When Malaysians woke up on May 10, the world looked and felt different. For the first time in years, many Malaysians feel a sense of optimism that was missing in their lives. For the past six decades, Malaysians have been living under the rule of the United Malays National Organisation (UMNO).
UMNO had won every election since 1955. In the May 9 general elections, Najib Razak, UMNO’s leader and prime minister, was not only confident, he was telling close aides that he was aiming for two-thirds of the seats in the 222-seat parliament. By the time the final vote was counted, UMNO had only 79 seats and lost power.
What happened? This will be the question preoccupying political scientists for years to come.
Suffice to say, Najib lost due to three main reasons.
First, his personal brand had become synonymous with kleptocracy. He was alleged to have received close to US$1 billion from a Malaysian sovereign fund via complex international transactions. It did not help that Najib’s wife, Rosman Mansor, was widely regarded as a spendthrift with a passion for diamonds and designer bags.
Second, Dr Mahathir Mohamad was no ordinary opponent. Mahathir was Malaysia’s longest-serving prime minister, from 1981 to 2003, and had come out of retirement to fight Najib.
Third, and perhaps most important, UMNO was simply seen as an organisation for political patronage, and a purveyor of racism and crony capitalism. It was no longer seen as a Malay nationalist party. In the past few decades, UMNO has been regarded as vehicle for making big money, government corruption and spreading hate towards the Chinese community in Malaysia.
The rural Malays, the mainstay of UMNO political power, could not stomach Najib’s toxic reputation as “Mr Kleptocrat”. They could see that under continued UMNO rule, their lives would be economically ruined. The GST brought in by the Najib administration was the last straw. Prices of basic necessities went up across the board despite Najib’s insistence that the GST would bring down prices.
There is tremendous goodwill towards Mahathir. Yes, he was dictatorial when he was prime minister the first time around. But most Malaysians I spoke to say this time it will be different. Mahathir is 92, and it is obvious he is a transitional leader.
He has said many times that once his jailed former deputy, Anwar Ibrahim, can get a royal pardon and a seat in parliament, he will hand over power to Anwar. Many Malaysians believe he will keep his word: after all, he cannot be going for re-election when he is 98.
Mahathir will also be constrained by the opposition’s organisational structure. His party, Pribumi Bersatu, has the third-smallest number of MPs of the four parties in Pakatan Harapan (PH) (Alliance of Hope). He is not in a position to bully.
Finally, what will happen to Najib Razak? Will he go to jail for 1MDB and the missing billions? In the short term, the answer is “no”. The new government will not immediately arrest Najib, or his wife. It will instead likely establish a committee to look into the 1MDB affair and get a definitive answer as to where the US$5billion disappeared to.
If the investigation panel shows Najib is behind the scam, then, yes, Najib will probably end up in jail. But this is a long process. It is more likely that any prosecution against Najib will start outside Malaysia.
Several governments, notably the US, are interested in sorting out the 1MBD issue. Thus far they could not complete their investigations because Najib used his position to stop Malaysian institutions from cooperating with the US Department of Justice probe into 1MDB.
There is a potential new angle to 1MDB, which is related to Australia. The bank account Najib used to launder 1MDB’s money is actually part-owned by ANZ Australia. Many believe some of the money from 1MDB passed through the Australian financial system.
Labor continues to hold a 51-49% two-party lead in the wake of last week’s budget. However, Malcolm Turnbull’s advantage over Bill Shorten has surged in the Newspoll published in The Australian on Monday.
But the Ipsos poll, in Fairfax papers, has Labor ahead by a much wider 54-46% margin on a two-party basis – a rise of two points for the ALP since the last Ipsos poll in early April, with a corresponding fall for the Coalition.
Post-budget opinion will soon be tested on the ground in five byelections, four of them caused by the citizenship crisis.
The Western Australian Liberals have announced they will not run in the two contests in that state, while Pauline Hanson and opposition leader Bill Shorten are trading public blows over preferences for the Queensland seat of Longman, where One Nation preferences were crucial in Labor’s win last election.
In Newspoll, Turnbull has stretched his previous three-point lead over Bill Shorten as better PM to 14 points. Turnbull jumped eight points to 46%, while Shorten fell three points to 32% in the poll, done Thursday to Sunday.
