Blaming immigrants for unemployment, lower wages and high house prices is too simplistic

Robert Breunig, Crawford School of Public Policy, Australian National University and Mark Fabian, Australian National University

Australia should cut its immigration intake, according to Tony Abbott in a recent speech at the Sydney Institute. Abbott explicitly cites economic theory in his arguments: “It’s a basic law of economics that increasing the supply of labour depresses wages; and that increasing demand for housing boosts price.”

But this economic analysis is too basic. Yes, supply matters. But so does demand.

While migration has increased labour supply, it has done so primarily in sectors where firms were starved of labour, and at a time of broad economic growth.

Immigration has put pressure on infrastructure, but our problems are more a function of governments failing to upgrade and expand infrastructure, even as migrants pay taxes.

And while migrants do live in houses, the federal government’s fondness for stoking demand and the inactivity of state governments in increasing supply are the real issues affecting affordability.

The economy isn’t a fixed pie

Let’s take Abbott’s claims about immigration one by one, starting with wages.

It’s true that if you increase labour supply that, holding other factors that affect wages constant, wages will decline. However, those other factors are rarely constant.

Notably, if the demand for labour is increasing by more than supply (including new migrants), then wages will rise.

This is a big part of the story when it comes to the relationship between wages and migration in Australia. Large migrant numbers have been an almost constant feature of Australia’s economy since the end of the second world war, if not earlier.

But these migrants typically arrived in the midst of economic growth and rising demand for labour. This is particularly true in recent decades, when we have had one of the longest periods of unbroken growth in the history of the developed world.

In our study of the Australian labour market, we found no relationship between immigration rates and poor outcomes for incumbent Australian workers in terms of wages or jobs.

Australia uses a point system for migration that targets skilled migrants in areas of high labour demand. Business is suffering in these areas. Migrants into these sectors don’t take jobs from anybody else because they are meeting previously unmet demand.

These migrants receive a higher wage than they would in their place of origin, and they allow their new employers to reduce costs. This ultimately leads to lower prices for consumers. Just about everybody benefits.

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There’s an idea called the “lump of labour fallacy”, which holds that there is a certain amount of work to be done in an economy, and if you bring in more labour it will increase competition for those jobs.

But migrants also bring capital, investing in houses, appliances, businesses, education and many other things. This increases economic activity and the number of jobs available.

Furthermore, innovation has been shown to be strongly linked to immigration. In the United States, for instance, immigrants apply for patents at twice the rate of non-immigrants. And a large number of studies show that immigrants are over-represented in patents, patent impact and innovative activity in a wide range of countries.

We don’t entirely know why this is. It could be that innovative countries attract migrants, or it could be than migrants help innovation. It’s likely that the effect goes both ways and is a strong argument against curtailing immigration.

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Abbott’s comments are more reasonable in the case of housing affordability because here all other things really are held constant. Specifically, studies show that housing demand is overheated in part by federal government policies (negative gearing and capital gains tax exemptions, for instance) and state governments not doing enough to increase supply.

Governments have responded to high housing prices by further stoking demand, suggesting that people dip into their superannuation, for instance.

In the wake of Abbott’s speech there has been speculation that our current immigration numbers could exacerbate the pressures of automation, artificial intelligence and other labour-saving innovations.

But our understanding of these forces is nascent at best. In previous instances of major technological disruption, like the industrial revolution, the long-run effects on employment were negligible. When ATMs debuted, for example, many bank tellers lost their jobs. But the cost of branches also declined, new branches opened and total employment did not decline.

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New research shows immigration has only a minor effect on wages

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In his speech, Abbott said that the government needs policies that are principled, practical and popular. What would be popular is if governments across the country could fix our myriad policy problems. Abbott identified some of the big ones – wages, infrastructure and housing affordability.

What would be practical is to identify the causes of these problems and address these directly. Immigration is certainly not a major cause. It would be principled to undertake evidence-based analysis regarding what the causes are and how to address them.

A lot of that has already been done, notably by the Grattan Institute. What remains is for governments to do the politically difficult work of facing the facts.

Robert Breunig, Professor of Economics, Crawford School of Public Policy, Australian National University and Mark Fabian, Postgraduate student, Australian National University

This article was originally published on The Conversation. Read the original article.

Abbott’s disruption is raising the question: where will it end?

Tony Abbott has reportedly threatened to cross the floor if there is any attempt to legislate a clean energy target.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

Even in today’s often bizarre political environment, Tuesday night’s encounter between Tony Abbott, Peta Credlin and Alan Jones on Sky News was surreal.

Credlin, Abbott’s former chief-of-staff, now works for Sky, where she more often than not is a sharp critic of the Turnbull government. Jones, a highly opinionated voice on 2GB who has a weekly Sky program, spruiks for the former prime minister’s return to the leadership. Abbott is running a jihad against renewables, increasing the pressure on Malcolm Turnbull as the government struggles to bring together an energy policy.

It was a cosy threesome, and the off-air chit-chat would have been gold.

Among the on-air gems was Credlin asking Abbott whether he trusted Turnbull, because “you know and I know what happened in 2009”. What they both knew, according to Credlin, was that Turnbull ordered one line to be taken in negotiations over an emissions trading scheme while “telling the partyroom something completely different”.

Credlin wondered: “Do you trust the prime minister is going to do the right thing or is he going to sign you up to a clean energy target without proper debate?”

Abbott said the important thing was that the decision would have to go through the partyroom where there are “extremely serious reservations about this clean energy target”.

Abbott has poked and prodded at Turnbull on a range of fronts for two years, steadily raising the heat in recent months.

Now his disruption has reached a new level – so much so that one wonders how it can go on without coming to a blow up.

