Institute for Private Enterprise » Malcolm Turnbull

Coalition’s Budget & Labor’s Reply

Des Moore — Fri, 05 Apr 2019 20:39:00 +0000

Shorten’s Budget Reply Speech Leaves Many Questions Unanswered

Economic Effects From Budget Aggregates

Shorten’s reply to Morrison’s Budget for 2019-20 does not offer any aggregate estimates for spending and revenue next year or for the four years aggregate to 2022-23. These are normally provided as a budget presentation and Morrison’s/Frydenberg’s figures are in the published Budget papers (see this summary in Federal Govt Budget Aggregates 2018-19 to 2022-23) .

Of course, Shorten does not have the access to the bureaucracy needed to construct estimates but he does have access to the Parliamentary Budget Office which will have provided confidential advice to him on possible variations to the official estimates. Yet even Shorten’s promise to have larger estimated surpluses than Morrison does not provide any indication of what the figures are. For one thing, while Morrison’s estimated surpluses for the four years are around a very poor $45bn (about 2% of GDP for those years), Shorten’s claim could be easily presented simply by indicating a miniscule higher estimate (say) $50bn. More questionably, Labor might have estimates for both total revenue and spending which are (say) 5 percentage points higher than Morrison’s but are undisclosed and yet still have the same estimate for surpluses. That would mean a significant increase in the size of government (tax and spending) with potential adverse effects on the economy and the private sector.

In short, so far Shorten has mentioned less about aggregate figures and focussed more on claiming what Labor will spend on a wide range of estimates of specific items. He does for example claim to be spending more on health and education, which will be among those which feature in the election debate. Perhaps the election debate will force him to expose the composition of the more important items of expenditure where he claims to be a bigger spender.

Shorten has of course attracted particular attention to his proposal to provide $2.3bn for a Medicare cancer plan through better diagnostic services and free cancer consultations, and this has attracted wide support because many people face expenses in attempting to overcome the disease. However, while this initiative seems to deserve applause, it does not provide a perspective on other items covered by the estimates for health or on spending already made on components of the plan.

It is pertinent that the Morrison government’s estimated total spending on Health over the next four years is about $500bn, including about $90bn to the states under the National Health Reform program and about the same amount for specific purpose payments on health to the states. Assessing the “new” cancer plan also needs to take account of the fact that public health is primarily a state matter and some of the items in the “new” cancer plan would already be provided by state run public hospitals. Thus this plan is not all new but is to a considerable extent increasing the eligibility for accessing the treatment of cancer already in place.

Economic Effects of Changes in Tax & Spending Policies

The Medicare Cancer plan illustrates on a relatively small scale how changes in government policy can improve the financial and health positions of individuals. What seem to have been neglected are the changes in tax policies which are likely to have net adverse effects on the decision making of the private sector and the economy as a whole.

This analysis derives from today’s article in Weekend Australian by Terry McCrann (see McCrann on Labor’s Budget & CC Policies). He argues that “Labor has a two-stage strategy to destroy Australia”, even suggesting that Labor could take us down the Venezuelan track.

McCrann’s Stage One,

“to be delivered immediately, is designed to destroy the entrepreneurial, investing, business risk-taking, job-creating class — with a $200 billion-plus tax attack on them and them very specifically and deliberately, the biggest in Australian history. It is sobering to detail what a Labor-Green government — as it will be, with the Greens in de facto coalition and Richard Di Natale de facto deputy PM — proposes to do from the get-go.

End franking credit refunds.

All but abolish negative gearing.

Double capital gains tax.

Increase taxation of trusts.

Increase the top personal tax rate to 49 per cent.

Not cut the major corporate rate from an increasingly globally uncompetitive 30 per cent”.

A detailed analysis would need to be made of the adverse economic effects of these policies and of the likely adverse effects not mentioned by McCrann of the establishment of a policy of a living wage and the increased regulation of wages and conditions of employment (virtually nothing was done to make use of the Dyson Heydon report made when Abbott was PM). But when put together these policies certainly have the potential to seriously detract from Australia’s economic performance. The detraction could be similar to what occurred under Whitlam.

But account also needs to be taken of the adverse effects of McCrann’s Stage Two, the implementation of the climate change policy. Such a policy did not exist under Whitlam but was started under the Howard government and is now having serious adverse economic effects, notably in higher electricity prices which have increased by a large percentage under the Turnbull/Morrison governments and which would increase further under a Labor government (or require much higher subsidies than already exist). Labor’s policy was outlined in more detail last Monday before the Budget and it includes for the first time a policy requiring that 50% of motor car vehicles to be fuelled by electricity by 2030 (!) and a regulatory policy restricting the cutting down of trees.

Viewers of my Commentary will be aware of the many reasons why the rationale of the dangerous global warming theory does not stand up to close examination. I have also suggested that there is scope to moderate the existing policy. Such a moderation at the start of the electoral debate may provide the only way the Coalition can save itself in the election.

I conclude with one the last remarks made by McCrann in his article, viz

“What the old-is-new-again Labor party of Bill Shorten — a man with a figurative cloth cap and a brain to match but a wardrobe full of, if not Zegna, still Super 120s suits and a taste to go with them — proposes is to destroy the two core foundations of not just a modern economy but modernity itself and indeed civilization”.

Coalition Must Take Now Risks with Policies & leaders

Des Moore — Tue, 12 Mar 2019 07:32:43 +0000

Time to Take Risks

In yesterday’s Commentary I argued that, given the latest Newspoll (and for policy reasons too), the Coalition should “change courses” asap. I also sent a letter to OZ (unpublished) advocating the cancellation of Turnbull’s membership of the Liberal Party. My advocacies are based on my perspective that, although risky, the Coalition needs to take risks now if it is to have any chance of winning the election and that an improved set of policies would in any event provide a better starting point in Opposition to a Labor government.