Last week Shorten was embarrassed over his previous boasts that Labor had a strong citizenship vetting process, after the High Court on Wednesday disqualified Labor senator Katy Gallagher for having dual citizenship when she nominated for the 2016 election. The court decision prompted three Labor MPs and a crossbencher to resign.
Turnbull’s satisfaction rating has risen three points to 39% in Newspoll, while Shorten’s rating went down a point to 33%. The Coalition primary vote was up a point to 39%; Labor also rose a point to 38%, since the last poll, published three weeks ago. One Nation is on 6%, the Greens are 9%.
Newspoll found 41% thought the budget good for the economy; only 26% said it would be bad. People were split on its impact for them personally: 29% said they would be better off, 27% thought it would leave them worse off.
Just over half (51%) backed the government’s tax plan, the first stage of which would give a tax cut to lower and middle income earners.
The Labor primary vote in the Fairfax-Ipsos poll was 37% (up three points). The Coalition was unchanged on 36%.
In the Ipsos poll, taken Thursday to Saturday, 38% believed they would be personally better off as a result of the budget – the highest rating in perceived personal benefit since 2006 – while 25% said they would be worse off. On the measure of fairness, 39% believed the budget was fair, while 33% said it was unfair. Ipsos found 57% would prefer the government to use extra revenue to pay off debt; 37% would prefer it to be used for tax cuts.
Turnbull’s approval rating was 51% (up four points) in the Fairfax-Ipsos poll; his disapproval was 39% (down four points). Shorten was on 39% approval (up a point) and 51% disapproval (down two points) . As preferred prime minister, Turnbull was ahead 52% (unchanged) to Shorten’s 32% (up a point).
The timing of the byelections is yet to be announced – they are expected to be on the same Saturday. Four are in Labor seats; the fifth is in Mayo, held by the Centre Alliance’s Rebekha Sharkie – the Liberals are hoping to wrest the seat back.
Braddon in Tasmania and Longman will be the two government-opposition head-to-head battles.
In Longman, on less than 1% margin, a ReachTEL poll commissioned by the left-leaning think tank The Australia Institute found the government leading the ALP 53-47% in two-party terms. It had One Nation on 15.1%. The poll was done Thursday night, of 1277 people.
As it seeks a strong candidate for Longman, the Liberal National Party is bedevilled by the dual citizenship issue that has caused the byelection in the first place. The LNP is having to ensure, before it does its preselection, that no potential candidate is a dual citizen, which can go to complicated questions of eligibility for foreign citizenship through relatives.
Labor’s Susan Lamb, who won the seat in 2016, also must renounce her dual British citizenship in time for her renomination.
Shorten at the weekend delivered a sharp response to Hanson’s demand that Labor put the Greens last.
Hanson wrote to Shorten that:
With a looming byelection in the seat of Longman and a federal election likely within the next 12 months, One Nation and its supporters are seeking an assurance from you as Leader of the Australian Labor Party that you will guarantee placing the Greens at the bottom of all Labor how-to-vote cards.
Conservative Australians do not support parties who flow their preferences to the Greens and I cannot in good conscience flow One Nation preferences to Labor if their preferences relationship continues with the Greens.
Shorten wrote back:
I know you are under a lot of pressure following your decision to support the Prime Minister’s $80 billion tax handout to multinationals and the big banks. That’s the only explanation I can think of for your letter to me, in which you appear to be attempting to direct the preferences of Longman voters voters to the LNP.
Meanwhile a row has blown up over the preselection dumping of Queensland Liberal Jane Prentice, an assistant minister in the Turnbull government. She was beaten decisively in a rank and file ballot by a Brisbane city councillor, Julian Simmonds, a former staffer of hers. Her defeat has reignited the criticism of the Liberal party for having so few women in its parliamentary ranks.
Asked about Prentice’s loss, Treasurer Scott Morrison told the ABC that politics was “a contestable process”. Prentice had “done a great job and we thank her for her service”.
For the last year, the people of Timor-Leste have expected – and received – little from their government except deadlock.
