31 December 2010
The beginning of the end of the Kevin Rudd era was deciding not to create either a tax or market mechanism to regulate carbon emissions (or call a double dissolution election to create a ‘mandate’ to do so) to deal with the ‘greatest moral, economic and environmental challenge of our generation’ following the failure of international talks in Copenhagen the previous December.
Kicking the ‘greatest moral challenge’ into the long grass established a meme of a government that overpromised and underdelivered, something exacerbated by problems with rolling out the ‘Building the Education’ revolution school building programme and the ‘pink batts’ debacle.
The Government’s problems were heightened by the proposed imposition of a tax on mining profits without following the usual protocols of fully informing affected taxpayers of the proposed change prior to announcing the proposed change.
This led to a highly aggressive attack on the Government by the mining industry and a broad view of a government in panic mode adopting populist policies without a full assessment of outcomes.
When all this was coupled with increasing discontent about a dictatorial Prime Ministerial style and a dysfunctional office, ‘the faceless men’ of the ALP backrooms moved to replace Rudd with Julia Gillard to improve a government that had ‘lost its way’.
An early election intended to cash in on the ‘honeymoon’ of Australia’s first woman prime minister was called. But there was no honeymoon.
The legitimacy of Gillard’s ascension weighed heavily on the campaign.
Moreover, the ALP always had an ‘upside down’ coalition of inner urban progressives who were increasingly supporting the Australian Greens.
They were challenged by an Opposition who had reduced their campaign to bite size slogans, such as: ‘we’ll end the waste. Pay back the debt. Stop new taxes. Help families. Stop the boats. Do the right thing’.
This led to a string of two bob each way policies that appeared to be designed by focus group – yes to an ETS….but only after input from a ‘citizens assembly’; offshore processing of refugees……but in East Timor and not Nauru; immigration was not about numbers coming into the country………..but merely where they lived. And so on.
Labor were finally buffeted by unprecedented leaks about Gillard’s position on issues such as paid parental leave.
Ultimately, the ALP steadied but the damage was done. It became a minority government reliant on the support of country and regional independents as well as the first Australian Green elected to the House of Representatives.
Having got to Christmas, the Government has tried to frame the debate by nominating that 2011 is the year of delivery and decision.
Labor hopes to deliver on broadband and health reform and make decisions on issues such as fiscal consolidation (bringing the budget into balance) building capacity on the supply side with tax, superannuation, infrastructure and skills initiatives and extending market-based reforms to health and education, carbon (despite promising not to during the election) and water.
It will be the ALP’s burden to ensure that ‘moving forward’ with this agenda will lead to policy and electoral success.
The Liberals had a reasonably good 2010. Largely through implosion of the opponent, it was able to get within touching distance of government on the basis of stringent opposition of government proposals and making its own pitch at a (very) high level.
It will be interesting to see how much policy meat is added to the slogan like bones offered up in the election.
The final point of interest was the Liberal Party (as part of a coalition with the National Party) winning its first state or territory election in 27 attempts when it won in Victoria.
The result appeared largely to be an ‘it’s time’ result. However, there were two federal lessons to be learnt.
The first was that in deciding not to provide the Greens any preferences, the Victorian Libs proved that you can take on the Greens without being seen as anti-environmentalist and suffer an electoral backlash.
The second lesson was that suburbia is feeling the pinch of high utility prices. This will be an increasing factor to take into account when ‘putting a price on carbon’ is ultimately unambiguously translated as being ‘increasing electricity costs’ as the carbon debate comes to a climax during 2011.
Something for the Feds to consider during the year of decision and delivery.
10 December 2010
At the start of December the political wing of the movement has had a lousy fortnight.
The Victorian Government fell.
The NSW Labor Party had to sack its party president when his union’s journal suggested it would support individual candidates from all political persuasions.
The South Australian Premier needed armed police protection to enter his own state conference to defend a union sponsored motion to dump his leadership and to defend the State Budget
Finally, a union affiliated with the Queensland ALP is thinking about standing candidates against Labor because of anger about the privatisation of assets such as Queensland Rail.
These states have (or had) long term Labor governments operating as being solid, conservative managers of the economy that moved to the centre on traditionally weak areas such as law and order and encouraged development whilst showing concern for the environment.
However, this model appears to have reached in use-by date, with the greatest pressure being placed on it by the ALP’s labour movement partner – the unions.
ACTU President Ged Kearney has publicly suggested that unions be prepared to criticise Labor publicly and be more independent of its traditional ally and her executive has endorsed a paper suggesting it be on a permanent campaign footing in a bid to advance an independent political agenda.
During the 20th century, There was a time that ‘the labour movement’ – the concept that permitted the representatives of labour and those who wished to express solidarity with the working class to operate within one political party – worked satisfactorily.
This meant in practice a coalition of employed workers and a professional class generally residing in the inner city.
However, the Greens ‘four pillars’ (ecological sustainability, social equality and economic justice, grassroots democracy and peace and disarmament and nonviolence) is an agenda increasingly appealing to a ‘progressive’ middle class constituency than one put out by a regimented party with 50% union control designed to achieve social justice primarily through the improvement of working conditions through the wages and taxation system.
At the same time both state and federal ALP governments are making decisions designed to introduce a ‘seamless economy’, including reforms designed to increase productivity – and as recent ructions illustrate, not every reform will be fully supported by unions as jobs and conditions come under threat.
The net result of trying to satisfy the social goals of the progressive professional classes and the industrial goals of the unions means that the ALP is not satisfying either part of its traditional disparate coalition.
Earlier in the year Dean Mighell openly questioned whether affiliation with the ALP remains in the strategic interests of the union movement whilst Michael Costa has again called for reform to remove the power of the union bosses.
In much the same way as there has been a ‘structural separation’ of the wholesale and retail arms of Telstra, any review of what constitutes ‘the labour movement’ may mean a structural separation of the movement’s erstwhile industrial and political arms.
As the traditional fault lines of labour vs. capital have blur to the point of being non-existent the unions can then prosecute the interests of members as they see fit, whilst the ALP can, should it choose, develop into a modern social democratic party so it can best compete in the Australian political market place of the 21st century.
10 November 2010
1. which level of government should have responsibility for particular public policy areas;
2. what taxation bases should be assigned to the states and territories; and
3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:
(a) indirectly, agreements made under section 96 of the Constitution; or
(b) a reference of power by the states to the Commonwealth or directly by the states or by constitutional amendment.
The political class really must come out one way or another and declare whether Australian States are either:
1. ‘incubators of innovation’ within a country where there is genuine ‘competitive federalism’ –where different jurisdictions will make different rules and regulations and have different levels of taxation, with each jurisdiction ultimately picking up what is ‘best practice’ or face the loss of people and investment; or
2. effectively English style County Councils providing a narrow range of services within an Australia with a single seamless economy with a centrally set of rules and taxation levels in force uniformly throughout the country.
The Senate has quietly formed a Select Committee on the Reform of the Australian Federation.
Only constitutional (and parliamentary) savants would have known that the Committee existed.
It would appear that some respondents are disposed towards something called a ‘Convention for the Federation’.
Others submissions are keen to ensure that the position of COAG within the federation is either formalised or, at the very least, clarified.
The Select Committee is currently to report by 17 November 2010.
In our view the work of:
(a) the Select Committee (and its submitters);
(b) the Henry Review on Taxation;
(c) the treasury heads report to be prepared for COAG; and
(d) a ‘Domesday Book’ which would look something like the List of Australian Government Bodies and Governance Relationships, and would assist in identifying what governments actually do and what duplications exist
would both form the basis of developing suitable terms of reference of a ‘Convention for the Federation’ as well as commence the conversation that would accompany the creation of such a body.
It will be interesting to see how reform of the federation will fare within Canberra’s ‘new political paradigm’.
He said in a recent speech:
Gleeson implicitly gives COAG the status of a parliament – something the political players have now tumbled to:
Both parties, nationally, seem determined to diminish and erode the powers of the states.
