Beware, there is a plan


There is much talk about the ‘chaos’ of the Abbott government but take a close look at what has been done, what it is talking about, and the reports it is gathering together. We need to look beyond the political catch-cries of the ‘debt and deficit disaster’ and ‘Labor’s mess’ and examine what is driving this government.

A simple starting point that helps explain Hockey’s 2014-15 budget is his mantra regarding the ‘end of the age of entitlement’. After obtaining government, and refusing assistance to SPC early in 2014, Hockey rolled it out:

Treasurer Joe Hockey has bluntly warned Australians that the days of governments saving businesses and jobs had passed, telling them, ''the age of entitlement is over, and the age of personal responsibility has begun''.

For Hockey that was not something new but something he brought to government with him. He had spoken about it earlier, while still in opposition, in a speech in London in 2012 and he did not abandon it. (I think many politicians have a rigid agenda about at least one item that they return to in one form or another: just as Peter Reith, even now as a political commentator, continually returns to the need for labour market reform.) The underlying message of Hockey’s ‘end of the age of entitlement’ is that there will be no more ‘socialist’ welfare policies. It is a clear catch-cry that government provided welfare is ‘socialist’ and discourages the independent, self-interested economic spirit which his, and the current Liberal party’s philosophy is based on. As Hockey said in London:

Entitlement is a concept that corrodes the very heart of the process of free enterprise that drives our economies.

In that approach everyone has to pull their weight, that is work, and get ahead by their own effort. It actually follows, in a slightly twisted sort of way, that government support (‘entitlement’) for the top of end of town is ‘good’ because it supposedly promotes economic activity that, in turn, provides the jobs that the otherwise lazy ‘dole bludgers’ require when they no longer have an ‘entitlement’ to socialist welfare. But Hockey did also warn that businesses need to be viable and not expect government assistance — it is just that not every member of the government agrees with him, particularly the Nationals when it comes to supporting farmers.

At the end of March, Hockey released the government’s tax paper. While he claimed everything was ‘on the table’, a number of commentators did suggest that it was primarily about increasing the GST, either in nominal value or the range of goods and services covered, or both. Even if we try to believe that the government will look at issues like ‘negative gearing’ and concessional tax rates for superannuation, we can’t be sure because Abbott continually repeats one of his new three-word slogans that under his government taxes will be ‘lower, simpler, fairer’. And he consistently promises that company tax will be lower: although company tax has provided as much as 25% of government revenue it currently provides about 18% (or about 22% if we take out the GST, which we must remember all goes to the states and territories and adds nothing to funding of commonwealth spending); so lowering the company tax rate requires higher taxes elsewhere or more cuts to government spending — no prize for guessing which way this government will go. Why was the government apparently so keen to increase the GST when it gains nothing from it? (Although the government has currently ruled it out because it cannot get bipartisan support, it has managed to put it in the public arena and it is being discussed, so I think it will raise its head again — read on.)

The answer lies in another White Paper the government is preparing on ‘federation’. Its purpose is described as follows:

Increasing overlap between the roles and responsibilities of all levels of government over recent decades has undermined the efficiency and effectiveness of our Federation. Hence, the Prime Minister and the Premiers and Chief Ministers have agreed that the Reform of the Federation White Paper should focus firmly on clarifying roles and responsibilities between different spheres of government and the need for all levels of government to coordinate action to ensure the best possible results for citizens.

A discussion paper was issued in February this year which raised the problems of vertical fiscal imbalance (VFI):

VFI refers to the mismatch between the expenditure responsibilities of the States and Territories relative to the revenue they raise, making them reliant on transfers from the Commonwealth to finance their activities. Around 45 per cent of total State and Territory revenue now comes from the Commonwealth (including the GST), although this varies across jurisdictions.

The existence of VFI is not necessarily a problem in itself, but a high degree of VFI creates perverse incentives for both levels of government. It allows the Commonwealth to act in ways which can compromise the autonomy of States and Territories in their own sphere, thus creating confusion about democratic accountability. A high degree of VFI also creates incentives for the States and Territories to blame the level of Commonwealth funding for problems in State-delivered services, rather than to make the case to their own electorates for raising more funding from their own revenue sources. [emphasis added]

Now you can see why increasing the GST is important. It is not directly for the federal government but will allow the federal government to pull back from services under the control of the states, particularly in health and education. In March 2012 Abbott told the Victorian Employers’ Chamber of Commerce and Industry, in discussing his plan for a Commission of Audit when in government:

"Other questions that the Commission of Audit might ponder could include: whether the federal Health Department really needs all 6000 of its current staff when the Commonwealth doesn't actually run a single hospital or nursing home, dispense a single prescription or provide a single medical service?

