Australia’s march towards corporatocracy


Michael West, University of Sydney

Confounding the familiar government narrative of reckless spending binges by Labor, the Coalition actually has the record of greater profligacy when it comes to showering billions of dollars of taxpayers’ money on external consultants.

When John Howard became prime minister, he axed 30,000 employees from the public service. But in his second and third terms in office, public service numbers rose again. They continued to rise under Kevin Rudd’s Labor government, only to taper off during Julia Gillard’s tenure and drop sharply under the present Coalition government.

Consultants’ fees, however, after rising under Howard, eased back under Rudd before falling by more than 30% under Gillard. They rose again the moment Tony Abbott assumed office, and have continued to rise, albeit more modestly, under Malcolm Turnbull.

Raw data sourced from AusTender and APS Statistical Bulletin.
Markus Mannheim

How will government look in 20 years?

Such is the pervasive influence of corporations and consultants over government and the de-skilling of the public service (as evinced by the recent slew of IT debacles) that Australia appears headed down the road to full-blown corporatocracy.

If they rely further on external parties for expertise and policy advice, governments – both state and federal – are likely to be emasculated, entirely laid at the whim of private vested interests.

With no expertise, let alone pricing power in negotiating external fees for expert advice, there will come a heavy cost to the public.

The devastating failure of Australia’s energy policy and spiralling prices for gas and electricity throw up a potent case in point.

It was recently reported that the Big Four accounting firms – PwC, EY, KPMG and Deloitte – picked up $2.6 billion over the past ten years for writing reports. That is from the federal government alone, to just the four top firms. They may have earned that again consulting to the states, though state disclosure is poor.

The crowning jewel in this cuff-linked fee-fest was a payment of almost $10 million, or $75,000 a page, for PwC to write its report on the future burden of welfare costs. This was the work that presaged the government’s strike on social security late last year and the ensuing Centrelink imbroglio.

Consultants’ reports deliver a licence for political action, an imprimatur. In light of the lavish fees, though, their authors can hardly claim to be “independent experts”.

Why could the Treasury not have penned this report? Why not the Productivity Commission? Surely, as bureaucrats, they are more independent, not susceptible to the tow of large corporate clients on the other side of a Chinese wall.

Is government captive to big business?

To put it crudely, many observers put the extravaganza of consultants’ fees down to “butt-covering”. This is just a ploy to lay the responsibility for political decisions, in case they go awry, at the feet of an external party. External reports can “test the water”, and can be tossed out without recrimination. They are so often a terrific waste of money.

There are two issues to consider then: one, the encroaching influence of private power over public policy; and two, the enormous expense to taxpayers in private firms penning reports that government departments and agencies could just as easily prepare.

Further to this rising sway of vested interests, there is also the incursion of corporate power in government in a physical way, via secondments.

Leading law firms, accountancy firms and banks often have executives spend time with a regulator or government department, but secondments are poorly if ever disclosed.

Then there are the “revolving doors” between industry and government: the passing of politicians, political staffers and the likes of mining lobbyists between industry, advocacy bodies and the public service.

Governments are infested with industry people with vested interests.
Vincent Diamante/flickr

As is the case with secondments, there is little in the way of transparency or decent policy in the arena of staff movement despite the inevitable influence it exacts over government policy. Not to put too fine a point on it, state and federal governments are infested with industry people whose influence on policy is undeniable.

The multinationals’ hidden hand

While consultancies, political donations, secondments and staff movements magnify corporate influence over government, an equally sinister trend is playing out in the world of multinational corporations.

Many observers of the proposed Trans-Pacific Partnership have expressed alarm that the fine print to the TPP draft agreement contains Investor-State Dispute Settlement clauses, or ISDS as they are known. These are mechanisms that allow corporations to sue governments by claiming a change in a nation’s policies has adversely affected their business.

Indeed, more than 120 cases have been filed internationally under various “free trade” agreements. Water and waste management giant Veolia sued the government of Egypt for lifting the minimum wage. Canada is being sued for a ban on fracking. Germany was sued for its phasing out of nuclear power. All these actions were taken under ISDS clauses in free trade pacts.

