Three (funny) charts on: 2017 in business and economics



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The Conversation, CC BY-NC

Jenni Henderson, The Conversation; Josh Nicholas, The Conversation, and Wes Mountain, The Conversation

Here in the business and economy team at The Conversation, we love charts. This year we’ve made plenty of good ones with academics.

There were the charts that showed how the wealth gap between old and young was growing and how this was affecting mortgages and home ownership.

Then there were the ones on how our workforce is changing (and how we’re discriminating in it) and what this means for unions.

Charts have a way of showing us that we can be wrong about our thoughts on, say inequality in Australia and financial vulnerability.

But it would be wrong of us to finish the year without just a few more charts, three in fact.

Not so many jobs, maybe forget innovation

We’re hearing a lot less of the “jobs and growth” and the “innovation” mantras from Prime Minister Malcolm Turnbull and Treasurer Scott Morrison.

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Maybe Jesse Stein was right when she suggested at the start of 2017 that it was time to ditch the spin around innovation. It got a very small mention in the Federal Budget, but it’s been hard for the government to make it stick to other policies too.

Speaking of other policies, there’s not much doing in jobs either. Despite the enthusiasm about recent unemployment figures, underemployment (where you can’t get enough hours despite having a job) remains high. For those who don’t have a full time job, like young people in the arts or services industry, it seems the pay off of casual work ain’t what it used to be either.

The Amazon apocalypse that didn’t happen

So far, Amazon’s Australian launch has been a bit of a fizzer. But tales of impending retail “decimination” were everywhere this year.

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At The Conversation, Gary Mortimer correctly predicted that Amazon won’t be the end of shopping as you know it. At least so far.

But this isn’t the end of the story. The likes of JB Hi-Fi and Harvey Norman will likely feel the heat, considering Amazon’s scale. And shopping centres are already scrambling to offer customers something new.

More worrying are the implications for Australia’s tax system and industrial relations given Amazon’s business model.

Now that Amazon is finally here, it’s time to start thinking about what it means for our own habits. Should we “click and collect”? And what’s with everyone trying to sell you a subscription box?

Maybe I will invest in Bitcoin…

One Bitcoin, as of mid day on December 15, was worth about A$22,000. That could buy you more than 6,000 avocados (because who wants a house anyway), 1,375 kilograms of Vegemite, four Chinese crested dogs or a small to mid-sized car.

Although you’d have to have at least two Bitcoins to buy a Tesla Model 3 Roadster, but as Tesla is not yet ready to deliver this model in Australia, you may want to wait until you only need one Bitcoin.


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But of course Bitcoin is a cryptocurrency so unless you exchange it for cash at the right time, all these comparisons are meaningless. In fact we’re not quite sure how to value Bitcoin even though we know why the price might be skyrocketing and how much energy it is guzzling.

The ConversationAll we can do is look back on bubbles and crashes of old and hope next year won’t see the worst case scenarios come true.

Jenni Henderson, Section Editor: Business + Economy, The Conversation; Josh Nicholas, Deputy Editor: Business + Economy, The Conversation, and Wes Mountain, Deputy Multimedia Editor, The Conversation

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

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Brandis off to London, as Turnbull prepares his reshuffle



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George Brandis has served as attorney-general since 2013.
AAP/Mick Tsikas

Michelle Grattan, University of Canberra

Attorney-General George Brandis will become Australia’s high commissioner to London in a ministerial reshuffle set to be announced on Tuesday.

Brandis’ appointment opens the way for Malcolm Turnbull to elevate deputy Senate leader Mathias Cormann to Senate leader, and gives the Turnbull government a cabinet vacancy.

But it leaves Turnbull with the problem of being seen to have adequate representation from Queensland in the cabinet. A Queenslander will have to be elevated, but the choice is limited and there is no standout candidate.

Queensland is a vital state for the Coalition at the next election.

While Brandis is a Liberal, the Nationals have been agitated for months about the need to boost Queensland’s representation in the ministry – and Brandis’ departure complicates the issue further.

Favourite to get Brandis’ portfolio of attorney-general is Social Services Minister Christian Porter, who was attorney-general in the Western Australian government before he moved to federal politics.

The Nationals, who appear confident of holding their five cabinet spots despite losing a parliamentary seat to the Liberals, now find themselves with an excess of Victorians in cabinet.

Their new deputy, Bridget McKenzie, is from Victoria, as is existing cabinet member Darren Chester. The party has only four federal MPs from that state.

It is speculated that Nationals leader Barnaby Joyce, who is agriculture minister, will move to Chester’s infrastructure portfolio in the changes.

The reshuffle also is likely to see the return of former health minister Sussan Ley, who resigned after allegations of the misuse of travel entitlements, which she denied. Turnbull wants to promote women and personally likes Ley.

The reshuffle comes as the government is behind Labor in the 25th consecutive Newspoll. The ALP leads 53-47% on a two-party basis, unchanged from the previous poll.

Turnbull said recently he regretted referring to Tony Abbott losing 30 consecutive Newspolls when he launched his 2015 challenge against the former prime minister.

The ConversationAbbott replied that he will respond to this Turnbull statement of regret, but he wanted to leave it until after Saturday’s Bennelong byelection.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Seven charts on the 2017 budget update


Ross Guest, Griffith University

Here’s how the budget is looking at the mid-year mark, in seven charts.