"Whether the Federal Education Department really needs all 5000 of its current staff when the Commonwealth doesn't run a single school?” [emphasis added]

So for Abbott and Hockey the two papers are linked. Abbott can keep his promise to lower commonwealth taxes because his government will be providing less assistance to the states, other than through redistributing the GST (they hope for an increased GST). No need for commonwealth support of hospitals or schools because they are not commonwealth services.

And how many other commonwealth government services can he be rid of? The answer lies partly in deregulation and privatisation. During the Howard years, Peter Reith said that if a service was available in the Yellow Pages, there was no need for government to provide it. They applied that to IT services and outsourced departmental IT services and created a host of problems. Similarly they privatised employment services. While that still costs the government money, it has faith, because it believes in market liberalism, that such services are more efficient and cheaper. I won’t go into the argument as to whether or not that is true but only make the point that it is an underlying belief of recent Liberal governments.

Although ‘post and telegraph’ was specifically mentioned in the constitution as an area of commonwealth responsibility (that is, for which it could legislate), we have seen that power used to privatise most aspects of those services. The same goes for banking which was deregulated and the government-owned Commonwealth Bank sold off.

Now we have this government, with Pyne leading the charge, attempting to deregulate another sector: higher education. If it is successful, it will further reduce federal government funding for the sector and reduce commonwealth revenue requirements — allowing more room for ‘lower’ taxes. Universities were originally established under state legislation and it was not until after WWII that the federal government moved into the area to fund the demand for teachers to meet the needs of the ‘baby boomers’ and also to enhance education for the post-war reconstruction. It was not until 1974 that the commonwealth assumed full responsibility for universities (and the establishment of CAEs under the Whitlam government). Now with that power, introduced by a Labor government, Pyne and Abbott look to dismantle the system and effectively privatise it. Universities are already largely independent and this will make them more so without the constraint of meeting government funding requirements: it will also reduce, if not remove, the capacity for government to influence requirements for the broader economy — as was done with the post-WWII need for teachers — but that also fits the plan as it will be the market determining what professional skills are required and what it will pay for universities to provide them. It’s a shame that there is not a ‘market’ for teachers in the public sector — no, that will be totally up to the states under the Abbott/Hockey plan.

Part of the reason the commonwealth government moved, over the years, into areas like health and education was to ensure some form of national consistency or, as in the case of universities, to meet particular national needs. A prime example was in trade-training (provided largely through TAFE at the state level). For many years there was a ridiculous situation (that almost everyone knew was ridiculous) that a tradesman, say a plumber, in one state could not operate in another state unless he went through a process of registration in that state to recognise his qualifications — and if the plumber moved to yet a third state, he would need to go through the process again. Simple enough one would think but the states demanded more money to make the necessary changes. A similar process occurred in the more recent development of the national curriculum for schools when the states also sought more money to implement it. So, if the commonwealth has moved into such areas, it has often been for good reason and it was the states that demanded commonwealth funding as part of the price of their agreement.

It is true that the federal government does not have specific power to make laws about schools and hospitals, except to the extent that the states agree, but while it controls the purse strings, it obviously can have an influence and, as was done in health, link funding to the achievement of particular outcomes and attempt to ensure that the outcomes are consistent at a national level. And, in some areas, like the environment, it can call on its ‘foreign affairs’ power in terms of meeting international agreements to which it is signatory (which was how the Franklin dam was stopped — a valid commonwealth law over-rides state law to the extent to which the two are inconsistent). But the Abbott plan sees no need for the commonwealth government to exercise such powers and would prefer to leave the environment to the states.

So beware, this government is not as shambolic as it sometimes appears. It wishes to deregulate and privatise and hand as many services as possible to the market; it will hand back as many public services as it can to the states on the pretext that the states should be responsible to their own electorates for the costs of education, health and similar services. Abbott may be able to provide ‘lower, simpler, fairer’ taxes because the federal government will be providing little in the way of services. He can increase the GST and argue it is because the states need the money, not his government, and boast that he can lower taxes but that will only be for the commonwealth: it is likely that state charges will need to rise to meet the additional fiscal responsibility they will have to take on — so individuals may be no better off, perhaps even worse off. But that is consistent with the overall plan, the neo-liberal plan of lower taxes and small government, at least at the commonwealth level where Abbott and Hockey can apply it.

