Tuesday, 29 January 2013

Gillard captain's pick: it's just not cricket

Personally I don't really care who Labor pre-selects as their representative for the Northern Territory (NT).
The incumbent, Trish Crossin, is useless, has done little for the NT and will not be missed. I suppose under the Roxon legislation this comment would be actionable so I thought I had better say it before the censors arrive.
The saga unfolding over the NT Senate preselection is just the usual circus that is standard operating procedure within Labor. Labor's real problem is that union membership is continuing to fall and rank-and-file members are disenchanted because they don't get a say in the running of their party. It is a long-term problem that is of little interest to PM Gillard who can't see that trampling over the rights of party members clashes with the long-term necessity of democratising the party.
As matters stand Gillard may know reform is necessary but she will calculate that, at the worst, she will be just one of a number of Labor leaders not prepared to do anything for the party that got them into politics. Gillard obviously does not see that the likes of Mike Williamson, Craig Thomson and Eddie Obeid are beneficiaries of the factional system in NSW and that Labor will never purge itself of factional politics and its consequences unless the issue is tackled.
No wonder Labor insiders like John Faulkner and Steve Bracks sound more and more frustrated that party reform remains in the too-hard basket. It is a case of short-termism beats long-termism every time in the Gillard office. If Labor loses the forthcoming election due to a strong swing in western NSW then the Peris manoeuvre will be just another minor decision that backfired through Gillard's personal ambition and lack of judgement. Fortunately, in a rare display of public service, by their mere public presence, Mike Williamson, Craig Thomson, and Eddie Obeid will spend 2013 reminding the NSW electorate that factional power plays in NSW Labor are reason enough to scrap Labor and vote Liberal especially in Western Sydney.
PM Gillard's "captains pick" is just tokenism of the worst sort. Nova Peris might be a good MP but likewise she might be hopeless. Peris only joined the Labor Party because she wants to be an MP - but until now she never thought it was worth the trouble to commit to the party that she now wants to represent in the Parliament. It is also a bad sign that she has been so willing or so naive to be Gillard's instrument. She will never be seen as anything else other than Gillard's representative to the NT rather than being a representative for the NT in Canberra.
Let's face it; Julia Gillard only picked Nova Peris because Gillard thinks it makes Gillard look good.
It is no wonder that resentment in the NT is rising. The Australian reported yesterday (paywall) that:
Three Indigenous former Labor ministers or candidates have added their names alongside sitting Senator Trish Crossin after nearly a week of anger over the Prime Minister's decision to ignore process and the wishes of the Labor rank and file. Party sources predicted as many as a dozen could join the protest against Ms Gillard's decision to oust Senator Crossin in favour of Ms Peris…
The Gillard intervention demonstrates Gillard's contempt for the people of the NT and highlights that her judgement is very poor when she thinks she can get away with abandoning any commitment to the principle that the party organisation should decide who will represent their party. Gillard thinks a 'captain's pick' is ok but politics is not cricket. If she wants to pick a team then she should join a cricket club.
It is just the sort of ill-judged political behaviour that has characterised Julia Gillard in the last 12 months. We can expect more similar stunts up to the 2013 election.
Meanwhile the really important issues are swept aside.
The one to watch is economic policy. Gillard will do anything and say anything to remain in office.
Labor has abandoned its own promise to balance the books and Gillard will be sorely tempted to pursue some big spending initiatives to buy some votes. Many parts of the economy are weak and unemployment is rising. The usual suspects are concerned the economy is going backwards so they are paving the way for more pump priming with money we don't have (AFR January 25-28, 2013). Heather Ridout wants "a bit of active management", Bernie Fraser says "I believe that governments should spend as long as they spend sensibly and appropriately" (a big call for the masters of pink batts and the education revolution) and Bob Gregory justifies the spending when he says of the economy (paywall): "There's going to be a hole".
PS: I had been thinking that PM Gillard would pull the plug on Minister Roxon's nasty anti freedom of speech bill but I might be wrong. There is a parallel between the Roxon Bill and the ID (identity) card debate in the mid-1980s. Like the current controversy, opposition to the ID card crossed the usual political divides. I remember being on the same platform with Marxists, socialists and every other colour of the political rainbow but public opinion did not deter Labor's Bob Hawke. Labor stubbornly fought the case through a federal election but was finally stopped, not by an outraged public, but by the late Ewart Smith, a first-class lawyer formerly of the Commonwealth Attorney General's Department.
If Labor remains doggedly committed to the Roxon Bill then it will be interesting to see if some high profile Labor supporters, who have publicly warned about our loss of freedom of speech, will stick to Labor at the expense of our basic freedoms or back their concerns by voting for the Coalition.