It was encouraging to receive a number of responses in basic agreement with this approach. And in his article yesterday’s Herald Sun (see Bolt on Abbott as Possible Leader), and again in his presentation last night on Sky News, Andrew Bolt rejected the idea of a new leader who is “a near-unknown that no one hates” because “such risk-aversion rarely ends well”. Instead, he suggests that Abbott would be best and that “helping him will mean that the Liberals after the election will again be overwhelmingly conservative, given how many of the Left are resigning or likely to lose”.

Of course, in principle nobody wants yet another change in leadership. But while Morrison has tried hard, the polling and such limited policy changes as he has offered, are clearly insufficient to swing voters. This is particularly the case with the policy that will be most important in the period prior to the election – energy. Yet Morrison has just rejected the idea of withdrawing from the Paris Agreement and has ignored the adverse economic effects from the retention of the Coalition’s target to reduce emissions by 26-28 per cent by 2030. Except for possible initial “voluntary” falls, the promised lower electricity prices would only occur if dictated by Federal Energy Minister Taylor.

However, in today’s Herald Sun, Terry McCrann points out, first, that while “the government’s proposed 26-28 per cent cuts are anything but timid, (they) are among the biggest cuts proposed by any country anywhere in the world”. And, second, that Labor’s proposed cuts in emissions of 45 per cent are equivalent to 55 per cent in per capita terms, which would be “entirely and exactly pointless. Those cuts can’t and won’t move the ‘Earth’s temperature’ even by one-ten-thousandth of a degree” (see Labor’s 45% Emissions Cuts Equal 55% per Cap: McCrann).

This analysis could provide a basis for a leader of the Coalition to at least moderate its emissions target and tell voters that Labor’s energy policy would cause much greater economic damage than the Coalition’s. Abbott as a leader would be well placed to convey that to voters if the Liberal’s were prepared to take that risk.

Monetary Policy

These days not many observers of the politico/eco scene take a close interest in monetary policy and many look to central banks to just keep them as low as possible without considering possible adverse economic effects. But it is important to recognise that “low” interest rates may have such adverse effects, including over a period of time. On 11 March I had a letter published in the AFR pointing out that the household saving ratio fell from 10% in 2008-09 to just over 5% today and this has been reflected in an increase in household debt and may account for “an increased tendency to reduce spending rates on consumption and housing. One possible explanation is that monetary policy allowed interest rates at relatively low levels for too long, resulting in higher borrowings and excessive debt levels” (see letter as published below).

In short, the recent slow-down in economic growth may be partly reflecting a pause in spending as household debt reaches levels which consumers and small businesses judge to be too high in present “risky” political conditions. Almost coincidentally, it was reported that RBA experts found that, ”all else being equal, a 1 per cent drop in interest rates would, over the long run, boost house prices by 17 per cent. The cash rate has been slashed from 4.75 per cent throughout most of 2011 to its current record-low level of 1.5 per cent as the central bank attempted to offset the end of the mining boom and encourage activity in the housing and consumption sector” (see RBA Analysis Suggests “Low” Interest Rates Stimulate Housing Construction).

In other words, the RBA may have allowed interest rates to go down too far or to go too low for too long, resulting, first, in excessive house prices and debt and, second, that this may have contributed to the current slow-down in GDP. If this is correct it may mean that, contrary to some analysts, there should not be any further reduction in interest rates – unless of course an unlikely recession occurs.

Interestingly, the US Federal Reserve has made four increases in interest rates whereas our RBA Head, Phillip Lowe, after threatening increases, has backed off. Of course, it would not be a good time politically for Lowe to increase rates even if he felt the inclination: from that viewpoint better to stay at present rates. Note that the head of the US Fed, Jerome Powell, has been under pressure from Trump to “keep rates low” with a view to help maintaining the strong growth in the US. But in what has been described as an “unusual” interview in public, Powell has asserted his independence (see Fed Chair Makes Unusual Interview). Lowe would be well advised to make his independence clear when he reports RBA monthly meetings to Treasurer Frydenberg.

Rate Cut Wrong in an Era of High Debt
(Letter by Des Moore published in AFR, 11 March 2019)

Should Coalition Change Any Policies?

Des Moore — Sun, 10 Mar 2019 21:00:56 +0000

The latest Newspoll shows that, after three successive results on 47/53 TPPs, the Coalition has now fallen to 46/54. Even though Morrison’s personal approval ratings improved a single point to 43 per cent so too did Shorten’s and, while Morrison’s disapproval numbers fell from 48 per cent to 45 per cent, Shorten’s also fell two points. These ratings gaps have not altered to any significant extent over the last fortnight and, although they still favour Morrison, there is no real sign that the Coalition can close the overall gap on TPPs by the May election (see Coalition’s Newspoll Down To 46/54).

What Now?

