Where does Abbott really stand on national security?


The idea of ‘national security’ arises from the ‘social contract’ referred to by political philosophers. The concept is that the people gave the power to enforce rules and punishments to their leaders, whether monarchs or elected governments, in return for ‘protection’. Otherwise, in going about our daily business we would also have to build into our day the need to protect ourselves and our families and property from any threats that may emerge.

So in a functioning society, we say I will largely divest myself of my right to defend myself and grant that power to our leaders, leaving me free to go about my business without those additional security concerns. The quid pro quo is that the government defends my other rights and my property, as well as my security. (I won’t go into the issue of protection of property as that is the dominant theme of neo-liberals and, in my view, is somewhat contentious for reasons that would make this piece two or three times as long.)

There are two aspects to protection: one from external threats and one from internal threats. As I recall, in international relations, one trait that was used in defining a nation state was its capacity to protect itself and defend its borders. Hence the need for a standing army or these days also a navy and an air force. And ever since the Middle Ages, there have also been spies and intelligence services as a means of gaining advance warning of potential threats and what one’s enemies may be up to. Note, however, that these are meant to protect us from external threats.

For internal threats the protection comes primarily from the police which also has a key role in protecting our rights — and, in fact, the main internal threats do relate to our rights. Our rights link to the basic John Stuart Mill tenet that freedom is about ‘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’. Thus we allow our governments to create rules that protect that freedom and, importantly, also stop us from impinging upon the freedom of others. Stealing, assault and fraud, for example, each deprive someone else of their rights and so are subject to punishment by the rules we create. That is where the police and the courts come in. We have many freedoms or rights, such as freedom of speech, freedom of assembly and freedom of movement which we consider important to our everyday lives (even if we sometimes take them for granted). Franklin D Roosevelt also spoke of freedom from want and freedom from fear — two that I think we do not hear enough about.

Of course, over time, societies can change their emphasis on some of these rights, considering one more important than another, and hence also change the rules that support or enforce them. And in times of genuine external threat, such as during World War II, we may accept the need to forego some of our freedoms in the name of national security.

So we come to the Abbott government’s view of national security.

Firstly, the so-called ‘boat people’. Are 50 or 100 people in a leaky wooden boat an external threat to our national security? I doubt any reasonable person would say so but Abbott dresses the Australian response to the ‘boat people’ in security terms. He created a secret operation (‘operation’ being used as military jargon) and refuses to provide any details because these are ‘operational’ or military or intelligence matters. That may be justified in time of war when a heavily armed invasion fleet is menacing the country but does not appear so when we are talking about boat loads of refugees.

Are we merely protecting our borders? That is a safer argument to make, at least up to a point. Yes, the boat people may be breaching our borders but only if they come within 12 nautical miles (22km) of our coastline (including off-shore islands). Beyond that, they are in international waters and should be free to move as they wish. They may come within our 200 nautical mile (370km) ‘economic zone’ but that applies only to economic activities such as fishing and also restricts the right of other nations to search for or exploit other natural resources within that zone — I don’t think the boat people are there searching for oil so that doesn’t apply. So the argument must be that our ‘intelligence’ suggests that these boats will breach our borders if they are not stopped in international waters — which, on the surface, is a valid argument.

The UN convention on refugees, however, does give people the right to breach borders in certain circumstances — when we recognise that their own government is failing to protect them and their rights. We have processes to assess such people to distinguish ‘genuine’ refugees from economic migrants who may simply be trying to skirt the immigration programs that most countries have.

So can Abbott justify that a major military-style operation is necessary to stop ‘breaches of our border’? Certainly not in a philosophic sense. It was Howard who said ‘we will decide who comes to our country and the circumstances in which they come’ and Abbott has basically continued that approach. It is ‘son of the White Australia policy’ and plays on the same fear of being over-run by hordes of ‘Orientals’, now refugees, who may bring with them a different life-style. Abbott ramps up those fears in the populace by exaggerating the threat to one akin to a military invasion, requiring military responses and the language of national security — all in the name of stopping a few leaky boats.

Logic would suggest that controlling the flow of refugees actually requires actions to manage the flow, and steps to reduce the flow, at their source. That would require assisting in the processing of refugees in refugee camps (as was done by the Fraser government for Vietnamese refugees) and providing aid that may improve the circumstances in countries of origin, so diminishing the need for people to leave. We are doing nothing on the first and actually cutting our international aid on the second. Therefore, it can only be a political decision to ignore measures that may reduce the problem at its source and instead focus on creating a situation where our government can react with overwhelming power on the basis of national security — it would not suit its political agenda to take pro-active measures. It also follows that this is only a ‘border security’ issue because the government chooses to make it so and it is the proverbial sledge hammer to deal with a mosquito.

Then we have the internal and external threat of ‘terrorism’. There is no doubt that this is a real threat but how great a threat to Australia and how far should we go in dealing with it?