State governments must accept that the Council of Australian Governments will play an increasingly important role in formulating national policies. NSW must not abdicate policy development. We must be leaders and not followers. NSW must be represented at COAG by highly talented officers with passion, purpose and policies to ensure the state gets a fair go.
Critics of COAG have included Mr Barnett, who has said that COAG has become almost a new tier of government and lacks accountability and transparency. Mr Barnett has said that with 43 ministerial councils, it was too much....
A review of the COAG process is to be conducted by the heads of Australian treasuries.
The review will look at how well the interlocking COAG agreements are operating as well as whether there is a need for clearly specified responsibilities for governments as well as the development of sufficient performance benchmarks.
Unfortunately, one thing not reviewed is the overall capacity of the states and territories to fund any identified ‘clearly specified responsibilities’.
In that context it is interesting to see the emergence of the relationship between the payment of the proposed mineral resources rent tax (MRRT) and state based royalties as an issue.
According to the mining companies (BHP Billiton, Rio Tinto and Xstrata) a term of the document that allowed the ALP to say there was an ‘agreement’ about a mining tax before the election was a promise the Commonwealth would refund the value of state and territory royalties paid by the mining industry.
The Feds now claim that refunds will be paid on the basis of the relevant formula (or any announced variations) in force as at 2 May 2010 - the day the agreement was made was made.
This poses the question of what happens if a state increases a royalty amount.
The Sydney Morning Herald reports that the Government may withhold transfer payments to the States such as the GST if they effectively challenge the collection rate from the mining tax by increasing royalties.
We had anticipated this probable outcome:
The fact is the federal government requires a lot of money to fund the broad ‘social democratic project’ established by pl.51(xxiii) and (xxiiiA) of the Constitution –income transfer payments, health, hospitals and (undoubtedly in the immediate future) disability support and will need more money (and not less) as an increasing number of worthy needs are identified as requiring support in a country with an aging population and an atomising society.As The Australian reported, the WA Premier has made his views clear:
A simple illustration: an portion of the proposed RRT is to help ‘build the roads, rail, ports, electricity and water supply, and other facilities needed to unlock Australia’s resource wealth’.Like housing, health and education, these are subject matters formally considered to be largely state responsibilities increasingly falling under Commonwealth control.
The Feds will increasingly need tax revenues to fund their projects in these areas on their terms. Then there is the ‘seamless economy’ and the wish to remove duplication.
Currently, the Government proposes that miners pay both royalties and the RRT, with royalty payments a claimable tax rebate. But it won’t be too long before calls are made that this is an inefficient way of doing things – only one tax should be levied (in this case) on the extraction of minerals. There isn’t much doubt which tax will go. (our emphasis)
In its 28 October letter to the Policy Transition Group (the Committee assisting the Government in implementing the MRRT) the Chamber of Minerals and Energy of Western Australia’s (CME) makes some pretty obvious points:
Referring to the Rudd government's initial resource super-profits tax, Barnett says: ‘With 65 per cent of this revenue coming from Western Australia, it was seen as an attack on the mining industry and on our resource income base. People talk about these resources belonging to all Australians. Well, constitutionally, they don't. They belong to the people of each state.
In relation to state royalties, CME has always maintained a strong preference for retention of the current state regime, administered by the state government and with revenues flowing to the state. The state has prime responsibility for resource project approvals and the provision of non-privately owned infrastructure. As such, it is imperative the state government maintains and receives a dividend for WA resources.It is now reported in The Age that the Treasury ‘is considering using its tax power in the constitution to 'pursue unilateral legislation’ for poker machine reforms.’
Whatever the merits of having the Commonwealth regulate gambling, the decision again attacks the capacity of states and territories to make spending decisions confident that there is a stream of ‘own source’ income available to support the decision.
Whilst it may not be immediately apparent to the players, the issues of who does what in the Australian federation and how states should receive the funds to discharge ‘allocated responsibilities’ are now coming to a head.
NSW Labor leader Kristina Keneally is leading the most unpopular Labor Government in the history of Newspoll.
To stay relevant, she is playing to her core constituencies.
One of the ways she is trying to ‘save the furniture’ is to renege on promises made to accept changes to the NSW occupational health and safety (OHS) issue to permit OHS to be harmonised around Australia.
This is an interesting development. As we said at the time the OHS intergovernmental agreement was made:
It is disingenuous for Keneally to argue her position on not agreeing to harmonised OHS provisions is the same as WA. At least WA refused to sign the agreement. NSW folded.
As part of the (Workplace Relations Ministerial Council) decision, unions will not be able to commence prosecutions, and prosecutors must prove OHS offences beyond reasonable doubt – the Council expressly voted down the current position in NSW – making union stakeholders quite cross.
WA declined to sign the communiqué as they were unhappy about the use of conciliation to resolve OHS issues, the low standard of proof for workplace discrimination claims, union right of entry to workplaces and the level of gaol terms. It remains a question how much of the national model each jurisdiction takes into its own law, although it is noted that uniform OHS laws are one of those things for which states and territories receive ‘reward payments’ under the National Partnership to Deliver a Seamless Economy
As the Sydney Morning Herald said on 14 May 2009:
(Then Minister) Mr Tripodi said NSW was committed to harmonisation of legislation, and he was disappointed that NSW laws allowing unions to prosecute for safety breaches were not adopted.
As one would nearly expect the Prime Minister has threatened NSW its ‘reward payments', with the Prime Minister reported as saying that 'the Council of Australian Governments must work on the basis that jurisdictions honour their commitments.'
This yet again raises the issue of the proper function of COAG within the Australian federation.
This will be discussed in the next couple of articles.
Like Greg Combet, who has called for Labor to ‘redefine itself as progressive with the core value of equity, social justice and compassion’ Cameron is concerned the party is losing ground to the Greens.
He called for the Left in the party to be able to ‘speak effectively to progressive people who are looking for a vision and a strong strategy for progressive policies.’
However, as reported by the Sydney Morning Herald:
New party rules introduced by Mr Rudd, which were designed to present a united front by stopping MPs from speaking against a Caucus position, worked in the government's favour early on but ended up costing the party.
‘There are many people within the Labor Party holding strong progressive points of view and progressive voters don't know this,’ he said.
‘The pledge system and the party system just puts a blanket over every different point of view.‘Everything is focused on the spin and on the take of the day and long
term strategic policy decisions suffer because of that.’
Prime Minister Julia Gillard said in response to the Senator's comments that she made it clear to Caucus she wanted more debate and new ideas about policy direction. But the pledge system would stay, Ms Gillard said.
One of the reasons that Australian politics is the most rigid in the world is the because of ‘the pledge’: the promise that ALP members make to uphold the party platform and to follow decisions made by Caucus.It is this practice that has provided Australia with the most rigid party system in the Westminster world.
This may have been appropriate once upon a time where one centre left party opposed a single coalition of the centre right, but may be less appropriate now.
As we have previously observed:
The ALP voting coalition has hitherto consisted of self identifying members of the labour movement, people with English as a second language, income transfer recipients, public sector workers, the arts sector and high income professionals who are both secularist and internationalist in orientation.However, the Greens message - guided by the so-called ‘four pillars’ (ecological sustainability, social equality and economic justice, grassroots democracy and peace and disarmament and nonviolence) is apparently more amenable to a ‘progressive’ middle class constituency than one put out by a regimented party with 50% union control designed to represent the ‘labour movement’ and achieving social justice primarily through the improvement of working conditions and changes to the wages and salaries system.
Despite winning the federal election, the ALP looks like they are going through the introspection usually undertaken by the losing side.
Eyes now turn to Victoria, where the Greens could get up to 19% of the vote and a number of seats in the Legislative Assembly – possibly even holding the balance of power.
This will mean the ‘quo vadis’ question being asked with increased vigour.
