Australia’s march towards corporatocracy


Michael West, University of Sydney

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

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

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

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

How will government look in 20 years?

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

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

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

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

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

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

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

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

Is government captive to big business?

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

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

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

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

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

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

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

The multinationals’ hidden hand

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

The Conversation

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

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

US president shoots the messengers. SAD!


Mark Beeson, University of Western Australia

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Conversation

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

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

How changing times made Australia’s political leaders more disposable


Rodney Tiffen, University of Sydney

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

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

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

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

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

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

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

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

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

Leadership is increasingly temporary


New South Publishing

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

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

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

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

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

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

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

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

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

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

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

The rise of partyroom coups

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

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

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

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

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


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

The Conversation

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

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

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


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

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

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

What’s being proposed?

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

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

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

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

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

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

Definition disputes

Defining small business goes beyond an academic debate.

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

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

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

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

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

What small businesses actually need

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

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

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

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

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

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

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

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

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

The Conversation

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

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

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


Narelle Miragliotta, Monash University

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

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

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

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

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

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

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

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

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

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

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

Consequences of the deal for the Liberals

The preference agreement carries some risk for the Liberals.

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

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

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

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

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

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

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

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

The Conversation

Narelle Miragliotta, Senior Lecturer in Australian Politics, Monash University

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

One Nation has now been ‘normalised’ in the Liberals’ firmament of political players


Michelle Grattan, University of Canberra

The decision by the Western Australian Liberals to do a preference deal with One Nation will bring some ripples for Malcolm Turnbull.

The WA Liberals have their backs against the wall – for them it’s a matter of the Barnett government desperately trying to survive against the Labor tide.

The embattled premier, Colin Barnett, said the move was “unusual, but it is a practical, pragmatic decision by the Liberal Party, because what we’re out to do is to retain government”.

And as Liberal senator Linda Reynolds told Sky: “One Nation has got a lot of support here in Western Australia”.

But inevitably, not just because of One Nation’s policies but because of the history of the Liberals’ attitude to the controversial party, the WA embrace will be challenging for Turnbull to handle. When he campaigns in the state poll, he’ll have to deal with questions about it.

The deal harms the WA Nationals who, though a different beast to their eastern cousins, and in an alliance rather than a coalition with the state Liberals, are nevertheless definitely part of the Nationals’ “family”.

Under the deal, as reported by the WA Sunday Times, the Liberals would preference One Nation above the Nationals in the upper house regional seats, in return for One Nation preferencing against Labor in the lower house. This could cost the Nationals seats and help One Nation to win the balance of power in the upper house.

Deputy Prime Minister and Nationals leader Barnaby Joyce observed cryptically on Sunday that: “Always as times grow cold … new friends are silver but old friends are gold”. It’s a fair bet it won’t be his last word on the subject. In response to earlier talk of the plan he predicted it would bring “another blue in WA”.

The WA deal will only be the start of the story. In Queensland the latest Galaxy poll has One Nation on 23% at state level, with an election likely later this year.

Federally, the Liberals are running the line that Hanson and her party are different these days.

Cabinet minister Arthur Sinodinos told the ABC on Sunday: “They are a lot more sophisticated; they have clearly resonated with a lot of people. Our job is to treat them as any other party.

“That doesn’t mean we have to agree with their policies. When it comes to preferencing, we have to make decisions – in this case a state decision, not a federal decision – based on the local circumstances.”

Compare the tone to Turnbull’s attitude before the federal election when he was asked whether he’d agree Pauline Hanson was a “known quantity in Australian politics” and “can you rule out negotiating or horse-trading with her”.

“Pauline Hanson is, as far as we are concerned, not a welcome presence on the Australian political scene. You’ve got to remember she was chucked out of the Liberal Party,” he said.

As soon as Hanson arrived in parliament with her Senate team Turnbull changed his tune. They had talks. Hanson was chuffed. When Turnbull was recently asked about the mooted WA preference deal he dodged the questioning but did note that federally: “We respect every single member and senator”.

One also has to remember that thanks to Turnbull running a double dissolution, Hanson won four Senate seats and a significant slice of the upper house balance of power.