Genuine terrorism is based on the premise that by creating terror and fear in a population, its government will be forced to change its policies in a way that meets at least some of the political objectives of the terrorists. Thus the IRA conducted a ‘bombing campaign’ on mainland Britain in an effort to change the British government’s policy on Ireland (this was done twice, once in the 1940‒50s and again in the 1970s). For a long time, the British government treated captured IRA members as criminals: they were tried under normal criminal law. It was the IRA itself that campaigned for its members to be treated as political prisoners or prisoners of war. It was an approach that refused to acknowledge publicly the politics of the situation and, as far as it went, down-played the threat (and the fear) by treating the acts as mere acts of criminality.

What terrorist threat does Australia actually face? The biggest threat at the moment appears to be the possibility of ‘lone wolf’ attacks inspired by radical Islamic and IS propaganda. There was the stabbing of the two police officers in Melbourne and a small number of threats that have allegedly been stopped before being carried out.

Abbott likes to refer to Monis at the Lindt Café siege as an example of terrorism reaching our shores despite evidence suggesting that Monis was mentally unstable and an attention-seeker wanting to link himself to IS. Reports emerging from the inquest indicate that there is no evidence of him ever having been in contact with any terrorist group and, when even a bikie gang found him ‘weird’, you do have to have some doubts that he was a genuine terrorist with political motives.

While we may find any single event terrible, we must keep a sense of perspective. We have had mass murderers with no political intent, such as Martin Bryant, and they do not generate the same degree of fear. We may be shocked but we perceive such events as a ‘one-off’, even if, as in the US, they occur on a regular basis. Terrorists, on the other hand, are trying to convince us that they are capable of carrying out their attacks again and again. If we perceive some events as worse because we also perceive them as ‘terrorist’ events, then the terrorists are winning the battle for our minds.

It was George W Bush who declared the ‘war on terror’ after the 9/11 attack on the twin towers. As horrific as that event was, taking the US to ‘war’ was giving Al Qaeda a status beyond its real power. Abbott is now doing the same in Australia, describing IS as a ‘death cult’ which really, as Abdul-Rehman Malik who runs an outreach group for young Muslims said, is accepting the IS propaganda and giving it an inflated status:
The propagandists of the Islamic State, when they hear themselves referred to as a death cult hell-bent on global domination, are patting themselves on the back because you know what? You’ve bought in to their narrative.
We seem to be adopting the former British approach but only in part. We tend to ignore the politics of radical Islam but we accept its proponents as political enemies whom we must engage in war. Can anyone else see the inconsistency in that? War is sometimes said to be an outcome of the failure of diplomacy but if we refuse to recognise the political elements of our enemy, which rules out diplomacy, and don’t treat them merely as criminals, then war becomes the only recourse — as it seems to be now. (There is little doubt IS is playing a similar game.)

In the case of IS, war may be justified because it does have some components of a ‘state’ in the areas it occupies and does see itself as forming an Islamic government of a caliphate. But as a ‘state’ it is not yet a direct threat to Australia. We can, if we so choose, be involved in supporting other states who are threatened by it: so there can logically be some justification for our current involvement in Iraq — it is a political or diplomatic decision to support another state.

Abbott, and Howard before him following 9/11, have used this so-called threat to our national security to curtail our rights. These laws are justified on the basis of our fear of terrorism and the need to protect us. The extent of that protection is driven by the intensity of the fear but, as suggested above, the level of fear being expressed by the government seems to outweigh the real extent of the danger.

Under laws that have been introduced to address ‘terrorism’:

  • ASIO can detain people for up to seven days and it is illegal to speak of that detention afterwards. You can be detained merely for questioning about your possible knowledge of an event even if you were not involved and you may not be told why you were detained. The warrant for your detention is decided merely on security advice without your presence and with no opportunity to challenge it. It sails very close to arbitrary detention.

  • ASIO has the power to monitor computers but that is now defined as including a network. At its broadest it means the internet can be treated as a single network: it is more likely to relate to smaller networks but that may still capture the computers of many people who are not directly under investigation. It also has the power to alter and delete material from those computers and you will not be told.

  • Journalists cannot report ASIO activities that involve Special Intelligence Operations (SIOs) but there is nothing to allow identification of which ASIO operations are SIOs and which just normal activities. Effectively, journalists are barred from reporting on ASIO with the threat of 10 year gaol sentences.

  • There are ‘control orders’ that can limit a person’s movements and who they can meet and again these can be decided without any other parties being present or able to challenge the decision. They can be likened to bail conditions except that the person has not been charged and may never be tried.

  • There are also travel bans under which it is an offence, also carrying a term of up to 10 years imprisonment, to be in areas ‘declared’ by the Foreign Minister as areas where terrorist organisations are operating. There are exclusions for legitimate purposes, such as providing humanitarian aid, but the presumption of innocence is reversed: the onus is on the individual to prove they were there for a legitimate purpose, and prove it was the sole purpose for their presence.