With that approach, perhaps we won’t need a federal government other than for defence, foreign policy, astronomical and meteorological observations, post and telegraph, and lighthouses. That rings a bell — something in our original constitution!

Floating above the economic approach, we have Abbott’s moral view of ‘Team Australia’, a white Australia that was only ‘bush’ before the arrival of the first European settlers, that requires values acknowledging the role of knights and ladies, that considers ‘work’ is the only validation of a person’s worth to society — unless of course you are rich and helping the economy in that way (whatever way that is — perhaps spending money on Qantas flights to travel to the casinos of Monaco!)

There is no room for ‘leaners’ in Abbott and Hockey’s plan; no room for ‘entitlement’ (aka ‘socialist’ welfare); no room for government services that the market can provide; no room for public services that the states can provide. It is the age of ‘personal responsibility’: bugger the ‘fair go’ and government assistance, you have to look after yourself! And as a result, the commonwealth government will proudly offer you lower income and company taxes — even if the states have to raise theirs.

Yes, there is a plan but not one that we can look forward to. Little wonder they don’t spell it out!

What do you think?

About Ken

Ken thinks Abbott and Hockey do have a plan. Perhaps not a good one but at least a plan — or perhaps we should call it a ‘hidden agenda’ since they won’t talk about it. Let us know whether you think Ken is right.

Next week 2353 looks at ‘The saga of Billy Gordon’ and raises important issues about where we should draw the line regarding a politician’s past indiscretions and their use for political purposes.



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Ad astra

26/04/2015Ken Thank you again for a learned treatise, plumbing as it does the depths of the Abbott government’s clandestine plan to reduce its responsibility for overseeing and funding key sectors of our economy, such as education and health. What you argue seems plausible, and entirely consistent with the stated beliefs and actions of Abbott and Hockey. To me, it has always been apparent that their actions, though at times barely credible, are consistent with an underlying political and economic philosophy that is built upon neoconservative free market beliefs, beliefs best spelt out in all its harsh detail in the IPA wish list for our federal government. Hockey’s philosophy of ‘the end of the age of entitlement’ translates in the vernacular into the disparaging term ‘leaners’, and the laudatory term ‘lifters’; the former despised bludgers, who are a burden on our society; the latter fine individuals and groups who must be encouraged and supported because they are the job and wealth creators from which benefits trickle down to those at the bottom of the pile. In my view, these philosophical constructs are so embedded in Abbott and Hockey’s personas that they condition all they, and their sycophants, say and do. No amount of evidence-based logic will change their minds. Reason will not work. What you have done Ken is to offer the view that rather than the random utterances and erratic actions of the leaders of an incompetent and dysfunctional government, what Abbott, Hockey and his senior ministers say and do is simply the outward manifestation of a furtive plan to implement a dogmatic neoliberal ideology to which they are captive. Which leads me to ask: ‘Is this a process of which these players are overtly conscious, or are they so indoctrinated with neoliberal ideology that they act like daleks, robotically reciting their neoliberal mantras, and mechanically acting in tune with them? What do you think?

ad astra

26/04/2015[b]Folks You will have noticed that [i]TPS[/i] looks different today. Web Monkey has upgraded it to the same version of BlogEngine.NET that [i]TPS Extra[/i] uses, so that both sites of the one blog now look similar. We hope you will find the new look attractive and easy to use. It is designed to make flicking between [i]TPS[/i] and [i]TPS Extra[/i] easy, convenient and intuitive. The main site of [i]The Political Sword[/i] will continue to feature well-researched pieces of a philosophical nature each Sunday evening, while [i]TPS Extra[/i] will offer topical pieces on the hurly-burly of day-to-day politics. We hope you will get into the habit of flicking from one to the other to enjoy the pieces on each. Please comment on either, or preferably on both sites. The process is the same. [i]The Political Sword[/i] has gone up a notch today; we hope it appeals to you. [/b]

Chris

27/04/2015The new site design looks OK, but the text is quite small, and won't resize on an iPad (my main reader). It would be good if you could make it resizable.

Web Monkey

27/04/2015I have updated the site so mobile fonts are now larger and quite easy to read on an iPhone. You can now also resize the screen (mobile devices). WM

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27/04/2015Chris I'm glad you like the new-look design of [i]The Political Sword[/i]. I've referred your comment to the site administrator, our beloved Web Monkey, who has give a lot of thought to the re-design. We'll get back to you regarding text size.

