Tuesday, 2 October 2012

Higher taxes would only encourage them

Given that Labor is already on a reckless spending splurge, why should anyone agree to give Labor an increase in tax revenues, asks Peter Reith.

While Peter Slipper clings onto the job of Speaker of the House of Representatives, he is a continuing reminder that our PM has made some shockingly bad decisions.

And to add insult to injury, the Government has given up its allegations against Mr Ashby and instead has settled its claims by giving Mr Ashby $50,000 of taxpayers' money.

The performance of Slipper and his sponsor PM Gillard are a blot on the Parliament and another example of the dreadful government Australia has had to endure since 2007.

Over time, the most obvious impact of Labor's dreadful failures will not be Mr Slipper but its incompetent management of the economy and the consequent fall in living standards. If you don't believe me, this is what Labor's favourite economist Ross Garnaut (with endorsement from Bob Gregory) said in the AFR on September 20:

I think we're going to have a very difficult time adapting to the decline in living standards that's going to be a necessary part to the adjustment to the end of phase one and two of the boom.

And in yesterday's AFR:

Merrill Lynch forecasts GDI to grow 1.1 per cent for the 2012-13 financial year, below population growth of 1.5 per cent a year, indicating a fall in real income per capita.

One consequence of the fall in living standards will be that the Government will want to increase expenditure, and to do that they will want to ditch their promise of surpluses. Labor has not yet produced one surplus and the 2012/13 surplus is now unlikely.

Instead of increasing its spending, the Government should be helping business to improve productivity and profits. In other words, they should be trying to grow the economic pie instead of boosting the deficit. But this would require policy changes e.g. workplace relations reforms that are unacceptable to Labor and especially the unions.

The consequence of Labor's policy failures will be, if Labor is returned in 2013, ever growing deficits that will burden Australia for many years.

Given that Labor is already on a reckless spending splurge, why should anyone agree to give Labor an increase in tax revenues? Why encourage them?

It would be folly to give Labor access to more revenue by increasing the GST. Already government as a percentage of GDP is heading towards 40 per cent. If the Government has more revenue, then the Government will squeeze the private sector more and more.

Compared to many other countries e.g. those in Europe, Australia has, partly under Hawke and Keating and strongly by Howard, promoted the private sector and benefitted from the greater efficiency of private sector provision of goods and services. A growing public sector from government activities like NBN will only act as a drag on economic well-being.

The Government's problem is not a lack of revenue but a lack of spending discipline.

Business groups that advocate a higher GST are naive. Australia's GST is only outclassed for economic efficiency by New Zealand because NZ does not, like Australia, have a pesky upper house with second-rate lefties like the Greens and others. Otherwise, our GST ranks as a more competitive tax than most other countries internationally.

Our GST covers both goods and services, which makes it vastly better than the tax it replaced, namely the discredited wholesales tax which was imposed on only some goods and then at different rates. It taxes expenditure, encourages savings, taxes the blacked economy, and it removed a huge burden on business because business collects the GST but it is not a tax on business.

Now some people want to tax food; they want to widen the base. In theory, this is not a bad idea, but its importance is exaggerated because Australia mainly needs a tax system that is internationally competitive; hardly any country taxes food. The idea to tax food was stopped by the Australian Democrats and Labor in the Senate.

The state premiers would probably like an increase in the GST rate. In isolation, this is not a good idea. The only time an increase should even be considered would be in the context of a revolutionary big tax package including something like a flat income tax of 20 per cent, a capital gains tax of 20 per cent, and the abolition of payroll tax etc. The premiers are kidding themselves if they think that an increase in GST would be good for them.

It is absurd to suggest the Coalition should advocate an increase in the GST from Opposition by widening the base or increasing the rate. We lost in 1993 advocating the GST from opposition. At least we had a big package of tax changes. But to advocate a tinkering of the system from opposition would be a mistake and the minimal potential rewards would not be worth the political effort.

NZ introduced a 10 per cent GST, won the following election, and then later increased the GST by 2.5 per cent. The 2.5 per cent increase produced a lot more public outrage than the initial reform. The Coalition will never increase the GST in my lifetime, but a desperate Labor government could easily make another bad decision.

The consequences of poor government were also aired by Lindsay Tanner last week. He is right to point to the deterioration in the quality of the infrastructure of our political system. Labor is not just making bad decisions; it is also degrading the decision making process. Eventually, a weaker system makes it more difficult to make good decisions.

It is most obvious within Labor. The obvious problems were spelt out by John Faulkner last year at Labor's national conference and again by Tanner. The Labor party's raison d'être is the union movement, but it no longer has a broad base and now only represents 13 per cent of the private sector workforce.

Labor is now just a mouthpiece for a minority group who spend most of their time exploiting employers e.g. the MUA, ETU, CFMEU etc, or exploiting their members like the HSU or running financial services for the benefit of the directors. If Gillard wants to keep alive her prospects of a second term, she could do a lot worse than clean up the party machine.

Monday, 1 October 2012

two quotes for today on living standards

Two quotes in my piece tomorrow on the Drum
They are food for thought

Ross Garnaut in the AFR (30th September 2012);

“I think we're going to have a very difficult time adapting to the decline in living standards that's going to be a necessary part to the adjustment to the end of phase one and two of the boom".

And in today’s AFR (1 October 2012)

“Merrill Lynch forecasts GDI to grow 1.1 per cent for the 2012-13 financial year, below population growth of 1.5 per cent a year, indicating a fall in real income per capita.

Tuesday, 25 September 2012

Labor dogged by the big issues

The Gillard Government seems to have a lot of trouble putting issues to bed.

John Howard and Bob Hawke on the other hand had a knack for bringing issues to a conclusion. Sometimes it took time, as it did for Howard with gun control and the controversy over Wik, and for Hawke it was means testing pensioners. But once these issues were dealt with, they stayed off the agenda.

For Prime Minister Gillard, most of her big issues seem to stick around.

The carbon tax will not go away; how can it when the increased costs have been so obvious on energy bills in the last month or so?

The mining tax is still an issue because there is real doubt about the revenues that will accrue from the deal done with the big miners. Maybe when the details of the first quarterly tax collections are announced next month, the issue might be put aside; but even then it should remain an issue all the way to the next election because the miners are under pressure from falling prices.

Peter Slipper is still being paid as Speaker despite not turning up for Question Time and Craig Thompson remains a daily embarrassment.

The boat people are also a continuing issue for Gillard and, despite the cave-in to reopen Nauru, the failure to 'turn back the boats' and reintroduce temporary protection visas will continue to dog the Government as the boats keep coming.

The Government got some exaggerated coverage last weekend as 18 Sri Lankans decided to accept free flights home at the expense of Australian taxpayers, but this does not mean the new approach is working.

Sri Lankans are in a different position to Afghanis and the arrival of more asylum seekers over the weekend only reinforced the Government's predicament. Unless Gillard can bring this issue to some conclusion, it will haunt her at next year's election.

At least Labor cast aside two issues last week; gay marriage and a referendum. Enough has been said about gay marriage - it will linger only as an issue with the Greens, but not more generally given that the parliamentary vote was overwhelming.

Labor has dropped its proposal for a referendum on the recognition of Indigenous people in the Australian Constitution. It was doomed from the start by bad process. The idea is at best tokenism or at worst an attempt to make substantial changes to the Constitution without proper disclosure of the legal consequences.

Fortunately, although the Coalition is not opposed to the principle of recognition, in practise it is opposed to the interim measure proposed by Gillard. Apparently the interim measure would be a parliamentary 'Act of recognition' (paywall). It is a typical piece of flummery from Gillard, full of hot air and a disguise of her likely real intention to permanently drop the whole idea.

Australia would be better managed if politicians more regularly decided to do nothing.

The Indigenous proposal has been linked by Labor, in their formal agreement with the Greens, to a second proposal to recognise local government in the constitution. This idea was put to the Australian people in a referendum in the past and was deservedly thrashed. It should be dropped again.

Local government is a creature of the state parliaments. Local government does not need a second master and Australia does not need another jurisdiction for contests between the states and the Commonwealth. It is bad enough for a council to have to deal with a state bureaucracy without burdening it with having to bow and scrape to distant bureaucrats in Canberra.

An additional reason for dropping both proposals is to remember that Labor has only ever put up one successful referendum, and so the prospects for success suggest more taxpayers' funds wasted on another lost venture.

On the Coalition side, one issue that has not been been put to bed is party reform. The Liberal Party is a federal organisation which provides a lot of flexibility for the state divisions to manage their own affairs. This system has many advantages, but there are times when a national approach is in the party's interest. In particular, there is a need to adopt a more uniform approach to pre-selection and to harmonise plebiscite processes for preselecting federal MPs.

The concept has been widely accepted, but not in every state. Even though the concept has had in principle support at the highest levels, the NSW party has not accepted the proposal.

Sadly, the Liberal party federal executive has failed to act as an honest broker in NSW to hammer out a way forward on plebiscites. As a result, the party was faced with a court injunction that prevented the party's scheduled meeting last weekend.

Last year Tony Abbott voted down a more activist approach to party reform and now he has to face the consequences.

In the two years since Abbott complained about the outcomes in NSW, the Federal Party has buried various reforms that could have helped avoid this latest mess. Maybe now Abbott might accept that modest party reform could help him into the Lodge.