  • We also have laws that people can be charged for ‘planning a terrorist act’. It takes us into dangerous territory. There is a difference between planning an action and being about to carry it out (which is when police often act if they have advance intelligence). Also, what constitutes a ‘terrorist act’ is not clearly defined, so how far could this law go?
Some of our traditional rights that are affected by these new laws include freedom of movement, freedom of speech, freedom of association and the right to a fair trial, procedural fairness and judicial review. The danger is not just from the current laws (which we may think won’t affect many people) but the precedent they set. We must always be vigilant of our rights and remember that the elected Nazi government began with small limitations to freedom in the name of maintaining social stability.

These approaches are also tearing up the ‘social contract’. Our national security actually depends on the social contract — a binding trust between the government and the people. If governments ignore their part of the bargain by undermining the rights they are meant to protect, then people may begin to question the value of the social contract and the role of government. Isn’t that exactly what the terrorists want us to do?

Finally, I return to Roosevelt’s ‘freedom from fear’. That is one of the rights that is supported by government when it provides for our protection. When, however, it is the government itself that is generating fear, and using that fear to weaken our rights and renegue on its side of the social contract, isn’t it actually the Abbott government that is threatening our national security? Isn’t it actually the Abbott government that is behaving like a terrorist organisation by creating fear to achieve its political objectives?

What do you think?
Are ‘terrorists’ just common criminals on steroids used to promote governments’ ‘law and order’ platforms? Why are asylum seekers labelled with the same description? With the increase in security measures - where are the corresponding increases in safety, or any scrutiny, checks and balances to ensure that the additional powers are used wisely or correctly? Ken’s piece is timely and relevant given the current discussion of the ‘race’ of ’terrorists’.

Next week Ken continues the national security and terrorism theme when he discusses the young Australian suicide bomber Jake Bilardi but comes to a very different conclusion in his piece ‘A failure of the Left’.


The politics of marriage


While Australia had a uniform Marriage Act from 1961 until 2004, there was nothing specific (except for common law) that prohibited marriage of two people of the same gender. The requirement that marriage was between a man and woman was only inserted into the act by the Howard Government. The government at the time claimed the change was to clarify the term ‘marriage’. The 2004 amendments were introduced in the final two sitting weeks of parliament and only a few months after the UK introduced its Civil Partnership Act. The Australian amendments were supported (nominally at least) by all political parties except the Democrats and the Greens.

During 2009, the Rudd government legislated changes to allow ‘civil unions’ to be recognised for all couples (regardless of the partner’s gender) as well as formally recognising rights for de-facto couples. Something like 85 pieces of legislation were changed to allow this to happen.

In February 2012, Fairfax Media reported that two thirds of Australians were in favour of same-sex marriage. By July 2014, there was 72% support. Greens Senator Hanson-Young has had a bill before parliament since 2010 and there have been various attempts to change the law since.

On 1 June 2015, Opposition Leader Bill Shorten introduced a private members bill into the House of Representatives that would delete the words inserted by the Howard government’s 2004 amendment to the Marriage Act as well as other sections that prohibited marriage equality or similar marriages solemnised overseas being recognised in Australia. Despite the lack of government members in the House at the time, the bill was shunted off to a committee. Tony Abbott’s response is that while marriage equality may be considered by the government in time, it is currently more important to pass the budget measures. In the same week, according to The Saturday Paper, Abbott himself is attempting to change the discussion to yet another ’national security’ debate:
First we got senior diplomat Greg Moriarty appointed to the newly created position of national counterterrorism co-ordinator. (Sherlock fans, I regret to inform you that Moriarty bears much more resemblance to Mycroft than to his evil namesake.) Justice Minister Michael Keenan got the new title of minister assisting the prime minister on counterterrorism, and then Philip Ruddock and Concetta Fierravanti-Wells got new posts aimed at tackling radicalisation.
Being fair to the Abbott government, it has spent considerable time both inside and outside parliament urging the ALP to allow the small business measures associated with the 2015 budget to pass — and to be fair to the ALP, passing the small business measures is something the ALP always said it would do. On 3 June, Shorten moved a motion, to a lower house almost empty of government members, to pass the small business legislation immediately. The government voted against it:
"Let us pass this bill straight away," Prime Minister Tony Abbott said on Monday.

"Let's get it through this place in a hurry," Small Business Minister Bruce Billson said last week.

On Wednesday, Mr Shorten obliged.

The government seen voting against putting their own small business budget measures to an immediate vote.

"We are not going to delay this legislation for one minute longer," he told the House of Representatives and then put forward a parliamentary procedure that if approved would allow an immediate vote.

The government opposed Labor's motion so it failed by 47 to 77 votes.

The leader of the house Christopher Pyne immediately decried the incident as a stunt, because the Senate is in estimates and not sitting this week.

"Labor are a joke. Ending the debate on small business won't get the bills to the Senate any faster – the Senate isn't in session!" he tweeted.

"So why the calls for Labor to get out of the way in such urgent tones," Labor backbencher Joanne Ryan immediately responded.

Small Business Minister Bruce Billson released a statement describing the spectacle as a "another pointless piece of politics by Labor".