“The Australian’s National Affairs editor argues that “Scott Morrison is approaching the point of no return. He either sticks with the current political strategy in the hope it will eventually start to bite, or he changes course before it’s too late. Both options are loaded with risk. The polls suggest that whatever the Coalition is doing, it is not working. But to restart the government agenda now would be ridiculous. There is no other narrative for Morrison. The economy and national security are what Coalition governments do. Cooler heads within government will be advising colleagues that the real driver of the polling numbers are the constant, and one would have to assume tactical, interventions. (see Morrison Near Point of No Return)

My belief is that the Coalition should in fact “change courses” asap. Even if it is too late now to win an election, it should aim to provide a better base from which to counter Labor in office. Such changes should include

A statement that policies operated during Turnbull’s reign will hitherto be revised to better reflect the Liberal Party’s small government and competition market beliefs. That should be accompanied by indicating that moves will be made to expel Turnbull from leadership of the Liberal party (see Turnbull).
Morrison should offer to subject himself to another election contest and indicate that he would support the appointment of Abbott if he won such a contest.
An indication that policy changes include changes in climate change policy involving a withdrawal from the Paris agreement, a major reduction in the emissions reductions target, a major lowering of the renewable target, the elimination of related subsidies, no increase in refugees from the already high level, a substantive reduction in immigration from the present rate, a closing of any gaps that allow asylum seekers to obtain unwarranted residence, and a reduction in government expenditure over the next three years to the level reached in the last year of the Howard government (to 23.% of GDP from the present rate of about 24.5%) to be set out in the April budget, with a reduction in the income levels at which social welfare is provided.

More Ministers Quit; Treasury Officer’s Life

Des Moore — Sun, 03 Mar 2019 22:31:36 +0000

Can Morrison Cope with Two More Cabinet Departures

Last Friday’s Commentary suggested that the latest Coalition’s Newspoll of 47/53 for the third successive time indicated that the Morrison government was still in serious trouble. I suggested that the additional policy decisions announced by Morrison on climate policy would be unlikely to help close the gap.

These measures included acceptance of the Paris agreement and an expanded use of renewable through the establishment of the very uneconomic Snowy2.0 and the usage of “big batteries”. Energy Minister Taylor also claimed the new measures would cut energy bills while lowering emissions but this failed to take account of the additional costs from using the Snowy or from back-ups needed when other renewable are not available. I noted that it seemed unlikely that the Energy Minister would be able to reduce electricity prices except through the adoption of a regulatory system which legally limited the maximum price able to be charged by retailers.

While the Cabinet elevation of Senator Reynolds to Defence Minister (from Assistant Minister for Home Affairs) means the Morrison cabinet now has the greatest representation of women in the senior ministry of any government, Pyne will stay as head of that ministry until after the election, when he will not stand for return to Parliament. Mr Morrison said of Senator Reynolds: “When you can call up a brigadier, in the form of Linda Reynolds, to take on the role of defence minister, it shows we have a lot of talent on our bench to draw from. Linda will be the second female to serve in a cabinet-ranked defence portfolio. She will bring the number of female members in the cabinet to seven. “This is the highest number of any cabinet since federation.” More importantly, in the interviews she has conducted since her appointment, Reynolds has shown she should have become a cabinet minister some time ago.

The recent loss of several Coalition Ministers, including (until the election) of Pyne as a senior Minister and the immediate resignation of Defence Industry Minister Ciobo, has led some to question whether this might not allow Morrison greater freedom to run the “ship” and to have the Coalition become a genuine “conservative” party with a reduced influence from so-called moderates. Of particular importance in this regard is the end of Pyne, who is reported as once saying he could have stood for Labor, and ran as a Liberal only because he lived in a Liberal seat (see Norington’s Analysis of Pyne or Realities of Politics). With both Turnbull and Pyne departing, the potential for a move of the Coalition to conservatism in greatly enhanced.

In today’s Herald Sun, commentators Andrew Bolt and Rita Panahi both argue that this situation may help the electoral position of the Coalition. Bolt argues that

“Malcolm Turnbull gone, Julie Bishop and Kelly O’Dwyer going, and now Christopher Pyne, too. Know what some Liberals call that? A good start. The election will do the rest. Check Sportsbet’s seat-by-seat odds. They tip that from the ruins of this Morrison Government after the May election will crawl a Liberal party where conservatives will again have the numbers and most of the talent. The Liberal Left has destroyed not just the party but itself, and that’s why some of its leaders are now deserting — and slamming the door in fury” (see attached Coalition May Become Conservative).

Of course, there is a lot of water to pass under the bridge before the election and Bolt acknowledges that Morrison himself is “ideologically flighty”. But Morrison has a much improved outlook if he can present himself as a leader who believes in the Menzian “small” government approach and who will spend more time attacking the policies being canvassed by Shorten.

Responses to Assessment of Treasury Life

During the time I was in Treasury (for 27 years until 1987) I naturally had several acquaintances with David Morgan who joined in 1980 at age 33 and left in 1990 to join Westpac. He did not work for me during that time but I became familiar with his economic and political views, although unlike some others I was not invited to his marriage to a Labor minister. His decision to have a book written about his life, titled David Morgan: An Extraordinary Life by an Oliver Brown and published at age 72, reflected his somewhat aggressive approach to letting the world know of his views. On 2-3 March the AFR published an article by Brown who says that at Westpac “he was given a brutal assessment of his management skills”.

The Australian’s Business journalist Richard Gluyas has also written about Morgan’s experiences and his article of 2-3 March is attached (see Gluyas on Morgan). That article however does not appear to provide a completely accurate picture of the then Secretary to the Treasury, John Stone. This has resulted in letters published by each of Stone and myself below.

Ros Kelly warning ‘did not happen’

Letters Published in The Australian, John Stone, Des Moore, 12:00AM March 4, 2019

8 Comments

I refer to Richard Gluyas’s Business Review article (“How a banker’s life lessons were forged”, 2-3/3) regarding David Morgan’s biography. In the article Morgan is quoted from the book as saying: “Over drinks one Friday night in Canberra, before (Morgan) married (Ros) Kelly in 1983, the arch-conservative then-Treasury secretary John Stone scowled at Morgan: ‘If you marry that woman, you will never be secretary to the Treasury’.” That is untrue.

I would never have said such a thing about Ros Kelly, nor would I have thought of Morgan (then a relatively junior officer) as a possible future secretary to the Treasury. My subsequent invitation (which I accepted) to attend their wedding renders the allegation even more bizarre.