In an ordinary Senate election she would have ended up with just her own seat. Turnbull would argue the double dissolution has made it easier to get legislation through – even though it is a tortuous process that will bring its failures – but in terms of boosting Hanson’s clout and profile the cost has been significant.

Even if she had had only one Senate seat One Nation might have surged in WA and Queensland, but her federal weight has helped – regardless of the antics of her now ex-WA senator Rod Culleton, who has been tossed out of the parliament.

One Nation, because of its power, has now been “normalised” in the Liberals’ firmament of political players, something likely to stick in the craw of their more “small-l” supporters. The Liberals are afraid of the populist party, but the days of denouncing it holus-bolus are gone.

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The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Queensland Galaxy: One Nation surges to 23%<


Adrian Beaumont, University of Melbourne

A Queensland Galaxy poll has One Nation surging to 23%, up 7 points since early November. One Nation’s gains have come at the expense of both major parties, with the Liberal National Party (LNP) on 33% (down 4), Labor on 31% (down 4), and the Greens steady on 8%.

While Labor maintains a steady 51-49 two party lead, the high non-major party vote makes this result a guesstimate. No fieldwork dates or sample size are given, but this poll was presumably taken between Tuesday and Thursday with a sample of 800-1000.

Of the three established parties, the Greens have been least affected by One Nation’s rise, indicating that demographics that vote Green are the least likely to swing to One Nation.

At the 1998 Queensland state election, One Nation won 11 of the 89 seats on 22.7% of the vote. If their vote in this poll were replicated at the next election, due by early 2018, One Nation would probably win a similar number of seats, and be likely to hold the balance of power.

Despite One Nation’s surge, Premier Annastacia Palaszczuk’s ratings are still positive, with 41% approval (down 3) and 37% disapproval (down 2), for a net rating of +4. However, Opposition Leader Tim Nicholls’ ratings have slumped a net 8 points to -12.

Federally and in other states, One Nation’s polling has met or exceeded their previous peaks from 1998-2001. It is no surprise that Queensland, which had the highest One Nation vote in 1998, is better for them than other states.

Whether One Nation and similar international parties continue to surge probably depends on President Trump. As I wrote here, if Trump succeeds in revitalising the industrial midwest, far right parties are likely to thrive. On the other hand, if working class people eventually decide that Trump is opposed to their economic interests, far right parties will probably decline.

The Conversation

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

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

Bernardi split is symptomatic of a fractured political system, here and abroad


Tony Walker, La Trobe University

When political parties splinter, the consequences can linger for generations. Consider the Labor “split” of the 1950’s between the Catholic right and the Labor centre and centre-left.

In those days, the word “progressive” to describe a political tendency was not in general use, but those who remained in Labor’s ranks were forerunners of today’s “progressives”.

The Labor “split” kept the party out of power for a generation and reverberates in Australian politics to this day. It can be seen in elements of an old Labor working class constituency gravitating towards the populism of Pauline Hanson’s One Nation and now, potentially, South Australian maverick Cory Bernardi.

It would be a stretch to compare Bernardi’s defection this week from the Liberal Party to establish his own “conservative movement” with the Labor split of the 1950’s. But combined with Hanson’s One Nation, these are perilous developments for the major parties.

Are we, as it seems, observing a further crumbling of the political centre with unpredictable consequences for the country’s direction? Or will we revert to the norm in which the major parties – aided by a voting system that favours the status quo – reassert themselves?

In the short term, I doubt that we will return to status quo politics.

If there was a detail writ large by this week’s Newspoll it was that one in three Australians were attracted to non-mainstream parties of left and right.

On top of that, a shrinking Coalition primary vote – which is down seven percent from the election to 35% – will have been especially worrying for a right-leaning alignment.

This far out from the next election due in 2019, polls are snapshots of the electorate’s mood. They are in no way prescriptive, but there is an unmistakable trend: support for the Coalition is continuing to bleed to movements of the right.

Just as Labor support has, over many years, bled to the populist Left in the form of the Greens, so is the conservative mainstream suppurating to Hanson’s One Nation and others on the right.

What makes all of this even more concerning – and less controllable – for the mainstream is that whatever is happening here is part of a global trend that is manifesting itself across Western democracies.

Donald Trump’s election on a populist anti-status quo platform in which he emphasised an inchoate antagonism towards outsiders – accompanied by nativist America First theology rooted in a need to build walls, economic and otherwise – is echoed by Hanson and now Bernardi, along with others.