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The A$5.8 billion drop in the 2017-18 underlying cash deficit compared with the original May budget is due more to higher revenue than lower spending. Receipts are higher by A$3.6 billion and payments are lower by A$2.1 billion.

The higher receipts reflect the stronger economy, which implies higher company tax (up A$3.2 billion) and superannuation fund taxes (up A$2.1 billion).

Receipts would have been even higher if not for stubbornly weak wages growth which, despite stronger employment growth, has tended to dampen individuals’ income tax receipts. These are in fact down by A$0.5 billion.

The estimates of GST and other taxes on goods and services remain unchanged since the budget.

The lower payments of A$2.1 billion are driven by several changes having opposite effects. Some of these are:

  • A$1.2 billion (over four years) lower welfare payments to new migrants due to longer waiting times;

  • A$1 billion (over four years) lower payments to family daycare services due to more stringent compliance checking; and

  • A$1.5 billion (over four years) lower disability support payments due to lower than expected recipient numbers.

There is not much change in the net debt projections relative to those in the 2017-18 budget. Net debt is A$11.2 billion lower at A$343.8 billion in 2017-18 (around 19% of GDP). Debt stabilises in 2018-19 and starts to steadily decline thereafter to about 8% of GDP in the next ten years.

The lower deficits as a share of GDP are obviously reducing debt, but one factor tending to increase debt is student higher education loans. These are projected to increase by 32% from A$44.4 billion to A$58.8 billion over just the next four years.


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The economic outlook continues to be a puzzle. National output of goods and services, real GDP, is expected to grow slightly slower in 2017-18 than the budget forecast – 2.5% compared with 2.75%.

However this is an improvement on the 2% achieved in 2016-17. And it is expected to increase further to 3% in 2018-19.

The economy is being driven by strong global growth and strong domestic business investment. Australia’s major trading partners are forecast to grow (meaning real GDP growth) at a weighted average of 4.25% in each of the next three years.

Wages and household consumption are the puzzle – they are not growing as fast as expected from the stronger than expected employment growth (up 0.25% on the budget to 1.75%) and lower than expected unemployment rate (down 0.25% on the budget to 5.5%).

Household consumption growth is down 0.5% on the 2017-18 Budget forecast to 2.25%. This has in fact become a global phenomenon due to higher costs and job insecurity from the forces of globalisation and automation.


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Commodity prices are notoriously volatile and hard to predict, yet they are critical to the budget forecasts because they impact the revenue of resource companies which feeds into company taxes and other taxes.

Iron ore prices are assumed to remain flat at US$55 per tonne over the forecast period, as in the budget. This forecast is almost certain to be wrong because iron ore prices never stay flat for long – the problem is that we can’t say in which direction it will be wrong.

The same applies to thermal coal prices which are assumed to be flat at US$85 per tonne which is again consistent with the budget forecast.


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Australian taxpayers continue to bear most of the burden of budget repair. The government can claim with some justification that their efforts to reduce payments further have been thwarted by the Senate.

Excluding the effect of Senate decisions, new spending has been more than offset by reductions in other spending. The gap between the revenue and payment is reducing at the rate of about 0.6 percent per year.

As a share of GDP payments are expected to be 25.2% in 2017-18, falling to 24.9% of GDP by 2020-21 which is slightly above the 30-year historical average of 24.8% of GDP.


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Wage growth has been revised down from an already low 2.5% in the budget to 2.25% in MYEFO. With the Consumer Price Index forecast to grow at 2%, wages are barely keeping pace with inflation – growing in real purchasing power by only 0.25%.

This provides a meagre compensation for labour productivity growth which is implied to be about 1% in MYEFO. Wage growth is expected to pick up by 0.5% next year to 2.75%.

This is important because it underpins government revenue growth, yet it’s brave to expect the deep forces that are keeping wages down in Australia and around the world to turn around and exactly match the 0.5% growth in real GDP expected to occur next year.


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New measures since the budget have increased the deficit on both the revenue and expenditure sides of the budget. On the revenue side, for example, higher education changes reduced revenue by A$76 million and the GST by A$70 million.

The ConversationOn the expenses side, needs-based funding for schools has cost an additional A$118 million and improving access to the Pharmaceutical Benefits Scheme costs A$330 million. The roll-out of the NDIS in Western Australia adds another cost at A$109 million, and Disability Care Australia at A$362 million.

Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith University

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

Government budget update saved by higher than expected economic figures


Saul Eslake, University of Tasmania

The 2017-18 Mid-Year Economic and Fiscal Outlook (MYEFO) is another reminder – if one is needed – that the relationship between the budget and the economy runs in both directions. While we mostly ask the question, “how will the budget affect the economy?”, this update shows the economy can also have (and has often had) a significant impact on the the budget.

The highlights of this year’s MYEFO, as far as the government is concerned, are the A$9.3 billion improvement in the underlying cash balance over the four years to 2020-21 (compared with what had been forecast in the May budget), and the consequential A$11 billion reduction in the forecast peak in net debt (from A$366 billion to A$355 billion) in that year.

These improvements are the result of revisions to economic assumptions and other so-called “parameter variations” since the budget, which in total have improved the four-year bottom line by more than A$11 billion. The biggest of these came from reductions in payments to people with disabilities, students, single parents and age pensioners (totalling A$4.6 billion over four years) due to lower-than-expected recipient numbers.


