Johno goes to heaven


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Have there always been religious ‘nutters’?

Let us know in comments below.

Recent Posts
Mr Turnbull, where are your verbs?
Ad astra, 20 July 2016
It was one of The Political Sword’s regular contributors, Casablanca, who drew my attention to the absence of a verb in the Coalition’s prime slogan ‘Jobs and Growth’. She had been alerted by an article in The Guardian by Van Badham in May: Good slogan, Malcolm Turnbull, but growth in what kind of jobs?

The absence of verbs
More...
Someone’s gotta pay
2353NM, 24 July 2016
According to the Coalition government, the ALP’s campaign over the privatisation of Medicare was somewhere between dishonest and outright lies. While it is true that the Coalition has frozen some Medicare rebates and eliminated others, attempted to introduce a $7 co-payment to see a doctor in the 2014 budget and set up a task force …
More...
Why is there so much anger?
Ad astra, 27 July 2016
No matter when we listen to the news, watch TV, or browse social media, the pervading emotion in so many items is anger, unremitting anger.

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

More...

Why is there so much anger?



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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How can this anger be assuaged?

Let us know in comments below.

Someone’s gotta pay


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Let us know in comments below.

Recent Posts
The Liberals are dreaming
Ken Wolff, 17 July 2016
On Sunday morning 10 July, before Shorten conceded defeat in the election, Arthur Sinodinos appeared on the ABC’s Insiders. He claimed the Coalition had a ‘mandate’ for its 2016 budget and its company tax cuts. Sinodinos’s view takes no account of the reality of the new parliament.

Although the final count is not yet complete, it appears the LNP will win 76 or 77 …
More...
The election in numbers
Ken Wolff, 18 July 2016
We know the Liberals lost 13 seats, or in other words Labor gained 13 seats, with one seat, Herbert, still in the balance at the time of writing. (Labor actually won 14 but gave one back which I will come to later.) The Liberals claimed a win because they did at least manage to hang on to government, thanks to the Nationals, and Labor claimed success because of the number of seats …
More...
Mr Turnbull, where are your verbs?
Ad astra, 20 July 2016
It was one of The Political Sword’s regular contributors, Casablanca, who drew my attention to the absence of a verb in the Coalition’s prime slogan ‘Jobs and Growth’. She had been alerted by an article in The Guardian by Van Badham in May: Good slogan, Malcolm Turnbull, but growth in what kind of jobs?

The absence of verbs
More...

Mr Turnbull, where are your verbs?



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

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

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


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

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

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

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

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

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

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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

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

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


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

Let us know in comments below.

The Liberals are dreaming


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Let us know in comments below.


Recent Posts
How has it come to this?
Ad astra, 10 July 2016
The MSM and blog sites abound with critiques of the election and tentative predictions of the political outcomes. So why bother writing yet another to explain how it has all come to this? You will judge whether this analysis adds anything useful.

Far from fulfilling his oft repeated promise of stable government and sound …
More...
Just do your job
2353NM, 13 July 2016
Fairfax media’s Matthew Knott asked the other day ‘Election 2016: The uncomfortable truth is the media got it wrong. How did we do it’. It’s a good question.

Knott details issues such as the polls showing split results for months prior to the election yet the betting agencies supporting the view that the Coalition would romp it in on 2 July; …
More...
Australia; we need to have a conversation
2353NM, 15 July 2016
There are three types of people in this world, those who make things happen, those who watch things happen and those who wonder what happened. – Mary Kay Ash

Mary Kay Ash, the founder of Mary Kay Cosmetics …
More...

Just do your job


Fairfax media’s Matthew Knott asked the other day ‘Election 2016: The uncomfortable truth is the media got it wrong. How did we do it’. It’s a good question.

Knott details issues such as the polls showing split results for months prior to the election yet the betting agencies supporting the view that the Coalition would romp it in on 2 July; Coalition party insiders suggesting that they would pick up ALP seats’; the ‘vibe’ that people were disappointed in Turnbull but not ready to get out the baseball bats; and even the ‘conventional wisdom’ that the eight-week campaign was a masterstroke. As Knott reports:
Leading commentators on Sky News predicted between 80 to 85 seats for the Coalition, with Peter van Onselen saying he would quit in the event of a hung parliament.
While there is some reflection on why the media got it wrong, has he left ‘the biggie’ alone? The ‘biggie’ may be they just didn’t report the news.

Political polling is based on statistics. There is considerable evidence to suggest that if a person asks a question of a number of people with certain demographic characteristics, they can extrapolate that result across a larger population with a degree of confidence. Normally in Australia, the polling companies interview around 1,500 people and can state with a degree of certainty that the response to the survey can be extrapolated across the entire population of Australia. So the result to a hypothetical question, let’s use “should pensions be increased by 50%” is 50% favour ‘yes’ and 50% favour ‘no’. Usually the polling companies will add to their media release that there is a 95% chance of getting the poll correct. There is always a margin of error which allows for the natural variations in a population.

While the headline is 50-50 support for increasing pensions by 50%, logically not everyone in the country is asked the question. Using our hypothetical example, if by some chance the pollster happened to ask the question randomly to a number of people in their early 20’s who have witnessed their loved grandparents living in poverty, the ‘vote’ to increase pensions reported amongst the ‘early 20’s demographic’ might be skewed towards increasing pensions rather than say buying more warships. Pollsters will calculate the margin of error as a percentage: traditionally in political polling around Australia the percentage is 3%. So the potential results for the hypothetical question could be between 47% and 53%.

A sales person for Apple will tell you that an iPhone is far superior to a Samsung Galaxy mobile phone. A Samsung sales person will tell you the opposite. The reality is that iPhones and Galaxy phones are both good products although the way they work is different. The media believed the spin coming from the Coalition media advisers and wrote their stories accordingly. The fact was the election was close as demonstrated by the eight weeks of incessant political polls which rebuts to an extent the margin for error argument. So the narrative that the Coalition would have an easy victory wasn’t able to be verified by facts — just rhetoric, which fed into later stories of why the Coalition was going to win. It is a never ending circle of person A writes that the Coalition will win, which influences the writing of person B and so on. You can see it happen most Sunday mornings on ABCTV’s Insiders and similar programs on other media outlets.

So the Coalition media advisers did their job. They were wrong — but they did their job. The Coalition media advisers convinced the media who convinced the public that Malcolm Turnbull had a much better chance of winning the 2016 election outright than the facts would indicate. As Knott indicates, the media also missed the Andrews’ victory in Victoria and the Palaszczuk victory in Queensland in the past year or two. Again instead of believing the facts — the polls — they believed the ‘insiders’, although to be fair there is at least one media company in Australia that has a view that they should influence you in a particular direction. At the same time the company is wondering why their sales are falling. (In Queensland anyway, if you spend a reasonably small value at Coles supermarkets at the moment, you can purchase one of that media company’s products for half price! Hardly something that would be happening if their sales were healthy.)

History is that the election result is effectively a ‘hung’ parliament; even if Turnbull’s Coalition creeps over the line by one or two seats. The terminology is misleading: there are still 150 members of the House of Representatives and 76 Senators but the groupings aren’t the traditional Coalition and ALP working majority which is driving the, again media supported, calls that ‘we’ll all be rooned before the year is out’ (with apologies to John O’Brien). What the media (and politicians) should be saying is there will be a minority government, where whoever is the prime minister relies on the support of members of parliament that ‘belong’ to another political party (or no political party at all).

Minority government is not a new concept in Australia. It’s actually par for the course. Since Menzies was elected in 1949, there has been a Coalition of the Liberal and National Parties at federal level. The reason for the Coalition is that neither party would be able to govern in their own right as they almost never get the 76 seats required to do so. Certainly the agreement between them is renegotiated after each election, win, lose or in this case draw, but ultimately even in Abbott’s ‘stunning’ victory in 2013, the Liberal Party gained 58 seats, the National Party 9 and 23 were held by the LNP (Queensland) and the CLP (Northern Territory). Again you need 76 to form a government and even if you split the 23 ‘others’ seats in half (half Liberal, half National), neither conservative party had the required number. The members of the LNP and CLP nominate which party room they will meet with, as demonstrated by Barnaby Joyce when he was a Queensland LNP Senator cohabitating with the National Party.

However, for the media to retain some justification to their claim of being effective at seeking and reporting and providing analysis of the ‘insider’ discussions and deliberations, they will have to do more than just rely on the claims made by the Coalition’s media advisers in the 45th Parliament — as the Coalition’s strategy will be amended on a regular basis to ‘accommodate’ the needs or wishes of other interested parties that have a vote on the final legislation. If it is reported in a similar way to the Gillard government (which relied on independent MPs for support), it will be seen to be a chaotic mess where the only outcome is confusion and delay. The reality is Gillard’s government passed a number of showstopper pieces of legislation dealing with people with disabilities, school funding and climate change. It wouldn’t have passed if there wasn’t a consensus of the majority of parliamentarians in both houses of parliament at the time (despite the claims of Abbott and his ultra-conservatives).

To his credit, Matthew Knott asked his readers (via social media) for their views on the election coverage. The responses are interesting:
  • An insistence the Coalition was on track to win (despite the polls predicting a tight result) and a consistent under-estimation of Shorten's performance;
  • Overly "insular" coverage dominated by conversations with political insiders and other journalists rather than voters;
  • Coverage that was too "presidential", with an intense focus on daily movements of both leaders;
  • Too much focus on the colour and movement of campaigning rather than the policy offerings of the two main parties;
  • A lack of co-ordination by journalists, especially in the travelling media pack, to demand answers from the leaders;
  • More focus on campaigning techniques by third-party groups such as GetUp!
Ironically, the ALP’s 2016 election Medicare and penalty rates campaigns may finally result in some truth in advertising legislation that is actually applicable to political campaigns:
While Senator Xenophon secured three Senate spots in his native South Australia, his overall vote was down from 2013. He believes a "misleading and deceitful" Labor scare campaign on penalty rates was part of the reason.

The ads claimed Senator Xenophon wanted to cut penalty rates — a decision that is actually up to the Fair Work independent umpire.

"It was a lie," Senator Xenophon said. "I had to put up corrective advertising, but nowhere near to the extent of their misleading advertising. Why should politicians be exempt from the sort of laws that apply to misleading and deceptive advertising that apply to corporations and individuals?"

The Greens are also planning to move amendments to the Commonwealth Electoral Act to incorporate truth in advertising provisions.

"Blatantly false political advertising runs counter to the public interest," Greens democracy spokeswoman Lee Rhiannon said.
If the media was doing their job, there should be enough evaluation of political claims to make political truth in advertising legislation redundant.

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

Recent Posts
The Liberal lie continues
Ken Wolff, 6 July 2016
In his speech on election night, as reported by The Guardian, Malcolm Turnbull:
… accused the Labor party of running “some of the most systematic, well-funded lies ever peddled in Australia” in a campaign in which Labor claimed the Coalition was planning to privatise the …
More...
Sausage sizzles and mandates
2353NM, 8 July 2016
There was a winner to the Federal Election last weekend. A lot of school parents’ organisations and charities made money on sausage sizzles and cake stalls across the country. While you could argue that if funding for education and to those less well-off was at a realistic level there would be no need for the sausage sizzle, it is becoming …
More...
How has it come to this?
Ad astra, 10 July 2016
The MSM and blog sites abound with critiques of the election and tentative predictions of the political outcomes. So why bother writing yet another to explain how it has all come to this? You will judge whether this analysis adds anything useful.

Far from fulfilling his oft repeated promise of stable government and sound …
More...

How has it come to this?



The MSM and blog sites abound with critiques of the election and tentative predictions of the political outcomes. So why bother writing yet another to explain how it has all come to this? You will judge whether this analysis adds anything useful.

Far from fulfilling his oft repeated promise of stable government and sound economic management; far from avoiding the 'chaos' of a close result, Turnbull seems unlikely to achieve either. The consensus among those analyzing the election results, the commentariat, and the social media, is that the outcome will be a narrow LNP majority.

I’ll not try to best guess the long-term political outcome, and instead ask what has brought about this situation.

While acknowledging that multiple factors bring about any election outcome, I propose that this time five significant factors have been in play: the Turnbull character; Medicare; Inequality; Turnbull reversals on the NBN, marriage equality, global warming and the republic; and insensitivity towards the Coalition’s constituency.

The Turnbull character
We don’t have to go far back to gain insight into Turnbull’s character. Annabel Crabb’s 2009 Quarterly Essay: Stop at Nothing: The Life and Adventures of Malcolm Turnbull spells it out in detail. You can read a summary of it in her article on the ABC website, updated on 16 May this year.  This is what we wrote about it on The Political Sword in June 2009.

Against the background of Turnbull’s successful involvement in the Spycatcher case and his representation of Kerry Packer (the Goanna) in the Costigan Royal Commission into the Federated Ship Painters and Dockers Union, Crabb writes: “From the Costigan affair we can draw some preliminary conclusions about the young Turnbull. The first is that he has no regard for orthodoxy...” and “This refusal to ‘play by the rules’ is something of a lifelong pattern for Turnbull; it explains much of his success, but also accounts for the worst of his reputation.”...“The second thing we learn from Costigan is that violent tactical methods are not just something to which Turnbull will contemplate turning if sufficiently provoked. It’s not enough to say that Turnbull is prepared to play hardball. He prefers to play hardball – that’s the point. It is impossible to rid oneself entirely of the suspicion that Turnbull enjoys the intrigue – the hurling of grenades...”

Turnbull is a risk taker. He backs his own judgement. He gambles on being right. Often he is, sometimes not. His gamble this year to take on Tony Abbott by challenging his leadership paid off immediately with a convincing win in the Liberal party room, high popularity in the electorate, and improving polls. But his gamble a couple of months ago to call a double dissolution election predicated on the urgent necessity to restore the Australian Building and Construction Commission, if needs be by a joint sitting of parliament, has ended in disaster for him. It was a charade from the beginning, hardly mentioned in the campaign, and now unlikely ever to pass a joint sitting. This episode was vintage Turnbull risk taking, foolish risk taking.

It is understandable that the relief felt by the electorate when he replaced the calamitous Abbott has dimmed memories of Turnbull in his earlier days as opposition leader and minister for communications. Then he performed as he is performing even now: incautious, indecisive yet at times precipitous in decision-making, inadequately prepared, and lacking in due diligence.

You will all remember ‘Ute-gate’, where Turnbull was conned by a Liberal mole in Treasury, Godwin Grech, into believing the contents of what turned out to be a fake email that attempted to implicate PM Rudd and Treasurer Swan in an underhand deal in which a car dealer gave Rudd a ute for campaigning in return for OzCar favours. Turnbull swallowed the story, hook, line and sinker, as did Murdoch journalist Steve Lewis. Turnbull, the accomplished barrister, had failed in due diligence, as had his collaborator, Eric Abetz.

In case Turnbull’s recent prime ministerial aura, such a contrast to Abbott’s embarrassing ineptitude, has erased the memory of his earlier days as Liberal leader, go to the archive of The Political Sword and re-read: The old rusty uteAfter TurnbullWhat will Turnbull do now?The Turnbull endgameTurnbull in a China shopMalcolm Turnbull’s intelligenceWhat is Malcolm Turnbull up to?, The Turnbull Twist, and Why does Malcolm Turnbull make so many mistakes?.  

It would take you hours to do so, and there are still more, but they will be sufficient to remind you that Malcolm Turnbull has not changed. What was written then could be written now. The context has changed, but the man has not. He creates his own disasters; he makes the going tough for himself.



PM Turnbull is the same man who over the years has been a big risk-taker but has lacked judgement and has eschewed due diligence. His successes have been overshadowed by his failures. We are now witnessing his most spectacular failure, one that will affect us all as politics in this nation enters an uncertain phase where governance will be very difficult.

Medicare
In an angry, ungracious speech on election night, Turnbull blasted Labor for its ‘Mediscare’ campaign: “Today, as voters went to the polls, as you would have seen in the press, there were text messages being sent to thousands of people across Australia saying that Medicare was about to be privatised by the Liberal Party. The SMS message said it came from Medicare – an extraordinary act of dishonesty. No doubt the police will investigate. But this is, but this is the scale of the challenge we faced. And regrettably more than a few people were misled ... But the circumstances of Australia cannot be changed by a lying campaign from the Labor Party.”

Turnbull sought to label the Labor campaign as the prime cause of his loss of support. The following day Scott Morrison was equally adamant; he was arrogantly unwilling to concede any fault on the Coalition side.

The next day though Turnbull was prepared to acknowledge that ‘Mediscare’ worked because the seeds of the scare ‘had fallen on fertile ground’, no doubt a reference to the suspicion created in the electorate by the Coalition’s many recent attacks on Medicare: the threat of a GP co-payment, the freezing of GP rebates until 2020, the threat to remove bulk billing inducements for imaging and pathology tests, and the increased co-payment for pharmaceuticals. Turnbull ought not to have been surprised that voters were susceptible to believing Labor’s assertion that the Coalition intended to privatize Medicare. The Coalition’s past and more recent attitude toward Medicare rightly made them suspicious. Turnbull’s denials and voluble reassurances were simply not believed.

’Mediscare’ was a significant factor in Turnbull’s humiliation at the polls, but not the only one. He reaped what he had so abundantly sown.

Inequality
Although the word was seldom uttered, the people were aware of the widening gap between those at the top and those languishing at the bottom. They spoke of feeling they were being left behind, struggling with cost of living pressures, and finding it increasingly difficult to make ends meet. Many were finding it hard to get a satisfying job. Their feelings of abandonment and resentment were accentuated by Turnbull’s continual reminders that there was “never a better time to be an Australian!”, something they were not themselves experiencing.

Voters needed no more than their contemporary experience to feel left behind, but then along came the Turnbull/Morrison move to give $48 billion of tax relief to businesses, extending over the decade to the big banks and multinationals, the very ones whom we all know do not pay their fair share of tax. The tax rorters were being offered a generous tax break!

The Coalition mantra of ‘Jobs and Growth’, on which they based their much-vaunted ‘economic plan’ was yet another example of the Coalition’s faith in ‘supply-side’ economics, despite it having been discredited repeatedly. The term ‘trickle-down’ began to be mentioned by commentators and included in questions to politicians, and even the long-debunked ‘Laffer curve’ was mentioned in a question on Q&A. The public became aware of the fraud they were being offered by the Coalition with their monotonously repeated and meaningless three-word slogan: ‘Jobs and Growth’.

I wrote in April that inequality would be a hot button election issue and it was - not in overt terms, but simmering angrily below the surface and significantly influencing voters’ preferences. Will the Coalition heed their desire for a fairer deal?

The Turnbull reversals
Countless comments have been made about Turnbull’s reversals of position. There has been widespread disappointment at his stance toward crucial issues. They are familiar to you all.

The NBN
In his attempt to avoid Abbott’s ‘demolish the NBN’ instruction, he has given us a hybrid multi-technology fibre to the node (FTTN) mishmash with speeds slower than are needed by a nation competing on the world scene, far too slow in rollout, and possibly more expensive than Labor’s superior fibre to the premises (FTTP) model, which Turnbull ridiculed so sarcastically. For such a tech head to oversee the introduction of this inferior technology is disgraceful. People are appalled, angry, and disappointed, especially those in rural areas, who if they can get connected to the Internet at all, suffer debilitating buffering.

