Category: politics

Good write-up from Greg Jericho on the Guardian:

So all up in percentage of GDP terms, revenue will continue to rise over the next four years from 23.0% in 2013-14 to 24.9% of GDP by 2017-18. It’s worth noting that the ALP governments never had a revenue take of more than 23.2% of GDP…

Expenditure in 2014-15 is expected to decline in real terms by 1.7%, which is among the biggest cuts in the past 40 years. But it’s worth remembering that that cut is in comparison to spending in 2013-14 – which includes the extra $11.9bn Joe Hockey spent in the Myefo – including nearly $9bn on the RBA. So that alone made reducing expenditure in this year an easier job.

Overall, it’s actually not a bad budget, and while it makes some dumb cuts, opens the gate for high fee universities in an effort to “get Australian universities in to the top 20” (like money alone solves that!) and establishes a $20bn “Medical Research Future Fund” that no-one except the pharmaceutical companies would have asked for while charging for doctor visits and lifting the costs of medicines… it’s nothing you wouldn’t have expected from a Liberal government.

If they had retained the carbon pricing scheme, I would have even said it was a respectable budget. I actually do like the fact that increased fuel excise revenue is tied to infrastructure spending, even if the bias towards roads over rail is stupid and very backwards looking. I’d even have respected Hockey more if he’d gone on the media afterwards and owned up to the fact that these were new taxes introduced – breaking a promise and then trying to spin your way out of it always seems to get things into farcical situations, rather than actually having people buy the spin.

My internet was slow yesterday. I’m blaming Abbott already. Where’s my real NBN?

As you might imagine, even knowing with what’s coming, I’m not a happy camper following the election. The Coalition romped home, and no matter how much lipstick you put on the pig that was the result for progressive parties, the shambles in the Senate or the infighting that’s engulfed Labor afterwards¹ is all just a bad situation.

The incoming government’s not setting a great tone, either. First, there’s the delay in recalling parliament til November, thereby removing any chance that there’ll be changes worth mentioning in the first 100 days. Second, there’s the clearly vindictive sacking of Bracks from the position of Consul General in New York – say what you will about jobs-for-the-boys being standard operating procedure on both sides, Rudd at least handed out some for the Coalition boys post-2007. Thirdly, well, they’re all just a bunch of smug bastards anyway.

On the other hand, Sophie Mirabella may not be re-elected, and we do have Barnaby Joyce joining the lower house, which should make for some amusing moments in question time at least. A pity Jaymes Diaz didn’t make it in (wouldn’t you love to see the Dixers from him? They’d be priceless), but on the other hand we have the fringe parties in the Senate to contend with; Family First just won’t die, Palmer United is about to send “the Brick with Eyes” to represent QLD (apt? possibly), the Australian Motoring Enthusiasts Party guy throws kanagroo poo for amusement, and there’s a dude with less than 2000 votes whose policies amount to “Sports are good” who will represent the great state of WA come July 1 next year. It’s an injustice that Xenophon got 25% of the vote in SA but gets only 1 seat because of preferences.

Here’s to the next three years being amusing, at least. Regular programming will return shortly.

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1. seriously, they can’t keep it in their proverbial pants even after the election with this leadership stuff, discussing it openly in the media?

I wonder how long the general public cottons onto the fact that campaign launches are as much a marker of how much money a campaign wants to get out of the public purse as it is of a cohesive platform launch. Again this year, Labor and Liberal parties left their campaign “launches” until the latter half of the actual election campaign period, allowing them to claim up until that day as part of their regular business of representing people. What crock.

Anyway.

We’ve muddled through 4/5ths of Campaign 2013, and with 5 days to go it appears we’re back where Rudd took over from Gillard, roughly speaking. He was touted as the great hope from QLD for saving the ALP, and all he’s gotten is a zero sum that leaves the Labor party no worse off at the very least from where they were looking some 2 months prior. All the pussyfooting around, all the posturing, and there’s little change to the picture that we couldn’t tell a while ago. The bump to 50-50 even keel was a honeymoon period.

When will we learn poll questions about hypothetical situations are useless? The election has meandered this way and that, and the Coalition has led from start to finish – whether you blame that on the Murdoch papers’ full-court-press for the Coalition, or the general fed-uped-ness that people seem to have for Labor’s antics over the past 3+ years, who knows.

Anyway.

What I’ve been able to extract from the many meaningless policy announcements and thought bubbles that have floated up around the place is that there’s really a few key areas where there is some difference. These, to me, boil down to the following:

The NBN

The National Broadband Network is a key infrastructure investment as much as it is a statement of communication and competition policy. As it is being constructed under the current government, the NBN serves multiple purposes in these areas:

1. to build an upgraded data communication network for internet & telephony access where the commercial interests have failed to do so;
2. to ensure that replacement of a century old copper network well past its use-by date is replaced with a long term replacement of optic fibre;
3. to separate Telstra’s wholesale arm from the retail arm, removing the pricing power they currently hold as (practically) monopoly wholesaler.

This is of course the anathema of everything the Coalition stands for, apparently, and claims of the $42bn spend as blowing the budget (despite the fact that this is entirely off budget and managed separately as an investment to be sold off in future). The upgrade of equipment is an anathema to the market because the government is picking a winner; the replacement of the copper is should be done by commercial interests at commercial rates. And finally, if Telstra has a monopoly, well, so be it apparently.