Read more: Budget update shaves growth and wage forecasts but is brighter about the deficit


Personal income tax cuts seem possible

There is no additional detail in MYEFO regarding the government’s foreshadowed personal income tax cuts ahead of the next election. But if the forecast surplus for 2020-21 of A$10.2 billion is credible, then there’s arguably some scope for the government to fund personal income tax cuts beginning in that year.

Although the cost of more significant tax cuts would escalate substantially over the medium term, there is actually more scope for these cuts than generally realised (provided the government succeeds in keeping growth in spending under control).

That’s because the projected moderate surpluses, averaging about 0.5% of GDP out to 2027-28, incorporate an arbitrary assumption that taxation revenue will be capped at 23.9% of GDP. If that assumption wasn’t made, the projected surpluses would rise to 1.6% of GDP by 2027-28.

In dollar terms that would imply a surplus of around A$55 billion, compared with one of around A$15 billion if the surplus were only 0.5% of GDP. Over the period 2021-22 to 2027-28, relaxing the assumption that tax revenues are capped at 23.9% of GDP results in almost A$90 billion of additional budget surpluses. This is over and above what is projected with that “tax cap” in place.

Presumably, some of those “additional surpluses” are absorbed, in the government’s internal figuring, by the promised phased reduction in the company tax rate for businesses turning over more than A$50 million per annum by 2025-26 – which according to the last publicly available estimate would reduce revenues by some A$65 billion over ten years.

However, that would still leave a considerable amount “left over” to pay for personal income tax cuts, and allow the government to continue to project surpluses of around 0.5% of GDP out to the second half of the next decade.

That’s assuming, of course, that we are able to clock up 36 years of uninterrupted economic growth, and that all the other projections come to pass, including for a return to more “normal” rates of wages growth.

Economic indicators in MYEFO

Treasury has revised downwards its forecast for economic growth in the current financial year, from 2.75% to 2.5%. A large part of this revision comes from stronger growth in public spending, which is now forecast to rise by 4% in real terms in 2017-18, up from 2.5% at the time of the May budget.

This reflects faster growth in both government spending (on the NDIS) and investment (NBN and state government infrastructure investment). The forecast for business investment has also been upgraded, from flat at budget time to growth of 2%, the result of both stronger growth in non-mining business investment and a smaller decline in mining investment.

This is largely the result of a downward revision to the forecast for growth in household consumption spending which has been lowered from 2.75% to 2.25%: and this carries over into a 0.25 percentage point reduction in the forecast for 2018-19, to 2.75%. Even these require a further decline in the household saving rate.

The forecast for dwelling investment spending has turned around from 1.5% growth to a decline of 1.5%, with the “softening in dwelling investment occuring slightly earlier than expected”.

Longer term, the government is still anticipating that economic growth will average 3% per annum from 2018-19 through 2023-24, by which time all the “spare capacity” in the labour market will have been absorbed. That is, the unemployment rate will be down to 5% and underemployment (workers not being able to get enough hours at work) returned to more normal levels.

The ConversationThe longer-term projections also assume that wages growth accelerates significantly from 2019-20. This represents the greatest risk to the goverment’s promise of a return to surplus by 2020-21.

Saul Eslake, Vice-Chancellor’s Fellow, University of Tasmania

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

Budget update shaves growth and wage forecasts but is brighter about the deficit


Michelle Grattan, University of Canberra

The 2017-18 budget update shows an improvement in the deficit forecast for this financial year but predicts lower economic growth and a smaller increase in wages than was expected in the May budget.

The deficit for 2017-18 is now expected to come in at A$23.6 billion, an improvement of A$5.8 billion from the May forecast, according to the Mid-Year Economic and Fiscal Outlook released by Treasurer Scott Morrison and Finance Minister Mathias Cormann.

Growth for this financial year is forecast to be 2.5% compared with the budget’s 2.75%, reflecting recent lower-than-expected growth in household consumption.

Nevertheless Morrison and Cormann said Australia’s growth story “remains a compelling one, and although real GDP growth has been slightly tempered in 2017-18, the trajectory is upward”. Real GDP is forecast to grow at 3% in 2018-19, the same as the budget number.

Budget update on wages

The update notes that wage growth “remains low by historical standards in both the public and private sectors and has been more subdued than expected since budget”.

Wages are forecast to increase by 2.25% through the year to the June quarter 2018 and 2.75% through the year to the June quarter 2019.

This is 0.25 of a percentage point lower in both years compared with the budget – vindicating the scepticism that economists expressed about the budget forecast being too optimistic.

The flat wages situation reflects a serious political pressure point for the government, as many people struggle with high power prices and other squeezes on their cost of living.

“Wage growth is forecast to lift as the economy strengthens, inflation picks up and excess capacity in the labour market is reduced,” the update says.

Budget receipts have been revised upwards by about A$3.6 billion in 2017-18 and A$2.8 billion over the forward estimates compared with budget time – driven mainly by company tax and superannuation tax. The company tax forecasts reflect increased profitability and enforcement activity by the Australian Taxation Office.

But “over the forward estimates, lower forecasts for wages and unincorporated business income are expected to weigh on individuals’ income tax receipts,” the update says.

The half yearly revised numbers confirm that the budget is on track to have a surplus in 2020-21. The projected surplus of A$10.2 billion in that year is A$2.7 billion better than estimated in May.

Savings measures on education and welfare

The government has announced in the update a new welfare crackdown to save money and also an alternative higher education savings package after it could not pass its earlier proposals.

Savings of A$1.2 billion over four years will be reaped by broadening the criteria for waiting periods for new migrants before they can get various welfare benefits.

