Doin’ the GST-a-rosy rag

Got a PM, PM we can’t trust
Said a higher GST is a must
Doin’ the GST-a-rosy-rag
Told the voters you must pay
If you want to see a surgeon on another day
He was doin’ the GST-a-rosy-rag

Been around, and new is old
Catch your cold and blow your gold and spend
Doin’ the GST-a-rosy-rag
[Apologies to Arlo Guthrie]

We’ve been around and around and back again, doin’ the GST-a-rosy-rag. I am usually not one to say ‘I told you so’ but back in April, in my piece ‘Beware there is a plan’, I suggested that Abbott and Hockey were looking to reduce the commonwealth government’s involvement in health and education and leave those matters to the states. How could they do that? — by increasing the GST, all the revenue of which goes to the states. At the time they ruled out an increase in the GST because it did not have bipartisan support. I did predict, however, that they had managed to put it on the political agenda and that it would raise its head again — I did not expect that it would be so soon.

So in July, what happened? Leading into the ‘leaders’ retreat’ before the formal COAG meeting, NSW Premier Mike Baird raised the prospect of increasing the GST to 15%. His main argument was that it was necessary to meet rising health costs — and, of course, those costs for the states rose dramatically after Abbott and Hockey cut $80 billion from future funding to the states for health and education.

When asked about it at the WestConnex sod turning in Sydney on 20 July, Abbott supported —
… Mike Baird’s willingness to discuss revenue issues because obviously, if there is a problem with revenue, it can’t just be the Commonwealth’s responsibility to solve.
Right? Wrong! Why isn’t it the commonwealth’s responsibility when it is the commonwealth government that collects all income tax and company tax and the states have to come as mendicants to get back some of the tax their citizens have paid? Has Abbott forgotten that income tax was originally levied by the states and they gave it up in a time of war expecting a fair deal afterwards?

The full transcript of Abbott’s words is here but there are some interesting things to note:
  • not once does he admit that he has anything to do with it nor that he has ever suggested it;
  • three times he manages to insert his new mantra of ‘lower, simpler, fairer’ taxes;
  • he constantly refers to it only as a ‘discussion’.
When specifically asked if this was part of the plan, ‘Having turned off the tap of federal health and education funding and forcing the states to come up with their own solutions’, he simply avoided the question and said:
I’m just really pleased that Premier Mike Baird, along with Premier Jay Wetherill, are prepared to have a constructive, responsible discussion. It is a sign that this generation of leaders at both the State and national level are prepared to do what’s necessary to make our country strong …
Still nothing to do with him! It is all about having a ‘discussion’ and luckily for him someone else raised it. (Was there any prodding behind the scenes? We will probably never know but is it merely coincidence that Abbott’s federal electorate takes in Baird’s state electorate?)
I want to see the overall tax burden go down. I want to see lower, simpler, fairer taxes. But at the same time, I do want to see a more rational arrangement of finances and responsibilities between the Commonwealth and the States.
With that last statement, Abbott is certainly pursuing his line that many ‘responsibilities’ should be handed back to the states and the real issue then is how the states will fund them. ‘A more rational arrangement’ could include giving back the right to tax individual incomes and the commonwealth government could totally withdraw from funding schools and hospitals and many other services — but that would be a step too far! The commonwealth government is now reliant on income tax for about 48% of its total revenue or 56% of its revenue if we remove the GST from the calculation (based on the 2015-16 estimates).

Mike Baird claimed that it is primarily to do with rising health spending. He suggested that state and commonwealth deficits in 15 years (in 2030) will total $45 billion of which $35 billion will be health costs. Even at an annual rate of 2% growth, government revenue in 15 years will be 32% higher than currently. Yes, all government costs will also increase in that time but surely there must be room within that increase to absorb some, if not all, of the rising health costs? (Also watch for my pieces on ‘Funding health’ in the next two weeks where I suggest that a key issue is managing economic and wages growth to cover costs, not simply increasing taxes.)

A problem with raising the GST is that it hits everyone the same in dollar terms and eats into proportionally more of the income of those on lower incomes and government benefits — a regressive tax. That is why Baird suggested that families on incomes up to $100,000 should be compensated. Abbott is also talking about lower income and company tax. So are we only paying more GST but getting it back in compensation and lower income tax with no nett benefit to the government? —and the bulk of that compensation would be borne by the commonwealth government while the states get all the revenue, so that doesn’t appear to make sense in solving the commonwealth government’s fiscal problems. So if there is no, or little, nett gain, who benefits?

The states will benefit: they will get the dollars as all the GST revenue is passed on to them. Given that the total deficit in 15 years, as Mike Baird pointed out, is $45 billion across all governments, it seems they do not really need a large increase. Based on the 2015-16 estimate of GST revenue, even the 2% growth in annual revenue I suggested would provide $20 billion extra in 2030. If the GST is increased to 15% and that same 2% real growth is applied, it would actually double the 2015-16 estimate to almost $120 billion in 2030: the additional amount ($60 billion) would give the state governments $25 billion more than Baird says they need for the health part of the deficit and $15 billion more than the total deficit: but Baird included the commonwealth government in his $45 billion estimate of deficits, so does that mean the states pick up extra funding that otherwise could have met commonwealth costs? — perhaps it is a neat trick he is attempting! (Personally I think Baird is smart enough to know that.)

Look also at the benefit for the Abbott government. It is able to make significant reductions in the funding (other than the GST) it provides to the states for health and education. With expenditure thus reduced, it can offer some of the tax cuts it talks about. It leaves the commonwealth government able to argue that it didn’t increase taxes — that was due to the states — and it has kept its promise and lowered taxes.

