, which the arch-conservatives in the LNP want defunded. The review that Turnbull foolishly asked the new Minister for Education and Skills, Simon Birmingham to carry out to placate them, has scarcely done so. Predictably, they now question its findings, and some want another. They will never give up their quest to destroy the program, despite its widespread acceptance. Their bigoted language has been shocking. Now we know what to expect from these reactionaries when the pre-plebiscite ‘Sexual Equality’ debate begins!

We have written about this in Safe Schools, Unsafe Politicians

It is to be hoped that Simon Birmingham will make a better fist of the portfolio than his predecessor.

Verdict: Pyne incompetent; Birmingham, Turnbull under test.

Healthcare
Healthcare has always been a problematic area. With the ageing of population, and the escalating cost of an increasing variety of medical interventions, funding the health budget is a headache for any government.

Regarded by the AMA as the worst-ever Minister for Health, Peter Dutton demonstrated his gross incompetence when, in pursuit of savings, he tinkered with Medicare, tried to introduce a co-payment for GP consultations, and in the process put the entire medical profession offside. He failed so badly that Abbott decided to replace him with Sussan Ley.

Ms Ley shows more promise. She is smart, well informed, and has established a better relationship with the profession. Her problem is that she is labouring under the Treasurer’s budgetary constraints that demand savings be made.

Turnbull says little about health, but has maintained the severe cuts to health funding for the States that Abbott and Hockey introduced. He is currently wooing Premiers with modest promises of increased funding.

Verdict: Dutton incompetent; Ley and Turnbull under test.

National Disability Insurance Scheme
Turnbull decided to not have a minister dedicated to oversee the NDIS; instead he has placed it in the Social Services portfolio under Christian Porter who comes to the post with a good reputation. The scheme is underway, but will be expensive as it expands. How well Porter will do under the current budgetary constraints, remains to be seen.

The previous minister, Mitch Fifield, seemed to be doing a reasonable job but he has gone to higher places.

Verdict: Jury still out on Porter.

There are several other areas of government where incompetence is stifling action, but let’s conclude with the NBN.

National Broadband Network
Here is the dilemma. We know Turnbull is a tech head, and is a strong advocate of fast broadband. But from the moment he was instructed by Abbott to ‘demolish the NBN’ that Labor had initiated, he has fiddled with it, diluted it with old technology, underestimated the cost and rollout time, and has thereby given us a second class hybrid scheme when we ought to have had the very best to compete on the world scene.

So is he incompetent or simply compliant with the Treasurer’s demands to cut costs. The sorry story is detailed in More about Puff the Magic Malcolm

Whether the new Minister for Communications, Mitch Fifield, can salvage some of the wreckage Turnbull has created is still to be determined.

Verdict: Turnbull is probably under the thumb fiscally, but has been incompetent in implementation, rather than incompetent technically. Fifield is under test.

So there it is. The analysis points to significant areas of incompetence in government departments, and gross incompetence among several key ministers.

Too many ministers have risen to their level of incompetence. The Peter Principle has struck again!

Turnbull has yet to demonstrate that he is competent to run an effective and efficient government, especially with fractious reactionaries snapping at his heels. He has dilly-dallied about the upcoming reform packages, the thrust of the Budget, and until this week about the likely timing of the election and whether it will be a double dissolution one or not. Until last Monday morning he seemed indecisive and all at sea – not a sign of competence. Now that he has taken the election plunge we shall see if there are signs of competence hidden beneath his urban exterior. So far he's kept them well hidden.

The jury is out, but it will be the voters who will bring in their verdict when the election is held, whenever that might be. Turnbull will be awaiting their decision with trepidation.




What do you think?
What are your views about PM Turnbull’s competence six months in?

How do you rate the competence of his key ministers?

How do you rate the competence of the Turnbull government?

Does it deserve re-election?

We look forward to reading your views and your comments.


An ode to Mal Brough

Malcolm Thomas Brough was born in December 1961. He is the current member of parliament for the seat of Fisher, based on Queensland’s Sunshine Coast. Between 1996 and 2007, he was the member for Longman, based on Brisbane’s outer northern suburbs. Brough recently announced his retirement from parliament would take effect at the next election. His brother Rob is also reasonably well known around the country as the host of a retired version of the TV game show Family Feud and he still reads the news on a regional Queensland television network.

Mal Brough was an army officer and ran some small businesses on the Sunshine Coast prior to his entry into parliament. He was also ‘noticed’ early by the powers that be in the Liberal Party. Despite being elected originally in 1996, he was appointed Parliamentary Secretary to the Minister for Employment, Workplace Relations and Small Business in 2000, Minister for Employment Services in 2001, Assistant Treasurer in 2004 and went on to be the Minister for Revenue. In January 2006 he was appointed Minister for Families, Community Services and Indigenous Affairs, a position he held until he lost his seat (along with John Howard) in the November 2007 election.

As minister for indigenous affairs Brough was the minister behind the Northern Territory Emergency Response in 2006, where the claim was made that reductions in social security payments and an increase in presence of ‘the authorities’ would somehow combat alleged high rates of child abuse and neglect in the outlying settlements of the Territory.

The Monthly, in an article from September 2013, paints a less than appealing side of Brough’s personality.
The Northern Territory intervention, the declaration of what amounted to martial law in Aboriginal communities awash with grog and plagued by child abuse, seemed the perfect vehicle for the captain-turned-politician. As indigenous affairs minister, he could bark out orders and expect them to be obeyed. Certainly, Howard thought Brough’s military background equipped him with the “right style” for the job. “His army training had given him a mix of authority and mateship,” he wrote admiringly in his memoir.