Tuesday, 11 September 2012

Turnbull and Rinehart show the challenge for reformers

There is a lack of demand for reform now because the system seems to work well, writes Peter Reith. But that would soon change in a crisis.

Reform is often not pursued because the public do not see the need for change. Two case studies presented in speeches last week demonstrate the challenges for true reformers.

Malcolm Turnbull is one of a kind and has a lot to offer. He is a strong intellect, good on economics, respected in the commercial world, and a good speaker. So when he announced he would retire from politics before the 2010 election, I was among those who rang him and said, 'If you are not sure about leaving then stay in the Parliament, otherwise you will regret leaving prematurely'.

I was not alone in making the call. He stayed. But he is not now, and not about to be, a threat to Abbott.

Turnbull has not furthered his political standing within the Coalition since his defeat at the hands of Tony Abbott. Abbott, meanwhile, has cemented his position. Of course, nothing is certain in politics, but I reckon Turnbull is more likely to do "an Ian McLachlan" than enjoy the tenure of "a Philip Ruddock".

I will never forget Turnbull's Sunday TV performance before the leadership contest. Turnbull was at his best and worst; he put his case forcibly and with eloquence, but at the same time he savaged his own colleagues with a ferocity rarely seen from a leader who had hoped to continue to work with the colleagues he had just torn asunder.

His recent speech on constitutional reform is a good read. But he still does not mind giving his colleagues a burst; for example, where he says some direct electionists in the 1999 referendum were deceived by self-delusion and trickery generated by Coalition monarchist opponents. With that statement alone he killed two birds with one stone - and both from his own side.

It was interesting to note that he remains fairly opposed to the direct election model despite his view that:

In practice, if the first few directly elected presidents performed the duties of their office soberly and impartially, and eschewed populist demagoguery, then I believe the presidency could evolve into a constitutionally functional institution in line with most views of what is needed. The office would be defined by its early occupants, especially the first.

I opposed the 1999 model because, for me, it was a second-best choice compared to the direct election model that has worked so well in Ireland. I have no doubt that candidates for president would campaign on the premise that the conventions of the governor-general would continue, thus cementing Turnbull's prediction. In fact, all candidates would be under intense pressure to make a statement to that effect.

Turnbull's speech was to celebrate the work of the late constitutional expert George Winterton. He was not out to create trouble and apparently showed the speech, in advance, to Abbott's office.

I am glad Turnbull made the effort to reflect on the debate. I have no doubt the issue will be revisited simply because Australia is, in practice, a republic, and one day the country will want to align its reality with its constitutional arrangements.

There is a lack of demand for change of our monarchical system because most people feel the system works well enough, and they mix that with apathy. Apathy would soon disappear if a constitutional crisis suddenly appeared.

Similarly for the economy, if people feel that living standards are dropping and unemployment is on the rise then the support for genuine reform would rise. Australia has had over 20 years of GDP growth so naturally there has not been a lot of public pressure for economic reform. But now, as the mining boom tails off, the poor performance of the Australian economy under Labor will be increasingly laid bare.

Turnbull calls for better quality in the public discourse. That could start with ABC radio. It put up unionist Dave Oliver and John Buchanan (a supporter of Labor's workplace system) to ridicule a perfectly sensible contribution to the public debate by Gina Rinehart.

It would have been far more balanced to have an economics commentator noting that Rinehart was merely supporting a mainstream view of good economic management. Her basic message was that costs of business are running out of control and that government is not listening to the business people who know first-hand what it takes to employ a worker.

Rinehart made a number of comments that are irrefutable. Fortescue put off a thousand people last week and Xstrata announced another 600 job losses yesterday. She said Australia was becoming too uncompetitive. This is a statement of the accepted truth. It has been said by numerous business people for the past two years e.g. Jack Nasser, chair of BHP, and his CEO Marius Kloppers when announcing the deferral of Olympic Dam.

Nasser also noted the need for workplace relations reform. This is also a no-brainer as even the Government's own handpicked panel on IR admitted that the current provision for greenfield sites was a problem.

Recently the World Economic Forum ranking dropped Australia from 16 to 20 in one year - the biggest slide of any country. WEF also noted constraints on our infrastructure. BCA noted much higher labour costs in the resource sector and backed up the claim with a detailed study of comparable costs in the US. Rinehart mentioned labour rates in Africa - she did not advocate $2 wages in Australia. Her comment on statistics was immediately manipulated by the Treasurer and most of what she had to say was soon lost.

Turnbull's remarks were fitting to the Treasurer's response to Rinehart. Turnbull said:

In my view, all of this requires politicians to be especially careful to remember our responsibility to explain the big issues of our time. Dumbing down complex issues into sound bites, misrepresenting your or your opponent's policy does not respect "Struggle Street", it treats its residents with contempt.

Tuesday, 4 September 2012

Workplace relations is off limits for Labor

Former Howard-era minister Peter Reith says workplace relations should be at the heart of economic reform, but once again it's been ignored.

Successful governments have to be realistic about Australia's needs if they are to deliver needed reforms of the education system or the economy.

From the perspective of an economist, capital and labour are the engines of economic performance. From the point of view of a parent, a good teacher can make a huge difference to school children. From the perspective of a business that needs premises in the CBD, the higher cost of buildings in Melbourne (around 30 per cent compared to most other states) makes a big difference to their bottom line.

All three perspectives shed light on the impact of the labour market. Australia has a reasonably efficient market for allocating capital, but we have a poor system for managing our people. In other words, money is not the be all and end all to better performance.

The way we manage our most important resource, namely our people, is absolutely fundamental. This is why workplace relations must be at the heart of the debate on economic policy. It is why this is an area of reform that can't be ignored by either side of politics.

And yet, reform of workplace relations was ignored yesterday by Julia Gillard when discussing improvements to education, and it was ignored by Minister Bill Shorten last week while the CFMEU was defying an order of the Victorian Supreme Court.

In Victoria in two days' time, the teachers union will run a statewide strike. According to the union, it will be the biggest strike in the state's history. The union wants more money, and it opposes performance pay and other Baillieu Government reforms, but it ignores the reality that the former state Labor government, supported strongly by the union, left Victorian finances in a parlous state.

The Gillard statement on the Gonski proposals failed to explain where the money was coming from. The statement yesterday was not only cynical but also every bit as empty as when Bob Hawke promised that no child would live in poverty by 1990 (or thereabouts; of course, it never happened).

PM Gillard is the same person who wasted billions on school halls, nearly finished the cattle industry in northern Australia, endorsed pink batts, and promised not to introduce a carbon tax. Her main achievement in education is to introduce a webpage, and now she is going to revolutionise the education system with money she does not have.

In addition, the Commonwealth is going to reform a system which is run by the states, not the Commonwealth. And after all the hyperbole, the PM failed to mention that spending more money on education does not necessarily improve standards, and also failed to mention the need for reform of workplace relations.

The failure to mention IR reform was no surprise because the PM is indebted to the unions who supported her campaign to knife Kevin Rudd, and as a result, reform in education is off limits because the Australian Education Union opposes reform.

Meanwhile, one of Australia's most aggressive unions, the CFMEU, is trying to cripple Grocon, one of Australia's most successful building companies.

The CFMEU wants even more control over the company's operations. Union tactics have resorted to the bad old days of the BLF; infamous for stopping the construction of lights at the MCG. The Builders Labourers Federation was finally deregistered by Labor governments, but it took many years at massive cost to the community before reality finally dawned on Labor to confront the BLF.

The CFMEU is flexing its muscles and defying orders of the Victorian Supreme Court. The union wants to be able to nominate its own safety inspectors. It is a claim built on the phoney proposition that the union will do a better job on safety than Grocon, which has won awards for the high standards of its safety record.

The real purpose of the CFMEU is motivated by the legal requirement that a union can't strike during the term of an agreement. Grocon and the CFMEU signed their latest agreement in recent months. If the CFMEU can control the safety inspectors, then the union will have the right to close building sites under the guise of phoney safety issues and regardless of their agreements. It is a pathway to even more strikes.

Once there were times when the unions were fair dinkum about safety; now they see safety issues as an opportunity to circumvent the law. The employers have the legal responsibility for safety and cannot give it away - and nor should they. Safety should be the subject of collaboration, but that is virtually impossible when the union culture is "them and us".

Of course, none of this is new; it was the problem on the waterfront until the 1997 dispute. The outcome of that dispute was that half the workforce was made redundant and new workplace arrangements allowed the remaining workers to increase productivity from around 15 crane lifts per hour to about 25 per hour; an increase in overall productivity of three or four times the previous practice.

The employer Chris Corrigan insisted that employees adopt the attitude that they work for the company, not the union. Unfortunately, since Corrigan left, the new owners have allowed the union to resume the old culture. No wonder productivity is, once again, a problem on the wharves and some stevedores want to replace workers with robotic machines. Those workers are about to be mugged by reality.

Labor has encouraged the CFMEU by abolishing "the policeman on the beat", the ABCC. It is an invitation to the building industry unions to intensify practices of intimidation and bastardry. The outcome is higher costs, declines in productivity, and encouragement to other militants.

The Gillard Government needs to be a lot more realistic about its circumstances if it wants to remain in government. There was a whiff of realism when it announced last week a change to the carbon tax, although there are grave doubts about the detail.

Paul Keating became much more realistic about the unions after he had been in office for 10 years. PM Gillard is running out of time; in fact, I think the public has already made up their mind about the Gillard Government. But the next election is still a year away and anything can happen, especially if political leaders are realistic about the challenges to be faced.