Constantly out in the public arena, Abbott currently is upping the ante over energy policy, and campaigning hard for a No vote in the same-sex marriage postal ballot.

On the latter Turnbull, a strong Yes advocate but leading a government split on the question, is in the hands of those who chose to vote in the voluntary “survey”. On the former, he’s ultimately in the partyroom’s hands. On both issues, these are uncomfortable and risky places to be.

Abbott’s onslaught against renewables is more than just disgruntlement from a man deposed. It’s a well-honed attack. Just like the one he and others mounted against Turnbull in 2009 over carbon pricing, which triggered Turnbull’s fall as leader and Abbott’s (unexpected) ascension.

Liberals still don’t think Abbott could recapture the prime ministership. But his power to harm an embattled Turnbull is enormous.

He is working on fertile ground in the energy area. A sizeable section of the Coalition is deeply antipathetic to renewables.

The Nationals’ federal conference recently called for the renewables’ subsidies to be phased out.

Turnbull initially seemed enthusiastic about Chief Scientist Alan Finkel’s clean energy target, although he always made it clear a policy based on it must include clean coal.

But he has stepped further and further towards playing up the role of coal, to the point of his face-off with AGL over its determination to close its Liddell power station.

In his comments, Abbott notes Turnbull’s greater emphasis on coal, saying – with a touch of condescension – that he thinks Turnbull has “got the message” which is to his “credit”.

But Abbott has put the bar as high as possible. It’s not just a matter of allowing coal into the clean energy target – a target mustn’t be countenanced. “It would be unconscionable – I underline that word – unconscionable for a government that was originally elected promising to abolish the carbon tax and to end Labor’s climate obsessions to go further down this renewable path.”

In that one sentence Abbott seeks to own energy policy, both past and future.

The Australian on Wednesday reported that Abbott has threatened to cross the floor if there is any attempt to legislate a clean energy target, and would likely be followed by others. He wrote in an opinion piece for the paper that “the Liberal and National backbench might need to save the government from itself”.

He is inciting the followers to constrain their leader before or, at the extreme, after the decisions on energy policy are made. Usually, the decision-making flows downward, from the prime minister and the cabinet to a backbench that is consulted but basically told what will be done.

It’s nearly impossible for Turnbull and ministers to handle the rampaging backbencher. They try to dodge and weave. “I don’t think a former prime minister is going to move to put a Labor government into power,” Deputy Prime Minister Barnaby Joyce said on Wednesday.

It’s counterproductive for them to get into a slanging match with Abbott, not least because the policy formulation still seems to be in shifting sands and also because they don’t want to agitate an already touchy backbench.

If Turnbull and the government embrace a clean energy target the danger is that Abbott might indeed be able to foment a revolt which, depending on the outcome, could be humiliating, or a lot worse, for Turnbull.

To the extent that Turnbull is forced to gesture to the Abbott line in the decisions made, Abbott will claim the credit.

But the more Abbott’s anti-renewables position can get traction, the worse the policy problem for the government. Turnbull may ensure coal has some prominence in the long-term policy mix but if the government were perceived to be turning against renewables, a growing industry would be set back, causing further investment chaos.

https://www.podbean.com/media/player/gfk6g-73d100?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Tony Abbott: consider burqa ban in places ‘dedicated to Australian values’

Tony Abbott said he was a reluctant banner but says the burqa is an affront to the Australian way of life.
Mick Tsikas/AAP

Michelle Grattan, University of Canberra

The issue of the burqa has erupted in the Coalition, with Tony Abbott suggesting a ban should be considered in places “dedicated to Australian values”, and the Nationals set to debate a prohibition on “full-facial coverings”.

Abbott said he was “a reluctant banner”, but “on the other hand, this thing frankly is an affront to our way of life”, a “confronting” and “imprisoning” garment.

“I think it is worth considering whether there are some places that are dedicated to Australian values such as our courts, our parliaments, our schools – maybe we do need to think about whether this garment is appropriate to be worn in places that are dedicated to upholding Australian values,” he told 2GB.

Abbott was commenting on a motion for a ban that Nationals MP George Christensen will move when the party’s federal conference meets this weekend.

The Christensen motion, supported by his Dawson federal divisional council, calls on the government “to implement a ban on full-facial coverings in all government buildings and public spaces, excluding places of worship, where it assists with security and public safety”.

Christensen said the qualification about security was to make exceptions for face coverings that for example were part of an entertainment.

The motion puts Deputy Prime Minister Barnaby Joyce on the spot.

“One of the great things about our party is that any person and any branch can bring forward any motion,” Joyce said.

“That doesn’t necessarily mean it becomes policy. That’s a matter for the federal conference, and I’ll be watching and listening to the debate like any other delegate.” Pressed on his own opinion he told reporters: “You can turn up the conference and find out exactly what I believe”.

In the Senate on Wednesday Pauline Hanson launched a vitriolic attack on Attorney-General George Brandis over his criticism of her stunt last month when she wore a burqa into the chamber. In his emotional speech that drew a standing ovation from Labor and the Greens, Brandis said it was appalling for her to mock the religious garments of Muslims and told her “we will not be banning the burqa”.

Brandis’ speech has since had a mixed reception in Coalition circles. On the day, there was limited and hesitant applause from his own ranks.

In her attack on Brandis, Hanson invoked the Anzacs when she accused him of defending “the most recognised symbol of radical Islam”.

“Whether or not you agree with my decision to wear a burqa in parliament is not the real issue,” she said. “The real issue is that Australians want a debate on full-face coverings and they want a debate on the issues that the burqa raises.

“It is, after all, a sign of radical Islam, which threatens the true Australian way of life. What would our Anzacs say? They fought for our freedom and way of life. There is room for only one flag, one language, one loyalty and one law.