But does that add up? I do not see how a cut in income tax and company tax is valid as a cut if GST has also been increased. That is just shifting the tax mix (and shifting it between levels of government), not reforming taxes. Does it really lead to a lower overall tax burden as Abbott promised? It may benefit the Abbott government (politically) but not necessarily anyone else. Will an increase of 5% in the GST be enough for the states? Will they abolish stamp duty and payroll tax as was promised when the GST was first introduced? That didn’t happen then and I don’t think the proposed increase will make it happen now: so, effectively when state and commonwealth taxes are put together people are likely to be no better off, possibly even worse off. And if the commonwealth government has reduced taxes to compensate for the increased GST, of which it gets nothing, what nett benefit to the budget bottom line has it achieved? It can only benefit if the tax cuts do not match its reduced expenditure on health and education — but it won’t explain that because people would realise they will lose out in the deal.

Premiers Andrews (Victoria) and Palaszczuk (Queensland) suggested, instead, an increase to the Medicare levy. It has the advantage that it is a progressive tax. In my health pieces I suggest that isn’t necessarily the way to go, but could it work?

All the money raised by the Medicare levy goes into the consolidated revenue of the commonwealth government. The commonwealth government pays out significant amounts in Medicare benefits and the current levy covers about 55% of those costs. The levy does not directly contribute to hospital funding. An increase, however, would mean that the commonwealth does not have to use as much of its other revenue to meet Medicare benefits, theoretically leaving that amount free to be added to hospital funding to the states. The main drawback with that approach is that it leaves the funding entirely in the hands of the commonwealth government which may be okay when Labor is in power but, as we are seeing, not when the Liberals are. Given what Abbott and Hockey have already done to health funding for the states, and their pursuit of less commonwealth involvement in health and education, how could they be trusted to hand the benefit of a higher Medicare levy to the states? While an increase in the levy may provide some benefit, and as a progressive tax is preferable to an increase in the GST, I certainly wouldn’t have any faith in this government to pass on the benefit.

I note, however, that the leaders’ meeting actually raised the idea of extending Medicare into public hospitals which would guarantee the funding rather than relying on commonwealth government beneficence. I doubt the commonwealth would be keen on that approach as it would have little control over the amounts paid as they would be dependent simply on the number of services performed and, with the number of medical services increasing each year, the cost could end up being higher.

As many commentators have pointed out Abbott and Hockey are consistently ignoring, even ruling out, other ways of raising revenue. Changes to negative gearing and superannuation have been ruled out even though they disproportionately benefit those on higher incomes. To use their own words, that approach fails the ‘pub test’ because it will be seen as unfair — but that no longer seems to concern them.

Tax concessions on superannuation will cost the government $170 billion over the forward estimates (to 2018-19). While the current concessions provide a benefit in encouraging retirement savings, there is certainly scope to trim that amount as Labor is proposing but which Abbott is ignoring. Also over the forward estimates, the government will spend $27 billion on the private health insurance rebate and forego just over $7 billion in tax by not taxing that benefit — a notional total of $34 billion which could otherwise go to support health funding (even allowing that there may be an increase in demand at public hospitals if the private insurance rebate is abolished). I mention these only as examples of places the government might look for revenue without raising the GST, if only it wanted to, and if only it was willing to pass on at least some of the increased revenue to the states.

There is little doubt that the debate about the GST has arisen from the Abbott government abrogating agreements the Rudd and Gillard governments had reached with the states regarding health and education funding. The obvious intention was to put pressure on the states to request an increase in the GST. The states have few other ways of getting money out of the commonwealth government, especially when it has made clear that it intends retreating from its involvement in health and education. The commonwealth control of the purse strings is, in that regard, a problem but via the GST the states, at least, have more control of the money. The Abbott government wants to redefine the federation and reduce its involvement in areas over which the states have direct responsibility but it won’t hand back the funding to allow them to take responsibility and it won’t hand back the income tax power, leaving the states with few options. It is clearly a political and ideological push by the Abbott government dressed up in fine phrases regarding federation and fiscal reform but it has little to do with either.

The GST is always going to be a political football and so here we go again ‘doin’ the GST-a-rosy-rag’.

What do you think?
In the piece above, Ken discusses the ‘opportunity’ given to the Prime Minister to ‘discuss’ taxation. Is increasing the GST a better idea than increasing the Medicare Levy or are there better options? We welcome your views below the line. Who knows, if a political staffer reads your suggestion, it may just become policy!

Next week Ken follows this up by presenting Part 1 of ‘Funding health’ which looks at the data and questions the real extent of the problem.

Winter winds, wind farms and hot air

About this time of the year the all-year-round residents of Canberra enjoy a reprieve from the hot air produced on Capital Hill. Pity is that this usually combines with winds that come from the Antarctic via the Snowy Mountains to make Canberra shiver through another winter of sub-zero mornings! The politicians usually leave town, return to their offices and try to remind their electors why they should be returned to parliament next time with a thumping majority. It seems to be a bit different this year — government front benchers are hardly to be found.

They could be busy searching for a ‘wind farm commissioner’ who has the similar beliefs to the LNP. You may have seen our esteemed treasurer complaining about the ‘visual pollution’ from wind farm towers last September. While Hockey is entitled to his opinion, did anyone ask him why open cut coal mines, telecommunications towers, or power stations are less visually obtrusive? Abbott is clearly of the same opinion but he claims they are noisy as well!

At least wind tower poles are designed to be aerodynamic — which also brings symmetry and aesthetics to the design. The approved-this-month Shenhua open cut coal mine near Gunnedah will have approval to flatten 771 hectares of endangered local ecology, most of it box gum woodland, and no doubt carve a scar in the ground some kilometres long — clearly a better look than a wind farm in the view of Abbott, Hockey and Environment Minister Hunt.