Surely ISDS clauses, as anti-democratic and anti-national interest as they are, are concocted and consented to by bureaucrats and politicians perverted by the influence of the very same legal and advisory firms whose multinational clients stand to benefit from ISDS lawsuits. The game is stitched up. Transparency is key, yet there is zero public visibility of these machinations.

Tax, too, is an arena of supreme conflicts of interest. While heavy staff cuts have hit the Australian Tax Office under both Liberal and Labor governments, multinational tax avoidance is rife. And the very advisers to government on tax, the Big Four accounting firms, are the tax advisers to almost the entire global community of multinationals. The answer here is to split these firms along tax, audit and advisory lines.

No longer are these corporations “bodies corporate” with their own boards of eight or so directors whose duty is to serve the interests of the local corporate entity. Rather, they have gradually morphed into puppet regimes.

For instance, Shell used to be called Shell Australia. Now it refers to itself as “Shell in Australia”, and managed to make $60 billion in revenue over three years without paying tax.

The multinational formerly known as Shell Australia used to publish accounts, but now quietly files only the absolute minimum of statutory disclosures with the corporate regulator.
John Duffy/flickr

Across the board, local company directors have become “undisclosed agents” for their global headquarters, mere stooges expected to transfer pre-tax profits to tax havens every year rather than act according to the intent of Australian corporations and tax laws.

So, the big law firms and accounting firms that advise governments and reap billions in taxpayers’ money for doing reports have a conflict of interest as they act also for large corporate clients.

Should the world’s largest corporations continue to grow and the authority of governments and regulators continue to wither, ordinary citizens will bear the brunt of the consequences.

Over recent decades, rising inequality has accompanied the march towards corporatocracy. It is a relentless process of influence-peddling, complex financial transactions, cunning legal tweaks that evade public scrutiny and pernicious restructuring dressed up as “efficiencies” or “streamlining”.

In its attempts to cut costs, the Tax Office tried to introduce a scheme whereby the duty of tax compliance for Australia’s largest companies was outsourced to none other than the company auditors. The foxes were very nearly in charge of the henhouse.

Under what was innocuously dubbed the External Compliance Assurance Program (ECAP), large corporations were to have paid their own external audit firms – read the “Big Four” – to conduct their tax compliance work as well as the audit.

Along with the disasters of privatisation, such self-compliance regimes (the corporate regulator ASIC once espoused “co-regulation” with industry bodies) can only entrench corporate power at the expense of public interest. They don’t work. After all, it is the job of companies to make money and the job of regulators to regulate.

Together, captive regulators, a shrinking public service (smaller than it was a decade ago on the basis of permanent employees), the proliferation of consultants and the rise of lobby groups and political donations, alongside an obeisant and compromised media, have delivered policy stasis.

Significant reform in Australia, indeed significant reform by any Western government, is now fiendishly difficult. The tail is wagging the dog; the long tail, that is, of powerful vested interests whose purpose is wealth creation, not public interest.

Is the Adani tail wagging the Coalition dog?
Taker/flickr

Now, at a time when the Coalition is moving to cut social security benefits for the most needy, it is ready to sling $1 billion to Indian billionaire Gautem Adani to build the world’s biggest new thermal coal mine.

While the government struggles to fund the NDIS to assist the disabled – and in an age where underwater drone technology is viable – it is prepared to splash $150 billion to build, man and maintain a submarine fleet. Not a squeak of dissent from the federal opposition, for fear it might be wedged as weak on national security.

The icing on this cake of corporate welfare is the government trying to shunt through a $50 billion corporate tax package when its multinational beneficiaries don’t pay their fair share of tax in this country anyway – if anything at all.

These three policy decisions – corporate tax cuts, subs and fossil fuel subsidies – are enough evidence of the power of the hidden hand of corporate and political interests.

Last year the Turnbull government planned to sell off a key piece of the corporate transparency regime. Thankfully, the public spoke up.