In making the case for the intervention, Brough projected the air of a commander addressing his troops on the eve of battle. The Australian public, he declared to parliament, were “willing to put their shoulder to the wheel when they feel that finally they can help to improve the lot of their fellow Australian citizens — the first Australians.” He concluded: “This is a great national endeavour and it is the right thing to do.”
Once he was out of parliament Brough became president of the Queensland Liberal Party for five months until the merger of alleged equals with the Queensland National Party was to occur. Brough resigned as president as well as a member of the party. According to The Monthly: “I’ve just had a gutful, quite frankly,” he told Fairfax Radio.

Under the terms of the formation of the LNP in Queensland, existing MP’s were guaranteed pre-selection for the 2010 election, and moderate Liberal Alex Somlyay in Fairfax as well as former Liberal but at the time National Peter Slipper in Fisher chose to take advantage of the guarantee, despite Somlyay recovering from throat cancer and Slipper’s less that stellar local reputation. It is claimed that Tony Abbott offered Somlyay an overseas posting to ‘free up’ a seat for Brough but the offer was refused. While the matter was referred to the Australian Federal Police, nothing ever came from the complaint.

It is history that Slipper accepted the offer from the ALP Government to become Speaker of the House subsequent to the 2010 election — and subsequently resigned from the LNP. Brough announced his intention to ‘serve the people of Fisher’ in December 2010 for the 2013 election knowing that pre-selection guarantees were a one off deal for the 2010 Federal election. The LNP’s leadership would have preferred James McGrath, the architect of Campbell Newman’s Queensland election victory and a former advisor to Boris Johnston, Conservative Party Lord Mayor of London, to be the candidiate in 2013. By the stage of the preselection however, Brough had built up local support and was subsequently selected to be the LNP candidate. Slipper ran as an independent.

Brough and Slipper’s aide, James Ashby, met during 2012. The details of that and subsequent meetings, together with the subsequent unofficial release of Slipper’s official diary entries by Ashby to a News Australia journalist via Brough are still under investigation by the Australian Federal Police. Independent Australia has written extensively on what they have termed Ashbygate — should you wish to read further, their reading list is here. Turnbull government ministers Christopher Pyne and Wyatt Roy are also under investigation over the same issue.

There is no way to know what the federal police are investigating, as quite rightly they will announce the area of their enquiry (in this case the misuse of official information — namely the diaries of the Speaker of the House) but not the specifics. It would be akin to the state police announcing that they will be knocking on the door at a specific address at 2.30pm in seven days’ time to look for evidence of an armed robbery. No doubt, if the evidence was in existence, it would not be where the police told the world they would be looking in seven days!

Having said that, investigators don’t just start looking into people’s lives because they drive a silver car, are holding a busload of people up on Monday morning when they can’t find their bus card or other meaningless justification. There has to be evidence of some potential misdeed reported to the authority with jurisdiction prior to an investigation being launched. Apart from the resourcing issue (investigations cost money for staff wages, telecommunications, office space and the rest of it), there has to be a reason to place people under a certain amount of (possibly unfair) speculation surrounding being the subject of ‘investigations from the authorities’.

It could also be suggested that politicians, as leaders of the community are held to a higher level of behaviour than others. Is it equitable? Probably not, but it is easy to argue that those who make the rules for others should clearly abide by the rules.

For instance, police, public officials and so on are expected to avoid conflicts of interest and uphold the laws they have a responsibility to enforce. Justices of the Peace — who are volunteers in the legal system — are not permitted to accept any reward for their services (in Queensland at least) and are expected to report any conviction made against them to the relevant government office. Should such a report be made, the expectation would be the Justice of the Peace will be asked to resign their office.

Malcolm Turnbull obviously knew when he appointed Brough, Pyne and Roy to his front bench that there was a possibility the investigations that were underway would produce evidence of some misdeed. As we have already discussed, the police don’t investigate people for the fun of it.

So why did Turnbull appoint them? Surely he has enough political smarts to realise that appointing three ministers who potentially will have to resign in disgrace wouldn’t be a good look — as well as being (several) ‘free kicks’ to the opposition parties. But then again, Turnbull doesn’t seem to consider how his choices and actions will be received at all. Perhaps it is a ‘born to rule’ mentality; perhaps it is that he believes the triple twists (with pike) that he has performed over the past few months since becoming prime minister; or perhaps he believes that we all want him to be prime minister so badly, we’ll accept anything.

To be fair, conversations about refugees, climate change, tax cuts, budget repair and so on are all things that Turnbull inherited from Abbott, and it does take time to turn around the workings of any large organisation including the federal government. Upon gaining the prime ministership, Turnbull claimed there would be a great deal of difference between him and his predecessor(s). Last November, Mark Kenny from Fairfax observed
Turnbull is in a hurry and his core message is the same to all of them [the impressive array of summits he attended soon after gaining office]. Australia, he wants them to know, is back — back in the international community, back participating in multilateral forums, back in the digital economy, back in the climate change discussion, back in the 21st century.

His oft-made observation that the household internet names — Facebook, Twitter, Uber, and Netflix — would still be in short pants if they were people, is designed to communicate his relaxed relationship with economic disruption, with change as opportunity rather than threat.