Speaking at a media conference in the Canberra suburb of Dickson a short time later, Mr Shorten said: "If they're in such a hurry to help small business, why were they so slow today?"

"I think the government's got some explaining to do," he said.

In question time on Wednesday, Labor pursued the Prime Minister, asking why his government had voted against passing its small business bills straight away.

Mr Abbott said the Senate was not sitting.

"What we saw from the opposition this morning was yet another childish stunt from the Labor Party, an attempt by the Labor Party to deny 11 Labor members and 31 Coalition members the right to speak on this bill and ensure that they were able to demonstrate their support for the small businesses of Australia," Mr Abbott said.
Stunt? — yup, it probably was. It is pretty amusing that on Wednesday the government is voting against something it was calling on the opposition to pass on Monday and Tuesday. It seems that there is an alternate agenda within the government: probably something to do with a number of government members getting a speech into the Hansard appealing to a part of the LNP’s core support base — small business. Getting and keeping the front page free of the budget (after the 2014 fiasco) also reduces the risk of adverse polling for Abbott and his government — which could be construed as keeping Abbott in a job.

Chris Berg, writing on the ABC’s ‘The Drum’ website suggests
The budget was delivered on Tuesday, May 12. National security week was launched on Monday, May 25. That's 13 days. Really just 12, if you factor in the budget lockup and newspaper print deadlines.

This quick hop from economics to security is indicative of a broader problem with the Abbott government's populist push. It knows it doesn't want to be unpopular. But it's not sure what it wants to be popular about.

The 2015 budget is nothing like the political catastrophe that the 2014 budget was. If anything it has been well received. Everybody likes the accelerated depreciation changes for small business. The fiscal reckoning has been postponed, and nobody but sticklers, obsessives and economists could object to that.
Clearly, changes to the Marriage Act don’t figure prominently in the Abbott government’s agenda. This fits with Abbott’s public pronouncements in the past, as well as the public pronouncements of other ‘well known’ government members such as Concetta Fierravanti-Wells who was recently interviewed on ABC’s PM radio program:
Senator Concetta Fierravanti-Wells was recently given the job, in harness with Philip Ruddock, of inquiring into tough new citizenship laws.

Today, she says allowing a conscience vote on same sex marriage would be a "cop out".

Senator Fierravanti-Wells says it could lead to a fracture between the Liberal Party's base and its parliamentary wing.

She spoke to James Glenday.

CONCETTA FIERRAVANTI-WELLS: I don't believe that this issue is a conscience issue. It's not a life or death issue, which has traditionally been the purview of conscience votes.
Thirty seven of the USA’s fifty states already allow marriage equality— although North Carolina is currently involved in a political intrigue that would surpass Game of Thrones to allow magistrates to choose only to marry those who fit their particular moral and/or religious beliefs. As the New Yorker discusses in this article, the proposed law — that was vetoed by the Republican (conservative) governor in spite of his personal support — is demonstrating signs of having the governor’s veto vetoed by the legislature! The (possibly) unintended consequence is that there could be the re-instatement of the long overturned ban on couples of mixed ethnic backgrounds marrying each other — despite the marriage being that of the seemingly all important man and woman — if the particular magistrate doesn’t approve. Apparently the US Supreme Court is currently deciding if equality in marriage will be legal in all fifty states, which may overrule the North Carolina brouhaha in any case.

Other countries, including New Zealand and Ireland, have allowed marriage equality over the past few years. In Ireland, a traditionally Catholic country, it was put to a referendum during May 2015 and 62.1% of the voters approved the change. Ireland’s parliament now will introduce the necessary legislation by the end of the year.

Reaction to the Irish referendum was generally positive around the world. The Canadian Broadcasting Corporation reported:
Political analysts who have covered Irish referendums for decades agreed that Saturday's results mark a stunning generational shift from the 1980s, when voters still firmly backed Catholic Church teachings and overwhelmingly voted against abortion and divorce.

"We're in a new country," said political analyst Sean Donnelly, who called the result "a tidal wave" that has produced pro-gay marriage majorities in even the most traditionally conservative rural corners of Ireland.
Politicians live and die in Australia at the whim of polling data. Just ask John Howard, Kevin Rudd, Julia Gillard and Tony Abbott. Unless there is a significant problem with the data in a number of surveys, there seems to be a significant level of support for marriage equality in Australia — despite the protestations of various members of parliament (from both major parties). So what is the problem here: is it that both sides of politics are scared of making the change, or are they attempting to differentiate themselves and lose the vote from the unaligned voter?

Shorten knows very well that his private members bill will not become law. Hanson-Young’s similar legislation has been sitting on the table since 2010 (when the ALP was in power). A number of political players have advised him that his bill wouldn’t help the process — assuming he does want the changes he has sponsored. Abbott has indicated he is prepared to allow a bi-partisan bill into the parliament for debate. The ‘problem’ with bi-partisan bills is that no political party can ‘take the credit’ for the initiative.