During December 2014, the government body (in Hockey’s department) that decides which groups are permitted to claim ‘charity’ status and receive tax deductible donations revoked the Waubra Foundation’s ability to process tax deductible donations. While the reasons are not made public, the Waubra Foundation exists to claim that wind farms have health implications. The results of a study of 4000 investigations into the noise from wind farms reported last February that there was no conclusive evidence to suggest that wind farms create any health concerns — despite evidence from a Dr (her speciality is not specified) Judy Ryan:
The slow corruption of science education so that people could be fooled by the oxymoron ‘scientific consensus’ is part of politically driven global agenda orchestrated by the United Nations. We should crawl out from under its thumb and treasure our nationhood and democracy.
And this sterling contribution from Alan Scott:
The time has come for Australian politicians from all warring camps to speak the truth to their electors, rather than mouthing the party lines handed down to them by their United Nations masters.
(The links to the actual submissions are contained in the SBS News article above.)

Perhaps instead of giving conspiracy theorists the time of day, Australia’s Wind Farm Commissioner, when appointed, should start an enquiry into how to harvest the hot air emanating from Capital Hill using a number of wind farm turbines and storing it in available battery technology. S/he could determine if Parliament House could be removed from the National Electricity Grid. Even better, if all the staff and politicians caught buses to work, the batteries could be installed in the car parks to retain the aesthetics of Capital Hill (as well as allowing the ACT government to reduce the subsidy to its bus operations).

Clearly the Wind Farm Commissioner is required urgently and cannot be delayed due to the winter hibernation in Canberra as this clip explains.

The cultural war against the ABC is clearly top of mind for our government. The Australian Broadcasting Corporation hasn’t comprehended it is supposed to be the government’s media mouthpiece in the same way that Pravda was to the old USSR.

It seems that the ABC is a thorn in the side of most sides of the political landscape at times — as Mark Scott (ABC Managing Director) has correctly pointed out in response to the ‘crime’ of allowing a person with a less than impeccable past to ask a live question of a government minister on the Q&A program late in June.

After the ABC followed their normal process and ran a repeat of the show in question during daylight hours a couple of days later on one of their digital channels, Abbott was very quick out of the blocks to demand that heads roll for the gross insult (do you suspect he wanted to use the word ‘insubordination’?). As Scott noted in the same speech to the Centre for Corporate Public Affairs:
"But even for the ABC, things seemed to have been taken to a new level when on Wednesday we scored four covers in one day in the News Limited tabloids, complete with photoshopped ABC flags being waved by jihadi protestors," he said.
Scott went on to question why ‘the question’ was such an outrage when the same person had featured in articles in The Australian and The Courier Mail (both News Corp products) in the past few years with no apparent controversy.

Nevertheless, the Abbott government wants (the presumably lefty pinko) metaphoric head of the ABC on a platter and announced there will be an inquiry. The ABC Board gets in first and appoints Ray Martin (former reporter, tabloid current affairs and chat show host) and Shawn Brown (former SBS managing director) to investigate if there is any bias in the Q&A program. Abbott bans ministers from appearing ‘for a while’ — probably until the inquiry is completed or the Q&A show is transferred into a different division of the ABC that has a different view of balance and equity.

Agriculture Minister Barnaby Joyce was the first ‘victim’ of the boycott on 6 July and Malcolm Turnbull also complied on 13 July — John Hewson was invited to take his place as he is not susceptible to Abbott decrees. The ALP has a history of boycotting media as well: in 2012 it boycotted the 2GB radio program hosted by Alan Jones after he made a particularly cruel and heartless attack on the then Prime Minister Julia Gillard. At the time, then Opposition Leader Abbott said the comments were offensive,
But when asked whether he would boycott Jones' show, he said he would not. It was all about the numbers.
"I am certainly not going to ignore an audience of half a million people in Sydney," Mr Abbott said.
Joe Hockey, then the shadow treasurer, agreed.
Ray Martin, in a guest hosting spot on Channel 7’s Sunrise program early in July called the Q&A ban ‘silly’ and almost immediately faced calls from two coalition senators to stand down from the inquiry:
Senator McGrath said: "I think he should step aside. His comments make him appear to be an apologist for Q&A rather than someone who will conduct an independent review."

Senator Macdonald said: "Ray Martin has respect in the community but these comments make you question whether he is the right person to conduct an independent review.”
News Corp joined in the baying for blood by publishing a piece from their well known balanced, considered and independent writer/broadcaster Andrew Bolt, as well as the front pages referred to by Mark Scott above.

Our frontbenchers would probably not be in Europe on a ‘study tour’. You also may have noticed in the news there are economic problems in Greece that may affect the European Community. The Greek public recently voted against further austerity so that the country could start to repay debt to a consortium of banks. The ‘anti-austerity’ Greek government then went into negotiations with the rest of the EU and agreed to harsher restrictions than the public rejected! Regardless of the final outcome of the ongoing story, elected Australian frontbenchers wouldn’t want to be stuck anywhere near the south of Europe while there is considerable instability. Apart from the lack of things to study in a country that apparently can’t pay its debts (remember the ‘debt and deficit’ disaster is ‘so last year’ in the view of Hockey and Abbott), who knows, they may not be able to get back to Australia in time for the resumption of hostilities on Capital Hill next week.

