Scott Morrison’s HomeBuilder scheme is classic retail politics but lousy economics



Easypads

Brendan Coates, Grattan Institute

Scott Morrison’s new housing stimulus package is straight-out retail politics.

HomeBuilder offers homeowners (including first home buyers) a grant of A$25,000 to build a new home worth less than $750,000 or to spend between $150,000 and $750,000 renovating an existing home.

The scheme is limited to owner-occupiers with reported incomes below $125,000 for singles and $200,000 for couples.

Giveaways to home buyers are wildly popular. And who wouldn’t want their house renovated on the public dime? The trouble is it’s bad economics.

Take the new grants for home owners wanting to renovate.

To be eligible, they have to sign a contract with a builder by the end of the year.

But renovations costing $150,000 or more take time to plan.




Read more:
Why the focus of stimulus plans has to be construction that puts social housing first


The plans need to be drawn up, finance approved, and any building and development approvals secured.

Which means that anyone who signs a contract with a builder today was already planning to renovate.

And chances are that many who sign contracts over the coming months have already planned to renovate.

The new grants will also encourage the in-demand tradies to raise their prices.

They’ll add up to a lot of spending for few jobs saved.

Not many more homes

The grants for buying new homes are more likely to support construction jobs. They will encouraging buyers to bring forward purchases.

It’s why in 2008, in response to the global financial crisis, the Rudd government tripled the first home buyer grant to $21,000 for new homes.

There’s no doubt the coronavirus crisis has hit construction hard: in the past three months almost 7% of the industry’s workforce have lost their jobs.

But most industry forecasters expect at least 110,000 homes to be built (and sold) in Australia anyway next fiscal year.

And most of those first home buyers will be eligible for the grants

About 83% who had recently bought their first home in 2018 paid less than $750,000 for it. Of those, about 90% would have satisfied the income tests for the new grants.

That’s a lot of homes that will have to be funded first before HomeBuilder funds the construction of any extra homes.




Read more:
Government to give $25,000 grants to people building or renovating homes


And stiff competition among prospective buyers of homes selling below the $750,000 price cap will force up the prices of those homes.

That’s a big win for developers selling house-and-land packages on the urban fringe.

Perhaps the best that can be said for the scheme is that it probably won’t cost much.

The grants are uncapped, but the government expects it to cost about $688 million for roughly 27,000 grants. And since many of those homes would have been built anyway the scheme won’t support many construction jobs either.

What’d be better

It’d be better to fund the states to build new social housing or refurbish existing homes, as the Rudd government did during the global financial crisis.

Many have forgotten about that scheme because it attracted so little controversy, unlike other of Rudd stimulus programs.

Public residential construction approvals spiked within months of the announcement, and more than half of the homes built went to tenants at risk or already homeless.

Building 30,000 new social housing units today would cost between $10 billion an $15 billion. it would support the building industry, and as important, would help many of the 116,000 Australians who are homeless on any given night.

It might not make for good retail politics, but it would help people who need it. And it would be good economics.The Conversation

Brendan Coates, Program Director, Household Finances, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Government to give $25,000 grants to people building or renovating homes



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Michelle Grattan, University of Canberra

The Australian government will provide eligible owner-occupiers with a grant of $25,000 to build a new home or extensively renovate an existing one.

The scheme – estimated to cost up to $688 million – will not be limited to first home buyers.

Contracts must be entered into between now and the end of the year, with work to begin within three months of the contract date, to maximise the stimulus to an industry set to take a big hit from the pandemic crisis.

The means-tested HomeBuilder scheme will be available to individuals with income up to $125,000 and couples whose combined income is up to $200,000.

It will not be available to companies or trusts, those who are not Australian citizens or people under 18 years of age. Owner builders will not be eligible, nor can the scheme be used for investment properties.

New builds must be for a principal place of residence with a cap on the combined value of house and land of $750,000.

Those renovating their existing home as a principal place of residence will have to be making changes valued between $150,000 and $750,000, with the dwelling worth not more than $1.5 million before the renovation.

The renovation must be “to improve the accessibility, safety and liveability” of the home. It can include a combination of work, such as a kitchen and bathroom renovation.

It can’t be for unconnected additions, such as detached sheds or garages, or for swimming pools, tennis courts or outdoor spas and saunas.

It must be under the supervision of a registered or licensed builder.

Sensitive to comparisons with the Rudd government’s stimulus grants in the global financial crisis, notably the controversial pink batts scheme, the government has listed differences including the limited term of the program, tighter eligibility criteria and expert supervision.

The latest package comes as Wednesday’s national accounts showed the Australian economy went backwards by 0.3% in the March quarter. Annual growth was 1.4%.

Treasurer Josh Frydenberg admitted Australia is already in recession, given the June quarter is expected to be horrendous. A common definition of a recession is two negative quarters.

Frydenberg also announced the government’s promised economic and fiscal update has been delayed, from June until July 23.

He said it would include the response to the review of JobKeeper, which is currently under way. He again flagged the government could cut the $1500 a fortnight payment for those earning less than that before COVID.

Shadow treasurer Jim Chalmers said the delay was a disgrace in these uncertain times.

The government says the housing scheme will help support 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.

The sector has lobbied for special assistance, saying it expects new dwelling starts to fall by half by the end of this year.

The government expects competition for work will keep prices contained.

Frydenberg said that “with dwelling investment expected to decline by around 20% through the June quarter, the HomeBuilder program will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most”.

The scheme will be implemented through the states and territories, which will monitor compliance. The grant will be paid to people when they make their first progress payment.

Prime Minister Scott Morrison said: “Our JobKeeper support has helped the construction sector weather the crisis, now we’re helping fire it up again.

“This is about targeted taxpayer support for a limited time using existing systems to ensure the money gets used how it should by families looking for that bit of extra help to make significant investments themselves.”

Housing Minister Michael Sukkar said “HomeBuilder will not only support the jobs of carpenters, plumbers, bricklayers and electricians on our building sites, it will also support the timber mill workers who produce the frames and trusses and the manufacturing workers who make the glass, brick and tiles for our homes”.