Tuesday, 22 January 2013

Could Alexander Downer be SA's next premier?

A move from Alexander Downer to become South Australia's next Liberal premier has long been rumoured. Peter Reith looks at how the switch could work, and what the former foreign minister has to offer.

I have not asked my friend Alexander Downer if he will pursue a career in South Australian politics, nor have I expressed any views to him on what he might do, but I can imagine it would be a difficult decision.

The only reason I can see why Alexander would go into politics in South Australia is because the state desperately needs some quality leadership.

It would be a big sacrifice for him, although that is not how he would see it. The only reason for his decision would be a sense of public service and commitment to South Australia in the mould of his father and grandfather.

Alexander has nothing to prove; he earns a lot more out of politics than he would ever earn in politics; he would see less of his family; and he would be giving up a lifestyle commensurate with the extensive public service he has already given.

It says a lot about the man that he would even contemplate going into state politics, but the 2014 election is a once and only chance for South Australia to change its current trajectory and drag itself out of the slow lane.

If South Australians want a state where the next generation can find good jobs and higher living standards on a par with the rest of Australia, then they need new leadership.

Labor has been in office in South Australia since 2002. The last premier, Mike Rann, said that he stayed in office until the expansion of the massive mine Olympic Dam got the go-ahead. Mr Rann left office when he was rolled by the current Premier Jay Weatherill and the expansion was deferred.

Prime Minister Julia Gillard appointed Mr Rann as High Commissioner in London; a good job out of the country for a man embarrassed by his many failures running South Australia.

Labor has burdened the state with massive debts, huge interest repayments and projected state finances more like those in Europe rather than in many other Australian states.

The Premier has admitted that the state's finances are so bad he could not find one member of his team who was capable of managing the Treasury portfolio, so he now holds the job himself.

The future for South Australia under more Labor administrations is a state that is forever asking the rest of Australia to prop up its economy with federal subsidies because it can't stand on its own two feet. Having been in office for 12 years, "It's time" is a slogan that suits SA Labor like a well-worn glove.

The next state election is due in March 2014. If there is a decision to change the SA Liberal leader, it will probably need to be made by mid-2013.

A change of leader is a matter for the Liberal organisation and Parliamentary Party in SA; I won't comment on Isobel Redmond other than to say I know her and she is well-respected and capable. One of her problems is that even Labor people are saying their polling shows Labor would be thrashed at the next SA election if Downer were leader.

Alexander left the Federal Parliament in July 2008. As a general rule it becomes harder to go back into politics the longer you have been out in the real world. One obvious reason is that it is not easy to find a seat. In the United States, the president can appoint anyone to the executive (i.e. the Cabinet) but an Australian minister has to be a Member of the Parliament (or become one within three months of their appointment).

For most ex-politicians, once you are out, it is not so easy to get back unless your parliamentary record is above average.

Mal Brough was a good minister and so it was no surprise to me that he was preselected for the 2013 federal election. Bob Carr only became Foreign Minister because an ALP senator gave up his seat to create a vacancy.

Alexander was an exceptional foreign minister, widely respected around the world. Even the most partisan South Australian would surely give him credit for the manner in which he represented Australia as Australia's longest-serving foreign minister. He is also well-respected as one of the key players in the Howard administration.

In my time in the Cabinet, Alexander was a key player in all the big decisions. He was always one of the people that prime minister John Howard would ring when he needed a sounding board. So Alexander would be a good bet to win a preselection. But there needs to be a vacancy.

A vacancy now would allow Downer to go straight into the State Parliament and challenge the Labor Government in the Parliament, face-to-face. The alternative is to follow Campbell Newman's example and seek election when the state election is held in 2014. This latter approach is simple enough and would be just as good, if not better. It worked in Queensland and would work equally as well in SA.

Apart from what Downer could do to improve the future for SA if he were premier, I would expect he could have a particularly strong role in dealings with the Federal Government. Downer would bring to bear his experience of economics, foreign affairs and many other issues of national significance. This could be of great value whether he was dealing with Federal Labor under PM Gillard or a newly elected Tony Abbott. And beyond those issues, he would be influential in matters such as Liberal Party reform.