Such observations fit perfectly into Turnbull's nuanced Australia presentation — one that eschews dogma, and instead synthesises solutions as needed, applying the best arguments and policies for a given problem. Results are all that matters, he says.
By 9 February 2016, even Andrew Bolt was questioning the ability of Turnbull to get anything done. Michael Gordon, The Age’s political editor discussed Turnbull’s metamorphosis from charming persuader to brazen scaremonger, from agent of optimism to voice of doom, and from true believer to barrister with a brief. Gordon, unlike Bolt, actually made an attempt at analysis of the problems Turnbull faces:
The dangers are everywhere: recalcitrants on the backbench who will revolt if Turnbull proposes anything they do not like; a Treasurer still struggling to justify his can-do reputation; and the prospect of Australia's longest election campaign since the 10-week odyssey of 1984.

But the biggest danger is that the approach invites cynicism on two fronts. The first is that Turnbull's scaremongering is at odds with his previously stated convictions on negative gearing. Just like his embrace of a plebiscite on marriage equality, or "direct action" on climate change. This is why he needs to announce his tax plans sooner rather than later and focus on his blueprint for the future.
Turnbull was communications minister in the Abbott government. So let’s have a look at NBNCo something he had carriage of — the NBN. You might remember the ALP were going to connect over 90% of Australian properties to a fibre cable, much faster that the currently available ADSL and ensure that those who missed out on the direct fibre connection were to receive access to similar speeds through the use of satellites. The LNP claimed that the network proposed by the ALP was gold plated, the roll out too long and not worth the money it was going to cost. Turnbull’s plan (after Abbott made him communications minister and publically gave him the task of destroying the NBN) was going to be completed much sooner, much cheaper and more affordably. So how’s that going? According to an internal NBNCo report:
the giant infrastructure project has fallen two-thirds short of its benchmark construction timetable. Connection costs to each house or business are also blowing out. The model had been marketed to voters as superior to Labor's NBN because it was ‘Fast. Affordable. Sooner’.

The ‘final design’ process for connections — needed before construction can start — is running far behind schedule, according to the February 19 report.

The Coalition's NBN roll-out is beset by delays and rising costs. While 1,402,909 premises should have been approved at the date of the report, the figure was sitting at 662,665 — 740,000 fewer than planned. The snapshot says NBN Co has achieved 29,005 fibre-to-the-node ‘construction completions’, while noting its internally budgeted target for this period was more than three times that at 94,273.
So sooner — nope; cheaper — probably not; affordable — not only is it looking like not being any more affordable to build, but the running costs are higher as each of the ‘nodes’ on street corners to convert the digital signal from the fibre to the analogue signal used in the household copper connections needs a power connection and electricity to operate.

The NBN failure is entirely Turnbull’s fault as he was the minister who had carriage of the project for an extended period of time. It was on his watch; he was responsible and the argument that he inherited the mess when he took over as prime minister is clearly a fiction.

Sometime in the next six months, Turnbull is going to be appearing on your TV and on your internet screen suggesting that he leads a government than can creditably manage this country for the next three years. Just remember:
  1. how he has managed the NBN rollout since 2013 (it was his job under Abbott),
  2. his ethics in the appointment of Mal Brough to his ministry, as well as
  3. how the ultra-conservatives are still driving the real agenda
and the only reason he’s there is that his party determined the previous bloke was worse.

What do you think?


On which leg does the Liberal Party stand?


The Liberal Party often describes itself as ‘a broad church’, particularly when its parliamentarians are expressing different views. It is to be expected that political parties will contain within them people with different views on some issues but it seems the Liberal Party has a basic philosophical dilemma.

John Howard famously described himself as ‘an economic liberal and a social conservative’ and referred to the philosophic traditions of John Stuart Mill (considered the ‘father’ of liberalism) and Edmund Burke (the ’father’ of conservatism) for those positions:
Mill and Burke are interwoven into the history and the practice and the experience of our political party.
The words of Mill emphasise the central role of the individual:
The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to attain it.
In that regard, speaking at the launch of The Conservative at Parliament House on 8 September 2005, Howard said:
… we are a party that is committed to the role of the individual. … If you look for evidence of the classic liberal tradition within our embrace and within our activity, we think of our commitment to labour market reform. … labour market reform is about transferring power from institutions to individuals.
When working in Aboriginal and Torres Strait Islander Affairs during the Howard years, it became quite apparent that we were not supposed to talk about ‘Aboriginal communities’. The whole government approach to both white and non-white people was about individuals and families. But Aboriginal and Torres Strait Islander people (including Noel Pearson who had some influence with that government for a while) spoke of families and communities, not individuals. The overlap of course was families but even that was understood in different ways with the government thinking in terms of nuclear families and Aboriginal and Torres Strait Islander people in terms of extended families. Little wonder there was not common ground on most issues.

And in Battlelines Tony Abbot put it this way, echoing Mill:
… the Liberal Party is concerned about the rights, responsibilities, opportunities and place in society of each person. We want each person to be empowered, as far as reasonably possible, to live the life he or she thinks best.
In his book, Abbott also refers to Howard’s approach to policy:
… policy should meet three criteria: does it strengthen the family, give individuals more incentive and hope, and give preference to private over government enterprise?
The last element captures what has become the modern neoliberal approach of small government and a fervent belief in competitive capitalism, that private enterprise will always provide better outcomes than government services.