Some days ago, Labor’s housing spokesman Jason Clare said the housing industry was “expected to go off a cliff” and a stimulus package was urgently needed. Labor has also said stimulus should be given to social housing.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Vital Signs: Morrison’s industrial relations peace gambit is worth a shot. Even if it fails, it’s shrewd politics


Richard Holden, UNSW

Australian Prime Minister Scott Morrison this week announced plans for a potential “grand bargain” on industrial relations.

Speaking at the National Press Club, he framed the issue as one of boosting economic productivity:

We must enable our businesses to earn Australia’s way out of this crisis. And that means focusing on the things that can make their businesses go faster.

Rather than directly introducing legislation into the parliament, Morrison’s plan involves creating five “working groups” of union and business advocates to look at issues from simplifying awards and the enterprise bargaining system to the treatment of casual workers and “greenfields” agreements for new enterprises.




Read more:
Morrison government invites unions to dance, but employer groups call the tune


This is shrewd politics. If the working groups find agreement, the government can push the required legislation through parliament with a claim to a mandate. And claim the credit.

If it fails, Morrison can say nothing can happen without business and workers agreeing. So the government avoids blame.

But it may also be canny economics.

Going for broker

Perhaps Morrison has realised his real power is not as an advocate but a broker.

This process might have less in common with Australia’s prices and incomes accords of the 1980s, where unions agreed to limit wage claims, than with the Dayton Accords, the peace agreement that ended the Bosnian War in 1995.

The accords between the Australian Council of Trade Unions and the Hawke and Keating governments between 1983 and 1991 were a response to the wage-price spirals that plagued advanced economies in the 1970s and early 1980s.

High inflation led to large wage claims, which further fuelled inflation. The 1983 accord broke this spiral by guaranteeing wage increases every six months tied to the consumer price index. As I’ve noted previously:

Once people knew that wages weren’t going to gallop ahead of prices, there was less of a reason to raise prices, which put less pressure on wages, and so on.

The Dayton Accords (officially the: General Framework Agreement for Peace in Bosnia and Herzegovina) were brokered by the US administration in Dayton, Ohio, in November 1995 between the presidents of Bosnia, Croatia and Serbia.

Booking a room

The shadow minister for industrial relations, Tony Burke, reacted to Morrison’s announcement by saying:

Let’s be clear: all the government has done so far is book a room. This is not an IR agenda – it’s a series of meetings.

Burke meant this as a criticism, but in fact it might be a virtue. It’s hard to imagine a deal on industrial relations without representatives of employers and employees agreeing. That agreement may be better served by a government acting as a broker rather than pushing its own specific agenda.

There is an emerging school of thought in economics that coordinating beliefs plays a crucial role in reaching value-enhancing deals. Having the participants believe there can be a deal might be the heart of the issue.

That was arguably the role US chief negotiator Richard Holbrooke played in the Dayton Accords, and the role federal industrial relations minister Christian Porter will need to play in this rather different setting.

Very different starting points

That said, the parties don’t agree on all that much – at least as a starting point. ACTU secretary Sally McManus has emphasised that:

We can only secure a better, stronger Australia if working people have permanent, well-paid work and the entitlements that come with it.

The head of the Business Council of Australia (BCA), Jennifer Westacott, says the issue is needing:

… a system that delivers higher productivity, letting people work more effectively, produce more and find new and innovative ways to work.

Can permanence and job security be reconciled with effectiveness and innovation in the workplace? I’m an optimist. But we shall see.

Are the representatives representative?

This possible grand bargain needs to be between employers and employees. Those at the table will be representatives of those groups – namely unions and employer groups such as the BCA and Ai Group.

A crucial question is how representative these representatives are.

As Leigh Sales observed on the ABC’s 7:30 program this week:

The vast majority of Australians aren’t members of unions, only 14% of people are. In this process, shouldn’t workers be represented by other voices that more likely speak for them?

In the private sector, union membership is even lower – about 10%.




Read more:
Three charts on: the changing face of Australian union members


One should ask similar questions of the BCA and Ai Group. For instance, do they represent the views of smaller businesses as faithfully as they do the big ones?

This is crucial because it affects the credibility of any potential deal, and how any benefits are spread. A cosy deal between big business and unions on greenfield construction sites is one thing. A grand bargain that helps workers not in unions and employers across the economy is quite another.

Will it work?

Morrison did frame the issue adeptly in his address. He was clear about the inputs needed to increase the economic pie:

The skilled labour businesses need to draw on, the affordable and reliable energy they need, the research and technology they can draw on and utilise, the investment capital and finance that they can access, the markets they can connect to, the economic infrastructure that supports and connects them, the amount of government regulation they must comply with, and the amount and the efficiency of the taxes they must pay.

Given all that, Australia’s industrial relations system does arguably need reform. And it won’t happen without the key players agreeing to it themselves.

Morrison’s gambit may not work, but it is certainly worth a shot.The Conversation

Richard Holden, Professor of Economics, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison government invites unions to dance, but employer groups call the tune


Anthony Forsyth, RMIT University

Prime Minister Scott Morrison this week proposed a new deal in industrial relations, bringing together the government, employers and unions to agree on reforms to create jobs and lift the economy in the post-CIVD-19 pandemic recovery phase.

“”We’ve booked the room, we’ve hired the hall, we’ve got the table ready,” he said on Tuesday. “We need people to get together and sort this stuff out.”

Comparisons have been made with the “accords” of the Hawke and Keating Labor years between 1983 and 1991.

It’s not the same.

The Morrison government is simply recasting an agenda that business groups have pushed for the past decade, and inviting unions (and other stakeholders) into the room.

The Hawke-Keating accord era

This is a long way from the seven accords agreed between the Hawke-Keating governments and the Australian Council of Trade Unions.

The agreements secured union support for the government’s economic reform program by promising improvements in the “social wage” in exchange for unions curbing claims for pay rises.




