Institute for Private Enterprise » Heydon Royal Commission

Newspoll & Why Policy Changes Must be Made

Des Moore — Mon, 20 Mar 2017 21:38:38 +0000

As a new Parliamentary week starts, the political editor of The Australian interprets the latest Newspoll as putting Turnbull “back in the game” (see below). But while the Coalition’s TPP has improved to 48/52 (from 45/55), it remains a long way short of a recovery let alone a Coalition leadership position. Importantly also, the polling still continues to confirm dissatisfaction with Turnbull. In terms of net satisfaction with leaders (only available on the web), Turnbull and Shorten are both about the same in negative terms (about -28) and, although Turnbull is slightly better than Abbott was when he lost the leadership (-33), he has lost the very favourable position he had when he took over in September 2015 (+19). He is also still below what he was even six months ago (-22). In reality, voters are very unhappy with both leaders and there is an opportunity for a new leader for either party.

Note also that One Nation has retained its improved vote (10% cf 1.3% at the 2016 election) and is now competing directly with the Greens (9% cf 10% at 2016 election). While Hanson has been criticised for her performance at the WA election , her focus on two important issues (climate change and Islamism) attracted only minimal attention in that election. The continued support for One Nation suggests that the Coalition has an opportunity to adopt policies which take a sceptical view on climate change and which strengthen counter-terrorism provisions and attitudes to extremist activities (we need to avoid the French situation, where there is now talk of compulsory military service). Sensible policy improvements would help improve the Coalition’s polling and further reduce that of the Greens, whose leader now wants us to work only 4 days a week!

However, as I argued in last Saturday’s Commentary, such improvements would need to involve a major change in energy and climate policy. For reasons stated in that Commentary, these policies are going in the wrong direction both practically and politically. If Turnbull were to be serious about improving Coalition polling he would abandon his apparent fear of being accused as “Trumplike”. Yet he has now adopted Trump’s use of Twitter to send (daily?) messages on government policy (more power to the PM and less to Cabinet let alone Parliament).

Andrew Bolt’s main article today is in line with my Saturday Commentary (for access see my web). Note in particular that the feasibility study on expanding the Snowy hydro (announced by Turnbull after implying that it is “all OK”) seems a lost cause. Bolt refers us to experts at ANU who suggest that the study will show that “it costs 20 per cent more to pump water uphill than you get from the hydro-electricity produced when it flows back down”. The economics of the Snowy are also likely to be negative if a proper analysis is done. In short, even as an attempt to attract political support let alone deal sensibly with the energy problem, Turnbull’s Snowy project is already a flop.

In his second article below, Bolt does, however, suggest that Turnbull may be moving in the right direction on some issues. Note in particular that Bolt draws attention to Turnbull’s now continued use of “Islamic terrorism”, a reference he could not accept when he first became PM. These developments (sic) in the Turnbull philosophy have been extended since Bolt’s articles were published by his “discovery” today of the Heydon Royal Commission report on Trade Unions, which reported in December 2015. He had his employment Minister introduce legislation today to penalise trade unions and employers for making or accepting “corrupt” payments. If properly and practically framed, such action goes to the heart of the powers exercised by trade unions and hence the role of Labor at present. This is a counter to the decision by Labor to attempt to legislate against any reduction in penalty rates decided by the Fair Work Commission and the statement by Shorten to make this reduction (with which Turnbull eventually said he agreed) an issue right up to the election.

It would be difficult to accept that Turnbull has suddenly become a conservative or even that he has decided to adopt conservative policies. Perhaps these latest developments are designed to give him time. But time to do what?

What Next for Turnbull?

Des Moore — Sun, 12 Feb 2017 11:39:05 +0000

What Next for Turnbull?

Turnbull’s attempted recovery from declining polls appears to involve two immediate strategies. First, expose and publicise dubious activity by Shorten when he was head of the AWU. Second, attack the energy policy adopted by Shorten now that he is leader of the Opposition. This approach seems to have been welcomed by most members of the Coalition and praised by some in the media, both of whom reacted with comments to the effect “why the hell has he taken this long to point out the defects in Shorten as Labor leader” or words to that effect.

However, some also question the extent to which this will work in practice.

Yesterday’s Herald Sun carried an article by veteran commentator Laurie Oakes suggesting that “One intensely personal speech bagging the Opposition Leader might take the heat off Turnbull for a while, but it will not solve the problem for the PM in the longer term. He needs to apply the same passion and rhetorical skill to explaining his policies and disproving Labor’s case” (see attached Oakes on Turnbull). Spot on.

In fact, yesterday’s AFR did have an article which suggests that Minister for Employment, Senator Michaelia Cash, might be allowed by Turnbull to emerge from her semi-retirement and introduce legislation to cover “ gifts such as free travel and housing renovations ‘reasonably soon’ and require greater disclosure of gifts to union officials, a government spokesman said. It is unclear how the law would work if the union leader had a family-like relationship with the employer” (see Cash on Shorten Relationship with Pratt.). Such action would of course be a reform of sorts but it would not do more than touch on the massive reforms needed to the regulation of workplace relations and the role of the Fair Work Commission, on which Turnbull has made only limited legislative progress by pursuing Abbott’s ABCC initiative.

More to the point perhaps may be that the new (sic) Turnbull himself makes greater use of the Heydon Royal Commission’s report, which as the article notes “identified four separate cases where the AWU received payments that may have been corrupt between 2003 and 2010. The findings, where were referred to police, led to a demotion for Mr Shorten’s protege and successor at the Victorian division, Cesar Melhem, in the Victorian Parliament, where he is now a Labor MP”. There is scope to use such findings (why are they still with the police?) to not only attack Shorten personally but justify the case for more broadly based reforms. As mentioned in my Commentary on Thursday, former Treasurer Costello told the HR Nicholls AGM dinner that the government has not yet made any response to the resignation from the FWC of Vice President Graeme Watson and his exposure of the unworkability of that body.