Marriage equality
Marriage equality is the focus of another Turnbull reversal. In an earlier life he was strongly in favour and insistent that it should be resolved with a conscience vote of the parliament. But he reneged on that to placate the hard right conservatives who want a plebiscite, designed by Abbott to delay the debate, allow it to be debased by the bigots, and eventually to be defeated. Another disappointing Turnbull reversal!

Global warming
After all the talk in his early days: “I will not lead a party that is not as committed to effective action on climate change as I am”, he has disappointed the climate lobby by insisting that the Coalition’s paltry ‘Direct Action Plan’ is all that we need, and that it is working. All his devotion to an emissions trading scheme has evaporated, simply to appease the climate skeptics in his ranks and thereby secure his leadership. It is to many his most profound, his most disturbing and disappointing reversal of principle.

The Republic
The cause to which Turnbull devoted himself so fully for so long no longer attracts his interest. He has discarded any intention to move soon on this, much to the chagrin of those who feel it is high time Australia became a republic. While it was unlikely to be a vote changer; it did confirm in many minds Turnbull’s willingness to sacrifice his principles for personal advantage.

Insensitivity to the Coalition’s constituency
Whatever else a politician does, he needs to avoid alienating the people who support him financially and who vote for him.

Turnbull has managed to alienate a large group of wealthy superannuants by proposing that changes to superannuation be made that will disadvantage them, and by the prospect of the changes being retrospective. In some analyses of the poor result for the Coalition at this election, anger over proposed changes to superannuation among his constituency have been cited as a powerful force that tuned away Coalition voters.

Another group that has been alienated are the hard right conservative clique that is currently agitating for more say, more clout, and more recognition, led by Tea Party admirer Cory Bernardi who wants to establish a group like GetUp, but right leaning, one that can represent conservative views. Because Turnbull is a moderate with progressive views, this group may cause him more grief than his traditional opponents as he tries to keep conservatives and ‘small l’ Liberals together. The conservatives are hostile and dangerous, still angry that he toppled their patron, Abbott. They paint Turnbull as a fraud, a traitor to their cause. Writing in The Australian, right-wing Sky News commentator Graham (Richo) Richardson's assessment is: “Turnbull is a traitor to his class and constituents.” His opponents will erode his standing in the party through internal sabotage. The sharks are already circling! We saw it when Kevin Rudd sabotaged Julia Gillard; it can happen again. It is more debilitating than external attacks.

In an attempt to reverse the alienation among Muslims that Abbott provoked with his anti-Muslim attitude and his obsessive focus on terror threats, Turnbull held out the hand of friendship, even to the point of inviting several prominent Muslims, including a radical sheik, to an Iftar dinner that he hosted for Ramadan. Whilst applauded by some, it has further alienated those who follow Pauline Hanson, who has now added to her anti-Asian stance an equally aggressive anti-Muslim one.

When the Coalition gets around to analyzing why it has done so poorly at this election, coming close to defeat, expect it to include pointed reference to the alienation of important parts of the Coalition’s constituency, with accusatory fingers pointing firmly at Turnbull.

You are bound to read about reasons for the diminishment of Turnbull’s prestige and standing, other than those cited above. Tell us about them in a comment.

How has it come to this? PM Turnbull has ‘won’ but is apprehensive; Opposition Leader Shorten hasn’t, but is smiling?



Whatever other factors were in play during the election, prominent factors were: Turnbull as an incautious risk-taker; the Medicare bogey; the unfairness and inequality felt by those on Struggle Street angrily watching the top end of town get the rewards; the reversal of deeply held Turnbull principles on the NBN, marriage equality, global warming and the republic, all sacrificed at the altar of self interest; and insensitivity towards the Coalition’s natural constituency. All were recipes for failure, and at worst, political disaster. Time will tell how potent they were.

What do you think?
What do you believe are the most significant factors in the Coalition’s poor showing?

Please offer your suggestions in comments below.

Recent Posts
The hazards of voting Liberal
Ad Astra, 29 June 2016
It’s clear that around half of all voters for the major parties will vote for the Liberal-National Coalition and half for Labor and the Greens. The result is likely to be close. There are many seats that promise to throw up intriguing results. If the Coalition wins, the Senate may end up being no more helpful to it than the last one.

The purpose of this piece is not to attempt to predict …
More...
The Liberal lie continues
Ken Wolff, 6 July 2016
In his speech on election night, as reported by The Guardian, Malcolm Turnbull:
… accused the Labor party of running “some of the most systematic, well-funded lies ever peddled in Australia” in a campaign in which Labor claimed the Coalition was planning to privatise the …
More...
Sausage sizzles and mandates
2353NM, 8 July 2016
There was a winner to the Federal Election last weekend. A lot of school parents’ organisations and charities made money on sausage sizzles and cake stalls across the country. While you could argue that if funding for education and to those less well-off was at a realistic level there would be no need for the sausage sizzle, it is becoming a tradition and clearly part of the Australian psyche.
More...

The Liberal lie continues


In his speech on election night, as reported by The Guardian, Malcolm Turnbull:
… accused the Labor party of running “some of the most systematic, well-funded lies ever peddled in Australia” in a campaign in which Labor claimed the Coalition was planning to privatise the government funded health insurance system, Medicare.

Turnbull questioned whether there would be a police investigation over the Labor campaign and he accused Labor of sending texts to voters claiming the Coalition would sell Medicare.
The Daily Mail (Australian edition) reported it this way:
“Today, as voters went to the polls, as you would have seen in the press, there were text messages being sent to thousands of people across Australia saying that Medicare was about to be privatised by the Liberal Party,” Mr Turnbull said in the speech.

“The SMS message came from Medicare. It said it came from Medicare. An extraordinary act of dishonesty. No doubt the police will investigate.”
And George Brandis said this:
I think that the thing that made the difference between a reasonably comfortable win and, if this is the case, a very narrow win for the Government, was the fact that the Labor Party threw the kitchen sink at one of the most mendacious and disgraceful campaigns that we've ever seen. The proposition that the Government planned to sell or privatise Medicare was ... a nonsense.
So they accept that the Medicare campaign by Labor had a major effect but they insist it was a lie. Why?

As I pointed out in Turnbull’s Medicare backflip — or is it? the government had begun the process of examining how the Medicare payment system could be outsourced or sold to a private provider. Although the Liberals described this as only the ‘back office’ operations of Medicare, payments are the central role of Medicare. When this first became public news in February, there was no denial that it was taking place.

It was only after Labor aired its Bob Hawke campaign advertisement, that you don’t create a Medicare privatisation task force unless you intend to privatise Medicare, that Turnbull eventually came out and guaranteed that Medicare would not be privatised and that updating the payment system would take place ‘within government’.

Thus, when Labor continued its Medicare campaign, Turnbull and other Liberals claimed that it was based on a ‘lie’. Firstly, remember that denying privatisation came late in the election campaign and only after Labor’s message was obviously having an impact. Before that, or in other words for the first few weeks of the election, privatisation of the payment system was still on the Liberal agenda. Turnbull’s ‘guarantee’ was a decision made on the run and not reflective of what had previously been Liberal policy. It was purely a last minute and desperate political decision.

Secondly, Turnbull’s denials and ‘guarantee’ did not address the other issues surrounding Medicare: namely that Medicare rebates will now be frozen until 2020, making no increase for six years; and that the removal of bulk billing incentives for pathology and diagnostic imaging services was still on the table and would be reconsidered after the election. Even the new president of the AMA, Dr Michael Gannon, not a natural ally of the Labor party, pointed out that the freeze would force GPs to charge higher fees and to abandon bulk-billing and that some GPs had already advised the AMA that they were doing so.

Turnbull’s response was that doctors could charge whatever they liked and that if the freeze was removed it would increase the scheduled fee by only 60 cents, or up to $2 if backdated. Those amounts are probably fairly accurate and sound small but if a doctor is seeing between three and six patients per hour for six or seven hours a day, five days a week for 48 weeks of the year, even at 60 cents that could add up to an extra $6000 per year which would no doubt assist in meeting the surgery’s running costs. If there are four doctors in the surgery that is potentially up to $24,000 a year, or about $80,000 if the increase is $2. So despite Turnbull’s attempt to downplay the effect of the freeze, its real impact can be quite substantial for a surgery’s business model over a full year.

The other issue relating to Turnbull’s response is that it continued to ignore the concern that people will have to pay more. By taking the approach he did, he was basically abrogating any responsibility for medical costs — that is not what people expect of the government. What they do expect is that if medical costs rise the government will assist in meeting those costs, not say it is nothing to do with them, that doctors can charge whatever they like. If anything helped raise the profile of Labor’s Medicare campaign in the last days of the election campaign then I think Turnbull’s response did.

Turnbull and the Liberals also tried to emphasise that the freeze had initially been introduced by Labor. That is true. It was introduced by Wayne Swan in the last Labor budget in 2013. What the Liberals didn’t say, thus lying by omission, was that Swan’s freeze was for a total of seven months, from November 2013 until June 2014 — of course, the savings made in that time would be built into future budgets. There was however another reason for that ‘freeze’, not just the need to save a few dollars. Indexation of Medicare scheduled benefits in November was associated with the old budget timetable when budgets were presented in August and new measures (costs) could only apply from 1 December. Since budgets have been presented in May all new measures can apply from 1 July and the change Swan made was to align Medicare indexation with the new budget timetable (most other indexed government payments had already been realigned and Medicare was one of the last). The freeze on Medicare rebates since June 2014 has been purely a Coalition government decision but, of course, they didn’t mention that.

So who was lying about Medicare? If the Coalition plans to continue the Medicare freeze until 2020, surely that is a valid point that Labor can make during an election. And if Medicare is covering less and less of the cost of seeing a doctor or specialist, that is also undermining the very purpose of Medicare. Again it becomes valid to argue that Medicare needs ‘saving’ because the Coalition’s approach would certainly mean that over time it would become worthless as health insurance. So Labor’s campaign of saving Medicare was not a lie. Medicare may not technically be ‘privatised’ but the continued impact of the freeze and removal of bulk billing incentives would have very much the same effect, pushing consumer costs higher and reducing both the health and social benefits of Medicare.

If voters responded to that, Turnbull has only himself to blame. His denial of privatisation came late so it could be questioned: the obvious response being that if you did not intend to privatise Medicare why didn’t you say so on day one of the election campaign? — why wait until you were forced to respond to Labor’s Medicare campaign? And if you only responded when forced to, can your decision really be trusted? If you are supporting Medicare, why is there a freeze on rebates for six years which is five years and five months longer than Labor’s original freeze? Why are you going to force pathologists and diagnostic imaging services to charge patients upfront and then have the patients claim a proportionally reduced rebate from Medicare?

They are questions that Turnbull just refused to address when Labor raised them. So it wasn’t simply a ‘privatisation’ scare campaign by Labor but a campaign that raised legitimate questions about Turnbull’s and the Coalition’s approach to Medicare. For Turnbull to come out and claim that Labor improved their vote because of a lie about privatisation is missing the point and is itself a lie because he will not face the truth that his other actions were still a threat to Medicare. People could see that and did believe that Medicare was worth saving.

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


Recent Posts
Your vote is valuable
2353NM, 29 June 2016
Over the past couple of months, Turnbull, Shorten, Di Natalie and others have been attempting to convince you that they are worthy of your first preference vote. The usual claim is that your vote is valuable. Guess what — it is. Every first preference vote cast at the election on 2 July is worth $2.62784 to the political entity that gets the vote (provided certain conditions are met). Ironically, the ‘value’ of your vote is indexed every …
More...
The hazards of voting Liberal
Ad Astra, 29 June 2016
It’s clear that around half of all voters for the major parties will vote for the Liberal-National Coalition and half for Labor and the Greens. The result is likely to be close. There are many seats that promise to throw up intriguing results. If the Coalition wins, the Senate may end up being no more helpful to it than the last one.

The purpose of this piece is not to attempt to predict …
More...
G’day America
2353NM, 3 July 2016
Hi, howyagoin? We hear that you are having a real problem with who is going to be your next president. We’ve done our election and gone back to the beach!

If we understand the issues correctly, there is the choice of a property tycoon who seems to be able to lend his name to a lot of developments, star in what are laughingly called reality television series, lampoon women and minorities …
More...

G’day America


Hi, howyagoin? We hear that you are having a real problem with who is going to be your next president. We’ve done our election and gone back to the beach!

If we understand the issues correctly, there is the choice of a property tycoon who seems to be able to lend his name to a lot of developments, star in what are laughingly called reality television series, lampoon women and minorities without fear or favour and also wants to build a fence along your borders. The last one is a bit silly – is it to keep you inside, or to keep others out?

The other alternative is the wife of a former president who while secretary of state maintained a private email server, allegedly made a horrible botch-up of a couple of sensitive issues and let’s face it, for a Democrat she is really pretty conservative. The really progressive Democrat unfortunately doesn’t have a hope.

Over this side of the Pacific, there is the occasional news or opinion piece on how a number of your citizens are considering moving to Canada if Trump wins the presidency. It seems that life is not necessarily greener north of the border when you consider the need to find another job, some new friends, change schools and learn the local customs. You would probably have to leave your guns ‘back in the states’ as Canadians seem to have a similar ‘oppressive gun control regime’ to Australia.

It seems that your current president quite likes the Canadian prime minister and their national airline is promoting the need to ‘test drive’ Canada before you move there.


There is another option that you might not have realised. Australia has a recent history of changing our prime minister every year or so over most of the past decade. It’s a ‘downunda’ thing – we have the option of getting rid of them if they lose their nerve so we have a few low mileage, fuel efficient late model leaders sitting on the lot ready to go. We’ll even arrange the finance for you. There are special deals on our Kevin Rudd, Julia Gillard, Tony Abbott, Malcolm Turnbull models – check the internet for the latest pricing.

For logistical reasons, this piece is being written before the Australian election results are known. Before anyone really thinks that any of the slightly used Australian prime ministers on offer can become the President of the United States – unfortunately they can’t. To be the President of the USA, not only do you have to be an American citizen, you have to be born in the USA. While a segue to a Bruce Springsteen song would fit here, this is a political blog so let’s look at the politics of change and uncertainty instead.

It is fact that in Australia, we have had five prime ministers in six years. At the same time the UK has had a referendum on Scottish Independence as well as the ‘Brexit’ vote, while the US has suffered years of ‘truther’ allegations over Obama’s country of birth (with subsequent questions over his eligibility to be president) followed by the rise of the neo-cons, as well as Donald Trump’s candidacy for president in the latter part of 2016.

As usual, there is a connection. All three countries have a history of two major parties that (for want of a better term) rotate through the effective ‘Head of State’ positions. In the case of ‘Brexit’, it seems that the Conservatives’ Prime Minister of the UK, David Cameron, sealed his own fate when he initially agreed to the European Union referendum in 2013. This The New Yorker article by John Cassidy discusses the issues:
In retrospect, it can be argued that Cameron’s mistake occurred as far back as 2013, when, in an effort to satisfy the Eurosceptics inside his own Conservative Party, he pledged to hold a referendum at some point before 2017. At the time, this was an easy promise to make: Cameron believed he couldn’t deliver on it. He was then heading a coalition government alongside the pro-E.U. Liberal Democrats, who wanted no part of a referendum and had the power to veto one. But after the Conservatives pulled off a surprise in the May, 2015, general election and won a majority in the House of Commons, the Prime Minister felt he had no option but to follow through on his promise.

Yet even after he had set a date for the referendum, Cameron could surely have done a better job of selling an upbeat vision of the E.U., one that had Britain as an active and enthusiastic member. Rather than accentuating the positive, Cameron and George Osborne, the Chancellor of the Exchequer, sought to scare the electorate into voting their way, arguing that a vote for Leave would plunge the U.K. economy into a recession and cost the average household about sixty-two hundred dollars a year.
Cassidy goes on to suggest that there is a lesson for Hilary Clinton in her campaign against Donald Trump:
Looking ahead, the fate of the Remain campaign should serve as a reminder of the limits of negative campaigning—a reminder that Hillary Clinton would do well to take note of as she goes up against Donald Trump. In confronting populist demagoguery, it isn’t enough to attack its promulgators. To get people to turn out and vote in your favor, you also have to give them something positive to rally behind. The Leave campaign, for all its lies and disinformation, provided just such a lure. It claimed that liberating Britain from the shackles of the E.U. would enable it to reclaim its former glory. The Remain side argued, in effect, that while the E.U. isn’t great, Britain would be even worse off without it. That turned out to be a losing story.
Nigel Farage, the leader of United Kingdom Independence Party (UKIP) while not the leader of one of the two major parties in the UK is an ultra-conservative politician who is protectionist and anti-immigration. He also was a prominent campaigner for the “Leave” side. He was interviewed on ITV’s Good Morning Britain program the day after the Brexit vote and backtracked on key planks of the “leave” campaign. You can watch it here and it’s refreshing to see a television host call out a politician on exaggerated claims. Boris Johnson (ex-Conservative Mayor of London) also campaigned hard for the “Leave” cause and all suspected it was to commence his bid to become the next Conservative Party Prime Minister. He announced a few days after the referendum result that he was no longer in contention after he lost support within his party. Adam Hills (known to most Australians as the host of ABCTV’s Spicks and Specks), who hosts The Last Leg on the UK’s Channel 4, launched into a stinging attack on Farage’s apparent backtrack (NOTE: explicit language warning).

There seems to be a deal of ‘buyers’ remorse’ since the ‘Brexit’ vote, with a number of articles around the world suggesting that the UK parliament may not invoke ‘Article 50’ – the section of the European Union rules that allows for someone to leave. The Guardian’s view is here and The New Yorker’s version is here. In a similar way, it seems that Donald Trump’s popularity is falling rapidly – here from Politico and here in The New Daily.

So where does this lead us?

We’re changing Prime Ministers faster that most of us move house or change our car. The British have voted to dismantle the United Kingdom and the European Union and those who live in the USA have a choice between two presidential candidates that nobody really seems to want.

There is a connection. Australia, the UK and the USA all have political systems with two major parties that to a greater extent have become corporatised over the past 10 or 15 years. The parties rotate in turn through the respective halls of power and have an intense hatred for ‘the other side’ as displayed particularly by Abbott in Australia, Farage (leader of UKIP) in the UK and Trump in the USA. Like most corporations, the culture is for the staff to literally hate the competition, so in this case the ‘party HQs’ continually generate a culture of hatred rather than consensus.

So you get claims such as ‘The Greens want to legalise the drug Ice’ (according to a leaflet dropped into my letterbox during the recent election campaign; they don’t by the way), which makes consensus after the election difficult as the respective sides start from a position of distrust. Those who really don’t follow politics hear these people on the news, get inflammatory leaflets in their letterbox or read paid advertising that has a small whiff of the truth in their social media feed every day either suggesting ‘the other side’ is morally and/or fiscally corrupt or promising ‘their side’ will ensure immediate action on whatever the issue of the day is. So our uninformed voter decides that the problem is ‘sorted’, or agrees with the proposition the other side is horrible (based on fabricated evidence) and gets on with their lives.