Read more:
Australian politics explainer: the Prices and Incomes Accord


As a result, landmark social improvements, including the establishment of Medicare and guaranteed employer contributions to superannuation, were achieved for all Australians.

As the accords wore on, though, unions paid a heavy price as “efficiency” became an element in deciding the merits of claims for higher wages. The last accord, for example, ended centralised wage-fixing and ushered in enterprise bargaining. This did more for business productivity than for employee gains.

The WorkChoices era

The election of John Howard in 1996 buried the accord era. His government embraced an overtly anti-union posture, culminating in the 2006 “WorkChoices” legislation that allowed individual workplace agreements. Howard championed this as giving flexibility to both employers and employees. But it really shifted the balance in favour of employers. The backlash helped end Howard’s reign in 2007.

The Labor government of Kevin Rudd then brought in the Fair Work Act, which reinstituted union-centred collective bargaining.

Since then the business lobby has fought back on two fronts: continuing to campaign for deregulation, and developing strategies (including through litigation) to enable employers to sidestep the Fair Work Act’s collective bargaining provisions.

The success of this approach for many employers largely explains the ACTU’s “Change the Rules” campaign before the 2019 election.




Read more:
Where to now for unions and ‘change the rules’?


Industrial relations has therefore remained hotly contested. Prior to the COVID-19 crisis it was almost like a war of attrition. The Coalition’s Ensuring Integrity Bill exemplifies its aggressive agenda. It would have enabled union officials to be removed from office, and unions deregistered, for minor breaches of workplace laws.




Read more:
‘Louts, thugs, bullies’: the myth that’s driving Morrison’s anti-union push


Lay down your guns

Now the prime minister wants everyone to put down their weapons.

In fact this has already occurred in the past two months, with the government, businesses and unions co-operating over emergency measures to deal with the pandemic.

Unions have agreed, for example, to the removal of award restrictions, enabling changes to business operations and work-from-home arrangements. They pushed hard for the JobKeeper wage subsidy scheme.

But how much more will union leaders be prepared to concede when it comes to considering permanent changes to workplace regulation?

Battleground issues

The scope for consensus is limited, especially given four of the five items on the government’s agenda align with that of business organisations such as the Australian Industry Group.

First, casuals and fixed-term employees.

This will be the most hotly fought area. The federal government is likely to address business concerns about the Federal Court ruling last week that “permanent casuals” have a right to paid leave as well as their casual loading. The likely outcome is a new statutory definition of “casual” to prevent this.

For unions, the court decision shuts down the ability of employers to treat workers as casuals long-term. A possible compromise might involve ensuring casuals have a legal right to convert to permanent employment after 12 to 18 months.

Second, “greenfields” agreements for new projects.

Employers in the resources and construction sectors have long complained they are compelled to negotiate with a union for new project agreements. Unions are unlikely to be willing to give this up.

Third, enterprise bargaining.

Employer groups complain the Fair Work Commission’s strict approach to the “better off overall test” and other technical requirements make reaching enterprise agreements too difficult. The unions contend some employers have perverted enterprise bargaining through tactics such as getting carefully selected employees to vote for substandard agreements. There is little room for common ground here.

Fourth, award simplification.

Employer groups have argued that wage-theft scandals are really due to awards being too complex. Yet we have gone from several thousand federal and state awards to 122 awards (one for each industry).




Read more:
All these celebrity restaurant wage-theft scandals point to an industry norm


It is hard to see unions agreeing to (for example) removing leave entitlements from awards when they are arguing in a case before the Fair Work Commission for pandemic leave to be included in awards.

Fifth, compliance and enforcement.

This is the one area where employee gains might be achieved, if the government makes good on its commitment to make systemic underpayment of workers a criminal offence.

Overall, however, the Morrison government’s agenda is skewed towards the reform ambitions of the business community without offering any equivalent of the social wage benefits of the original accord.

Unions may well regard his peace proposal as a request to surrender. They won’t, of course, and will try to ensure their concerns about wage stagnation and exploitation of workers in the gig economy form part of the coming discussions.The Conversation

Anthony Forsyth, Professor of Workplace Law, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison wants unions and business to ‘put down the weapons’ on IR. But real reform will not be easy.



Lukas Coch/AAP

Ray Markey, Macquarie University

In a bid to repair the economy, Prime Minister Scott Morrison has announced an industrial relations overhaul.

Business groups and unions will be brought together to try to change a system that Morrison says is “not fit for purpose”.

This is a positive step after years in which industrial relations has substantially divided interested parties. As Morrison told the ABC on Wednesday, “we’ve got to put down the weapons”.

But reaching meaningful agreement will not be simple or straightforward.

Accord 2.0?

Morrison’s move has invited comparisons with the Accord between the Labor Party and the ACTU when Bob Hawke became prime minister in 1983.

This was the basis for economic reform built on wide consensus between employers, unions and government.

However, there are many differences between the special circumstances of the Accord and now, which may indicate the chances of success for the current initiative.




Read more:
Australian politics explainer: the Prices and Incomes Accord


Hawke had the advantage of high levels of trust from both unions and employers, based on his years as a successful negotiator as ACTU president and industrial officer.

While Morrison talked positively about to the “constructive approach” between unions and employers during the coronavirus pandemic, he does not have any such record of trust to build on.

Another difference with the Accord is that in the 1980s, the industrial relations system was more centralised. So, employer organisations and the ACTU enjoyed greater coverage and authority among their own constituents to bring them to an agreement.

One indication of that difference now is the recent Jobs Protection Framework negotiated between the National Tertiary Education Union and the Australian Higher Education Industrial Association.

It has fallen over as a sectoral agreement because many universities have refused to participate and it has attracted criticism among some union members.

What needs to be fixed in 2020

Unions, business and government all agree that reform of the current system is needed. Finding common ground on what those changes are will be more difficult.

ACTU secretary Sally McManus says she wants to make jobs more secure for workers.
Joel Carrett/AAP

Morrison has announced five working groups, to be chaired by Industrial Relations Minister Christian Porter. The groups will look at award simplification, casual and fixed-term employment, greenfield projects, and compliance and enforcement for wages and conditions.