This writer is no fan of a large public service per se, only of an efficient and independent public service, of public servants properly doing the job they were appointed to do. And a robust watch needs to be kept on procurement of consultants.

It may seem too late to arrest the inexorable rise in the influence of powerful corporations and the Big Four partnerships over government. Ironically, in the execution of this column, we met with much dithering and eventually stonewalling from the Australian Public Service Commission when attempting to request information.

That did not engender confidence. Yet, arresting the slide comes down to public awareness of all these things. Social media should help.

Only ten years ago corporate tax avoidance was not on the public radar. Now tax fairness has come to the fore; people understand that the richest institutions among us, those who can afford to pay the most, pay proportionately the least.

Efforts by politicians to hike the GST, lower corporate taxes or lift other taxes on ordinary workers are also loudly derided. Multinational tax avoidance is no longer a secret. It is now understood for what it is. The Double Dutch Irish Sandwich no longer bewilders; it is now widely debunked as a scam.

Public understanding and transparency are therefore everything. The public funds government, voters are entitled to disclosure, and they should demand it.


This column, co-published with michaelwest.com.au, is part of the Democracy Futures series, a joint global initiative between The Conversation and the Sydney Democracy Network. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.

The Conversation

Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of Sydney

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

Health Check: are naps good for us?


Gemma Paech, Washington State University

Catnap, kip, snooze, siesta; whatever you call naps, there is no doubt these once frowned-upon short sleeps are gaining acceptance. The increase in popularity is not surprising, with the Centers for Disease Control and Prevention in the US finding around a third of American adults do not get the recommended seven hours sleep each night.

Insufficient sleep not only affects our overall performance, but can affect some physiological functions such as changes to hormones, metabolic factors and immunity. From a business perspective, insufficient sleep can translate into lost profits due to decreased worker productivity. This has led companies such as Google, Nike and Ben & Jerry’s to encourage or allow napping at work, providing employees with napping facilities such as napping pods and quiet rooms in which they can nap if desired.

The pros and cons

Naps have been shown to be effective in reducing and minimising some of the negative effects of insufficient sleep. For example, compared to when no nap is taken, naps have been shown to effectively reduce feelings of sleepiness and improve cognitive performance on tasks such as reaction time and vigilance. Naps may also help to improve short-term memory and overall mood.

Moreover, these improvements can last for a few hours after the nap has ended. Naps may also offer longer lasting improvements in cognitive performance and reduced sleepiness than other commonly used countermeasures of sleepiness such as caffeine.

But as with everything, there are downsides too. Although naps are associated with performance improvements and reduced sleepiness, these benefits may not be immediate. Naps can be associated with a period of sleep inertia, which is the feeling of grogginess most people experience immediately after waking.

You might wake from your nap feeling groggy – for up to 60 minutes.
Brown Windsor/Flickr, CC BY

Sleep inertia is also characterised by a decrease in performance ranging from slowed reaction time to decreased coordination.

While the effects of sleep inertia generally subside within 15-60 minutes after waking from a nap, this period of delayed responsiveness and grogginess may pose serious risks for individuals who are required to function at optimal levels shortly after waking, such as those in transportation, aviation and medicine.

Following a nap, a period of sleep inertia may occur, before sleepiness is reduced and performance improved.

There is some research showing naps may affect your ability to get to sleep at night. Following an afternoon or evening nap, night time sleep duration may be shortened and more disrupted according to some studies. But there is some debate about this. A majority of the research suggests naps have minimal impact on night time sleep.

It’s all about timing

The degree to which naps help, or hinder, largely depends on the timing and duration of the nap. Longer naps (two hours or longer) are associated with longer lasting performance improvements and reduced sleepiness than short (30 minutes or less) or brief naps (ten minutes or less). Longer naps, however, are also more susceptible to sleep inertia, with a worsening in performance immediately following the nap. Alternatively, the benefits of brief naps occur almost immediately and are without the negative side-effect of sleep inertia.