The changes will extend the present two-year waiting period for a range of payments, such as Newstart, to three years, and introduce a consistent new three-year waiting period to apply to a further number of benefits such as Family Tax Benefit and Paid Parental Leave.

Social Services Minister Christian Porter said the measures “will reinforce the foundational principle that Australians’ expectation of newly arrived migrants is that they contribute socially and economically for a reasonable period before having access to our nation’s generous welfare system”.

The higher education package includes a freeze on total Commonwealth Grant Scheme funding from January 1, set at 2017 levels, and a combined limit for all tuition fee assistance under all HELP and VET Student Loans.

The government will also pursue an alternative set of HELP repayment thresholds from July 1 next year, with a new minimum repayment threshold of A$45,000, higher than the A$42,000 in the original plan. At present the threshold is A$55,000.

Most of the new higher education package doesn’t have to be legislated, thus avoiding the Senate hurdle. The previous higher education package was set to save A$2.7 billion over the forward estimates; the new one saves A$2.1 billion.

Real growth in payments over the budget period is expected to be an annual average of 1.9%. Compared with the budget, nominal payments are lower in every year of the forward estimates.

The payment to GDP ratio is expected to fall to 24.9% of GDP by 2020, slightly above the 30 year historical average.

Morrison told a joint news conference with Cormann: “As we push into the new year, there is still more work to be done but we are on the right track.

“Jobs and growth will continue to be our mission and our focus. Helping the lives of the thousands of Australians, millions of Australians, and their families and returning the budget back to balance.”

Cormann said: “This is a good set of numbers in all of the circumstances.”

Shadow treasurer Chris Bowen said the government remained committed to increasing the tax paid by working Australians. He said there was no mention of personal tax cuts – which Malcolm Turnbull has foreshadowed – in the update. People only got a tax rise.

He condemned the revised higher education package, saying it would particularly hit those from a lower socioeconomic background.

The ConversationThe chair of Universities Australia, Professor Margaret Gardner, said the package would leave university funding “frozen in time”. She said the blow would be hardest in areas where university attainment was lowest, such as regional areas.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Bennelong brings Turnbull a prized Lego piece – but he still has to build the set



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Malcolm Turnbull’s excitement, no doubt fuelled by relief, at the Bennelong byelection win was obvious.
AAP/Mick Tsikas

Michelle Grattan, University of Canberra

Sometimes Malcolm Turnbull is as transparent as a child. In Bennelong on Saturday night, he was like the four-year-old welcoming Santa. He was full of excitement – fuelled by relief – at a result that, if it had come out badly, could have shaken his leadership to its core.

Over at the Labor gathering, Bill Shorten’s response was carefully calculated. This was a poor outcome for the ALP, given the government’s problems, Labor’s “star” candidate, and the effort Shorten had put into campaigning. But the ALP had readied itself, even before people cast their votes, to translate whatever swing was achieved into the number of seats it would yield if replicated in a national election.

This is the longest of bows, as Labor knows. There can be no meaningful projection, especially when the average swing in byelections is around 5% and, on latest figures, this one is about that.

In terms of the outcome and context, the Bennelong result resembles the 2001 byelection in the Victorian seat of Aston, where an embattled Howard government held onto a seat at a crucial time. The win gave that government a much-needed boost.

Saturday was a big fillip for Turnbull. More so than the New England byelection (where he also looked like the kid for whom Christmas had come), because the result in Barnaby Joyce’s seat was never in doubt.

In tangible terms, the Bennelong outcome means the government is back to majority rule. The most worrying immediate consequence for Labor is that the Coalition can refer to the High Court those Labor MPs it has targeted over their citizenship – and it can prevent its own being sent to judges who have proved punishing.

Also important is that the result takes some pressure off Turnbull’s leadership. He ends the year on as much of a high as possible for a leader who has lost 24 consecutive Newspolls.

In the last few weeks, things have gone Turnbull’s way, just as they’ve gone against Shorten, not least with the Sam Dastyari fiasco.

Same-sex marriage is dealt with as an issue and hailed by Turnbull as his achievement – even if it took a backbench rebellion to get it done, and there is still the religious freedom debate bubbling.

Progress is being made on energy policy, although that has a long way to go.

Monday’s budget update is set to be positive, including gross debt now projected to be A$23 billion less by the end of the forward estimates than was estimated in May. Even the pressure for a royal commission on banks has been responded to, albeit only thanks to another backbench revolt.

Shorten won’t be fooling himself with his own spin. The early part of 2018 could be a nightmare for Labor if it faces byelections. This is likely in Batman in Victoria at least, and perhaps in several seats.

Batman could well be lost to the Greens, which would be a disaster for the ALP; a byelection in the Queensland seat of Longman could also be problematic for Labor.

Those in the opposition who are critical of Shorten can note that it would have been better if he had let the positions of ALP MPs be clarified this year rather than next.

It is undeniable from polling and focus groups that Shorten will not go into the election, due in 2019, on a wave of personal popularity. If he wins – and he’s favourite at this moment, Bennelong notwithstanding – it would be on the basis of the government’s unpopularity and disunity, and Labor’s strong policy pitch and relative cohesion.

Whether the “unity” factor will continue to be as bad for the government and as good for Labor in 2018 remains to be seen. There will be, or should be, pressure on the Coalition conservatives and disruptors to behave better after the marriage result and, for that matter, the Bennelong showing. But they often put ideology, and in some cases bloody-mindedness about Turnbull, ahead of the good of the government, so there is no guarantee.