As the interview with Farage demonstrates, he and the other popularist politicians such as Abbott and Trump tend to leave certain opinions in people’s minds, even if (as Farage claimed in the clip above) they actually didn’t make the precise claim they are being accused of. Is it any wonder that people feel disenchanted with the process when, inevitably after the event, the popularist politician is seen to renege on the reason that people supported them? Remember Abbott was going to remove the ‘carbon tax’ on Day 1 of his prime ministership? In reality it is highly unlikely that Trump will ever convince the Mexican government to pay for a wall along the shared border – no matter how many times he claims it will happen.

They promise what they can’t deliver, they will make whatever promise they see as necessary to achieve their aim and then renege. They will disparage people, lifestyle choices, religions and whatever else it takes to get their way, and then wonder why people hold them and their peers in contempt. Sooner or later their exaggerated or false claims will catch up with them, Abbott was originally seen by the conservatives of Australia as the man who could fix everything. Inside two years, there was a spill motion to remove him. Johnson, after the success of the “Leave” campaign was a shoo-in to become the next Conservative UK Prime Minister – and in Farage’s case the beginning of his downfall may have happened on UK national television last week. The good citizens of the USA still have time to find a president who will actually look after the safety and security of their society – so they probably don’t really need a recycled Australian prime minister who potentially had trouble implementing their respective promised ‘vision’ for our Country.

Parliaments are places where representatives of communities are supposed to gather to discuss ideas and implement plans to make life better and more equitable for all members of the community. The two party system is an effective block to this happening, as if either side gets control of the Parliament, they can effectively do what they want. Isn’t it time that we put our politicians on notice that behaviour as displayed by the likes of Abbott, Johnson, Farage and Trump is not acceptable, degrading people or making unrealistic promises is no longer permitted and while in the past the two party system worked well, we now require diversity of opinion and that opinion needs to be understood and acted on? Turnbull and Shorten have both discussed in the past eight weeks that there needs to be more consensus and less war – we need to ensure they and their successors deliver.

What do you think?
Has politics just become the same in western democratic-capitalist countries?

Can the existing major parties adapt to working with other parties to govern?

Most importantly - what was the ‘democracy sausage sizzle’ like at your polling booth?

Let us know in comments below.

Recent Posts
Turnbull’s Medicare backflip — or is it?
Ken Wolff, 26 June 2016
Turnbull recently announced that his government, if re-elected, will not change any element of Medicare. It came in response to Labor’s campaigning that Medicare was under threat, that it would be privatised under a Liberal government. The general media response was to take Turnbull at his word and that Labor’s continuing use of the campaign was no more than a ‘scare campaign’ now based on a ‘lie’…
More...
Your vote is valuable
2353NM, 29 June 2016
Over the past couple of months, Turnbull, Shorten, Di Natalie and others have been attempting to convince you that they are worthy of your first preference vote. The usual claim is that your vote is valuable. Guess what — it is. Every first preference vote cast at the election on 2 July is worth $2.62784 to the political entity that gets the vote (provided certain conditions are met). Ironically, the ‘value’ of your vote is indexed every …
More...
The hazards of voting Liberal
Ad Astra, 29 June 2016
It’s clear that around half of all voters for the major parties will vote for the Liberal-National Coalition and half for Labor and the Greens. The result is likely to be close. There are many seats that promise to throw up intriguing results. If the Coalition wins, the Senate may end up being no more helpful to it than the last one.

The purpose of this piece is not to attempt to predict …
More...

Your vote is valuable


Over the past couple of months, Turnbull, Shorten, Di Natalie and others have been attempting to convince you that they are worthy of your first preference vote. The usual claim is that your vote is valuable. Guess what — it is. Every first preference vote cast at the election on 2 July is worth $2.62784 to the political entity that gets the vote (provided certain conditions are met). Ironically, the ‘value’ of your vote is indexed every six months to the CPI — which is more than the politicians are willing to do for Medicare rebates for doctors’ visits.

Given that 16,295,463 of us (as at 30 June 2015) will vote this weekend, that is around $42.8 million that will be taken straight from the taxpayers’ pocket and given to political parties, with no strings attached. Of course those that convince more of us to vote for them will get more of this largesse, which probably explains why it is rare to see members of political parties running the pub raffles or fundraising at community events — they don’t need to.

Public funding of political parties in Australia was ‘invented’ by a New South Wales ALP member, Rodney Caviler, who now admits it was the biggest mistake of his life. While originally intended to be a method for anyone who felt the need to stand up and represent a community in parliament to re-coup their costs in running for election (within an upper limit cap), it is now a free-for-all where the money is usually given straight to the political party’s head office with no strings attached.

The reality is that the major parties have no real need for branches and membership fees: the majority of their costs are met by public funding and donations from corporate sponsors. This gives them a large advantage over smaller parties and those who are trying to establish a party. The major parties have the financial ability to get their message out to a far greater extent because they can afford the research, preparation and production costs that this type of marketing requires, which in return ‘earns’ more votes at the next election. The Greens (probably the next largest political party in Australia) claim that almost all their donations are from individuals and the value is nearly always under $500, although they would also receive public funding.

On 23 May 2016, ABCTV’s 4 Corners program devoted an episode to political donations in Australia. The program included interviews with corporate donors, former party fundraisers and the Chairman of the NSW Electoral Commission, Keith Mason QC, who at the time was withholding $4.4 million from the NSW Liberal Party due to non-disclosure of donor information relating to the 2015 NSW State Election. Mason was asked:
How important is it, in your view, to the proper functioning of democracy that ... that donors are open and transparent?

KEITH MASON QC, CHAIR, NSW ELECTORAL COMMISSION: It, it, it's really vital. And it's equally important — ah, perhaps some would say more important — to make sure that, that representatives in government respond only to the, the voting decisions; not to corrupting decisions of, of undisclosed financial donations.
The donations in question were sent to the Liberal Party through a claimed third party in Canberra known as the Free Enterprise Foundation.

Former Liberal Party Federal Treasurer Michael Yabsley was also interviewed by 4 Corners and suggested a return to community fundraising rather than corporate donations would be a good thing for our democracy:
MICHAEL YABSLEY: Now, you know, the political parties — and you can hear it now: they'll be saying, "Oh, you know, we'll have to do sausage sizzles and, and lamington stalls."

In terms of the health of democracy: that would be a damn good thing, if that's how fundraising needs to take place. Far better to take the fundraising to the sausage sizzles, um, than, than some sort of, um, um, arcane process around a boardroom table.

QUENTIN MCDERMOTT: So back to the future?

MICHAEL YABSLEY: In, in many respects, ah, I'm, I'm all for it. It would be a very, very healthy thing for democracy.
In the last week, the world has found out that asking electors for their opinion doesn’t necessary get the answer the politicians expected. The referendum asking if the UK should leave the European Union (EU) was an unexpected victory for those that wanted to leave. The proponents of the leave cause were the ‘right wing’ of the Conservative Party, led by former London Mayor Boris Johnson and the ultra-conservative United Kingdom Independence Party (UKIP). Interestingly, The [UK] Spectator magazine noted in 2014 that Prime Minister David Cameron was leading his ‘conservative’ MPs on by forcing through
… the EU referendum bill — originally introduced in a panic by Number 10 as a symbolic measure to unite the party and highlight Labour and Lib Dem opposition to giving the British people a say on Europe
Well, that political move ended well. The current resident of ‘Number 10’ resigned the day after the Referendum, admitting the failure of his ‘remain’ campaign.

It could be argued that Abbott tried the same thing with the same sex marriage plebiscite in Australia. He pushed it out hoping that it would unite his party and highlight the lack of traditional ‘morals and ethics’ of the ALP and Greens, possibly something he could capitalise on at the 2016 election.

At the time Abbott came up with the plebiscite proposal, the Australian Electoral Commission estimated the cost of the special plebiscite at close to $160 million. The AEC helpfully publishes the cost of all federal elections since 1901, so the estimate is readily verified. Assuming a public vote is necessary to determine the marriage equity issue (which legally it isn’t by the way — the Howard Government inserted the condition that marriage is between a man and a woman into the Marriage Act in 2004), the referendum could have been run in conjunction with the current election campaign. The cost estimate for that scenario was around $44 million. Turnbull (who claims he supports marriage equity) is still planning on the plebiscite which he now claims is non-binding — so we pay the money out and his side of politics (at least) will vote according to their individual personal beliefs. Turnbull is effectively pouring $160 million of your and my money down the drain in what could be described as a vain attempt by his predecessor to hold his political party together.

And before we conclude, here’s another thing to consider. The election campaign was eight weeks. The ALP campaign launch was at the beginning of week 6, the Coalition campaign launch at the beginning of week 7. Considering that the timing of the election was picked by the Coalition, why would they leave it so late to ‘open’ their campaign? The reason is simple: until the campaign launch, the travel by the Prime Minister, Leader of the Opposition and most other politicians is paid for by you and me — not the political party. That’s right, you and I are paying for Malcolm and Bill’s ‘Magical Mystery Tours’ until they launch their campaign!

This either makes the ALP stupid or better off than the Coalition as they will be paying for Bill’s ‘Magical Mystery Tour’ for an additional week. However, there is no redeeming value here in the ALP’s actions. It’s similar to suggesting the Olympics being ‘opened’ on day 7 is better than performing the opening on day 9 of the 10 day competition. It’s not logical and it only makes sense if you support the current ‘norm’ of politicians being able to take what they believe is necessary from the public purse, without worry about privacy or the funding constraints imposed on the health, education and support mechanisms for members of our community in need; not to mention an interesting definition of morals and ethics.

A software company (Parakeelia) wholly owned by a political party charges MP’s for the (mandatory) use of its product, the charge is paid by the MP from taxpayer funds and the profits are returned to the political party. Also, the workings of the Free Enterprise Foundation only became known because the NSW Electoral Commission decided to use the tools they had available to force the details of how hundreds of thousands of dollars ended up in the NSW Liberal Party’s bank account. Political parties are paid for every vote they receive. All of this is apparently legal. It’s not hard to see who writes the rules and who they benefit.

Probably, the worst abuse of power is that all the donations (provided they are over the generous threshold of $13,000) will be released to the public — 24 weeks after the election. You and I have little influence when large organisations can write cheques for thousands to reinforce the policy that they want to get over the line (and the major parties have the marketing skills, techniques and funding to sell ice to Eskimos). When will this stop?

While we have a two party system, these arrangements will continue into the future. The reality is that in the majority of the electorates in Australia, either an ALP or Coalition candidate will be elected. It has been demonstrated across Australia and around the world that a parliament without a majority forces people to work together, which usually creates a better result. New Zealand has worked in this manner since the 1990’s and most western European countries have worked in this way for far longer — without the revolving door to the prime minister’s office that Australia has endured. While no one can tell you how to vote on 2 July, remember your vote does have some value — the person or party you choose to give you first preference to receives $2.62. Make sure the respective political machine earns it.

What do you think?
Should WE pay for political parties’ campaigns?

Should parties be required to fund all of their costs from when the election is called (or when parliament is dissolved), not just after their ‘official’ launch?

Let us know in comments below.

Recent Posts
The tale of two Daleks
Ad Astra, 19 June 2016
Good Daleks are hard to find. They’re expensive. But for the Treasury and the Department of Finance, no cost is too high. So they spared no expense in their search for reliable Daleks that could repeat their messages tirelessly. They had hoped to find some with a rudimentary knowledge of economics and some understanding of finance, but had to settle for ones that at least could recite mind-numbing messages repeatedly and consistently.
More...
Your call is important
2353NM, 22 June 2016
To paraphrase, hell hath no fury like a politician scorned. Dennis Jensen, MP for the seat of Tangney, was not preselected by the Liberal Party to recontest the seat in Parliament. He is running as an independent. Jensen recently claimed Liberal MPs use database software to profile constituents and decline requests for help from decided voters, even their own supporters. The system is apparently called “Feedback”.
More...
Turnbull’s Medicare backflip — or is it?
Ken Wolff, 26 June 2016
Turnbull recently announced that his government, if re-elected, will not change any element of Medicare. It came in response to Labor’s campaigning that Medicare was under threat, that it would be privatised under a Liberal government. The general media response was to take Turnbull at his word and that Labor’s continuing use of the campaign was no more than a ‘scare campaign’ now based on a ‘lie’…
More...

Turnbull’s Medicare backflip — or is it?


Turnbull recently announced that his government, if re-elected, will not change any element of Medicare. It came in response to Labor’s campaigning that Medicare was under threat, that it would be privatised under a Liberal government. The general media response was to take Turnbull at his word and that Labor’s continuing use of the campaign was no more than a ‘scare campaign’ now based on a ‘lie’. But let’s take a closer look, including a careful examination of the words he first used.

First we need to understand Medicare. Although we associate Medicare with medical services, it actually does not deliver a single such service. In essence, it is no different to private health funds insofar as it provides cover for the costs when people purchase medical services — or as it is sometimes described, a ‘universal health insurance scheme’ and we pay the Medicare levy as our insurance policy payment. Of course, it has ‘bulk billing’ which allows that medical services, if provided at a cost stipulated by Medicare, can be provided at no cost to the ‘consumer’. It is basically a payment system. The government controls policy and sets the ‘prices’ it will pay for services and also determines what services are included in the Medicare benefits schedule (which is the other work of Medicare staff, advising on those prices and services). There have been policy decisions over the years that provided additional funding (‘incentives’) to service providers, such as pathology and diagnostic imaging, if they bulk billed.

So it is similar to government provision of pensions. Government sets the policies but provides only a payment and no direct service. By way of comparison, think about the Bureau of Meteorology or the Australian Bureau of Statistics: government again controls policy but its funding of those bodies is for the direct provision of a service.

Back in February it was revealed that a task force had been established within the public service to examine the Medicare payment system, including the ‘commercial possibilities’. The government described this, however, as only the ‘back office operations’ of Medicare. From the description of Medicare, you will see that the payment system is not a ‘back office operation’ but is the core business of Medicare.

The proposed change was described as:
… part of our commitment to ensuring the government embraces innovation and is agile and responsive to changes in the digital economy.
No doubt you will recognise the words ‘innovation’ and ‘agile’ and their obviously intended link to Turnbull’s previously announced national innovation agenda. The implication being that we should support the proposed changes to Medicare as part of a much broader agenda in the national interest.

And:
Any outsourcing would only apply to back office operations and the administrative actions of making payments to individuals and providers. It doesn’t include setting fees or rebates and it doesn’t have any impact on the cost of health care, other than it may result in services being delivered more efficiently.
The latter are Turnbull’s words in parliament and remember this was only four months ago. He wasn’t denying it then.

Labor attacked then and continued the attack that the Liberal government did not support Medicare. It had plenty of ammunition including the continued freeze of Medicare rebates (now continuing until 30 June 2020) and the cessation of incentive payments for bulk billing to pathology and diagnostic imaging services. For the election, Turnbull announced that stopping the incentive payments had been put off for six months, will be reviewed, and that rents for pathologists will be reduced. How he can achieve the rent reduction is a vexed question — surely a Liberal government would not wish to interfere in the market in that way! All Turnbull has done is remove it temporarily while the election takes place. He has not said it is off the table permanently.

Labor’s attack was obviously gaining traction in the electorate forcing Turnbull to come out and say:
It will never, ever be sold. Every element of Medicare services that is being delivered by government today, will be delivered by government in the future. Full stop.
Apparently this was a ‘captain’s call’ by Turnbull but still Labor wasn’t convinced.

And I had to ask myself why did he spell out ‘every element of Medicare services that is being delivered by government’. As far as I can glean the only services not delivered by Medicare, but associated with it, are some registries of diseases kept by non-profit organisations in the medical sector. Or did he mean that payments are not a ‘service’? Or when he referred to ‘government’ was he limiting it to the ministers in his cabinet who govern the country? — in that case, what the government ‘delivers’ is the policy of Medicare. He was so specific in his statement that it hints at obfuscation.

Also he claims that these services ‘will be delivered by the government in the future’. What does that clause actually mean? It doesn’t preclude the possibility that payments could be contracted out: that is still a ‘government service’ but it has simply asked someone else to do it. Consistent with Turnbull’s statement it is not ‘selling’ the provision of Medicare payments, merely hiring someone else to undertake the task. Remember he is a trained lawyer and understands the use of words.

Subsequently Turnbull had to clarify his meaning and spelled out that payments would not be outsourced and upgrading of the payment system would take place 'within government'. The fact he was forced to do so emphasises that his opening explanations were less than clear but more importantly not convincing the electorate.

As Labor initially continued the attack, despite the denial, Turnbull said that Labor was ‘peddling an extraordinary lie, so audacious it defies belief’. Surely it shouldn’t defy belief within the Liberal party: after all they used a similar tactic regarding Gillard’s words about a carbon tax.

Turnbull also made a point of saying that the issue had not gone before cabinet and, therefore, there was no government decision. However, when Labor made an FoI request on the issue it was denied a number of documents because they involved ‘briefing the minister on a submission which is proposed to be submitted to cabinet’. Clearly the public servants had been preparing briefs and submissions on the issue: that doesn’t happen without someone in cabinet knowing about it and such submissions to cabinet are coordinated by Turnbull’s own Department of Prime Minister and Cabinet. So Turnbull’s nit-picking that the issue did not go to cabinet was a little disingenuous.

Although the task force seems no longer to be operating, Labor also points to a Productivity Commission report requested by Treasurer Scott Morrison:
… to review all aspects of human services delivered by government, including community services, social housing, prisons, disability services and Medicare.

The terms of reference include examining ‘private sector providers and overseas examples like the United States’ for alternative service delivery models.
One could ask why the United States is specifically picked out as an overseas example. If the government wished only to improve efficiency but retain services within government, it could have listed a few European countries as examples for study. No, looking to America, with its heavy emphasis on the private sector, is clearly indicating the model the government wants.

I still question Turnbull's stronger dismissal of Labor's argument. If payments by the Department of Human Services are outsourced on an American model, it would become logical in the future to also outsource Medicare payments — we already see Centrelink and Medicare in the same shopfronts and it would make sense for staff to have access to the same payment system on their computer screens. Would such an approach still be 'within government'? — it could, simply by fully moving the Medicare payments system to the Department of Human Services.

Whatever else may be said, Labor achieved its purpose and forced Medicare to front and centre of the election debate. For a while it moved discussion onto its favoured ground forcing the Liberals to respond with border security and turning back boats and revealing information they normally claim is a secret operational matter. Yes, when it comes to an election operational secrecy no longer matters!

Turnbull, as are many politicians, is a trained lawyer and knows how to choose his words carefully. He knows how to avoid outright lies but also how to avoid the truth. He knows how to say only what he wants to say and avoid adding any flourish that may reveal more than he wishes. The fact he was forced to change his words does imply that he was less than truthful in his initial statements or, at the least, was attempting to keep his options open. And perhaps even his stronger denial still has an element of keeping his options open but I leave that for you to think about.