Most of the working group topics relate to employer groups’ reform agenda.
The Business Council of Australia has advocated for greater flexibility and simplification of the award system for the economy to successfully rebuild.

Employment relations professor David Peetz warns that this is code for shrinking the award safety net. Unions are likely to interpret this similarly.

Unions may be more interested in simplification of the enterprise bargaining system to benefit workers. They are concerned with the ease with which employers have increasingly terminated agreements and moved employees onto lower paid awards.

Casual workers

The casual workforce is likely to be a contentious area for discussion.

The Australian Industry Group has called for tighter legislative definition of casual worker status, after recent court decisions granted leave for long-term casuals.

Ai Group chief executive Innes Willox is concerned about the definition of workers.
Lukas Coch/AAP

Meanwhile, the ACTU has long sought a general right of conversion to permanent employment for long-term casuals of six to 12 months standing, whom they consider to be exploited.




Read more:
Australian economy must come ‘out of ICU’: Scott Morrison


Notwithstanding the casual loading for casual workers, they earn less on average than permanent employees.

There may be grounds for agreement on this issue. Employers would need to concede a formula for long term casuals’ easy conversion, if they choose, to permanent employment. Unions would need to concede no leave entitlements for employees who choose to remain casuals.

Greenfields sites

Greenfields sites – which involve a genuine new business, activity or project – have been a battleground in the Fair Work Commission for years.

Greenfields agreements on large construction sites have enabled employers to reach enterprise bargaining agreements with a small number of employees before most workers are hired. Workers who are hired when the project gets fully underway are then bound by the agreement.

Compliance and enforcement

There may be more common ground over improved compliance and enforcement for wages and conditions. Employers and unions have condemned major cases of underpayment recently uncovered by the Fair Work Ombudsman.

However, better compliance may be difficult to reconcile with the government and employers’ desire for less regulation.

Where to now?

Unions and employers have indicated willingness to participate in good faith, despite the huge challenges they face. But the omens are poor.

There is already disagreement over the Fair Work Commission’s annual minimum wage decision, due in July.

The ACTU is arguing for a 4% increase, angering business groups.

Industrial Relations Minister Christian Porter will chair five working groups to try and overhaul the IR system.
Joel Carrett/AAP

The Australian Chamber of Commerce and Industry has argued the minimum wage should remain frozen until at least mid-2021. It has even cited a precedent of the 10% reduction awarded on the basis of capacity to pay during the Great Depression.

The fact that wages growth had been at record lows before the COVID-19 crisis will not help matters.




Read more:
View from The Hill: Can Scott Morrison achieve industrial relations disarmament?


There is also a serious question as to whether industrial relations reform is the right place to be looking to reboot the economy.

Former top public servant Michael Keating was head of the Employment, Finance and Prime Minister’s departments during the Accords era.

Writing last month, he said Australia’s industrial relations regulation was more flexible than that in the United States, and the reforms of the past 25 years have had little substantial impact on productivity, labour market adjustment, wages growth or industrial disputation.

Keating also warned that industrial relations reform is mainly “camouflage for lower wages, which is the last thing this economy needs right now”.The Conversation

Ray Markey, Emeritus Professor, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: Can Scott Morrison achieve industrial relations disarmament?



Lukas Coch/AAP

Michelle Grattan, University of Canberra

Scott Morrison has indeed taken to heart that adage about not wasting a crisis. He insists he is going to put to advantage the opportunity brought by these most unfortunate circumstances.

His plan for a government-employer-union-community effort to reform this country’s industrial relations will, if it comes off, be a substantial achievement (although the actual magnitude would depend on just how much was done).

Politically, success would give Morrison something positive for the next election, which will be fought in the testing circumstances of likely high unemployment and sectors of the economy still struggling.

Labor would be outflanked.

If Morrison’s effort ends as a busted flush, he’ll say he tried and move on to something else.

Despite his pragmatism, Morrison aspires to be remembered as a leader who delivered reform. Remember when as treasurer under Malcolm Turnbull, he pushed strongly to change the GST and talked up his mission?

In Tuesday’s address to the National Press Club, he was the ambitious consensus prime minister, declaring “we’ve booked the room, we’ve hired the hall”, to get everybody to the table in pursuit of better industrial relations arrangements.

The present system had “retreated to tribalism, conflict and ideological posturing,” he said. It had “settled into a complacency of unions seeking marginal benefits and employers closing down risks, often by simply not employing anyone”.

As a “good faith” gesture, the government won’t pursue another Senate vote on its controversial Ensuring Integrity bill which would give the Federal Court the power to cancel the registration of a union or an employer organisation and introduce a public interest test for the amalgamation of such organisations. The Senate rejected the legislation last year.

In his speech Morrison announced a structure for talking, and broad topics to talk about. Industrial relations minister Christian Porter will chair five groups – they will consider award simplification; enterprise agreements; casuals and fixed term employment; compliance and enforcement, and greenfield agreements for new enterprises.

“Membership of each group will include employer and union representatives, as well as individuals chosen based on their demonstrated experience and expertise and that will include especially small businesses, rural and regional backgrounds, multicultural communities, women and families,” Morrison said.

The process will run until September. “It will become apparent very quickly if progress is to be made,” he said.

Indeed, it is not as if Porter is starting from scratch. After being appointed industrial relations minister following the 2019 election, Porter set up a process of IR reform which has produced several discussion papers and consultations on a range of issues.

A frustrating feature of the Coalition government, if you take it as a whole from its election in 2013, is its failure to finish what it starts.
Key reform processes have previously begun but run up dry gullies or been overtaken.

For instance Tony Abbott commissioned white papers on taxation and federalism. After overthrowing Abbott, Turnbull aborted the white papers. Turnbull in turn flirted with tax change, not just possible GST reform but even the states raising their own income tax. Tax reform as well as federalism are among the issues Morrison has in his sights.

As for Morrison’s declared determination to get a better system for training and skilling workers for the jobs of the present and the future – we have heard this from governments of both stripes for a very long time.