As to Energy Policy, Turnbull is on delicate ground in attacking the Opposition on “extreme” targets for using renewable energy when the Government itself has a target of 23 percent by 2020, which experts say is not achievable and which would in any event put Australia ahead of most Western countries. This article by Chris Kenny outlines the absurd situation in which South Australia has got itself under its Labor government (but on which Liberal leader Marshall seems unable to announce opposition on energy policy notwithstanding continued blackouts). But the problem extends beyond South Australia to the Turnbull government. As Kenny says,

“The serious complication for Malcolm Turnbull is that while Weatherill’s climate crusade is all his own doing and the political consequences for him ought to be dire, it has all occurred under a federal RET that has had bipartisan support. It is classic case of our muddled federation where we have different levels of government acting at cross-purposes. Setting a national RET at less than 25 per cent doesn’t stop self-harming states using it to achieve their own unilateral targets of 50 per cent (Queensland is aiming for 50 per cent, Victoria 40 per cent and Western Australian Labor has been flirting with 50 per cent).The states are responsible for their own foolhardiness. And the Turnbull government’s RET ambitions seem eminently responsible compared to Bill Shorten’s shapeless and uncosted plan to more than double the RET to 50 per cent by 2030. Yet Turnbull and his Environment and Energy Minister, Josh Frydenberg, need to deal with the reality that the current chaos is occurring under a RET to which they subscribe.Remedial action is urgently needed to turn their political ascendancy on energy policy into a practical prescription’.

Turnbull may try to escape from the problem by drawing on advice from Chief Scientist Finkel, who has been commissioned to review energy security. But experts outside government say that Finkel has no background in climate policy and is likely to produce a report which would accept the use of “up to” a limit of renewable sources. The AFR is running an article this weekend (not accessible digitally) which mistakenly claims that Finkel is “highly regarded”. Finkel has also chosen a panel of two supporters of climate change policy. The article quotes Finkel as saying it would be “hard to change the rules” for South Australia but limits on renewable might be an option for other states. That would of course create a (further) problem for federal-state relations and raise the question as to how the Commonwealth would enforce limits.

As previously suggested, the Turnbull government needs to change its climate policy by markedly reducing the target for renewable on the ground that it has adverse economic effects and telling states that it will reduce grants to any who do not observe the lower target. That would indicate that we have a really “new” Turnbull. Perhaps an opportunity for our new Conservative Party to move in the Senate?

Bolt on Turnbull, Interpreting Bernardi, Costello at HRN

Des Moore — Thu, 09 Feb 2017 12:17:10 +0000

For the second day in a row Turnbull has “savaged” Shorten in Parliament – and outside it. The savaging included an accusation about the benefit to Shorten arising from “managing” one of the deals done by the union he led before he became an MP and Labor’s leader, as outlined in the Heydon Royal Commission. The opportunity for the government to use those investigations has so far been largely neglected and the attack on Shorten presumably reflects a number of recent unfavourable developments, such as the drop in Coalition polling to 46/54 on a TPP, the resignation from the Liberal Party of Senator Bernardi, and the apparent success of Trump in effecting major changes in policy in the US (one of which was even quite favourably regarded in a poll here).

While the initial response of Coalition MPs and some media has been favourable to Turnbull’s attack initiative, the question is whether this will be followed by major policy announcements and initiatives. That is much more difficult to achieve under Australia’s political “system” than it is under America’s, which seems to allow the President himself greater power to implement executive decisions. But there is ample scope to attack the Opposition here on the basis of it’s reliance on support from unions which, in most cases, are exploiting their power via the Fair Work Commission and its union-based interpretations of the legislation implemented under Gillard. Equally, there is scope to mount a major attack on the failure of the Opposition to support budget measures sufficient to reduce the deficit.

Turnbull might also indicate support for many of Trump’s initiatives and for Brexit. As indicated in Sheridan’s article, the resignation by Bernardi is “symptomatic of the broader crisis in Western politics”. He also points out that “this is still a government which doesn’t show enough fight”. The problem is whether a Turnbull led government is capable of identifying issues which it could use to attack the Opposition and, at the same time, persuade sufficient of the electorate to reverse the recent polling. The adoption of major changes in environmental policy is a very obvious track to follow given the almost certain major changes in the US and the increased evidence that the so-called experts have made major analytical errors, even using deliberate manipulation of data to obtain non-existent warming. Imagine for a moment that Turnbull announced a major agreement with Trump on correcting the mistakes made by past respective governments. The trouble is that it is virtually impossible for a Turnbull to take such an initiative.

Not surprisingly, therefore, Andrew Bolt published an article on 8 Feb (before Turnbull’s first savaging) arguing that Turnbull must be dumped. While Bolt does not make it clear who he favours to succeed him, it certainly appears that the Coalition cannot win the next election through a legislative reform initiative given the difficulty of securing passage through the Senate. Arguably, it would be better to give one of the possible candidates a chance now (Bolt mentions a number) rather than wait until the months close to the election (which is uncertain anyhow). But there is no sign that such possible candidates are ready to engage in a battle for the leadership.

I am also attaching a summary version of the speech made by Peter Costello at last night’s AGM dinner by the HR Nicholls Society, which I attended. I continue on the board of that Society but mainly in hope rather than expectation that the Government will push for a major reduction in the regulatory arrangements presently in place and their obvious anti-productivity effects. As Costello points out, the Turnbull government has made no comment about the resignation of Vice President Watson (who also attended the dinner along with about 80 others) and his very serious criticism of the workings of these arrangements. Again, this could be an opportunity to attack the Opposition for installing the present arrangements and resisting sensible changes.

Turnbull’s Status Since the July Election

Des Moore — Sun, 04 Dec 2016 12:00:10 +0000

With the end of the Parliamentary session it is timely to assess the status of the Turnbull government and the latest “achievements” of a Coalition which offers itself as a provider of small government.

Will Turnbull’s Polling be Lifted?