There is continual brouhaha regarding marriage equality? Senator Wong bluntly reminded Senator Abetz recently that the majority of Australians don’t think you need either a marriage certificate or a traditional mother and father role to successfully raise children.
The Labor senator said the debate in the Australian community about gay marriage was currently “much more charitable, much more respectful, much more tolerant and much kinder in many ways on this issue than the members of our parliament”.
Seeing the failure of that particular argument staring them in the face, the government retired Senator Abetz from the play and substituted Barnaby Joyce. Joyce’s argument held even less credibility:
Some parts of south-east Asia could view Australia embracing same-sex marriage as “decadence”.
While news may take a while to reach the north west of NSW, which Joyce now calls home, New Zealand, Canada, and the US, amongst other countries, have marriage equality — in some cases for periods of up to a decade — and South East Asian countries still trade and deal with these ‘decadent’ countries on a daily basis. Regardless, it does take time and resources for government frontbenchers to make such informed comment to the debate that the majority of Australians seem to regard with a ‘meh’.

Are the frontbenchers sitting on the sidelines waiting to make a valuable contribution towards justification of the new Border Force Act? The Act apparently contains ‘secrecy’ laws around the possibly legal offshore detention policy for asylum seekers — a concept supported to an extent by both sides of politics. Apparently if anyone in Australia reports (one assumes unfavourably) on the conditions or treatment of asylum seekers held by the Australian government in Nauru or Papua New Guinea, they can be imprisoned. The government, through the newly named Australian Border Force Agency, disputes this. George Newhouse, writing in The Guardian (based in the UK), however, answers the government’s claims here.

Bill Shorten (Opposition Leader) faced the Royal Commission into Trade Union Governance and Corruption during July. While Shorten didn’t come out unscathed — there is the matter of the $75,000 donation to his election campaign eight years ago that wasn’t declared until early in July 2015 — Katherine Murphy writing for The Guardian reported:
This is how politics works, Shorten told the commission with a resolute tone and nothing approximating a flinch or a flicker of self-doubt. He’s absolutely right. This is how politics works. This conduct, and other conduct like it, is widespread and endemic. If you lack the self-belief to hustle, if you lack the network to fundraise, and if you lack the stomach for inhabiting a universe crafted in a material called grey area and powered on compromise, you really aren’t party or government material.
You could suggest that the strategy to discredit Shorten worked ... until someone looked at Speaker Bronwyn Bishop’s travelling allowance claims.

Bishop the elder should have known better than to charter a chopper at taxpayer expense for an 80km flight above the freeway from Melbourne to Geelong to attend a party fundraiser. The helicopter memes that have appeared everywhere from Facebook to News Corp papers in the last week or so are clever but starting to get a bit obvious.

Now the discussion is turning to who else has their ‘snouts in the trough’. A prime candidate seems to be Treasurer ‘it doesn’t pass the sniff test’ Hockey who is accused of paying rent on a Canberra house where the landlord is his wife and making a number of trips to Cairns while shadow treasurer with time allowed to inspect his (now on the market) property near Malanda on the Atherton Tableland, west of Cairns. Here’s a hint to Hockey: when Andrew Bolt is ‘oh dearing’ a conservative MP such as yourself, you have a problem.

The Premiers and Chief Ministers joined Abbott for a COAG retreat to reinforce our commitment to act against the threats to our community from violent extremists, family violence and the drug ice. New South Wales’ Premier Baird (who doesn’t have to face an election for nearly four years) opened a discussion on increasing the GST rate to 15% — strangely enough you can probably guess the headlines after the press conference which was also notable for the display of nine flags to signify greater importance than other announcements with less flags in the background!

The ALP held its National Conference in Melbourne last weekend. Shorten announced before the conference that the ALP would aim for a mandated 50% renewable energy use by 2030 as well as supporting an asylum seeker boat turn back policy as if they were done deals. If the outcomes are known before the conference starts, why the display of discussion and debate unless the party wants to further the impression that they do not agree on everything. Their media friends also get the chance to use headlines such as ‘Bill Shorten wins freedom to use boat turnbacks, but leadership split on issue’ without having to chase ALP leaders all over Australia for comment.

Agriculture Minister Barnaby Joyce did come out of hiding to disagree with the approval of the Shenhua mine (which is inconveniently in his electorate). Abbott claimed that Joyce was speaking as the local member — Joyce disagreed. Maybe Joyce doesn’t really see the difference between the aesthetics of wind farm towers so hated by Abbott or Hockey and open cut mining scars in the ground.

If you’ve got this far, you may wonder why anyone would be concerned what our elected officials do while there are long recesses in Canberra. There is a really simple answer. Towards the end of June, I sent an email to a ‘frontbench’ senator in my state as well as my local ALP MP. At the time of writing this I don’t have a reply from the senator, which I believe I deserve, as effectively I am one of the two million or thereabouts electors in Queensland who employ this senator. The MP has rung me to discuss the email I sent.

Frontbench senators could not be rude enough to ignore an elector’s genuine question, could they? Is the senator so caught up in waiting for instruction from LNP HQ on when he can leave the imposed seclusion to fire the next salvo in the political war, he hasn’t had the time to develop a factual and honest answer to a simple question regarding funding for an enquiry into the ABC? Although he could also just be dusting his bookshelves.

What do you think?
As 2353 suggests there are many issues to talk about but few heads appearing above the parapets, and yet they are so busy they don’t have time to answer his email. Well, next week they will be back in Canberra and will have to show their faces and be accountable.

Next week Ken takes a look at the latest craze, ‘Doin’ the GST-a-rosy-rag’ in which politicians seem to take turns to place changes to the GST back on the agenda.

How did we get a multi-party Westminster system? Part 2

[The opening of Australia’s first parliament by Tom Roberts]

Last week I gave a brief outline of how the Westminster parliamentary system evolved in England. Then came Australia which largely adopted the British parliamentary system and recognised the British monarch as head of state.