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


Recent Posts
National security theatre
2353NM, 17 June 2016
It’s probably a co-incidence that there has been a lot more advertising around the National Security Hotline since the election was called. You know the ones, the sober colours, formal fonts asking you to report anything suspicious to a free call number. The television and radio advertising (with the foreboding music and deep voice reading the message) give you the impression that all information given and act on it…
More...
The tale of two Daleks
Ad Astra, 19 June 2016
Good Daleks are hard to find. They’re expensive. But for the Treasury and the Department of Finance, no cost is too high. So they spared no expense in their search for reliable Daleks that could repeat their messages tirelessly. They had hoped to find some with a rudimentary knowledge of economics and some understanding of finance, but had to settle for ones that at least could recite mind-numbing messages repeatedly and consistently.
More...
Your call is important
2353NM, 22 June 2016
To paraphrase, hell hath no fury like a politician scorned. Dennis Jensen, MP for the seat of Tangney, was not preselected by the Liberal Party to recontest the seat in Parliament. He is running as an independent. Jensen recently claimed Liberal MPs use database software to profile constituents and decline requests for help from decided voters, even their own supporters. The system is apparently called “Feedback”.
More...

Your call is important


To paraphrase, hell hath no fury like a politician scorned. Dennis Jensen, MP for the seat of Tangney, was not preselected by the Liberal Party to recontest the seat in Parliament. He is running as an independent. Jensen recently claimed Liberal MPs use database software to profile constituents and decline requests for help from decided voters, even their own supporters. The system is apparently called “Feedback”.

Let’s be realistic here, Feedback is a form of Customer Relations Management. It the same concept as you scanning your ‘Woolworths Rewards’ card at the supermarket or disclosing your frequent flyers number when making a travel booking. Companies use this information to target their information to convince you to purchase more from them, rather than their competition. To convince you to allow them to track your purchases, there is a reward of some form. It could be a discount on your petrol purchase if you spend a certain value in the supermarket, a ‘free’ flight from Sydney to Melbourne or access to a marketplace where they offer various trinkets (sorry ‘quality merchandise’) for the points you have accumulated.

That is why if you do use a Woolworths Rewards card, you occasionally get emails with ‘specials just for you’. It also explains that if you are searching on the internet because you need to purchase a new vacuum cleaner, all the advertising on the internet sites you visit for a while afterwards seem to have advertising for vacuum cleaners or retailers selling vacuum cleaners. Basically, it’s profitable for retailers and manufacturers to pay for a system to track your interest in various items and present options to you — hopefully convincing you to purchase their item rather than the option presented by the competition. Rather than sticking an ad on the side of a bus and hoping someone who is in the market sees it, they target ‘qualified’ consumers.

It’s the same with ‘Feedback’. The Liberal Party tracks your interactions with them. So, for example, if you choose to write a letter to Immigration Minister Dutton protesting at the inhumane treatment of refugees in the concentration camps located on Manus Island and Nauru, your name and address details together with some information on why you contacted the Minister will be recorded on ‘Feedback’. Now, say you live in a seat that the Liberal Party deem to be at risk — either one of theirs they think they will lose or one held by another party they think they can win — they use this information when the election is called. The system will ensure that the ‘tough on border protection’ personalised material is mailed to others around you but you are more than likely to get some marketing about (again for example) how some grant to an Indigenous community is assisting them to break the poverty cycle.

The logic is simple. Sending you a letter boasting how tough they are on border protection would in the normal course reinforce your existing opinion of the Liberal Party and why you would not vote for them. The alternative on a ‘closing the gap’ initiative would, in the opinion of the marketing experts, demonstrate to you that the Liberal Party does have a concern for the standard of living of those that are less well off in the society we live in and make you more likely to vote for the Coalition.

If you’re an ALP member and read this far saying ‘we wouldn’t do that’ — well you’re wrong. The ALP version of the customer management software is called ‘Campaign Central’ and the same decisions are made by a different group of marketing experts for exactly the same reasons. The ALP purchases a third party solution (in other words, someone else develops and sells a customer management system which is probably customised for the ALP’s needs). An internet search on the ‘Campaign Central’ suppliers name, Magenta Linas, has their official site at the top of the listing.

ABCTV’s 7.30 program reports:
Feedback is owned by a company called Parakeelia, which is wholly owned by the Liberal Party.

Its directors include federal party boss, Tony Nutt, and former minister, Richard Alston.

Former Melbourne Lord Mayor and Liberal figure Ron Walker is listed as a major shareholder on ASIC documents.

Mr Walker told 7.30 that was a mistake and he was involved in the company's establishment but resigned in December 2002.

He said party figures confirmed to him he had resigned, and his remaining on the company documents was an error.
There also doesn’t appear to be a website for the company which is strange considering the company writes software and apparently understands how to market to potential customers.

Jensen claims that he was ‘requested’ to pay $2500 to Parakeelia along with all other Liberal MPs. It is alleged that usually the payment comes from the funding provided by the parliament for the operation of the Member’s electorate office. The company, wholly owned by the Liberal Party, then provides software and training to electorate office staff on the operation and data mining abilities of the system to determine the political preferences of those who contact the electorate office. The electorate office staff are instructed to assist those who are more inclined to be an additional vote for the Coalition to a greater extent than those the system determines would vote for (or never vote for) the Coalition anyway.

So we have federal MP’s being told to use a particular software system to manage enquiries to the electorate offices that has been designed and developed by a firm wholly owned by the political party the MP represents. Furthermore, the MP is told to use taxpayer funds to make the ‘mandatory’ payment to use the system. While it’s probably legal and some software to manage your customer relations is probably more efficient than going through paper files to see where you are at — that’s not all. It seems that Parakeelia is the Liberal Party’s second biggest source of funds.

From Fairfax:
Last financial year, Parakeelia transferred $500,000 to the federal Liberal division, making it the party's second-biggest single source of funds. The year before it came in fourth with $400,000; before that $200,000.
While it all may be legal, what part of it is morally or ethically correct?

Gabrielle Chan wrote an opinion piece in The Guardian recently that commented on the morals and ethics of the Liberal Party owning Parakeelia and then accepting large donations. She also points out that during the current election campaign you can meet the ALP Shadow Minister of your choice for a ‘measly’ $10,000. Tony Windsor (candidate for the federal seat of New England currently held by the Nationals Leader Barnaby Joyce) has released the records of political donations by a mining company to the Nationals around the time the Coalition government was trying to expunge legislation relating to water use. The mining company rejected the allegations pointing out their (publicly reported) donations to Labor were actually higher than to the Nationals since 2011. While it may be numerically accurate, that’s hardly the point is it?

While Dennis Jensen dumped on the Liberal Party over the use of Feedback, to be honest his motives were not exactly honourable:
Jensen said: “Labor is no better. The company they use for Campaign Central doesn’t donate to the party but they use their tool in exactly the same way.”

Jensen complained that since he lost preselection he no longer had access to the Feedback database.

“The fact they pulled this from me, and the Liberal candidate will now have access to it, tells you everything you need to know about the extent to which it is a tool for constituents versus a tool for party political purposes,” he said.

“The taxpayer paid for my constituents’ information to be put into Feedback and yet the Liberal party and Parakeelia think they can pull it from me.
Clearly there is some information in Feedback that Dennis Jensen ‘needs’ or ‘wants’ to give him what he believes to be a good chance of retaining his seat in Parliament as an independent. It is probable that the information isn’t how his office processed his electorate’s gripes with government services or payments.

Under federal law, donations to political parties under $13,000 do not have to be disclosed to the authorities. During May 2016, the Liberal Party in New South Wales finally provided a list of donors to the NSW Electoral Commission after the Commission withheld $4million in taxpayer funds ordinarily given to political parties after an election based on the votes they received. The dispute was over the bona-fides (under NSW law) of some donors who chose to provide funds through a related identity to the political party totalling some $700,000:
Arthur Sinodinos, the party’s treasurer and chairman of its finance committee at the time, has denied knowing that a “substantial” amount of the $700,000 donated by the foundation had come from property developers.
Arthur Sinodinos is the current federal cabinet secretary and while no ICAC corruption finding has been made against him, ICAC has yet to release its final report.

When the presumptive prime minister stands behind a lectern on the night of 2 July, he will no doubt tell us all that he will work for all Australians. That may well be the intent, but while anyone can buy access to a shadow minister for $10,000 or Liberal Party MP’s have to spend $2500 of taxpayer funds (provided to run their office) purchasing a licence to a particular piece of software owned by the Party’s head office as well as clearing donations through related entities, there is going to be some doubt as to who they really represent.

It seems that there is a competition between political parties for donations so we all can be bombarded with the respective travelling roadshows and glossy advertising come election time. While the particular winners in the 2016 ‘campaign arms race’ may claim to represent us all, the acknowledged acceptance of donations gives the impression that the donors interests will take precedence — even if the politicians personally are the model of independence, morals and ethics.

The bigger problem here is politicians and political parties are exempt from privacy laws. When you tell your local MP that Centrelink has miscalculated your entitlements, Child Support has misunderstood your circumstances, the Tax Office is picking on you or anything else that is somewhat personal, according to Jensen the information is apparently punched into the customer relationship management system, regardless of it being Feedback or Campaign Central. It stands to reason that political operatives employed by the party also have access to the system and its cross referencing to the electoral roll — otherwise how would those personally addressed missives get to you so quickly after an election was called (and the one that you get is different to your neighbours)?

The popularity of the ‘frequent flyer’ type customer relationship schemes for airlines and supermarkets is undoubted and we all happily give up some privacy for the potential free flight or $10 off our grocery bill. It seems not to matter to most that using the pretty card will disclose that they regularly fly from Brisbane to Sydney or buy a particular brand of Corn Flakes. Really, while the information may be useful for the business (it needs more seats on the planes or to keep a particular brand of Corn Flakes in stock to keep you coming back), some of the information given to MP’s when they are asked to help you is somewhat more confidential, and the information is shared with the political party’s headquarters without your knowledge or approval.

Jensen claims:
"It was a very clear understanding that there's Feedback training provided to staff members and basically the training is to use it as a database politically rather than to assist constituents," he said.

"Indeed, the instruction given by Feedback trainers is if there's not a vote in it, don't do it."
It seems your call is important – as your call will tell the politicians your social grouping, your politics, your belief system, maybe your income and determine if they really do give a damn about your problem.

We elect Members of Parliament to represent us without judging if we are on their side or supportive of their financial donors. If ‘computer says no’ and that leads to nothing happening to assist you, there is a problem.

What do you think?
Do you think that we are well represented by our politicians?

Is there a problem with Parakeelia donating funds to the Liberal Party?

Let us know in comments below.

Recent Posts
Time for a new economic model
Ken Wolff, 15 June 2016
Late in the 1970s Keynesian economics was largely abandoned when it failed to explain the stagflation that had occurred during that decade. Recently, in my piece ‘What economic plan?’, I quoted an Australian analyst with the CBA who suggested that recent national data released by the ABS was showing ‘bizarre’ results, an ‘anomaly’. That sounds suspiciously like the criticism of Keynesian …
More...
National security theatre
2353NM, 17 June 2016
It’s probably a co-incidence that there has been a lot more advertising around the National Security Hotline since the election was called. You know the ones, the sober colours, formal fonts asking you to report anything suspicious to a free call number. The television and radio advertising (with the foreboding music and deep voice reading the message) give you the impression that all information given and act on it…
More...
The tale of two Daleks
Ad Astra, 19 June 2016
Good Daleks are hard to find. They’re expensive. But for the Treasury and the Department of Finance, no cost is too high. So they spared no expense in their search for reliable Daleks that could repeat their messages tirelessly. They had hoped to find some with a rudimentary knowledge of economics and some understanding of finance, but had to settle for ones that at least could recite mind-numbing messages repeatedly and consistently.
More...

The tale of two Daleks



Good Daleks are hard to find. They’re expensive. But for the Treasury and the Department of Finance, no cost is too high. So they spared no expense in their search for reliable Daleks that could repeat their messages tirelessly. They had hoped to find some with a rudimentary knowledge of economics and some understanding of finance, but had to settle for ones that at least could recite mind-numbing messages repeatedly and consistently.

After a long search, and after discarding some defective ones that seemed incapable of learning their lines, they settled on DM and DC as their primary Daleks, and KO’D as a trainee.

DC had had previous experience in finance, and had been programmed so often to repeat the same words and phrases that he needed no further programming. He was brilliant. No matter what the question, he would repeat the same mantras and catchphrases with his inimitable accent, which had an insistent Germanic tone to it. Indeed, he was so good that he became a tutor for DM who previously had been used in Immigration. DC tried to tutor KO’D, but gave up – she was too inclined to go off-message.

When DM was in Immigration, he had been programmed to repeat ‘Stop the boats’; ‘We’ll turn the boats around when safe to do so’; ‘We don’t discuss on-water operational matters’; ‘This government is not running a shipping news service for people smugglers’; ‘We are running a military-led border security operation which is stopping the boats’; and ‘We’ve taken the sugar off the table’.

When he was used in Social Services he would repeat: ‘The age of entitlement is over’, a mantra used by another Dalek, discarded because he was past his expiry date and had been exported second-hand to the US. It must have been an oversight, but DM was not programmed to label people as either ‘lifters’ or ‘leaners’.

The programmer of these Daleks was so skilful that they always repeated the same phrases, word perfect, again and again and again, so much so that anyone remotely interested in politics could recite them by heart. Some voters, too wedded to political discourse on TV for their own good, slowly became obsessive-compulsive, and sat in their corner of the psychiatric ward muttering the lines they had heard so often. “Jobs and Growth’ was so imprinted that it was impossible to erase this mindless utterance. Every time the TV was turned on, there were the Daleks regurgitating their lines, over and over, monotonously, word perfect.

What’s more, they were carefully programmed:
  • to talk quickly, as if firing verbal bullets’;
  • to talk loudly;
  • to talk incessantly;
  • to repeat their words over and again;
  • to talk over their interviewers, and ’never take a breath’;
  • to avoid answering questions they didn’t like’; and
  • to answer such questions with “I don’t accept your characterisation".
The programmer guaranteed that with such tactics it would be impossible to ignore them, impossible to escape them.


Joseph Goebbels knew that if you told a lie often enough, the people would eventually believe it. What’s more, he knew that the bigger the lie, the more the people would be drawn to it. The Dalek programmer knew this too, so it was of no consequence if the words he programmed into the Daleks were wrong, were untrue, were senseless, or had no meaning, so long as they served a political purpose.

Any new device needs testing, so the programmer got DM and DC together to try them out with some talented ABC interviewers, Leigh Sales and Michael Brissenden, who took it in turns to see if they could trip them up.

Leigh Sales began by trying to catch DC off guard:

LEIGH SALES: Against the backdrop of the campaign, Australia has just posted the slowest wage growth in decades. Between that, low inflation, low productivity and a stubborn deficit, do politicians need to level with Australians and say to them that they're unlikely to continue enjoying rising standards of living?

DC: Well our economy's an economy in transition. We're dealing with global economic headwinds, we're dealing with lower global economic growth and we're dealing with much lower global prices for our key commodity exports and that is of course why it is so important that we continue to implement our plan for jobs and growth. And, I mean, if you look at the results that we've achieved so far, the economy is growing at three per cent - higher than any of the G7 economies, double the rate of Canada, employment growth is strong, the unemployment rate at 5.7 per cent is not as low as we would want it to be, but it is much lower than what had been anticipated when we came into government in 2013. So we've got to keep heading in the same direction, we've got to keep implementing our plan for jobs and growth, including a more competitive enterprise tax rate.

Head spinning, she turned to DM:

LEIGH SALES: You talk a lot about your ‘plan’; the electorate still doesn’t understand what it is:

DM: The budget is an economic plan to ensure that we provide for growth and jobs to drive this transition that is occurring in our economy.

Australians know that our economy is transitioning and they know there are great risks and threats to it. This budget is the economic plan, which will support that growth that supports those jobs by backing in the investment that is needed to make it happen.

Michael Brissenden jumped in to chance his arm with DC:










MICHAEL BRISSENDEN: Alright. On the broader economic policy issues, what exactly did Treasurer Scott Morrison mean when he said the government may have to ‘recalibrate’ its policy mix after the election?

DC: Well you know, obviously we have a very clear national economic plan for jobs and growth but as you know, we have always - as we have done in the past and as we continue to do moving forward, we'll always make judgements based on the circumstances as they evolve to ensure Australia's…

MICHAEL BRISSENDEN: So everything could be back on the table?

DC: No, that is not right. I don’t accept that characterization. I think that everybody knows that we are focused on implementing our plan for innovation to support start up businesses everywhere.

Everybody knows we're focused on implementing our defence industry plan to support local high-end manufacturing.

Everybody knows we're focused on rolling out our export trade deals, which help our exporting businesses.

And everybody knows that we're focused on making our tax system more growth friendly, delivering business tax cuts paid for by crack downs on tax avoidance and by better targeting relevant tax concessions.

Now, obviously as economic circumstances evolve and as we continue to face economic headwinds, we pursue opportunities and we will continue to do everything we can to ensure that Australia is as strong as possible.

An economic foundation to take advantage of the opportunities but also to be resilient in the face of any challenges. We must live within our means!

MICHAEL BRISSENDEN: And the political realities may mug you as well after the election, you may be forced to change things because you can't get stuff through the Senate for instance.

Nick Xenophon tells us that he has some pretty serious reservations about the company tax cut, extending beyond businesses earning over the turnover of 10 million.

So you may have to compromise on some things including some of the centrepiece of your election budget strategy.

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates, yes in the House of Representatives but also give us your vote in the Senate because it is in our judgement in the national interest for us to have the capacity to get our plan for jobs and growth through the Senate as well as through the House of Representatives on the other side of the election.

MICHAEL BRISSENDEN: And if that doesn't happen, you may have to compromise, might you?

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates.

MICHAEL BRISSENDEN (exasperated): Okay. DC, we'll leave it there!

He decided to try his hand with DM and tackle him about priorities (Sales sat quietly head in hands):

MICHAEL BRISSENDEN: You talk about a $50 billion tax cut for businesses, but you say you can't afford $37 billion for schools.

I mean it is about where you're putting your priorities.

DM: And you know what our priority is – growth, economic growth – because if you don't have economic growth, you don't have jobs.

If you don't have economic growth, you don't have the growth in revenue that pays for schools and for hospitals and for all of these things. And we must live within our means.

Now what Labor is doing in this election is running around committing money that it doesn't have.

MICHAEL BRISSENDEN: And we still have a spending problem under you, your own budget papers show that tax...

DM: I don’t accept that characterization. We're getting it down to 25.2 and what we've learnt this week is Labor's big defence yesterday was to say oh well, it's not as much as $67 billion. It's only $37 billion.

Now what it also admitted to yesterday is that all of the revenue they say they save by, or gain again by not going ahead with our small and medium sized tax cuts for businesses, all of that is already spent because they have to make up 18 billion in measures that they're already blocking.

So when Bill Shorten says 'I'm paying for this on schools or hospitals because we're not going ahead with the company tax cuts', well that's a lie.