The last Newspoll on 20 November showed the Turnbull Government with a TPP of 47/53, the exact opposite to what it was on 23 Nov in 2015 and down from the 50/50 TPP as recently as 12 September. Judging by what happened last year, there will be another poll in early December ie very soon. This should provide an indication of the extent to which, as Turnbull claimed in addressing the Party Room on 29 Nov (see Turnbull on Performance), “we are delivering … on the National Economic Plan” (sic). It will be recalled that, after an extended eight-week official campaign period and with the first election under a new voting system for the Senate that replaced group voting tickets with optional preferential voting, the Coalition lost 14 seats in the 2 July election. It is left with only a one seat majority and a Senate with 11 cross-benchers of diverse views (and 35 Labor/Greens and 30 Coalition).

Turnbull’s address to the Party Room on 2 Dec included claims of “delivery” since the July election on:

Over $20 billion in gross budget “savings” (these are over four years and mainly take the form of tax increases. Detail will be available on the latest budget position in the Mid-Year review due on 19 Dec);
”Reforming” of the superannuation system (this “saves” about $3bn pa and is entirely a tax increase agreed to by Labor and affecting better-off superannuants);
Agreement with Singapore to build $2.25bn of new defence infrastructure in Australia and send up to 14,000 military personnel to Australia for training, up from the 6000 a year now (negotiations started under the Abbott government);
Abolition of the Tribunal providing unwarranted regulation of truck drivers favourable to unions (done before the last election);
Amendment of Fair Work legislation to protect volunteer fire fighters in Victoria (as promised during the election campaign) ;
Passage of amended Registered Organisations legislation designed to make unions accountable for members money;
Legislation to restore the regulatory authority of the Australian Building and Construction Commission (passed, but with major changes after the Party Room meeting);
Passage of a tax of 15% on income earned by back-packers (this was accomplished after the Party Room meeting and was the subject of horse-trading, notably with the Greens, and providing $100 mn for landcare);
Passage of legislation authorising the retention of high risk terrorist offenders ( this also occurred after the Party Room meeting and was the third piece of national security legislation passed in the last fortnight).

The media has given a general assessment that Turnbull has made modest progress in reforms since the July election and that he can claim to have justified the double dissolution election on Labor’s refusal to pass legislation restoring the ABCC and improving the Registered Organisations arrangement to upgrade the applicability to unions. However, even with Turnbull’s many TV appearances it would be surprising if the Coalition’s TPP has improved.

First, the process of obtaining of the passage of legislation on the ABCC and Registered Organisations exposed the weakness of the Coalition’s support in Parliament and the resultant horse-trading is unlikely to have appealed to the electorate. The headline to Paul Kelly’s article in the Weekend Australian – TURNBULL’S VICTORY AMID SENATE BEDLAM – paints the picture.

Second, and more importantly, the substance of the changes is minimal from a reform perspective. In the attached article in the Weekend Australian, economic analyst Judith Sloan concludes that the Turnbull government has failed to “safeguard the use of taxpayers’ money and to talk to them in frank and honest terms” (Sloan on Turnbull 3 Dec 2016). On the budget, I was surprised to learn that the claimed budget savings “were already on the books” but, whether they are or not, there has been no attempt to either reduce expenditure or present the case for doing so. Yet Sloan gives examples of where there are obvious cases for spending reductions and/or a tightening of eligibility – child care funding, breaches of the work test for the Newstart Allowance (the dole), and loans for vocational education (for which a new scheme was legislated on 2 Dec). No attempt has been made to explain the broader need for reducing middle class welfare: indeed Turnbull has praised the importance of the middle class and, notwithstanding his public support for “small government”, he is in reality not a supporter.

Sloan also rightly argues that, with the changes made to the ABCC legislation after the Party Room meeting, the new regulator will have a minimal effect in reducing workplace relations problems. Importantly, the ABCC applies only to the building and construction industry (although now including offshore oil and gas projects) and major problems in other industries will continue (it is reported that Turnbull has indicated –at last – that some attention will be given in 2017 to the Heydon Royal Commission analysis).

In the construction industry itself, the changes made because of Senate negotiations mean that builders with current enterprise agreements, or whose agreements have expired, will not be able to change to the new “freer” (less regulatory) construction code until November 2018. The fact that one such prominent builder whose EBA has expired is already faced with rolling strikes and further industrial action by the CFMEU confirms that the industry will continue to experience serious union-inspired problems. In any event, builders seeking to use the new code will first have to advertise vacant positions in Australia (so as not to give preference to possible temporary employees from overseas); new procurement rules will apply to projects worth more than $4 million; maximum civil penalties are tripled but the amounts of $36,000 for individuals and $180,000 for bodies corporate will not deter disruptions by powerful unions;deals between employers and unions stopping the ABCC from taking legal action are outlawed; there will be an increase in the oversight of ABCC and its use of coercive powers. In short, the “reformed” ABCC still contains an excessively regulatory system which will limit the capacity of building employers to negotiate with potential employees who are not unionists and will continue to inhibit negotiations with unions too.

Sloan’s conclusion is that the ABCC is now “a lamb duck with expensive, onerous and protectionist appendages… this is a case (where) a win is a loss”. Turnbull will almost certainly find it difficult in 2017 to claim he implemented a significant reform.

Turnbull on Climate Change

Turnbull did not say anything about climate change to the Party Room but he has adopted a strategy of attacking targets for the usage of renewables which he and Environment Minister Frydenberg rightly regard as “excessive”. These include the 50% targets of Federal Labor and those also adopted by the three Labor states of Victoria, South Australia and Queensland. He has been (unintentially) helped by the further blackouts in South Australia (which already use 45% renewables) and by BHP even deciding for once that it needed to make a “political” statement critical of the SA government after its Olympic Dam project was out of power for about 10 days. Colleague Jim Brooks, who lives in SA, has sent the following comments on the further blackout there and the reactions of SA Treasurer, Koutsantonis:

While Koutsantonis said there was no way renewable energy generation in SA could be blamed for the loss of power, wind farms were only generating at 6% of their rated capacity when the fault hit. So having the state relying 40% on renewables that were not operating when needed means the lack of power was not attributable to renewable energy policy.
Koutsantonis blamed BHP for not having its own redundant power supply (as opposed to a backup supply for emergencies).
Thus the problems are not the fault of South Australia’s green government driving the state electricity grid to the brink of collapse. The problem is BHP made the mistake of expecting reliable electricity – they should have built redundant backup systems, like they do in corrupt idiocracies in the third world.
If BHP wanted to make a coal fired ultra super critical plant nearby, it could probably sell electricity to South Australians at half what they currently pay, still make a profit, cut emissions (not that that matters) and have its own guaranteed supply. But the SA government won’t let it do that. If SA Customers want to buy that cheap electricity, the SA government won’t let them.