As Labor voters from the ‘moral middle class’ feel able to vote Green the traditional ALP ‘upside down coalition’ of social progressives and the traditional ‘working class’ is now under great strain.
Rather than claiming to be in favour of ‘equity, social justice and compassion’ (which sounds as meaningful as being in favour of ‘truth, justice and the American way’) Labor will need to redefine what ‘the labour movement’ – the concept that permitted the representatives of labour and those who wished to express solidarity with the working class to operate within one political party - means in the 21st century.
This would be advanced by open public discussion of policy and political options – the idea of smothering debate may not be helpful.
Antony Green has observed that the NSW ALP now has the same voter share as the party had in 1904, with the current mob possibly being the last ‘in its own right’ Labor government in the state.
If the Party gets the redefinition of what the ‘labour movement’ means wrong, this could be their fate everywhere.
11 October 2010
KERRY O'BRIEN: This is your first overseas trip as Prime Minister. There must be something of a sharp learning curve in all this for you. All domestic portfolios until now; suddenly you're meeting 11 world leaders in a day. Have you found your comfort zone yet?
JULIA GILLARD: Oh, look, Kerry, I'm obviously working my way through. Kerry, I'm just going to be really upfront about this: foreign policy is not my passion. It's not what I've spent my life doing. You know, I came into politics predominantly to make a difference to opportunity questions, particularly make a difference in education. So, yes, if I had a choice I'd probably more be in a school watching kids learn to read in Australia than here in Brussels at international meetings. That's what took me into politics, that kind of education work. But obviously in this role I will serve as Prime Minister doing the full job, and the full job includes coming to places like Brussels to be a feisty advocate for Australia's national interest. And that's what I will do. It's what I'm doing here.
This is no surprise to us. As we said earlier:
Gillard is very much, as Trevor Cook put it, one of Whitlam’s grandchildren:
Throughout his political career, Whitlam pursued a philosophy of “positive equality”, and he sought to change the national debate and the role of the national parliament.
Positive equality is not about the old battles between capital and labour; it is about removing barriers to self‐improvement and overcoming disadvantage and deprivation through national approaches to policy areas like health, education and transport that emphasise universal access. For Whitlam, positive equality was also about community‐building and social cohesion. In many ways it is a middle‐class and gradualist reform agenda which envisages the use of government to ensure the benefits of economic prosperity are used to create better opportunities for individuals and communities.
The interview followed a mini-spat as to whether Tony Abbott should have accompanied Gillard to a trip to Afghanistan on his way to the British Conservative Party conference.
In the event, he was going to visit on the way back - although his excuse that he didn’t accompany the Prime Minister because he would be ‘jetlagged’ for the Conference looked and sounded dopey.
This, together with Liberal allegations the government displayed ‘low bastardry’ in allegedly leaking the fact he knocked back accompanying the PM was a fascinating scandalette.
Only one thing was missing – a treatment of the appropriate role of Australian forces in Afghanistan as well as the standard of their kit.
Both leaders are clearly at home dealing with domestic issues.
The concern we have is that when you have leaders who think government is a glorified state government – a mere service provider – and who place their policy emphasis in areas like education (important as that is) and deal with other issues such as defence and foreign affairs only when they really, really ‘gotta’ means that these issues don’t get the attention they deserve.
All the benefits of a federal system are lost – and the Australian national interest suffers.
25 September 2010
The Australian Constitution anticipates that sometimes ties will happen, and when they do the Speaker will break the vote - and that is the designated role of the position.
As the bible of the British Parliament, Erskine May, says:
‘If the numbers in a division are equal…the Speaker, who otherwise never votes, must give the casting voice. In performance of this duty, he is at liberty to vote like any other member, according to his conscience, without assigning a reason: but, in order to avoid the least imputation upon his impartiality, it is usual for him, where practicable, to vote in such a manner as not to make the reason of the House final and to explain his reasons….’
As they did in NSW, if you want to change the voting power of the Speaker you really do have to change the Constitution.
The NSW Constitution only gave the Speaker only had a casting vote until 2007.
To accommodate the wish of an Independent Member of Parliament encouraged by the NSW ALP to become Speaker to participate in debates and vote when an issue important to his electorate came up (much like what Rob Oakeshott appeared to want to do federally) the law was changed.
Now, so long as the Speaker is not presiding, he can participate in debate and vote.
However, the Constitution had to change to allow this to happen.
As the Solicitor-General’s advice makes clear, the agreement of parliamentary reform sealed with a ‘man hug’ during the discussions to form a government can be honoured - it is quite possible for a party to organise for one of its own to abstain to ‘match’ the vote of the otherwise non-voting speaker if they want, thus creating a constitutional ‘work around’.
That said, the question of whether ‘pairing’ the Speaker is a good idea remains.
For better or worse, Australians returned an equally balanced parliament. Sometimes, ties will happen. And the Speaker will have to make a casting vote.
Had the Liberals stuck to the ‘pairing agreement’ they would have explain to the millions of people who voted for it that where otherwise the vote in the House would be tied, in the name of ‘stability’ one of its members abstained from voting - thus allowing through something contrary to its constituent’s interests like a mining tax or carbon tax or any other controversial measure that will invariably come up - in a circumstance where otherwise, if custom was followed by the Speaker, the matter would not have passed but rather stayed in the House for further consideration.
The ALP would of course have been in the same conundrum if they were in Opposition.
The result of the election will therefore be properly reflected in the votes of the House.
Strap in for a wild three years.
27 August 2010
One of the reasons that Australian politics is the most rigid in the world is the because of ‘the pledge’: the promise that ALP members make to uphold the party platform and to follow decisions made by Caucus.
It is this practice that has provided Australia with the most rigid party system in the Westminster world.
If there is to be a truly consensual brand new political world, this is a practice wel worth reviewing.
We discussed this issue in a post dated 14 September 2009. It is republished below:
Senator Judith Troeth recently crossed the floor to vote with the Government in support of their plan to stop charging asylum seekers and immigration detainees for their mandatory detention.
Immigration Minister Chris Evans lauded her for her decision.
On the same day, three ALP MPs endorsed a petition calling on the government to retain the prohibition on parallel importation of books.It will be interesting to see if they cross the floor should the Government decide to remove the ban.
It is not often that ALP members cross the floor. This is because party rules prevent it.
In particular, Rule 5 says (in part):
d. The Federal Parliamentary Labor Party shall have authority in properly constituted Caucus meetings to make decisions directed towards establishing the collective attitude of the Parliamentary Party to any question or matter in the Federal Parliament, subject to:
i. at all times taking such action which may be possible to implement the Party's Platform and Conference decisions;
ii.on questions or matters which are not subject to National Platform or Conference or Executive decisions, the majority decision of Caucus being binding upon all members in the parliament; and
iii. no attitude being expressed which is contrary to the provisions of the Party Platform or any other decision of National Conference or National Executive
The existence of this rule in particular weakens the role of all Australian parliaments.
In Westminster, party whips divide votes into three categories.
In very trite terms:
a ‘one line whip' tells members what the party line is, however, there is a degree of discretion as to whether the line is followed;
a ‘two line whip’ is a debate in which a member is expected to vote in according to the party line, unless there is a strong conscientious objection; and
a ‘three line whip’ is a debate where the member should simply follow the party line.
However, all that said, there are many circumstances in which members of the House of Commons have 'rebelled' from the Whip and voted against party, notwithstanding the declaration of a three line whip.
Ask yourself: how often do you see an ALP member 'cross the floor' in Parliament?
The answer is 'seldom' - and when they do, they are usually disciplined.
In that case, it is hardly surprising that the alternative political grouping becomes as rigidly controlled - if they weren’t, common sense tells you they would never win a parliamentary vote.
There are many circumstances where party discipline means that MPs are voting for a proposal against their better judgement.
The best way to ensure that legislation is appropriate is to ensure that there is a properly functioning parliament with members making decisions according to their conscience and not their party whip.