From a political standpoint, there’s been gridlock for nearly a year after the Fretilin party eked out a victory in parliamentary elections last July, kicking independence hero Xanana Gusmao’s National Congress for Timorese Reconstruction (CNRT) party out of power for the first time in a decade.
However, Fretilin’s minority government found itself blocked at every turn by CNRT and its allies. It finally collapsed in December, forcing the beleaguered president to call for new elections, to be held on Saturday.
At the same time, there’s been economic deadlock, as well. The vast riches of the oil and gas fields in the Timor Sea have been locked away due to Timor-Leste’s seemingly intractable negotiations with the Australian government over a disputed maritime boundary.
In March, a boundary treaty was finally signed between the countries, which could lead to billions in royalties for Timor-Leste. But disagreements remain on how to develop the untapped Greater Sunrise basin that lies across this boundary.
In the past, Timor-Leste governments have focused on a “big development” economic strategy to exploit the country’s limited fossil fuels, which José Ramos Horta, the Noble Peace Prize laureate and former president and prime minister, has called “an absolute necessity for the future well-being of this country”.
The recent political impasse has put serious discussions about the future of the country on hold. For starters, the tenor in the run-up to the election has been acrimonious and personal, with the leaders of each party trading insults and playing up their contributions to the war of independence against Indonesia instead of debating policy.
Candidates have focused their campaigns on voting for the best “fatherly” figure of the revolution, with little regard for the country’s youth, who suffer from high unemployment rates and have largely been marginalised from the political process.
The economic development of the country, meanwhile, has been left out of the debate. The candidates all stress the need for “big resource development” and the need to build massively expensive gas processing infrastructure on the south coast of the country. But what’s lacking is any indication of whether gas can (or will) be developed in the long term by any multinational gas producer.
Also lacking is any real discussion about the future of the economy and how best to wean the country off its reliance on fossil fuels to drive economic growth. This has long been seen as a risky and unsustainable strategy.
Based on my own research in the country, as well as the work of other academics and development experts, the new Timor-Leste government will need to take a different strategy more in line with the [United Nations’ Sustainable Development Goals], encouraging private investment and developing non-oil exports in agriculture, community forestry and coffee exports. Timor-Leste has committed itself to these SDGs, even if it is struggling to meet them.
According to tradition, a sacred house in Timor-Leste is formed by four pillars. If two of those pillars are in a sloping position or broken, it will impact the house as a whole. When that happens, the elders will ask the young people to find new pillars to replace the ones that are damaged.
Timor-Leste now finds itself with two broken pillars – the leadership of the country and the dysfunctional parliament. The situation requires the attention of all Timorese to help fix the broken pillars and right the country.
The big question is whether the politicians who are elected on Saturday will listen to the people and bring an end to the deadlock holding the country back.
I would like to acknowledge the contribution made to my article by Victor Soares, Lecturer in Public Policy, Universidade Nacional Timor Lorosa’e (UNTL), Dili
Cutting taxes lets companies keep more of their profits, allowing them to invest in new equipment and premises for example. The company then needs to hire more workers to work with these new assets. The newly created jobs require businesses to compete for workers and this increased demand pushes up wages across the entire economy.
Suppose a retail company gets a tax cut and opens a new store. It advertises for workers, many of whom are already employed by a rival store that didn’t get the tax cut. The first company will need to offer the workers higher wages to entice them away. The rival store will need to consider matching the wages in order to keep the workers.
In other words, even workers in companies that don’t receive the tax cut should see a wage rise.
Going through the AlphaBeta report
In 2015, the federal government cut the tax rate from 30% to 28.5% for businesses with less than A$2 million in revenue. Eligible businesses saved around A$2,940 on average because of the tax cut.
AlphaBeta used transaction data from 70,000 businesses to compare businesses just below the A$2 million threshold to companies that were just above it.
The analysis looked at the differences between the two groups of firms in terms of whether they hired new workers, invested in their businesses, increased worker wages, or kept some of the cash as a reserve.
AlphaBeta chalked any differences between companies that received the tax cut and those that didn’t to the company tax cuts.
As reported in The Australian, AlphaBeta found that companies that received the tax cut increased their employee headcount by 2.6%. The companies that didn’t receive the cut increased employment by just 2.1%.