I won’t bother with the colonial era, although it doubtless had some influence, but will focus on Australia’s federation in 1901 and the foundation of our system, The Constitution, as passed by the British parliament and assented to by Queen Victoria. It drew on both the British and American systems: the Senate in particular is based on the US Senate. It seemed to be a given, following the British model, that we should have two houses of parliament but, without ‘lords’ to make an upper house, the American model was adopted to create a ‘states’ house. In reality, it was not essential to have an upper house — New Zealand is governed without one. The difference was that we were federating six separate colonies whereas New Zealand was a single colony. (Our constitution allows for New Zealand to become a state of Australia.) The smaller states supported the American concept of an upper house in which they could not be outvoted by the more populous states of NSW and Victoria. That is also reflected in the provisions for the passing of referenda to alter the constitution: that they must be supported not only by an overall majority of votes, but by a majority of votes in a majority of states — which meant the constitution could not, and cannot, be changed just by the sheer weight of numbers in NSW and Victoria.

Despite the fact that the Westminster system fuses the legislature and the executive, by selecting the ministers from the legislature, our constitution does set out the three arms of government: the parliament (legislature), the executive and the judiciary. It is important that they appear in that order: you may think that the executive should come first, being at the top of the tree, but that obviously wasn’t they way the framers of our constitution saw it — parliament is supreme, not the executive. On the other hand, the part referring to the Senate does precede that of the House of Representatives, reflecting the traditional style that the upper house is more important. It may no longer be so in practice but it does retain that final right of turning a Bill into an Act before it is presented for royal assent. And the monarch, or the Governor-General, still appears in the Senate, not the House of Representatives, when he/she attends parliament (just as the Queen attends the Lords, not the Commons, in the UK).

I won’t dwell on the chapter regarding the judiciary as that basically establishes the High Court to adjudicate on the constitution (and a few other matters), and the capacity to establish other federal courts. Like the parliament, many of the practices we attach to the judicial system are also a result of hundreds of years of evolution. Thus, although it is not spelled out in the constitution, we expect that only a court can impose punishment because only a court can rule whether or not a law has actually been breached. The constitution, however, does specify trial by jury when a commonwealth law is broken — and the case can be tried in a state court in the state in which the offence occurred.

Legally, the parliament comprises the monarch (or the Governor-General as the monarch’s appointed representative), the House of Representatives and the Senate and it is given the legislative power of the commonwealth.

The Governor-General has the power to:
… appoint such times for holding the sessions of the Parliament as he thinks fit, and may, also from time to time, by Proclamation or otherwise, prorogue the Parliament, and may in like manner dissolve the House of Representatives.
It provides that parliament must meet at least once per year: there cannot be a twelve month gap between parliamentary sessions (the 1689 requirement for ‘frequent’ meetings of parliament). Many of the provisions are the details of numbers (but also allowing for later changes by the parliament), election of the Speaker, the conduct of elections and so on but it also spells out the functions for which the commonwealth parliament is responsible and these provide the basis on which the High Court decides whether or not commonwealth legislation is valid.

In our modern economy the commonwealth’s powers have actually increased as a number of its powers are only operative when an issue goes beyond a single state’s borders: for example, banking, insurance, arbitration of industrial disputes, commerce. Now it is more often normal for those matters to operate beyond the bounds of any single state. The commonwealth can also take on or share additional powers with the agreement of the states and that has happened in regard to, for example, income tax and universities.

Our constitution sets in law that proposed laws for appropriations or taxes cannot originate in the Senate — matching Henry IV’s grant of such power to the Commons in 1407. We do not have a Standing Order 66 limiting money matters to motions of a minister (at least not that I could find) but we do have Section 56 of the constitution that states that votes on appropriation Bills can only be taken after the purpose of the appropriation has been recommended in a message from the Governor-General.

Importantly the constitution establishes the right of the people to elect the members of parliament: the phrase ‘directly chosen by the people’ is used in regard to both the Senate and House of Representatives. That gave rise to the High Court’s decision that there is an implied right of freedom of speech, at least regarding political communication, because it follows that people should make an informed vote and therefore require free expression of political ideas to inform them.

Given the people’s right to elect the members of parliament, the constitution sets out that Senators will be elected by each state voting as one electorate ‘until the Parliament otherwise provides’. So although the parliament has the power to change how the Senate is elected (perhaps by creating ‘divisions’ within a state), we have kept that system of a single electorate and used proportional representation since 1948. The States do retain many powers relating to the Senate including the right to issue the writs for Senate elections and to select replacements in the event of vacancies.

While the constitution nominated the number of members for each state in the House of Representatives for the first election, it provided that in future the number of members in each state would be determined by:

  • dividing the total population of the six states of the commonwealth by twice the number of Senators to obtain a ‘quota’ (the territories are not included in the population count, nor are their Senators included, as they did not exist at the time) and note that this is the ‘total population’ not just the number of voters
  • then dividing the population of each state by the ‘quota’ and rounding to the nearest whole number — provided that none of the original states can have fewer than five members.
That is still the way the Australian Electoral Commission calculates the number of seats to which each state is entitled and is now also applied to the NT and ACT although they are not counted in determining the ‘quota’. The proviso regarding the original states allows Tasmania to retain five seats even though by the ‘quota’ method it is currently entitled to three.

It was allowed that the members of the House of Representatives could also be elected in that first election by the state voting as one electorate if a state had not yet created ‘divisions’: the commonwealth parliament, however, had the power to determine how this would be done in the future. We basically adopted a modern system of ‘boroughs’, or ‘divisions’, or what we commonly call ‘electorates’ (the Australian Electoral Commission still calls them ‘divisions’). Although only the number of seats is specified by the constitution, the Electoral Act requires that within each State each electorate should contain approximately the same number of voters.

The most interesting part of the constitution concerns the executive: it is clearly a constitutional monarchy and legally sets that out, relying on the the conventions inherited from England to underpin it.
The Executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen’s representative, and extends to the execution and maintenance of this Constitution, and the laws of the Commonwealth.
There it is — full stop! The monarch, through his or her representative, is the executive.