Matters may very well be assisted if the ALP abolished its rule.
24 August 2010
As we said previously:
The presence or absence of a national broadband network, an absence of a mining tax, temporary protection visas and the extension of unfair contract laws to small business are the only real areas of difference – most other things are differences in emphasis and timing.
(Although more on the NBN, anon.)
For all of that, both Abbott and Gillard are representatives of their respective strands of thought.
Gillard is very much, as Trevor Cook put it, one of Whitlam’s grandchildren:
Throughout his political career, Whitlam pursued a philosophy of “positive equality”, and he sought to change the national debate and the role of the national parliament. Positive equality is not about the old battles between capital and labour, it is about removing barriers to self‐improvement and overcoming disadvantage and deprivation through national approaches to policy areas like health, education and transport that emphasise universal access. For Whitlam, positive equality was also about community‐building and social cohesion. In many ways it is a middle‐class and gradualist reform agenda which envisages the use of government to ensure the benefits of economic prosperity are used to create better opportunities for individuals and communities.
Hence, however constitutionally iffy the proposals are in a post Pape world without a section 96 agreement with the States, Gillard was always at her strongest when she was ‘educational Julia’ promising improved teaching and schooling standards.
Conversely, Abbott is very much from the ‘Christian democrat’ (or Catholic Liberal) wing of the Liberals, with a focus on traditional social values and a respect for individual effort, whilst mindful for the need of social solidarity and more comfortable with a greater level of regulation of market forces than some of his colleagues – hence support for things like substantial tax rebates for education expenses and paid parental scheme paid for by big business whilst wanting to ‘stop the boats’ and remove ‘big new taxes’ (etc).
It was therefore unsurprising when Abbott said in his last address to the National Press Club for the election that he wanted to ‘transform Australia from ‘welfare state to opportunity society’ by linking new workforce initiatives to his economic agenda:
My ambition is for us to make the journey from welfare state to opportunity society ... which preserves the comprehensive safety net but which eliminates the cancer of passive welfare.
(Why this wasn’t said by him more often when the Liberal campaign was criticised for having nothing to say in the middle weeks of the campaign is beyond us.)
However, that said, despite different starting points the practical end point is that the policies of the two parties constitute a welfarism that differs only in emphasis as to the manner of implementing outcomes in broadly agreed areas.
This absence of shade and light led to state issues (particularly relating to government competence in NSW and Queensland) having disproportionate influence in the election.
The net result: a draw in the number of seats.
It may well be that the ALP will form government.
However, the large Greens vote could mean that they become Labor’s ‘new Country Party’, pushing them leftwards and away from the ‘Sussex Street’ Labor model of representing the ALP as being solid, conservative managers of the economy, moving to the centre on traditionally weak areas such as law and order and encouraging development whilst evincing a general (but not overwhelming) concern for the environment.
This leftward push could be paradoxically assisted by having to deal with the ‘Old Country Party’ – the three independent country members holding (at time of writing) the balance of power, with views on issues such as transfer payments to ‘worthy’ recipients being surprisingly similar to city progressives.
It would be something if perhaps the only significant difference between the parties – the national broadband network – is the thing that will settle who will form government.
This Parliament could inadvertently mark the commencement of the political paradigm of the 21st Century, as the ‘labour/capital’ divide of the 20th century is replaced by one block representing a ‘secular humanism’ (typically found in voters in inner urban Australia), balanced by a block representing small ‘n’ nationalist and ‘aspirational’ values found more commonly in suburban and provincial Australia.
We live in interesting times.
10 August 2010
Following the ‘leaders debate’ the major parties started the process of making, as they always do, targeted promises to win specific constituencies as the ‘momentum’ magically builds one way or another.
And so the ALP made promises in areas such as hospital staffing, suicide prevention, water harvesting from stormwater drains, a disability strategy….… and a rail link to Redcliffe (met and matched by the Opposition, to the surprise of the local candidate).
The Liberals made promises on slowing the growth of marine parks, a ring road for Cairns, an education card for disabled students and their version of hospital funding, with their largest promise being a promise to reduce company tax to the general level promised by the ALP…..a bit of a surprise given the Leader had previously said ‘no one much is going to notice a 2 per cent cut in company tax’.
However, the Kevin Rudd issue – how he was dumped and what he would do in the future – as well as strategic leaks about what Julia Gillard may or may not have thought about pension increases and paid maternity leave dominated the second week, leading to a dysfunctional looking ALP and polls showing the Liberals either tied with or just ahead of Labor at the end of week 2.
And so week 3 began with the ‘old’ Julia Gillard becoming ‘feisty Julia’, taunting Abbott to debate her on economics as well as doing wild and risky things like riding on the campaign media bus (!) whilst Tony Abbott continued to campaign in the restrained manner of the front runner, concluding with a policy launch long on contrasts with Labor but short of policy specifics.
The reason why cosmetic issues like the ‘old Julia’ has changed into the ‘new Julia’ is so newsworthy is because there are few massive differences between the parties.
The presence or absence of a national broadband network, an absence of a mining tax, temporary protection visas and the extension of unfair contract laws to small business are the only real areas of difference – most other things are differences in emphasis and timing.
This should be expected because of the way Australian politics is structured.
There are two main reasons for this.
Compulsory voting means that so called ‘rusted on’ voters can be overlooked.
This leads to a practical exercise of what is called Hotelling’s Law, which presumes that the optimal place for a business (or political party) to focus its attention is the perceived half way point of its target market.
Thus in this context everything is aimed at the ‘swinging voter’ in the middle of the political spectrum.
Moreover, it is our experience that many (if not the majority) of people involved in parliamentary politics could just as easily work for the other side.
This is because those who choose to participate in politics are generally middle class tertiary educated people who are vaguely socially progressive, and whilst not anti-market nevertheless possess a belief in an activist government that can intervene to improve the lot of society, usually through the continued creation of entitlements to ‘worthy’ recipients falling within targeted eligibility grounds.
It is also the case that they are overwhelmingly young and with little experience in small business (in particular) or in broader community life.
The result is that parliamentary government is in the hands of a narrow political class with an equally narrow world view.
Little wonder that this election is one of the most soulless ever conducted.
For all of that, we are now in the second half of the campaign. The ‘new Julia’ appears to have steadied the ALP ship and is segueing towards her preferred battleground of eduction.
Conversely, the coalition campaign appears to have remained still for the better part of week 3, as Labor went through their woes.
However, they may have played it too safe.
Despite all the tremors within Labor, attacks on Abbott’s economic credentials and readiness for government and an absence of strong coalition positives may have had an effect - the ALP is now marginally in front.
Gillard’s incessant requests for a debate on economics may also have had some effect, as both she and Abbott are to front the same public meeting at the delightfully named Rooty Hill, in Western Sydney.
This will undoubtedly be the starting platform for the last stanza of election 2010.
03 August 2010
One area of the 2010 election campaign that hasn’t been particularly discussed thus far has been election policies specifically addressing small business to be implemented over the next parliament.
This is a brief review.
The ALP is generally standing on what it has done for small business in the life of this parliament – things such as a superannuation clearance house within the ATO, the creation of a small business advisory committee and a handbook to assist independent contractors.
Prospectively, the ALP proposes giving small business the ability to instantly write off assets costing up to $5,000 and cut the corporate tax rate from 30 per cent to 29 per cent as from 1 July 2012 - one year earlier than larger companies.
However, this would appear to be subject to the passage of what is now called the Mineral Resource Rent Tax applicable to iron ore and coal projects.
Moreover, another part of the suite of measures to be funded by the MMRT is an increase in the superannuation guarantee from 9% to 12%.
The supporting documentation indicates the increase in superannuation will ‘affect… wage negotiations between employers and employees’, an observation implicitly recognising that employers are ultimately responsible for funding superannuation.