On the other side, Labor’s unity partly depends on the political dynamics going well for it.

From the government’s point of view, while it can look to Bennelong as a modern Aston, it can’t carry the comparison with 2001 too far. Though some would dispute this, I believe that while Aston became a symbol of the Howard government’s resurrection, it would not have won the 2001 election if it had not been for the extraordinary circumstances of the Tampa affair and the September 11 attacks in the US.

In Turnbull’s case, if history is to see Bennelong as some sort of turning point, his government will have to make it so by its performance over the next year. Bennelong has brought Turnbull a crucial Christmas Lego piece – he still has to assemble the set.

Turnbull’s next political challenge is his ministerial reshuffle, both an opportunity and a risk because there will be winners and losers.

He wants to freshen the team, promote younger talent, and hand out some rewards.

Peter Dutton is already set to step into the new mega home affairs portfolio. Turnbull would also like to promote the very competent finance minister Mathias Cormann to Senate leader, and hence wants the incumbent, Attorney-General George Brandis, to become high commissioner in London.

Brandis, who earlier was one of the more accident-prone ministers, has recently done well and would be going out on a high. He played a significant role in the same-sex marriage issue and has brought to fruition legislation to combat foreign interference in Australian politics.

One who’d not be unhappy to see him leave would be Dutton – Brandis lost ASIO to Dutton but retained some checks for the attorney-general.

Brandis is understood to be concerned that his departure would significantly diminish the voice and clout of the moderates, while also reducing the influence of Queensland – a state that will be vital to the Coalition at the election – in the highest levels of the government. On the basis of merit, there is no obvious Queensland replacement for promotion into cabinet.

As well, the government has yet to shepherd the foreign interference legislation through, which is not without its own controversy.

The ConversationOf course, Turnbull will have the last word on Brandis. If he were wise, he’d leave him where he is.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Australians working in China should expect fallout over questions of political interference



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The People’s Daily, the official newspaper of the Chinese Communist Party, has let its displeasure over questions of influence in Australian politics be known.
Reuters/Thomas Peter

Ryan Manuel, University of Hong Kong

Despite Sam Dastyari resigning this week over ongoing allegations of promoting Chinese interests, and regular denunciations of Chinese interference in Australian politics, little has been said about what China makes of it all.

On Monday, we received the definitive answer: an authoritative condemnation of Australia, signed off at the highest levels.

A brief timeline of Chinese responses shows how the matter escalated.

Last week, the Chinese Embassy in Australia issued an unusually heated statement criticising Australian media and politicians. Some politicians, it said, had made:

… irresponsible comments that hurt mutual trust, and that we fully reject.

The statement included a translation of a statement from Prime Minister Malcolm Turnbull that “Chinese influence is interfering with Australian politics”.

The embassy in Canberra clearly reported their displeasure to the foreign ministry in Beijing. Foreign ministry spokesmen at the Beijing press conferences in the following days made similar statements.

The following day, Turnbull said “the Australian people stand up” to China, a phrase he said was inspired by Mao’s 1949 declaration that the Chinese people had stood up.


Read more: Dastyari saga shows the need for donations reform, and for politicians to take more care


The matter then escalated. Following the comments being reported, and a meeting in Beijing (almost certainly the next day) to determine the official line, China launched a full rhetorical assault on December 11.

China’s official government spokesperson made a public statement that China:

… offer(s) Australia a word of advice: some of these people should stop saying things that hurt Australia’s image and Australia-China mutual trust.

Turnbull’s statement that Australian people “stand up” was the third-leading item on the national news put out by China’s state television broadcaster. Most significantly of all, the People’s Daily, China’s official newspaper of record, had a special signed editorial attacking Australia’s government and media.

Of these events, it is the People’s Daily editorial that is the most authoritative.

The People’s Daily is the official newspaper of the Communist Party that runs China. It has a number of different classes of editorial. This one is known as a “signed editorial”: it represents the “voice of China”. It must be signed off on by a member of China’s highest leadership committee, and drafted by a special group within the People’s Daily. It is the third-highest ranking editorial that can be released. The two highest-ranking editorials are only released for special occasions, roughly monthly.

Why is this editorial so important? Because it immediately signals to the entire Chinese political system, including roughly 90 million party members and 40 million public servants, that their top leaders are angry at Australia.

Based on the television broadcast and the official editorial, the issues appear to be with Australian media, the public discourse on China, and with the prime minister’s phrase that “the Australian people stand up” (which was described as “laughable”).

Next, the many ministries, departments, bureaux, businesses and Communist Party bodies of the massive Chinese state must determine how seriously they take this official displeasure. Chinese leaders rarely release specific orders with targets. Rather, they release exhortations and vague statements for which they then expect the lower level actors to provide specific solutions. So subordinate departments are to prepare and submit a response that is in line with the editorial so that the leaders may look favourably on them.

None of these measures threatens the Australian state, nor our economy. China will not launch a trade war over this. But we need to be clear: “breaching mutual trust”, as the Chinese government describes it, can be lived with as long as the benefits to Australia outweigh the costs. Based on the current official Chinese media, costs are highly probable.