The problem with Turnbull’s policy position is reflected in the following comments he made in a radio interview on SA’s 5AAA:

PRIME MINISTER: “Well you’ve had a state Government that has pursued renewables from an ideological point of view. Again I want to be very clear about this, I am totally non-ideological about renewables versus fossil fuels versus any other source, solar, wind, etc. All of them can contribute to our energy mix and all of them do. But you have to take the ideology out of this. Take that Left ideology that somehow or another we can pursue these enormous energy targets. I mean Bill Shorten wants to have a 50 per cent renewable target. He has no idea of how to get there. He has no idea of how that will maintain security, no idea of what it will cost. No idea of what it involves. These are big ideological statements and what happens is when they get converted into government policy, you start to get the problems that you’re facing now. So the targets have got to be, and this is why we have Dr Finkel, the Chief Scientist, undertaking the review that Josh Frydenberg has set up. The focus has got to be on achieving those three goals – security, affordability and meeting your emissions reductions” (see Turnbull interview with 5AAA).

Thus the supporters of renewables are said by Turnbull to have failed to take account of security and cost, and have “no idea of how to get there”. But the Turnbull government has failed to say anything about the adverse effects on costs of adopting its renewables target of 23.5% for electricity generation by 2020 (7.4% in 2014), ahead of most other countries. Nor, of course, has it attempted to justify the policy of reducing CO2 emissions to prevent the supposed risk of dangerous global warming by 2100. With the likely change in US emissions policy under Trump, such a justification is now badly needed.

Temperature Measurements

In my Commentary of 30 Nov I reported that the NASA satellite showed a fall in average world temperature of 1C since the middle of the year. This was sourced from the UK Global Warming Policy Foundation and published in Sunday Mail in London. It now appears that this was mistaken and, according to Roy Spencer’s satellite-based temperature for the lower atmosphere, there was in fact a slight increase in November. However, the graph still shows a large fall since the El Nino peak earlier in 2016.

Abetz and other Speakers at HRNicholls Dinner

Des Moore — Sun, 23 Oct 2016 11:28:34 +0000

On Friday evening I attended the annual dinner of the HR Nicholls Society and gave the vote of thanks to the speaker, Senator Eric Abetz. His address was highlighted by The Weekend Australian giving it the front page lead story (see below) and the SMH also reported it, but not The Age. Abetz, who was dropped by Turnbull from ministerial ranks (he was Minister for Employment under PM Abbott) and from being Coalition leader in the Senate, used the HRN dinner as an opportunity to criticise Turnbull for failing to make reform of workplace relations a major policy issue at the election on 2 July. He pointed out that, with the ammunition provided by two major reports (the Heydon Royal Commission and the Productivity Commission), a policy advocating further reform had been a “gimme” and he noted that “not even the unlegislated elements of the 2013 election policy were taken forward such as changes to right of entry, transfer of business and individual flexibility arrangements”.

My vote of thanks supported the need to do more than restore the Australian Building & Construction Commission and amend the Registered Organisation legislation to reduce corruption within the union movement. I also expressed regret that when Opposition Leader Turnbull had decided not to vote against the Fair Work legislation initiated by Gillard when she was PM.

In the full text of his address, Abetz makes a number of points relevant to the recognition of the unionism of Shorten and the need for reform, including the following:

Kimberley Kitching, who is the replacement nominee for the retired Senator Conroy and was “championed” by Shorten, “was found by the Fair Work Commission to have provided false evidence on a number of occasions (something that eminently qualifies her to be a Labor Senator)”;
If given the chance, Shorten says “he would govern our nation like a trade union boss”;
Officials of the Western Australian Branch of the Maritime Union of Australia, publicly admired by Shorten, are “regularly before criminal and civil courts for significant breaches, including for assault in addition to harassing workers with ‘scab’ posters and other breaches of the Fair Work Act”;
Shorten has effected “sleazy deals doing the low paid workers out of pay for self or trade union enrichment”;
His (Abetz’s) engagement in considerable negotiations with cross bench senators, some successful, showed it is possible to obtain agreement to legislative changes;
When Labor was in office Shorten extended “misconceived favours” to the MUA which have resulted in a considerable reduction in the number of major Australian registered ships and in their share of Australian freight. Reform in that area has not yet been started but needs urgent attention;
On the basis of advice received before the 2013 election that there was “reform fatigue”, it was decided to limit the proposed reforms for that election.

The final paras of his address are as follows:

“It is vital that the Government advance workplace reform as a top tier priority if it is to achieve its stated desire of pursuing jobs and growth. The hard yards have been done, we have two large reports that don’t only recommend change but make an unassailable case why that change is imperative. And, I can attest, there is a Department of professional and dedicated men and women who could implement this agenda. All that is needed is the political will. A failure of determination will have a lasting effect on our economy, on employers but above all on workers and their families who will be denied a self-sustaining work opportunity. Encouraged by the luminaries of the H. R. Nicholls Society, I will continue to agitate for such vital reform”.

The Weekend Australian report also refers to the promise made by Turnbull, after the Heydon Royal Commission report was published early this year, that the government would publish an assessment. Employment Minister, Michaela Cash, said then that it would “try to implement the overwhelming majority of the Heydon royal commission recommendations”. No such assessment has been released but Cash told a Senate Committee earlier last week that the government planned to introduce reformative legislation next year (see this report by Workplace Express).

Abetz’s address shows that he retains considerable expertise on workplace relations and it makes a strong case for the Coalition to propose a more comprehensive set of reforms in the current Fair Work arrangements even though it would be difficult to get changes through the Senate even with the support of One Nation, whose workplace relations representative, Senator Malcolm Roberts, told the HR Nicholls conference that they would be supportive. Roberts has been given access to the secret document submitted to the government by the Royal Commission. If reformist proposals are backed by justified reasoning and examples of union misbehaviour that should attract public support.