If it comes to pass, it will be interesting to see how much of the reduction in the tax rate will be retained in the business if during these negotiations the reduction is identified as a source supporting an increase in overall employee remuneration (including the rise in superannuation).
However, reductions in company tax rates will be of little interest if a business is caught up by a possible change to personal services income laws.
Personal services income
On 19 December 2009 the Assistant Treasurer (Senator Sherry) received a Board of Taxation review on the area.
Releasing the report, he said the Board had found:
‘a low level of compliance and a degree of uncertainty or ‘greyness’
around the rules, such that it has found the alienation of personal services income rules in their current form do not provide acceptable levels of integrity and equity…. This means that ordinary workers may be missing out on proper pay, proper super entitlements and a range of other employment conditions such as long-service and other leave entitlements.
The use of sham contractors is a threat to the integrity of the taxation system and a threat to working conditions of employees – and the Rudd Government is determined to see an end to its inappropriate use.
The Government decided it would wait for the final report of the Henry Review into taxation before deciding what to do.
Recommendation 10 of the Henry Review was:
Consideration should be given to a revised regime to prevent the alienation of personal services income that would extend to all entities earning a significant proportion of their business income from the personal services of their owner-managers, whether in employee-like or non-employee-like cases. This regime may also apply an arm’s length rule to deductions arising from payments to associates to ensure deductions reflect the value of services provided.
This would appear to require businesses to distinguish between income earned from capital as opposed to labour, adversely affecting all ‘knowledge professionals’ from consultants to barristers, and from accountants to computer consultants.
It would certainly appear capture most home based micro businesses – which many in the bureaucracy have never accepted as ever being ‘real’ businesses.
In our experience its view is if you can’t see stock or staff you are not in business but either (depending on your taste) a ‘true’ employee in an arrangement to rort the tax system or a simpleton ripe for exploitation.
The Coalition has said that it will not change the current personal service income laws as ‘no case has been made or evidence provided to justify changes to force independent contractors and self employed people into more ‘employee-like’ arrangements’.
This appears to be a solid commitment. However they are also considering how they are going to respond to the Henry Review.
It would therefore remove all doubt if the Coalition would expressly confirm that Recommendation 10 will not be considered as part of the response to Henry Review.
Otherwise be interesting to see if it will get new life once the Treasury starts providing them with advice, should they win.
Gotta protect the integrity of the tax base y’know. And so forth.
It will be interesting if the ALP will make any commitments about its treatment of PSI during the election.
The Coalition have countered Labor’s proposed company tax cut with a 1.5 per cent cut in the company tax rate from company tax from 30% to 28.5% on July 1 2013.
It is to be hoped that this commitment can be afforded, and is not a cynical ‘meet and beat’ commitment to retain the mantle of being ‘the party of small business’ during the election campaign, to be discarded in the name of fiscal responsibility once in government.
The Coalition has made a number of other commitments.
Proposed coalition changes to government structure
There will be a cabinet level ‘small business’ minister. This is symbolically important although the more valuable component of this promise is the requirement for cabinet submissions to address how proposals impact small business.
The mere fact of having to write something requires those having to prepare ‘cab subs’ to at least think about the issue.
A proposed ‘small business’ representative on the Taxation Board of Review is also symbolically important, although it will be interesting to see how the impact of having this proxy representation can be measured in practice.
Government agencies will have to use procedures and practices to ‘that do not disadvantage small business participation and instead, actively encourage it.’
Governments of all persuasions promise this.
However, in many circumstances public servants involved in letting tenders have neither the information to make informed decisions in favour of selecting smaller businesses nor the time to gather it. And you can never be blamed for anything if you’ve ‘bought IBM’.
Public sector procurement and prudential rules, which are costly to comply with in their own way for both contract manager and service provider are also unlikely to be loosened.
So it will be interesting to see what will be different this time.
Businesses will also be able to charge interest if payments for any service provided are late - although whether the costs involved (particularly in time) in chasing up the interest amounts that can be charged may make this right somewhat problematic.
A Small Business and Family Enterprise Ombudsman is to be created to ‘provide an advocacy, dispute resolution and support role for the sector’ across the government.
Given that every small business in Australia could contingently be a ‘client’ of this proposed agency, the indicator of how committed the Opposition is to this initiative will be how well the Office will be funded.
It is noted that whilst the Victorian Small Business Commissioner is reasonably well funded, equivalent offices in the ACT and SA were early sacrifices to budget savings.
It will also publish with a series of ‘better practice guidelines’ to explain and encourage’ fair commercial conduct’.
‘Guidelines’ to become a ‘better corporate citizen’ are all well and good, but mere publication aren’t much practical help to a shopkeeper having a dispute with a supplier or landlord if they have little actual effect, particularly if the proposed Ombudsman is ill-equipped to provide much more than moral support.
It may be better if these proposed guidelines had some legal effect.
The proposed Australian Consumer Law to commence operation on 1 January 2011 will permit small businesses can take action where there has been ‘unconscionable conduct’ in trade or commerce.
The relevant provision sets out things to take into account when considering whether unconscionable conduct has taken place.
It would be better if any proposed guidelines must be taken into account when considering whether unconscionable conduct has been displayed.
This would increase the impact of any guidelines that might be issued.
Changes to trade practices law
The Coalition has promised it will to extend the unfair contracts protections available to consumers to small business.
This will mean that small business will be able to avoid ‘unfair’ standard form contracts in the same way ordinary consumers can under the proposed Australian Consumer Law to commence operation on 1 January 2011 – something the current government removed from legislation immediately prior to its introduction into Parliament.
Finally, the Coalition promises another review of the Trade Practices Act – soon to be called the Competition and Consumer Act - which is to be focussed on ‘giving small business a fair go’.
As The Australian noted on 21 July 2010 there have been 59 different reviews of the old Trade Practices Act in the past decade.
It is difficult to see what will be achieved here that wasn’t achieved by the Trade Practices Act review that gave rise to what was known as the Dawson Report which had terms of reference that included examining whether there was ‘an appropriate balance of power between competing businesses, and in particular businesses competing with or dealing with businesses that have larger market concentration or power’.
This is particularly the case, given that shadow Treasurer said of the review in his budget reply to the National Press Club:
There may not be a need to dramatically change our competition policy and regulatory frameworks, but there is a need to consider what changes could be made so that market efficiencies and productivity enhancements are maximised.
The Australian reports that Bruce Bilson, the relevant Shadow Minister, is ‘keen for it to go along the lines of a Productivity Commission review’.
If the matter goes to the Productivity Commission, there is unlikely to be any real change to the current legislation.
This is because it has consistently confirmed the importance of ensuring that allocative efficiency is maintained – any changes that it considers may affect innovation or market dynamism such as for instance, changing the test that allows a harsh contract to be reviewed from ‘unconscionable conduct’ to ‘unfair conduct’ (as is the test in the Independent Contractors Act) may not win favour.
The Coalition has always had to square the competing interests within its electoral coalition of the Big End of Town, with its eyes on ensuring they maintain the scale to compete internationally with the Small End of Town, which perceives the need for some protection against larger corporations because of inequality of bargaining power – hence the somewhat tortuous drafting of current trade practices law.
The Coalition therefore really needs to indicate whether they are being ‘fair dinkum’ in giving small business a ‘fair go’ in this context.
27 July 2010
They commenced as frontrunners, with publicly available opinion polls suggesting they were ahead 55/45.
They were also aided by a slow start from the Liberals as well as confusion over the Opposition’s industrial relations policy.
The previous Workchoices policy was supposed to be ‘dead buried and cremated’ - however, Liberal spokesmen suggested the legislation could still be ‘tweaked’ (whatever that meant).
The great difference between Workchoices and the current legislation is the primacy of the industrial award as the basis of determining wages and conditions, as opposed Workchoice’s built in bias towards some form of individual contract.