There are LNP members of parliament that have indicated they will co-sponsor a bill with the ALP to make the debate happen. The experience in other countries demonstrates that changes that allow marriage equality do not cause revolution, moral decay, pestilence or any real impact to most people’s lives. Maybe if the polling is correct, both sides of Australian politics should take a reality check and listen to what the public actually want. If Ireland can ask the public and act on public opinion, why can’t Australia?

Ironically Fairfax Media claims that changing the marriage act would cause a $1.2 billion boom to the economy. With the Australian economy almost flat-lining, perhaps it’s the boost we all need.

What do you think?
Apparently focus groups are showing that voters consider this a non-issue, not because they are indifferent, but because they see it as inevitable and just want the government to deal with it and move on. As 2353 points out, politicians are too busy playing games with the issue to listen to the people. As ‘the people’, speak up now and leave a comment.

Next week Ken will take a philosophical look at national security and answer the question ‘Where does Abbott really stand on national security?’. His answer may surprise you.


The $19,990 special

The amount of ink spilled in the analysis of the 2015 Australian budget would probably fill Sydney Harbour. The number of electrons expended in the same way would probably light up a small town for a week. There is no need to add to the consumption of electrons here. Instead, let’s look at the sales pitch.

To put it into perspective, there is, unfortunately, a little bit of economics that we have to endure. Australia is one of the few countries in the world to maintain a AAA ‘credit rating’. Nominally, that means that the country can borrow money at lesser cost. Australia is one of the few countries in the world that can truthfully claim that the economy has not been in a recession in the last 20+ years. Things are, however, not all rosy in the garden: while it is a positive that we do have a Reserve Bank official cash rate above 0%, it is at the time of writing a hardly stellar 2%. In fact 2% is the lowest it has ever been. The official cash rate is the measure of how much interest the Reserve Bank is prepared to pay lenders should it decide it will hold on to money that banks can’t place elsewhere (at a higher return).

Interest rates, to an extent, also refer to consumer confidence. If consumers are confident that the economy is bubbling along quite nicely, they are more comfortable to borrow to upgrade the house, buy the shiny new car or spend the ‘rainy day money’ on a visit to Disneyland, the new lounge suite or buy the larger TV (because a 55 inch TV would look absolutely fabulous!). In a similar way if business thinks that the consumer is going to ‘walk’ into their business and make a purchase, they will be more inclined to upgrade the computer system, buy the new delivery van, upgrade the shop fittings and so on.

The problem is that once consumers lose confidence, it takes a lot to get the confidence back. At the start of the Global Financial Crisis, the Rudd Government, on the advice of Treasury, distributed billions by way of $900 cheques. The Opposition at the time decried the extravagance claiming that some would spend the money wastefully — and produced examples of people taking the money straight to the local pokie palace or to the local electronics store to purchase the largest TV they could get. Regardless of the morality, those that work in pokie palaces and electronics stores kept their jobs as a result of the expenditure. While Rudd was trying to appeal to his constituency, the $900 cheques did keep the economy ticking along and, with assistance from other programs, did keep Australia from tipping into recession. The pumping of the economy by the Rudd/Gillard Government also retained consumer confidence — people were prepared to go out and spend the windfall. The other parts of the Rudd/Gillard package prolonged the demand through both quick and long term infrastructure improvements to people’s homes (while assisting to reduce energy usage and costs) as well as considerable new infrastructure to schools, health care providers and so on. Human nature being what it is, if people have a reasonable expectation of receiving an income next week, they will not conserve every cent they have this week.

In contrast, prior to the 2014 — it’s going to be tough — budget, Hockey and Cormann were pictured smoking cigars. The reason for the ‘toughness’ that was to be imposed on the community was claimed to be due to the ‘debt and deficit disaster’ inherited by the Abbott Government.

Regardless of the truth of the ‘debt and deficit’ claim, Hockey killed consumer confidence. The marketing of the budget in 2014 resulted in News Corp publishing an article like this, dryly listing the adverse effects of the budget on ‘the average person/family’, such as:
IF YOU NEED TO SEE A DOCTOR WHO BULK-BILLS ... All the rumours were true. From July 1, 2015, you will have to pay a $7 “patient contribution” fee each time you visit your GP.

You’ll also get slapped with that charge when you visit out-of-hospital pathology and imaging services, such as getting an X-Ray or an MRI.

Concession card patients and kids under 16 years will only have to pay the contribution for their first 10 visits a year.

Doctors have discretion to choose who pays the fee, but there is a catch.