Tuesday, 7 August 2012

Fair Work Act review has little value

We know why the Government sought a review of the Fair Work Act; they had no choice.

There should have been a proper assessment of the original legislation but that would have been too embarrassing, in the same way there was no proper assessment of the National Broadband Network.

So the Government was forced to have a later review of FWA. The Government ensured that it got the result it wanted by manipulating the terms of reference, by ensuring that the panel would be sympathetic and by supplying departmental bureaucrats to 'help' write the report.

In fairness to the Government this sort of behaviour is not new; many politicians have subscribed to the concept that you should never set up a committee unless you know the answer. But Workplace Relations Minister Bill Shorten forgot that the accompanying rule is to be a bit subtle about it, e.g. by appointing an opponent. The outcome has been the most one-sided report in living memory.

Of course, the reality is that whatever is in the report, the Government's formal response will be to continue to provide special arrangements to prop up the labour movement. The labour movement is steadily losing members. In the private sector, despite massive pro-union support from the Government and the Greens, rank and file workers are deserting the union movement.

The percentage of private sector workers is now down to 13.2 per cent. It will fall lower; not just because of corruption in the HSU and in the AWU but because union bosses can no longer serve the aspirations of workers. The remaining pockets of union membership will be in the public sector and in those parts of the private sector, e.g. resources, offshore and building/construction where the unions can use their monopoly position to increase the incomes of highly paid workers. These are not downtrodden workers; they are workers earning hundreds of thousands of dollars and who will ultimately deprive Australia of the investments we need in these sectors.

Shorten is a former union boss and he knows where his bread is buttered. He has shown no capacity to assess the public interest. All he knows is how to toe the line as demonstrated in a recent interview when he was asked if he agreed with a comment by the PM. He said he did. He was then asked what the PM had said. He replied he didn't know. The TV presenter was incredulous and Shorten then explained that he always agrees with the PM regardless of what she says.

Not surprisingly, and to Australia's embarrassment, the video clip went viral. He is not the only second rate performer in the Cabinet. Anthony Albanese spoke for the Government to mark the New Year and drew his inspiration for Australia's future from a US TV drama series, the Trade Minister made a goose of himself as a singer and this week we find that instead of seeking inspiration from a hefty tome on political history or economics, we find that the Treasurer thinks that all he needs to know to run the economy is to play a song from Bruce Springsteen. If it wasn't serious, it'd be just a laugh but these are the people running our country.

The problem is that the system desperately needs reform but the only reform from Labor that is possible would be even more concessions to the unions. Any Coalition reforms, as described by Nationals Leader Warren Truss last Sunday, would be minimal. Even though the Coalition has not outlined any policy to date it seems unlikely that the Coalition will move to abolish or materially change Labor's 140 pro-union measures detailed by Innes Willox, CEO of AIG. Many of these are significant and should be tackled especially as the Coalition has already refused to contemplate individual agreements which are fundamental to real reform.

One of the alleged reforms introduced by Labor in the Fair Work Act was the concept of 'good faith bargaining'. I never had any doubt that it was always just another means to buttress the position of unions so that they can tilt the whole system in favour of union bosses.

The 'good faith bargaining' provisions have been a favourite slogan for the unions. Now that the Act has been in operation for a period time the provision has now been put under scrutiny in a case before The Honourable Geoffrey Flick in the Federal Court in a matter between Endeavour Coal and the Association of Professional Engineers, Scientists and Managers.

The term 'bargaining' is not defined by the statute so Judge Flick turned to the ordinary and natural meaning of the word and looked at definitions in various dictionaries. He then said "Illustrative of the process of 'bargaining' or 'haggling' is the exchange between Brian and the street merchant in Monty Python's Life of Brian" (P16 Endeavour Coal Pty Limited v APESMA [2012] FCA 764)

This was an excellent description of the legislation brought in by Julia Gillard. Poor Brian he was trying to escape the Romans and ducked into a shop with the pretence to buy something for his wife. He was told the price was 20 shekels but the merchant wanted to haggle even though Brian had proffered his asking price. The merchant then demanded that Brian bargain in good faith according to the requirements of the bazaar.

'Good faith bargaining' was a ploy introduced at the demand of the ACTU. It is another of the many flaws in Labor's FWA that needs to be repealed.

Tuesday, 31 July 2012

Last week, on the same day, there were two news stories touching on a key economic issue.

One was about Qantas teaming with Emirates, an airline owned by the UAE Government. The story pushed up Qantas shares by nearly 10 per cent.

You don't have to be an economist to understand that working collaboratively with a company, albeit a state-owned enterprise, can be good news for jobs and economic performance.

The other story was triggered by comments from Tony Abbott in China that it would be rarely in Australia's interest "to allow a foreign government ... to control an Australian business".

The comments were arguably a little ambiguous and shadow treasurer Joe Hockey sensibly clarified the situation when he said (in the AFR, July 27, 2012):

I do not see any need for changes to the national interest test nor do I see any need for dramatic changes to foreign investment rules.

He then added:

We need foreign investment, we welcome foreign investment. If we are going to get growth in our economy, foreign investment is going to help us, not hinder us.

Unfortunately, the matter is not at an end.

The problem is that, although he is a good man in many ways, Barnaby Joyce has a bias towards protectionism and he does not like foreign investment.

These positions are not viable for the Australian economy, but no one has told Joyce that his positioning is not acceptable. Instead, he has been running a populist campaign on his twin hobby horses.

Abbott likes Joyce but wants to keep in with Nationals leader Warren Truss. Truss gives Abbott little trouble, but Truss is threatened by Joyce's popularity and has been looking for a way to keep Joyce at bay by conceding him some policy ground.

It was obvious to me last week that Truss was speaking in the knowledge that he had a wink and nod from Abbott. My experience of Warren Truss is that he would not normally go public expressing a view unless he thought it was going to be adopted.

It looked to me that his remarks were emboldened by his understanding of "progress" of an internal paper not yet released. Some in the Coalition want a different approach to appointments to the FIRB, a new national interest test and in some cases a requirement to list on the ASX.

Abbott said on the weekend (AFR, p3, July 30, 2012) that he will soon release a paper, "that will include some good improvements". He thinks he can have his cake and eat it too; he says, "We have a good foreign investment review regime".

So why change the system? The current system is basically a Treasury operation. The government sets the rules and oversees implementation. It should not be changed.

Abbott wants the FIRB to reflect "the range of businesses in this country". Why? FIRB should represent the government of the day, not rent seekers or people who have no idea about economic management.

Tuesday, 24 July 2012

At last Labor takes fight to the Greens

When Bob Brown left the Parliament only a few months ago, many predicted the demise of the Greens.

Although the counting in the Melbourne by-election is not finished, it looks like that prediction is coming to fruition. But because the Greens have a swag of Senate seats, it will take time before their influence is reduced.

If ever the Greens were going to win against Labor, then this was their best chance. Despite the proliferation of minor parties, it was a straight contest: Labor versus the Greens.

It was a wise move by Ted Baillieu to let them fight it out without the distraction of a Coalition candidate. It is the second time he has made the right call on dealing with the Greens.

The point about the Greens is that they are further to the Left than Labor. They have a wide policy agenda. They probably spend just as much time on gay marriage and asylum seekers as they do on the environment.

And on workplace relations, they have been more closely associated with militant unions than unions more committed to workers on low pay.

They get very little scrutiny. And they are zealots, as exemplified by the fact that they voted against the first attempt to introduce climate change policy. If that policy had been enacted, then it may well have stayed on the statute books, but instead, as a result of the controversy that followed, including the axing of PM Rudd, the carbon tax is now virtually certain to be repealed.

That does not worry me, but it demonstrates that zealots can play political havoc with the major parties when people like PM Gillard give them too much say and when they are not prepared to accept that in a democracy, there are times when it is sensible to acknowledge other points of view, even if you think they are wrong.

Melbourne may be more Left than some seats, but the result showed they still support sensible policies like funding for local Catholic schools and they still think that a little pragmatism to stop asylum boats is better than doing nothing while hundreds drown on the perilous trip to Australia.

Daniel Andrews, the Victorian Labor leader, is claiming that Labor's win in Melbourne has sent a message to Victorian Premier Ted Baillieu. He could not be more wrong.

The by-election result was forged by Labor's NSW Right aggressively attacking the Greens. Thank heavens the state secretary in NSW, Sam Dastyari, and Paul Howes and others finally did something to protect the mainstream of the Labor Party vote.

No-one can say for sure it made the difference, but Labor internal polling suggests that it was not without influence in a close contest.

In a way, the win was against the tempo of the play. Under Gillard, policy has been run by the Greens on issues like climate change and the mining tax.

The relevance of the outcome for federal Labor is real enough but nuanced. The decision to intervene by NSW demonstrates that there is a vacuum at the centre of Australian politics. The Right know that if they don't challenge the Left, then they are finished as a political party.

Labor has had these internal fights before. Their problem now is that PM Gillard does not understand that if she won't do the job, then the NSW Right will have to do it for her. So when Dastyari took up the cudgels, he reinforced Gillard's weakness.

No wonder the unions have certain doubts about Gillard, even though on workplace relations policy, she gives them everything they want, even at the expense of the broader economy.

Only when Labor was defeated by the Greens on asylum seeker policy did they start to realise how bad things have become as a result of Gillard's decision to team up with the Greens after the 2010 election.