Read more: Ban on foreign political donations is both too broad and too narrow, and won’t fix our system


The last time that Australia received an official editorial condemning its actions was in 2009, when it refused official requests by China not to issue a visa to a dissident filmmaker (at the same time as the arrest of Australian citizen and Rio Tinto employee Stern Hu in China). A pointed editorial, albeit one of lower rank than the one issued on Monday, warned about “Australia’s Choice”.

Australia’s prime minister at that time was expert sinologist Kevin Rudd, who refused to intervene personally in the situation. Rudd was not personally criticised in the editorial. And China eventually sent the head of its government over to make an unusual joint public statement. As this statement would also have needed to be signed off at the highest levels, it sent a new signal to the Chinese system that Australia was out of the dog house.

So until a new line or editorial comes out of Beijing, Australian business and government representatives in China can probably expect some rather heavy-going.

Recent events are likely to be raised in many meetings. It very likely will also retard the progress of the next stage of the Australia-China free trade agreement. Finally, there is likely to be a reduction in the number of Chinese students allowed to study in Australia – the editorial argued that these students had been “significantly wounded”.

The ConversationThere are some other factors that may reduce costs. This is the best time to incur the wrath of the Chinese government. Due to the delay between choosing new national Party leaders and then assigning them to their various government ministries (which occurs in March), government agencies tend to be less reactive to official media signals than usual.

Ryan Manuel, AsiaGlobal Fellow, University of Hong Kong

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

John Alexander easily retains Bennelong, and how the LNP saved Labor’s Jackie Trad in Queensland



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The Bennelong byelection result will boost Malcolm Turnbull’s standing in the Coalition.
AAP/Mick Tsikas

Adrian Beaumont, University of Melbourne

Liberal John Alexander defeated Labor’s Kristina Keneally in the Bennelong byelection by a 54.2-45.8 margin, a swing to Labor of 5.6 points since the 2016 election. Primary votes were 44.1% Alexander (down 6.3), 36.3% Keneally (up 7.8), 6.9% Greens (down 2.2), 4.5% for the Australian Conservatives, and 3.2% Christian Democrats (down 3.2).

Up to 16,000 postals are still to be counted, and these will further increase Alexander’s vote, probably pushing his lead out to 55-45.

The easy win for Alexander restores the Coalition’s 76 seats in the lower house, returning it to a two-seat majority (76 Coalition vs 74 for all others).

In Bennelong, Newspoll and Galaxy had Alexander respectively at 50% and 51% two-party-preferred in polls conducted in the final week, while ReachTEL gave Alexander a 53-47 lead. In this case, ReachTEL was better than Newspoll and Galaxy.

Before the byelection, I said that, given the inaccuracy of seat polls, Labor could win, or there could be a thumping Liberal victory. Unlike the Alabama Senate byelection, this time the vote of the right-wing candidate was understated.

In New England, there was a large swing to Barnaby Joyce following a Section 44 disqualification, so Labor’s consolation in Bennelong is that it received a swing that would have easily won it a general election. Nevertheless, given the polling that suggested a close contest, this is a disappointing result for Labor, and will boost Malcolm Turnbull’s standing within the Coalition.

At the 2016 election, the Christian Democrats won 6.4%, so the overall vote for the Christian right (Australian Conservatives and Christian Democrats) was 7.7%, up 1.3 points.

Bennelong voted marginally against same-sex marriage (50.2-49.8), but this result does not suggest a massive number of same-sex marriage opponents are turning to the Christian right. Alexander had supported same-sex marriage.

Queensland poll critique, preference flows, and how the LNP saved Jackie Trad

The table below shows the final three Queensland election polls, and how they compare with the election results.

Kevin Bonham estimated Labor won 51.2% of the two-party vote, virtually unchanged on 2015. A poll result within one point of the actual outcome is in bold.

Queensland election polls vs results.

ReachTEL asked for statewide One Nation support, while Newspoll and Galaxy only asked in the 61 (out of 93) seats One Nation contested. ReachTEL may have been close had One Nation contested all seats. Newspoll was very close on all primary votes, while Galaxy was a little high on the major parties, and a little low on the Greens and One Nation.

Tim Colebatch wrote in Inside Story that One Nation preferences flowed to the LNP at a 65% rate, while Greens preferences went to Labor at a 76% rate.

This data is based on the distribution of preferences, which includes preferences from other candidates in the One Nation and Greens totals. It is likely the flow from One Nation primary votes to the LNP was higher than 65%, and the flow from Greens primary votes to Labor was higher than 76%.

I believe Newspoll and Galaxy expected a One Nation flow to the LNP of about 60%, while ReachTEL used respondent-allocated preferences. The final ReachTEL poll was thus better than Newspoll or Galaxy on two-party-preferred terms. However, earlier ReachTEL polls consistently had the LNP ahead by 52-48, before the final poll became more in line with Newspoll and Galaxy.

31% of overall votes were won by parties other than the big two, but Colebatch says One Nation and Greens preferences effectively cancelled each other out.

84 of the 93 seats went to the primary vote leader. Of the other nine, Labor lost three it led on primary votes, but won four it trailed on. The LNP lost two seats to the Greens and Katter’s Australian Party that it led on primary votes.

Labor’s left-wing deputy premier, Jackie Trad, became treasurer after the election. She would almost certainly have lost her South Brisbane seat had the LNP recommended preferences to the Greens ahead of Trad.

Primary votes in South Brisbane were 36% Trad, 34% Greens, 24% LNP. Trad won 62% of LNP preferences, giving her a 53.6-46.4 win over the Greens. Had the LNP put the Greens ahead of Trad on its how-to-vote cards, rather than the reverse, the Greens would have very probably defeated Trad.