If GPs choose not to charge a patient, they won’t receive their $6.20 bulk billing consultation payment from the government.
While Abbott and Hockey were effectively telling us all to swallow our medicine, they were showing a distinct inability to get budget measures through the Senate. The ABC reported in late May 2014 that Hockey was threatening that interest rates, as well as taxes and charges, would increase if the budget measures did not pass the Senate. History will tell us that a lot of the measures that weren’t passed by the Senate were quietly rescinded in the 2015 Budget. We also now know that the official interest rate set by the Reserve Bank fell over the period of the 2014 budget to the lowest level ever — 2% — causing the Chief Executive of CPA Australia, Alex Malley, to comment, as reported in The Saturday Paper:
“A 2 per cent interest rate is another way of saying there’s no pulse in the economy,” says Malley.
So then we come to Budget 2015. If Hockey and Cormann shared some time smoking cigars again, it certainly wasn’t in public view. Hockey returned to his ‘genial Joe’ persona pointing out the benefits to all from the latest budget. Sophie Morris, who wrote The Saturday Paper article linked above, observed:
In an extraordinary about-face, Hockey has gone from being the treasurer who helped destroy consumer and business confidence last year, with a tough budget and talk of “debt and deficit disaster”, to an enthusiastic hawker going all-out to try to rekindle it. He’s throwing himself into the task with all the gusto of a steak knife salesman on daytime television.
In an interview with one of the ‘doyens’ of the Australian media, Laurie Oakes, Hockey was asked what happened to the ‘debt and deficit disaster’ last year since there has been little improvement in the Australian Government’s budget position:
Hockey replied: “Well, we made significant progress last year, Laurie, and that’s underestimated, but we actually have come a long way. Now we are on the next stage of our plan to build growth, and we’re investing.”
You could also question if the change in attitude was somehow influenced by the last 12 months of opinion polls, as evidenced by the commentary that the 2015 budget has ensured the ALP would now win an election by a smaller margin than for most of the past 12 months.

The ‘highlight’ of this year’s budget is the $20,000 immediate write off for asset purchases by small business. The plan apparently is for small business to go out and purchase business related equipment — which in turn means money is pumped into the economy, people in the businesses that supply equipment to small business retain their jobs and go out and spend their income to inject further money in the economy. Of course it is a complete coincidence that the strategy is similar to the Rudd/Gillard strategy to address the GFC, which the LNP so roundly criticised at the time for being economically reckless. There are some differences of course: Rudd/Gillard were responding to a worldwide event; Abbott and Hockey are responding to an event of their own making. Both political parties are of course favouring their preferred demographic.

It appears, however, that the ‘sales job’ to unaligned Senators in 2015 is no better than it was last year. Fairfax Media is reporting:
Almost three weeks into its budget sales job the Abbott government is still struggling to secure Senate support for some of its key proposals, leaving billions of dollars of savings in doubt.

The government's age pension changes, childcare package, cuts to paid parental leave and plan to impose a one-month wait for the dole all still face an uncertain fate in the upper house.

While crossbench negotiations are set to ramp up even further in the coming weeks, it looks increasingly likely the government will be forced to abandon or heavily amend some of its plans. The latest crossbench talks come after the Parliamentary Budget Office warned Senate intransigence could carve a $100 billion black hole in revenue in the next decade.
Abbott, Hockey and others have accused the Rudd/Gillard Government of spending excessively, in turn making the dramatic spending cuts of the last two budgets prudent and necessary. For a number of years, this ‘self-evident’ truth has been accepted at face value by a large proportion of Australian media (and the community). It is clear that the unaligned Senators have thought differently when disallowing a number of the revenue measures proposed by Abbott and Hockey.

It is perhaps ironic that the elected Senators of Australia have demonstrated the sales pitch doesn’t convince them and the ABC’s FactCheck unit determined that Abbott and Hockey are now spending more that Rudd/Gillard did. Hockey’s sales pitch this year is better, but the budget is still about ideology rather than improving the status and wellbeing of our society.

What do you think?
What can we expect from this government except a litany of failure? 2353 points out that in selling their two budgets they have shown that they couldn’t sell a glass of water to a thirsty man. Worse, they demonstrate their hypocrisy with an approach in 2015 that they roundly criticised when in Opposition and is the polar opposite of their own approach in 2014. Can they get any worse? Let us know what you think.

Come back next week when 2353 will consider the politics of the marriage equality issue.


The unhappy marriage of democracy and capitalism


Most Western countries, including Greece and Australia, have a system of democratic-capitalism. It marries a democratic political system with a capitalist economic system and they are perceived as being well-matched because both are founded on philosophies about individual freedom. It is, however, not necessarily a happy marriage. In the current Greek situation, it is very clear that capitalism is abusing its spouse democracy, and capitalism is dominating the marriage. What does that mean for the future of democracy? Can the marriage be saved? Or should democracy move out and find a new partner?

In January 2015, the people of Greece expressed their democratic right and elected a leftist government — a reaction to austerity measures that had been imposed on the people by previous governments since 2010.

Admittedly, Greece had been living beyond its means, accumulating mounting deficits each year, but as part of the euro-zone had no control over its own currency. With such control it could have devalued its currency or, if floated as an individual currency, it is likely that it would have been sold down well before the situation became as bad as it did. Germany, however, is the heart of the euro and its economic performance tends to drive the relative value of the euro on the world’s currency markets: so Greece was always going to end up in trouble and did so when the GFC hit.