Of course, it was an easy decision for Gillard to deal with the Greens, because the real Gillard has always basically been a leftie. The Victorian Parliamentary party is generally to the Left, although they usually appoint more moderate types like Steve Bracks as the human face of their team.

The truth is that Andrews and Gillard were both too weak to stand up to the Greens. They were both in the same camp as the Left. They were on side with John Faulkner and Doug Cameron, the leader of the Left in the Federal Labor caucus. Gillard and Andrews should have backed the decision of the NSW Right to take on the Greens.

So the lesson for Gillard is that whatever her real views are on politics, as PM her mainstream support is still the centre Right, and if she keeps giving way to the Left, whether within the caucus or with the Greens, then she will have to be removed (regardless of the polls).

Because if the Labor Party is too far to the Left, then it will never win enough votes to form government.

One Nation comparisons
One senior Labor member said that the Greens were the Coalition's One Nation. Of course, such comparisons have their limitations, but it is true that, like the Greens today, One Nation aimed to displace a major political bloc, especially the National Party.

The "Joh for Canberra" campaign also had delusions of supplanting the federal Coalition and, like the Greens today who are constantly undermining PM Gillard, it fed off dissatisfaction with the Federal Coalition at the time.

Monday, 9 July 2012

With allies like that, who needs enemies?

The whiff of discontent between the Federal Labor Government and their alliance partners, the Greens, spells trouble for both parties.

In the middle of the Peacock/Howard years, Bob Hawke said if you can't run yourselves, you can't run the country. Discord within the ranks makes the business of government very difficult because the main players end up spending most of their time extinguishing political fires lit by their colleagues.

What makes this situation different is that the Greens are in the Gillard tent, but they will not hesitate to walk outside and turn the blow torch on their allies. They have their cake and eat it too; all care, but no responsibility.

In contrast, within the coalition of the National Party and the Liberal Party there is, most of the time, a common political objective to win seats and then government. For the Greens, they don't want to be in government with Labor; they want to supplant the Labor Party.

Of course, they are entitled to try but when you look at the record of the motley crew sitting behind Senator Milne and if you look at their policies, they are so far removed from mainstream Australia , the prospects of them bumping off Labor is negligible.

The Greens stopped the first legislation on climate change and, as a result, set off a chain of events that has given Labor grief. It took away the tax cuts for business, which were a quid pro quo on the mining tax, and it scuttled the Malaysia solution. Prime Minister Gillard should be asking herself with allies like that, who needs enemies?

But the disasters are not all behind Labor. Labor has done deals with the Greens for referendums on local government and Indigenous Australians. Back in 1988, the referendum on local government was put to the voters and it was thrashed. Nothing has changed since in terms of constitutional matters so another referendum would be a rerun. This proposal is just tokenism and fiddles with a constitution that has been guarded by the Australian public who need very good reason to make any change.

Even if the Coalition supported the proposal, I would expect Coalition State governments to oppose it. This would be enough to seal its fate. Even without opposition from the States, a lot of people think councillors are too full of themselves and it could be easily defeated anyway.

The second referendum is on recognition of Indigenous Australians in the Constitution. The Australian Constitution was drawn as an agreement between the States and the Commonwealth to decide who would be responsible for the different activities of each level of government. Our constitution is not a set of cherrios to people who have made a  contribution to our society. It is not a Bill of Rights. That has been discussed since the constitution was first drafted. Australia followed the Westminster approach. We could adopt a change, but a mini Bill of Rights was also turned down in 1988.

You can tell that some Labor ministers want to push the issue, but they have nearly left it too late for this year and the Party's faceless men will not want a referendum campaign leading up to next year's election.

The Minister forcing the issue seems to be Jenny Macklin, another one of Labor's many dud ministers.

Both sides of politics will often use a form of shorthand to attack the arguments of their opponents. As long as the party has a clear policy position, there is nothing wrong with reducing an argument down to "sound grab" dimensions.

In the 1988 referendum campaign the Coalition had a simple theme. It was intended to encourage voters to look behind the proposed referendums and see the complexity of the proposals. Our theme was "there is more to this than meets the eye".

It worked well because the 1988 proposals were complex and we had distributed substantial written arguments that demonstrated the 'No' case.

The Labor Party's hymn book for attacking Tony Abbott includes various themes which are repeated around the country ad nauseam. A Labor Minister who cannot think of anything else to say will invariably parrot favourite lines like "Abbott's relentless negativity" or a plea for bipartisanship quickly followed by a claim that Abbott is "seeking to politicise" an issue for base political motives.

When last week, I heard Jenny Macklin attack Abbott over the idea of a referendum to include recognition of Indigenous Australians and when she reached down for Labor's hymn book, it reminded me of very similar remarks made by Labor in the 1988 campaign.

It is standard practice for Labor to claim that anyone, who does not agree with their plans to change the constitution, are negative and political. These are exactly the same sort of comments that were made in 1988, which produced the biggest 'No' votes in the history of referendums. The problem for Macklin is that there are substantial reasons to oppose the foreshadowed referendum.

The problem for the Coalition is that it is not enough to say that any referendum put up by Gillard will be defeated because she is unpopular. The Coalition should oppose the proposal, but they don't want to be seen as 'negative'. So they are left with a half reasonable claim, but one which does not grapple with the substantive issues.

Labor is spending $10m to whip up interest in the proposal. It would not surprise me if the spending is contrary to the spirit of legislation. Labor has form on this; in 1988 the Coalition had to take legal action in the High Court to stop the Labor government from breaching the law. The pity is that instead of splashing money on consultants some of those funds might have gone to a practical project like education.

Tuesday, 3 July 2012

Delusional carbon tax comparisons with GST

It's a fair bet, although less certain than putting money on Black Caviar, that last weekend will be a turning point in Australia's political history, but not as Labor hopes.

The introduction of the carbon tax will be Labor's self-imposed coup de grace. Voters can look forward to a year of election campaigning while the carbon tax erodes our economy and Labor remains paralysed on other key issues like the asylum seeker non-policy. And then there will be an election and Labor will be thrashed.

No wonder the public are sick of politics; we are in our political winter of discontent.

Labor takes solace by comparing the GST with the carbon tax. They only ever quote the comparisons that suit their argument, and that is fair enough as a debating technique, but they are deluding themselves.

For example, Labor now claims it will stick to the carbon tax regardless of the outcome of the next election, but the comparison with the GST is that the Coalition abandoned the GST after it lost the 1993 election.

In the three years from 1990 to 1993, I was the chief GST salesman for the Coalition in my role as shadow treasurer. It was a hard slog, but as a general rule if you had 20 minutes to explain the proposal, then a majority of your audience would accept the GST as a good idea. Our internal polling showed that many thought the GST would be bad for them personally but good for the country.

The trouble was there was never enough time to sell the GST, even with the entire Coalition working to sell it. The GST was widely used in Europe and elsewhere, and it had very strong support from academics and economists. Business liked the GST because it reduced their costs even though they had to collect the tax on behalf of the government.

Despite all the plusses of the GST, in the lead up to the 1993 election (which we lost), we were forced to significantly change the proposal because Paul Keating had effectively eroded our support.

Five years later, despite giving the public a vote on the introduction of the tax in the 1998 election campaign, the Howard government still lost seats. To put it another way, on the two occasions the GST was put to the people at an election, it cost us votes.

Labor can't afford to lose one seat. The carbon tax adds cost to business and reduces Australia's competitiveness; it's an own goal for our economy. The tax in Australia is unlike any equivalent; Australia has become the leading zealous international advocate, while most world leaders will not agree on international action and now can't even be bothered to go to the latest international talkfest on climate change.

The tax is so controversial government ministers either can't explain (as demonstrated by Anthony Albanese on the Bolt Report last Sunday) or avoid trying to explain the rationale for the tax because it is a lost cause. And of course Gillard solemnly promised she would not introduce a carbon tax and then welshed on her commitment.

Labor could have responded to rising public angst by slashing the price of $23 per tonne, but they did not have the political savvy to realise that some acknowledgment of public concern might have smoothed the way for its introduction. Instead they have turned their back on public opinion, and the latest polling shows that opposition to the tax has risen to two to one against. A better comparison for the carbon tax, rather than the GST, might be the poll tax in the UK that finished Margaret Thatcher's political career.

The Gillard Government is terminal, as it has been all through her time as PM; the only conclusion one can come to is that Labor needs to change the leader and, at the same time, change the policy.

Sadly for Labor, the senior cabinet ministers around Gillard seem not to have the authority, the wit or the requisite political savvy to understand that their responsibility is to confront the political reality of Labor's obvious demise.

As an example of the senior people around Gillard, Anthony Albanese does not have the gravitas of a John Button or John Dawkins or Richo; his Australia Day speech, heralded as a vision for Australia, turned out to be taken from a US TV show and confirmed his status as a B-class operator. One of Gillard's many problems is her team, and that is not going to change either.

Unfortunately Australia will have to soldier on regardless. Worse still is that poor decisions are the continuing trade mark of the Gillard Government. The latest example followed the High Court's decision on the funding of the federal chaplaincy program. This decision ruled that the government had no authority for the program introduced by the Howard government (I had retired by then so please don't blame me for that one).

It is a serious matter when a government acts outside its authority. It is even worse if the Parliament, in response, gives up its power to control expenditure by giving the executive virtually unlimited powers to get around High Court decisions. The Coalition suggested a sunset clause but Labor and the Greens voted with the Government.