The more extreme version of this approach is captured by Senator Leyonhjelm when he opposes mandatory wearing of bicycle helmets and measures to reduce smoking — it is not government’s role to protect people from themselves, as this amounts to the ‘nanny state’ (although it ignores the cost to the wider community of such behaviours). Although not a member of the Liberal Party, there are a number in the party who share such views.

Edmund Burke was not initially seen as a conservative. As part of the Anglo-Irish aristocracy, he supported greater freedom in Ireland and opposed the British war against the American colonists. It was his reaction to the French Revolution that ultimately was to make him the ‘father’ of modern conservatism but that was also consistent with some of his earlier works. He rejected the idea of a ‘social contract’, as espoused by Hobbes and Locke, suggesting instead that the relationship between individuals and the state was a product of history and while change could occur it should be gradual — as it had been throughout history. The ‘natural law’ was a result of that evolutionary process but also based on god’s law as that was reflected in ‘man’ as a creation of god. From that he supported the institutions of society: so he could support the role of both the Anglican and Roman Catholic churches (although favouring the Anglican). What he disliked about the direction of the French Revolution was that it was based on a ‘vision’ of society and was making enforced changes to achieve that, rather than allowing a gradual and natural evolution. (He accepted England’s ‘Glorious Revolution’ of 1688 primarily because it returned England to its traditional form of governance and society.)

In the same speech referred to earlier in 2005, Howard laid out his conservative credentials:
I am sceptical of radical reform in society. In fact, I’ve been a profound opponent of radically changing the social context in which we live. As Liberals we support and respect the greatest institution in our society, and that is the family. There is no institution that provides more emotional support and reassurance to the individual than the family. There is no institution incidentally which is a more efficient deliverer of social welfare than a united, affectionate, functioning family. It’s the best social welfare policy that mankind has ever devised.
Tony Abbott, when Health Minister in the Howard government, also clearly expounded the conservative approach to change (from speech notes at the Queensland Press Club, August 2005):
… the Howard government has never shirked fundamental reform, if it is necessary to solve serious problems. By the same token, conservative governments don’t lightly make systemic changes. “If it ain’t broke, don’t fix it” and “if it is broke, fix it, don’t throw it away” are good conservative instincts … To some extent at least, nearly all reforms end up illustrating the iron law of unintended consequences. The theoretical benefits of structural change need to be weighed against the real costs of the disruption which significant change always entails.
Abbott continued his very conservative social position when prime minister with his deliberate procrastination over marriage equality for non-heterosexual couples, his expressed discomfort with homosexuality and his views on the role of women:
What the housewives of Australia need to understand, as they do the ironing, is that if they get it done commercially it’s going to go up in price - and their own power bills when they switch the iron on are going to go up.
And he believes passionately in the importance of Western and christian values:
Western civilisation came to this country in 1788 and I’m proud of that …
But, like Howard, he adopted a liberal (or neoliberal) economic approach. As he is reported to have written recently:
The government’s economic narrative had been clear from the beginning — lower taxes, less regulation and higher productivity.
Each is a neoliberal approach offering less government involvement and keeping wages down, as productivity in the neoliberal world is chiefly measured by the input price of labour.

Turnbull arrived as prime minister, professing both liberal social and economic views. It was a little more old-style Liberal and an approach that caught the public’s attention after the very conservative social values of Howard and Abbott. But, to date, he has disappointed by maintaining Abbott’s conservative social policies.

How can the Liberals wind these two strands of thought into a single political philosophy? On the surface, it would seem that there are some inconsistencies between the two: liberalism emphasises the right of the individual to make their own decisions meaning ‘small government’ and minimal government regulation and, as Howard claimed about labour market reform, giving more power to individuals over institutions.

In October 2014, when the Mining Tax was repealed, the legislation also included slowing the process to increase superannuation for workers. Senator Lazarus, then speaking for PUP which had agreed to the changes, and Finance Minister Mathias Cormann, both emphasised that this gave individuals more money in their own pocket. Cormann went so far as to suggest people could now decide what to do with their extra money:
"This is not an adverse, unexpected change as it will leave Australian workers with more of their own money pre-retirement which they can spend on paying down their mortgage, spend on other matters or save for their retirement through superannuation as they see fit," Finance Minister Mathias Cormann told the Senate.
That is a classic liberal, or now neoliberal, approach.

The conservative, however, emphasises traditional values, slow incremental change and the maintenance of society’s institutions.

Back in 2001, then Treasurer Costello, gave a hint of the Liberal link between liberalism and conservatism by suggesting that reduced government involvement (liberalism) left more space for society’s established institutions (conservatism):
… we ought to get governments out as far as possible, out of family lives, you ought to let non-government institutions of society, like the family and the school and the community and the church take a lot of slack.
So, is that the key to the Liberals’ combination of liberalism and conservatism? It may work if both sides of that divide take a moderate position but it appears that in more recent times both the liberals/neoliberals and conservatives have taken more strident positions within their respective philosophies. That makes the combination of the positions within the Liberals that much more difficult.

The conservative side is represented by Senator Cory Bernardi:
Society will always do better where citizens have a belief in justice, honour and private morality. Where individuals are reduced to the satisfaction of personal appetites society will decline. The need to preserve society is at the very heart of conservatism and the absolute moral truths that are required for this preservation are not subject to change.