The address to the conference by Victorian Shadow Minister for Industrial Relations, Robert Clark, provided added support to the case for reforms which reduce the capacity of unions to obtain increases in wages and/or conditions of employment that are not justified for those employed by state governments or their agencies. He gave numerous examples of “concessions” obtained by unions in Victoria which use their political relationships with the Labor government and its ministers ( including Premier Andrews) and threats of various types of disruptions if such concessions are not granted. Clark referred particularly to the dispute over the attempts to exercise union control over the country fire volunteers and to stop Boral providing cement to construction projects in Melbourne. He praised the decision of the then Labor Minister Garrett to refuse to kow-tow to union pressure on fire volunteers as an example of obtaining public/media support when the lack of substance of union claims is revealed.

Other speakers at the conference spoke in support of a lesser set of regulatory arrangements that allow or require managements of businesses to be more involved. Judith Sloan argued that the attempt in the legislative changes made by Peter Reith to encourage enterprise bargaining has failed and that, outside governments and large businesses, such bargaining agreements are no longer the first choice. I suggested that what had happened was a restoration under the Fair Work arrangements of the centralised intervention system whose role Reith had tried to markedly reduce and that major changes needed to be made to the Fair Work arrangements to put businesses in a position where they are able to prevent union disruptions if they do not have all their demands met.

Unfavourable Polling for Coalition & Some Reactions to Turnbull Dinner

Des Moore — Thu, 23 Jun 2016 22:31:09 +0000

The reactions to Turnbull’s dinner at Kirribilli House with “dozens” of Muslims vary but will likely have only limited electoral influence in a context where the latest Fairfax –Ipsos poll shows for the second time that Labor is ahead at 51/49 on a TPP basis. While the Newspoll of marginal seats suggests this may not be sufficient to win (because the support for Labor is not fully reflected in marginal seats), the Fairfax poll seems to confirm that there has been a slight swing against Turnbull since the election started. In one sense this is surprising given the greater extent of promised additional unjustified expenditures announced by Labor, the fact that it has acknowledged that it would have higher Budget deficits than the Coalition over the next four years, and numerous policy announcements that provided the opportunity for extensive criticism, including the claim that Turnbull would privatise Medicare (Turnbull favours government interventions and the claim just gave him justification to confirm that without upsetting colleagues). But Turnbull has so far failed to exploit Shorten’s poor budget policy partly because the Coalition itself has already budgeted for high deficits and this makes it more difficult to distinguish between the two major parties. In addition, Turnbull has continued to announce expenditures which while claimed as already provided for in the Coalition budget estimates (The Australian’s SPEND-O-METER shows $5bn announced by Turnbull cf $16.2bn for Labor during the election campaign) give the impression that both sides are adding to deficits and that the differences between the two are small.

Important also is the limited extent of announcements by Turnbull of policies in other areas. On workplace relations, for example, the announcements extend beyond the re-instatement of the ABCC to only a very limited extent and do not make use of the Heydon Royal Commission’s recommendations (see Workplace Relations). Equally, no indication has been given on Australia’s defence involvement in the Iraq/Syrian war against IS even though the US Defence Secretary publicly invited an increase in Australian participation. And on climate change, Turnbull’s announcement with the Coalition’s “Greenie” Hunt of extensive funding to protect the Great Barrier Reef came after it was revealed that an acknowledged expert on coral bleaching has concluded that the dangers of damage are much less than other experts have judged and in fact exposed research errors by them (which led to him being told in effect to fall into line with his colleagues!).

The failure of Turnbull to present a convincing role for the Coalition across all major policy areas, and to sufficiently distinguish the Coalition from Labor, has contributed to the indication that there will be a large vote for minor parties and an almost certain repetition of the difficulty of securing passage of legislation in the Senate. On present indications even if the Coalition is returned Turnbull will present himself as a failed leader with a limited mandate for reform.

Turnbull’s Dinner for Muslims

The Age has given no coverage to this incident, the ABC’s Insiders program gave it limited coverage but News Limited publications have included extensive comments additional to those made on the day after the dinner and reported in yesterday’s Commentary. These include an editorial pointing out inter alia that

“A quick Google search by Mr Turnbull’s staff, however, would have revealed that the sheik[invited to the dinner]also condoned stoning to death for adultery, insisted Islam would take over the world and said wives must obey their husbands to enter heaven. Other guests shared his disdain for homosexuals, including Australian Federation of Islamic Councils head Hafez Kassem, who said active homosexuals should be “treated”. Other religions also regard homosexual acts as sinful. But they do not prescribe the death penalty for that or any other “sin”. Under sharia law, death is the penalty for homosexuality in at least 10 theocratic Islamic states — a practice defended yesterday by Yusuf Peer, president of the Council of Imams Queensland: “That is what Islam teaches and that will never change.” Homosexuals are not the only people, however, whose human dignity is affronted by Islamic leaders. A decade ago, Australia’s most senior Muslim cleric, Sheik Taj Din al-Hilali, blamed immodestly dressed women not wearing head coverings for being preyed on by men. He likened such women to abandoned “meat” attracting voracious animals” (see Editorial on Turnbull Dinner).

In addition to an excellent Op-Ed in The Australian by Janet Albrechtsen entitled “Shut Down The Sheiks Who Incite Violence by Muslims” and an article by Peta Credlin in the Sunday Herald-Sun arguing that the offending sheik should have been removed from his leadership of head of the Imams Council the next day, several letters were published on the views expressed by Muslims. My letter below (written before the Turnbull dinner) calls for a public statement indicating that support of violent activity and preaching will not be accepted. Note also the letter by Senator Cory Bernardi in similar vein.

Election Proposals Omit Structural Reforms Too

Des Moore — Wed, 25 May 2016 11:52:39 +0000

My Commentary sent out late Sunday (thanks to those who sent compliments) drew particular attention to the article by Judith Sloan on the Federal budget and her conclusion that “Labor is completely out of control fiscally; the Coalition is slightly better but no cigar”. This followed other strong critiques, including by John Stone. Meantime we have Turnbull and Shorten buying votes as they go from electorate to electorate and adding up to $100mn a day to budget spending. What does the odd million matter?