Belated Western Australian election poll critique

I was expecting a statewide two-party count in all Western Australian seats for the March 11 election, but this has not occurred.

Antony Green estimated Labor won 55.5% of the two-party vote, a swing to Labor of almost 13 points since the 2013 election. I have used this estimate in the table below.

Western Australian election polls vs results.

All polls asked for One Nation support statewide, when One Nation did not contest many seats. This error led to the change in Queensland for Galaxy and Newspoll.

In WA, all polls underestimated Labor and the Greens, overstated One Nation, and had the combined Liberal and National vote about right. Labor performed better after preferences than expected.

The ConversationAs in Queensland, ReachTEL’s earlier polls in WA were worse for Labor, before its final poll fell into line with Newspoll and Galaxy.

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

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

Alexander holds Bennelong, Turnbull holds majority



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Malcolm Turnbull and John Alexander celebrate victory in the Bennelong byelection.
AAP/Mick Tsikas

Michelle Grattan, University of Canberra

The Liberals’ John Alexander has comfortably won the crucial Bennelong byelection, preserving the Coalition’s parliamentary majority and giving Prime Minister Malcolm Turnbull a significant boost going into 2018.

Alexander, who faced the high-profile Labor candidate Kristina Keneally, a former New South Wales premier, has a two-party swing against him of about 5.6% on counting so far. This gives Alexander a 54-46% two-party vote.

Addressing the party faithful, Alexander told Turnbull: “This is a renaissance of your leadership”. The Bennelong win follows the strong government victory in the recent New England byelection.

An exuberant Turnbull said: “Thankyou Bennelong”. He declared that Alexander, a former tennis champion, was “winning yet another great title”.

Turnbull told Liberal supporters Alexander had said to Bennelong voters, “I have been your champion, now let me be your champion again”, and they had said: “Yes, John Alexander, you are Bennelong’s champion just as you have been Australia’s champion”.

The Liberals have had a swing against them of about 6.3% on primary votes; the swing to Labor on primaries has been around 7.6%.

The result – with a swing around the average for byelections – is a major relief for Turnbull, who would have faced deep trouble if the seat had been lost.

Alexander said: “This is an extraordinary moment for us. … It’s been a real battle”.

In the last days of the campaign, Labor said it did not expect to win the seat, which had a 9.7% margin, but it hoped to run the government closer than it has.

On Saturday night, Labor was making the most of the swing by translating it to a national election result.

Opposition Leader Bill Shorten told Labor supporters the voters of Bennelong had given Labor “an election-winning swing at the next election”.

“This was not an ordinary byelection,” he said. “Normally in a byelection the former member does not run again.” Given Alexander’s personal vote, the entire swing was “attributable to Malcolm Turnbull and his rotten policies for this country”.

If Labor could replicate this swing at the election, “24-28 government seats will fall”, Shorten said. “Labor finishes 2017 with the most remarkable wind in its sails.”

He said in 2018, Labor “will be courageous and we will stand up and put people first”.

Keneally told the Labor campaign workers this had been “an extraordinary result”.

She said unfortunately she was not there to claim victory but “I am here tonight to claim success for the Labor movement”.

Turnbull “owns this result”, Keneally said. “The verdict is in, the message is clear, we have had enough of your lousy leadership.” Thousands of people who had previously voted for the Liberals had rejected the government, and Labor had been “energised” by the result, she said.

Labor was texting journalists saying such a swing would take out cabinet ministers Peter Dutton and Christian Porter.

Leader of the House Christopher Pyne said of the Shorten and Keneally speeches: “The level of delusion was epic”. He said the result would improve when the prepolls and postals were counted.

The byelection was sparked by Alexander resigning in the citizenship crisis.

Both Turnbull and Shorten had campaigned hard in the electorate.

In a seat with a very high proportion of Chinese voters, the byelection campaign was particularly bitter.

Labor accused Turnbull of “Chinaphobia” in the wake of the government’s attacks on Labor’s Sam Dastyari and its move to crack down on foreign interference in Australian politics.

Dastyari, under pressure for his closeness to a Chinese benefactor and for promoting Chinese interests, announced earlier this week that he would resign from parliament. Keneally has not ruled out seeking to fill the Dastyari vacancy in the Senate.

The government resurrected Keneally’s history as NSW premier, seeking to link her to disgraced Labor figures Eddie Obeid and Ian Macdonald, both of whom are in jail.

Cory Bernardi’s Australian Conservatives, in its first electoral outing, had a vote of about 4.5%, with preferences flowing strongly to Alexander.

The government will now have the numbers to refer the citizenship of several Labor MPs to the High Court, while successfully resisting having any of its own MPs referred.

Pyne said Shorten faced a potential four byelections next year.

The ConversationThe minister for international development and the Pacific, Concetta Fierravanti-Wells, said this was a good win for Turnbull and urged an end to the backgrounding against him.

Michelle Grattan, Professorial Fellow, University of Canberra

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

Instead of congratulating ICAN on its Nobel Peace Prize, Australia is resisting efforts to ban the bomb


Ramesh Thakur, Australian National University

Earlier this week in Oslo, the 2017 Nobel Peace Prize was officially given to the International Campaign to Abolish Nuclear Weapons (ICAN), a global campaign that was launched in Melbourne in 2007.