Longer naps may also have a greater impact on subsequent sleep periods than shorter naps, as they may decrease “sleep pressure”, which can make falling and staying asleep more difficult.

The time of day naps occur can also affect the benefits of napping. Naps taken in the early morning hours, when there is a high circadian drive for sleep, may worsen the effects of sleep inertia and may not offer as much recuperation compared to naps taken in the afternoon.

One sleep or two?

More recently it has been suggested that perhaps humans were not meant to have one sleep, but were meant to sleep bi-modally – two shorter sleeps instead of one long one a day. While there is still some debate about whether this is true or not, it seems the number of sleep episodes may not make much difference to waking performance.

Rather, the overall amount of sleep per day, seven to nine hours, is what is likely to have the biggest impact on performance. It’s possible splitting the sleep in this manner may affect different sleep stages such as non-rapid eye movement and rapid eye movement sleep, which may have long-term implications on general health and well-being, however these effects need to be investigated further.

While there are some disadvantages to napping, such as sleep inertia, for the most part, the benefits of improved performance and reduced sleepiness outweigh the negatives. Short naps, less than 30 minutes, may offer the most “bang for your buck” as they can improve performance quickly with minimal side-effects.

The Conversation

Gemma Paech, Postdoctoral research fellow, Biological Rhythms Research Lab, Washington State University

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

US president shoots the messengers. SAD!


Mark Beeson, University of Western Australia

Even those of us who didn’t have high hopes about what a Trump presidency might look like in practice have been astounded by his incompetence, ignorance and refusal or inability to confront reality.

As the old saw has it, you can have your own opinions, but not your own facts. Donald Trump clearly feels this is another idea that doesn’t apply to him or his administration.

Any doubts that the 45th president of the United States really is a thin-skinned blustering bonehead with appalling judgement and little understanding of the complexity of the job he is supposed to be doing were put to rest by his latest press conference. It’s not hard to see why he doesn’t like giving them.

It’s not just that his behaviour was “unpresidential” that was so striking – surely no one expects a man with his personal track record and “life experience” to be a role model for his country or anyone else’s – but that he refused to acknowledge even the most basic, well-documented claims about his administration and its operations.

The “fine-tuned machine” Trump claims to have created at the centre of America’s government is in reality chaotic, dysfunctional, and still populated with some deeply divisive, potentially dangerous individuals. A number are either the representatives of precisely the sorts of vested interests Trump promised to eliminate or – in the case of the Rasputin-like figure of Steve Bannon – ideologues with a Manichean worldview that sees chaos as necessary and potentially cleansing.

The demise of National Security Advisor Michael Flynn, who was belatedly fired because of his close ties to Russia – not to mention lying to the vice-president, the FBI and the public-at-large – is emblematic of Trump’s poor judgement. This “captain’s pick” was a compromised figure who should never have been considered for such a crucial role.

Even more worrying, however, is that Bannon has been appointed as a key security advisor, too – over the heads of more seasoned and potentially appropriate choices with defence backgrounds.

It is important to remember that Bannon thinks – as does Trade Secretary Peter Navarro – that war with China is inevitable.

Given their respective positions and the influence they appear to exert over a president who appears to have little understanding of, or interest in, the complexities of global politics or even economics – his supposedly strong suit, let’s not forget – they have the capacity to make some of their fantasies reality.

Neither is Trump going to lose any sleep about possible conflicts of interest when his own family is the living embodiment of all that is wrong with his administration and his complete contempt for the idea of good, never mind principled government. His wife and daughter clearly see occupying the White House primarily as an opportunity to leverage their respective brands and earning potential.

His refusal to answer questions from the “lying media” about his business interests or release his tax returns as he promised is another telling illustration of his unaccountability and hostility to one of the few institutions that seems potentially able to hold his administration to account.

Although, when the Wall Street Journal’s own staff are collectively uneasy about the lack of scrutiny the paper is applying to a regime that is seen as close to Rupert Murdoch, even this is no certainty anymore.