It's not true because he's already spent them. He's spent every single cent of that going ahead with those company tax cuts, not on paying for schools or hospitals but for paying for the things he already opposes. We intend to live within our means!

DC chipped in:

DC: Well our message to the Australian people is that if you want us to implement our plan for jobs and growth, if you want us to implement a plan that would help secure our successful transition from resource investment driven growth to broader drivers of growth, then support our candidates.

Irritated by DC’s repetition, Brissenden jumped in to see if he could give a more plausible response to his question to DM. Could he trip him up?

MICHAEL BRISSENDEN: How come you can afford a $50 billion tax cut for businesses, but you can't afford $37 billion for schools?

DC: Well, I don’t accept your characterization. You know what our priority is – growth, economic growth - because if you don't have economic growth, you don't have jobs.

If you don't have economic growth, you don't have the growth in revenue that pays for schools and for hospitals and for all of these things. And we have to live within our means!

DM could not resist having his say:

DM: The budget is an economic plan to ensure that we provide for growth and jobs to drive the transition that is occurring in our economy.

Australians know that and they know there are great risks and threats to it. This budget is the economic plan, which will support that growth that supports those jobs by backing in the investment that is needed to make it happen.

It’s all about jobs and growth, jobs and growth, jobs and growth, jobs and growth, jobs and growth…

Brissenden’s eyes glazed over. He turned to Sales. Leigh, how on earth do you turn these things off?

Don’t know Michael. I guess they will stop when their batteries run out. But I suspect someone recharges them every night. We may never escape them!

As Sales and Brissenden retreat defeated, DM and DC chatter on:



Jobs and Growth, Jobs and Growth, Jobs and Growth; Our economy is transitioning, Our economy is transitioning, Our economy is transitioning; The budget is the economic plan, The budget is the economic plan, The budget is the economic plan; If you don't have economic growth, you don't have jobs, If you don't have economic growth, you don't have jobs, If you don't have economic growth, you don't have jobs. It’s all about Jobs and Growth, Jobs and Growth, Jobs and Growth, Jobs and Growth…….

As Sales and Brissenden disappear, DC and DM smile knowingly at each other: Together they babble:
We won. We won. We won! Again!!!

What do you think?
What do feel about our Daleks?

Do they irritate you?

Do you listen to them any more, except for amusement?

Let us know in comments below.

Time for a new economic model


Late in the 1970s Keynesian economics was largely abandoned when it failed to explain the stagflation that had occurred during that decade. Recently, in my piece ‘What economic plan?’, I quoted an Australian analyst with the CBA who suggested that recent national data released by the ABS was showing ‘bizarre’ results, an ‘anomaly’. That sounds suspiciously like the criticism of Keynesian economics in the ’70s. It suggests that it is time we reconsidered the current dominant economic models.

Under Keynesian economics inflation was normally associated with an expanding economy and increasing employment, leading to rising wages and prices. In the 1970s, however, inflation was rising but so was unemployment and production was falling — stagflation. Many put this down to the ‘oil-price shocks’ (which occurred twice during the decade) but Milton Friedman, with his monetary theory, put it down to faulty monetary policy on the part of governments and central banks. Although he had been developing his theory since the 1950s, the problems of the 1970s meant it was ready and waiting to be adopted and was initially taken up by the Reagan and Thatcher governments.

Friedman argued that inflation is always a monetary phenomenon: that prices could not increase without an increase in the money supply — he pointed out that the money supply should be matched to economic growth (GDP) to keep inflation under control and also to prevent governments simply printing as much money as they pleased. He also believed there was a ‘natural’ level of unemployment and inflation would also occur if unemployment fell below that level.

In his work Capitalism and Freedom he espoused the free market as the solution to many problems rather than leaving problems to government to resolve: government should keep an eye on the money supply and allow the market to take care of itself — the market was considered more efficient in dealing with inflation and unemployment.

His emphasis on monetarism and the free market led to two related approaches: supply-side economics and the rise of neoliberalism.

The free market which Friedman emphasised is based on the individual’s rights over private property, which the individual then uses to engage in the market. That was used by the neoliberals to place the individual at the forefront, not only economically but socially. The approach had been spelt out by the philosopher Robert Nozick during the 1970s.

Nozick considered that as each individual owns the products of her or his own endeavours and talents, it is possible for an individual to acquire property rights (as long as they are not gained by theft, force or fraud) over a disproportionate amount of the world. Once private property has been acquired in that way, it is ‘morally’ necessary (in a philosophic sense) for a free market to exist so as to allow further exchange of that property — it is only individual private property rights and market mechanisms that are logically important.

That captures much of the approach adopted by the neoliberals and helped give their approach a philosophic underpinning.

Nozick also posited that the state’s single proper duty is the protection of persons and property and that it requires taxation only for that purpose. That matches the current neoliberal argument for small government and minimal taxes and also fits with supply-side economics.

The basic argument of supply-side economics is that high taxes, particularly high marginal tax rates, are a disincentive to work, saving, investment and the efficiency of resource use. Some other taxes can also distort investment decisions by treating different types of capital investment unequally.

Supply-side proponents argue that:

  • lower taxes on wages will increase labour supply and increase employment by reducing the pre-tax real wage but increasing the post-tax real wage
  • lower taxes on interest and capital gains will lead to an increase in savings, leading to more savings flowing into capital markets and raising investment
  • for governments, lowering taxes will actually lead to higher tax revenue as people will work or invest more, thus increasing the size of the tax base
What have these approaches actually achieved since the 1980s?

Following supply-side economics, many governments around the world have, since the 1980s, lowered marginal tax rates on income, including company tax rates, and the rates for earnings from investments and capital gains. Many other economists accepted that some of the outcomes suggested by the supply-side theories were possible but their impact was measurable only in decimal points of a percentage and the benefits were not as large as claimed by supply-side theories. The tax cuts made by the Reagan government were a classic example of supply-side theory but led not to an increase in government revenue but a huge increase in government debt, which other economists suggested over-rode any potential benefit.

Economists acknowledge that supply-side actions take a long time to show their benefits — although governments usually prefer to take short-term actions.

In 1996 one researcher wrote of the USA:
Economic growth, at its simplest, is the result of more people working and more output per hour (ie, increased productivity). Given two facts — annual productivity growth of about 1.1 per cent for more than two decades, and a slowdown in the growth of the working-age population — slower economic growth is the inevitable result. Since cutting (or raising) taxes has made no obvious, large difference in productivity, the idea that tax cuts will noticeably increase long-term economic growth is without merit.
More recently, to cover the long term nature of supply-side changes, some research has looked at the history of tax cuts in the USA going back to 1945, thus covering a period of about 65 years (at the time of the research). The research was conducted by the Congressional Research Service and first appeared in 2012. It found that there was no correlation between lower tax rates and saving, investment or productivity. What was found was that the changes had helped concentrate wealth in the hands of the top 1%, and particularly the top 0.1% of income earners, as their tax rates had fallen by more than 50%.

The market emphasis on the individual, supported by the neoliberal approach, basically endorses inequality because it results from individual ‘effort’. It ignores social responsibility and the common good. I won’t go into this as we have covered it before on TPS but it leads to the economists and neoliberals seeing no role for government in ameliorating the situation, or as the philosopher Nozick put it:
While it is true that some individuals might make sacrifices of some of their interests in order to gain benefits for some other of their interests, society can never be justified in sacrificing the interests of some individuals for the sake of others. [emphasis added]
Under this approach, governments should not intervene in the market, nor over-rule individual rights to reduce the increasing inequality, although it has been government decisions, under pressure from supply-side economists and neoliberals, that has exacerbated the situation.

Greg Jericho, writing recently in The Guardian, also pointed to the unusual outcomes occurring under the current economic approach:
The OECD has just released its latest compendium of productivity indicators and it shows that across the world productivity growth was slower in the decade from 2004‒2014 than it was from 1996‒2004.

But as the OECD notes, the slowdown in productivity growth has come during a time of “rapid technological change” and increasing participation of firms and countries in the global market — things which should see improved growth.

It is a “paradox” which the authors of the paper rather unsettlingly attribute to among other things, difficulties of measurement.
For its failures, supply-side economics has been disparaged and dismissed as ‘voodoo economics’ (used by George H Bush as regards Reagan’s economic approach during the 1980 presidential primaries), although it still lingers among many governments, including the Liberal government in Australia. Despite the evidence, our government still believes that lowering taxes will help investment, economic growth and ultimately government revenue. In Fairfax papers on 9 June, Peter Martin wrote that the government’s company tax reduction would cost a nett $8 billion a year (after some increased income from personal taxation). For that cost, the benefit would be an improvement in gross national income of between 0.5% and 0.7% ‘after several decades’ or less than 0.1% per year (so low that at one decimal point it rounds to zero):
And the boost to jobs would be even smaller. Independent Economics says employment would eventually climb by 0.17% if the tax cut was funded by a tax on households, or by as little as 0.02% if it was funded by cutting government spending. That’s an eventual increase of between 2400 and 20,400 jobs. By way of comparison employment has climbed by an average of 24,000 per month over the past year. It means that after 20 to 30 years the $8 billion per year holds out the prospect of delivering an extra month’s worth of employment growth.
That certainly echoes the long-held criticism of supply-side economics that it produces only marginal improvements over very long time spans.

Another common problem is the acceptance of Friedman’s ‘natural’ level of unemployment: our government does nothing to reduce unemployment below 5%. That figure is the accepted norm within the Australian Treasury and its longer term projections, such as in the Intergenerational Reports, use that figure consistently over many years (linked to stable inflation). While it is all but impossible to achieve zero unemployment, prior to Friedman’s approach unemployment at about 2% was considered ‘full employment’. If we now accept that another 3% of the labour force (over 300,000 people in Australia) should always remain unemployed, doesn’t that also have an impact on demand and production?

To me, as an economic layman, controlling the money supply seems to have become more difficult because financial institutions have created artificial financial products that do not appear to bear any relationship to their actual value. In relation to the GFC, there was a small number of economists and market analysts, who pointed out that the total value of derivatives and futures traded was greater than the money supply in the US and of the total value of the goods being traded — so something had to give!

Following Friedman’s approach, perhaps that situation indicated the money supply was too low but, in fact, it was too high — deregulation of financial markets had seen to that!
Friedman and other monetarists envisioned strict controls on the reserves held by banks, but this has mostly gone by the wayside as deregulation of the financial markets took hold and company balance sheets became ever more complex. As the relationship between inflation and the money supply became looser, central banks stopped focusing on strict monetary targets and more on inflation targets.
For that reason, some argue that Friedman’s theory has not failed but that governments have moved away from it. Rather than controlling inflation through the money supply, control is now more focused on interest rates set by the central banks. On the other hand, Friedman argued for freedom in the markets and deregulation is just a way of achieving that — so is there an inconsistency in his arguments?

A number of governments around the world, have engaged in increasing the money supply (quantitative easing) following the GFC but it has not increased inflation (and growth) as Friedman’s theory suggests. Instead national economies are stagnating or growing painfully slowly and employment and production are not rising significantly. So if increasing the money supply is not working what will?

Whichever way you look at it there are more and more questions and anomalies in the current economic situation not explained by Friedman’s monetarism or supply-side theory.

A Keynesian would increase government spending and, if necessary, government debt to stimulate the economy. Friedman, however, warned that government debt is bad because it encourages governments to allow inflation to rise as a way to effectively reduce the debt — which was how many governments paid the debt they had accumulated during WW2. But as explained in ‘Bankers 3 Democracy 0’, such inflation is resisted by financial institutions because they are the ones that stand to lose.

Finally, some investment advisers in the US are warning that there is a danger that America could face the return of stagflation. While advising that it is only a small risk at this time, they are suggesting that investors may wish to hedge their position by placing more of their investments in gold and government bonds. If even Friedman’s approach is potentially leading to stagflation, shouldn’t it also be abandoned?

Do we return to Keynesian economics? Although supply-side economists say it shouldn’t work, it worked for Australia in the GFC: the Rudd government provided cheques to households to spend. That was pure Keynesian because it allowed a demand-driven boost to the economy without changing the underlying tax base (and thus future government revenue).

Which Australian political party will be brave enough to stand up to the economists, including those in Treasury, and say your current economic theories aren’t working? — reconsider what you are telling us and tell us something that will actually work! There are other economic approaches available, such as Modern Monetary Theory (MMT) and what is sometimes termed ‘middle out’ economics which uses a demand-driven model that emphasises the capacity for spending of the middle class to drive economic growth. Perhaps it is time that government, and the Treasury, gave these approaches more heed because Friedman’s monetary theory and supply-side economics certainly aren’t working.

What do you think?
Why should we stick by Friedman’s approach and supply-side economics when it is clear they are not explaining current ‘anomalies’ or ‘paradoxes’?

How can we support an economic approach whose greatest achievement seems to be increasing inequality?

Let us know in comments below.


Recent Posts
Turnbull is selling us a pup
Ad Astra, 8 June 2016
You all know what that idiomatic expression means – being tricked into buying something that is worthless. It arose from the old swindle of selling a bag that purportedly contained a piglet, but instead there was a puppy inside.

PM Turnbull wants you to believe that his bag contains a piglet, but all you will find is a pup. The piglet is called ‘Jobs and Growth’. Every day, many times every day, he is out there …
More...
The real Malcolm
2353NM, 10 June 2016
Since Malcolm Turnbull’s elevation to the role of Prime Minister, there has been consistent reference to his stated ideals and beliefs last time he was the Leader of the Liberal Party plus his public comments on ‘social issues’ such as same sex marriage, internet connectivity, climate change, the republic and so on versus his actions as Prime Minister. For a member of the same party as Abbott and Bernardi, he was really quite ‘small L’ liberal. At times he was more ‘liberal’ …
More...
Feed a man a fish
2353NM, 12 June 2016
Those who missed the ABC’s Lateline last Wednesday night lost the opportunity to learn about a private (they would prefer the term ‘independent’) school in Sydney that actually seems to want to make a difference.

Barker College, a co-educational school in the Anglican tradition, based at Hornsby in Northern Sydney owns and operates the Darkinjung Barker School near Wyong, on the New South Wales …
More...

Feed a man a fish


Those who missed the ABC’s Lateline last Wednesday night lost the opportunity to learn about a private (they would prefer the term ‘independent’) school in Sydney that actually seems to want to make a difference.

Barker College, a co-educational school in the Anglican tradition, based at Hornsby in Northern Sydney owns and operates the Darkinjung Barker School near Wyong, on the New South Wales Central Coast. The Darkinjung Barker School is small and operates in association with the local Aboriginal Land Council to provide an education to children of aboriginal background in an area where there appears to be significant educational underachievement.

Featured in the Lateline report was the Darkinjung Barker School’s principal Jamie Shackleton. He justified the small size of the school and the better than usual resourcing (the teacher to student ratio) is around 1 to 7 by observing:
We couldn't do it with a class of 30. It would be - it would be children again slipping - slipping through the cracks. And we're lucky enough now to have two classes with two teachers and two teachers' aides where it's nearly a ratio of one to seven. And that, for those children, is a need.
The school is an attempt to ‘close the gap’. Some of the statistics are scary. From their website

  • YEAR 3 - In all assessed areas of NAPLAN and for most States and Territories the mean score for Indigenous students is only at the 20th percentile score for non-Indigenous students (NAPLAN report 2013, p63)
  • YEAR 5 – Only 65.8% of Indigenous students across Australia are at or above the minimum standard for persuasive writing compared to 93.3% for non-Indigenous students (NAPLAN report 2013, p 127)
  • YEAR 7 – In NSW the mean scores for Indigenous students are between 59 and 73 points below the mean scores for non-Indigenous students. (NAPLAN report 2013, p191)
  • YEAR 9 – By Year 9 the gap between Indigenous and non-Indigenous students ranges from 57 scale points in spelling, to 88 points in persuasive writing (NAPLAN report 2013, p225)
Not that Darkinjung Barker School is a new idea. The St Andrew’s Cathedral School in Sydney founded Gawura Primary School, based in Central Sydney, in 2007. The school caters for 28 students from prep to year 6 and attendees are granted scholarships to attend. Gawura’s website suggests
Gawura has three full-time staff, one full time teacher’s aide and one part-time teacher’s aide working with 23 students. This exceptional student/teacher classroom ratio allows us to specifically address the individual academic and pastoral needs of the students. Dialogue between home and school is openly encouraged and reinforces the attention devoted to our students
Darkinjung Barker School openly admits the idea for their school was ‘pinched’ from the Gawura St Andrew’s Cathedral School. Gawura claims their process is simple:
Gawura has a simple formula; the continuity of practice, work habits, expectations and attendance being paramount. The classroom programmes are systematic and intensive, with an emphasis on literacy and numeracy, delivered in a culturally supportive and enriching environment. The Gawura programme continues to promote identity and cultural understanding. Our students are proud of their Aboriginal and Torres Strait Islander heritage. Wiradjuri classes are always a highlight of the week and the students take great pride in every cultural performance. Eminent educationalist, Dr Chris Sarra, once commented that “Education strengthens Aboriginality”.
The Lateline report linked above records the stories of two of Gawura’s graduates, who are now first year university students, in the accompanying video.

Dr Chris Sarra was appointed the principal of Cherbourg State School in South East Queensland in the 1990s. Cherbourg is an Indigenous community and Sarra (who is of Indigenous/Italian decent) introduced his ‘Stronger Smarter’ philosophy which led to dramatic improvement in the educational outcomes of the school.
When Dr Chris Sarra arrived as the principal in 1998 he set about making fundamental changes to school. He challenged school staff to look at their attitudes towards students and raise their expectations of the children. He also challenged children to raise their own expectations and required them to meet higher standards of behaviour, attendance and learning.

This seems to have worked. Over an eighteen-month period unexplained absences dropped by 94%. Improved attendance also led to better educational outcomes. The diagnostic reading tests of year two students originally showed that 100% of children were below expected reading rates. Two years later, less than half were below expected reading levels. These shifts were also evident for older children. In 1999 all of the year 7 students were significantly below the state average for literacy, by 2004, 17 of 21 year 7 students were achieving within the state average range
Sarra left Education Queensland in 2005 after several complaints were made against him during his time at Cherbourg. The principal who replaced him did not share Sarra’s commitment to the ‘Stronger Smarter’ system and the results achieved by Sarra diminished. A new principal in 2011 welcomed Sarra and his philosophy back into the school and the outcomes are again on the rise. Dr Chris Sarra is now the chairman of the Stronger Smarter Institute

While Sarra seems to support the actions of Barker College and St Andrew’s Cathedral School, in the interview with Tony Jones and Phillip Heath (the Head of Barker College), available here, he has concerns with those who for some reason cannot access the services provided for the ‘select few’.

The Gillard government negotiated with federal MPs as well as state governments of varying political persuasions to introduce the changes (and generally increase) to education funding across the country known as the Gonski reforms. Gonski was a needs based system whereby if a school was in a lower socio-economic area, it received funding appropriate to ensure that the students of that school were not educationally disadvantaged, through the introduction of additional staff and facilities to make a difference. The statistics from the Darkinjung Barker School website suggest that Indigenous schools are generally seeing the results of the disadvantages of lower socio-economic areas.