Now the finer detail of how that works.
There shall be a Federal Executive Council to advise the Governor-General in the government of the Commonwealth and the members of the Council shall be chosen and summoned by the Governor-General and sworn as Executive Councillors, and shall hold office during his pleasure.
That follows the ancient structure of a monarch and a group of advisers and is like an Australian version of the Privy Council: legally, there appears nothing to stop the Governor-General acting on the advice of such a council irrespective of the parliament. It is mainly the conventions (or England’s unwritten constitutional rules) that give it a modern appearance.

Then come ministers:
The Governor-General may appoint officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish.
(Although the word ‘officers’ is used, it appears under the heading ‘Ministers’ and, just so there is no confusion, I point out that there is a separate section on the appointment of civil servants to those departments of State.)

And there is a provision that ministers must be members of the parliament which, unlike the UK, actually makes that former convention law.

There is no mention of a cabinet or a prime minister, nor is it law that the Federal Executive Council must be made up of ministers, let alone members of parliament. That is where Westminster conventions come in and the history that gave rise to them. In Australia the Federal Executive Council actually comprises all ministers past and present — that allows former ministers to retain the title ‘The Honourable’ as that title relates not to their role as a minister but as a member of the Federal Executive Council. It appears that no one has ever been removed from the Federal Executive Council, although the Governor-General has that power. As in England since the 1700s, however, it is the current cabinet, as a ‘committee’ of the Federal Executive Council, that exercises the role as advisers to the Governor-General.

What helps make the system work is the provision that:
The provisions of this Constitution referring to the Governor-General in Council shall be construed as referring to the Governor-General acting with the advice of the Federal Executive Council. [emphasis added]
That effectively prevents the Governor-General acting alone except for certain residual powers left over from the days of the governors of the colonies. Apparently there was discussion during the framing of the constitution about codifying those ‘reserve’ powers but it was decided that it was too difficult and best left flexible (and the British government had also advised against it which meant the constitution may not have passed the British parliament if we had persisted).

When the constitution and the Westminster conventions are put together, the Governor-General is, in most matters, effectively tied to following the advice of ‘the government of the day’ which brings us back to ‘cabinet government’ and places effective executive power with the cabinet. But that is not the law, only convention. It would theoretically be possible, and seemingly legal, to appoint non-parliamentarians to the Federal Executive Council but that would require that they are also able to have the executive decisions legislated by parliament — hence we are back to the need, first identified over 300 years ago, to have members of parliament, particularly those who can command a majority in (or have the confidence of) the parliament, as advisers (members of the council). For even longer, those advisers have been ministers responsible for the different aspects of government — the departments of State which under our constitution must be created by the Governor-General with the advice of the Federal Executive Council. Our constitution states that all ministers must be members of parliament and all those members of parliament must be ‘directly chosen by the people’. In those ways the system links the council, cabinet, ministers, the elected members and the voters by a combination of law and convention:

  • the Governor-General acts with the advice of the Federal Executive Council — law
  • the role of the Federal Executive Council is fulfilled by the cabinet — convention
  • the cabinet comprises ministers — convention
  • ministers are members of parliament — law
  • members of parliament are directly chosen by the people — law
By the time Australia federated, we already had parties in place but not as we know them today. As we were just taking the first step to become a nation, the parties generally were organised within each state. At the first federal election in 1901 the two major parties were the ‘free-traders’ (officially the Australian Free Trade and Liberal Association) centred in New South Wales and the Protectionist Party centred in Victoria. Although not nationally organised, most candidates across the country did declare themselves as either free-traders or protectionists. And each state, other than Tasmania, had its own labour party. At that first election, 31 protectionists were elected to the House of Representatives, 28 free traders, 14 state labour members, and two independents who later joined the labour party (King O’Malley had been elected in Tasmania as ‘independent labour’ and the other was, in any case, a former member of state labour). A national parliamentary labour party (Labour — it became Labor in 1912) was formed when those elected state labour members first met at the parliament in Melbourne and Chris Watson was elected as the first national leader. The first government, headed by Barton, was a protectionist minority government with Labour support and had to meet a number of Labour demands.

At the next election in 1903, 26 protectionists, 25 free traders and 23 Labour members were elected, which led in 1904 to Labour splitting from the Deakin government and forming the first Labour government. It was short-lived (only four months) but helped lead to the realignment of Australian politics.

Tariffs were the major source of revenue for the early commonwealth governments and even some free-traders supported a limited range of tariffs for that reason. With Labour and protectionists supporting tariffs, by 1906 the free-traders had basically lost the argument and renamed themselves The Anti-socialist Party.

In 1909, Andrew Fisher was leading a Labour government and pursuing a labour program of legislation:
Far more provocative was the Labor proposal for a land tax to break up large estates and promote closer settlement, and the proposal to strengthen the Conciliation and Arbitration Act 1904. Perhaps the most contentious Labor project was the planned ‘new protection’ referendum to amend the Constitution and give the Commonwealth government the power to tie labour protection to industry protection.

This Labor program was precisely the bonding agent needed to bring all three non-Labor groups in federal parliament — Deakin’s Liberals [formerly protectionists], the Anti–Socialists … and John Forrest’s ‘Corner’ [a WA party] — into coalition.
Those groups merged to form the “Commonwealth Liberal Party’. And that is how it has been for most of the time since, a basic division between Labor and anti-Labor forces.

Rather than finishing this with the traditional TPS ‘What do you think?’, it seems more appropriate, as an information piece, to ask:
Do you have any questions?
We hope you enjoyed Ken’s two-part explanation of the complicated 800 year story that led to the parliamentary system we have (he does apologise for it being so long but suggests that it amounts to only about six words per year!). As Ken invited, we also urge you to express your thoughts on our system and ask questions. Based on the research he undertook, Ken will do his best to answer your questions.