Speaking of the Murdoch press, The Australian’s Greg Sheridan can be relied upon to take a Panglossian view of Australia’s alliance with the US under any circumstances. This week he didn’t disappoint his admirers. In customary form, Sheridan suggested:

The substantial signs on policy from Trump over the past week or more have been generally very reassuring and showed a fairly rapid move back to the centre of the centre-right continuum on foreign policy.

No doubt this was due to the efforts of the “Trumble government” and its enormous influence in the US.

Yes, that’s a cheap shot at Trump’s beleaguered press secretary, Sean Spicer, but not being able to remember the names of supposedly key allies in not a good look. At least it was an inadvertent slip of the tongue, rather than a deliberate attempt to muddy the waters and the collective public consciousness with “alternative facts”, which is another trait of team Trump.

The key question to ask about Trump is whether he knows he’s lying when he dismisses well-documented facts about domestic politics, foreign relations and his own extensive business interests, or whether he actually believes the patent nonsense and untruth he spouts.

It really is hard to know which is the more worrying: that he is a congenital liar with an absolute contempt for the truth, or that he is so removed from the reality the rest of us inhabit that he actually doesn’t recognise it or feel the need to engage with it. This is not just a world of alternative facts; it is an alternative world.

The key question to ask Australia’s policymakers and strategic elites is: do we really want to be associated with, never mind potentially hostage to, a regime that is immoral, dishonest and more dangerous by the day?

We’re only four weeks into a rapidly unfolding nightmare. We must hope those who believe Trump will be socialised by America’s political institutions are right. There is little indication of it so far to judge from his rapidly deteriorating relationship with the fourth estate.

The Conversation

Mark Beeson, Professor of International Politics, University of Western Australia

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

How changing times made Australia’s political leaders more disposable


Rodney Tiffen, University of Sydney

Politics in 1950s Adelaide was a gentlemanly affair. The premier, Thomas Playford, and Labor’s Mick O’Halloran faced each other in four election campaigns between 1950 and 1959. More surprisingly, they dined together each week to discuss Playford’s future plans for South Australia, and often praised each other publicly.

O’Halloran remained Labor leader until he died in 1960. Playford wept openly when told of the death, and was a pallbearer and speaker at O’Halloran’s state funeral.

To contemporary eyes it is not surprising that the victorious Playford – the longest-serving party leader in postwar Australian history – remained leader, but more unusual that O’Halloran also remained leader without serious challenge through four losing elections.

In the decades after the second world war, losing an election was not necessarily grounds for a leader being replaced or challenged. Federal Labor leaders Bert Evatt and Arthur Calwell and Victorians Clive Stoneham and Clyde Holding all lost three successive elections while remaining in place. In contrast, only one party leader since the 1980s (Rob Borbidge, Queensland Nationals) has survived to suffer three or more electoral defeats.

Until at least the 1970s, the major route to party leadership was through seniority, and patience was considered a virtue. When Harold Holt became prime minister in 1966, he proudly told his wife:

I climbed over no-one’s dead body to get here.

In Western Australia, Charles Court “desperately” wanted to be premier, but he was “unbelievably patient”, waiting until his long-reigning predecessor, David Brand, retired for health reasons.

Brand’s successor as premier, Labor’s John Tonkin, did not become leader until he was 63, having been deputy for 15 years, and then became premier when aged 69. Some of his junior colleagues suggested he might step down for someone younger, but he neatly deflected them, and open challenge did not occur to them.

The emphasis on seniority and patience had its costs. It denied some of the most able people their chance to lead.

Leadership is increasingly temporary


New South Publishing

The way times have changed is exemplified in the frequency of party coups against sitting prime ministers.

Robert Menzies was the first prime minister to be overthrown by his own party, in 1941. It was another 30 years before it happened again – when John Gorton fell in March 1971 – and then 20 years until Paul Keating defeated Bob Hawke in December 1991.

So, in the century up to 2010, three sitting prime ministers were victims of party coups. Then, in just five years, three more followed – Kevin Rudd was defeated by Julia Gillard in June 2010; Rudd then defeated Gillard to resume the prime ministership three years later, in June 2013; and most recently Malcolm Turnbull defeated Tony Abbott, in September 2015.