The evidence from both Cherbourg State School and the Darkinjung Barker School discussed above suggests that smaller class sizes and overcoming issues such as transport are essential to ‘close the gap’ in Indigenous education. The Gonski model of education funding recognised this and made the necessary adjustments.

Prime Minister Turnbull’s overwhelming message in the current election campaign is yet another Abbott style three-word slogan ‘jobs and growth’. Turnbull claims that one of the parts of the plan to deliver ‘jobs and growth’ is advising voters that their children and grandchildren can get good jobs ... That is what they want to know.

Ensuring their children and grandchildren can get good jobs is a lofty ambition and one that most Australians would wholeheartedly agree with. The evidence suggests that to get a good job, a good standard of education is required, and in this society there is an expectation that all children will have the opportunity to receive a comprehensive education at a government school for little cost.

In 2010, David Gonski chaired a review of the existing school funding models and determined that in part, the resourcing of schools affected the outcomes produced. The Gillard government negotiated with politically diverse state governments and members of parliament and after some false starts, implemented the Gonski school funding model. The funding model proposed by Gonski and implemented by Gillard funded schools according to the individual needs of the students who attend the particular school. If schools get additional resources based on the perceived needs of their students, they can use the funding to provide support in a number of different ways – whether it be reducing class size, professional development for staff, increasing specialist teachers or providing assistance for students with special needs.

Abbott, in the lead up to the 2013 federal election claimed that he and then Prime Minister Rudd ‘were on a unity ticket’ in relation to ‘Gonski’ funding. By November that year, Education Minister Pyne was suggesting that the Coalition government would ‘go back to the drawing board’ on school funding by 2015. In the now famed 2014 budget, the Coalition government changed its position again and decided to fund education on the Gonski model until 2017.

Current Coalition Prime Minister Turnbull has not changed the previously announced Coalition government position on Gonski funding. The ALP under Gillard, Rudd and now Shorten committed to funding education according to the Gonski model in full. While there is a cost, what is more important – tax concessions to Multi-National Companies as proposed by the Coalition or comprehensive quality education of all Australians? That additional funding needs to be applied to schools in lower socio-economic areas speaks volumes of the inadequacies of previous funding models.

Turnbull is correct – today’s parents and grandparents want their families to have a good job. To get a good job, you need an education. So how does Turnbull reconcile his decision not to reinstate the education funding system, the system the Coalition government under Abbott and Pyne scrapped, with his aim of todays children getting a good job (and potentially growing the economy).

He can’t logically.

The evidence would suggest that the Gonski funding model works. Dr Chris Sarra and Phillip Heath both agreed to the proposition last Wednesday night on Lateline. Apparently Aristotle (rather than the Catholic Church Jesuits religious order) was responsible for the saying, ‘Give me a child until he is 7 and I will show you the man’. Those who have watched the 7 Up television documentaries over the years may dispute the accuracy of the statement. Another old maxim is ‘give a man a fish and you feed him for a day; teach him how to fish and you feed him for a lifetime’. This demonstrates the benefits of education over handouts.

Education is important. If Australia’s future is going to be in high technology areas (because it sure won’t be mining), surely we need to ensure that all Australian children get an equally good education – regardless of the socio-economic standard of the area they grow up in. Who knows where the next Australian to potentially invent something as useful as Wi-Fi is going to school. Independent schools and other groups shouldn’t have to pick up the responsibility for funding initiatives to ‘close the gap’ on education ‘one person at a time’ and eventually provide equal opportunity to all. Governments over the past 200 years have created the problem, they need to fix it.

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

Recent Posts
The economics of debating
2353NM, 5 June 2016
Economists will tell you that they practise a science in a similar way to chemists, biologists and physicists. If certain inputs are made to solve an economic problem, there will be a certain result. Other scientists also use the same process, a chemist will tell you if you add certain quantities of two chemicals together, it might change colour, smoke or (everyone’s favourite) create an explosion. Others who are less enamoured with …
More...
Turnbull is selling us a pup
Ad Astra, 8 June 2016
You all know what that idiomatic expression means – being tricked into buying something that is worthless. It arose from the old swindle of selling a bag that purportedly contained a piglet, but instead there was a puppy inside.

PM Turnbull wants you to believe that his bag contains a piglet, but all you will find is a pup. The piglet is called ‘Jobs and Growth’. Every day, many times every day, he is out there …
More...
The real Malcolm
2353NM, 10 June 2016
Since Malcolm Turnbull’s elevation to the role of Prime Minister, there has been consistent reference to his stated ideals and beliefs last time he was the Leader of the Liberal Party plus his public comments on ‘social issues’ such as same sex marriage, internet connectivity, climate change, the republic and so on versus his actions as Prime Minister. For a member of the same party as Abbott and Bernardi, he was really quite ‘small L’ liberal. At times he was more ‘liberal’ …
More...

Turnbull is selling us a pup



You all know what that idiomatic expression means – being tricked into buying something that is worthless. It arose from the old swindle of selling a bag that purportedly contained a piglet, but instead there was a puppy inside.

PM Turnbull wants you to believe that his bag contains a piglet, but all you will find is a pup. The piglet is called ‘Jobs and Growth’. Every day, many times every day, he is out there on the streets crying ‘Jobs and Growth’, ‘Jobs and Growth’, ‘Jobs and Growth’, like a door-to-door snake oil salesman.

The piglet that Turnbull says he has in his bag sounds attractive. Who would deny the benefit of more jobs? And only a nihilist would eschew the notion of growing the economy.

Trouble is that he won’t let you peep inside to check out the piglet. And he won’t tell you where he got it. He doesn’t want you to know its bloodline, whether or not it’s diseased, and whether it's able to do what piglets do best.

He wants you to buy his ‘Jobs and Growth’ piglet sight unseen; he does not want you to question its soundness.

How does he intend to feed his Jobs and Growth piglet? He says he will feed it with tax cuts for businesses, not just small businesses that we are told are the life blood of our economy and the leading employer of our workers, but also large businesses right up to multinational corporations, owned mainly by overseas investors.

How does he know that feeding the Jobs and Growth piglet with tax breaks will make it develop into a fat and succulent pig? Well, he has a theory.

It goes like this: cut taxes to businesses and they will use the extra money in their pockets to expand their business, produce more, and employ more. That’s it! Turnbull didn’t invent it, nor did his daleks Treasurer Morrison or Finance Minister Cormann. It’s been around a long while. It goes by the name ‘Supply-side economics’. If you want to learn more about its origins and modus operandi read this detailed account in Wikipedia, which begins:
“Supply-side economics is a macroeconomic theory which argues that economic growth can be most effectively created by investing in capital, and by lowering barriers on the production of goods and services.

“According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices; furthermore, the investment and expansion of businesses will increase the demand for employees and therefore create jobs. Typical policy recommendations of supply-side economists are lower marginal tax rates and less government regulation.”
You’ve heard about lower marginal tax rates and less government regulation before, and how the benefits of these measures will trickle down to those at the bottom of the pile. We’ve written about: ‘Trickle down economics’ on The Political Sword’. Its original name, coined by economist John Kenneth Galbraith, was: ‘Horse and sparrow economics’ – “If you feed enough oats to the horse, some will pass through to the road for the sparrows.” Read The trickle down effect by 2353NM, How the economic rationalists tried to steal our hearts and minds by Ken Wolff, and Trickle down economics breeds inequality by Ad astra.

Turnbull’s propositions might sound plausible to the casual observer, but does supply-side economics do what its proponents insist it does? Does it work? Is Turnbull’s Jobs and Growth piglet capable of developing into a large edible pig?

This question is not one that conservatives intend to address, although there is plenty of evidence that might provide an answer. They have an extraordinary capacity to ignore evidence. In an article in Alternet, Noam Chomsky quotes political scientist Norman Ornstein’s description of the fervently conservative US Republican Party: “…a radical insurgency that doesn’t care about fact, doesn’t care about argument, doesn’t want to participate in politics, and is simply off the spectrum.” Here we have the Liberal Party – same mind-set.

So does supply-side economics work? We have written often about the fallacy of trickle down economics, (see above) but there is much more. Sometimes you hear this economic theory described as ‘Reaganomics’ or ‘Thatcher economics’.

Let’s start with a blistering critique of Reaganomics, or ‘Riganomics’ as she prefers to call it, by Rachel Maddow, an American television host, political commentator and author who hosts a nightly television show, The Rachel Maddow Show, on MSNBC. The critique is titled: How Reaganomics Destroyed The Middle Class...And Maybe America. It’s worth watching the whole 8 minutes 26 seconds of this YouTube clip:



If that hasn’t convinced you of the fallacy of supply-side or trickle down economics, read this appraisal in Wikipedia. Part of the theory, which some describe as ‘voodoo economics’, posits that rather than federal revenue falling when tax cuts are made, it would rise, as portrayed by the mythical Laffer curve, debunked long ago. The theory is refuted here:
”Economist Gregory Mankiw used the term "fad economics" to describe the notion of tax rate cuts increasing revenue in the third edition of his Principles of Macroeconomics textbook in a section entitled "Charlatans and Cranks":

“An example of fad economics occurred in 1980, when a small group of economists advised Presidential candidate, Ronald Reagan, that an across-the-board cut in income tax rates would raise tax revenue. They argued that if people could keep a higher fraction of their income, people would work harder to earn more income. Even though tax rates would be lower, income would rise by so much, they claimed, that tax revenues would rise.

“Almost all professional economists, including most of those who supported Reagan's proposal to cut taxes, viewed this outcome as far too optimistic. Lower tax rates might encourage people to work harder and this extra effort would offset the direct effects of lower tax rates to some extent, but there was no credible evidence that work effort would rise by enough to cause tax revenues to rise in the face of lower tax rates…

“People on fad diets put their health at risk but rarely achieve the permanent weight loss they desire. Similarly, when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate. After Reagan's election, Congress passed the cut in tax rates that Reagan advocated, but the tax cut did not cause tax revenues to rise.”
Writing in Business Insider Australia, about the US economy in an article titled BOMBSHELL: New Study Destroys Theory That Tax Cuts Spur Growth, Henry Blodget says:
“One economic theory has been repeated so often for so long in this country that it has become an accepted fact: Tax cuts spur growth. Most Americans have gotten so used to hearing this theory that they don’t even question it anymore.

“One of our two Presidential candidates is so convinced of the theory that he has built his entire economic plan around it, despite the huge negative impact additional tax cuts would likely have on our debt and deficit.

“But is the theory true? Do tax cuts really spur growth?

“The answer appears to be “No.”

“According to a new study by the Congressional Research Service (non-partisan), there’s no evidence that tax cuts spur growth.

“In fact, although correlation is not causation, when you compare economic growth in periods with declining tax rates versus periods with high tax rates, there seems to be evidence that tax cuts might hurt growth…

“One thing that tax cuts do unequivocally – at least tax cuts for the highest earners – is increase economic inequality. Given that economic inequality is one of the biggest problems we face in this country right now, this conclusion is very important…

“…this topic has become highly politicized, so it’s impossible to discuss it without people howling that you’re just rooting for a particular political team. Second, no one likes paying taxes. Third, everyone would like a tax cut, including me.

“So I think we can all agree that everyone would prefer that tax cuts actually did spur economic growth.

“Alas…”
Blodget goes on to prove his point with a number of charts.

He asks: “So, have these declining tax rates for the rich – the ‘job creators’ who are being given a bigger incentive to invest by the reduced tax rates led to faster economic growth?

“Nope.”


Later he says: “Although tax cuts do not appear to spur economic growth, they DO appear to lead to greater economic inequality. Inequality in the United States recently hit a level that has not been seen since the 1920s: The country’s top earners are taking home more of the national income than at any time in 70 years.”

Referring to his charts, he says:
“And now let’s look at the correlation between this rise in inequality and tax rates – the lower the top marginal rates go, the bigger the share of national income that goes to the top 0.1% of wage earners. And it’s the same for capital gains rates.

“Meanwhile, the share of national income that goes to “labour”– a.k.a., most Americans – goes up as the top tax rates increase.

“Why is the rise in inequality so troubling? Well, beyond the issues of fairness and stability, increasing inequality is hurting the economy. Unlike middle class and upper middle class folks the country’s highest earners don’t spend all the money they earn. So this money doesn’t get circulated back into the economy, where it can become revenue for other companies and salaries for other workers. (If there were a dearth of investment capital, the money might get invested, but we’ve got plenty of investment capital right now. Our problem is a lack of demand).

“So, what’s the bottom line?

“Well, the bottom line appears to be that low taxes do not spur economic growth and DO cause greater economic inequality.

“So, although it sounds like heresy, presidents and Congress-people who actually want to fix the economy might want to consider raising taxes rather than cutting them. Or, at the very least, keeping them the same.”
You can read the whole article here.

Along with tax cuts for businesses, Dalek Morrison keeps repeating that we don’t have a revenue problem, only a spending problem! He and Dalek Cormann are programmed to say this mindlessly and endlessly. The unavoidable consequence is spending cuts, which also go by the name ‘austerity’. Austerity has been tried in many places with little success.

An article in the Australian edition of The Guardian by Larry Elliott, Austerity policies do more harm than good, IMF study concludes, subtitled: Economists give strong critique of neoliberal doctrine ushered in by Ronald Reagan and Margaret Thatcher in the 1980s begins: “A strong warning that austerity policies can do more harm than good has been delivered by economists from the International Monetary Fund, in a critique of the neoliberal doctrine that has dominated economics for the past three decades.”

In response to the UK Chancellor of the Exchequer George Osborne’s wish to introduce austerity measures “…to give the government more flexibility in the event of a future crisis”, IMF economists:
“…rejected the notion that austerity could be good for growth by boosting the confidence of the private sector to invest. They said that in practice, ‘episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1% of GDP increases the long-term unemployment rate by 0.6 percentage points.’

“The IMF economists summarised what a growing consensus among economists across the globe now think, that Osborne-style austerity economics increases inequality and instability, and undermines growth.”
They concluded:
“…that the increase in inequality threatened to be self-defeating.

“The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth.”
In yet another article in The Guardian: You’re witnessing the death of neoliberalism – from within, Aditya Chakrabortty quotes IMF research: “The results, the IMF researchers concede, have been terrible. Neoliberalism hasn’t delivered economic growth – it has only made a few people a lot better off.”

It seems that if neoliberalism is not yet dead, it is moribund.

How much more evidence do we need to be convinced that Turnbull is selling us a pup? There is no Jobs and Growth piglet in his swag. What’s more, even if there were, it could not grow into the jobs and growth he promises every day. His much-vaunted ‘plan’ has no substance. Ken Wolff goes into this in his TPS Extra piece: What economic plan?

Turnbull’s Jobs and Growth promise will not, indeed cannot be achieved. The food he says he will feed his Jobs and Growth piglet: lower taxes for businesses and spending cuts, will not make it grow. Indeed all the evidence, gathered over fifty years, indicate that his food will not even keep his Jobs and Growth piglet going.

Instead, the opposite will occur – it will starve. There will be no more jobs, and growth will not occur. Inequality will increase.

The rich will get richer and the poor will languish waiting for the promised benefits that will never trickle down.

In fact, the piglet Turnbull is trying to sell us is a pup.

Why do Turnbull, Morrison, Cormann and fellow ministers fly in the face of the facts? Why do they persistently cling to supply-side economics, which has been discredited over and over again? Ornstein’s answer rings true: Neoliberals are 'a radical insurgency that doesn’t care about fact, doesn’t care about argument, doesn’t want to participate in politics, and is simply off the spectrum.’ They adhere to their preferred economic theory because it suits them and their top-end-of-town supporters, replete with top hats.  

How can we argue with such people? We can’t. The only way to destroy their dangerously flawed economics, which threatens not just our economy, but also the social fabric of this egalitarian nation of the ‘fair go’, is via the ballot box.

July 2 is our best chance to tell Turnbull that he is selling us a pup.


What do you think?
Do you feel you are being sold a pup?

If not, what is Turnbull selling us?

Let us know in comments below.

The economics of debating


Economists will tell you that they practise a science in a similar way to chemists, biologists and physicists. If certain inputs are made to solve an economic problem, there will be a certain result. Other scientists also use the same process, a chemist will tell you if you add certain quantities of two chemicals together, it might change colour, smoke or (everyone’s favourite) create an explosion. Others who are less enamoured with economics will suggest that if you put 100 economists in a room and give them a problem, they will come up with a solution. When the solution doesn’t work (because it usually won’t), the same economists will give you 150 reasons why it didn’t.

Really, economists get a bad rap. There will be those of us who remember the time years ago when weather forecasters plied their trade only to receive general hilarity from the rest of the country. The science has improved and, while weather forecasters don’t get it right 100% of the time in your particular bit of Australia, on a regional level they are usually pretty close to the mark. Economists believe that the market will always react rationally. The problem is that people are by nature irrational; their personal beliefs or circumstances will normally overrule ‘rational’ decision-making.

For example, most people who find $500 on the ground at a shopping centre would hand it in to the centre management or police, rationalising that $500 is a substantial sum of money to have lost. Only a minority would pick it up and keep on walking, rationalising that their need was more important (without obviously knowing the needs of the person who lost the money). Most would at least consider the circumstances around pocketing the money before acting rationally. The temptation of the minority to take the money would overrule the ‘rational’ decision-making process.

A similar behaviour pattern can be shown in the current election campaign. Let’s assume for a minute that there are 24 million people living in Australia. If you didn’t watch the ‘Leaders Debate’ last Sunday night, you’re in good company. Something like 23.5 million of us didn’t. Maybe it demonstrates the economists’ argument that people generally make rational decisions.

Surely a large majority of voters would like to hear the plans and aspirations of each leader for the future of Australia? The ‘Debate’ would be a perfect opportunity for some statements and (well) debate about our collective future. To put it into the basest of terms — why does Turnbull or Shorten think his side better than the other side? The ‘Debate’ didn’t include the Greens and Nick Xenophon. It would be fair to say they have a reasonable probability of influencing the way the ALP or Coalition govern from July 3 until hopefully sometime in 2019, so surely their views should be considered as well.

If those who watched the ‘Debate’ thought there was going to be a common interest in explaining policies and principles across the political parties in Australia they would have been sorely disappointed last Sunday night. Most of the media called the ‘Debate’ a draw. The Conversation’s Michelle Grattan called the ‘Debate’ a disappointment where ‘both men did a disservice by resorting to scares and simplistic attacks during their encounter’ while Fairfax’s Mark Kenny wrote ‘Sunday night's election debate did little to animate a fresh image for Australia nor even to lift a surprisingly formulaic election campaign from its desultory torpor’. Other media outlets were similarly damning in their assessment.

Those who chose to watch a vision actually being fleshed out were probably viewing Channel 7’s House Rules. Other choices included a show where people are supposed to recite their lines — The Voice on Channel 9. Probably the most ironic show on television last Sunday night at the time of the Debate was Seconds from Disaster which was on ABC2. Despite Seconds from Disaster being on a ‘digital’ channel with a smaller audience than the ‘Debate’, it was probably the better choice — at least they were investigating why a disaster happened, rather than watching one happen in front of their eyes on ABC’s main channel.