“Recently, the lives of precious Australians have been lost in Afghanistan, Iraq and Syria to stop radical Islam. But, senator Brandis, you forgot those lives when you defended the most recognised symbol of radical Islam, the burqa,” she said.

“You have a right to a view on my decision to wear the burqa into the Senate, but it is arrogant, incorrect and ill-informed when you presume to speak for most Australians,” Hanson said.

She said that all Brandis’ colleagues had “remained seated and stunned while you strutted the Senate stage with your quivering lip”.

Christensen said he thought Brandis had “over-egged” his reaction to Hanson. He said there had been criticism of Brandis’s speech among Coalition MPs, and the standing ovation had been “from people with values that are antipathetic to ours”.

He said the burqa was not a religious requirement but a “a cultural practice that is based in the oppression of women”.

Christensen said his motion talked “not about the burqa and the niqab specifically but full-facial coverings, so this would even apply to violent people that we have seen in the past violent protesters on the far left and the far right … who put the balaclavas over their nose and mouths to disguise themselves”.

A ReachTEL poll taken after Hanson’s stunt found majority support for banning the burqa.

https://www.podbean.com/media/player/qi46m-71c69c?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Abbott scores big win on party reform as Coalition continues to trail in Newspoll

Tony Abbott’s ‘Warringah motion’ for party reform was passed by 748 votes to 476.
Daniel Munoz/AAP

Michelle Grattan, University of Canberra

The Abbott forces are seeking to drive home their sweeping Sunday victory in winning rank-and-file endorsement for reforming the New South Wales Liberal Party by putting a three-month deadline on the changes being ratified.

A special convention of party members voted overwhelmingly for motions from the former prime minister’s Warringah federal electorate conference (FEC) backing plebiscites for preselecting all candidates and direct election by the party members of those who run the party organisation.

This comes as the latest Newspoll, published in The Australian, shows the Coalition continuing to trail Labor 47-53% in two-party terms. This is the 16th consecutive Newspoll in which the government has been behind.

The Coalition’s primary vote rose one point to 36%, while Labor also rose one point, to 37%. One Nation slipped from 11% to 9%; the Greens fell from 10% to 9% since the last poll a fortnight ago.

Malcolm Turnbull’s net satisfaction improved four points to minus 20; Bill Shorten’s net satisfaction was static on minus 20. Turnbull widened his lead as better prime minister from eight points to 11 points.

At the convention of NSW Liberal Party members, the plebiscite motion was passed by 748 votes to 476, and the accompanying motion by a two-to-one margin.

The endorsement of the “Warringah” model is a huge challenge to the factional grip of the state division held by the moderates and soft right.

The changes would likely see the division move to the right, in line with the political colour of its rank-and-file, and make it harder for moderates to win preselections.

But the reforms have to be approved by the state council before they take effect. Given the majorities on the key votes were so decisive, and backing crossed factional lines, it would be hard for the current powerbrokers to resist the general thrust. But there could be a struggle ahead over timing and detail.

Walter Villatora, president of the Warringah FEC, said after the two-day meeting: “These reforms now need to be ratified, which I expect will happen within three months.”

“Somewhere up above in Liberal Party heaven Robert Menzies is looking down and smiling. The party membership have clearly spoken. The era of brutal factionalism is over,” he said. “The NSW Liberal Party is now the most democratic division in Australia.”

But a statement by state president Kent Johns suggested there would not be any rush. “The convention result reflected the members’ desire to reform some of our organisation’s internal processes, and serves as a clear demonstration of participation by our membership,” he said.

“Members showed their support for introducing a plebiscite model to ensure that the NSW Liberal Party continues to preselect the best candidates …

“Discussions at the convention will inform the development of the party’s modernisation plan, which will be prepared by me and the state director, Chris Stone. Constitutional amendments will be prepared over the coming months by our constitutional committee, and proceed to the party’s governing body – state council.”

Turnbull positioned himself carefully in his address to the convention on Saturday so as not to be caught in the firing line if the Abbott push won.

He stressed his support for plebiscites, saying every member should have a say in selecting candidates. It was widely believed, however, that he would have preferred a more circumscribed model.

But the convention voted down or didn’t reach motions attempting to impose some restrictions. These included having a longer eligibility period and an “activity test” before members could vote, and the grandfathering of electorates with sitting members.

In the Warringah model the only condition on party members voting in the plebiscites would be that they must have been a member for two years.

The present preselection system has candidates chosen by panels comprising local delegates and non-local members.

Neither Turnbull nor premier Gladys Berejiklian were at the convention when the vote was taken.

Later a spokeswoman for Turnbull said that as the prime minister had said at the convention: “He has long supported that all Liberal Party members have a direct say in preselections. The PM wants to ensure that every member of the party knows that their voice is heard and respected.

“The PM made it clear yesterday that plebiscites for preselections are a good idea, but hardly a new one. Every other Liberal party division has adopted them,” she said.

Abbott emailed members in his electorate: “This is a great advance for our party – and it would not have happened without the hard work of the Warringah conference led by our president, Walter Villatora.

“There’s more to do, of course. Democratisation now has to run the gauntlet of state council; but this is potentially a wonderful new start for our party. A revitalised, less factionalised party will be really important to winning the next election.

“This is a big ‘thank you’ to all Warringah Liberals. Let’s now do our best to build on this success.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Grattan on Friday: Abbott shapes up in Liberals’ fight over their ‘internals’

Tony Abbott is showing no sign of backing off his continual challenges to the government in his public commentary.
Brendan Esposito/AAP

Michelle Grattan, University of Canberra

Cory Bernardi, the senator who defected from the Liberals to found the Australian Conservatives, sits like a crow on a fence as those in his former party fight bitterly over its directions and organisation.