Today, despite different backgrounds, those of us who are willing to respect the traditions and history of this country can join together under one national banner as Australians. this is the kind of unity that the conservative will embrace, not the superficial and divisive ‘diversity’ talk of the radical, who prefers to constantly re-create the nation according to some momentary fashionable utopian image and denounces all patriotic sentiment as jingoistic and bigoted. [emphasis added]
More recently, in regard to the Safe Schools program:
Senator Cory Bernardi told the ABC the program was seeing children "being bullied and intimidated into complying with a radical program".
"It's not about gender, it's not about sexuality," he said.
"It makes everyone fall into line with a political agenda.
"Our schools should be places of learning, not indoctrination."
Although Bernardi’s views are now considered more extreme, they are entirely consistent with the Burkean tradition, emphasising traditional values and dismissing utopian visions of society.

By way of contrast, if we go back a little in Australian political history, it could be argued that until the 1980s Australia adopted a conservative economic approach, with tariff protection for our industries. Both Labor and Liberal supported that approach. The Liberals had a more liberal approach to social issues and Labor sometimes adopted more radical social policies. Currently, it could be said that the Nationals now represent both conservative economic and social positions. Since the 1980s, Labor has also adopted a more liberal/neoliberal economic policy but remains more committed to a radical or progressive position on some social issues, meaning that it is more willing to undertake government intervention to support social outcomes.

Have the Liberals adopted conservative social policies because Labor now mostly shares the neoliberal economic approach and that is less a point of differentiation between the parties? Did it have to express such views to stand apart? It does use its liberal philosophy to oppose Labor’s interventionist approach but underpins its opposition with its conservative philosophy — that is, the individual should be free to make their own decisions but within the framework of the traditional values and institutions (which some would argue, as in the marriage equality debate, actually restricts the freedom of the individual).

So which leg do the Liberals really stand on? Are they liberal or conservative? Or, as John Howard professed, do they jump from leg to leg depending whether it is a social or economic issue? Are the two approaches really compatible? We do have to remember that, historically, the liberal and conservative traditions in Australia drew together not for any reason of a logical marriage of ideas but to present a united front against the ‘socialism’ of the Labor party which was considered more dangerous than the differences between the liberal and conservative philosophies.

The modern versions of liberalism and conservatism seem to have moved from middle of the road positions to more extreme positions making the matching of the two philosophies more difficult and that seems to be reflected in the current problems and disagreements within the Liberal party.

While those more extreme positions remain in play, it will be difficult for the Liberal party to present a united front. It may remain a ‘broad church’ but it will be a church divided.

What do you think?


Malcolm’s Bitter Harvest



It would be trite to begin with the platitude: You reap what you sow. To Malcolm Turnbull though, that cliché must have an ominous ring about it as he reflects on his past. To what extent has he brought upon himself the political troubles that afflict him now?

His career was illustrious before he entered federal politics, but once inside the rabbit fence the rules changed and so did he.

Brought up by his father, he had a sound education at Sydney Grammar School and the University of Sydney, from which he graduated in Arts and Law, and on a Rhodes Scholarship at Oxford he took a degree in Civil Law.

He is remembered as an adventurous barrister defending Kerry Packer against the ‘Goanna’ allegations made by the Costigan Commission, and is famous for his success in the ‘Spycatcher case’ when he took on and defeated the UK government, which was trying to suppress the publication of the book of the same name by Peter Wright, a former MI5 official.

He tried his hand at journalism, moved into merchant banking and became managing director and later a partner at Goldman Sachs. Subsequently he showed his entrepreneurship and technical skills when he oversaw the expansion of Internet Service Provider OzEmail, which he later sold for $60 million. He was Chairman of the Australian Republican Movement, and entered federal politics in 2004.

Even his opponents acknowledge his intelligence, his enterprise, and his substantial achievements. So how has it come to this?

This week, Bernard Keane began an article in Crikey: The Abbott legacy: Turnbull heads for the worst of both worlds with: “
The political chattering class owes the people of Australian an apology. Nearly all of us, to a woman, were badly off-beam about the transformation of Australian politics last September. We were overcome with a sense of relief that the chaos and debacle of the Abbott era was over…

“Enter Malcolm Turnbull. Turnbull the adult, Turnbull the brilliant communicator, a changed Turnbull who had learnt his lessons from 2009 and would now lead a rational, mature, consultative government. He promised to give us a genuinely Liberal government, in contrast to the reactionary rabble he had just ousted, and he promised reform via an intelligent conversation with the electorate. The years of destructive, negative politics from Abbott, the years of internecine squabbling from Labor, were at long last over.

“For a while it seemed to work. Turnbull was charming and, yes, Prime Ministerial. He refused to rule out reform options, insisting he was going to change politics by refusing to play those sort of petty games…

“Then it went wrong. Turnbull's government is adrift, there's open warfare within it…the much-vaunted tax reform package will be barely worth the term ‘minimalist’, with almost every worthwhile tax reform now ruled out because of backbench pressure, the desire to run an uncluttered scare campaign…

“What we missed in the relief rally that accompanied Turnbull's ascension was that merely because there was a new prime minister, that didn't mean the underlying causes that drove Australian politics into the ground in the first place had vanished. They were still there, and still capable of damaging politics and policy.”


Many of us, while enjoying the prospect of a more progressive prime minister to replace the reactionary conservative Abbott, had our reservations.