Bernardi tells us he wants to “make Australia great again”.

Expectations Trumpism will crash and burn sooner rather than later may prove to be misplaced. Assumptions on which a rules-based, liberalising global order rests are being revisited, and risk being torn apart.

In France, for example, likely standard bearers in the forthcoming presidential election are espousing a form of anti-status quo populism of left and right as they compete for an army of disaffected voters across the political spectrum.

Historians and political scientists are scrambling to explain a populist phenomenon whose waves have crashed across the political landscape in the past year. It began with Brexit, followed by the Trump earthquake and accompanied now by indications German Chancellor Angela Merkel, the leader – in the abdication of a US president – of liberal Western democracies, is in deep trouble with elections pending.

At home, Malcolm Turnbull, who has burnished his progressive credentials over many years, is himself a victim of a global antagonism towards identity politics and progressivism.

Turnbull can seek to reinvent himself by yielding ground to the right, but in the process he is squandering a valuable commodity – authenticity. And indeed inviting questions about whether he believed in anything in the first place, separate from acquiring power.

His give ‘em hell speech in parliament this week – in which he eviscerated opposition leader Bill Shorten over contradictions inherent in Shorten’s criticism of the prime minister’s elitist pretentions – is unlikely to be the game changer his supporters crave, unless it is accompanied by a marketable political narrative, and there is not much sign of that.

So, where is all this leading?

Margaret MacMillan, professor of history at Oxford and one of this generation’s more perceptive commentators, contributed a characteristically thoughtful assessment of where we stand now in the development of populist movements.

She makes a good point about what distinguishes the present from the past when she writes:

Protest movements throughout history have furnished ideas and leaders that have eventually become part of the political mainstream. The populist campaigns that gained so much ground in 2016, most notably in the UK and the US, are different, because they categorically deny the establishment’s legitimacy.

MacMillan reminds us that populism was first described in the late 19th century by American farmers railing against banks and railroad monopolies. These days, populist movements decry an establishment represented by the media, industrialists and politicians.

When Trump talks about “draining the swamp, these are his targets, especially a media that questions his word and his integrity, since his world is built on make-believe.

As MacMillian writes:

Political orientation is unimportant in populism, because it does not deal in evidence or detailed proposals for change, but in the manipulation of feelings by charismatic leaders.

Unlike traditional conservative or socialist parties, the new populism does not appeal to a socioeconomic class, but to identity and culture. Populists’ target audience is anyone who feels economically threatened by globalisation, worries that immigrants are taking jobs and changing the composition of society, or is simply unhappy with a perceived loss of status (a sentiment reflected in hostility, especially among white men to “political correctness”).

MacMillian’s essay describes the condition, but is less sure about what might be done to counter a trend that is upending the status quo.

Bernardi’s defection from the Liberal Party this week is less important in itself than what it says about a wider trend towards a fracturing of Australian politics. We have entered a new phase in which a split in conservative ranks risks proving the harbinger of an unsettling political environment unseen since the early days of Federation, and more recently the Labor split.

The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

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

Turnbull’s rant about Shorten a treat for the troops but will it play with the public?


Michelle Grattan, University of Canberra

After Malcolm Turnbull called Bill Shorten a “social-climbing sycophant”, a “parasite”, and a “hypocrite” in parliament on Wednesday, Liberal Party director Tony Nutt tweeted a link, so people could watch Turnbull “tell the truth” about Shorten.

The Liberals obviously think Turnbull’s extraordinary harangue will go down well with Mr and Mrs Suburbia. Victorian senator James Paterson told 2GB it was “great to see a bit of steel from the PM, I think that’s exactly what the people want”.

Maybe. But it is equally possible ordinary people might see this as another example of just what they dislike about politics. Nutt has been around long enough to recall the experience of Paul Keating. Insiders loved his colourful tirades, insulting and demolishing opponents. But the voters came to hate them.

Turnbull went boots and all for the personal onslaught after Shorten attempted to move a motion against “Mr Harbourside Mansion”, claiming he was “attacking the standard of living of over a million Australian families” with an omnibus bill which includes big savings in social security as well as reform of the childcare system.