But austerity measures made the situation worse, not better. Unemployment rose, reaching 26.8% in January 2013 and by April that year youth unemployment was 60%. Overall unemployment continued to rise, to 28% in February 2014, no doubt helped by the sacking of 15,000 public servants during 2013. Three-quarters of the unemployed were then long-term unemployed (longer than 12 months). The latest figure I was able to find shows unemployment has fallen slightly but is still at 25.3%.

GDP has been in ‘negative growth’ (that is falling rather than growing) for most of the time since the GFC in 2008, dipping to ‒8.9% in 2011 and was still at ‒3.3% in 2013. By 2013 GDP per capita had fallen to 2004 levels (GDP per capita is often a proxy for standard of living). In all, Greece’s GDP has slumped by 25% since 2008. In 2010 the government’s revenue was €97.2 billion but had fallen to €78.1 billion in 2014 (this for a population of about 11 million). And yet it is the revenue side of the equation that has been Greece’s main problem: its historic spending levels, around 50% of GDP, are similar to many other European governments but its revenue (around 40% of GDP) has been lower. If revenue had not fallen so disastrously (largely a result of the austerity measures), it could have achieved a balanced budget in 2012 or 2013 with no further cuts to spending. It is little wonder that Greek people took to the streets in reaction to the waves of austerity that were introduced. Apparently, Greece now has a ‘primary surplus’, meaning revenue can meet government expenditure, but it is the interest on loans and repayment of loans that is causing the problem, as the total government debt is now 170% of GDP.

There was a glimmer of hope in 2014 when GDP grew marginally but as successive presidential elections late in the year failed to achieve a clear outcome, and then the election of the leftist Syriza government in January 2015, GDP began falling again as financiers and big business pulled money out of the country (I have read estimates ranging between €40 billion and €55 billion). With the uncertainty, including the prospect that Greece may withdraw from the EU, people also began withdrawing their money from the banks, threatening the stability of the banks. The banks had been able to support themselves by borrowing money from the European Central Bank (ECB) using Greek government debt (bonds) as collateral but in February this year the ECB said it would no longer accept Greek government bonds — leading to more money being withdrawn (€23 billion so far this year). Despite that announcement, the ECB has made a €1.9 billion profit from trading Greek government bonds: it has agreed to pay that to the Greek government but has not yet done so. Greek government bonds are now considered ‘junk’: the rate demanded on the financial markets has varied between 19% and 25% to cover ‘risk’ — that is the sort of rate charged by ‘loan sharks’ and means the value of an initial loan would double in 3‒4 years. Borrowing at such rates would create an impossible situation which is why the Greek government is now mainly reliant on loans from the ECB and the IMF. Many of the private financiers were paid off in earlier bail-outs in 2010 and 2012 when they also took a 20% ‘hair cut’ (in other words, they were paid 80 cents in the dollar on what they were owed).

The new government has been trying to renegotiate the loans from the IMF and the ECB. It wants an easing of the austerity conditions. It does not want to undertake any further labour market reform (at least in the short term); it wants to rehire 4,000 public servants; and is refusing to make any further cuts to pensions although it is open to reform of the pension system. The government recently said that if forced to choose between repaying loans and paying the pensions, then it would pay pensions — in other words it would default on its loans.

The people have spoken in the home of democracy but the bankers aren’t listening.

Mark Weisbrot from the US Centre for Economic and Policy Research said of the move by the ECB to refuse to accept Greek government bonds:
“They are trying to force the government to abandon its promises to the Greek electorate, and to follow the IMF program that its predecessors signed on to. … The ECB should be ashamed of its latest assault on Greek democracy. And they should not be able to get away with disguising it as anything less than that.”
And Joseph Stiglitz wrote:
Seldom do democratic elections give as clear a message as that in Greece. If Europe says no to Greek voters’ demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics.
It fits with a common criticism of our society since the 1980s: that the ‘economy’ has come to dominate political debate rather than debate about ‘society’; that we have become an economy, no longer a society; that dollars, not people, now rule and determine the actions of governments.

While money may be an essential part of our system, allowing exchange between people who do not know each other, for items that may be made by someone else, it appears to have also become a tradeable item (a commodity) in its own right. Capital markets do allow for borrowing for genuine purposes, like banking needs and productive activities, but they have also become, like stock markets, a source of speculation and profit making. In Australia we know that banks are amongst our most profitable institutions and, in Greece, banks are among the biggest private companies in the country. How have we allowed that? Money is meant to be a servant, a medium of exchange, but it has become so much more.

Consider who benefits from bail-outs to countries. A country may borrow funds to meet the normal activities of government, particularly for public infrastructure, but if the government cannot repay the loan when it falls due it may be bailed-out. That bail-out is not to help the government directly but to allow it to pay the original financiers. It is done because a ‘default’ is considered a threat to the international financial structure — why? One reason is that if one or two countries are allowed to get away with defaults, then others may follow suit, lenders would no longer feel confident about lending if they weren’t going to get their money back and lending could dry up. With no capacity to borrow, governments would have to print their own fiat currency — which they can do anyway — and there would be no need for international financiers! (And, of course, they can’t allow that to happen.)