Puff the Magic Malcolm published on 18 February on The Political Sword, began with an initial optimistic paragraph that ended: “Most important though was his stated vision for this nation: it was upbeat, forward-looking, encouraging and exciting…” But the second and third paragraphs read: “
Those of us who have followed politics for many years had reservations though. We remembered how after his rather brutal takeover from Brendan Nelson to become Leader of the Opposition in 2008, he offered much promise to his party and to the electorate. Many applauded particularly his enlightened views on global warming and his collaboration with Kevin Rudd to mitigate it. But after a promising start, an ill-considered instance of over-reach brought him undone. Failing to do the due diligence required of an accomplished barrister, a disturbed Liberal mole in Treasury, Godwin Grech, led him up the garden path with a fake email. He remained there, stranded and exposed as one too obsessed with bringing down a prime minister and his treasurer. ‘Utegate’ uncovered a fatal flaw in Turnbull’s personality. He did not recover fully until he removed Abbott in September last year.

But everyone knows that to garner the votes he needed to replace the unpopular Abbott, he had to compromise many of his beliefs and principles. Just how many, and to what extent, we would soon discover.”
Turnbull has sown the seeds of his own decline, and possibly his own destruction.

He took on the leadership with some cherished principles and beliefs:
- the need for action on global warming
- the need for marriage equality
- the need to move to a republic
- the importance of the Gonski school reforms
- the need for superfast broadband for all
- a cities policy with emphasis on public transport
- the need for sound economic management (which he believed his predecessor lacked).

One by one he has diluted or abandoned each of these:

Far from his support for an emissions trading scheme in the Rudd era, and his sarcasm about the Coalition’s Direct Action Plan, which he described as a ‘fig leaf’ for doing nothing, on becoming PM he immediately endorsed it, took it to Paris, and left us looking dangerously inattentive to climate change in the eyes of the world. And recently he has done nothing about the decision of Larry Marshall, chief executive of CSIRO to slash 110 positions in the Oceans and Atmosphere division, effect a similarly sharp reduction in the Land and Water division, and reorient climate change activities. Overseas climate scientists are alarmed that they will lose an important data-gathering source. Turnbull has been unmoved.

His support for marriage equality has been seriously diluted by his acceptance of the Abbott delaying tactic of a plebiscite after the election at a wasteful cost of $160 million. In similar vein, his support for the ‘Safe Schools’ program that supports gender diversity and counters bullying of LGBTI children, has been diluted by his authorization of an ‘investigation’ into it. In both these instances, the hard right conservatives and the Australian Christian Lobby have been let loose with their divisive propaganda.

His reaction to the revisiting of the Gonski reforms was unenthusiastic. He allowed the same old negative rhetoric of the Abbott/Pyne era to resurface, thereby giving it credence: “ You can’t fix the school curriculum by throwing money at it. No alternative was offered, with or without money.

His management of the NBN after Abbott ordered him years ago ‘to demolish it’ has been no better than Labor’s, which he ridiculed in such derogatory terms. It is still far behind schedule, costs are rising inexorably and will likely exceed the cost of Labor’s NBN, and the technology is antiquated.

His cities policy and his advocacy for public transport seem to have taken a back seat. Big promises; little achieved.

And as for the superior economic leadership and fiscal management that he insisted was needed after what Abbott gave us, it has all but evaporated. After hand-on-heart promises of comprehensive tax reform and attention to industrial relations, we are now facing a desolate scene as the fiscally inexperienced Morrison struggles to formulate his May Budget with virtually all his options propelled by a fractious Abbott-led backbench into the too-hard basket.



How has this all come about?

The answer is straightforward. Abbott and his henchmen, some of whom sit on the backbench, have made almost impossible every move Turnbull wanted to make.


The hard right reactionaries, supported by the coal lobby, have made action on global warming dangerously difficult.

The same neo-conservatives, aided and abetted by the ACL, have got their teeth into the sexual equality and Safe Schools debates, and have already debased them.

The Gonski reforms sit on the shelf, opposed by the Abbott conservatives who do not believe in equal opportunity for good schooling irrespective of postcode, income and ethnicity. How many of these are themselves recipients of private education, who believe in ‘user pays’? If you can’t pay, too bad!

The NBN will remain second rate because of the mixed technology and copper wire connections to the premises. Why the LNP does not warmly embrace FTTP technology, so essential for a first world economy and competiveness, seems mysterious until one recognizes that the FTTP NBN was a Labor initiative, and therefore must be denigrated and despoiled by the LNP.

Behind all this opposition is an Abbott-led Fifth Column of reactionaries, who still bridle at what happened to their man. It is determined to show us that they were absolutely right when in power. Abbott announced last week in Japan that he wears his 2014 Budget as a badge of honour. At the weekly party meeting he again called for spending cuts, particularly to welfare, and tax cuts, which will benefit mainly the wealthy.

Abbott has another objective: to upend and replace PM Turnbull. Anyone who doubts this has a faulty memory for Abbott’s characteristics. He has always been a poor loser way back to his student days. He is a bare-knuckle street fighter who never gives up his quest to destroy his enemies – destroy, not simply defeat. Turnbull is his enemy, notwithstanding Abbott’s vow to do all he can to have the Turnbull government re-elected. This is another of his lying utterances, like his promise that there will be no wrecking, no undermining and no sniping. Now all of these are happening! His erroneous comments about the delay to the purchase of submarines were an overt attempt at wrecking and undermining.