Of course, the past isn’t necessarily a guide to the future, and Morrison’s handling of the pandemic points to his adaptability as a leader.

His agenda appears broad and ambitious (although we can’t be definitive ahead of the detail). He has talked skills and industrial relations this week, but there’s also deregulation (another recurring Coalition theme) and energy as well as tax and the federation.

Admittedly it is not a matter of all-or-nothing. Worthwhile but limited changes would be better than not making the effort.

The extent to which Morrison succeeds will depend on a number of factors.

On industrial relations, it is whether employers and unions put the interests they share above those that divide them – whether each side will be willing to give ground for a larger common cause. The chance of agreement will differ according to the issue.

ACTU secretary Sally McManus responded on Tuesday: “The ACTU will measure any changes to industrial relations law on the benchmarks of: will it give working people better job security, and will it lead to working people receiving their fair share of the country’s wealth?”

They could be challenging benchmarks.

A co-operative discussion will go against the instincts of some of the Coalition’s anti-union hardliners, and be resisted by some in McManus’s constituency.

Asked his message to people in his own party who might see this as an opportunity to finally neuter the union movement, Morrison said: “I think everybody’s got to put their weapons down on this”.

On making progress with reforms involving federal-state relations, including the training system, the attitude of the states will be crucial.

Morrison lauds the national cabinet, and the government contrasts it with the more bureaucratic Council of Australian Governments processes.

But national cabinet and COAG are the same people. The difference is national cabinet is operating in a crisis and totally focussed on that, and on the moment.

COAG deals with everything, and is mostly putting in place measures for the longer term. Inevitably, interests will diverge and corners are harder to cut (which doesn’t mean COAG’s working can’t be usefully shaken up).

Even if national cabinet continued, on some of these reform measures the states would probably behave more like they were in COAG – that is, there’d be more “process”.

Finally, there’s whether a crisis really does produce a climate conducive to reform.

It certainly concentrates attention, turns the page, sweeps away most else. (Asked on Tuesday about the timetable for the religious freedom legislation and the proposed anti-corruption body, Morrison had no answers. It was almost as though they were from another era.)

The road out of this crisis will be very tough for many people. Extensive reform is often painful. Whether the Australian public will be in the mood for it as they cope with the aftermath of such a trauma is an open question.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: JobKeeper $60 billion snafu like your house builder revising quote: Morrison


Michelle Grattan, University of Canberra

Campaigning in Eden-Monaro with just-selected Liberal candidate Fiona Kotvojs, Scott Morrison on Sunday turned folksy to present the upside of the $60 billion JobKeeper forecasting snafu.

“If you’re building a house and the contractor comes to you and says it’s going to cost you $350,000 and they come back to you several months later and say, well, things have changed and it’s only going to cost you $250,000, well, that is news that you would welcome.”

Two things happened with the JobKeeper estimate.

First, treasury made wrong assumptions about the likely numbers and cost. The about 6 million employees anticipated to access the program has shrunk to some 3.5 million, so the $130 billion cost has fallen to $70 billion.

Second, The Tax Office didn’t spot treasury’s bad forecasting for a long time because it failed to pick up that its own data was flawed due to some employers filling in their forms wrongly.

Treasury says it erred in part because things didn’t get as bad as it had expected. Also, there was the “inherent uncertainty” in estimating the take-up of a demand-driven program.

It’s notable however, that writing in The Conversation in late April, Melbourne University economists Roger Wilkins and Jeff Borland pointed to a disparity between the drop of 2.6 million full time jobs implied by the Reserve Bank and the 6.6 million jobs their calculations suggested treasury was preparing to fund under JobKeeper.

Given this big discrepancy, one might have thought the treasury bureaucrats would have kept a careful eye on the numbers. But they were falsely reassured by the Tax Office’s incorrect figures.

Presciently, the academics wrote: “Forecasts – even those based on the most relevant and up-to-date information – can be wrong. This isn’t a criticism. Making forecasts is hard.

“But it might be that 6.6 million turns out to be an overestimate.”

They argued that “if so, it creates an opportunity.

“It would allow JobKeeper to be extended to some of the workers who at present miss out, among them casual employees in their job for less than 12 months and the temporary visa holders who are currently excluded.”

This is just what the government doesn’t want to do.

Inevitably the huge looming underspend has intensified the widespread calls for JobKeeper to be broadened.

Asked on Sunday about using the money to extend the program to more people or beyond September, Morrison replied, “If the suggestion is that we should be increasing borrowing more than would be needed to deliver the program that we’ve designed and [are] delivering, well, the answer is no”.

But Morrison also said JobKeeper was not the only programs the government had. He noted hard-pressed sectors such as tourism, the arts and media, and housing. He said, “we will continue to target our support and it will become more targeted as time goes on.”

“There are many challenges that the economy will face beyond September. We know that and there are particular sectors that will feel this for longer, particularly those who are particularly dependent on international borders. We understand that and we’ll be considering that carefully.”

Morrison is leaving the way open for further assistance, but would seem to prefer not to give it via substantial changes to JobKeeper.

Still, there has been speculation about JobKeeper being phased out rather than having the proposed hard finish in late September. And there is a review of it reporting in June. So the government has wriggle room.

Whatever the mechanism, there’ll be a lot of pressure to extend more funding to the tourist industry in the context of the Eden-Monaro by-election, especially with Morrison declaring that “job-making is honestly what this byelection is going to be about”.

The windfall also puts pressure on over JobSeeker.

A poll released by The Australia Institute, a progressive think tank, found 59% of Eden-Monaro voters want a permanent increase to the JobSeeker payment (all or some of the Coronavirus Supplement of $275 a week retained). The poll was done May 12 of 978 residents. At present the payment is due to snap back to the old level at the end of September – $282.85 for a single recipient without dependants, roughly half of what they are getting now.

The opposition has leapt on the massive forecasting/monitoring snafu to call for Treasurer Josh Frydenberg to appear before the Senate committee that is examining the government’s COVID measures.