Ken

27/04/2015Ad You may well be right that the Abbott/Hockey approach is just embedded in their psyche. But I certainly think it is a very conscious part of the plan to work towards an increase in the GST and so pull back from commonwealth funding of health and education - which is reflected in the 'tax' and 'federation' papers. What Abbott doesn't appear to realise at the moment (being so obsessed with lower taxes and small government) is that if his plan is carried out he will have less room to provide pork barrelling - as he did with offers to fund hospitals in Tasmania. And that woould have an interesting impact on electioneering.

ad astra

27/04/2015Ken You may be right. Abbott is probably not thinking as far ahead as his electioneering tactics, so he may be in for a rude surprise when the time comes!

2353

28/04/2015Ad - while Ken successfully argues the case that Abbott has a plan, I wonder if he has found out that it looks a lot easier to implement a plan when you're sitting outside the office looking in.

totaram

28/04/2015Implementation of the full plan may be difficult, but death by a thousand cuts is equally effective. Just check how much of the 100 point plan of the IPA has already been implemented. And don't forget the subtler aspects of the "culture war" which lays the ground for future action. Lomborg and ANZAC day, museums in France, are all part of that. Australia has spent lavishly on this ANZAC centenary, even as money for other services is cut.

Ken

28/04/2015totaram I agree entirely and only space prevented a longer exposition. As you say, and as has been discussed previously, the IPA has a big influence in all this. And, yes, the 'culture wars' can be seen as part of the process, softening up the electorate - even the children. When you put it all together, as you suggest, it is even scarrier.

patriciawa

28/04/2015ad astra noted "You will have noticed that TPS looks different today........." I much preferred the straightforwardness of the one old Political Sword and the lucidity of your posts, AA, as well as the formatting of Lyn's links! You had quite a following back then! Lovely to exchange thoughts with what felt like old friends. I've noticed the falling off of visitors with regret, though I do come back now and again hoping to recapture some of that earlier buzz, but......... I thought some of my resistance to TPS of late was just an 'oldie's' knee jerk response to change at one of my favorite sites. I had already noticed my similar reaction to the much busier AIMN and Miglo's seeming to leave Cafe Whispers to its own devices. But I think it's because when something is good, a bigger version of it isn't necessarily better. The print size wouldn't be a problem if it could be adjusted without having to leave the screen. I imagine web monkey can explain why if that's not possible.

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29/04/2015Patriciawa I do understand your yearning for the yesteryears when there was a large following on [i]The Political Sword[/i] and many, many comments in the years leading up to the 2013 election. When the government changed hands in 2013, both Lyn and I felt it was time to step back, as we had devoted a lot of time to [i]The Political Sword[/i] for several years, and felt we needed respite. Some of our regulars were concerned that [i]TPS[/i] might fade away, as other sites have, so Jan Mahyuddin (@j4gypsy) mobilized an excellent team to continue the site. She was joined by Bacchus who does much of the administration and the coding of pieces, and by two excellent authors, Ken Wolff and 2353, whose experience in the public service gives them special insight into how governments function. They have written most of the pieces on [i]The Political Sword[/i] since I stepped back. As they are still engaged in regular work, because their time is limited it was decided that one piece per week, posted on a Sunday evening, would be all that was possible. You have seen their work: erudite, well-researched and referenced, informative, educational pieces that have addressed many of the basic tenets of political life in this nation. I have enjoyed reading them and have learned much from their writings. Casablanca took over where Lyn left off and produced her regular Casablanca’s cache, sometimes several per week. They were aggregated in the Page List on the previous [i]TPS[/i] site. We will offer sometime similar on the new-look site when the development process is complete. You can still access her Cache, as well as Lyn’s Links Archive, by using the search facility. Casablanca will still post her Cache in 'Comments' when sufficient material presents. When the Abbott government showed us how incompetent it was, when Abbott himself made mistake after mistake, day after day, there was so much to write about contemporary politics that I thought it would be useful to create a sister site that could respond quickly to the unfolding chaos in Canberra. Thus [i]TPS Extra[/i] was conceived and born. It has the same blog engine as [i]TPS[/i]; the two sites function the same. Since then I have written many pieces for [i]TPS Extra[/i], sometimes several in a week, but mostly one or two a week. They are not heavily referenced; they are simply quick responses to day-by-day happenings. I imagine that when the 2015 budget session starts in May there will be plenty to write about as Abbott and Hockey struggle to redeem themselves after their poorly received 2014 budget. Although the number of comments is not large on either site, the ratings are good and the traffic stats show that many visit to read what is offered without commenting. Figures on similar sites suggest that as few as one in a hundred who visit leave a comment. At present, as I’m moving house, I’ve been preoccupied with that process, but when that’s finished I’ll have more time to write until I travel north in June to visit some of the family. We are all working only part-time at [i]TPS[/i], but will try to keep the site interesting and vibrant. To get the most out of it, I suggest you look first at the weekly piece on the main site of [i]The Political Sword[/i], and comment there, then flick across to [i]TPS Extra[/i] by clicking the [i]TPS Extra[/i] icon at the top right of the main site to see what’s there. You can switch from one site to the other easily by clicking the other icon, and you can comment in both places in the same way. Web Monkey has adjusted the print size, so I hope you are now finding it easier to read. I do hope we can continue to provide you and other readers at [i]The Political Sword[/i] with contrasting pieces, some more philosophical in nature on the main site, with shorter opinion pieces on contemporary political affairs on [i]TPS Extra[/i].