Whatever the future holds for the Australian Conservatives – and it will inevitably be an uphill battle – Bernardi could not ask for more auspicious circumstances in which to recruit.

Bernardi’s party has nearly 13,000 members nationally – the youngest 15 and the oldest almost 102 – with around 4,000 in New South Wales. The NSW figure compares with a Liberal Party membership in that state said to be about 11,000, although some internal critics claim the number is much smaller.

The Australian Conservatives have three state MPs: two South Australian upper house members as a result of its absorption of Family First, and a former DLP member of the Victorian parliament.

Bernardi says about 40% of Australian Conservative members were formerly members or active supporters of the Coalition parties. Some former Liberals probably see the Australian Conservatives as “the party they joined originally”, he says.

Bernardi might have an eye on potential pickings following this weekend’s NSW Liberal convention.

The issue at the special meeting is the rules – for which read the distribution of power – in the party’s NSW division, which is controlled by a tight factional combination of moderates and soft right.

Tony Abbott and other disgruntled conservatives are trying to win support for reform in how candidates are preselected and party officials are chosen. A motion from Abbott’s Warringah federal electorate conference (FEC) proposes plebiscites for all candidates and direct election for the party positions. Although other states have plebiscites, in its sweep the Warringah blueprint is radical change on steroids.

Some predict a loss of members to the Australian Conservatives if there is not significant change. Bernardi already has a following within the NSW Liberals – he has been invited to appear at its Roseville branch next month.

While the possible implications for Bernardi’s party are an intriguing aspect of the weekend’s debate, the immediate focus will be on its consequences for the Abbott-Turnbull conflict, in which – despite disclaimers – it is being seen as another episode.

The party’s open wound has been on full display again this week. On Sunday new Liberal federal president Nick Greiner warned of the damage being done and called for the two men to resolve things “face to face”.

“If we are not able to present a compelling unified face to the Australian public we won’t win the election in two years time – I think it is as simple and as stark as that,” Greiner said.

He’s right, of course. But highlighting the problem is only useful if it helps get a solution – otherwise it just draws more attention to it, putting Turnbull in an awkward position.

On Thursday he was asked by 3AW’s Neil Mitchell: “what’s wrong with picking up the phone and saying, ‘Tony, green tea, my office, let’s talk about it’?” Turnbull replied: “I look forward to catching up with him again soon when parliament gets back if not before”, adding that he’d been going to say he’d known Abbott “for a million years – it may feel like a million years – it’s about 40 years”.

Indeed. Even right back in those early days, these two were on different pages, as recalled in a BuzzFeed article this month. Turnbull, writing for The Bulletin in 1978, disparaged student politician Abbott’s “rather boisterous and immature rhetoric” and argued that his “conservative moral views” were too much for the general student constituency.

Turnbull can’t fix his Abbott problem. Even if he brought him into cabinet, which he won’t, it would likely eventually end in tears.

Abbott, for his part, is showing no sign of backing off his continual challenge to the government in his public commentary. His latest criticism was of this week’s decision for a home affairs department; he said the advice to his government was that such a “massive bureaucratic change” wasn’t needed.

Abbott has invested a great deal in his push for party reform, and so has a lot of credibility at stake in the convention’s result. No-one is sure how it will unfold. Open to all party members, and subject to “stacks”, about 1,400 have signed up to attend. Its outcome won’t be the end of the matter – decisions rest with the state council.

Turnbull, squeezed between factional allies who want to limit reform and militant rank-and-filers, addresses the convention on Saturday morning. He has previously indicated he is in favour of plebiscites, but looks for measured changes rather than Warringah’s full monty.

Compromise positions are being pressed by backbencher Julian Leeser and assistant minister Alex Hawke.

Among the restrictions proposed for plebiscites are a longer qualification period (three or four years membership rather than two) and an “activity test” before party members could vote, as well as “grandfathering” electorates with sitting members to the current preselection system.

In an email this week to party members Walter Villatora, president of the Warringah FEC, and Jim Molan, the retired major-general who helped devise the Coalition’s border security policy, denounced the compromise positions as “window dressing”.

“The Hawke/Leeser reforms will cement in factional domination for another generation,” they said.

The Warringah supporters are arguing an all-or-nothing line. That leaves Abbott in a corner if there is a compromise, making it harder for him to claim any ownership of more limited change. Not that he worries too much about the odd contradiction, as we’ve often seen.

If he fails to get what he wants and seriously kicks up the dust, that is likely to encourage some disgruntled members to pay their A$25 to Bernardi – who incidentally is holding a meeting for his party’s NSW members next Friday.

On the other hand, if the Warringhites have a victory, Turnbull will suffer yet another bout of bad publicity, with more trouble to come from a much-emboldened Abbott.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Grattan on Friday: Everything’s going Bill Shorten’s way

The fight over penalty rates is an issue made for Bill Shorten’s skill set.
Paul Miller/AAP

Michelle Grattan, University of Canberra

Bill Shorten has been on holidays this week. Probably just as well. The “energizer bunny” would have felt the need to be out every day, as usual. His absence left more room for the fractured Liberals.

Shorten’s extraordinary political luck continues, as Tony Abbott rampages, to the despair or fury of frustrated colleagues.

But it is not just his opponents that have been raining political gifts on Labor. Last weekend saw the start of the phase-in of the Fair Work Commission’s decision to cut Sunday penalty rates for retail, hospitality, fast-food and pharmacy workers.