Now Judith has written an equally devastating article on the bipartisan failure to either implement or propose significant structural reforms (see below). My favourite “missing” policy is workplace relations and it is relevant that today’s The Australian leads its Talking Points with five letters on that issue (see Letters on IR Reform). While Turnbull has a bad record on workplace relations, it is astonishing that he has so far made only very limited use of the Heydon Royal Commission. Shorten must feel (to use a Turnbull phrase) “very very” relieved. Of course, Turnbull did use the Senate blocking of legislation to tighten regulation in (mainly) the construction industry as the vehicle for calling a double dissolution. But why stop there? Reform is needed across the whole area of workplace relations.

There is one reform item which Sloan failed to mention, doubtless because she judges it would be a No,No politically. I am referring to global warming, on which Turnbull agreed to stick with the policy Abbott had endorsed but which he would like to change. My view is that there is an opportunity for those candidates who are sceptics to say publicly that Australia may have to modify its climate change policy if Trump becomes US President, which is now a real possibility (one US opinion poll shows Trump equal with Clinton). While Trump tends to change his policies quite frequently, there is significant questioning in the US of the extent of the global warming threat (this extract from a Pew Survey in the US made just before the Paris Conference shows that only 20% of Republicans regard CChange as a “very serious” problem and no more than 50% support action to limit emissions).

Here in Australia there are significant numbers who are concerned about the adverse economic effects of measures limiting emissions, notably on electricity prices, which are already being taken to (supposedly) deal with the alleged threat even though Australia only emits about 1.3% of total world emissions. Even Turnbull has criticised as excessive proposals by Labor and the Greens to (in particular) more rapidly increase the use of renewable energies from wind and solar sources(which are two to three times more expensive than fossil fuels).

Coalition candidates in this election who have sceptical views of one degree or another do not need to indicate that they oppose limiting emissions. All they need to say is that they oppose proposals by Labor and the Greens because they judge it wise not to take further measures than the government has announced as Australia would need to review its policies if Trump becomes President. Such statements could set a different atmosphere on global warming policy after the Australian election.

Where to now?

There are major responses to PEFO and the Newspoll showing Labour as possible winners. The left-wing media (The Age, SMH, and ABC) is running the line that the deterioration in support of Turnbull is because he has failed to show the “real” Malcolm ie the progressive Malcolm. But writing in today’s Australian, Greg Sheridan argues that is “100 per cent wrong” (see Sheridan on Turnbull). He argues that Turnbull must change to be leader of the centre-right of the party and that, if he doesn’t, even a win would give him reduced authority and the strength of his authority would be “very problematic”. Put another way, the strength of the Coalition will be much reduced and Australia will face another period of poor governance and miniscule reform.

Another article in The Australian (by Troy Bramston) claims Turnbull is “not a natural politician” and that there is a disaffected section in the Liberals (one might add the Nationals) who won’t vote for the party or will temporarily switch their allegiance in the Senate. There is no doubt that a large number of Coalition supporters have this in mind if Turnbull continues on his present path. Bramston even canvasses possible leaders if the Coalition loses the election. He concludes that “a return to Abbott post-election cannot be ruled out” (see Bramston on Abbott).

As I went for my morning walk through the Botanic Gardens this morning a flock of twenty or so birds winged by and, after swirling around, settled on a damp piece of grass hiding the worms. And, as Milton Friedman once observed about bird flocks, this flock was led by a bird that knew where to find the worms. We are certainly missing that bird in this electioneering. Are there any in the flock who might persuade the leader where the best worms are?

What’s Missing from Turnbull

Des Moore — Tue, 17 May 2016 12:05:21 +0000

While the Morgan Poll is not generally regarded as being the most accurate, its latest result gives Labor a potential winning lead with a TPP of 52.5 to 47.5% and Queensland being the only State where the LNP is leading. This is the largest lead since Turnbull was elected leader of the Coalition and it also has a 30.5% vote for minority parties. While it is too early to be definitive, this suggests that the electorate is not attracted by either major party and that neither will have control over the Senate.

It also suggests that if anything Turnbull has lost potential Coalition supporters even since he obtained a double dissolution. As a hitherto consistent Liberal voter, experienced conservatist journalist Tom Switzer wrote in yesterdays’ Sydney Morning Herald (see Switzer on Turnbull) that:

“What’s different about Turnbull is that he has not actually done anything to explain his rapid downhill trajectory. He is no Paul Keating or Campbell Newman, legislating unpopular big-bang reforms in the national interest or spending cuts to rein in budget deficits as far as the eye can see. Contradicting himself almost every week, Turnbull has stood fast in indecision. He has been consistently indecisive”.

A prime example is his failure to espouse a definitive national security policy, as indicated by Greg Sheridan in the article below. His early naïve venture into arguing that the terrorist threat from extremist Islamists has nothing to do with religion has been only very slightly modified and unlike Abbott he has not sought to push for an increased role for Australian troops in Iraq/Syria. Further, although the attempt by five Australian to travel by boat to Syria offered an opportunity to announce a further tightening of counter-terrorist laws, he has had nothing of substance to say about the extent of the obvious extremism involved. While he is also reputed to have a “flexible” view on the treatment of refugees, it seems that it is only because the bipartisan policy agreed with Shorten is under attack within the Labor Party that he has emerged in public support of not allowing refugees to cross our borders by boats.

Other policy problems with Turnbull’s own party include workplace relations where he has made only limited use of the Heydon Royal Commission and, despite supporting the passage of tougher regulatory legislation on (mainly) the construction industry which allowed him to have a double dissolution, he has not taken advantage of the obvious need for major reform of the whole field of regulatory legislation covering workplace relations. His record here is bad in that when Opposition Leader he refused to vote against the Gillard government’s union-favoured legislation. A not dissimilar attitude exists on climate change, where having accepted the mainly National’s view that to become PM he should not change what Abbott had done, he has made only very limited criticism of the extraordinary proposals by Labor let alone the Greens. As I have previously mentioned, the idea that renewable energy should provide 50% of energy by 2030 should be attacked on practical grounds as well as being not required.