Why they couldn’t say that in Government the coalition would retain the award system and not reintroduce the concept of unfair dismissals (if that’s what they wanted to do) without winding up into knots over whether or not they would touch any sort of legislative instrument related to the Fair Work Act currently in place over the next three years is beyond us.
As for Labor, however repetitious it was, the ‘moving forward’ mantra confirmed the idea that Kevin Rudd was no longer the leader. Noting infrastructure pressures was also a sound message to sell into Middle Australia.
However, things started to slow for them midweek.
Firstly, Kevin Rudd appeared, reminding people he wasn’t dead after all. Focussing on him soaked up around two days of the campaign week.
This took from view promises both sides made on what can be claimed under the education tax refund scheme as well as the Liberal’s re-announcement of its hit list of expenditure savings.
The remainder of the week underlined the difficulty Labor has keeping its bifurcated constituencies of inner urban progressives and outer suburbanites together.
As Bernard Salt said in an Australian article on 13 August 2009, a significant and growing cultural divergence has evolved in Australian cities between different social groups between those who live in the inner city and those who live on the city’s edge.
The traditional ALP voting coalition has generally consisted of self identifying members of the labour movement, people with English as a second language, welfare recipients, public sector workers, the arts sector and high income professionals who are secularist and internationalist in orientation.
On one analysis, Julia Gillard is well placed to keep this disparate coalition together.
In the Weekend Australian on 16 February 2002, Matt Price described Julia Gillard as someone with the cheese-grater voice of a Footscray fishwife and a the multi-shaded hairstyle of a Toorak trendoid.
At a memorial service held on 14 December 2007 after Price’s death, Gillard indicated she had corrected Price, claiming she had the cheese-grater voice of an Altona fishwife and the multi-shaded hair of a Fitzroy trendoid.
Altona fishwife and Fitzroy trendoid. This sums up the disparate nature of the ALP constituency.
The danger for Labor is that they have the problem that in trying to straddle both sides of the fence they will satisfy neither trendy nor burby.
A confusing message could mean they don’t stand for anything or anyone.
For example, during the week the Prime Minister claimed that the whilst she believed in global warming and the price of inaction about it was ‘too high a price to pay’, promising an emission trading scheme some day – something for Fitzroy.
However, the political process has to be tied to a ‘community consensus’.
The result a review of the proposed ETS during 2012 – but not before a ‘citizens’ assembly’ debates the issue over 12 months to assist in building community consensus (slowing the introduction of the ETS and thus a price on carbon, with its inherently higher consumer costs that it imposes) – something for Altona.
This idea (particularly the ‘citizens’ assembly’) was universally panned – in trying to please everyone they pleased nobody.
Promising offshore processing of asylum seekers arriving by boat (something for Altona) but not at Nauru (as it hadn’t signed the UN Refugees Convention – something for Fitzroy) similarly appeared to please no-one.
A final example was where the Prime Minister argued that the population debate she commenced was less about immigrant numbers but rather where skilled migrants were going to live.
However, as ex-leader Mark Latham said, it was a phoney debate. He went on to say:
If it's not an immigration debate, it's no debate…………and I'll tell you what it is, it's a fraud. It's an attempt to con people in western Sydney that she's going to do something about congestion.
Nevertheless, these problems ultimately didn’t alter Labor’s frontrunning position.
By weeks end, the Morgan poll still showed the ALP with a 54/46 margin (with a high number of women indicating they will vote Labor), although the last Newspoll had it 52/48.
The Liberals were aided by a ‘nothing to see here move along’ debate between the two leadership contenders (which really was a joint news conference) in which Abbott won by not losing to Gillard (the more accomplished public speaker) and Abbott getting through a 7.30 Report interview unscathed.
And so the second stanza commences with the challenge for the Liberals is whether an Abbott led party can be plausibility regarded as The Champion of Suburbia as well as getting over a perceived problem with women voters.
As frontrunners, it is Labor’s challenge to show that it is not trying to be too clever by half.
01 July 2010
Others have commented on the machinations leading to the change, so we will leave it to others to comment on its political benefits to the ALP, whilst history can decide whether stories of temper outbursts and dysfunctional decision making will mean Rudd will be regarded as Labor’s Billy McMahon.
We will examine matters from another angle: the parliamentary parties of the 42nd Parliament have functioned as they should have - as representatives of the constituencies they represent.
The Liberals have seen four leaders (Costello (very nominally), Nelson, Turnbull and Rudd) and the ALP two (Rudd and Gillard).
For the Liberals, the retiring Costello was replaced by Nelson, who was the most attractive ‘not Malcolm Turnbull’ candidate standing as leader.
This was appropriate for a party room not totally sharing the inner urban policy priorities that Turnbull represented – from things like placing a greater weight on the environment as an abstract issue through support of policies such as the Emission Trading Scheme (ETS) to possessing less hawkish view on boat arrivals, and so forth.
Nelson was then removed for simply not cutting it. This is rational behaviour for a parliamentary party aiming for early return to government. The party turned to Turnbull – the only candidate making himself available.
Turnbull was replaced in turn by Abbott, largely over the ETS.
It will be remembered that Turnbull staked his leadership on the policy.
He didn’t make the argument well enough to persuade the majority of the party room to abandon the views of core supporters – those who were genuinely climate sceptics or believed in the low taxation and limited government participation in the economy, as well as those for whom the fear of increased costs and possible loss of employment opportunities as a result of the introduction of the ETS trumped general concerns about ‘the environment’.
The net result is an Opposition Leader running a traditional platform for a centre right party, with its emphasis on opposing ‘great big new taxes’ on everything, preserving national security and so forth.
The Rudd/Gillard change illustrates the same dynamic.
Rudd announced so many policy initiatives to solve The Greatest Moral Threat of our Time (or similar rhetoric) in so many areas the view was formed that he overpromised and underdelivered.
The ALP (particularly the NSW Right) see themselves as the guardian of the various programmes incrementally introduced by Labor over the course of time, doing (to coin a phrase) whatever it takes – to the point of appearing nihilistic – to ensure electoral success.
Rudd’s lack of programmatic specificity in speech left this at risk.
The ALP also remains part of the overall union movement.
As Paul Howes said on Lateline on 23 June 2010:
TONY JONES, PRESENTER: One of the key moments of tonight's extraordinary developments was the announcement that the Australian Workers Union had lostGiven the relative influence of the factions and unions over the parliamentary ALP, Caucus elected a new Prime Minister who said in her first public statement after taking the job:
confidence in Kevin Rudd and was backing a move to Julia Gillard. Well the national secretary of the AWU is Paul Howes. He joins us in the studio. Why did you do that?
PAUL HOWES, NATIONAL SECRETARY, AUSTRALIAN WORKERS' UNION: Well we've been looking at what's in the best interests of the members of our union. We know that if Tony Abbott is elected as a prime minister of Australia, Work Choices will be back, the legislation which ripped away fairness from our workplaces will be reinstituted on our members, reimposed on our members, and we know that Labor's message had been lost for the last few weeks, and in fact months, under the Prime Minister's leadership. We have to look at what's in the best interests of our members of our union to ensure fairness remains in our member workplaces and we think that Julia Gillard is the best option to lead Labor to victory at the upcoming election.
And….I believe fundamentally that the basic education and health services that Australians rely on and their decent treatment at work is at risk at the next election.
I love this country and I was not going to sit idly by and watch an incoming Opposition cut education, cut health and smash rights at work.
A very traditional Labor platform.
So, there it is.
After some policy deviations the two major parties have come up with leaders reflecting their traditional values – all as a result of the parliamentary parties acting more proactively against decisions made by the executives of the parties than Australians have become accustomed.
It is now up to the electorate to decide who will form the new government.
19 June 2010
The Committee is to examine compliance of all forms of legislation with international instruments purporting to capture the rights and freedoms of people.