Admittedly this isn’t WorkChoices. But for Shorten it could become a pale version of it. Hundreds of thousands of employees stand to lose, very many of whom are low-income earners. And it’s not just those directly affected. Think of parents who have kids doing some Sunday shifts. And consider the potential for a scare campaign about other sectors.

Shorten has a clear-cut policy to sell. A Labor government would legislate to reverse the commission’s decision and prevent a repeat.

This is an issue made for Shorten’s skill set. As a former union leader, he’s effective at rallies and at home in workplace conversations. He can mesh his campaign with that of the union movement, which has plenty of feet on the ground. There can be photo opportunities at businesses that decide not to cut their employees’ rates.

The opposition will potentially lose support among those in small business who favour the rates cut. But Shorten can reckon that most of them would be voting Coalition anyway.

There is a social logic and an economic rationale for lowering Sunday penalty rates. You can say that these days Sunday is little different from Saturday, for which penalty rates have been less. The economic argument is that businesses will be inclined to put on extra workers, or in some cases open on Sundays, if rates are not as high.

But there is a disconnect between the economics and the politics.

What would make sense if setting rates from scratch is political poison when it is a matter of changing the status quo. It’s the same difficulty a government has when removing or reducing access to a benefit.

Also, even assuming there’ll be a gain in employment – which some dispute – it is unlikely to show up quickly, given the phase-in.

The pain will be felt before any gain. Anyway, that gain will be difficult to separate from other factors affecting employment. Those suffering a cut in wages will be able to identify its cause; people getting jobs that mightn’t have been there before won’t usually make a direct link.

The government knows penalty rates is dangerous ground for it. While it makes the economic case in a desultory way, it is more likely to emphasise that it was the umpire’s decision.

On both sides of politics there’s now a feeling the next election is Shorten’s to lose. But that in itself is a reason for a few Labor jitters. There could be nearly two years before the election; the favourite doesn’t always win the race; the sour mood in voterland carries its risks for both sides (though mostly for the government); Shorten lacks charisma and always lags behind Malcolm Turnbull as preferred prime minister.

Shorten is something of a prisoner of his success. With Labor in a sustained lead in two-party terms, he needs to maintain that advantage. If the Coalition hauled up to equal, the climate would quickly change, fuelled by the media, sections of which are feral.

While it’s extremely unlikely Shorten would be replaced before the election, any serious revival of the Coalition in the polls would trigger a rash of speculation about the ambitions of Anthony Albanese.

A taste of what Shorten can expect as the election draws closer came with Daily Telegraph’s Wednesday front page fake news story reporting a Shorten government’s first 100 days. Under the heading “NOW HERE’S YOUR BILL”, it read: “Workers laid off. Record tax rates. Rents hit new high.”

In the Shorten office they had a good laugh. They can take comfort in the fact the Tele’s clout in Sydney’s west isn’t what it used to be.

Much of the political risk Shorten faces revolves around tax. Labor’s policy is to reimpose the deficit levy on higher-income earners (it expired on June 30). So if there were a change of government these people would face two extra taxes – that levy and the budget’s increase in the Medicare levy, proposed to kick in from 2019. They would have a marginal tax rate of 49.5%.

Labor opposes the government’s proposal for tax cuts for big companies but has yet to say what it would do about the already-legislated tax cuts for small and medium-sized businesses, phased in over coming years. While it will keep the cut for small businesses (up to A$2 million or perhaps $10 million turnover), the medium-sized businesses (up to $50 million turnover) are likely to take a hit.

If that turns out to be the decision (expected before the end of this year) it will cause Shorten grief with the business sector – more than his stand on penalty rates will. What to do about these legislated company tax cuts looms as one of the most important policy judgements Labor has to make in coming months.

Shorten’s opponents are still struggling to find the right negative with which to hit him.

There was an unfulfilled expectation he’d be much damaged by the trade union royal commission. Turnbull has tried to cast him as the friend of billionaires.

Recently, Shorten was hammered not just by the government but in the media for his nay-saying response to the budget, including opposing the Medicare levy hike for those on incomes under $87,000. While the Labor frontbench was divided over the levy stand, it did fit squarely into the wider Shorten narrative of protecting lower-income earners.

Labor also came under fire for its opposition to the government’s Gonski 2.0 package – its stance on this seemed to me much more dubious in policy terms than its attitude on the Medicare levy.

So far, the criticisms of its policy positions haven’t harmed the opposition in the polls.

One reason Labor is proving hard for the Coalition to dent is because of what the public are not saying about Shorten’s team. People aren’t saying it is divided and fighting internally. That stark contrast with the other side is a boon for an aspiring prime minister.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Leaky Liberals spill the beans again

Another leaked recording – this time of Tony Abbott – has the Liberal Party under pressure.
Brendan Esposito/AAP

Michelle Grattan, University of Canberra

For the second time in a little over a week, the Liberal Party has been embarrassed by leaked audio of frank comments from a private event – this time Tony Abbott’s blunt assessment of the party’s position.

Abbott on Monday told a Liberal branch meeting in the Deakin electorate of Michael Sukkar, assistant minister to the treasurer, that “just at the moment … we’re at a bit of a low ebb”.

Last week some Liberals went into a meltdown after the leak of cabinet minister Christopher Pyne’s triumphalist observation to a factional function about the power of the moderates and his suggestion that same-sex marriage could be delivered earlier than expected.

The latest leak has put Sukkar – one of the ambitious younger conservatives often touted for promotion – on the spot. Not only did he have Abbott in his electorate but before the audio came out, he had said he didn’t think “there was anything that was a particularly tough critique” in what the former prime minister said.

The audio was leaked to Fairfax Media, which posted some of it online on Wednesday.