There is now talk of the ‘Second Abbott government’. Already he is out and about with another set of slogans he believes will win government: He has condensed Labor's election promises to a threat of: ‘five new taxes’ a housing tax (negative gearing), a wealth tax (capital gains), a seniors tax (superannuation), a workers tax (smokers), and the carbon tax. It is vintage scaremongering Abbott, but his behaviour is infuriating his colleagues. He has declared open war on Turnbull.



So has Malcolm sown the seeds of the harvest he is now reaping?

Yes. His bitter harvest is the direct result of his willingness to sacrifice so many of his sacred principles and policies in order to scavenge the votes he needed for leadership.

He put his longstanding ambition to be prime minister ahead of his deeply held values and principles. He ought to have known that the Shylocks who extracted that price are ruthless operatives for whom power is all that matters. They will never give up. They are determined reactionaries, hell-bent on upholding their ultra-conservative beliefs at all costs. Indeed, some believe it would be better to lose the election in order to cleanse the LNP of the moderate elements and restore and protect conservative values. To them, that is of supreme importance.

We should not be surprised at their destructive behaviour. They will not change; they cannot. They will fight to the bitter end in what is now clearly a life and death struggle between Turnbull and his moderates and the Abbott-led extreme right wing reactionaries. Abbott told us often that the LNP is not Labor. He was right. The LNP is now set upon a course even more self-destructive than that of Labor.

Malcolm’s Bitter Harvest is upon him. He has reaped what he sowed.




What do you think?
What are your views about PM Turnbull six months in?

We look forward to reading your views and your comments.


The Peta Principle – how Abbott rose to the level of his incompetence



‘What’s wrong with Tony Abbott?” It’s a question that’s been asked ever since he rose to prominence as party leader, if not before. But then the question had a whimsical ring about it. What was wrong with a leader who was so nasty, so misogynist, so belligerent, so hell bent upon the destruction of his enemies? People had their answers, answers that went back to his early days in student politics. We wrote about it on The Political Sword in late 2009 in The pugilistic politician. The conclusion was that this was Abbott’s nature, malevolent though it was.

Over the years we have seen a man who rose from ministerial ranks to opposition leader where he was deemed to be competent, to prime minister where he was manifestly incompetent.

Abbott’s rise is a classic example of a management principle enunciated by Laurence J. Peter in his famous 1969 book: The Peter Principle, in which he asserted that as managers are promoted, they "rise to the level of their incompetence." We have written about The Peter Principle before.

Let’s trace Abbott’s path. The media was lavish in its praise for his performance as opposition leader, some going so far as to assert that he was the best ever, presumably arguing that aggression, confrontation, adversarial behaviour and ceaseless negativity were the preferred ways to electoral success. Murdoch journalists particularly barracked for him endlessly. Defeat of the detested Labor government and the installation of a grown-up, adult Coalition government was all that mattered; the means, no matter how ruthless, were irrelevant.

So it came to pass. The tacit assumption, rarely ever challenged, was that Abbott’s electoral success would translate into success in government. Some of us challenged that assumption, but who was listening?

Back as far as July 2011 we plumbed the forbidding prospect of an Abbott prime ministership on The Political Sword in If Tony Abbott were PM, and again in August 2013 in Say no, no, no to Tony Abbott, we predicted the disaster that Abbott would become in government. The media though, and much of the public, were sanguine. The right-wing think tank, the Institute of Public Affairs, now had their puppet captive in the most powerful position in the land. It soon filled Abbott's policy free zone with a list of 75 policy suggestions.

Then along came his actual behaviour as prime minister.

We observed it month after awful month. Many could see a dysfunctional pattern developing as Abbott tried to apply to governance the strategies that got him elected. He seemed not to see that different strategies were needed in government; he seemed to think that persistent negativity would again win the day for him. Some columnists were prepared to point this out, but the Murdoch media continued to be his advocate, making excuses for his increasingly aberrant behaviour, hoping to see some change towards effective governance. It never came. Eventually, even News Limited journalists started to show doubts, and gave subtle warnings to Abbott. But excuse making continued, hoping that soon Abbott would wake up.

There was one journalist though who wrote regular columns in The Australian, Niki Savva, who did begin to express reservations about Abbott and his Chief of Staff, Peta Credlin.

Now Savva has put the cat among the pigeons with her just-published book: The Road to Ruin – How Tony Abbott and Peta Credlin Destroyed Their Own Government. Even the title is revealing: How Tony Abbott and Peta Credlin destroyed their own Government. Savva’s story shows how Credlin believed it was as much her government as Abbott’s. Herein lies the clue to the most extraordinary relationship that came about between Abbott and Credlin, one that achieved success in opposition but lamentable failure in government.

Although Savva’s book has been available only this week, the published excerpts and the media comments of the author and her interviewers provide enough detail for preliminary analysis.

It is not the purpose of this piece to explore whether the relationship between Abbott and Credlin was sexual in the sense they were sleeping together. Some feel affronted by this possibility; most are more concerned with the deeper relationship where Credlin seemed to have an overweening influence over Abbott, a relationship where Abbott seemed dependent on her for advice, strategies and instructions about how to run government day by day. Credlin insisted she got Abbott and the Coalition into power and that Abbott could not run the government without her. Moreover, she believed that what worked in opposition would work in government. The pattern of behaviour continued. What she failed to comprehend was that Abbott, and perhaps she too, had been promoted to their level of incompetence.