The pace and pressure of contemporary society is one reason for the greater turnover of leaders. Of the 17 postwar leaders who led their party continuously for 12 years or more, ten became leader in 1960 or before, and only three (Bob Carr, Mike Rann and John Howard) became leader after 1980.

The fact that leadership has become more precarious and conditional is starkly confirmed by trends in length of tenure. Those who became party leader before 1970 averaged eight years and six months in the role, while those who became leader from 1970 on averaged just under half that: four years exactly.

Similarly, those who became leader before 1970 fought 3.0 elections, on average. Those from 1970 on averaged just 1.2 elections as leader. Some states have moved from a three-year to a four-year election cycle, but that is only a very small part of the explanation.

The more temporary nature of party leadership is clear from these figures, but they only start to capture the greater ruthlessness. A successful leader can still lead the party to several elections, but an unsuccessful (or not likely to be successful) leader is much more quickly disposed of.

In recent decades, fewer than three in ten losing leaders led their party into the next election, in contrast to six in ten in the 1950s and 1960s.

Challenges became increasingly pre-emptive: among those who became leader from 1990 onwards, one-quarter (20 of 78) were ousted by their colleagues before they had fought a single election.

Of the 55 post-war leaders who became leader before 1970, their leaderships finished predominantly for personal rather than political reasons. Almost one in five (ten) actually died in the role, the last such death being Queensland Country Party Premier Jack Pizzey in 1968, the second-last being Harold Holt, who drowned the previous December.

If we combine those dying in office, those who retired as a result of old age, those who resigned because of a medical reason or for personal reasons, the total is 55 per cent of all the pre-1970 leaders. Since then, all those reasons combined account for just 10% of leaders’ departures.

The rise of partyroom coups

The reasons for leaderships ending in recent decades are much more political. 30% resigned either after an election loss or because of poor electoral prospects, compared with 15% of the earlier group, while almost half were forcibly displaced by their own party.

Of leaders whose tenure began after 1970 and finished by 2016, almost half (68 out of 138) were victims of party coups. It has become the single most-common means by which leaderships end.

Taking just the two major parties at federal and state level (plus the Queensland Nationals, which were the major party in that state), there were no successful leadership challenges in the 1960s. But since 1970, there have been fully 73, and the rate has been accelerating. In the 17 years of this century there have already been 32.

The increasing frequency of leadership coups has not made them any less disruptive. In process, they are often fraught by uncertainty and crisis and sometimes these, the most personal of political conflicts, produce enduring legacies of bitterness and internal division.

Despite having their roots in parties’ greater electoral pragmatism, the majority are followed by electoral failure rather than success.


This is an edited extract from Disposable Leaders: Media and Leadership Coups from Menzies to Abbott, published by Newsouth Books.

The Conversation

Rodney Tiffen, Emeritus Professor, Department of Government and International Relations, University of Sydney

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

After all the talk, what is the Turnbull government actually doing for small business?


Martie-Louise Verreynne, The University of Queensland and Thea Voogt, The University of Queensland

Treasurer Scott Morrison continues to warn about the decline of Australia’s global competitiveness if the centrepiece of the 2016–17 federal budget – a company tax rate cut – is not passed.

However, such tax cuts are not necessarily the best approach for the government to support small business. They need other – more immediate – forms of support, our research shows.

What’s being proposed?

The 2016-17 budget reflected the Turnbull government’s catchphrase of “jobs and growth”. From a small-business perspective, the budget wanted to:

… boost new investment, create and support jobs and increase real wages, starting with tax cuts for small and medium-sized enterprises, that will permanently increase the size of the economy by just over 1% in the long term.

In 2014, Australia had the fifth-highest company tax rate among OECD countries, albeit average in the Asia-Pacific region. Local investors benefit from lower taxes on dividends through Australia’s dividend imputation system, which passes credits onto them for corporate taxes already paid.