When you have been in politics at a senior level for a long period, it does not take much to get the adrenalin going and wonder about a return to politics. Not many switch from state to federal politics or vice versa, and not many switch and become leader of their party, but it is certainly possible in the case of Alexander Downer. There is no doubt South Australia is desperately in need of the best person that can be lured to be the next premier.

Tuesday, 15 January 2013

Stop milking our dairy farmers

Just because people get used to paying more taxes doesn't mean they should have to, writes Peter Reith. Dairy farmers should be given a chance to compete.

As our televisions have been saturated with stories of fire and the tireless work of volunteer firefighters, many Australians would be thinking about the 'mateship' that is such an important part of the Australian identity.

One element of mateship is unquestionably the willingness of Australians to rely on their own initiative and not wait until being told what to do and when.

In fact, fire authorities have been making the point that residents in fire prone areas need to have their own fire plan including when and how they will leave their properties in the event of a likely fire. This self-reliance is a feature of a free people making decisions for themselves and their families.

The Country Fire Authority in Victoria has tremendous public support because the concept of local people managing their own affairs is recognised by the public as embodying the right values of 'mateship' as well as being the most sensible and efficient method of getting the job done. Some would call this 'ideology' but I would call it 'practicality'.

The concept of self-help and personal responsibility is very obvious in the agricultural sector. The South West region of Victoria is a vital part of the national agricultural economy but currently the dairy farmers are having a pretty tough time.

The basic problem is that the price of dairy produce is marginally below the price in the international market. In international markets, Australia is a 'price taker' not a 'price maker'. Of course, we can improve the quality of our products, we can be innovative etc, but the reality is that the local farmer is not able to control his or her costs.

Governments control many of the costs of a dairy producer and regularly dump costs on the industry. The last government to significantly reduce costs was the Howard government when it introduced the GST and abolished the hidden wholesale sales tax that was paid by farmers. The Howard government also cleaned up the wharves which improved productivity and reliability which in turn improved the supply chain for dairy farmers.

Last night, an expected more than 500 dairy farmers held a public meeting to discuss the plight of their industry. Many of these farmers will have been fighting fires over recent weeks. Some will be demanding an increase in dairy prices. I understand why but it's not going to happen. The price is set by events overseas, not in Australia.

The only prospect of relief for their industry is a radical plan to cut costs. My plan is radical in the sense that I doubt any government is going to do much for the farmers, but it is not radical because my plan could easily be done if only governments were prepared to get off the backs of business and give them a better chance to compete.

This is a classic case of knowing what needs to be done but no-one being prepared to do it.

My simple and practical six-point plan to reduce costs is:

   Cut municipal rates; councils have been increasing expenditure above inflation. This needs to stop.

   Abolish payroll tax including on all dairy processing plants. Most of Australia's competitors do not have payroll tax so this tax especially imposes costs on Australian producers.

   Reduce energy prices by abolishing the carbon tax and remove impediments to other initiatives like gas, including coal seam methane. An increased gas supply in the US has been a boon to US manufacturing.
   Reform labour market policies introduced by Labor for the benefit of the unions. Penalty rates are a huge problem and a new flexibility is urgently required. Labor's policy to require a minimum of three hours work is nonsense for milkers, unfair dismissal is a problem for small business, and militancy in construction for dairy industry infrastructure is another problem that needs to be fixed.

   Slash government waste, cut wasteful expenditure, and stop the boats to cut costs.

   Slash the petrol tax to lower business costs. Improvements to transport should be a much higher priority to support the agricultural sector including for the South West in Victoria (but also elsewhere around the country) an upgrade for the road from Winchelsea to Warrnambool. These projects can be assessed for economic benefit and should have priority over the NBN which has never had a cost-benefit analysis and which should be undertaken by private enterprise.

Many of these issues are not top of mind issues for the public. People get used to the taxes and other imposts they have to pay. To me, it is no surprise that public angst with the carbon tax has lessened with the passage of time. People running their own business are too busy trying to survive.

As The Australian reported, the number of complaints about the carbon tax has dropped. But so what? There are limits on how long the public will maintain their rage. The debate over the Mabo decision of the High Court followed a similar pattern. There was a lot of angst about the High Court's decision to recognise native title. The debate raged for months and many said the issue would be central to the next election, but the issue cooled and was never a big election issue.

The carbon tax will not be as big an issue in 2013 as it was in 2011 and 2012. But that does not mean the Coalition should reconsider its position. Nor do I think that Tony Abbott will amend his position. He is right to fight the issue as hard as he can. He has said he will abolish the carbon tax and he will call a double dissolution election if the Senate tries to block his 2013 election mandate.