They include the:
International Convention on the Elimination of All Forms of Racial Discrimination;
International Covenant on Economic, Social and Cultural Rights;
International Covenant on Civil and Political Rights;
Convention on the Elimination of All Forms of Discrimination Against Women;
Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment;
Convention on the Rights of the Child; and
Convention on the Rights of Persons with Disabilities.
The intention behind both the committee and a requirement for administrators to prepare statements of compatibility when introducing legislative instruments is the creation of a human rights ‘dialogue’.
Time will tell whether this form of ‘dialogue’ is accepted by the advocates of ‘dialogue’ between courts and the parliaments created by the human rights charters in force in the ACT and Victoria. Somehow one doubts it will.
The bona fides of government will be tested by both the time and resources the committee will be given to examine every legislative instrument prepared by government.
There are lots of legislative instruments prepared and the seven international agreements purport to confer an extremely wide range of rights.
They range from from (for example) Article 9 of the International Covenant on Economic, Social and Cultural Rights, which requires consideration of the ‘right of everyone to social security’to Article 25(a) of the Convention on the Rights of Persons with Disabilities, which requires signatories to ‘(p)rovide persons with disabilities with the same range, quality and standard of free or affordable health care and programmes as provided to other persons, including in the area of sexual and reproductive health and population-based public health programmes’.
So if this is a fair dinkum committee, it will require fair dinkum resources.
The other issue relates to the compatibility statements to accompany legislative instruments.
Subclause 9(2) of the Bill requires ‘an assessment of whether the legislative instrument is compatible with human rights’ with the explanatory memorandum to the Bill suggesting the statements are to be ‘succinct assessments aimed at informing Parliamentary debate and containing a level of analysis that is proportionate to the impact of the proposed legislation on human rights’.
Frankly, despite all the training that will (perhaps) be offered, we doubt that most ‘rule makers’ making legislative instruments would have the background to know their instrument may require consideration of one of the widely drawn rights contained in instruments listed in the Bill let alone the tricky question of determining whether an instrument is ultimately ‘compatible’ with human rights.
The jury is well and truly out as to whether this is a serious attempt at ‘dialogue’ or a mere fig leaf to cover what some may regard as another area where the government has overpromised and underdelivered.
11 May 2010
As expected from his various speeches, the Review canvasses a number of different policy areas.
It will be a smorgasbord of policy options that will be dined on over the years as was the 1975 Asprey Report.
We will satisfy ourselves with two observations.
The first is what constitutes a ‘super profit’. It would appear the starting point of what constitutes a ‘super profit’ is the ten year government bond rate (currently averaging 5.7%) – the figure identified as the ‘risk free return benchmark’.
We would hope that any return above the risk free return benchmark would not become the standard benchmark for ‘super’ profits made in the (insert here the industry to be picked off) whenever government requires extra revenue.
By definition it would discourage risk taking – the very thing that keeps the economy advancing.
The second relates to the fiscal federal structure.
Economists tend to think that a federal structure is an anathema to their guide star of allocative efficiency.
Whilst begrudgingly acknowledging that Australia will have three levels of government ‘at least for the foreseeable future’, the Review nevertheless acknowledged that as long as State governments have significant expenditure responsibilities they should have access to significant and sustainable tax revenue with a residual own source taxation capacity to finance marginal expenditure decisions.
However, the Review nevertheless recommended on efficiency grounds that a resource rent tax (RRT) replace state based royalties as the way to bring mineral extraction to taxation - with the Australian and State Governments to ‘negotiate an appropriate allocation of the revenues and risks from the resource rent tax’.
The report also suggests the abolition of a slew of State based taxes.
In particular, payroll tax would be replaced in favour of a broad based ‘cash flow tax’ imposed at a uniform rate across Australia (and thus deprive states the further capacity to change the rate to suit the needs of the jurisdiction).
It also suggests that the States and Australian Government could share, in particular, the income tax base.
It is clear that for these reforms to work, the Commonwealth would have to allow the states some access to income tax and a reasonable flow of resource rent tax revenues.
It ain’t going to happen.
The Review adopted the standard view that as the national government is better placed to coordinate actions, taxes used to redistribute income should be levied by the national government.
The fact is the federal government requires a lot of money to fund the broad ‘social democratic project’ established by pl.51(xxiii) and (xxiiiA) of the Constitution –income transfer payments, health, hospitals and (undoubtedly in the immediate future) disability support and will need more money (and not less) as an increasing number of worthy needs are identified as requiring support in a country with an aging population and an atomising society.
It is also the fact (undoubtedly assisted by taking in 82 per cent of total tax revenue) that the Feds are assuming more and more state government responsibilities.
A simple illustration: an portion of the proposed RRT is to help ‘build the roads, rail, ports, electricity and water supply, and other facilities needed to unlock Australia’s resource wealth’.
Like housing, health and education, these are subject matters formally considered to be largely state responsibilities increasingly falling under Commonwealth control.
The Feds will increasingly need tax revenues to fund their projects in these areas on their terms.
Then there is the ‘seamless economy’ and the wish to remove duplication. Currently, the Government proposes that miners pay both royalties and the RRT, with royalty payments a claimable tax rebate.
But it won’t be too long before calls are made that this is an inefficient way of doing things – only one tax should be levied (in this case) on the extraction of minerals. There isn’t much doubt which tax will go.
Finally, there is the history of Australian federation.
As the report itself says:
Tax sharing of income tax operated in Australia before the Second World War, although there was little coordination between the two levels of government. In 1976, the Australian Government introduced the possibility of the States levying a personal income tax surcharge to replace financial assistance grants. No State took up the option. A key reason for this was that the Australian Government did not reduce its own tax rates to make room for the States.As the report itself admits, the States are more likely to be tied to the Deakin’s ‘chariot wheels of central government’ tighter than ever before:
The implementation of a number of recommendations related to state taxes would require cooperation between the Australian government and the states. Further, some recommendations related to Australian government taxes would also impact on State taxes……... Depending on when some of the recommendations are implemented, the states may also be subject to losses in revenue that could not easily be made up from other revenue sources (our comment – ask WA about the loss of royalties!) funding from the Australian government may at times be necessary to ensure that the financial position of a state is not adversely affected.
As we have recently said, it is time to decide
1. which level of government should have responsibility for particular public policy areas;
2. what taxation bases should be assigned to the states and territories; and
3. where it is appropriate for the Commonwealth to be the level of government determining policy outcomes but is an area where it has no clear constitutional capacity to act, whether it is appropriate to confer Commonwealth power either:
(a) indirectly, through an agreement made under section 96 of the Constitution; or
(b) through a reference of power by the states to the Commonwealth or directly by constitutional amendment.
The Henry Review advances the discussion.
However, following the firestorm arising from the introduction of the RRT this is a matter that should form part of the discussion at the next election.
 See Part C1-1 of Volume 2 of the Report (esp.p.223 and footnote 2 of page 332 of volume 1)
 Page 570 of Volume 2
 Page 574 of Volume 2
 Page 680 of Volume 2
 See table on page 680 of Volume 2
 Page 681 of Volume 2
 Page 682 of Volume 2. The Commonwealth would retain control over the tax base.
 Page 673 of Volume 2
 Page 676 of Volume 2
 Page 682 of Volume 2
 Page 684 of Volume 2
29 April 2010
After achieving 20% of the popular vote and 5 seats in a 25 seat Assembly, and deciding to prop up a minority Labor administration, the Greens now have a seat in the Tasmanian Cabinet – an Australian first.
This follows an agreement by the Greens Party in the ACT to support a minority Labor Government contained in a document perilously close to looking like an old fashioned coalition agreement.
The Greens there were able to strike their agreement after winning over 15% of the vote and 4 seats in a 17 seat legislature.
Whilst these are outcomes obtained in parliaments elected via proportional representation they could portend the future of legislatures constituted by single seat constituencies.
As demographer Bernard Salt has noted there is a social and economic division between those who live in the inner city and those who live on the city's edge:
…... I am suggesting that there is almost a regionalisation of wealth, income and culture based on urban geography.