In his remarks, Abbott said: “Just at the moment, I’m not always the person that every Liberal wants to associate with”. But, he said, Sukkar “knows who his friends are and sticks by them through thick and thin”.

He said one reason he was speaking out was not because there needed to be a change in personnel but “because I think we’ve got to just move the direction a little bit”.

“If we can’t because of the Senate entirely change the direction, at least don’t lose the sense of what the bloody direction should be, for god’s sake.

“I mean, you can’t always determine the speed of the advance, but by god we should be able to determine the direction of the advance. We shouldn’t let the Senate go the wrong way even if it is trying to stop us from going very far in the right direction.”

Abbott said that if “you listen to senior members of the government”, the reality of the Senate meant “we have had to bring forward a budget which is second-best. A taxing and spending budget, not because we believe in these things, but because the Senate made us do it.”

“Well, a party that has to do what’s second best because the Senate made us do it is a party which needs some help.”

This was not the first time Abbott had referred to the budget as second-best. In May, he said publicly: “The reason why the other week we had a second-best, rather than a first-best budget, is effectively because the 2014 [budget] couldn’t get through the Senate.”

Treasurer Scott Morrison brushed off Abbott’s critique as background noise.

Senate crossbencher Nick Xenophon said Abbott was “being a huge pain in the arse right now”.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Liberal Party reform becomes the next proxy battle in Abbott versus Turnbull

The end game of Tony Abbott’s policy pitches is unknown, but in the interim they seem to be destabilising the party.
Brendan Esposito/AAP

Michelle Grattan, University of Canberra

For his own good, Malcolm Turnbull can’t get out of the country quickly enough. He’s off on Wednesday to the G20 in Germany and, if he has any sense, while he’s abroad he’ll try to avoid being drawn on local Liberal shenanigans.

As it is, one year from his narrow election win, he’s been talking his way into trouble.

There was the interview with the Sunday News Corp papers in which he said “when I cease to be prime minister, I will cease to be a member of parliament”. While he might have had his mind on how Tony Abbott should behave, inevitably this came to be interpreted as Turnbull threatening a by-election if he were rolled.

Then on Monday he told reporters: “Look, I intend to be prime minister for a very long time. I know you may think that at 62 I am too old – I can assure you I’m going to be prime minister for a very long time. I will be running at the 2019 election and will win.”

This wasn’t as provocative as when Bob Hawke, riled by Paul Keating’s “Placido Domingo” speech, told journalists he would be prime minister for the following five years (only to be deposed a year later). But it was bad on two grounds.

“A very long time” manages to sound simultaneously presumptuous and defensive. And why would a leader who feels totally secure choose to assert, rather than have it taken for granted, that he would be running at the next election?

Abbott’s ultimate objective is to see Turnbull leave the leadership. It’s unclear what will be the outcome of that story. But if he has an intermediate goal – of distraction and destabilisation – he is achieving that. Turnbull is talking about himself – unhelpfully – while his ministers are having to defend him and comment on Abbott, and the message to voters is of a party divided.

The rather plaintive if obvious statement from Industry Minister Arthur Sinodinos – “I can’t control Tony Abbott” – goes for them all. Abbott has disproportionate negative power, in the sense that his public contributions, whether speeches or radio interviews, routinely gain maximum attention and become reference points for the media.

Abbott is operating on two fronts. One is a populist pitch to the voters on the right. The other is an appeal to disgruntled members of the Liberal Party, both broadly but especially in his home state of New South Wales.

He is picking up on issues of concern to ordinary people and throwing out prescriptions – for example proposing a freeze on subsidies for wind farms to help ease pressure on power prices, and urging a cut in immigration to assist with housing pressures.

For the conservatives among the party faithful, he has become the voice of tradition. For the NSW rank and file, he is the vanguard in the fight for internal democracy.

While his policy pitches, to voters generally and those within the party, are simplistic, unconvincing and often at odds with what he did while prime minister, his stand on party reform in his home state highlights serious flaws in the NSW party organisation.

Party reform – more often something that has bugged federal Labor leaders than Liberal ones – is also emerging as a serious front on which Turnbull will have to manage the “Abbott factor”.

In 2014, in a report commissioned by Abbott, John Howard outlined the NSW Liberal division’s problems, including its entrenched factionalism, and recommended changes, one of which was a system of preselection plebiscites for lower house seats, in which branch members of two years’ standing would be able to vote.

Howard has acknowledged that reform in the NSW division will only come if the party’s federal and state leaders get behind it.

Last year, as Abbott promoted the issue, Turnbull and then-premier Mike Baird backed a broad motion on reform but kicked the issue down the road to a party convention, which will be held on July 22-23.

Abbott is pushing a radical plan, with rank-and file-votes for preselections for all seats and for all organisational positions including for the party president. He told Alan Jones on Monday: “The best way to liberate our party from factional control, the best way to liberate our party from the lobbyists is to give every single member a vote because it’s much harder to control 500 members than it is to control 50.”

Once again, Turnbull and the state leader, Premier Gladys Berejiklian, will have to take a stand.

To say it’s difficult for Turnbull is an understatement. His moderate faction (together with a “soft right” subsection of the right) controls the NSW division, including its preselections, tightly and with an iron fist.

The power of lobbyists over what happens and who is selected is notorious. Abbott’s attempt when prime minister to break their clout did not succeed.

Genuine reform would weaken the present factional control, although to what degree and over what time frame is not clear. The whole power structure could be transformed.

This is the last thing the moderates want. Moderates express doubts about going too far because of the dangers of branch stacking, which is what they say has happened in Victoria. Their opponents call this “branch building”.

There are counter proposals that include a longer qualifying time to vote in preselection plebiscites, and a test that would reward people for their activities in the party.