Next week we resume normal transmission with a piece to get us in the mood for the resumption of parliament: ‘Winter winds, wind farms and hot air’ by 2353.

How did we get a multi-party Westminster system? Part 1

[Charles I in parliament: ‘Attempted arrest of the five members’ by Charles West Cope]

Earlier this year we had a couple of pieces that raised issues about the parliamentary and party system in Australia (‘President Abbott’ and ‘Instant Experts’) and in June we had the 800th anniversary of Magna Carta. Our system is known as a Westminster parliamentary system and incorporates a multi-party system (or sometimes a ‘dominant party’ system, as when the Coalition governed from 1949 to 1972). Some comments on those earlier articles raised questions about how effective our system really is and mentioned some of the quirks that seem contained in it. I thought that deserved some research as to how the system arose and how our constitution expresses it.

Of course the basis of our system is the English parliamentary system which operates in what is now a constitutional monarchy. England does not have a written constitution: instead, it has taken hundreds of years to develop some written and many unwritten rules (conventions) that determine how Britain is governed.
Parliament developed in the 13th and 14th centuries largely through the desire of Edward I and his successors to wage war. This needed more money than they had from their own wealth [personal royal estates] and they had to levy "extraordinary" taxes, with Parliament's assent, to raise the funds. But each time the King requested assent to a tax from Parliament, it could ask a favour back … and often used the King's desperation for money to get what it wanted.
While the ‘lords spiritual’ (abbots and bishops) and the ‘lords temporal’ (originally earls and barons and later including dukes, marquesses and viscounts) had been called together before to grant taxes to the king, during the reign of Edward I (1272 –1309) it became more common to also call in the ‘knights of the shire’ (two from each county) and ‘burgesses’ (two from each city and town, or ‘boroughs’ as they were known). Those knights and burgesses were usually ‘elected’ but both the franchise and the election procedure varied from place to place. From 1327, under Edward III, that became the norm and from 1341 the Commons (or representatives of the ‘communes’) met separately from the Lords — although most government business still belonged to the Lords. The Commons exercised its power in 1376 when it impeached some of the monarch’s ‘corrupt’ ministers and did so again in 1388 in what became known as ‘The Merciless Parliament’. The Commons complained about being ignored in the king’s discussions with the Lords about taxes and in 1407 Henry IV formally affirmed the right of the Commons to initiate all grants of money — a power jealously guarded ever since.

Petitions to the monarch and the parliament was the common way to present grievances and they would be remedied by a statute (an Act) of the parliament.
… petitioners began to submit their grievances first to the Commons and, based on these petitions, the Commons wrote draft statutes, known as Bills, to be presented to the Upper House.

In 1414, the Commons successfully insisted to Henry V that the King and Lords should not change the wording of any of the Bills submitted by the Commons without its agreement and that no Bill should become … a statute without their assent.
So by the early 1400s the presence of two houses in parliament, the Commons and the Lords, was firmly established and the Commons had gained clear and important roles.

The modern parliamentary system really starts with the Bill of Rights in 1689 which was presented to William of Orange and Queen Mary when they jointly assumed the throne. After listing the crimes of the previous king, James II, the Bill stated, among other matters:
That the pretended power of suspending the laws or the execution of laws by regal authority without the consent of Parliament is illegal.

That levying money for or to the use of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or in other manner than the same is or shall be granted is illegal.

That the raising or keeping of a standing army within the kingdom in a time of peace, unless it shall be with the consent of the Parliament, is against the law.

That election of members of Parliament ought to be free.

That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.

And that for the redress of all grievances, and for the amending, strengthening and preserving of the laws, Parliaments ought to meet frequently.
(A brief aside here: in England, it was tradition that the monarch was not above ‘the law of the land’ and that had been set in writing in Magna Carta in 1215. So it was possible for an English parliament to assert that a monarch should not act illegally — something that could not be done in some other kingdoms.)

I think you will recognise the basis of our current parliamentary system:
  • laws are made by parliament
  • money can only be raised by, and spent with the consent of parliament
  • free elections
  • freedom of debate (the monarch cannot interfere and nowadays rules of slander and defamation do not apply, which is why we sometimes see politicians challenged to repeat a statement outside the parliament)
  • frequent meetings of parliament
There were other matters relating to ‘cruel and unusual punishments’, no fines or forfeitures before conviction, and the right of Protestants to keep arms, which were also to influence the American Bill of Rights a hundred years later.

About 60 years later (in 1748), the concept of the ‘separation of powers’ was spelled out by Baron de Montesquieu when he explained the difference between the executive, the legislature and the judiciary: his ideas drew on ancient Rome but also the system that was emerging in England. In those days it was highly relevant because the monarch (advised by his ministers, who were selected and appointed by the monarch) was still the ‘executive’. We need to keep that in mind because as the Westminster system evolved it actually fused, in practice if not in law, the legislature and the executive.

It was also in the 1600s that nascent political parties emerged although not yet formally organised as parties — more like-minded people grouping together, or factions. In England, they were the Whigs and the Tories and the grouping started over the Exclusion Bill in 1678: there was one parliamentary group (the Whigs) trying to stop James succeeding to the throne after his brother Charles II and another (the Tories) wishing to continue the Stuart line of succession. By 1689, however, they actually agreed that a limited constitutional monarchy was preferable to the absolutism of ‘divine right’ that had been displayed by James II — although some Tories did support later attempts by the Stuarts to reclaim the throne. Over time, the Whigs evolved into the English Liberal party and the Tories into the Conservatives (still commonly referred to as the ‘Tories’).