I have known Morgan for 47 years. His intellectual abilities have never been in doubt. It was for an entirely different reason, when he asked some time ago that the author of his then planned biography might speak to me, that I declined.

John Stone, Lane Cove, NSW

In his commentary on David Morgan’s book on his own life, Richard Gluyas writes that “after an early career at the International Monetary Fund”, Morgan switched over to Treasury where he formed a tight bond with fellow thinkers who allegedly “marginalised” Treasury secretary John Stone, who “then exited Treasury”.

I have not read this book but am puzzled by this assertion.

As a deputy secretary Treasury at the time Stone resigned in 1984, I was in close contact with him at that time and I do not recall him attributing his resignation to any pressure from within Treasury. To the contrary.

Regarding the exchange rate float in 1983, Paul Keating’s concerns later of the danger of us becoming a banana republic suggest Stone correctly advised implementing other regulatory and policy changes with the float.

Des Moore, South Yarra, Vic

Coalition Remains in Serious Trouble

Des Moore — Fri, 01 Mar 2019 01:34:30 +0000

Newspoll & Subsequent Policy Announcements Suggest Coalition Still in Serious Trouble

Due to a major technical problem which put my computer out of action for two days (possibly caused by a hacker I was advised) I am now in a catch-up position in regard to circumstances where numerous pre-election statements have been floated around by both major sides of politics. It has almost seemed like a new policy per day, which seems unlikely to have attracted votes because of the limited attention by the Coalition to explaining benefits. One commentator even described Morrison as a Muppet and, despite his increased media appearance, it is difficult to see a closing of the polling gap next time.

The February Newspoll left the Coalition on a 47/53 TPP for the third successive time and showed a fall in Morrison’s net satisfaction rate from minus 2 to minus 4 (Shorten’s also fell to a similar extent). This polling occurred despite expectations that Labor would be adversely affected politically over the passage of the Medivac bill instigated by Labor/Phelps/Greens and passed because the government had lost its control of the lower House. This legislation allows refugees and asylum-seekers to be fast-tracked to Australia for medical treatment on the orders of two doctors and involves an effective loss of border control decisions by a Minister, although the concern seems more about what would be likely to happen under a left wing Labor government than about the exploitation of the Medivac.

In fact, instead of a Labor win, Morrison appears initially to have instigated a favourable course of action by announcing that existing asylum seekers on Manus/Nauru will be transferred to Christmas Island and this initially secured approval from Shorten. However, Shorten has since backed away from his “approval” and it is not clear if the possible “misuse” of the legislation can be made there too.

That aside, Morrison has responded to pressure from within the Coalition, and of course from Labor’s accusations (and from some media “experts”) that it is taking no action on climate change or to fulfill its undertaking to reduce electricity prices. Morrison has apparently decided to make various day by day announcements designed to convey the impression that action is being taken. But the measures announced would be unlikely to involve any significant reduction in prices (unless accompanied by increased subsidies) and are suddenly focused on increasing the Coalitions’ reliance on renewable as a major part of its CC policy, viz

“the Prime Minister said the government’s support for big hydro projects was vital and economically prudent, as Australia’s energy market “continues to transition towards renewables”. “If you want to have a renewables future, you’ve got to have big batteries like this, and the commercial element of that is quite compelling and that’s what the numbers so far have shown,” he said. “We get the economic harvest, we get the jobs harvest, we get the energy harvest, and we get the renewable and the sustainable energy harvest that delivers on our environmental commitments.” The opposition said the government’s commitment to hydro power “only make sense under Labor’s renewable energy policies” (see Morrison Announces More on Renewables).

However, in the same article Energy Minister Angus Taylor claimed the new energy efficiency measures would cut energy bills while lowering carbon emissions. “We know that businesses and community groups are struggling under the weight of high power prices,” he said. “That’s why we’re taking strong steps to ensure they get the practical support that they need to reduce their energy use without reducing productivity.”

True, the reduction in emissions from the (newly announced) shift to renewable would in themselves favour lower prices. But renewable additions would also add to costs (including of course the additional back-ups needed in case renewable are not available) and would be unlikely to lead to lower prices overall (see also Coalition Climate Policy).

It was particularly disheartening to see on Sky News that there was agreement amongst participant that Turnbull’s decision to expand Snowy Hydro was endorsed by Morrison as a major component of his latest climate change policy. No account seemed to be taken of the much higher cost of such expansion compared with the cost of producing the electricity using fossil fuels. As Judith Sloan points out, “were the electricity market not so distorted, there would not be any economic case for Snowy 2.0. The project has been around for many years and it never stacked up. The cost and the execution risk made it a complete non-starter. The fact the Coalition government refuses to unpick the distortions in the market, rather than adding to them by promoting Snowy 2.0, is a sad indictment of where energy policy has landed. And, by the way, for the sort of investment being devoted to Snowy 2.0, you could get several high efficiency, low emissions coal-fired plants” (see Sloan Says Snowy2.0 Fairy Story).

Many others have concluded that the Snowy2.0 should not be started but it seems likely that bureaucrats in PM&C and Environment have promoted the case.