But Morrison on Sunday ruled this out, and Frydenberg can’t be compelled.

While the government under the Westminster system must accept responsibility for the incorrect forecasting and poor monitoring – and Morrison did so – it is the officials that have the detailed information about how it went wrong.

Morrison said he had “a great deal of confidence in our public service and the officials”. He wouldn’t be wanting to say anything else given, as he noted, “there are many, of course, who live here in the Eden-Monaro electorate”. Indeed it has the highest proportion of government workers of any electorate outside the ACT.

The Tax Office has admitted its attention was on making the early payments and it didn’t have its eyes on the estimates of numbers.

But treasury? While it has given some reasons, there are surely more questions, in light of what seemed obvious to the academics weeks earlier.

The value of having the Senate committee is it can get quickly from the public servants a fuller explanation of what was not a black hole but a over-inflated balloon.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coalition gains Newspoll lead as Labor ahead in Eden-Monaro; Trump’s ratings recover



AAP/Mick Tsikas

Adrian Beaumont, University of Melbourne

The latest Newspoll, conducted May 13-16 from a sample of 1,500, gave the Coalition a 51-49 lead, a one-point gain for the Coalition since the previous Newspoll, three weeks ago. Primary votes were 43% Coalition (up two), 35% Labor (down one), 10% Greens (down two) and 3% One Nation (down one). Newspoll figures are from The Australian.

Scott Morrison fell slightly from the best net approval for a PM since Kevin Rudd in 2009: 66% (down two) were satisfied with his performance, and 30% (up two) were dissatisfied, for a net approval of +36, down four points.

Anthony Albanese had a net approval of +7, down four points. Morrison led Albanese as better PM by 56-29 (56-28 previously).

In my previous Newspoll article, I wrote that it was abnormal to show a two party tie while the PM had a +40 net approval. While these measures are now in better agreement, there is still a large gap between the Coalition’s two party vote and what would be expected based on Morrison’s ratings.




Read more:
Labor gains in Newspoll despite Morrison’s continued approval surge; Trump’s ratings slide


A plausible explanation is that decisions on the coronavirus crisis are being made by the “national cabinet” that involves the premiers, three of which are Labor. As the section below shows, five of the six premiers beat Morrison’s +40 Newspoll net approval three weeks ago.

Involving the premiers in decision-making has made the decisions appear more bipartisan, and probably inhibited the Coalition’s voting intention gains.

In additional Newspoll questions, 72% were more concerned with moving too quickly to relax coronavirus restrictions, and just 24% were more concerned with moving too slowly.

Newspoll repeated coronavirus questions last asked six weeks ago. 78% were worried and 19% confident about the economic impact (84-14 worried previously). On preparedness of the public health system, it was 69-29 confident (57-41 worried previously). On public information, 80-18 confident (67-32 confident).

On these three issues, there was a solid rise in approval of federal and state governments’ management. On the economy, 60% were satisfied and 24% dissatisfied (47-33 satisfied previously). On the health system, 78-15 satisfied (59-28 satisfied previously). On public information, 82-13 satisfied (75-20 previously).

Premiers’ sky-high Newspoll ratings

The day after the April 27 federal Newspoll, approval ratings of the premiers were released. WA Labor Premier Mark McGowan had the highest ratings, with 89% satisfied and just 6% dissatisfied for a net approval of +83. This is likely a record high in any poll for any Australian prime minister or premier.

Tasmanian Liberal Premier Peter Gutwein was at 84% satisfied, 11% dissatisfied (net +73). Victorian Labor Premier Daniel Andrews was at 75% satisfied, 17% dissatisfied (net +58). NSW Liberal Premier Gladys Berejiklian had 69% satisfied and 23% dissatisfied (net +46). SA Liberal Premier Steven Marshall had 68% satisfied and 21% dissatisfied (net +47).

Queensland Labor Premier Annastacia Palaszczuk, who faces an election in October, performed worst of the premiers with 55% satisfied and 39% dissatisfied (net +16).

Samples for these state Newspolls were about 520 for each mainland state, plus 309 in Tasmania. Figures from The Poll Bludger.

Eden-Monaro seat poll: 51-49 to Labor

After Labor member Mike Kelly’s resignation, a byelection will be required in Eden-Monaro on a date to be advised. In 2019, Kelly held Eden-Monaro by just a 50.9-49.1 margin. That narrow margin and Kelly’s absent personal vote gives the Liberals some chance of gaining Eden-Monaro at the by-election.

As reported by The Poll Bludger, a uComms robopoll of Eden-Monaro, conducted for the left-wing Australia Institute, gave Labor a 51.1-48.9 lead. Primary votes were 39.8% Labor, 34.3% Liberal, 7.3% National, 6.7% Greens and 6.5% One Nation. The poll did not give candidate names, just parties.

Seat polls are unreliable, and there is a long time to go until the byelection.

Trump’s ratings recover despite terrible jobs report

This section is an updated version of an article I wrote for The Poll Bludger, published on Friday.

In the FiveThirtyEight poll aggregate, Donald Trump’s ratings with all polls are 44.0% approve, 51.7% disapprove (net -7.7%). With polls of registered or likely voters, Trump’s ratings are 44.2% approve, 52.1% disapprove (net -7.9%). Since his lowest point of the coronavirus crisis, Trump has recovered about two points on net approval.

In the RealClearPolitics average of national polls, Joe Biden’s lead over Trump has fallen to 4.5%, down from 5.9% three weeks ago. There have been two recent polls of key swing states. Biden leads Trump by three points in a Wisconsin Marquette poll. The previous Marquette poll, in March, also had Biden leading by three. Biden leads Trump by six points in a recent Florida poll.

On May 12, byelections occurred in two federal House of Representatives seats. While the Republicans won by 57-43 in Wisconsin’s Seventh, this was positive for Democrats, as Trump won this district by over 20 points in 2016.