The outcome of the convention is not binding on the party hierarchy but would be hard to defy.

Turnbull is caught between his nemesis, who has wrapped himself tightly and conspicuously in the flag of party reform, and his faction, which doesn’t want to give away more than absolutely necessary.

The expectation is that Turnbull will back changes but they will be hedged and qualified. One would think the party would support the Turnbull position, given the stakes.

The wider point is that Turnbull, with all his other problems, does not need a battle over Liberal “internals” as another distraction.

https://www.podbean.com/media/player/smqzz-6c8fdc?from=yiiadmin&skin=1&btn-skin=107&share=1&fonts=Helvetica&auto=0&download=0&rtl=0

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

ReachTEL: One Nation voters prefer Abbott to Turnbull by over 3:1

Adrian Beaumont, University of Melbourne

A ReachTEL poll for Sky News, conducted Thursday from a sample of 2390, has Labor leading by 52-48, a one point gain for the Coalition since the previous Sky News ReachTEL, just after the May budget. Assuming the 7.1% undecided are excluded, primary votes are 36.5% Coalition (down 1.3), 35.6% Labor (up 1.4), 10.3% Greens (steady) and 9.8% One Nation (down 0.4).

The primary vote changes suggest Labor should have gained after preferences, but ReachTEL is using respondent allocated preferences. According to Kevin Bonham, using previous election preferences, Labor leads by 52.8-47.2, a 1.3 point gain for Labor since the previous ReachTEL.

At the 2016 election, One Nation preferences split almost 50-50 between the two major parties. However, this poll has evidence that One Nation is now attracting the hard right of the Coalition, and thus that their preferences will be more Coalition-friendly at the next election.

Turnbull is preferred as Liberal leader to Tony Abbott by 68-32, with Coalition voters favouring Turnbull 73-27. However, One Nation voters prefer Abbott by a massive 77-23. It appears that as Turnbull has become more centrist over the last two months, the hard right has moved towards One Nation.

In ReachTEL’s forced choice better PM question, Turnbull leads by 54-46, a two point gain for Turnbull since the May Channel 7 ReachTEL. Same sex marriage is supported by 62-26, with 59% in favour of a plebiscite to decide the issue, while 41% prefer a parliamentary vote. 64% thought penalty rates should be higher on Sunday than Saturday.

Essential 52-48 to Labor, YouGov 51-49 to Labor

In this week’s Essential, primary votes were 39% Coalition, 36% Labor, 10% Greens, 7% One Nation and 3% Nick Xenophon Team. After surging to 9% last week, One Nation’s vote has fallen back. This poll was conducted over the last two weeks from a sample of 1790. Additional questions are based on one week’s sample.

Turnbull’s attributes were relatively unchanged since February, while Shorten’s were a little worse. Turnbull had double digit leads over Shorten on “intelligent”, “capable leader” and “good in a crisis”, but also on “out of touch” and “arrogant”.

By 79-6, voters supported the proposition that politicians should publicly disclose meetings with lobbyists, and by 78-5 they supported continuous reporting of political donations. Over 60% were in favour of bans on foreign donations, donations of over $5,000 and company and union donations. However by 46-30, voters opposed a complete ban on donations, with all political campaigning taxpayer-funded.

UK pollster YouGov has entered the Australian market. Polling will be conducted every fortnight from Thursday to Tuesday by online methods with a sample over 1000. The first YouGov poll, conducted from 22 to 27 June from a sample of 1125, has Labor leading by 51-49. Primary votes are 34% Labor, 33% Coalition, 12% Greens, 7% One Nation, 4% Christian parties and 3% NIck Xenophon Team.

Labor’s narrow two party lead was obtained using respondent-allocated preferences. Using the previous election method, Labor would lead 54-46. Christian parties are not included in the readout in any other poll, and it is likely that most of them are Liberals.

Victoria and ACT to gain seats, while SA loses a seat

On 31 August, the Electoral Commission will determine the number of House seats each state and territory is entitled to, based on the latest population figures.

The 2016 Census was released on 27 June. As a result, according to the parliamentary library, SA’s seats will be reduced by one to 10, while Victoria and the ACT will both gain one seat, to 38 and 3 seats respectively. Other states are unchanged, with NSW entitled to 47 seats, Queensland 30, WA 16, Tasmania 5 and the NT 2. Overall, the House will have 151 members after the next Federal election, up from the current 150.

Labor easily won both ACT seats at the 2016 election, so the creation of a third seat is good news for them. The political effect of redistributions in Victoria and SA will not be known until draft boundaries are released.

If an election is called before the redistributions are finalised, special arrangements are used to create or merge seats. These arrangements have never been used.

Tasmania should have only three House seats, but is entitled to five as this is the minimum entitlement for any of the six original states. As Tasmania has tended to give better results for Labor than the mainland, this malapportionment favours Labor.

More UK post-election analysis

The Guardian has analysis of a post-election study from pollster Ipsos Mori. In terms of swing from the 2015 election, the Conservatives performed best among demographics where the UK Independence Party (UKIP) had its highest vote shares in 2015: these demographics included those aged over 65 and lower social classes.

The Conservatives have adopted UKIP’s populist agenda regarding Brexit, and right-wing populism explains some of the swing to the Conservatives among demographics that were most likely to vote for UKIP and Leave at the 2016 Brexit referendum.

Labour performed best in swing terms among voters aged 18-44 and higher social classes. UKIP had low 2015 vote shares among these demographics. Although Jeremy Corbyn’s radical left-wing policies were also important in winning over young people, Labour’s unexpectedly strong performance can be seen as a rejection of right-wing populism among demographics that voted Remain at the Brexit referendum.