The speech was notable for its sheer quantity of sustained abuse.

“We have just heard from that great sycophant of billionaires, the leader of the opposition,” Turnbull said. “All the lectures, trying to run a politics of envy – when he was a regular dinner guest at Raheen, always there with Dick Pratt, sucking up to Dick Pratt. Did he knock back the Cristal [champagne]? I don’t think so.

“There was never a union leader in Melbourne that tucked his knees under more billionaire’s tables than the leader of the opposition. He lapped it up!

“He was such a sycophant, a social-climbing sycophant if ever there was one. There has never been a more sycophantic leader of the Labor Party than this one and he comes here and poses as a tribune of the people.

“Harbourside mansions – he’s yearning for one! He is yearning to get into Kirribilli House. You know why? Because somebody else pays for it.

“Just like he loved knocking back Dick Pratt’s Cristal, just as he looked forward to living in luxury at the expense of the taxpayer. This man is a parasite.

“He has no respect for the taxpayer. He has no respect for the taxpayer any more than he has respect for the members of the Australian Workers Union he betrayed again and again. He sold them out.”

Quoting Shorten’s words of some years ago that lowering company tax assisted job creation, Turnbull said: “I reckon he probably talked about that with Dick Pratt and Solly Lew and Lindsay Fox and all the other billionaires he liked sucking up to in Melbourne, on their corporate jets”.

“Or did he give them the blast, the good attack on the rich, down with anyone that has got a quid. … I don’t think so.

“No, I think he just sucked up to them … I think he says one thing here and another thing in the comfortable lounge rooms of Melbourne …

“No consistency, no integrity … This simpering sycophant. Blowing hard in the House of Representatives, sucking hard in the living rooms of Melbourne. What a hypocrite!”

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Turnbull has many faces but this is not the one most people would have expected when he overthrew that aggressive verbal boxer Tony Abbott. He stood for another political style.

So what’s made him flick the switch to nasty?

He’s been obviously stung by Shorten’s adoption of the “Mr Harbourside mansion” handle that Peta Credlin, Abbott’s former chief-of-staff, attached to him before the election. After Shorten again tossed the term out last week, he reacted angrily.

Also Turnbull must be seriously discombobulated by a dreadful start to the year, including this week’s bad Newspoll followed by the defection of Cory Bernardi to set up a conservative party.

Turnbull knows his followers are uneasy. Nothing like a red meat speech, delivered with his superior barrister’s skill, to provide them with a short-term adrenaline rush.

But closer to the interests of the average voters than Wednesday’s hyperbole around it will be the actual measures in the omnibus bill, which includes a reworking of certain earlier initiatives in an effort to massage them through the Senate. A lot of people stand to be affected, positively or negatively, by the content of this enormous bill.

The childcare reforms, designed to boost workforce participation, are as they were proposed previously. The government says the changes would give about 1 million families “relief from out-of-pocket child care cost pressures” and “encourage more than 230,000 families to increase their involvement in paid employment”.

Also in the bill are savings of more than A$5.5 billion, including changes to the family tax benefit (FTB) system and to paid parental leave provisions.

But the government has softened its proposals in both these areas, to accommodate crossbench senators.

Thus, while it still would phase out FTB end-of-year supplements, it would double to $20 the maximum fortnightly payment rates of FTB Part A. It has also abandoned its planned scaling back of FTB Part B for children between 13 and 16.

And it will increase from 18 to 20 the maximum number of weeks the government’s paid parental leave scheme provides.

The concessions will reduce the savings the government would originally have got by about $2.4 billion.

But as “cameos” flew from government and opposition about how individual families would be affected, Shorten said that “the prime minister is taking $2.7 billion from Australian families and yet he proposes giving $7.4 billion to big banks in tax giveaways”.

“We draw a line in the sand on this $2.7 billion cut to family payments. We are not buying it and the Australian people are not buying it,” he told parliament.

The omnibus legislation also includes other leftovers from past attempts to tighten social security, among them various pension-related savings and the four-week waiting period for unemployed young people seeking income support payments.

The government seems confident it has a set of measures it can “land” in parliament. But there will likely be more trade-offs required for that to happen, amid a good deal of noise from those who stand to lose.