The problem is that we cannot draw any conclusions about the effect of company tax cuts on jobs or wages by studying a bunch of firms that received them and another bunch that did not, even if the firms are only slightly different.
This is because, as noted above, the effect of company tax cuts on jobs and wages take place in the entire labour market. An increase in demand for labour flows through to all business, and therefore, so do higher wages.
So we should not expect to see wages rising only in those businesses that receive the tax cuts. The finding that an increase in wages is small and insignificant is exactly what we would expect to see from this study.
Another problem is that we do not know whether the characteristics of the companies in AlphaBeta’s sample. Were some industries with particularly pronounced employment or wage increases over represented in one group but not the other, for instance?
Studying the effect of company tax cuts on employment and wages also requires a longer time period – sometimes years – and careful control of other factors affecting jobs and wages in some firms relative to others.
The analysis in this review is generally fair and reaches a sound conclusion regarding the AlphaBeta report. However, the logic behind company tax cut raising wages is somewhat simplified.
A cut in company tax lowers the costs of production and can flow to labour, capital (including equipment and buildings) and consumers. Economics tells us that who actually benefits from a tax cut depends on what is more responsive to the tax – labour, capital or output.
The lower production costs from a company tax cut can lead to greater output and lower prices as consumers buy more goods and services. This depends, of course, on how responsive consumers are to changes in price.
In the short-run labour is more mobile than capital, which is usually regarded as fixed. Therefore, in the short-run most of the benefit is borne by owners of capital (the companies) in the form of higher after-tax profits.
However, over the longer term, companies invest their after-tax profits in the business. So most of the benefit of the tax cut goes to workers though higher wages as the increased “capital stock” (such as equipment) makes labour more productive.
It follows that there is no reason to expect a significant increase in wages over a period of one or two years (as the AlphaBeta report covers). Indeed, such a result would be somewhat surprising. – Phil Lewis
With Iran’s ruling clergy already preparing to celebrate the 40th anniversary of the 1979 Islamic Revolution, it may be too late to question whether or not the revolution was in fact Islamic. What we can do, at least, is explore the revolution’s degree of Islamicness.
In Iran, like elsewhere in the world, often competing utopian political visions shaped the political landscape of the previous century. Marxism, nationalism and liberalism all played important roles in the 1979 revolution. Yet it was later branded “Islamic” with such insistence that this eventually became its sole adjective.
Most Iranians were religious, which positioned the clergy far ahead of any other political group in being able to mobilise the masses. The clergy benefited enormously from their highly effective religious network, which was both far reaching and fully under their control. By that time, the Pahlavi regime had severely weakened the organising capacities of Iran’s other political groups.
The consolidation of power
After claiming a dominant post-revolution position, the clergy under then Supreme Leader Ayatollah Khomeini exploited their irreproachable reputation and religious bond with the masses to eliminate their rivals and consolidate their power. They converted Iran’s religious networks into permanent political platforms.
Mosques and other religious spaces and occasions were at the forefront of their propaganda machinery. Mosques were also – and still are – used as polling stations during elections.
The ruling clergy coupled the term “Islamic” with the revolution, calling it a “regime of truth”, to use Foucault’s terminology. More importantly, they impeded the emergence of a non-religious alternative to their peculiar political system. Over the past 39 years, no secular political group has been able to mount a formidable challenge to the Islamic Republic.
Instead, other religious forces have challenged the ruling clergy. They have done so both on the level of practical politics and by way of introducing viable alternatives to the ideal of the Islamic state.
The impetus for Iran’s most significant periods of political unrest in recent decades can be traced to the Islamic reformists. Examples include the reformist movement from 1997 until 2005, and the Green Movement, which emerged after the disputed 2009 elections.
The Green Movement brought the regime to the brink of collapse, and its religious ties were undeniable. Its leaders, Mir Hussin Mousavi and Mehdi Karubi – who are still under house arrest – are both religious figures who have always aligned with the Islamists. The colour green is a religious symbol, hence the name of the movement.