ICAN lobbied to establish a special UN working group on nuclear disarmament, campaigned for the UN General Assembly’s December 2016 resolution to launch negotiations on a prohibition treaty, and was an active presence at the UN conference that negotiated the treaty.


Read more: How Melbourne activists launched a campaign for nuclear disarmament and won a Nobel prize


Prime Minister Malcolm Turnbull failed to congratulate the Australian faces of ICAN, adding to the growing body of evidence of his flawed political judgement.

There were no political downsides to phoning ICAN, noting the difference of opinion on the timing and means to effective nuclear disarmament, but warmly congratulating ICAN for the global recognition of its noble efforts to promote nuclear peace.

Out of step with the global nuclear order

The global nuclear order has been regulated and nuclear policy directions set by the Nuclear Non-Proliferation Treaty (NPT) since 1968.

The 2015 Iran nuclear deal and North Korea’s unchecked nuclear and missile delivery advances show the benefits and limitations of the NPT respectively.

The transparency, verification and consequences regime mothballed Iran’s bomb-making program by enforcing its NPT non-proliferation obligations. These will remain legally binding even after the deal expires in 2030.

By contrast, the crisis over North Korea’s nuclear program has intensified within the NPT framework. Heightened geopolitical tensions in Europe, the Middle East and south and east Asia have further stoked nuclear fears. Meanwhile the NPT-recognised five nuclear weapon states have no plan to abolish their nuclear arsenals.

Frustrated by the stubborn resistance of the nuclear weapon states to honour their NPT commitment to nuclear disarmament and alarmed by rising nuclear threats, on July 7 this year, 122 countries adopted a UN treaty to stigmatise and ban the bomb.

The nine nuclear powers and all the NATO and Pacific allies who shelter under US extended nuclear deterrence dismissed the treaty as impractical, ineffective and dangerous.

Critics allege the treaty is a distraction that ignores international security realities, will damage the NPT, and could generate fresh pressures to weaponisation in some umbrella nations. Nuclear deterrence has kept the peace in Europe and the Pacific for seven decades.

They will argue that the ban treaty undermines strategic stability, jeopardises nuclear peace, and makes the world more unpredictable. It ignores the critical limitations of international institutions for overseeing and guaranteeing abolition and has polarised the international community.

Australia still under the US nuclear umbrella

The ban treaty is not compatible with nuclear sharing by NATO allies whereby nuclear weapons are stationed on their territory, nor with Australia’s policy of relying on US nuclear weapons for national security and nuclear-related co-operation with the US through the shared Pine Gap asset.

In a period of power transition in which China’s geopolitical footprint is growing while the US strategic footprint recedes, reliance on the security and political roles of US nuclear weapons by Australia, Japan and South Korea has increased, not diminished.

The most strident criticisms of the diplomatic insurgency have come from France, UK and US, while Australia has been among “the most outspoken of the non-nuclear states”.


Read more: Australia’s stance on nuclear deterrence leaves it on the wrong side of history


Australia’s preferred approach does not challenge the social purposes and value of nuclear weapons nor question the legality and legitimacy of these weapons and the logic and practice of nuclear deterrence. It leaves nuclear agency entirely in the hands of the possessor states, accepting that they can safely manage nuclear risks by appropriate adjustments to warhead numbers, nuclear doctrines and force postures.

To critics, the nuclear powers are not so much possessor as possessed countries. Within the security paradigm, nuclear weapons are national assets for the possessor countries individually. In the ban treaty’s humanitarian reframing, they are a collective international hazard.

The known humanitarian consequences of any future use makes the very possibility of nuclear war unacceptable. Dispossession of nuclear weapons removes that future possibility. Stigmatisation and prohibition are normative steps on the path to nuclear disarmament.

The nuclear weapons states have instrumentalised the NPT to legitimise their own indefinite possession of nuclear weapons while enforcing non-proliferation on anyone else pushing to join their exclusive club. For them, the problem is who has the bomb.

But increasingly, the bomb itself is the problem.

A curcuit breaker

The ban treaty is a circuit-breaker in the search for a dependable, rules-based security order outside the limits of what the nuclear-armed countries are prepared to accept.

The step-by-step approach adopts a transactional strategy to move incrementally without disturbing the existing security order. The ban treaty’s transformative approach transcends the limitations imposed by national and international security arguments.

For Australia, nuclear disarmament is of lower priority than bolstering and indefinitely sustaining the legitimacy and credibility of nuclear deterrence. In its view, the ban treaty will neither promote nuclear disarmament nor strengthen national security.


Read more: Three good reasons to worry about Trump having the nuclear codes


Australia’s instinct is to support incremental, verifiable and enforceable agreements and commitments. There is no detailed framework for actual elimination, verification and enforcement.

The Foreign Policy White Paper repeats the familiar mantra that a complex security environment requires a patient and pragmatic approach. It simply ignores the adoption of the ban treaty, pretending it does not exist.

Australia should join global efforts to ban the bomb

The UN Treaty on the Prohibition of Nuclear Weapons is a good faith effort by 122 countries to act on their NPT responsibility to take effective measures on nuclear disarmament.

A constructive approach would be for Australia to lead a collaborative effort with like-minded countries like Canada, Japan and Norway to explore strategic stability at low numbers of nuclear weapons and the conditions for serious and practical steps towards nuclear disarmament.

The ConversationInstead, Australia has chosen to join the nattering nabobs of negativism.

Ramesh Thakur, Professor of International Relations, Australian National University

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