TalkTurkey

29/04/2015Hi Comrades I agree with all the comments by all the people here above! First, Ken, I agree with you. Though maybe the Right is as dim as an earthworm in its apprehension of the greater movement of species towards more complex forms, it still will always grope its way towards the dark side of a Y-maze. Maybe that is the sum total of its *plan*, but it is always there, slowing or often reversing the conscious effort of more advanced forms of life to seek the light. I agree with Ad astra too: what you have said has been and always is evident in all neo-con pressure: it's why *J*U*L*I*A* & her front bench could warn with perfect confidence that the LNP would bring back Work Choices in whatever guise it could be disguised, and why one can always tell which way they could grope as a group. But totaram (to whom Welcome btw!) nails the awful truth, that the direction of their grope is made explicit in the IPA's 100 Points, and that many of those points are either achieved already, or are on the way to it. And many, once achieved, can never be reversed. Patriciawa, delightful to see you & Tacker, and Yes I must agree, I liked the old format of TPS with Ad astra leading the discussion too ... But for his own reasons he prefers to take a back seat and to write a parallel column TPS Extra dealing with the hurly-burly of day-to day politics as he says. But times have changed since *J*U*L*I*A*s time in office.In one way in particular, I actually predicted the current slump in contributions on such sites as TPS, and my prescience was based on actual precedent: I was an early user of CB Radio, which similarly had a brief but spectacular flowering in the early 80's. Every night the airwaves were crammed with people talking to people - nice people too mainly, though there were "bucketmouths" (akin to SM "trolls") who did their best to bugger up other people's QSO's (conversations.) CB raged for a couple of years, then came a time when within a couple of months the craze was over and CB just died. One can never tell what will be the shape of future Social Media. But I will always value the commentary to be found here on TPS, especially that of its founder. And it's less than 18 months to The Election. So be staunch, Comrades, never forget to Maintain the Rage, VENCEREMOS!

ad astra

29/04/2015TT Your words of wisdom always strike a respondent chord in me. Maybe when the end of Abbott, Hockey, Pyne, Hunt [i]et al[/i] is imminent, the voices stilled during the Abbott years will again be raised in protest and keen anticipation of a change to a government so much better than this one. VENCEREMOS indeed!

DoodlePoodle

2/05/2015Do you think this is part of the plan?? http://www.heraldsun.com.au/news/opinion/all-signs-point-to-liberals-in-poll-position/story-fni0fha6-1227330843327

Ken

2/05/2015DoodlePoodle Interesting speculation by Laurie Oakes. As he points out near the end of the article, a double dissolution would probably require reform of senate voting beforehand - otherwise Abbott ends up with even more minor party representatives. And I'm not sure that the Clean Energy Finance Corporation Abolition Bill is important enough for a double dissolution. It certainly provides the legal basis but may leave voters wondering why they need to vote again over a 'minor' issue. I agree with Oakes that the approach to the coming budget certainly has an air of an 'election budget' about it. And we also have to remember that the Governor-General has more discretion about agreeing to elections (he doesn't have to act just on the advice of the government as in many other issues). That gives him some power to stop governments going to early elections just because it suits them. It doesn't mean the G-G won't agree but he does have to be convinced that it is necessary.
How many umbrellas are there if I start with two and take 2 away?