It is a sad reflection on Australian political parties that they are so gun shy of a bad headline that they won’t let their potential leaders debate who is the better option to run the country. The Guardian’s Lenore Taylor discussed the format, which was agreed prior to the debate occurring:
The format — no interruptions by the questioners or the other prime ministerial candidate — meant that despite the best efforts of the panel, even those voters not lured back to the more dramatic Sunday night offerings on the commercial television stations would have finished the hour-long debate not much the wiser.

Neither leader really won the encounter, because it wasn’t really a contest, but rather an opportunity to deliver speaking notes in stereo.
It seems that the personality of people like former PM Hawke is a foreign concept to today’s politicians. Prime Minister Hawke and his Treasurer, Paul Keating, over a period of a decade, completely restructured the Australian economy. It was their work that allowed Howard and his Treasurer Costello to be able to introduce a significant amount of middle class welfare while ‘banking’ surpluses. Certainly the mining boom helped prime the economy, but Hawke and Keating gave them the tools to collect and manage the income they received.

While Hawke was prime minister, his exploits were well known and in comparison to today’s ‘perfect’ role models. Hawke had an ‘interesting life of beer, women and song. A considerable section of the population really didn’t approve of Hawke’s ‘private’ life prior to politics but most admitted that he had some personality. Turnbull and Shorten may be seen on the nightly news with a beer sitting in front of them but it is infrequent to see them actually drink any of it and that’s about as risqué as it gets. Personality is limited to the standard stump speech with daily variations to demonstrate that the prime ministerial contender is actually where the television footage seems to place him at the time rather than standing in front of a ‘green screen’ at a studio in one of our large cities.

So we have a number of planes (and buses) running all over the country doling out a few dollars here and there to demonstrate to people that those allegedly running the joint haven’t forgotten about them. For example, on the day this article was written, Turnbull (if re-elected) was going to allocate $20million to some Sydney researchers to enable them to identify earlier cancer in children. Worthwhile? — certainly: however, it could be suggested that this would have happened anyway regardless who was in government at the time.

At the same time Shorten was ‘slumming it’ in Cairns announcing (if he is elected) funding for protection of the Great Barrier Reef. Again, highly worthwhile but almost certain to happen anyway.

In both cases, as they both ‘believe’ in the effects of climate change you’d have to ask how much carbon was released and dollars were expended in getting everyone to a pretty backdrop (either a research lab or out on the reef) to make the announcement. Why are we force fed these thematic announcements that somehow are supposed to demonstrate that Turnbull cares about research to a greater level than Shorten — and conversely Shorten cares more about the reef.

The ongoing theme of this election so far has been the size of the ‘black holes’ that various funding announcements have created in the country’s budget. In reality, the ‘black holes’ don’t matter. We started off talking about economists and how their predictions usually are incorrect because circumstances change. Without disparaging the work of the ‘beancounters’ in the Treasury and Finance Departments, the real surplus or deficit for the financial year is announced some months after the event. What it’s going to look like next year is anyone’s guess, let alone ten years’ time.

To paraphrase a former onion eating Prime Minister, stuff happens. Financially the ‘stuff’ has an effect on the economic plan (or Budget) announced usually in May to the fascination of some and the snores of others. To expect a political party (even with help from Treasury and Finance) to understand all the variables in a policy or program that hasn’t been implemented is fantasy. Furthermore, to expect considerable accuracy around what is going to occur in ten years’ time is lunacy. To bring this back to your household economy: you have calculated that in two years you’ll be able to take the kids to Disneyland and figure you need $10,000 to do it. So things are plodding along nicely until the fridge blows up three months into your plan and then a further six months on the transmission in your car fails. The funds you are saving now pay for a new fridge and car and Disneyland is now three or more years away. Yes, the numbers are bigger in the Australian economy, but so are the inputs.

If the polling is correct, the election will be a close run thing. The reality of the 2016 election is that neither of the presumptive prime ministers is likely to obtain a large majority in both houses of parliament, accordingly they will have to convince another political group to work with them to pass legislation and provide certainty in matters of supply and confidence. Various minority governments around Australia have demonstrated they are much more efficient and consultative than Abbott/Turnbull’s parliament has been to date. A minority government (or one with a third group having the balance of power in the Senate) really isn’t a bad outcome and hopefully stops the excesses of absolute political power such as ‘Workchoices’ or sections of the 2014 budget becoming law.

Having said that, both Turnbull and Shorten have to convince others they can win and win both houses of parliament. It seems that the way they are doing this is by playing ‘me too’, by making large announcements over miniscule funding issues (Australia’s GDP is around $1.5 trillion so announcements that commit millions really aren’t that ‘big’) and flying around the country to be seen in areas their party machine think are liable to be gained or lost.

There is a lot of cost (hiring a 100 seat jet for each party isn’t cheap), lots of happy snaps but no actual benefit. You can’t help but wonder if one of the leaders stopped the set piece daily round of flying into some poor unsuspecting location with their entourage, making the announcement, doing the pre-planned ‘doorstop’, possibly walking around the local business area and repeating ad nausem, they might actually contribute something to the discussion. Then there might be some interest and substance instead of what is fast becoming Malcolm and Bill’s respective road trips.

Another common saying is that if you’re not making mistakes, you’re not trying hard enough. On that basis, there is clear evidence that neither leader is really trying. As a result, most electors are acting rationally and going along with their lives, to the detriment of this country in the future.

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

Recent Posts
* T & Cs apply
2353NM, 31 May 2016
Charles Dickens wrote a book called Oliver Twist. It is undoubtedly a classic. The book has been the subject of numerous reviews, movies and is frequently a subject for study in English Literature classes. Perhaps the best known section of the book is where young Oliver asks the Master of the Workhouse for ‘more’.

The poor, disabled and incapable who were unfortunate enough to live in what is now the United Kingdom from the 1700s …
More...
It’s all their fault
2353NM, 1 June 2016
Have you ever noticed that politicians in general have a great ability to blame others? As an example, here Labor is blaming Prime Minister Turnbull (as he was the former communications minister) for a $15 billion cost blowout in the construction of the NBN. Here’s Turnbull in 2013 accusing Labor of the same thing (only the value is $12 billion in this case). Let’s put this simply — they both can’t be right!

The two major political parties have a number …
More...
What economic plan?
Ken Wolff, 3 June 2016
Prime Minister Malcolm Turnbull declared that GDP growth of 3.1%, reported by the ABS on 1 June, showed that his plan for the economy was on track:
You cannot succeed without a clear economic plan. Everything we have is encouraging companies to invest, to employ.


More...

It’s all their fault


Have you ever noticed that politicians in general have a great ability to blame others? As an example, here Labor is blaming Prime Minister Turnbull (as he was the former communications minister) for a $15 billion cost blowout in the construction of the NBN. Here’s Turnbull in 2013 accusing Labor of the same thing (only the value is $12 billion in this case). Let’s put this simply — they both can’t be right!

The two major political parties have a number of differences in their policies, history and generally their philosophy on life. For the purpose of this discussion, it’s probably valid to suggest that parts of each party’s policy on any specific issue are genuinely useful but other parts of the policy look after the history and philosophy of the party rather than the common good.

Recently I took my kids to see Zootopia at the cinema. It is what you would expect to see from a kids’ movie from Disney, really well done animation, a reasonable story line, some ‘humour’ for the parents as well as the kids and, of course, a moral to the tale. Without giving away the plot completely, in a world where animals live in a civilisation like ours there are of course little tensions: in this case between the predators (lions, tigers etc) and the prey (sheep, rabbits and so on). The first rabbit to try and join the Police Department, which is predominately staffed by predators, is met with some difficulties and finally overcomes them through hard work and a lot of perseverance. Sure, the rabbit has self-doubt and at times seemingly insurmountable problems, but she finds a way to overcome the difficulties and eventually rises to the top. Hence the moral, if you work really hard and take the opportunities that are presented to you, you will achieve your aims.

Back in real life, people pay small and large fortunes to try and improve their lifestyle: it could be to make themselves fitter, improve their mind, improve their financial position or even to try to find a ‘soul mate’. To meet the demand there are a multitude of people and organisations that are prepared to ‘help’ you achieve your aims, usually at some cost and sacrifice to your time, wallet and current usual routine. While there is an element of dodgy behaviour by some in these industries, a lot of suppliers are good at what they do and do produce the results they claim to be capable of.

If we talk about making you fitter (the implication being that you would also be healthier, live longer and so on), gyms seem to be the current fashion. Gyms in general promote that if the participant works to their individually designed program, which over time encourages increases to the time exercising as well as the effort expended (heavier weight or more repetition), the participant’s goal of being a better person is achieved and they can then move mountains (probably not literally but you get the point). Weightwatchers and similar organisations work using the same methods, weekly motivational events with a somewhat competitive process around actual weight loss since the last meeting attendance — those who lose what is considered to be a healthy amount each week are congratulated for their work while those who fail are given time for self-reflection.

Self-help classes and literature are a dime a dozen. The premise here is that the participant is not a worthless person but does add value to not only their life, but the lives of those around them. It is usually a gradual process where the participant is exposed to literature, lectures or ‘one on one’ meetings that promote the concept that each person (including the participant) is a valuable member of the community and can overcome whatever their immediate problem is. Of course if a person has been told for years that they are not worthwhile, the self-help process may take years but still, if the program is followed, the participant should believe they are capable, productive and valued at the end of the process.

There are thousands of avenues available to potentially increase personal wealth and surprisingly a lot of them are legal. While this isn’t the place to discuss them, negative gearing and the use of tax havens (if you already have a lot of wealth) are popular conversation topics at present. There are also schemes that involved multi-level marketing, working a second job, as well as the usual range of books, lectures and methods promoted on line, through the real estate industry, share brokers, and so on. Again each of them has a plan that if a participant strives to complete the program and maybe foregoes that annual trip overseas to put the money into an investment, you will end up wealthier than when you start.

Everyone has probably seen the advertising for companies such as eHarmony, RSVP and so on: they all promise that you will meet your ‘soul mate’ provided you play by their rules (and pay the money of course). Generally, there is a listing of people who ‘match’ the participant’s personality profile and through communicating with the suggested matched people, a strong and long lasting partnership will develop. However, participants are expected to complete a personality profile and actively manage their membership to achieve success.

Regardless of the perceived improvement need, there are two recurring themes here. The first is that there is some work to be done. If someone going to a gym for six months can now lift an additional 40 kilos repetitively, it’s progress towards an objective. In a similar way, if a person with issues regarding their self-worth starts to work out why they loathe themselves, it really is progress.

The second issue is the sacrifice needed to get the results. They person going to the gym is probably not eating and drinking the same ‘comfort’ items that they used to consume over and above the continuing gym membership fees, while the person with self-worth issues is probably being assisted to process a lot of hurt and anger from issues that occurred in their past.

There is a point to this article — and here it is. If we teach our kids that they can achieve anything they want provided they put the work in, and there are probably millions of groups that will assist you and me to rectify some perceived issue that we have, why on earth do we accept the argument that the fault for [insert problem here] is solely the result of the ‘other’ side of politics?

Think about it. Zootopia tells our kids that they can be like Judy Hopp, the rabbit that wants to become a Police Officer; Weightwatchers (and similar programs) can show people how safely to take 60kg from their weight (with the resulting physical and mental good that come from that); people can be taught to treat themselves as a worthwhile member of the community; there are financial strategies that will increase your wealth to an extent provided you stay within the rules laid down by the authorities; and yes, eHarmony and RSVP do produce partnerships that last until ‘death do they part’.

Yet we started this article with an example of both of the major political parties blaming the other for an adverse outcome in a program that was seen to be in the public good. Labor’s NBN and the Coalition’s NBN are really two different animals. The Labor plan was to connect most Australian dwellings directly to a fibre-optic cable that at the moment could be used for fast internet and phone communications (and who knows what else in the future). The Coalition plan is for partly fibre optic cable to junction boxes on street corners, then existing copper cable to the dwelling; other parts of the system would use upgraded existing cable-television cable generally strung from power poles or in the same pits as the power cables in newer areas. It is slower and potentially cheaper (as there is less new work involved) but the maintenance costs are higher as the junction boxes need electricity to operate and the copper/cable TV cable is not new (with a greater potential to fail due to age). So they are not directly comparable in any case.

To be fair, Labor started the NBN journey and in all likelihood decided to make the ‘headline’ cost of the work the option where not much goes wrong – it makes sense, that’s the cheapest option. However, as we all know, Murphy was an optimist and things do go wrong; the hoped for cheapest option inevitably doesn’t happen. When the Coalition came to power in 2013, part of their platform was that the country could not afford Labor’s NBN, so they ‘reviewed’ it and changed it. Regardless of the benefits of each party’s plan and the cost differences, it is pretty unlikely that the Communications Minister has any more input to the day to day construction operations of NBNCo than initial policy setting and reviewing a budget — to claim that ‘the other side’ were the reason the estimate was ‘out’ is gilding the lily to some extent. Both sides have been in power for considerably more than the time needed to develop realistic estimates and discuss with the public the difference between an estimate and a guaranteed price. Clearly they both chose not to.

Perhaps unsurprisingly, this isn’t the first article on The Political Sword that questions the wisdom of short term expediency versus the long term good of various policies (by all sides of the political fence) for the country and those who live here. Ad Astra wrote ‘The curse of adversarial politics’ in December 2008 and I commented about the problems with ‘absolutely’ ruling something in or out in ‘You reap what you sow’ in July 2014. Ironically, Ad Astra also asked in December 2008 Why does Malcolm Turnbull make so many mistakes. It seems that the more things change …

There is still a considerable percentage of the public who accept the argument that because the red team said this or the blue team said that, they should vote for the side making the accusation. There could be a million and one reasons why this is the case — although a lot of it is probably that people are just not interested, precisely because of the standard of debate and discussion in this country. Those that ‘don’t care’ are the real bunnies here. The first thing any ‘self-improvement’ program, like the ones we talked about above, will tell you is you have to do the work and make the sacrifice — which means that you have to stop blaming others for your problem and take responsibility for changing something that you can’t accept.

Regardless of how the Coalition would have run government between 2007 and 2013 (when Labor was in power), the fact is they weren’t and need to accept that we are at a certain point with the NBN, taxation, industrial relations or any one of a number of other functions of government. Should the current government want to change or improve on where we are, how about doing the work and making the sacrifice rather than suggesting it’s all the other side’s fault. After all, they were handed the keys to the prime minister’s office over two years ago.

And rather than blame the previous guy, perhaps next time they are in power, the ALP should comment that while they might have done it differently, the current position is what it is. Immediately following is an acknowledgement that they are in charge, they are prepared to do the work and sacrifice to make it better, and this is what is proposed.



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


Recent Posts
Turnbull's Australia Tax
2353NM, 27 May 2016
You may have heard of “the Australia Tax”. The term comes from the apparent difference in the price of a seemingly identical product sold apparently cheaper in another country than the retail price in Australia. Computer software and Apple products are frequently mentioned as being subject to this tax and while it really isn’t that simple, the impression that you pay more because you live in Australia is certainly there.

The problem in the …
More...
How the Liberals are destroying Australia
Ken Wolff, 29 May 2016
The image above shows rich and poor alongside each other in Mexico. Is this Australia’s future under the Liberals?

Australia has a long history of egalitarianism. Between the gold rushes and the 1890s Australia was considered a ‘working man’s paradise’. The depression of the 1890s changed that somewhat but also fostered the growth of unionism and the birth of the Labor party to represent workers’ interests.
More...
* T & Cs apply
2353NM, 31 May 2016
Charles Dickens wrote a book called Oliver Twist. It is undoubtedly a classic. The book has been the subject of numerous reviews, movies and is frequently a subject for study in English Literature classes. Perhaps the best known section of the book is where young Oliver asks the Master of the Workhouse for ‘more’.

The poor, disabled and incapable who were unfortunate enough to live in what is now the United Kingdom from the 1700s …
More...

How the Liberals are destroying Australia


The image above shows rich and poor alongside each other in Mexico. Is this Australia’s future under the Liberals?

Australia has a long history of egalitarianism. Between the gold rushes and the 1890s Australia was considered a ‘working man’s paradise’. The depression of the 1890s changed that somewhat but also fostered the growth of unionism and the birth of the Labor party to represent workers’ interests. That meant that by 1911 Australia was still considered a great country for the ‘working man’ with higher wages than in many other countries, shorter hours than the USA and Canada and more holidays. Australia was also a world leader in social reforms, including universal suffrage, and was known for not having as large a gap between rich and poor as most industrial countries — it was effectively largely egalitarian.

It was not a rigid system that enforced the same conditions on everyone but a system based on the ‘fair go’. It was built on the concept that we are all inherently equal and, therefore, the differences between us should not be great if we each have a ‘fair go’ — in modern parlance, it was equality of opportunity. We were also very good at cutting down the ‘tall poppies’ when the differences exceeded what we thought acceptable.

Now much of that has changed and the Liberals have contributed mightily by their actions and also by their underlying philosophy.

What drives the Liberals’ actions is their belief in the individual, based on the John Stuart Mill maxim on freedom when he wrote in On Liberty in 1859:
The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to attain it.
The Liberals aim towards the first part of that statement but tend to ignore the provisos in the second part. Despite what the Liberals may think, the condition Mill imposes on individual freedom is consistent with the Australian value of the ‘fair go’: as an individual, I give others a ‘fair go’ by not depriving them of their freedom nor impeding their efforts to attain it. It shows that although the ‘fair go’ can be said to be founded on the individual, it includes a social responsibility to give others a ‘fair go’, just as Mill envisaged. In that sense, the ‘fair go’ is the true inheritor of Mill’s legacy, not the Liberals’ approach.

When the Liberals emphasise the individual they are undermining society. They sometimes speak of community spirit, such as when we pull together during times of bushfire and flood, but they do nothing to support it. Generally they believe only in the individual and the family, and community and society do not get a look in. That also provides a green light for individuals to ignore their social responsibilities and look only after themselves if that is their want — it is a green light to reject the ‘fair go’ and a green light for individual greed.

The economic emphasis on the individual is leading to rising inequality in our society. The gap between the richest and the poorest has increased significantly. The gap between the pay of a worker and the CEO of the company for which she or he works has increased dramatically in recent decades. Whereas once it was the equivalent of 2‒4 years of the worker’s wage, now it can exceed 15 or 20 years. The ‘tall poppies’ are now protected under the Liberals’ approach and are viewed by them as essential for economic success.

In Australia, based on taxation records, the top 10% of taxpayers had 25% of total national income between 1974 and 1985 but that grew to 31% in 2010. For the top 1% their share was about 4.5% between 1976 and 1984 and in 2010 was 9.2%, after reaching a peak of 10.1% in 2006 before the GFC.

In 2013, a Productivity Commission paper also showed that since 1998‒99, even just among those employed, wages had been increasing faster for high income earners than for low income earners.