The package will need better salesmanship than on Wednesday, when the mass of detail had it struggling to be understood – and then it was overshadowed by the Turnbull rant.

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The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Bernardi should have resigned his Senate seat: here’s why


Narelle Miragliotta, Monash University

Senator Cory Bernardi’s decision to quit the Liberal Party comes as no surprise to most political observers. For quite some time, and certainly since Malcolm Turnbull’s elevation to the Liberal leadership, Bernardi’s resignation from the party was always a distinct possibility.

However, his decision to quit the party without resigning from the Senate has sparked (the inevitable) condemnation from his former party colleagues. While he might well be feeling “reluctant and relieved”, many Coalition MPs are savage about this decision.

The perils of ratting out the party

Parties have little mercy for those in their ranks who quit the party but continue to occupy their seat in parliament. Such persons are often decried as “deserters” or “rats”.

In this case, the displeasure with Bernardi runs even deeper. From the Liberal Party’s perspective, it believed it had gone to some lengths to accommodate some of the senator’s policy concerns. Yet the efforts to appease Bernardi ultimately proved insufficient to prevent him from tendering his resignation only seven months after the federal election that granted him a six-year Senate term.

On a more practical level, Bernardi’s resignation makes an already complex Senate even more so for the Turnbull government. Once the vacancies triggered by Rod Culleton and Bob Day are filled, Bernardi will be among a 21-strong cross bench. The Turnbull government’s numbers have been reduced to 29 senators, 10 votes short of the 39 it needs to transact most business in the chamber.

High-profile, senior Liberal Party ministers, such as George Brandis and Christopher Pyne, have argued that Bernardi should resign as senator to give rise to a casual vacancy. This would enable the party to select a replacement senator.

The problem for the Liberals is that Bernardi does not believe he is under any particular obligation to do this. For Bernardi, the decision to resign from the Liberal Party is a matter of principle, and therefore justified and imperative.

In constitutional terms, Bernardi is not obliged to quit the Senate just because he has resigned from the Liberal Party. The party can do little to force his hand, except to hope that he might eventually fall foul of the Constitution’s various eligibility requirements to serve in the federal parliament. This would be unlikely.

Should Bernardi resign on ethical grounds?

While there is no constitutional basis for Bernardi to resign from the chamber, there is a compelling ethical case for him to do so.

Before I outline my reasons, I must clarify the scope of my claim. First, the argument is not directed exclusively at Bernardi. This is an argument that should apply to any senator who quits his or her party, short of reasons of their party imploding, or being fired by the party.

Secondly, this argument is not one that I would extend to members of the House of Representatives who resign from their party. It is particular only to party defections when the member was elected in a seat through proportional representation.

My argument is essentially tied to two particular features of the Senate electoral system: the statewide basis of that system and group ticket voting. In combination, these elements greatly heighten the importance of the party label to the electoral success of major party candidates.

The statewide basis of the electoral system creates a geographical obstacle for all but a rarefied group of candidates to build a sufficiently strong personal mandate to secure a Senate quota. For this reason most independent candidates choose to contest lower house electorates rather than nominate for the Senate, where campaigning is conducted over a much wider, often more diverse electoral terrain.

Group ticket voting has further elevated the importance of the party label to the election of Senate candidates. Known colloquially as “above the line” voting, it allows parties to predetermine their preferred order of election of their candidates. While voters are permitted to vote for any candidate in any order that they wish, most do not. Only a very small proportion of voters cast their vote within the party list.

The combination of these features of the Senate electoral system means that most major party senators would struggle to make a convincing case that they were elected on the basis of personal appeal and support.

If we use Bernardi as the case in point, of the 345,767 votes cast for the South Australian Liberals at the 2016 election, he attracted just 2,043 of the first preference vote. Bernardi’s re-election had almost nothing to do with his personal vote and almost everything to do with the Liberal Party label and the favourable number two Senate spot that South Australian party officials awarded him on the party’s ticket.

Established parties can legitimately claim, therefore, that the single most decisive factor that accounts for the election of their senators is the power of the party label. For this reason, senators who quit their party under the current rules should feel compelled on ethical grounds to resign their vacancy, so that the democratic will of the party’s supporters is fulfilled.

The Conversation

Narelle Miragliotta, Senior Lecturer in Australian Politics, Monash University

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