The Republicans’ win by a big 55-45 in California’s 25th is much worse for Democrats as the district voted for Hillary Clinton by almost seven points. This was the first gain of a Californian seat for Republicans since 1998. The 2016 presidential figures are from a Daily Kos downloadable spreadsheet.

During the 2016 campaign, whichever candidate drew the most attention would generally suffer in the polls. Clinton’s lead widened after Trump’s “grab em by the pussy”, but narrowed after her own “deplorables”, and when the FBI reopened its investigation into her emails.

Until recently, Trump was conducting daily coronavirus briefings. The media focus on these briefings may have contributed to his ratings slide. Recent media attention on Tara Reade’s sexual assault allegation against Biden from 1993 could have damaged him.

In the 2016 exit poll, those who disliked both Clinton and Trump voted for Trump by 17 points. CNN analyst Harry Enten says that in 2020, Biden is crushing with “double haters”, but Trump is crushing with those who do not dislike either candidate. In 2016, double haters were a larger portion of the electorate than now, while those who dislike neither candidate has grown.

There has been a recent decline in US coronavirus cases and deaths. If much of the economy can be reopened without a renewed surge in cases, that would be good news for Trump, enabling him to brag about a strong recovery before the November election. I cannot see Trump winning if the current terrible economic situation continues until the election.

A terrible US jobs report

The April jobs report was released on May 8. 20.5 million jobs were lost and the unemployment rate jumped 10.3% to 14.7%. That is the highest unemployment rate and the biggest one-month change in the history of this series. This data goes back to January 1948, so it does not include the Great Depression. The previous highs for unemployment were 10.8% in November 1982, and 10.0% in October 2009.

The employment population ratio – the percentage of eligible Americans that are employed – crashed 8.7% in April to just 51.3%, far lower than in the global financial crisis, during which the lowest employment ratio was 58.2% in June 2011. As the unemployment rate excludes those not participating in the workforce, I prefer the employment ratio as a summary statistic. In Australia’s April jobs report, the employment ratio was 59.6%, much higher than the US.

In January, before the current crisis, the US employment ratio was at 61.2%, the highest since November 2008.

The one positive in this jobs report was that hourly wages rose $US 1.34 to $US 30.01. But this was the result of so many low-income jobs being shed. The aggregate weekly payrolls (weekly wages times number employed) fell 10.9% in April.The Conversation

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

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Grattan on Friday: Descending the COVID mountain could be hazardous for Scott Morrison


Michelle Grattan, University of Canberra

Just a year ago, Scott Morrison was on the cusp of achieving what most had believed impossible. His ability as a campaigner, aided by the failure of his opponent to connect with the Australian public and Labor’s over-heavy policy bag, brought him the unexpected May 18 election victory.

Now he is riding another wave of success. But it’s thanks to the strangest and scariest of circumstances.

Morning Consult polling published in the May 9 issue of The Economist shows Morrison, with an approval rating of 64%, heading a selection of world leaders. Behind him are Trudeau (Canada), Merkel (Germany), Johnson (UK), Modi (India), Macron (France), AMLO (Mexico), Trump (US), Abe (Japan) and Bolsonaro (Brazil).

It’s a hell of a way to become top of the political pops.

Without the pandemic, Morrison would likely be going into the second year of this parliamentary term in a very sub-optimal position.




Read more:
Grattan on Friday: The delicate art of political distancing during the pandemic


Voters would remember the past year more for his shocker performance during the bushfires, the “sports rorts” scandal and the controversy around minister Angus Taylor than for positive achievements.

In dealing with the COVID crisis, Morrison has succeeded (so far) because of his extreme pragmatism (the government’s huge spend defies its ideology), a willingness to listen, and his ability to learn from mistakes.

He heeded the health experts – though he balanced their advice with his own economic orientation (hence his rejection of the aim of eliminating the virus). In crafting the relief package he heeded Treasury advice.

Having been frustrated by the lack of federal government powers during the fires, and aware that, similarly, in the COVID crisis power overwhelmingly would rest with the states, he established the national cabinet to maximise Canberra’s clout.

He became a devotee of consensus politics, even when that meant embracing disagreement.

He’s used his communications skills to the maximum, and worked hard at switching from arrogance to empathy.

Every news conference, of which there are many (watched live by quite a few of the public) opens with a carefully crafted homily, which often has the feel of a sermon.

These are designed to connect, exhort and set a tone. (“This is a tough day for Australia, a very tough day. Almost 600,000 jobs have been lost,” he began his Thursday press conference about the horrifying figures that will be followed by even worse numbers.)

But extremely difficult as it has been, managing the “hot” stage of this crisis is likely easier than navigating the journey out which, at least for the foreseeable future, will have the virus lurking as activity steps up. As Boris Johnson said, charting his government’s way ahead, “it is coming down the mountain that is often more dangerous”. (He was echoing a similar line from Jacinda Ardern.)

If we think of the parliamentary cycle, where will Morrison be in May 2021, when (at most) the election will be 12 months away?

The unemployment queue will be shortening but still long. Many businesses, especially small ones, will have disappeared. There’ll have been stoushes about the government’s winding back its JobSeeker and JobKeeper programs, and the free child care it is currently providing. Perhaps it will have been forced to modify those wind-backs in some respects.

Treasurer Josh Frydenberg’s budget of October this year would have contained a massive deficit for 2020-21 (Deloitte estimates it at more than $131 billion), after a likely even bigger outcome for 2019-20. The government would be producing a 2021 budget with a deficit, on Deloitte’s forecast, of more than $51 billion for 2021-22.

By May 2021, the government will be having a stab at reforms, the nature and extent of which are at this point unclear, probably even to it. Indeed, Morrison needs to start managing expectations; while every parrot (to adopt a Keatingism) might be squawking about reform, there are no silver bullets.




Read more:
First stage of ‘road back’ will boost monthly GDP by $3.1 billion and jobs by 252,500: Frydenberg


Regardless, some or much of whatever the government does will be contested, by the opposition and by some stakeholders.

If proposals involve political losers, there’ll be blow back. On the other hand, there may also be disappointment from some, especially in business, that the reform agenda hasn’t gone far enough, and concern it doesn’t have sufficient heft to adequately stimulate growth.