The carbon tax is an impost that can't be justified while Australia is out of step with the rest of the world. It makes Australia less competitive and we can't afford to undermine the Australian economy. My plan is practical; it's aimed at making agricultural businesses more competitive and lifting living standards for all Australians.

Tuesday, 8 January 2013

Sorry Keating, you were the lesser reformer

The galling truth for Paul Keating is that his predecessor Bob Hawke and successor John Howard were the greater reform prime ministers, writes Peter Reith.

The annual release of archived cabinet papers is a good time to reflect on what was said and decided by cabinets of yesteryear.

Past cabinet decisions are not just about history; the debates often reflect longstanding values of continuing relevance. For example, a cabinet debate in the 1980s about the constitution could provide an insight into a similar debate on federalism in 2013 because the essentials of the discussion have not changed greatly.

The formal documents include not just the cabinet decisions but also cabinet submissions and cabinet notebooks, described here by the official archivist:

Meetings of Cabinet and Cabinet committees are usually attended by officials of the Cabinet Office. Their role includes the recording of proceedings so that minutes accurately reflecting the decisions made or conclusions reached can be prepared. These records of proceedings are referred to as the Cabinet notebooks.

The papers provide lots of information and the gist of what was said and why: so the release of the documents is a valuable source to better understand how our system works. Of course, often the notes are not the only means by which the public hear what is happening on the inside. The conventional wisdom is that the public hear less about cabinet decisions from governments that are united and more from governments that are divided.

Paul Keating was no shrinking violet when it came to public controversy; in a way it was one of his better characteristics because public debate is vital in any democracy. Obviously the release of the papers that reflect continuing debates (e.g. on the GST) encourages former ministers and their opponents to continue their fights of days gone by.

That is fair enough, especially if former participants have mellowed enough to scrub the spin and try to describe what actually happened. This was certainly not the case with Paul Keating this year. He claims to be the great reformer of our time but the truth is that while he made some good contributions as treasurer, as PM he walked away from positions he had earlier championed. The galling truth for Keating, as prime minister, is that Hawke as PM did more to implement reform than Keating.

James Massola for the AFR said last week that the Hawke-Keating reforms were "the likes of which Australia has not seen since (paywalled)". This opening comment on his piece about Paul Keating was as over the top as Paul Keating putting the argument to Massola (AFR p4 2-4 January 2013) that "Australia did not need the GST eventually introduced by the Howard government". This was an absurd comment.

Keating promised income tax cuts to match Fightback and legislated the tax cuts before the election. He won the 1993 election by hypocritically opposing the GST. After the election he proved he could not match Fightback because he had to abandon the tax cuts. That measure alone was a key reason he lost in 1996. The truth is that Keating had been passionate about the GST (and many admired him for that passion) but the sole reason for dumping the tax was because Hawke did a deal with the ACTU in a motel room in Canberra.

The absurdity of Keating's claim is compounded by the then existence of the wholesale sales tax (WST). Much of the proceeds of the GST were to abolish the WST. Keating could not find the money for the income tax cuts so he could hardly find the money needed to abolish the WST. Australia would be a lot worse off if we still had the dilapidated WST; income tax would be higher, savings would be discouraged, tourists would not be paying GST, business would be loaded up with the costs of the WST, and black economy participants would be laughing all the way to the bank.

Keating also showed how he has lost the plot when he said that productivity is languishing because of the failures of the Howard government. Of course, there are many factors that impact on productivity performance but a flexible labour market is a key element. Paul Keating, who has privately attacked Hawke for his dealing with the unions on the GST, was every bit as spineless when he caved in to union demands to scuttle Keating's labour market policy blue print announced by him at the Institute of Company Directors in April 1993.

Rather than any useful reform, Keating introduced the unfair dismissal laws that have been a major disincentive for employment ever since. There was a lot of talk by Labor about labour market reform but the real reform only came when the Howard government was elected in 1996 and we secured passage of the Workplace Relations Act that came into operation in mid-1997.

John Howard was every bit and more of a reformist than Keating. He had a better record than Keating on labour reform, the GST, fiscal policy, the independence of the Reserve Bank and many others. And John Howard has been very fair in giving Keating and Hawke their due; as one example, he has publicly acknowledged the benefits to Australia of floating the dollar.

It's time that Paul Keating congratulated John Howard for some of his 'signature' reforms like the GST and the labour market. Surely one way to promote reform is to praise those reformers who have succeeded.