In considering possible electricity price reductions, it is pertinent to note that under policies adopted by the various states in recent years (which have been based on the perceived need to reduce the usage of coal because of the supposed danger from higher temperatures):

The adoption of such policies has been a major contributor since 2010-11 to a trebling in average wholesale electricity prices, rising from about $30-40 per MM to about $80-110 per MM;
While businesses and households would be unlikely to have experienced similar such increases at the retail level (data for retail prices back to 2010-11 are not readily available), they would undoubtedly have increased since 2010-11 at a much faster rate than pre 2010-11;
The retail figures available for 2017-18 show an increase of more than 10% on the previous year according to figures published by theAustralian Energy Market Commission (AEMC), which was set up by the Council of Australian Governments through the Ministerial Council on Energy in 2005. In the current year the AEMC estimates a reduction of about 3% followed by another reduction of about 9% in 2019-20. The AEMC says the estimated falls since 2017-18 are “driven primarily by wholesale costs” but details of these estimated costs are not readily obtainable.
At this stage it is difficult to see any significant price reductions except by the Federal government establishing the Default price it has canvassed and by enforcing a maximum price at a lower level. Such a policy, said to be operated by regulation and claimed not to require legislation, would imply that there is inadequate competition in the current market and that seems to have been assumed in regard to the major generators. But no explanation has been given as to why the ACCC could not act to enforce competitive measures rather than the government itself establish a regulatory direct.

Ispos Poll Shows Big Improvement in Coaliton Polling

Des Moore — Mon, 18 Feb 2019 08:57:19 +0000

Has the Tide Really Turned?

Today’s polling, not by NewspolI but by Ispos for Fairfax press, must have come as a bit of a surprise to those associates with that media group, as it also has for those supporting the Coalition. Most of the latter have been expecting an improvement in the Morrison government’s polling from the 46/54 TPP result last December but not by three percentage points to a 49/51 TPP. That is close enough to the election result in July 2016 under Turnbull (50.4/49.6) to lead the Fairfax media (and the ABC) to downplay it as much as they can.

But they also find it difficult to explain away the two percentage point increase in Morrison’s performance rate since December which means he is now a nine percentage points better performer than Shorten (49/40) and ten percentage points more preferred than Shorten as PM. (Strangely, Ispos have asked to interview me tomorrow morning, to which I have agreed).

Of course, this polling may be only a “one off” and we have to wait until the next Newspoll (which is probably next Monday) to see if it also shows a big improvement in the Coalition’s electoral hopes. But there can be no doubt that this poll provides a major “scare” to Shorten and Labor. Even the leftish political editor of the Fin Review has had to acknowledge this (see Coorey Says Test of Nerve For Labor). Note his comment on last week’s debate on whether to allow “exceptions” to border controls, viz

“There was a great deal of trepidation within the party last week over whether it had done the right thing by opening the door on boats, an entrenched political weakness which has cost it at least two elections this century”.

As I argued in last Friday’s Commentary, “Morrison’s attack on Shorten for showing weakness in handling Caucus is obviously correct (as the emergence of Deputy Albanese on TV suggests) and provides a useful stick for Morrison to use and argue that, if Labor were to win the election, they would again allow border controls to be breached. Morrison has already established that up to 300 refugees have obtained the approval of doctors to be transferred to Australia. It seems likely that under Labor border controls would be eased and smugglers would again penetrate access in one way or another”.

It is not only the AFR which is having to pull its horns in. As Andrew Bolt points out in his article in today’s Herald Sun:

“So how to stop them? Labor’s media shills offer two fixes. First, suggests The Age: “The turnback policy is cited by experts and insiders as the most effective deterrent … It would be prudent to buttress this barrier.” Pardon? Turning back boats is the Tony Abbott policy which The Age was still damning in 2015 as “morally repugnant”, and “ruthless and despicable”. It’s a policy many on Labor’s Left still hate. So why did turnbacks go from “morally repugnant” to something The Age wants more of? Why? Because The Age knows Labor has put sugar on the table for the people smugglers, and if boats now turn up it could lose the unlosable election. That’s why many Leftist journalists also insist Prime Minister Scott Morrison stop saying Labor has weakened our borders. He’s giving people smugglers ideas, they say. Guardian Australia’s Murphy even accused Morrison of “looking like you are whistling up new boats for a bit of cheap partisan advantage”.

Many leftist journalists insist Prime Minister Scott Morrison stop saying the policy has weakened Australia’s borders. How crazy. The Liberals now can’t inform voters that Labor’s policy is dangerous? And how dumb do journalists think the bosses of those multimillion-dollar people smuggling cartels are? They don’t need Morrison to tell them what Labor has done — especially not with activists celebrating at high decibels” (see Bolt on Fairfax Support for Labor).

Bolt’s article today would have been written before the editorial in today’s Age, which has done some backtracking even to acknowledging with mixed views that “There is, however, a legitimate issue for this election about whether the ALP is the better party to manage asylum seekers. The left of the party has only accepted Mr Shorten’s approach with great reluctance”. The Age adds that it “reported from Indonesia on Saturday that asylum seekers stranded there since 2013 said the bill had not made them more inclined to take the risk of boarding boats, but one source, long known to this organisation for having links to people smuggler networks, said that if the ALP won government, Mr Shorten could face a test of his nerve”. But it then makes the astonishing addition that there is no reason why the ALP cannot face down the challenge from people smugglers just as resolutely as the Coalition, apparently forgetting what happened to attempts to control borders under the Rudd/Gillard/Rudd governments! (see the full text of today’s Age editorial, which should surely lead to a change in editor of a paper which claims it is “independent always”).

Of course, the asylum seeker issue is only one of several explanations for the narrowing of Shorten’s lead in the polls.As today’s Age also acknowledges, Shorten “may also be suffering from some of his tax policies. Many voters, including, surprisingly, 30 per cent of ALP voters, are worried about his plans to end cash refunds of franking credits. Still, it is the issue of asylum seekers that appears to be weighing most heavily on the electorate. To maintain his lead, Mr Shorten will have to prove his mettle both to voters here and also to those waiting in Indonesia for a sign of weakness”.

As electorally beneficial as the border control issue is likely to be, Morrison can’t rely only on using that as a stick to beat Shorten with. Other policies need to be finalized and presented, including the budget before the election.