Such inequality impacts equality of opportunity and this was recognised by the OECD as early as 2005:
... children of poor parents have less chance of succeeding in life than children of rich parents: a widening inequality of income risks leading to a widening inequality of opportunity. Because of these factors, a failure to tackle the poverty facing millions of families and their children is not only socially reprehensible, it will also weigh heavily on our capacity to sustain economic growth for years to come.
Given the last statement in that quotation, is rising inequality also contributing to current sluggish economic growth worldwide, not just the GFC hangover? That’s one for the Liberals to ponder, if they dare!

Australia survived the GFC thanks largely to a return to Keynesian economics by the then Rudd government (on the advice of then Treasury Secretary Ken Henry). Even now our economy has been growing at 2½‒3% a year, below our long term average but still a moderate rate of growth. So why do people feel financially insecure?

Wages growth is currently the slowest it has been in 20 years so that certainly doesn’t help but another aspect mentioned by a number of writers, including in relation to the middle class in the USA, is cuts to government services. People feel they have less social support as government services disappear, that such services will not be there when they need them. Also any increase in their wages may go in paying for services previously provided by government — their situation, at best, is not improving or is going backwards.

In Australia, the Liberals cut government services because they believe in the neoliberal economic philosophy (still based on John Stuart Mill) that the individual should be free to use, that is buy, only those services they require. That, by economic demand, the market will meet the need for those services. Government providing services for all, that many may not use, is an inefficient use of resources! The Liberals will continue to emphasise low taxes because this puts money back into the pockets of the individual to buy the services they want and government can withdraw from that provision. That presumes, however, that everyone is earning enough to buy those services which is not the case under the Liberals’ approach.

We are also seeing a rise in what is termed ‘precarious’ employment — casual and part-time work, and short-term individual work contracts. The April employment figures this year showed that 20,200 part-time jobs were created but 9,300 full-time jobs were lost (there had been no increase in full-time employment in the previous three months). Continued work is not guaranteed in such situations, leaving workers unsure of their future: they need to be earning very large amounts, as with some of the FIFO mining contractors, to make them feel such uncertainty is worthwhile. But in many cases these approaches are used to reduce wages and working conditions. As the number of full-time positions diminishes that situation worsens. The Liberals have long supported this approach, no more so than when Howard introduced WorkChoices. Unions are sometimes criticised for not paying enough attention to part-time and casual workers but that is because they tend to focus on keeping, and creating more, full-time positions as it is only a full-time position that provides economic security. There are some studies in Australia suggesting that for a family to lift out of poverty at least one member of the family has to have a full-time job — even having a number of members of the family working casual or part-time doesn’t help because they are unable to invest in a better future as their work, and income, can stop at any time with little or no notice.

So the Liberal approach to employment is also increasing economic insecurity no matter how well the economy may or may not be going.

The current Liberal (Turnbull) government is focusing on business, and small business in particular, at least to start with. A focus on small business is to some extent consistent with the ‘fair go’ but not when large businesses and multi-nationals are included, and not when increases in productivity are being pocketed as profits, not improvements in wages.

In a 2013 report for the ACTU it was found that in the 1990s there was a stability between productivity and wages — both productivity and real wages grew at 2.1% each year.
Wages decoupled from productivity in the 2000s. Between 2000 and 2012, productivity rose by an average 1.3% per year, while real hourly labour income rose by only 0.6% per year on average. This meant that labour’s share of national income fell over the decade, and fell quite sharply. In 2000, the labour share was 65.6% — this had fallen to 59.7% by 2012.
Again, this is a global phenomenon:
In developed countries, the share of labour income declined, falling by 5 percentage points or more between 1980 and 2006-07 — just before the global financial crisis — in Australia, Belgium, Finland, France, the Netherlands, Norway, Sweden, the United Kingdom and the United States, and by 10 points or more in Austria, Germany, Ireland, New Zealand and Portugal.
It is global because so many governments are following the same neoliberal economic philosophy.

If workers do not benefit from increased productivity that is not a ‘fair go’. As the ACTU report suggests, a ‘fair go’ involves profits and wages increasing at about the same rate as productivity, not one outpacing the other by a wide margin. Now, to return to a fair distribution of national income, the profit share needs to reduce, which is not going to happen under this government. So if people turn against Turnbull’s approach it will be obvious why.

The approach is justified by the ‘trickle down’ (or supply-side) theory in economics (see Ad Astra’s recent article here for an explanation), that claims supporting business, including big business, improves the overall economy — a rising tide for all. At least that’s the theory. As so much evidence shows, however, it does not work.

On matters like education and health, the Liberals prefer to follow their economic path focused on the individual and are only held in check to some extent by outcries from the Australian public that their approach is unfair. Their obvious preferred model is for privatised health and education based on the premise that the value people put on these is shown by the price they are willing to pay. They are undermining Medicare. They are reducing funding for hospitals and schools (a recent increase does not match proposed cuts already built into the budget). Yet they continue to spend $6 billion a year on a rebate for private health insurance.

Almost everything the Liberals are doing is undermining Australian communities and Australian society as a cohesive unit. Their philosophy, so centred on the individual and ignoring community support, social responsibility and the common good, is anathema to the ‘fair go’. Their focus allows them to ignore inequality because that is simply some individuals doing better than the rest. In their approach, it supposedly provides an incentive, a goal for those lower down to aspire to. They believe that aspiration will inspire people to work harder. Aspiration may have been valid when Australia had a more egalitarian range of incomes: if the CEO was only earning the equivalent of a few years’ wages of the worker, then aspiring to a similar lifestyle was an achievable goal but not when that gap can be 20 years or more, effectively requiring a lifetime's work just to come closer to the aspiration without being likely to achieve it. When an aspiration becomes unachievable or unrealistic it no longer has value but the Liberals don’t seem to recognise that.

The Liberals cannot honestly call on our community spirit when they are the ones undermining it.

In 2014, the Centre for Policy Development released a book Pushing our luck: ideas for Australian progress. Lindy Evans wrote in it of the need for a new Australian narrative. She asked for more emphasis on Australia’s democratic history: the radical path we trod in the late 1800s and early 1900s, giving women the vote and allowing ordinary people, not just an elite, to be elected to parliament. She related the story of an early member of the Australian parliament making a speech with holes in his suit pants because it was the only suit he had. The fact that Australia had the world’s first Labo(u)r government was no accident but a result of our founders ensuring that ordinary people were drawn into the political process.
The idea that human societies are not chained to repeating history and that we can create a better world runs deep in the Australian tradition. In recent years we have lost sight of how rare that philosophy was, and still is.
She called her approach ‘egalitarian nationalism’ and presented it as an alternative but inclusive national narrative to that of multiculturalism. But if the Liberals continue their destructive path, our chances of ever achieving that sort of uniting narrative, emphasising our egalitarian democratic values, diminishes by the day.

What do you think?
Can Australia retain the ‘fair go’ if the Liberals continue running the country?

What happened to Tony’s ‘Team Australia’?

Do readers have any suggestions for the post July 2 government that may help return Australia to a more egalitarian footing?

Let us know in comments below.


Recent Posts
Behind the NBN raids: hypothetically speaking
Ken Wolff, 25 May 2016
On Thursday 19 May the AFP raided the parliamentary offices of Stephen Conroy in Melbourne and the home of a political staffer as regards leaks from NBNCo. Next morning the AFP Commissioner maintained that there had been no political influence on the investigation, nor the timing of the raids, and that the relevant minister, the leader of the opposition, and even Conroy himself, had only been advised of the ‘investigation’ …
More...
What happened to us?
Ken Wolff, 26 May 2016
Tony Abbott liked to scare us with tales of violent terrorists coming to attack us and, therefore, requiring more and more security to protect us. Even if we thought he was crazy or going too far, at least he was addressing us. Think about Turnbull’s approach and ask where are the policies, even the broad approaches, that address us, the people and communities of Australia, and our needs.

Almost every decision is based on economic or fiscal policy …
More...
Turnbull's Australia Tax
2353NM, 27 May 2016
You may have heard of “the Australia Tax”. The term comes from the apparent difference in the price of a seemingly identical product sold apparently cheaper in another country than the retail price in Australia. Computer software and Apple products are frequently mentioned as being subject to this tax and while it really isn’t that simple, the impression that you pay more because you live in Australia is certainly there.

The problem in the …
More...

What happened to us?


Tony Abbott liked to scare us with tales of violent terrorists coming to attack us and, therefore, requiring more and more security to protect us. Even if we thought he was crazy or going too far, at least he was addressing us. Think about Turnbull’s approach and ask where are the policies, even the broad approaches, that address us, the people and communities of Australia, and our needs.

Almost every decision is based on economic or fiscal policy and every approach is predicated on supporting business. Funding for social areas of policy has been left at the levels of the Abbott government, cut again, or given only minor increases that do not match the previous cuts.

The one significant social announcement by Turnbull occurred soon after he became prime minister when he announced a funding package addressing domestic violence. That, however, was so soon after he became prime minister that it had obviously been in the making for some time previously, so he cannot be given any credit for it. Otherwise, there have been no announcements on social policy, no education policy, no health policy, no social welfare policy: each of these areas have only been considered in budget terms to address fiscal policy.

Turnbull’s major policy announcement was the National Innovation and Science Agenda in December last year. At the launch of the policy he did say:
It is believing in our human capital and remembering that the best assets we have, the most important assets we have in this country are not to be found under the ground, but walking around on top of it is the 24 million Australians, the men and women of Australia, these and their ideas are what secures our future. And this package will incentivise, dynamise [sic], energise that enormous opportunity.
Pyne, also at the launch, made clear, however, that this was ‘the centrepiece of the Government’s domestic economic policy agenda’. Despite recognising that people are central to economic activity, the innovation agenda remains an economic policy, not a social policy.

The government sees its role as supporting innovation:
… by investing in enablers such as education, science and research, and infrastructure; incentivising business investment; and removing regulatory obstacles such as restrictions around employee share ownership or access to crowd-sourced equity funding.
An emphasis on STEM education could be seen as having some social elements (Shorten had also spoken about that seven months earlier in his 2015 budget reply speech) but it is only as an adjunct to economic policy. Turnbull sees it as necessary for the jobs of the future but, as some have pointed out, there will be students who may need some, but not high levels, of those STEM skills, who wish to be plumbers, bricklayers and similar tradespeople. We will certainly still need such tradespeople into the future. Not everyone will be an entrepreneur or be starting high-tech companies. Turnbull just doesn’t seem to see that side of life. He sees such tradespeople only as small-business people and, while that may be true for a significant number, there are also many others who are employees of both small and large businesses. Where do they fit in Turnbull’s vision? Does he recognise that we actually have a shortage of skilled tradespeople as reported by the Department of Employment in February? Why don’t we also have a focus on training more people for the trades rather than his continual focus on high-tech start-ups? His only approach to the trades is the re-introduction of the Australian Building and Construction Commission!

A major focus of the innovation agenda is changes to the business environment by such measures as a tax off-set for early stage venture capital, changes to the ‘same business test’ for tax losses and reforming insolvency laws. The idea is to encourage investment in risky undertakings and encourage risk taking and entrepreneurial activity — a cultural shift as he termed it. Turnbull said:
This is not just a list of measures and incentives and the levers that government pull, this package is designed to inspire. It is designed to lead. It is designed to encourage every single business, large or small to be more innovative, to be more prepared to have a go at something new because in the world of the 21st-century, in 2015, that is how you prosper.
Although the Abbott government had cut research funding, the innovation agenda returns some of that money but places a greater emphasis on research collaboration between businesses and universities and scientific bodies for that funding. It is creating a $200 million innovation fund within the CSIRO but the government is providing only $75 million of that (and providing only $5 million a year) and the balance is to come from the CSIRO’s WLAN licence fees and private sector support. Pure scientific research is taking a lower priority and yet it is such research that sometimes makes the breakthrough that leads to other developments that can then be utilised for commercial purposes.

On the other hand, out of the $1.1 billion for the innovation agenda, most of it ($814 million) is actually for existing projects that would likely have received ongoing funding in any case — the Australian Synchrotron and the Square-Kilometre Array. So even Turnbull’s commitment to the innovation agenda is a little misleading.

The innovation agenda also gave birth to the jobs and growth mantra: ‘innovation for jobs and growth’.

Just prior to the election announcement Treasurer Scott Morrison presented the budget but said it was not a budget but ‘an economic plan’. He went on to state:
Australians know that our future depends on how well we continue to grow and shape our economy as we transition from the unprecedented mining investment boom to a stronger, more diverse, new economy.

They know that their future, their jobs and those of their children and grandchildren depend on it. This is a very sensitive time.

Australians have clearly said we must have an economic plan to make this economic transition a success.

This economic plan is the foundation on which we can build a brighter, more secure future, in a stronger, new economy with more jobs.
No mention of social issues.

The focus of the budget is on business: its key initiative is the ten-year reduction of company tax rates (at a cost of $48 billion). Like the innovation package, it is meant to support ‘jobs and growth’ but will also ‘increase real wages’ according to Morrison. The argument used by the government, and supported by many business groups, is that a tax cut will encourage re-investment in and expansion of businesses, leading to additional jobs. Although businesses continually argue this, it is not supported by history. Company tax for small businesses has already been reduced from 30 cents to 28.5 cents in the dollar from 1 July 2015. Historically, company tax has come down from 46 cents in the dollar in 1980. But we are now (again) suffering high unemployment and slow job growth, so why will an additional cut change anything?

The one announcement that may have a social aspect was:
… a new initiative to help more than 100,000 vulnerable young people into jobs, to be part of our growing economy by giving them real work experience with real employers that lead to real jobs.
But as that statement implies, it is all about economics, not the assistance those ‘vulnerable’ young people may actually need. Some may require health and social support before being ready for employment but that does not enter Turnbull’s nor Morrison’s thinking.

Some additional money was provided in the budget for hospitals and schools but it did not make up for previously foreshadowed cuts and was addressed primarily within the fiscal policy of the budget. The government had earlier announced that it would not meet the final years’ funding for education under the Gonski funding model: that model focused additional funding towards the most disadvantaged schools and students. ‘Gonski’ was clearly a social policy (with economic benefits from a more educated population) but the government’s approach shows that it is not interested in social policy — only economic and fiscal policy.

The same can be said of the government’s approach to health: it is primarily based on fiscal policy (and ideology favouring private health providers). There have been continual cuts to Medicare, through freezing the indexation of rebates, and to hospital funding — on 23 May Health Minister Sussan Ley revealed that it was, indeed, the Treasury and Finance Departments not ‘allowing’ her to end the freeze on Medicare rebates. While the government emphasises economic policy, its approach to health ignores that a healthy workforce is also essential to economic activity.

Turnbull and Morrison claim they are providing record levels of funding for health and education but, given inflation and the fact that government revenue usually increases each year (only the rate of increase varies dependent on the health of the economy), such a statement is no better than stating they are providing more funding than in 1960.

In announcing the election Turnbull continued to ignore social policy:
At this election Australians will have a very clear choice; to keep the course, maintain the commitment to our national economic plan for growth and jobs, or go back to Labor, with its higher taxing, higher spending, debt and deficit agenda, which will stop our nation’s transition to the new economy dead in its tracks.
In Turnbull’s mind there is obviously no room for Labor’s spending on social issues. Such spending will undermine his grand vision of an agile and innovative economy. He went on:
We have an economic plan for growth and jobs. Every single element of it is designed, is calculated, determined, to deliver stronger economic growth and more jobs for Australians. On the other hand, our opponents are promising to increase income tax, they are opposing a tax cut for Australian businesses.
Of course he fails to mention that, after ten years, his business tax cuts will apply to all businesses, including the 6,000 odd large businesses in Australia and the multi-nationals operating here. He fails to consider that some of the $48 billion it will cost could have been used for hospitals and schools. Simply improving business conditions and encouraging business growth does not support people who need the welfare and other services provided by government.

Even his attack on Labor’s negative gearing policy included that it was ‘blocking the road to entrepreneurship’. As a former entrepreneur himself, Turnbull seems to see that as the height of human achievement.

I was surprised that it actually took Barnaby Joyce, in his brief election launch following Turnbull, to add a human dimension to the LNP’s approach. He actually spoke about people and about politicians as people:
“We see the future of our nation through the regional towns and making sure that the problems in their lives, the concerns of their lives, are dealt with in a way that truly reflects the dignity of the people and how seriously we hold the job that they do. We have proven ourselves but we are merely at the start.”

He says he is looking forward to voicing the concerns of the Australian people in a sometimes fun, unscripted way.

“Making sure that we walk humbly with our people, not in a way that doesn’t let us have fun, not in a way that doesn’t mean that we are not, you know, turn(ed) into some peculiar creature that is completely scripted.”
What Turnbull is missing by his single-minded focus on the economy and business is that a strong economy is supported and underpinned by strong social policies: an education and training system that provides skilled workers and skills for young people entering the workforce (for all levels of jobs); a health system that keeps the workforce healthy and productive; a welfare support system that gives people the resources to be able to re-enter the workforce if they are able. Other social issues also have economic effects such as when people leave the workforce to care for aged parents or sick children and social policies should be in place that recognise this.

Even the concept of ‘healthy’ communities is important. If our communities are falling apart from lack of amenities, or even social dislocation, then that will also impact the economy. If communities are not willing, or are unable to work together, we will not even have a functioning society.

In other words, everything is intertwined. We need good social policies for what they deliver and achieve in their own right but, even in Turnbull’s terms, we need them to support the type of economic policy he is advocating. Why doesn’t he understand that?

Given Turnbull’s approach, Labor’s policy catch-cry, ‘putting people first’, may have some resonance. At least it is recognising ‘us’.

What do you think?
Will Turnbull’s blindness as regards social policy come back to bite him?

Is Labor enhancing its electoral chances by focusing on people?

Let us know in comments below.


Recent Posts
Dead cats and reset buttons
23535NM, 23 May 2016
Let’s not give further oxygen to Immigration Minister Peter Dutton’s nonsensical, bigoted and racist comment the other day regarding refugees coming to this country, taking our jobs and adding to our unemployment queues. Apart from the obvious flaw in the argument (if you lower yourself enough to call it that) how can people that are taking our jobs add to our unemployment statistics at the same time? Dutton’s outburst is factually wrong on so many levels
More...
Hordes of illiterates
Ad Astra, 24 May 2016
If you had to pick a minister to deliver a nasty message, you would not go past Peter Dutton, master of cruel comments, replete with his trademark po-face and matching body language. Last week, on Sky News, responding to the suggestion by the Greens that we should up our refugee intake to 50,000, his comment was: “They won’t be numerate or literate in their own language, let alone English. These people would be taking Australian jobs, there’s no question about that.
More...
Behind the NBN raids: hypothetically speaking
Ken Wolff, 25 May 2016
On Thursday 19 May the AFP raided the parliamentary offices of Stephen Conroy in Melbourne and the home of a political staffer as regards leaks from NBNCo. Next morning the AFP Commissioner maintained that there had been no political influence on the investigation, nor the timing of the raids, and that the relevant minister, the leader of the opposition, and even Conroy himself, had only been advised of the ‘investigation’ …
More...