The Independents in the House are so bereft of understanding of the most basic principles of our democracy that one of them actually said the Government's rushed legislation was somehow good for the Parliament.

Whether you are a Labor voter or a Green or anything else, please don't take my word for this but read what Professor Anne Twomey has said on this issue. Anne is well respected, impartial, and she knows more about how governments work than most people.

Tuesday, 26 June 2012

Abbott's chance to redefine the oversight of unions

Last week there was a lot of talk about 'dirt' files, and then former Labor attorney-general Robert McClelland got one from his bottom drawer and started talking about Julia Gillard in the Parliament under privilege.

Throwing dirt at political opponents is standard practice and is fair enough, provided that there is a public interest in the material being used. It is all a matter of definition and context.

Needless to say, the public find the practice abhorrent, but knowing your opponent is part of the contest, and not just in political warfare.

Most of the media have turned a blind eye to the McClelland story, so I expect that the story will die down again as it did last year. Whether it will resurface will probably depend on the existence or otherwise of any new information.

Elections are normally about hip-pocket issues, general economic management, and specifics like health and education, not some vague allegation.

The better way to think of the issue is to look at the broader policy issues. In this case, the broader issues are the role and management of unions. These are real issues for both sides; for Labor, because the unions run that party; and for the Coalition, because a better system would improve productivity and boost living standards.

For Labor, corruption in the union movement is a risk. This is why Bill Shorten recently introduced legislation to deal with the HSU scandal, in which rank and file union members have been ripped off by the union hierarchy.

For the Coalition, the HSU saga is an opportunity to canvass the wider issues. So far, Tony Abbott has proposed higher penalties for failure to meet compliance standards and a shift of supervision of the legal requirements from Fair Work Australia to the Fair Work Ombudsman.

This shift is just moving the chairs on the Titanic. Former registrar Doug Williams has proposed that the function be switched to ASIC so that there is a real change in the culture of this function and so that unions are treated the same as small businesses.

Abbott's position so far is OK but he needs to go further. He needs a narrative to better describe what is happening across the labour market. For example, widespread corruption and exploitation in the building and construction sector needs to be cleaned up.

Abbott has a policy to bring back the ABCC but he needs to link this good idea with other reforms. The unions now represent 13 per cent of the private sector workforce, but they have been given huge leverage over parts of the economy by policies like superannuation which puts union leaders in the box seat of major investments.

The union hierarchy get superannuation board positions for which they have no expertise, and they have a system of default contributions which deny rank and file members' real choice.

Abbott has said he will support increases in the superannuation levy. Personally, I think this is a poor decision on his part, but he could show he means business by saying that his support for the increases in the levy will depend on the passage of legislation to impose real choice for union members on superannuation and genuine transparency on how union superannuation is managed. He could force union super funds to have expert directors who know about superannuation.

He should also announce that the Coalition will repeal the "conveniently belong" provisions of the Fair Work Act. The Coalition wanted to remove this clause back in 1996. It should be Coalition policy now because the existing provision denies workers the choice of the union that represents them.

The lack of competition is not in itself corrupt but it is contrary to the principles of competition that apply elsewhere in the economy and should apply to unions. Competition might make some union bosses realise that they can't afford to take their members for granted as happened in the HSU.

Governments can be slow to react to changing circumstances but because they have a lot of resources, when an issue needs to be addressed, they can take control.

People used to say about John Hewson that he wasn't political enough, but actually he had two particular strengths. The first was that he was an expert on how to run a modern economy and he was strong intellectually. His other quality was his ability to set the political agenda.

The best example of this was his campaign 'Fightback!' which set the political agenda for at least 10 years (when the GST was finally adopted). He had the political instinct to know when to go on the front foot. He knew that by being quick off the mark he could set the political agenda.

One of Hewson's favourite means of doing so (which should be remembered by Abbott who then worked for Hewson) was that he would often put out long treatises, dressed up as press releases, on Sundays. I think his record for one Sunday was seven press releases.

The relevance of this point is that today Minister Shorten is trying to control the union corruption agenda by introducing his legislation to make it look as if he is cleaning up the HSU mess. In response, Kathy Jackson said he is more like Dracula in charge of the blood bank.

For the Coalition, unless they can paint a much broader picture of what needs to be done to really clean up corruption, then they will be largely leaving the issue to Shorten.

The Coalition should not let him get away with it; it would be a big mistake and a lost opportunity not to challenge his approach.

The promise to increase penalties is fine but it is only one element of what is needed. The Coalition needs to demonstrate a strategic approach. It needs to get around and talk to all the interested parties, and work up a comprehensive policy and a timeline for implementation.

It should be putting that policy out soon, not three weeks before the next election. It needs its strategic response to be part of its answer to the Thomson affair and any other union scandal, old or new, that might come along in the meantime.

The HSU issue has highlighted a huge vulnerability for Labor; it is time the Coalition got on the front foot and made the most of the policy opportunities now presented.

Tuesday, 19 June 2012

Economic posturing favoured over real reform

Julia Gillard is off on another overseas trip to try to boost her political standing at home. As a political ploy, her efforts have so far yielded no dividends at home, and abroad, our PM seems oblivious to the likely reaction of many Europeans to her simplistic commentary on economic issues.

Only a year or so ago she said she wasn't even interested in foreign affairs, and now on this occasion she started lecturing the Europeans even before her arrival at the meeting of the G20 in Mexico.

It is fair enough to tell the Europeans to get their act together, but she is the wrong person to deliver the message. Europe's problems include debt and poor economic management and notoriously rigid labour markets. Gillard has yet to deliver a surplus and she has reregulated the Australian labour market, so she is hardly in a position to be lecturing others.

But worse, she is championing major changes to Europe's political system. Her statement jointly authored by the South Korean president (widely reported in last Sunday's papers e.g. The Sunday Age, page 1) stated:

A crucial element of restoring confidence in Europe is agreement on a road map for the eurozone to underpin its monetary union by a fiscal union and a banking union.

This might be true, but Australia should not be telling citizens in Europe that they should cede more of their sovereignty to bureaucrats in Brussels. New Zealand is not about to go broke but hypothetically, if they were, then it would not be smart politics for outsiders to tell the Kiwis that they had to cede economic control of their country to Australia.

In the same way, many Europeans cherish their freedom, and the thought that they should now be forced to give up control of their own budgets, mainly to the Germans, must give many people cause for thought. Nothing Gillard says will make any difference to what happens in Europe, so why go round giving gratuitous advice?

The same simplistic approach was on show at last week's economic forum. The Gillard talkfest was a classic example of everything that is wrong with Labor's handling of the economy. The whole affair was just a stunt. A lot of top business people refused to go while a bevy of union leaders were all given top billing.

Why would anyone serious about economic reform invite Paddy Crumlin from the MUA or the populist protectionist Paul Howes from the AWU to a meeting to discuss economic reform?

The MUA is one of the main reasons that the competitiveness of the offshore gas industry is so poor that future billion-dollar developments are under threat. Howes wants more subsidies for industry, more protection, and he is opposed to government policy to facilitate the needs of big resource projects for skilled labour.

And then there was Joe de Bruyn from the shoppies union. Joe is supposed to be the moderate face of unionism in Australia, but he opposes reform in the retail sector even though the Productivity Commission's report on the industry made it crystal clear that without reform, the industry will suffer from growing online competition and thus fewer jobs. He was also responsible for stopping young people from working after school hours.

The only reason for indulging the union bosses is because they put Gillard in power and she wants them to keep on supporting her. The fact that they are a slowly fading minority group is irrelevant to Gillard. Her problem now is that the business people who run the economy will certainly not want to turn up next time Gillard calls an economic forum.

The model forum from last weekend was the HR Nicholls Society conference in Melbourne. Unlike the Gillard forum, the conference doors were open at all times, there were no constraints on what could be said, and it tackled issues that Gillard steadfastly pretends do not exist.

Doug Williams, the last industrial registrar before the establishment of Fair Work Australia, called for registered unions and employer associations to be supervised by ASIC. As registrar, Williams was well regarded for his impartiality; there is no question about his independence, and he obviously knows more about the issues than anyone.

His call for reform was a challenge for both the Opposition and the Government. The Government is intent on having as little reform as it can get away with. The Coalition wants to pass the supervisory function to the Fair Work ombudsman and thereby merely change the venue rather than tackle the underlying cultural problems of Fair Work Australia.

Under the Coalition, the same people running the show now will remain in place, whereas a shift to ASIC would force real change. In my view, the Coalition needs to take some advice from Williams and they need to push this issue a lot harder.

Another presentation at the HR Nicholls conference provided a case study which showed how Gillard's Fair Work legislation has encouraged higher levels of militancy and days lost to strikes and thus reduced productivity in the resources sector.

Respected pollster Mark Textor outlined how political parties need to better explain the need for reform. He emphasised the importance of demonstrating that reform must be aimed at work flexibility that allows people to earn more or better meet their needs such as balancing the pressures of work and family. He noted that the quality of relationships at work and the opportunities that can be provided through work also need to be important aspects of the reform agenda.

The HR Nicholls conference showed what a few volunteers can do to promote real debate; perhaps Ms Gillard might be wise to scrap phoney summits in the future and instead start with a realistic assessment of Australia's circumstances, rather than hosting a political gimmick to ask business leaders to give her a pat on the back.