It remains to be seen whether further polling will force Turnbull to adopt policies more consistent with the views of the conservative wing of the Coalition. A further deterioration along the lines of the Morgan Poll could well lead to an internal revolt unless that is done. A lot could happen to Coalition policies in the next six weeks, particularly if the budgetary analysis by Treasury/Finance in ten days time reveals an opportunity for the Coalition to exploit the outlook provided by Labor’s future budgets and their composition (assuming sufficient data is provided by it). Instead of reviewing Backpacker’s licences (as announced today) Turnbull needs to announce that (for example) in government he will review (or better still) reduce the regulation of workplace relations ie as Switzer suggested, he needs some intended big-bang reforms.

The Missing Economic Policy

Des Moore — Thu, 25 Feb 2016 03:21:52 +0000

The Missing Economic Policy

Today’s Newspoll shows the two major parties are now on the same TPP (down from a steady 53/47 for the Coalition). Although Turnbull remains clearly preferred as PM, his indecisiveness over whether to raise the GST/cut income tax and his failure to produce any new substantive economic policy has contributed to the downturn (see Backbench cranks up pressure on Turnbull, Morrison by Dennis Shanahan). Turnbull’s general approach of not ruling any policy in or out –and then not deciding on anything – has not helped and his net satisfaction rating is down to 10 compared with 38 in mid-November. As Rowan Dean put it in Saturday’s AFR, “Turnbull: The Force Awakens has lost business to Deadbill”.

My previous Commentary discussed this situation when assessing the presentation to the Press Club by Treasurer Scott Morrison and the publication by today’s AFR of my letter (see below) reiterates my suggestion of adopting a strategy of cutting expenditure. The need for such a policy is reinforced by Turnbull’s sudden awaking and savage attack on Labor’s policy of reducing the access to negative gearing (see attached article in The Australian “Fear Shorten, says PM, he’s out to smash house values”). This surely means that at least on this occasion Turnbull has allowed something to be “taken off the table” and reducing negative gearing is no longer a possible major revenue source for financing cuts in income tax. Other possible revenue sources exist from adjustments to the treatment of superannuation and capital gains but in practice seem limited and open to criticism that income tax reductions are being financed by an increase in taxation.

As I have noted, in his Press Club presentation Treasurer Scott Morrison rightly said “what all that means at the end of the day is the only way to have lower taxes is to have lower expenditure”. Both Morrison and Turnbull have already signalled that State governments should not expect additional federal assistance and, while these governments continue to object to the (post 2016-17) cuts in education and health announced by the Abbott government, the Turnbull government seems to have succeeded politically in maintaining that policy.

But how could a strategy of taking something away from individuals be sold politically in the lead up to the election?

As suggested in my letter, that could surely be based on the idea that government assistance to those with above average incomes of around $65,000 should be strictly limited because most on such incomes are capable of looking after themselves. Relevant are the strong increase in average real incomes over the past 20 years and that a significant part of the tax and social security system consists simply of churning taxes back from whence they came, that is to higher income groups themselves.

Such a strategy would not be popular amongst those groups. But the risk of a loss of seats would be small. To whom would the losers move their vote.

It is also important to recognise that there is a much greater case for increasing spending on defence than on not reducing benefits that go to upper income groups. In Why We Need to Beef Up Defence, Tony Abbott points out that Labor let defence spending fall to the lowest level since before the last war (1.6% of GDP) and that the threats from various sources have been increasing. He notes that, while the Turnbull government “continues to resist US requests to put at least some special forces on the ground” in Iraq, the ‘injection of Russian planes and missiles into the theatre” makes it important to have the right equipment in the area. There is also serious concern about the threat to Afghanistan, where Australian forces battled for six years, from increased militant Islamic forces from the Taliban and IS.

As an aside, Russia’s involvement in Syria has led to German complaints that one object may be to intentionally increase migration to Europe and Germany in particular. This it is argued may be designed to destabilise the European union and reduce the potential threat to Russia from Europe (see Merkel fears Putin sabotage).

Another need is to develop a coherent policy on workplace relations by making use of the Heydon Royal Commission report. When that report was published last December, Turnbull made a commitment to publish a comprehensive reaction in the New Year. But while we continue to see reports of criminal behaviour of union officials and unjustified union action designed to disrupt business activity, a policy designed to reform an outdated regulatory system (sic) shows no sign of appearing.

In short, opportunities exist for developing a wide-ranging economic policy which could provide additional funding to finance a reduction in income tax, allow increased spending on defence, and upgrade the competitive situation in the labour market.

Australia Day & Some of Its Consequences; Budget & Spending Levels

Des Moore — Sun, 31 Jan 2016 12:50:14 +0000

Our Political System

With minimal editorial change, today’s Australian has published a letter of mine praising the virtues of the present Australian political system. The Letters Ed interpreted it more as an attack on the US system (which it is indirectly) but its main intent is to question the merits of the alternatives proposed for us, including the republican one for which our current PM led the charge in the 1999 referendum but is now suggesting that any move should await the death of the Queen. While he knows Prince Charles favours a republic, he is off track even there: as the monarchical head for Australia Charles would have no legal power or influence on policy.

The substantive question is whether a republican President would be likely to improve the workings of our political system. If he or she were to be given any powers, the answer is a clear “No”: the likelihood is that it would make the system harder to operate. Another letter writer below sets out one of the problems and Paul Sheehan in his article in the SMH also identifies potential problems. The fact that five State Premiers indicated support for a republic probably mainly reflects the view that we should not have a Pom as head: but this is almost certainly by-passed by making our real head of state (the GG) an Australian.

Selecting a head of state looms as a PC nightmare

The Australian, January 29, 2016

The idea of a republic and an Australian head of state has strong appeal. However, given the dominance of political correctness in society, the process of selecting a head of state shapes like a nightmare. I can envisage the outcry if a head of state happens not to be of the Left’s liking. Words such as misogynist, Islamophobic, racist, bigot and fascist will be used, even when unfair or inaccurate. Worse, we could end up with a head of state who laments Australia and the majority of its citizens.