The Coalition proposes a half-hearted effort. Instead of building optic fibre networks to each premises, they will instead build it to “Nodes”, cabinets that will stand at the corner of every few streets, where the optic fibre trunk will terminate. The current copper will remain, in Telstra’s hands, to avoid the spend to connect to each place. Except this remains a bottleneck in the infrastructure, and ensures that board access to optic fibre speeds is missing, thereby defeating all three of the above goals. It’s a compromise that ends up being more of a white elephant than anything Labor was building.

I can understand where the Coalition is coming from, but from an investment point of view, from a technology point of view and from a competition point of view I can’t see how the Coalition is offering a better deal. This enough is for me a vote changer, but I know plenty don’t share that view.

Greenhouse Gas Emissions Control

If there’s one thing more frustrating and backwards than the NBN approach, it’s the take on greenhouse gas emissions control that the Coalition is taking.

Labor choked on this issue more than once, and has  paid a significant political & public relations price, but the current policy leading into the election reflects what was once bipartisan: an emissions trading scheme that attempts to control carbon dioxide emissions through a market based price for a finite number of emissions permits. The fixed price carbon tax imposed by the Greens is out as of July next year.

The Coalition, contrarian as always, is taking the opposite tack: we’ll abate it through “Direct action”. Instead of requiring companies to pay to pollute, they will pay them to reduce their emissions. Oh, and a “Green Army” to plant 2 million trees and do various other things which apparently will reduce carbon emissions.

The analogy I drew on was that the current policy is like a levy on cigarettes – for every cig (tonne of CO₂ emission) smoked, there’s a certain cost imposed by the government. If you don’t smoke them, you can sell them to someone else who needs to. Every year, a certain number go “bad” to force the users to reduce their usage. The market determines the price of the cigarettes.

The Coalition instead will say “We will pay you x amount to not smoke y cigarettes,” and then put some bins out to collect the butts.

That the Coalition is taking an approach contrary to market principles, and is willing to rip up a system entrenched now, well established and soon to be linked with markets globally seems blinkered at best, foolish and laughing in the face of economic principles at worst. The cost is capped, not the emissions abated, and is likely to require a purchase of pollution permits from overseas anyway.

Oh, and the kicker is that the carbon tax compensation stays, because Tony Abbott and Joe Hockey don’t want to take the freebies away even if they take away the revenue source that pays for it. It’s like Maccas giving out the Happy Meal toys even if you don’t actually buy a Happy Meal.

What gets me most however is the plan to abolish the Clean Energy Finance Corporation, which is (a) off the books, (b) making investments on commercial terms, (c) developing technologies locally to reduce carbon intensity, and (d) is likely to make a profit. It seems entirely antithetical to abolish what appears to be a well run program, and moreover hands any chance of local development of clean technologies over to foreign governments who are funding this kind of thing.

Tesla is an example of how this can work well. A smart investment in technology to clean up energy production and reduce carbon intensity would be huge – that’s the kind of stuff that can change the energy profile of the world. Even incremental improvements make huge differences when applied to a planetary scale, but because of the lack of size in Australia and the lack of commercial incentive to develop these technologies once a price on carbon goes away, we remove any motivation for the free market to fund this stuff in Australia, and doom ourselves to following in the wake of others.

This isn’t about cultural cringe, it’s economic cringe – a safe, middle of the road country that doesn’t do or produce anything beyond the primary production stage of digging rocks out of the ground, and of selling the grains that grow above the ground, or the animals that feed on them. There’s no value added here. Do we want to be that country?

The Grab Bag of other policies

There’s other policies where the parties differ, of course, but the above are the two reasons enough for me. The Coalition policies are backwards, not market friendly and seek to be obstructive for the sake of obstruction – promising these things in opposition is not the same as carrying them to policy in government that looks at the future. But let’s have a look at a few key ones:

• Paid Parental Leave: Abbott’s scheme for full pay funded by the tax payer, no questions asked. This now amounts to a variable baby bonus dependent on your pre-baby income, and the levy that was designed to pay for it doesn’t cover half the cost. Tell me, why am I paying for your baby?
• “Border protection”: a pox on both the parties in this case as far as I’m concerned, but then Abbott promised to buy the boats. I mean, is this guy for real? Cash for clunky Indonesian boats, really?
• Marriage equality: given some 62% of Australians are in total agreement with this, and it doesn’t harm anyone, the world doesn’t end, and we’re far from the first to do it, can Abbott get over it already? The world is moving on.
• Middle class welfare: restoring the FBT scheme back to what it used to be? restoring the 30% health rebate for all? a childcare rebate for nannies? Sure, this stuff would probably be of benefit to me, but how does this help with responsible economic management? Means testing should in theory be a right-wing policy – I’ve no idea why this looks like a left-wing idea.

(Any other policy areas that stick out? Willing to look into them to nail down difference.)

In 2013, we have a choice between picking economic madness, and the generally sensible status quo of policies that seem to be reasonable. The problem is tumultuous 4 years that have buried whatever legacy under a pile of muck around the party’s ability to govern itself, and prevents itself from selling its alternative with any credibility. All told, we’re going to have PM Abbott on Saturday night, and this will be a sad fact to live with until the next election at best.