Turnbull Can No Longer Be Accepted As a Liberal

Des Moore — Thu, 07 Feb 2019 03:38:03 +0000

Morrison Could Now Distance Himself From Turnbull

In today’s Herald Sun, Andrew Bolt points out that on Tuesday Malcolm Turnbull “gave a ludicrously generous endorsement to Liberal turncoat Julia Banks, the MP now running as an independent against Liberal Health Minister Greg Hunt” and rightly describes this and other actions by Turnbull as “treachery” which however many journalists have failed to so characterize (see Turnbull’s Party Betrayal Must Be Called Out).

Bolt argues that “Turnbull has now done all that’s needed for the Liberals to expel him as a saboteur. The constitution of the party’s NSW branch, to which Turnbull belongs, states: ‘State Executive may expel a member where the member has actively assisted a candidate other than a candidate endorsed or approved by the organisation for election to office.’”

Bolt also argues that “Turnbull is involved in the spate of so-called ‘independents’ and ‘moderates’ now standing against his Liberal foes and all pushing his signature cause of global warming”;
Turnbull shows “other clear signs of vengeance against the Liberals who failed to see how utterly brilliant, loved and successful he really was”;
Turnbull “publicly attacked” Morrison’s proposal to move Australia’s Israel’s embassy to Jerusalem;
He lobbied Liberals to refer Peter Dutton’s to the High Court to determine his eligibility as an MP;
Followed a new “Vote Tony Out” Instagram campaign against Tony Abbott re-election in Warringah.

Bond concludes that Turnbull “just wants the Liberals to lose” and yet “Morrison is too scared to take on Turnbull publicly”.

Bolt is far from being the only commentator who is critical of Turnbull’s behavior from the viewpoint of the Liberal Party. An article in The Australian on 6 Feb, jointly authored by Greg Brown and National Affairs Editor Simon Benson, reports that “Liberal Party federal president Nick Greiner criticized Mr Turnbull for suggesting in an interview that Ms Banks was an ‘outstanding parliamentarian’. Mr Greiner, a former NSW premier who was the former prime minister’s pick for party president, said Mr Turnbull should “follow his own advice” about the behaviour of former prime ministers after they leave politics” (see Greiner Criticizes Turnbull).

One day in the near future Liberal President Greiner may be asked to support a motion to expel Turnbull.

Janet Albrechtsen is another liberal commentator who has been extremely critical of Turnbull’s behavior. In an important article in The Australian on 6 Feb she correctly claimed that “last week, Malcolm Turnbull was further marked down in senior government circles as the culprit who has one final act in Australian politics: to bring down the Morrison government and destroy those who tossed him out for being a poor prime minister last year, using his totemic issue of demanding further action on climate change”( see Albrechtsen Exposes Turnbull).

Albrechtsen also points out that “Turnbull’s political history points to a man who burns people who thwart his ambition. Following the 2007 election, when Brendan Nelson beat Turnbull for the leadership, Turnbull wasted no time in tearing Nelson down”. Nelson’s chief of staff, Peter Hendy, told a Fairfax journalist that “Turnbull told me that my job was to get Brendan to resign in the next few weeks because Brendan was hopeless and he would damage the Liberal brand so much that by the time he, Turnbull, took over, the next election would no longer be winnable. Turnbull said much the same to Nelson”.

Important in the present context, Albrechtsen claims that “when Turnbull lost the prime ministership to Scott Morrison last year, he did everything he could to destroy the Morrison government. Turnbull refused to help Liberal candidate Dave Sharma during the Wentworth by-election. Those close to Turnbull pleaded with him to write a letter supporting Sharma. He refused”. She also suggests that the Turnbull may have a hand in the rise of a batch of fake independents, assisted by GetUp, running against his longstanding nemesis Tony Abbott, Greg Hunt too for voting against Turnbull in the leadership coup, and even the member for Mackellar, Jason Falinski. The so-called independents have this in common with Turnbull — a fixation on more action on climate change. She also recalls that in October 2009 Turnbull said “I will not lead a party that is not as committed to effective action of climate change as I am.” And Abbott’s response: “OK then, don’t.”

As to Banks herself, the following picture accompanying Albrechtsen’s digitalized article itself tells its own story.

Malcolm Turnbull visits the then newly elected member for Chisholm Julia Banks in Oakleigh in 2016. Picture: Jake Nowakowski

Her false claim to have “unfinished business” on climate change action is reflected in what she told the ABC’s Rafael Epstein, viz that ‘we should meet or exceed the Paris targets’. “That was news to Jane Hume, a Victorian Liberal MP who once supported Banks but said she had never heard Banks raise such matters on climate change in the party room. A new-found conviction then? Maybe one assisted by her good friend, the former PM, and his son”.

There is much more that could be said about Turnbull’s character and ruthlessness. John Stone has had a number of articles published pointing out that, for a variety of reasons, he was totally unsuited to be head of the Liberal party. Most of these were re-published in my Commentary now on my web.

The most important policy implication now is that the revelations cited above provide an opportunity for the Morrison government not to say publicly that Turnbull is no longer accepted as a Liberal but to say that some of the policies adopted by Turnbull have been reviewed and are being improved. Morrison should not be “scared” to take on Turnbull, as Bolt suggests he is. The Coalition should say that they now judge themselves more likely to be accepted by the electorate than present polling suggests by making an updating in some policy areas.

This requires a change in what is the most important “political” policy for the election, viz climate change. In particular, the policy being developed by Energy Minister Taylor should include a departure from the Paris Accord by eliminating or at least reducing Australia’s targets for reducing carbon emissions and also reducing the renewable target. Morrison should also strongly reaffirm the other main policy, viz that on border controls and on immigration policy generally including a major reduction. This appears to be mainly (but not entirely) on track (see Morrison Will Vote Against Bill On Medical Treatment).