Tuesday, 12 June 2012

Australian laws fail the most willing parents

Nine days ago the Melbourne Age carried a story of a young couple and their quest to have children.

This couple's long, heart-wrenching and expensive saga was partly a story of the failure of main stream politics.

In my case, as an eight-times grandfather, I look at the story mainly out of personal pride as well as understanding the obvious desire of most young people to have children. It is part of their DNA and they harbour powerful and wonderful instincts for the growth of mankind. For those who are blocked, through no fault of their own - either temporarily or permanently - from having children, only the prospective parents could describe the heartache and deepest disappointment occasioned by the years of hope stuck in IVF and similar programs.

As a washed up ex-politician, I also see the issue through economic policy and politics which may seem mundane but which are still important. Australia is still a relatively new society, it has already built solid organisational structures in commerce, public life and cultural aspects but it still has a long way to go. A singular task for Australia is to grow in every way possible; culturally, socially, economically and in anyway free people want to grow. And to achieve this goal of continuing growth Australia needs more people or, in the jargon, a policy of increasing its population.

One aspect of this growth is to continue the policy of welcoming migrants to join our expanding enterprise. Unfortunately that policy is under attack, mainly from Labor and the unions but also the Greens and parts of the Liberal Party. Given that a majority of Australians have a migrant background it is surprising that migration policy is politically controversial. The union movement is generally opposed because they mistakenly think that less migration protects jobs when in fact migration has for decades helped to grow the economy as evidenced by the Snowy Rivers scheme and today in the mining industry. The Greens are anti-development so they are lukewarm on migration except for queue jumpers, and have common cause with the unions. Labor's 2008 policy to open the door to people smugglers has also had the effect of discouraging public support for migration because community support is eroded by genuine concerns that the Government is unable to manage our borders. This is the wider impact of the story dramatically demonstrated when people smugglers were recently found living in public housing in Canberra under the nose of the witless Gillard Government.

But migration policy is not the only means to increase population. Governments have spent millions on baby bonus schemes, subsidies for new homes and child care funding arrangements to encourage young couples to have babies and to go back to work.

The one group that attracts less support are the young couples who want to have a baby but are struggling to do so for medical reasons. They do receive financial support from government through Medicare and publicly-funded medical research, although in recent times the Gillard Government broke a promise and made cuts to this funding.

But this is only one aspect of the issue. The real deterrent and the obvious barriers for many couples are the huge financial burdens imposed on young people simply because our political class don't support their right to have children.

In Australia the system is designed to stop couples who need assistance to have a baby.

You can't advertise for a surrogate or a donor egg. If you could find what you needed, the bureaucracy of all the do-gooders would make red tape in the business community cause for a national summit.

If you are one of the handfuls that go through this nightmare, then there is still a risk, because birth mother can claim the child. In Canada and India, the law protects the agreement between the parties so that the parents know they will be able to keep the child but in Australia this unjust law is clearly another means to discourage these couples from having a baby.

You certainly can't pay an Australian resident to have the baby for you and it is illegal in NSW, Queensland and the ACT for you to pay for an overseas surrogate. So in these states you could be jailed for having a child overseas, or alternatively they expect you to leave NSW, Queensland or the ACT and live somewhere else.

The Age noted that despite the illegality of paying a surrogate in India, our High Commission provides advice on its website on how to have a newborn registered as an Australian citizen in the system. I think that is sensible but it highlights inconsistency in Australian law when one government opposes the practise and another facilitates its reality.

Aly and her husband Damien O'Brien reported in The Age (June 3, 2012) that they had to sell their home to pay over $120,000 to have their twin daughters born in Canada. A picture is worth a thousand words; you only have to see the happy couple and their healthy and happy twins to know that, they succeeded in their dreams to have a family.

But as the couple persevered, Australian laws did worse than just fail them; those laws were against them for most of their journey.

While Captain Emad has his family living in public funded housing, Aly and Damien have paid a huge penalty just for wanting a child.

Young couples who want to have a baby should be supported not discriminated against. Inconsistent approaches to law are confusing and unjust.

I can only assume the reason this state of affairs continues is because there are difficult issues around surrogacy and mainstream politicians have found it easier to let moral and religious crusaders have too much say.

The Canadians obviously have a system that is much better than Australia's and it's about time that main stream politicians, state and federal, within Labor and the Coalition get together and sort out a much fairer system.

Tuesday, 5 June 2012

Labor guilty of basest politics hypocrisy

The current Parliament is not that much worse than previous parliaments. Australia's problem is its government.

The fact that we have a minority government is no excuse for poor policy nor is it an excuse for protecting people who shouldn't be protected. Of course the media like to say how things are worse than ever because it sells newspapers and certainly many people are very frustrated at Australia's recent and poor economic management.

The situation is exacerbated by the fact that the global financial crisis that started at least five years ago is still a problem. Understandably, even though Australia is in better condition than other countries, recent huge losses on share markets and falling house prices have all added a level of uncertainty that we are not accustomed to.

When the Australian public look at the political system today they see a government that has made one bad decision after another and while they clearly support a change in government that is not going to happen for a little while yet. No wonder that people are not impressed with politics today. That is understandable; but we should not lose sight of the fact that Australia has a relatively vibrant and successful democratic system.

Compared to most countries, Australia is free of corruption. Some decisions made in the Australian Federal Cabinet and party rooms may at times smell of incompetence, they may further vested interests of minority groups, they may be made in ignorance and they may be made with the basest of motives but fortunately corruption is not part and parcel of the way we do political business in Australia. The truth is that there are enough good people in the Federal Parliament, a free press and a judicial system to keep Australia free of corruption.

So our system is not as bad as some people make out but most would agree that we have our fair share of hypocrisy. Hypocrisy can sometimes reveal the weakness in a proposition. There have been two examples recently.

The first was the appointment of Peter Slipper as Speaker of the House of Representatives. The hypocrisy of the Slipper appointment was overwhelming because Labor prides itself on opposing people who rat on their own side as exemplified by their reaction to Mal Colston's defection. But there was also a certain amount of hypocrisy from the independent MPs who promised a new paradigm for the new Parliament and then voted for a person whose standing in the Parliament was not of the same standard as the previous speaker Mr Harry Jenkins. Literally within weeks of the appointment, the Labor Government had reason to regret their decision.

The Colston incident will probably go down as the classic act of hypocrisy in Australian politics. The 1996/97 Labour Party senate opposition attacked Colston for travel rorts but it was later revealed that Labor had protected Colston from the very same allegations.

Mal Colston, an ALP senator, harboured ambitions to be the deputy president of the senate and he was promised the job. The trouble was that his colleagues changed their mind so Colston abandoned his own party, nominated for the deputy president's position and won the vote with the support of the Coalition. That set off a chain of events. Unlike their pitch for Craig Thomson today, Labor did not wait for due process; their attack was revenge, pure and simple. Colston retaliated by moving a motion that the travel allowances of all members and senators be investigated.

This led to the revelation that under the Hawke government, Colston had been protected for years for his 'misdemeanours'. The proof of the cover-up was a file note in August 1983 that stated 'The Attorney felt that any action that might be taken should stop short of investigation". Alan Ramsay wrote "it remains the most exquisite irony that, with Beazley and Evans now Labor's national leaders, the very investigation Labor stymied 14 years ago should now involve not only Colston's inventive behaviour over the years but their own roles in shielding him from exposure in 1983". (Alan Ramsey Sydney Morning Herald 19 April 1997 and 19 November 1997). The hypocrisy rebounded on Labor.

Quite frankly, the controversies around Peter Slipper or Craig Thomson will all be sorted out one way or another in due course. The public will make up their own mind and if someone's been a hypocrite then they will be judged at the ballot box or in the party room and life will go on.

But one recent example of hypocrisy has however been worse than usual. Mary Jo Fisher is a South Australian Senator. She once worked with me as an adviser and she is a person of the highest integrity. She was recently in the Adelaide Magistrates Court arising from a panic attack in a supermarket and a claim that she had stolen groceries.

The incident occurred at a time when Senator Fisher was trialling new medication for depression. Whilst the Labor party have been saying that allegations against Craig Thomson should be dealt with in the courts and he should not be judged beforehand, the Labor Party, including Prime Minister Gillard, seized on Senator Fisher's problems by giving them as much airing as possible as a counter to the activities of Craig Thomson.

This in itself was despicable behaviour. Her situation was completely different to Craig Thomson and it was the basest politics for Labor to drag her name alongside Craig Thomson. When the matter was first listed in the courts Senator Fisher's barrister, Adelaide QC, Michael Abbott told the court that police prosecutors offered to resolve the matter without it going to court. Abbott's view was that, like many other similar cases, this matter should never have gone to court and the police agreed with him. It was agreed that there would be no conviction recorded.

But instead a decision was made higher up and a lengthy and expensive trial was held. The senator was acquitted of theft and the magistrate found the assault charge 'trifling'. The opposition justice spokesman in South Australia said recently (in the Australian, May 26, 2012) 'I am very concerned that there may have been interference on political grounds'.

Labor has had much to say about due process for Craig Thomson. It's a pity they have never afforded the same courtesy to Mary Jo Fisher.

Tuesday, 29 May 2012

More wrong with the FWA than just its name


There is a lot more wrong with the entity Fair Work Australia (FWA) than its name. As the new president, Ian Ross, said yesterday before a Senate committee, people cannot distinguish between the Fair Work Act and Fair Work Australia, which comprises a tribunal which used to be called the Australian Industrial Relations Commission (AIRC), and the compliance organisation, otherwise known as the administration, which is run by a general manager.