Do we really want to put ourselves through that? I can imagine picking up the newspaper or watching television only to be hounded as to why such and such a person is unfit to represent modern Australia. There is nothing the media loves more than polarising a debate into two extremes with no middle ground. It would be a recurring nightmare depending on the length of the term.

If we are to vote in the republic, we must be very careful which system we choose. Selecting a head of state in this climate would be a free kick to the Left who will use all the tools in its bag of tricks to get its way. As much as the notion of a republic resonates, I feel the serpent of political correctness waiting to bite.

Matt Sinclair, Ivanhoe, Vic

Dwindling US leadership

Australia Day always produces suggestions for changes to the Constitution but rarely do these have substantive appeal or recognise the problems. The reality is that we probably have the best political system in the world. This is revealed when we consider the operation of the system under the US republic.

Every four years it produces a president who seems able to determine policies that extend beyond his constitutional powers on foreign and defence policy and to implement policies with minimal debate in congress. One result is that under Barack Obama, the leadership of the US has dwindled significantly and, as Greg Sheridan indicates (“Obama is to blame for the Donald”, 26/1), has produced candidates for the next president such as Donald Trump and Bernie Sanders with apparently simple answers to complex problems.

Australian political parties also produce leaders with simplistic policies but they are subject to extensive debate within and between the relevant parties and in parliament. As such, they are much more alterable. While that could continue under a republic with a leader who has minimal powers, the dangers of having an Obama are all too real when one reads the views of advocates and the candidates in the US.

Des Moore, South Yarra, Vic

The Budget and Expenditure Levels

For Treasury Head, John Fraser, to outline the budget problem we face is timely given the return of Parliament next week. I have highlighted a few sections of his address and repeat some below. PM Turnbull has also been having timely pre-parliament interviews which range across the budget and the economy. Fraser’s reference to the importance of maintaining our AAA credit rating has attracted attention including from Turnbull who told 3AW Melbourne that the media was exaggerating the risk. But equally Turnbull himself needs to take more of a leadership role in emphasising the need to improve the budget and debt position. Even after the Mid-Year review the outlook for bringing spending under control remains gloomy and a long way short of the “marker” of 25% of GDP suggested by Fraser.

Note also Fraser’s reference to the need for action on policies to improve growth, which Turnbull has also yet to actively pursue. And Fraser does not mention industrial relations, on which the government said it would provide a detailed response on the Heydon report in the new year.

On some specifics in Fraser’s address (his comments in bold).

First , he rightly points out that while “the work of fiscal repair during the late 1990s and early to mid 2000s provided an important buffer for when the global economy was hit by the GFC, … a very substantial amount of the revenue windfall was used to lock-in long-term spending commitments. And since then, the rate of Government spending growth has remained high despite considerable savings measures over more recent years”. In short, the Howard/Costello government should not have allowed so much spending of the revenue from the commodities boom.

Second, on present estimates “spending will not get below 25 per cent (of GDP) at any time over the next decade”. And this does not allow for any election promises, of course.

Third, “Generally speaking, our welfare spending is highly targeted and redistributive. After taking into account the low level of tax paid by those on lower incomes, Australia redistributes more to the poorest 20 per cent of the population than any other OECD country except Denmark. As a side note, the OECD recently reported that Australia spent well below the OECD average on pensions. But when other forms of assistance are included, such as non-cash benefits – for example, subsidised health care, and superannuation tax concessions – Australia compares more favourably. But Australia shouldn’t be aiming to compare itself with the high welfare countries in the OECD.

Fourth, with lower than expected growth in working age population and in wages, “in total, we now expect to receive around $39 billion less in tax receipts in 2016-17 than we did at the time of the 2013 PEFO”. And “the expected underlying cash balance has deteriorated by some $37.9 billion, with the most recent estimate being a deficit of 2.0 per cent of GDP for 2016 -17” ie there has been virtually no cut in spending to offset the loss in revenue.

Fifth, “Net debt is approaching levels not seen since the early 1990s recession, which at that time was the highest since World War 2. We are yet to return to pre-GFC net debt levels …It’s important that Australia maintain its top credit ratings, which helps to contain the costs associated with servicing public debt. Australia is one of only ten countries with a triple A credit rating from all three of the major rating agencies, reflecting our reputation for fiscal prudence. But this rating is dependent on credible fiscal consolidation and a smooth transition to a more diverse economy. We should not be complacent about this. I know from personal experience during the financial crisis how important a strong credit rating is to investor confidence. If we are to permanently reduce net debt, we are going to need to achieve sustained ‘structural’ budget improvements”.

Sixth, “Simply increasing the overall tax burden to raise more revenue is not the answer. It runs the real risk of distorting economic incentives and lowering international competitiveness with negative impacts on investment, growth and job creation. Of course, it is always a matter of judgment – but seeking to keep spending below 25 per cent of GDP may be a useful marker. This would mean that we would seek to avoid having spending reach or exceed the levels met in periods of especially adverse circumstances in the past few decades”.

Seventh, “Faced with the same difficult choices that Australia now faces, many developed countries have managed to undertake significant budget repair in a relatively short time. While at the same time, they have seen economic growth prosper”. Fraser gives three examples of countries achieving a recovery in growth while reducing budget deficits (The US, the UK and Ireland).This is an important comment that helps answer the Keynesians who oppose reducing deficits because it risks lower growth.

Eighth, “economic growth will be critical for fiscal sustainability as well as continued improvements in living standards. This will require ongoing productivity-enhancing structural reform … this includes reforming competition policy and implementing the Harper Review recommendations. Improving productivity is a far more sustainable way to boost economic growth than relying unduly on an exchange rate depreciation. These growth-enhancing policies also very much include tax reform. Tax is not just about raising revenue, it is also about helping to shape the economy so that we attract and deploy resources in a manner to promote long term growth. The arguments for a tax mix switch rest heavily on encouraging more jobs through a higher growth path. Tax reform is a complex issue and is very much the focus of the Government at the current time”.