The swing to Labour in higher social classes, and the swing to the Conservatives in lower classes, has meant that the Conservatives narrowly won the top three classes, and Labour narrowly won the fourth class. At previous elections, there has been a far greater difference in party support by class.

On 26 June, the Conservatives committed to spend an additional £1 billion (about $AU 1.7 billion) on Northern Ireland (NI) in return for support on important Commons votes from the Democratic Unionist Party (DUP).

During the election campaign, PM Theresa May told a nurse who had had no wage increases for eight years, “There isn’t a magic money tree we can shake”. Every time the Conservatives now say there is no money for schools, hospitals, public sector wage increases, etc, people will remember the £1 billion “magic money tree” for NI.

Adrian Beaumont, Honorary Associate, School of Mathematics and Statistics, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Grattan on Friday: It’s a year since Turnbull won his first election, but what about a second?

Malcolm Turnbull broke out his leather jacket this week and tried to shrug off the tensions consuming his party.
Jennifer Rajca/AAP

Michelle Grattan, University of Canberra

An admission. When I heard people raising the “transaction costs” after Tony Abbott was deposed by Malcolm Turnbull, I thought they were exaggerating. Surely these couldn’t be too high, given the relative popularity levels of the two.

Nearly two years on, when the Coalition is lagging badly in the polls and many Liberals – albeit way out from an election – already see opposition looming, those costs are there in spades, in the form of a deeply vengeful Abbott, bent on wrecking his successor; a party at war internally, and speculation being fanned about whether its leader will last to the election.

It’s just a year on Sunday since Turnbull narrowly won the election, but the fear of defeat is strong.

Former Queensland premier Campbell Newman, who spectacularly lost office in one term from a massive majority, has a credibility problem in commenting on what leaders should do. Nevertheless, his call this week for Turnbull to stand down is just another unhelpful piece of flotsam for the Liberals.

“He can’t be deposed – we can’t have another execution,” Newman said. But Turnbull was “dividing the Liberal Party”, what he’d tried wasn’t working, and he should “do the right thing” and quit.

Like most other people in the community, politicians are more impatient than they used to be. So parties are even less willing than once to contemplate losing office.

A period out of power would be painful, no question. The Liberals would soul-search to define the identity of the party they wanted to go into the 2020s.

A new generation would take over, replacing top players of the last decade – Turnbull, Abbott and Julie Bishop. The Nationals might possibly break out of a coalition relationship with the Liberals.

For a Liberal Party that thinks office is its natural home, this would be like facing a nasty spell in hospital to repair severely broken bones. One comfort, perhaps, would be that the febrile nature of today’s politics means government is never too far away. Kevin Rudd won handsomely in 2007; Abbott almost became prime minister at the following election. Abbott swept into power in 2013; Turnbull nearly lost in 2016.

As this year ebbs away, Turnbull’s hold on the leadership will become more precarious if there is no lift in those relentless Newspolls.

But a problem for the party and an insurance for Turnbull is that of the possible alternatives – Bishop, Peter Dutton, Scott Morrison, a resurrected Abbott – there is no one who’d obviously do any better. And given that we may be talking about “saving the furniture”, like Rudd did in 2013, who would want to be the one to lead to a loss?

Just say Turnbull, facing a rout, did decide (much later) to do what Newman says he should do now. Who’d benefit by getting a poisoned chalice?

Bishop? To end a sparkling career by leading to a likely defeat?

Dutton? In recent times, especially since Morrison’s sheen disappeared, Dutton has been talked up as a future leader. But lose an election, perhaps in a landslide, and it would be hard to hang onto the leadership in opposition.

The same applies to Morrison, even if he could get the party room numbers.

That leaves Abbott. Peta Credlin, his confidant and former chief-of-staff, said this week he “actually doesn’t want the job of prime minister”. Unlikely as this seems, that assessment is corroborated by another source.

The thing about Abbott, however, is that he can take one view one day and the opposite the next. If there was half a chance to put on the boxing gloves, he wouldn’t care too much about facing defeat. He’d feel vindicated, and relish the fight.

Don’t lay any money on such a scenario. It’s just one of many long shots in an unfolding story.

Meanwhile, Abbott is said to be in good spirits, as he’s been a centre of attention this week, with a speech articulating his broad agenda, followed by one calling for Australia to consider acquiring nuclear-powered submarines.

Once again, as is his wont, he went back on a position he took in government. “Not more robustly challenging the nuclear no-go mindset is probably the biggest regret I have from my time as PM,” he said.

The submarine speech saw him wading into the portfolio of Defence Industry Minister Christopher Pyne, who has had a nightmare week.

As the dust settles, one legacy question will be how much damage Pyne has done himself with his foolish boasting about the moderates’ power and the prospects for the earlier-than-expected delivery of same-sex marriage – comments which, when leaked, sparked such a damaging furore.

Pyne traditionally has had a heavy coating of teflon. His ministerial performance during this government has been lacklustre: in education, he failed to deliver his tertiary package; he was in and out of the innovation job in a flash, and the most talked-about feature of his period so far in his present post has been his covetous eye on the Defence job held by fellow moderate Marise Payne.

As he said in last Friday’s speech to the “Black Hand” moderates’ function, he’s always voted for Turnbull. But he managed to crack Abbott’s inner circle, before climbing on board with the Turnbull coup.

Pyne’s ambition is the deputy leadership – which would allow him to move into foreign affairs.

Before this week, he might have thought himself well placed, for example, to be deputy to Dutton in opposition. Now he has suffered a lot of reputational damage. But he has considerable powers of regeneration, and the thickest of skins. When some years ago he was featured in a Good Weekend profile with the cover asking “Is this the most annoying man in Australia?”, he was reportedly delighted.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.