The Abbott government later succeeded in lowering the tax rate for small businesses with a turnover of less than A$2 million from 30% to 28.5%. The Turnbull government’s plan would eventually reduce the rate for all companies to 25% by 2026-27. It’s a phased implementation over the next ten years, starting with an immediate cut for small companies to 27.5%.

However, 70% of small businesses are unincorporated. This means their owners add profits to their personal income for tax purposes. While the government has promised an increase in their tax offset percentage, it plans to retain the cap of A$1,000.

All small businesses will benefit from the simplification of tax rules for stock, GST and depreciation. But the government’s plan introduces three levels of concessions for small businesses. This complicates the definition of what these small businesses are.

Definition disputes

Defining small business goes beyond an academic debate.

With little consensus on typical turnover numbers – these range from A$2 million to A$25 million – a better indicator could be the Australian Bureau of Statistics definition of small businesses as those with fewer than 20 employees. And 97% of the 2.1 million businesses trading in Australia fit this definition.

It is risky, though, to simplify the definition into one blunt instrument that ignores differences in industry, life cycle and high-volume versus high-worth sales. A more nuanced approach is needed to ensure relief for the businesses that need it most.

However, the major political parties seemingly remain focused on turnover as a measure of what is and isn’t a small business. The government’s plan extends the upper limit for the turnover of small businesses to A$10 million by 2016–17, which covers some of the 3% of Australia’s non-small businesses.

Meanwhile, Labor has argued for immediate support for tax cuts to small businesses with a turnover of less than A$2 million.

Lifting the turnover threshold for all small businesses from A$2 million to A$10 million in the short term will increase the number of businesses that can access some tax concessions by 90,000. And it may improve economic growth as larger firms receive some relief.

What small businesses actually need

Small businesses need immediate and certain tax relief in the short term. They struggle with an uncertain business environment.

But, in the longer term, our research shows increased competition, a lack of market demand and red tape are but a few of the issues small businesses deal with. They highlighted statutory and regulatory compliance, as well as tax planning and compliance, as major issues for them.

More than tax rates, complex tax requirements and regulations are issues causing small businesses substantial distress. The Australian Tax Office’s research supports this: more than 70% of surveyed clients viewed their tax affairs as complex. And the World Bank’s ease of doing business index ranks Australia 25th in terms of ease of paying taxes.

The immediate tax relief for small businesses is tied up in proposed legislation surrounding the government’s ten-year tax plan, which is unlikely to find enough support to pass the parliament in its current form. The uncertainty and complexity that have ensued from the political conflict over tax have negative effects on the small business landscape.

Innovation is likely to suffer under such uncertain conditions. The government’s plan recognises that:

Small businesses are the home of Australian enterprise and opportunity and they are where many big ideas begin.

In addition to ideas and passion, small businesses need resource availability, appropriate capabilities and market access to innovate. The plan proposes measures that satisfy some of these criteria, but more focus on finding ways to minimise bureaucracy to provide time to focus on innovation is needed.

The role of government is undeniable in such initiatives. Even if one argues that tax relief is a temporary reprieve, this cash injection can jump-start small business innovation and growth.

Should the two major parties fail to find common ground on the government’s company tax cut, the stalemate will continue – and leave small businesses in the lurch.

The Conversation

Martie-Louise Verreynne, Associate Professor in Innovation, The University of Queensland and Thea Voogt, Lecturer in Tax Law, The University of Queensland

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

WA state election: Liberals’ deal with One Nation may come back to bite them


Narelle Miragliotta, Monash University

Elections are colourful affairs, and the March 11 state election in Western Australia is no exception. What is bringing particular clamour to this election is the resurgence of One Nation.

Pauline Hanson’s party has certainly made its presence felt. The party is contesting 35 of the state’s 59 Legislative Assembly seats, and fielding 17 candidates across the six upper house regions. According to the polls, it is also the third-largest party in electoral terms. The most recent Newspoll has One Nation’s primary vote at 13%, well ahead of the Nationals (5%) and the Greens (9%).