We also saw during the GFC that the Wall Street banks were bailed out — they were ‘too big to fail’ — while ordinary people lost their homes. Why couldn’t people have been paid that money to pay out their mortgage and thus save their home? — the money would have gone back to the banks in payment of the mortgage. The government could make the payment as a loan, even at concessional rates (though given that US interest rates are so low it wouldn’t matter too much). As I understand it, the housing bubble burst, house values fell, so people owed more than their house was then worth and many just walked away. The government could have paid people to buy their houses at the lower price, saving the government money, and the banks would take a ‘hair cut’: they would get some money back but not the full value of the original loan. What’s wrong with that? Isn’t that just allowing normal operation of the market?

The banks had created the problem by buying and selling debt as a means to make a profit. They had mixed risky debt with a small amount of ‘safe’ debt and sold the entire package: they were making a ‘killing’ until it unwound. But still they were bailed out with taxpayers’ money.
Whatever regard they [the banks] may claim to pay to the wider concerns of the nation, their policies are dictated in the last resort by the desire to make profits and to secure the value of their own assets.
That was said by Ben Chifley in 1947 and nothing has changed.

Yes, we need a financial system but it has gone way beyond its original purpose, which was to support the operation of the market, and has become a market in its own right. Traders buy and sell currencies, not just to make necessary international transactions, but to speculate on a currency’s rise and fall and make a profit. Such speculation may even impact the value of a currency. Is that a valid use of the financial system? — I think not, but that’s only me.

I do not propose that we should go to a socialist system as that certainly didn’t work, as least as it was pursued in the Soviet Union, but governments should, at the least, be playing the role of arbiter between the market and society and not simply supporting the big end of town because of its economic power. Governments in a democracy are elected by the people and are meant to represent the people but too many seem bent on putting the economy, and the companies allegedly contributing to the economy, first.

As Eva Cox wrote in a piece for The Conversation:
… mainstream centrist parties’ economic emphases are struggling to engage voters as their policies are failing to respond effectively and acceptably to GFC-damaged market models.

A consistent trend is voter concern about public spending cuts and economic priorities that promote markets as the means to cut “excessive” public costs.

Questions need to be asked about why there is little or no serious discussion on the relative roles of government, markets and communities in delivering goods and services for the nation. [emphasis added]
The emphasis on the ‘free’ market that arose from the rise of neo-liberalism in the 1980s may have contributed to increased overall wealth but at the cost of greater inequality. Even the IMF has raised concerns that increasing inequality is leading to public distrust in the political process and greater social instability. In essence, the system is failing to support democracy and the people are realising it.

Is China the modern example we should be following? — a form of guided capitalism. We may not adopt its political system but a system where the government exercises greater control of the economy. There would be an outcry that that is against individual freedom as embodied in the free market but capitalism, in practice, already undermines the individual freedom of the majority as rising inequality makes clear (and according to Piketty that is inherent in the capitalist system).

I found it passing strange that Catherine Livingstone, President of the Business Council of Australia (BCA), told the National Press Club:
As it stands in Australia ... the gap between the digital literacy of our young people and that of our competitor nations is increasing.

If we want increased productivity and participation, we need urgently to embark on a ten year plan to close that gap. [emphasis added]
I didn’t think we were allowed to mention 5 and 10 year plans: aren’t they something associated with socialist systems? But perhaps now that those systems no longer exist we can talk of such plans without the Cold War political implications. If even the BCA can be talking about 10 year government plans, then there is a case that business recognises that the market cannot provide everything that makes the market work. Governments still have a key role and should be fulfilling that role, not simply dreaming (as our current government does) that the market is capable of doing everything ‘better’ and more efficiently. Without that ‘10 Year Plan’, the BCA is well aware that efficiency and productivity may become historical constructs that we can only recall with fond memory. (It is also of more than passing interest that Bill Shorten’s emphasis on science, technology and maths education in his Budget Reply speech is exactly what the BCA asked for.)

The Greek situation has, in my mind, brought this tension between capitalism and democracy into sharper focus. But governments are in thrall to the big capitalists and the financial institutions and are yet to acknowledge it. They will not recognise it while they remain blinded by the ‘free market’ philosophy of neo-liberalism, and refuse to see that it is not only the market but also governments and communities (as Eva Cox said) that have a role in ensuring a country gets the goods and services it needs and wants.

Is it time that ‘democracy’ sought a divorce from this domineering and aggressive ‘capitalism’ so that governments again understand that the ‘demos’ in democracy means ‘the people’, not markets and money?

What do you think?
Who is really running the nation? The government or the bankers and capitalists? And where do we, ‘the people’, fit in that? While Syriza in Greece is trying to redefine and reassert the government’s role in the economy, and a similar party, Podemos, is gaining popularity in Spain, should the people of Australia, as Ken suggests, also be demanding a change? Or are most Australians too apathetic to care? Is Labor offering an alternative or not? Ken’s piece raises many questions and we will be pleased to share your views on those questions.

Next week we return to budget issues when 2353 discusses ‘The $19,990 special’.