Battlers, migrants and assorted low-income earners who formerly lived in the inner city are now being flung out, as if by some centrifugal force, to the city's edge.
What is left in the inner city is an odd coalescence of tribes - namely students, singles, couples, dinks, gays, expats, corporates, divorcees and, most important of all, the professional and entrepreneurial classes.
And to this lot I might add the entertainment, information and media glitterati. As a general principle, none of this class would ever think of living more than 10km from the city centre.
The ALP voting coalition has hitherto consisted of self identifying members of the labour movement, people with English as a second language, income transfer recipients, public sector workers, the arts sector and high income professionals who are both secularist and internationalist in orientation.
However, the Greens message - guided by the so-called ‘four pillars’ (ecological sustainability, social equality and economic justice, grassroots democracy and peace and disarmament and nonviolence,) is apparently more amenable to a ‘progressive’ middle class constituency than one put out by a regimented party with 50% union control designed to represent the ‘labour movement’ and achieving social justice primarily through the improvement of working conditions and changes to the wages and salaries system.
So, why could the Greens be the new Country Party? As the bulk of the Country/National Party votes tend to be geographically clustered, so similarly much of the Green vote is clustered in the inner city.
They are on the cusp of winning seats at state level such as Marrickville and Balmain in NSW; Melbourne, Richmond and Northcote in Victoria; and at federal level, (as Lindsay Tanner is only too well aware) seats such as Melbourne.
Recent opinion polls indicate that at state level (in particular) the ALP primary vote is dropping.
For example, the most recent polling in Victoria suggests that for the first time in a long time the Liberal/National primary vote (38%) is higher than the ALP primary vote (37%).
A hung parliament here is not unthinkable.
The Greens vote is at 14%.
Given the decline of long term state Labor governments and an increasing perception of the Greens as a legitimate party of government many ‘progressive’ voters may consider that a primary vote for the Greens is not wasted and vote for them in such numbers they can break through and win seats.
Now, it must be said it is difficult to believe that Greens rank and file members would endorse an arrangement with the Liberals.
Drawing on the ACT/Tasmanian precedents, a party prepared to prop up a larger party, capable of winning specific concessions for the interests they represent.
Just like the old Country Party.
One final observation.
As the current British elections are demonstrating, the old two party system is breaking down with voters on the ‘progressive’ left prepared to leave Labour for the Liberal Democrats.
Who knows? If the Greens can internally make the jump from party of protest to party of government, perhaps the Greens can assume a similar role in Australian politics.
We live in interesting times.
This is no bad thing.
We are in the camp that says that the terms of a charter cast in vague aspirational language confers too much discretion on an unelected judiciary and takes too much from elected legislatures, particularly when construing provisions such as Article 21 of the International Covenant on Civil and Political Rights (ICCPR):
The right of peaceful assembly shall be recognised. No restrictions may be placed on the exercise of this right other than those imposed in conformity with the law and which are necessary in a democratic society in the interests of national security or public safety, public order (ordre public), the protection of public health or morals or the protection of the rights and freedoms of others.
There is nothing so special about the training of a lawyer or judicial method that would allow a judge to make a value judgement as to what is or isn’t ‘necessary in a democratic society’: in a parliamentary democracy, this is really something only for a Parliament.
There are two interesting elements to the fig leaf of a commitment to human rights agreed to by Cabinet.
The first is the proposed establishment of a new Parliamentary Joint Committee on Human Rights to provide greater scrutiny of legislation for compliance with international human rights obligations.
The second is the requirement that each new Bill introduced into Parliament be accompanied by a statement of compatibility with international human rights obligations.
It is no bad thing for a parliamentary committee to examine whether legislation satisfies the international human rights agreements such as the ICCPR.
Australia has signed these treaties. In much the same way as scrutiny of legislation committees such as the Senate Standing Committee for the Scrutiny of Bills ensure that laws meet particular standards, it is appropriate for Australian parliaments to have some analysis as to whether particular legislation meets these international commitments before it passes legislation, although for the reasons we have expressed it is for the Parliament to ultimately take responsibility for the legislation it passes.
It will be interesting to see how much time this proposed committee will have to construe relevant legislation and whether parliamentary rules of debate will be changed so any report can be properly considered before a particular piece of legislation is passed.
It will also be interesting to see if the Committee will be charged to consider treaties Australia has acceded to such as the International Covenant on Economic, Social and Cultural Rights, which includes provisions such as Article 9:
The States Parties to the present Covenant recognise the right of everyone to social security, including social insurance.
There is then the requirement for the Government to publish a statement of compatibility.
There are two models of statement available.
The first is the ACT model, where the statement is usually as brusque as this:
In accordance with section 37 of the Human Rights Act 2004 I have examined the Crimes (Sentence Administration) Amendment Bill 2010. In my opinion the Bill, as presented to the Legislative Assembly, is consistent with the Human Rights Act 2004.
In Victoria, the statements are relative works of art. For example, the powers of inspectors under prosaic legislation such as the Livestock Management Bill reads:
Section 13: privacy and reputationThat said, given the presence of the proposed joint parliamentary committee a compatibility statement appears unnecessary.
Section 13 (of the Victorian Charter of Human Rights and Responsibilities) establishes the right for an individual not to have his or her privacy, family home or correspondence unlawfully or arbitrarily interfered with and the right not to have his or her reputation unlawfully attacked.
The right to privacy concerns a person's 'private sphere', which should be free from government intervention or excessive unsolicited intervention by other individuals.
An interference with privacy will not be unlawful provided it is permitted by law, is certain, and is appropriately circumscribed. An interference would not be arbitrary provided that the restrictions on privacy are reasonable in the particular circumstances and are in accordance with the provisions, aims and objectives of the charter.
Entry and search provisions
Divisions 1 to 4 of part 5 of the bill provide for search and entry powers and as such engage the right to privacy. However, these powers are neither arbitrary nor unlawful for the reasons set out below.
The search and seizure powers granted to inspectors to enter and inspect that are authorised under clause 31 can only be exercised for the clearly stated public purposes of either determining whether the act, regulations, standards or specifics in the letter of approval have been, or are being, complied with or where the inspector has a reasonable belief that there has been non-compliance with the standards, which has resulted in or is likely to result in an emergency that threatens animal welfare, human health or biosecurity.
The bill clearly prescribes the scope of the power to search and inspect. Places of
residence cannot be searched unless the occupier has consented or where a magistrate has issued a warrant or in the emergency situation referred to above.
The bill requires an inspector to inform an occupier of his or her rights in relation to consent before a search and entry power can be exercised. When a warrant has been issued, clause 34 of the bill specifies that an inspector must inform an occupier that he or she is authorised by a warrant to enter a place or vehicle and clause 35 specifies that an inspector must show his or her identity card before exercising any power as well as any time upon request. The bill also specifies the procedures that must be followed in the instance that a premises is entered without the occupier being present.
Under the bill, this will only be applicable under a warrant or in an emergency situation.
To the extent that these provisions relate to private information and permit access to residences, they arise in the controlled and prescribed circumstances set out in the bill and are lawful. Procedural safeguards have been included in the bill in relation to the exercise of these powers. Consequently, I (the Minister of Agriculture) do not consider that these requirements can be described as arbitrary.
Accordingly the provisions are compatible with the right to privacy in section 13 of the charter.
It is for the Committee to form an opinion as to whether a Bill passes international muster.
One would presume that the Government will implement internal mechanisms such as a suitable amendment to the Legislation Handbook to ensure relevant international commitments are considered when drafting legislation and would be ready to make submissions to the joint committee where there is doubt about compliance.
Finally, the Government may have hoped that Bill of Rights adherents would be a least a little bit satisfied with the Government’s compromise.
However Professor George Williams started an op-ed immediately after the Government made its announcement as follows:
The battle for an Australian charter of rights is the debate that will not die.
Perhaps they won’t be happy, after all.