The president has no power over the general manager.

The use of the words 'fair work' is just an example of Labor Party spin. There is nothing particularly fair about the FWA. As Ross admitted, there are "legitimate questions" about its behaviour and you can be certain it is overmanned and unable to perform its functions under the legislation as demonstrated by the fiasco of the Thomson affair.

When I was the minister for industrial relations, I organised redundancies for members of the AIRC. Like many government organisations, the more people you appoint the more work they find themselves, and FWA is no different.

The FWA was introduced by Julia Gillard. An unintended consequence of the new legislation opened the way for the president of FWA to attend and answer questions in a Senate committee. The only person who realised what had happened, and the opportunity it afforded the Senate, was Senator Mary-Jo Fisher, who then initiated the Senate request to the president to appear before the relevant Senate committee.

The former president appeared three or four times but always complaining his appearance was beneath his status and then campaigned behind the scenes so that he would not have to appear again. Neither the government nor the Greens were prepared to uphold the rights of the Senate. As a result, until the Thomson matter, it appeared that the president would not appear again.

The question now for the new president is whether or not he is prepared to continue to appear before the Senate again. He ducked the question when asked yesterday by Senator Fisher. There is no doubt there is a legal requirement to attend but only if requested.

Mr Ross says the tribunal "must become more efficient and accountable" and "the current process has significantly damaged the tribunal's reputation". These are significant matters which should be the subject of ongoing Senate interest. Therefore the first test of Mr Ross will be his willingness to voluntarily attend future Senate committee meetings. He says FWA is a 'justice' institution but of course it is not a judicial institution and should not be given a waiver from public scrutiny.

It is now obvious to everybody that the administration part of FWA is simply not fit for purpose. This should come as no surprise except that the situation has obviously got much worse in recent years. Too many working in administration have strong links to the union movement and have failed to properly pursue administrative failures by unions. Some years back it used to be said that one state section was closely linked to the Socialist Left.

The only way to really clean up the situation would be to start again with a new organisation with new people and with a very clear set of objectives and a rigorous system to audit the implementation. With this new start, a minister should have responsibility and thus accountability to the Parliament in the same way that the Treasurer is ultimately responsible for the management of corporate compliance. Needless to say, as announced by Tony Abbott sometime ago, the penalties for failure to meet basic requirements of reporting need to be significantly increased.

Mr Ross also says that a more effective complaints mechanism should be put in place to deal with complaints against members. But he is wrong to suggest that the tribunal within FWA should be treated the same as judges.

Firstly there should be a realistic appreciation of the quality of some of the tribunal members. I have notes made by me of comments made by a former AIRC president to the effect that some members were basically duds. You cannot have a fair system unless there are minimum standards required of tribunal members. If minimum standards are not maintained then there should be a way of getting rid of people who are not up to scratch.

Of course, it would help if the duds were not appointed in the first place, and while both sides of politics can be criticised for appointments, it is noteworthy that literally all recent appointments have been union people. There is nothing wrong with union appointments, but when nearly all the appointments come from the one grouping, it's only reasonable to assume that merit has played little part in the choice of new members.

Mr Ross is a member of the Federal Court. When his predecessor was appointed as president of the AIRC, he was also appointed as a member of the Federal Court. There was only one reason for doing so. His concern and mine was that if he did not hold a commission with the Federal Court, then an incoming Labor government could engineer his removal by way of establishing a new body in the same way that Labor did with Justice Staples.

We made him a member of the Federal Court so that he had somewhere to go if needed. We did not appoint him as a member of the Federal Court so as to give some additional status to the AIRC. FWA does not need more status; the world has changed, and the days that senior people in the commission were judges or their equivalent are well and truly over.

Mr Ross refuted claims made by Craig Thomson against FWA and in particular in regards to the vice president. Thomson made a claim, but without anything to back up his statement, so the matter ends there.

But it is true that Mr Lawler was reported in the press (The Australian, February 6, 2012) as having written to New South Wales Police investigating alleged corruption in the HSU "making allegations of criminal conduct".

Any citizen can write to the police, but when that citizen is the vice president of FWA and the partner of a key figure within the HSU, a wiser person might refrain from being involved. And a new president might make the point to his new colleagues, as he said yesterday, "The independence and standing of the tribunal established by the Act is central to the operation of the Act and the attainment of Parliament's objectives."

Tuesday, 15 May 2012

Craig Thompson

Craig Thomson has promised a response to the 1,100-page report of Fair Work Australia. At first he wanted speaking time of 10 to 15 minutes - now he wants half an hour.

Personally, I would give him as much time as he wants. Someone should move an amendment that allows the Member for Dobell to speak for as long as he wants to answer the claims against him. He says the allegations against him are all false, so let him explain how and why he is right and everyone else is wrong.

Rob Oakeshott said Thomson should answer the FWA claims line by line. It could take hours if he has a defence. The Australian public are surely entitled to hear how, as now claimed by Thomson, the reputation of the Parliament has been trashed by persons unknown acting in a conspiracy against Mr Thomson.

Personally, I would like to know who these people are. Is it the man that Thomson once said had paid back $15,000 in relation to credit cards used for an escort agency? Is it his successor Kathy Jackson or her former husband with whom he has been in dispute?

Will he expose the names of those conspirators who since 2004 have been out to get him? Will he tell us their motives?

Will Mr Thomson tell the Parliament why he never went to the police about his allegations? Will he explain why he signed off on his credit card statements even though he now says that the expenditure was not by him and presumably unauthorised?

Will he seek to table documents that show that the cash he took was all accounted for and used for union business? And will he say that using union funds for his campaign was authorised by the HSU membership?

Will he produce minutes of the meeting that agreed to this spending? Or perhaps he will provide evidence that many unions behave this way so he thought his behaviour was OK? Will he produce declarations, for tabling in the House, from other union bosses who have also had their union financially back their political ambitions?

Did Mr Thomson raise his concerns with other trade unions? Has he known of this happening elsewhere in the union movement? Was the alleged threat to Mr Thomson sparked by some factional infighting? Did he seek assistance from his colleagues in the broader union movement or was he terrified that there may be repercussions if he told anyone of the threat?

And will he also explain his relationship with the Labor Party in the period since 2010? When did he meet with the PM? What was said? What were the terms of the financial support he received from Labor? Who was party to that decision? And does he intend to seek preselection again from Labor?

And when he has finished his address will he then think Labor should lift his suspension? Will he think that the police will soon drop their investigations? Will he be looking forward to be endorsed for the next election? Does he expect that his union, the HSU, will want to support him again with the hard-earned wages of low paid HSU members?

There are many questions for Mr Thomson to answer. I doubt he will evoke a sense of sympathy in the electorate; maybe the appearance before the court of public opinion will finally bring him undone. Whichever way it goes, he will have had his say, for now.

For more than three years, Craig Thomson has been protected by Labor and the independents. They are the Thomson backers, the Thomson supporters. Every imaginable tactic to delay an inevitable conclusion of the issues surrounding Thomson has been employed.

For what seems an aeon in politics the Opposition has never given up its questioning his behaviour and Labor's continuing support for him. And yet last week, Tony Windsor, Rob Oakeshott and senior Ministers were finally pressured into conceding the Opposition demand that Thomson explain himself.

They dropped the mantra that the Thomson issues had to undergo due process. Their constant but false claim was that the Parliament could never be judge and jury on Thomson so the only intervention would have to be by due process i.e. the FWA and the police.

Labor reckoned this course was not too bad because these issues can take forever and by the time the courts were involved and then the appeals, Thomson would be out of the Parliament and dispensed.

The trouble was that that tactic was not working. The public pressure and Abbott's fierce condemnation of Gillard became too much, especially when the 1,100 page report from FWA was published thanks to the Coalition's demands in the Senate committee system.

Tony Windsor must now be blaming himself for pressuring Thomson to concede to Coalition demands.

Windsor has reason to worry that he is seen to be too aligned to Gillard so he has come up with another talk fest. He has no intention of pulling the plug on Labor by undermining Thomson. So he invites discussion on a proposal that has been discussed on many occasions, a proposition that has never been agreed on, let alone seen as necessary, in the more than 100 years of our Parliament, and a proposition that would require MPs to submit to someone other than their constituents for behaviour that is not illegal.

Former democrat Andrew Murray says one requirement on MPs could be "to strive to maintain the public trust placed in them". Wow, under that vague obligation lots of MPs would soon be kicked out; at least the lawyers would do well out of the court cases that would ensue – all at public expense.

The only issue for the independents is whether they are remembered as the MPs who kept themselves in their seats as long as possible by propping up a discredited government mired in corruption (the word used by Bill Shorten) or as two MPs who championed higher parliamentary standards.

Until now, Thomson has resisted making any statement. It will be interesting if he does make the promised statement. Don't be surprised if he doesn't turn up.

The Honourable Peter Reith was a senior cabinet minister in the Australian Liberal government from 1996 to 2001 and then a director of the European Bank for Reconstruction and Development from 2003 to 2009.

Tuesday, 8 May 2012

No reforme, no future

Tonight's budget should be interesting although I generally prefer to read it than to speculate about it.

However, what we can say about this year's Australian budget is that it will not be worse than previous Labor budgets. It would have been a lot tighter, but for the prudent Howard years. And our finances are certainly not as bad as the French.