Many were worried about her tactics and her influence. Those close to Abbott were concerned, even apprehensive about her, and the way she manipulated him. Savva documents these concerns in a number of on-the-record statements ministers, backbenchers and public servants made to her. So angry and frustrated were they about Credlin’s autocratic behaviour that they were prepared to put their name to them.

What then went wrong with Tony Abbott?

Clearly, he was profoundly influenced by Credlin, dependent on her advice, and needed her instructions about what to say and how to say it. What he did not realize was that her advice was no longer relevant now that he was Prime Minister.

He wanted her to be close to him in meetings, even with international dignitaries, willing to let her run the political show, even foreign policy, happy to let her decide on his appointments, his appearances, even small details of protocol. He allowed her to micromanage his office and his cabinet, to interact with his staff, his ministers and with public servants, to instruct them, even about staff appointments, and to discipline and bully them if they disobeyed or disappointed her, sometimes in an undignified way.



Credlin’s behaviour repeatedly evoked adverse reactions and anger, among even senior people, many of whom she treated with disdain. Many of these have ventilated their longstanding resentment and frustration in Savva’s book. Many sought her removal, but Abbott would have none of that. His attachment and dependency were too great. Likewise, senior party figures warned Abbott, and at the time of the February 2014 spill advised him to get rid of Credlin. Rupert Murdoch demanded, nay ordered Abbott to sack his Chief of Staff. The advice was never heeded.

Abbott allowed Credlin to run an insular, secretive PMO that excluded many, where she overplayed her hand repeatedly, where she was dominantly in charge.

Unquestionably, she is a prepossessing woman: intelligent, accomplished, assured, and overbearing. No doubt it would have been difficult to control her, to hold her back. But it was Abbott who was selected to lead the government, not Credlin. He ought to have been in control. In Say no, no, no to Abbott, it was postulated that in government Abbott would exhibit conflicting attributes: vengefulness and weakness. He has certainly exhibited vengefulness that all can see. But only now are we seeing the depth of his weakness. Unable to govern himself, he was so weak that he handed over governance and many of his prime ministerial functions to his Chief of Staff: he openly referred to her, and it seemed, increasingly deferred to her as the ‘Boss’. The fact that this person was a woman is immaterial; it is the fact that he recklessly handed away his responsibilities to another that is reprehensible.

What is astonishing is that the work of government could be so readily handed over to a non-elected person by someone like Abbott, who shows so much machismo, who flaunts his masculinity, who enjoys so much playing the tough guy, tough enough to ‘shirtfront’ Vladimir Putin.

Behavioural psychologists and psychiatrists would relish debating the Abbott/Credlin relationship, and attempting to attach a diagnostic label.

I will not try to emulate them, but even the untrained must be asking themselves what sort of behavioural problem, what sort of psychiatric condition each might have, and what sort of pathological relationship they might have had.

‘Emotional dependence’, where an individual can’t make decisions without the other, springs to mind. The influence of Credlin is reminiscent of that of Svengali, the evil hypnotist in the novel Trilby by George Du Maurier. Colloquially, ‘a Svengali’ is used to describe a person who completely dominates another, usually with selfish or evil motives.

Whatever the psychiatric diagnosis might be, there is no doubt that Savva’s book documents the intensity and extent of the relationship that existed between Credlin and Abbott and its awful outcomes that proved to be so counterproductive and injurious to them both and destructive to the government they led.

This situation is more fitted to the drama of the theatre than to real life day-to-day politics, yet there it was under our very noses, at the pinnacle of our national government. How could such a situation have ever arisen? We have seen dysfunction in our federal government before, but nothing like this!

Who is to blame? While some point the finger at Credlin, clearly Abbott is the culprit. He was the prime minister, the one in charge. He should have been calling the shots. We at The Political Sword pointed out long before Abbott became prime minister that he would be a dud should he get that job. It was only when he got it that it dawned on him that he wasn’t up to it, and so he turned to Credlin. Too inexperienced for national governance, Linus-style, Abbott reached out for his security blanket – Peta Credlin. Sadly for him, and the nation, she could not rescue him from his own incompetence. Together they resorted to opposition tactics and wrecked the government.

An even more bizarre twist to this story is that Abbott, along with some of his sycophants, still hold out hope for a second Abbott government, an exercise in delusion of monumental proportions. Well connected people in Canberra predict that if Abbott tried to topple Turnbull, he’d be lucky now to get even a tiny handful of votes; Eric Abetz, Kevin Andrews, Peter Dutton, Andrew Nikolic et al - the so-called ‘Monkey Pod’- are likely all who are still waving Abbott’s flag.

So let’s not engage in speculation about whether their relationship was sexually intimate. It matters not. The only conclusion that is tenable is that Abbott was incompetent and insecure as prime minister. He was a dud; he did not know how to govern or how to consult; he did not know how to assume the vast and widely variable responsibilities of his position.

In a classic illustration of the Peter Principle, Abbott had risen to his level of incompetence. He turned to the only one he thought could save him, Peta. But she too was a victim of this same principle; in her case, let’s call it the ‘Peta’ Principle. She had risen to her level of incompetence. She couldn’t save him and didn’t. End of story!

What do you think?
What are your views about Niki Savva's account of the Abbott/Credlin saga, and this assessment of it?

We look forward to reading your views and your comments.