The rise of parliament also gave rise to the role of a prime minister because monarchs realised that to achieve their aims they would need someone who could command a majority in (or had the ‘confidence’ of) the parliament — but that was to take a little longer to be formalised.

William III (William of Orange) had tried selecting ministries comprising people from different factions (both Whigs and Tories) but soon realised he was better off appointing a unified group. Thus by 1710 Queen Anne could dismiss a Whig ministry and appoint a Tory ministry.

The ministers were still selected by the monarch (most often from the Lords but could include members of the royal household or royal family) but found that to convince parliament of the financial requirements, the power for which had rested with the Commons since 1407, they needed to attend the Commons frequently and were given a reserved seat at the front which became known as the ‘Treasury Bench’ as they were led by the Lord Treasurer (a title the British prime minister still theoretically holds).

A development in those early years (in 1713) was what in Britain was ‘Standing Order 66’ which states that the Commons will only vote regarding money on the motion of a Minister of the Crown. That was intended to prevent ‘ill-conceived’ money bills being introduced by any member of the parliament and continues to this day (now Standing Order 48 in the British parliament).

Robert Walpole is often recognised as the first prime minister in England (1721 – 1742) but he was still selected by the monarch — although ‘elected’ to parliament from a ‘family parliamentary seat’. He was able to manage the parliament in a way that set the example for the future. At first, the term ‘prime minister’ was an insult implying that the person was placing himself above the monarch as ‘head of government’ — even Walpole denied he was a prime minister. It was Walpole, however, who began conducting most of the business of government in the Commons rather than the House of Lords.

Cabinet government came to the fore during the reigns of George I, II and III largely due to historical accident. (The ‘cabinet’ was an informal name given to the group of ministers that met with and advised the monarch — technically it was a committee of the Privy Council.) George I Duke of Hanover was German, could speak little English and took little interest in English political affairs:
After 1717, George rarely attended Cabinet meetings. This allowed the Cabinet to act collectively and formulate policies, which, provided they were backed by a majority in the Commons, the king was usually powerless to resist.
George II, although initially active in politics (he was the last British monarch to lead his forces in battle), largely withdrew in the last ten years of his reign (1750‒60) and Pitt the Elder effectively ran the government. George III tried to govern as a monarch, being his own ‘prime minister’, and appointing and sacking ministers but then suffered mental debility for the last ten years of his reign (1810‒20) which again left effective governance in the hands of the cabinet. The American War of Independence (during George III’s reign) also contributed. When England lost that war there was a parliamentary vote of no confidence in the then ministry which led to the Marquess of Rockingham reasserting the prime minister’s control over cabinet:
Rockingham assumed the Premiership “on the distinct understanding that measures were to be changed as well as men; and that the measures for which the new ministry required the royal assent were the measures which they, while in opposition, had advocated.” He and his Cabinet were united in their policies and would stand or fall together; they also refused to accept anyone in the Cabinet who did not agree. King George threatened to abdicate but in the end reluctantly agreed out of necessity: he had to have a government.
Although Rockingham was not prime minister for very long, his stance set a basic principle for cabinet government — ‘cabinet solidarity’, which included the prime minister having the cabinet he wanted, not one selected by the monarch. And also the concept that a ‘party’ was entitled to bring to government the ideas it had pursued while in opposition.

Opposition had been a dangerous business during the 1600s as it was seen as traitorous, as opposing the monarch and his government. That idea had waned during the 1700s and in 1826 the term ‘His Majesty’s Opposition’ was first used. Although originally used partly in jest, it became part of the system, recognising a two-party system in which it was constitutionally possible to oppose the government without being a traitor: reflecting this, in the UK the phrase ‘Her Majesty’s Loyal Opposition’ is now common.

Although it seems to have been the practice for some time, the convention that ministers should be drawn only from the members of parliament, including the Commons, and not just be selected by the monarch became entrenched from the broadening of the electoral franchise early in the 1800s and particularly the Reform Act of 1832. That Act eliminated the ‘rotten boroughs’ which had allowed people to buy their seat in parliament and monarchs to place ‘their’ people in such seats. Among the problems with ‘boroughs’ was that the right to return members to parliament was traditionally granted by the monarch, so by 1832 their distribution had not kept up with the distribution of the English population — new industrial centres like Manchester and Birmingham had no parliamentary representation. With representation spread more evenly across the country after the Reform Act, public opinion, particularly as expressed at the polls, mattered.
It is significant that Lord Melbourne suggested that it would be impossible to carry on government without the rotten boroughs which the Act of 1832 swept away, so little could he realise the essential character of the new system which was being created. It is significant also that he never fully appreciated the new position; when he resigned in 1841 after an unsuccessful dissolution, regarded by him and the Queen as an appeal by the latter to the people to return her ministry to authority, he advised the Queen to state that she had only parted with her ministers in deference to the opinion of Parliament, though she still had confidence in them. Naturally she did not realise any more than her retiring Premier that in the nature of things the verdict of the electors deprived her of the right to feel confidence in ministers of whom the voters had disapproved, that it was no longer a question of personal integrity or sagacity in a minister, but of his right to represent the will of the people, as expressed by the suffrages of the electorate. [emphasis added]
So after six hundred years of evolution, by the 1840s the essential elements of the Westminster parliamentary system were in place, including a parliamentary party structure. Later broadening of the franchise, during the later 1800s and early 1900s, reinforced those changes and also led to more organised political parties as it became necessary to engage more and more of the population for elections.

Then came Australia …

Any thoughts or questions so far?
Come back next Sunday as Ken continues the story of how we ended up with the system we have and focuses on the federation of Australia and the form of government we inherited from England which relies not just on our Constitution but many of the conventions described above.