With the resumption of Parliament next week these changes in policy, and their explanations, should be settled before then.

Can Electricity Prices be Reduced?

Des Moore — Thu, 31 Jan 2019 12:14:43 +0000

Will Electricity Prices Be Allowed by Governments to Fall?

The improvement in the Coalition’s Newspoll on 29 January (still down at 47/53 TPP) has almost been forgotten and questions continue as to whether Morrison is able to address the “two big things” (quit Paris accord and slash immigration) needed to give the Coalition a chance. The need for quitting the Paris accord has been enhanced by what has happened under heat waves in Victoria, South Australia and now NSW.

Since my 29/1 Commentary the possibility of the Coalition establishinga policy which would, as promised, allow lower electricity prices to happen and be sustained continues to be highly unlikely– except of course if government controls are able to be imposed legally and producers/retailers are compensated for a proportion of the existing higher costs which would otherwise be met by consumers of electricity, but with taxpayers then having to pay the costs. As indicated in the this article (Forward Electricity Prices Increase), at present futures markets are operating on the basis that the increasing reliance on renewables under announced policies will mean that there will be periods when major shortages of supply occur given that states have policies which will rely on up to 50 per cent of power coming from renewable and prices will have to increase to choke off a proportion of demand (the discussion in the article is confused because the author and the AFR itself supports existing policy).

This is basically what happened during last week’s heat wave and little wind power and which led to a sudden major increase in costs. It is reported that Victorian and South Australian consumers of electricity had to pay additional costs of about $1bn for just two days last week, which indicates the frailty of existing policies operated by those two states (see Power Costs Increase by $1bn in Two Days) and which other states also operate. Indeed, NSW has today experienced blackouts which appear less than in Melbourne but which include outages (and additional costs) in hospitals (see Blackouts in NSW Too).

Note that Federal Resources Minister Canavan said that this occurrence “justifies investment in reliable sources of power, such as coal-fired power”. But he fails to recognise that the private sector will not make any such investments under the existing climate change policy which aims to reduce usage of coal. Note also that the climate “expert” employed by The Australian, Graham Lloyd, comments that “Renewable energy might be the cheapest option to build but it makes sense only if there is power available when it is needed”(see Graham Lloyd on Renewable). But he doesn’t canvass a reduction in usage of renewable or a basic problem with policies.

The “solution” of course is to withdraw from the Paris accord which Turnbull signed on our behalf (sic) and, instead, adopt a climate change policy which preferably eliminates any target for using renewable or reducing carbon emissions but at least reduces such targets to a major extent. Properly handled, that would provide a major weapon with which to fight the election given that Labor has adopted an even larger bunch of targets to use renewable and to reduce carbon emissions. But Morrison has first to indicate that his government is now not in agreement with CC policies adopted under Turnbull.

Newspoll Lift Helpful But Coalition Has a Long Way to Go

Des Moore — Tue, 29 Jan 2019 10:24:15 +0000

Helpful Lift in Coalition Newspoll But Still Well Behind

Today’s first Newspoll for 2019 shows a helpful improvement for the Coalition in its TPP gap from 45/55 in early December to 47/53 but Morrison’s “Satisfactory” rate as PM went down from 42 to 40 and his “Dissatisfaction” rate went up from 45 to 47. By contrast, the “Satisfactory” and “Dissatisfaction” rates for Shorten each improved by a point and left him only 3 rates behind Morrison. In the “Better PM” rate Morrison also dropped a point while Shorten’s rate was unchanged, albeit at 7 points behind Morrison. This Newspoll was taken during the period when three ministers announced they would not stand at the next election (see Newspoll TPP Loss Reduced to 53/47).

One might say that the improvement in the Coalition’s TPP is not cancelled out by the deterioration in satisfaction and better PM rates. But the improved TPP has also to be assessed by noting that it is still suggests a 3.4 per cent swing against the government since the July 2016 double dissolution election won by Turnbull by one vote. Remember also that the Turnbull government itself experienced a swing against it then of over 3 per cent ie the Coalition has a lot of ground to make up.

The NSW State election on 23 March (for all seats in the lower house) will provide the next electoral test for the Coalition, although there will also be more Newspolls before then.

In my Commentary on 27 January I argued that Morrison needed to get cracking on enunciating policies asap and drew particular attention to the problems arising from existing energy and climate change policies, including of course the large blackouts in Victoria. Commentary concluded that “the cost of producing more power, and reducing electricity prices, would also be reduced if the existing policy of reducing emissions from coal usage was either dropped or substantially reduced and the non-binding agreement in Paris was dropped or reduced”. I also argued that increased usage of renewable is not the way to reduce electricity prices.

Note too that, according to Simon Benson at News, Morrison believes that the Coalition’s attack on Labor’s negative gearing and dividend imputation policies “represent a significant vulnerability in Labor’s economic argument”. But the (correct) attack on such policies is likely to have only a limited effect on polling.

So far there is no sign of any movement on the most important policies and Morrison’s announcement today of tax concessions for small businesses, apparently at a cost of $750mn , is only touching the edges of policy (see Morrison Announces Tax Concessions for Small Businesses). Equally, to meet his prediction that there will be an increase in jobs of 1.25 mn over the next five years (similar to Abbott’s successful prediction), appropriate policies and circumstance will need to be in place.