The French are socialists. So it is hardly surprising that the socialists should once again succeed in electing a socialist president. France is run by socialist elites and the labour movement. Nicolas Sarkozy was never going to emulate great economic reformers like Margaret Thatcher (Conservative UK) or Roger Douglas (Labor NZ). His presidency was doomed from the start because he never introduced the economic reforms that are desperately needed in France and elsewhere in Europe.

Sadly the best you could say about Sarkozy is that his departure will be as irrelevant as his arrival. France still needs a leader and now she has François Hollande; how sad for France and Europe.

And it's a disappointment for Australia as well because although the US, UK, Canada and a few other countries are reasonably well run and provide the leadership and civilising standards for the international community, a stronger, liberal, free market Europe is in Australia's long-term interests. A weak and fractious Europe ultimately undermines our security and the common values that underpin our society.

The last socialist president, François Mitterrand started his term with a series of disastrous economic measures. Fortunately when confronted with the consequences of his policy he retreated, but the damage was done. He left France economically weaker. His successor promised pro-market reform, but failed to implement significant reforms partly due to his inability to overcome vested interests.

The president Hollande might get lucky. If the Sarkozy party in the Parliament can retain its majority in the forthcoming elections then they may provide a good excuse for Hollande to not pursue his announced policies. In this event he will end up a one-term president, like Sarkozy. Maybe then the French people might finally realise that the true path to equality and liberty is a free market; not more government but a lot less government.

Conventional wisdom is that the European economies will muddle through the continuing crisis. The alternative scenario is further economic turmoil. This scenario can't be dismissed. One reason Sarkozy was defeated was because he had no plan for France to confront her economic woes. The economic vacuum he left behind has now helped to open the door to more extreme politics.

Europe has a history of extremists, both left and right wing. If the socialist experiment with Hollande fails, as it is certainly doomed to, then there is every chance of a right wing resurgence. That resurgence was already in evidence in the first round of the Sarkozy/Hollande contest when the Le Pen party attracted more than six million votes. It was also apparent in Sarkozy's anti-immigration stance. The problem is that populist right-wingers will be just as bad as socialists; neither will advance sensible pro-market reforms.

The same could happen in Greece and elsewhere in Europe. The public do not like austerity measures and, more than ever in difficult times, they are itching to hear politicians who will tell them what they want to hear. It is a dangerous development. And so, instead of encouraging politicians who will lead, you get populists who think getting into government is everything.

Of course, Australia and Europe are very different. But there are many similar issues in how to manage a free enterprise economy within a democratic society. Topics like taxation, privatisation, labour market flexibility, free trade, provision of basic services (such as health and education), free speech and monetary policy are common to all the leading economies.

Modern societies now have a lot of knowledge to know how to manage an advanced economy. In many cases the path of reform is clear; the only issue is who has the determination and the leadership to make the reforms a reality. This is as much the situation in Australia as it is in France.

In Australia, we know that a flexible labour market will increase wages and we have recently had real time experience of the benefits of flexibility. This idea is not in vogue now within Labor, but it was championed by Labor in the early 1990s.

We know that governments have to live within their means; today, this is the mantra for the Swan budget. We know that the public do not like privatisation, but it is a good idea and works (ask Anna Bligh, ex-Premier of Queensland and the shareholders in Queensland Rail). We know competition is a great driver of higher living standards and is the best known way to ensure that consumers get what they want. We know that high tax rates kill incentive and too much welfare has the same effect. We also know that if you impose too many costs on business then they lose sales and that costs jobs. So we know that the carbon tax, especially one that imposes higher costs than those on competitors, will cost jobs in Australia.

And we know that president Hollande's policy to lower the working age to 60 will force people out of work and so reduce productivity and living standards. And we also know that more taxes on business, like the mining tax, will only give the Canadians the chance to take investment from Australia and that will lessen work opportunities for Indigenous Australians.

Last year, the budget deficit was about $20 billion but will end up around $40 billion. So do not get excited about a projected surplus of $2 billion knowing it could end up as a deficit. It would be better if the Government announced some long-term reforms that we know would really make a difference. As things stand today, and despite all of our differences, there is little chance of that in either Australia or France. For that reason, the chances are that no-one will be talking about the Aussie budget by this time next week.

Tuesday, 1 May 2012

Gillard's Speaker fiasco

Julia Gillard's proposal to have Speaker Peter Slipper stand aside has no precedent: it is not authorised under the constitution, does not stop Slipper from collecting his $300,000 pa plus salary, and could end up in farce and another blow to the credibility of the federal Parliament.

As to when and how the speaker will stand aside is unknown. His statement in yesterday's press was that he would:

... make a short statement to the House and then invite the Deputy Speaker to take the chair as Deputy Speaker ... (and thereby) avoid what could be a controversial debate on the floor of the Parliament.

What exactly happens after that no-one knows, and clearly whatever the Speaker now says, there is no way of knowing what he will do and say in a month's time or longer.

Slipper might go away for a few weeks and then just walk straight back into the House and take over.

Before the Parliament resumes, the Attorney-General should commission and release a joint opinion on the legality of the Gillard fix. It may be illegal and certainly it is politically flawed. I suggest the persons best qualified for this job would be the Clerk of the House and a respected non-political QC.

Regardless of the legal position, Slipper continues to damage the Parliament and Government, and for that reason alone should be removed. It might be that the court of public opinion is at best rough justice (and I speak from personal authority) but the constitution provides no halfway house.

There is no provision for a speaker to just stand aside. Slipper certainly can't sit on the crossbenches. He will have to stay away from the Parliament altogether.

If there is an election before the allegations against him are finalised, then he might never be seen again. In the meantime, the Coalition should make clear that it will vote against any motion giving Slipper leave under clause 38 of the constitution.

In particular, the Coalition should vote to amend (in order to exclude Slipper) the global motion at the end of the current session that gives all members leave of absence.

Clause 36 of the constitution states:

Before or during any absence of the Speaker, the House of the Representatives may choose a member to perform his duties in his absence.

The word 'absence' is not defined in the constitution or House Of Representatives Standing Orders.

What is quite clear is that Slipper will continue as the Speaker. So if, for example, he later decides to sit on the crossbenches, he would not have a deliberative vote because he is still the Speaker.

If a division were called, members are required under the Standing Orders to move to the left or the right of the Speaker. It seems that Slipper's only option in that situation would be to resume the Speaker's chair and announce, if required, his casting vote.

Another complication and potential farce is if Slipper sits on the crossbenches, in which case he is not absent; it is difficult to see how a deputy speaker can become the acting speaker because the House is only able to appoint if there is an absence.

The appointment of the deputy can be done before the absence of the speaker so there is no reason for Slipper to take the chair when the House resumes on May 8. I presume that Gillard agreed to give Slipper his day in the sun before kicking him out. Who knows why she decided to give him the chair again.

Given that she stabbed Rudd in the back, I reckon that Gillard has a gift for sniffing political blood, especially if it might be her own. The reason she moved against Slipper and Thomson was because she must know that Shorten is after her job. Now.

It's hard to find a good national leader. The best we have had in Australia since World War II have been Menzies, Hawke and Howard. The good ones had years in Government or Opposition before they finally reached high office.

Hawke was different, although as the head of the ACTU he was actively involved in government for a long time.

Hawke also shared another characteristic with successful leaders; he was well-known to the public before he became PM. In other words, he had been around long enough for the public to get know him. There were no surprises with Menzies, Hawke or Howard.

One of the problems with Rudd and Gillard has been that that they were both unknown novices. The media gave the public the impression that they were competent but time has demonstrated that neither have had what it takes to lead and no-one really knew what they stood for.

This was so obvious in the 2010 campaign that Gillard actually said it was time to reveal the real Julia. Imagine John Howard or Bob Hawke making that statement!

The latest non-entity novice to push himself forward as PM is Bill Shorten.

He has just arrived in the Parliament. He has hardly ever had a real job. He is hopeless as a speaker in the chamber. The only government he has experienced up close is the dysfunctional Rudd-Gillard government, and his only qualifications on policy are the National Disability Insurance Scheme which is supported by both sides of politics.

He has been promoted by the media as the rising star and has had a very easy ride. He has not been subject to the policy and personal scrutiny that comes with long service, controversy and policy commitment.

At this stage, he is just another union boss on the make. The one thing he really knows is political manoeuvring and that was on display last week.

Months ago Shorten was letting it be known that he was the man for the top job but he would be a passive player for the moment.

Now what has changed is that, more recently, Shorten has decided to become pro-active. His move on the HSU was the first tangible move he has made against Gillard.

He moved to differentiate himself from Gillard's support for Thomson. It could have been done a long time ago; it was initiated last week for political reasons that suit Shorten.

His second move was his statement that he supported Gillard regardless of the fact he did not know what she had said. It made him a laughing stock around the world but it was his way of pretending he still supports her even though he was differentiating against her.

It was the same as Shorten telling Jon Faine on Melbourne radio that he did not want to be PM. It was just a crude political device for short-term benefit.

By her own description, Gillard talked last weekend about dark clouds overhead Australia. Craig Emerson admitted yesterday that Labor MPs are thinking about changing the leadership but Labor's problem is that the public now want to dispel the dark clouds, and that means an election.

An election would be in the public interest, but not for Tony Windsor and Rob Oakeshott, so the farce looks set to continue although it is hard to believe the current fiasco can go on much longer.