It is little wonder, then, that the Liberals finally ended speculation by announcing a preference deal with One Nation. The Liberals will direct preferences to One Nation upper house candidates in regional seats. In exchange, One Nation will direct lower house preferences to Liberal candidates ahead of Labor candidates.

While the Liberals’ preference deal with One Nation is the first of its kind since John Howard took the decision as prime minister to place One Nation last on the Liberal how-to-vote card at the 2001 federal election, it is not likely to be the last. Over the past six months or so, the Liberals’ anti-One Nation resolve has been fraying.

In spite of catastrophising in some quarters, the preference deal is important for the Liberal-led government’s chances of re-election. The party’s first preference vote is at 30% and its two party preferred vote is 46%. ABC election analyst Antony Green estimates that “a swing of between 2.2% and 10% against the Liberals would produce a minority government”. In the face of a resurgent Labor Party, such a swing is possible.

The Liberals’ partners in government, the WA Nationals, are the most grievously affected by this deal. Some commentators estimate it could cost them their five upper house seats.

But the Nationals can hardly be surprised by the Liberals’ decision. Although the relationship between the two parties is often civilised, it also has a long history of strife.

In recent years, tensions between the parties were re-ignited when, prior to the 2008 WA election, the Nationals declared they would not be seeking a coalition but a partnership with the Liberals.

The Nationals leveraged the fact that neither major party had attained a parliamentary majority to negotiate a deal that provided for 25% of all state royalty payments to be set aside for re-investment into a royalties for the regions program. While the Nationals eventually agreed to support the Liberals, there was no doubt that the Nationals were seriously entertaining the prospects of doing a parliamentary deal with Labor.

A more traditional coalition arrangement was resumed following the 2013 state election, but the relationship between the two parties showed signs of strain by August 2016. The return of Brendan Grylls – the architect of the 2008 parliamentary agreement – to the Nationals’ leadership, and the unpopularity of the Barnett government, marked the return of a more assertive Nationals party.

Under Grylls’ leadership, the Nationals have been less than willing to commit to a new alliance with the Liberals. Grylls has indicated that support for any minority government would be contingent on the Liberals agreeing to support an increase in the lease rental fee on BHP and Rio Tinto from 25c to $5 a tonne on Pilbara iron ore production. The Liberals oppose this.

Consequences of the deal for the Liberals

The preference agreement carries some risk for the Liberals.

It is not entirely clear whether One Nation preferences will flow in a manner consistent with the party’s how-to-vote card. In part this is a question of whether One Nation has the infrastructure to deliver on the agreement.

A successful how-to-vote card strategy requires a party presence at polling booths on election day. The major parties struggle to cover all of their polling booths, so One Nation is likely to struggle too.

There is also a question mark over whether One Nation supporters will actually follow the party’s how-to-vote card recommendations, even if given one.

If the party’s voter base is anything like some of One Nation’s candidates, there is no reason to think that the preference deal will be widely supported. Already one of the party’s highest-profile candidates, Margaret Dodds, has rejected the deal on the basis of policy differences with the Liberals and concerns about the lack of consultation over the agreement.

Even if a significant proportion of One Nation preferences help to secure the Liberals’ return to government, the deal will cost the Liberals when the incoming upper house members take their seats in May.

While lower house preference deals are difficult for parties to impose on their supporters, there is greater certainty on preference flows for the upper house. Proportional representation, combined with above-the-line voting, makes it highly likely that most of the Liberal surplus preferences will find their way to One Nation’s upper house candidates.

This greatly increases One Nation’s prospects of holding the balance of power in the Legislative Council. Should this happen, the Liberals’ plans to partially privatise the state’s electricity utility in order to pay down soaring debt will not be realised. One Nation is staunchly opposed to the privatisation.

So while the Liberals’ decision is “pragmatic and sensible” in the short term, it might seriously compromise the party’s legislative agenda should it be returned to office.

The Conversation

Narelle Miragliotta, Senior Lecturer in Australian Politics, Monash University

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