To implement reforms, many of which lie in the remit of the states, the co-operation of the premiers will be needed. But political differences are likely to constrain this, even if the national cabinet were to be kept going in some form.

A wild card is whether the trade dispute with China gets worse in coming months. This is of course about a lot more than trade. It will be a serious economic problem if China is determined to punish Australia. Strong exports are being relied on to help us get through the crisis.

Anthony Albanese this week delivered Labor’s broad principles for Australia’s economic recovery. His main message was that we must not just “return to as we were”. Issues such as the excessive casualisation of jobs and jobseekers stuck in poverty had to be addressed, he said.

In short, Albanese is arguing the lessons of the pandemic feed into Labor’s advocacy of a fairer, better society. It was familiar if worthy territory, but with little evidence of any transformational ideas from the opposition.




Read more:
Let’s “SnapBack” to better society with more secure jobs: Anthony Albanese


The impending by-election in the Labor-held seat of Eden-Monaro will provide an early test of whether Morrison’s good performance over the virus translates into electoral reward. Albanese, however, has more at stake in this byelection than Morrison.

A loss would be a major knock to him personally and to morale in Labor, which has inevitably struggled on the sidelines during the crisis. It would reduce his authority with his colleagues, and sharpen his critics.

Assuming the ALP holds Eden-Monaro, Albanese in the coming two years has to do what Bill Shorten could not: that is, persuade people they can see him as prime minister. Given all the advantages of incumbency, and Morrison’s salesmanship skills, that’s harder than it might sound.

On the other hand, the unprecedented circumstances could as easily assist Labor as help the government.

As an election pitch, Morrison may be able to say, “look how well we handled the health crisis, supported so many people through the recession/depression, spurred economic recovery, and are now repairing the budget”.

But Labor may be able to counter, “Look how many people are still on the scrap heap, especially the young, in an economy where growth is still struggling, too much work is insecure, and some industries – such as tourism – can’t get out of the doldrums”.

Whether voters remember the disasters missed or mitigated, and believe the Coalition is the best manager in bad times, or they are preoccupied with the country’s continuing pain and blame the government for it, could determine the result of the election due early 2022.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Let’s “SnapBack” to better society with more secure jobs: Anthony Albanese


Michelle Grattan, University of Canberra

Anthony Albanese says Australia must use the pandemic experience to move to a more resilient society, creating more permanent jobs and revitalising high value manufacturing.

In his fifth “vision statement”, delivered against the background of the government foreshadowing an extensive post-crisis reform agenda, Albanese is giving a broad outline of Labor’s priorities for change.

The Monday speech, issued ahead of delivery, comes a day before parliament resumes for a three-day sitting expected to be more combative than the previous two one-day sittings. It also precedes Josh Frydenberg’s economic update on Tuesday – the day the treasurer was, pre-pandemic, due to deliver the budget, now delayed until October.




Read more:
Grattan on Friday: The delicate art of political distancing during the pandemic


Referring to the government’s “SnapBack” terminology, Albanese says: “Let’s not SnapBack to insecure work, to jobseekers stuck in poverty, to scientists being ignored.”

“It’s no time for a ‘SnapBack’ to the Liberal agenda of cutting services, suppressing wages and undermining job security.

“This pandemic has shown that Labor’s values of fairness and security and our belief in the power of government to shape change to the advantage of working people are the right ones.

“A constrained fiscal position does mean difficult choices. But a reform agenda that doesn’t work for all Australians isn’t one we should pursue”.

Albanese says Labor has been constructive during the crisis, not allowing “the perfect to be the enemy of the good”; he contrasts its approach with the Coalition’s negativity against the Labor government during the global financial crisis.

While Australians have been getting through the crisis together, it has been tougher for some than others, including those who have lost jobs and businesses, he says.

“Sharing the sacrifice to get through the crisis together has to mean working to secure a recovery in which no one is left behind.

“We have to be clear in recognising that those with the least, have suffered the most through this crisis – something that must change.

“It’s critical that we are still saying , ‘we’re all in this together’, after the lockdown has come to an end,” Albanese says.

“We must move forward to having not just survived the pandemic, but having learned from it.

“To secure a more resilient society, given just how quickly things can change, through no fault of anyone.

“To better recognise the contributions of unsung heroes, like our cleaners, supermarket workers and delivery workers. To honour our health and aged care workers.

“To recognise that young people have done more than their share.

“Young people deserve better than an economy and society that consigns them to a lifetime of low wages, job insecurity, and unaffordable housing.

“We must ensure that what emerges is a society that no longer seems stacked against them, or denies them the opportunity and economic security of older generations”.

Albanese says this is a once-in-a-political lifetime event that “creates once-in-a-century opportunity to renew and revitalise the federation” and “a once-in-a-generation chance to shape our economy so it works for people and deepens the meaning of a fair go”.

“We must build more permanent jobs, an industrial relations system that promotes co-operation, productivity improvements and shared benefits,” he says.

“We must revitalise high value Australian manufacturing using our clean energy resources.”

He also urges nation building infrastructure including high speed rail and the local construction of trains; a decentralisation strategy including restoring public service jobs in agencies such as Centrelink that deliver services to regional areas; a conservation program to boost regional employment; and governments working with the private sector and superannuation funds to deliver investment in social and affordable housing.

“A housing construction package should include funding to make it easier for essential workers to find affordable rental accommodation closer to work.”

Albanese says that “too much of the risk in our economy has been shifted onto those with the least capacity to manage in tougher times.

“The broadest burden has been put on the narrowest shoulders.

“Our economy has become riskier, and we need to think through what that means for us all.

“We need to realise that a good society can’t thrive when the balance between risk and security falls out of step.”

Albanese says there needs to be an emphasis on growth, “because only inclusive economic growth can raise our living standards.

“We need to put more emphasis on secure employment – especially for the next generation of younger workers who nowadays have little idea of the meaning of reliable income or holiday pay”.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.