In today’s Herald Sun et al, Terry McCrann says “Sorry Scott and Josh, but there ain’t anything you can do to stop it. Labor is going to win the federal election. The two of you, and especially Scott, won’t do the two big things that are so critical to Australia’s future and, properly argued “axe-the-tax style”, could at least make a fight of it. That’s to slash immigration and walk away from the Fake Paris Climate Accord” ( see McCrann: Labor will Shutdown Lights/Economy)

Morrison needs to address in a substantive way the “two big things” mentioned by McCrann.

Morrison’s Objectives Not Clear; Sea Levels; O’Dwyer Resignation

Des Moore — Sun, 20 Jan 2019 05:32:29 +0000

Where is Morrison Going?

In my Commentary for 17 January I noted that “there is no sign yet of a more comprehensive presentation of Coalition policies even though Turnbull has gone”. Recent developments have now raised the question of what Morrison is actually seeking to achieve as leader of the Coalition. For example, his three day visit to Vanuatu and Fiji, accompanied by his wife, and the announcement of financial provisions for extensive infrastructure and other aid have made it appear an important initiative for Australia (see Australia/Fiji Relations).

Yet while this might help limit Chinese activity in the region, and help Fiji itself, it scarcely rates as an initiative which the Coalition leader should undertake at a time when other policies need to be developed prior to an election in May. Concetta Fierravanti-Wells, who was Minister for International Development and the Pacific, and had made 35 trips to the Pacific islands, might well have implemented the enhanced Pacific policies announced by Morrison, albeit at a lower level (see Warning on Loans to Pacific Islands). But she was dropped as a minister.

Morrison himself seems to have been ill-prepared to handle the views of Fiji President, Bainimarama, on climate change and, in particular, the supposed threat of rises in sea levels.Yet all the Pacific Islands have long used the supposed threat from climate change as a basis for requiring more aid and Morrison should have recognised this. But he appears to have accepted sea levels as a real, almost immediate, threat (see Morrison on Climate Change).

Climate expert Bill Kininmonth points out that “Bob Hawke got a similar serve from the then Fiji PM at a South Pacific Forum meeting back about 1988. As a consequence the Australian government funded the South Pacific Sea Level and Climate Monitoring Project, a network of about a dozen automated sea level and meteorological observing stations. The project was managed by the National Tidal Facility at Flinders University. The NTF was incorporated by BoM in the early 2000s. I was on a project review team in the early 200s when it was still in Flinders. There seemed to be excellent technical management of the project”.

An examination of the monthly sea level data (Max, Min and Mean) share shows that, except in one year (1997-98), there is no upwards trend in sea levels according to BOM data.

Was Morrison unaware of this? Did he consult his environment Minister? Did he consult fellow Cabinet colleagues before the visit?

His apparent failure to check on sea levels in the Pacific and Fiji in particular is made more important by an interview conducted about a year ago by the UK’s Global Warming Policy Foundation with expert oceanographer Nils-Axel Morner. In fact, Morner’s analysis extends beyond the Pacific and he disparages the IPCC as having “always misrepresented the facts on this topic. It exaggerates the risks of a sea level rise enormously. The IPCC relies in particular on questionable computer models rather than field research”. Morner adds that using his research “We were able to prove that the sea level in Fiji from 1550 to about 1700 was about seventy centimeters higher than it is today. Then it sank and was about fifty centimeters lower in the 18th century than it is today. Then it rose to about the current level. In the last 200 years, the level has not changed significantly. For the past 50 to 70 years, it has been stable” (see Nils-Axel Morner Says Sea Levels No Problem).

The failure of almost all political leaders, and of many who write about the supposed threat from climate change, is also illustrated in the article by Bjorn Lomborg published in Weekend Australian. He points out that a major charity, Christian Aid, has released a report, Counting the Cost: A Year of Climate Breakdown, documenting the “huge costs of climate impacts” and saying that the cost of climate change last year was $US85 billion ($118bn). Lomborg says that this claim was “repeated by many newspapers — just as it was designed to — yet it is nonsense”… “But the charity, which receives money from the British and US governments and the European Commission and raised more than £100 million in 2017-18, is scaremongering” (see Lomborg Identifies False Claims on CChange).

In short, activists who support the dangerous warming threat and the need for governments to implement policies to reduce emissions, are costing taxpayers unwarranted expenditure. But, while the meeting of political leaders at Davos this week will doubtless have considerable discussions on CC, they are unlikely to do much about that.

Resignation of Kelly O’Dwyer

Today’s announcement that Kelly O’Dwyer, the Liberal member for Higgins, will not stand again for election is another surprise the more so as it has been a blue ribbon seat. The reported resignation indicates that she had given Morrison advance notice and that “I would particularly like to thank the Prime Minister and Jenny for their personal support in what has been a very difficult decision. I have worked closely with Scott not just as PM but also as Treasurer,” Ms O’Dwyer said. “He is the right person to lead our nation and I will do all that I can, both locally and nationally, to ensure that this continues” (see Is O’Dwyer Quit a Loss to Libs?).

Her appointment was as Minister for Women and for Industrial Relations, but she has not appeared to have made any impression on the latter or its much needed reforms. Indeed, it was a bit surprising that she was given a ministry which has to deal mainly with men, had no obvious experience with the issues, and yet is thought to be a major election issue.

At the press conference announcing the resignation, Morrison is reported as agreeing that “family is so important”, and that he supported Ms O’Dwyer’s choice to leave politics. He said that being able to choose shows “great strength” and said “no one in Parliament has worked harder” on issues that women face. “When asked about Ms O’Dwyer’s replacement, she said there was plenty of talent within the Liberal Party and she hoped it would be another woman. Mr Morrison did not want to speculate on who the candidate might be” but there is much media commentary to the effect that it will “have to be a woman”.

Morrison has missed an opportunity to say that he would select the most important person available and there is in fact a need for a revised Ministry.