A new politico-religious discourse is emerging that offers a viable alternative to the Islamic Republic. The Green Movement must still be understood within the broader “Islamist” school of thought, as it promotes a political role for religion. It is, however, unique in that it envisions this role as part of a democratic polity.
Islam lacks a blueprint for government
The reformist movement amounts to a direct backlash against the ideal of the Islamic state. It targets the foundational pillars of the Shiʿi model of the state, which is based upon Khomeini’s doctrine of wilāyat-i faqīh.
The reformists intend to strip away the ruling clergy’s proclaimed religious legitimacy. They maintain that Islam does not specify a blueprint for political matters and explicitly avoids providing economic, political, or policy prescriptions. The Qurʾān and many Ḥadīths support the notion that humans have the capacity to determine appropriate solutions for their worldly problems.
Thus, reformists argue that Islam should be actualised in politics through the political contributions of believers rather than the political leadership of the clergy.
Islam does not stipulate a model political system. This makes it impossible to extract the notion of democratic government from Islamic teachings.
However, one could argue that democracy is an appropriate political system for the Muslim world, based on human reasoning. For example, Mohsen Kadivar asserts:
Democracy is the least erroneous approach to the politics of the world. (Please note that least erroneous does not mean perfect, or even error free.) Democracy is a product of reason, and the fact that it has first been put to use in the West does not preclude its utility in other cultures – reason extends beyond the geographical boundaries. One must adopt a correct approach, regardless of who came up with the idea.
Divine sovereignty and Sharīʿa
The religious backlash has been particularly focused on refuting two interconnected claims that form the existential grounding of the Islamic state. These are the claims of divine sovereignty and the necessity of implementing Sharīʿa, or Islamic law.
Iran’s ruling clergy argue that the divine right to political leadership rests not only with the Prophet Mohammad and Shiʿi’s Infallible Imāms, but also with Islamic jurists in today’s world. According to Khomeini:
God has conferred upon government in the present age the same powers and authority that were held by the Most Noble Messenger and the Imāms, with respect to equipping and mobilising armies, appointing governors and officials, and levying taxes and expending them for the welfare of the Muslims. Now, however, it is no longer a question of a particular person; government devolves instead upon one who possesses the qualities of knowledge and justice.
This assertion could be questioned on various levels. First and foremost, it offers a problematic reading of Islamic history. It ignores the reality that the Prophet Mohammad’s governance was a historical occurrence as opposed to a part of his divine mission.
In the same vein, many Iranian religious reformists repudiate the divine source of political authority, not only in the present, but also for the Prophet and Infallible Imāms. These interpretations of the revolution reject the possibility of claiming any sort of divinity in the political realm. This empowers believers to manage their political lives based on their collective rational reasoning.
The second major claim is that Islam is a political religion because Sharīʿa law encompasses important socio-political dimensions. Its proponents maintain that Sharīʿa ought to be implemented to its full extent, thus requiring political leadership by the clergy.
This was a founding maxim of Khomeini’s doctrine of wilāyat-i faqīh. But he revised this when he began running a modern state.
Soon after the revolution, Khomeini realised that implementing the many components of Sharīʿa would interfere with the basic tasks of government. In other words, he concluded that full compliance with Sharīʿa law would make it impossible for a state to effectively carry out its core functions and responsibilities.
His response to this predicament was to prioritise political interests over religious considerations. He went so far as to declare Sharīʿa as secondary to governing:
A government in the form of the God-given, absolute mandate was the most important of the divine commandments and has priority over all derivative divine commandments … [it is] one of the primary commandments of Islam and has priority over all derivative commandments, even over prayer, fasting and pilgrimage to Mecca.
This was conceptualised as a Shiʿi jurisprudential principle called Fiqh al-maṣlaḥa (expediency-based jurisprudence). It establishes that a state is regarded as Islamic if the head of state is a jurist, a walī-yi faqīh, regardless of whether the state enforces Sharīʿa and Islamic precepts.
Open to the charge of exploiting Islam
Expediency-based jurisprudence leaves the fate of Sharīʿa ordinances, and by extension the entire religion of Islam, to the “personal” understanding of the ruling jurist. Unsurprisingly, it has been challenged for exploiting religion.
Critics say that decisions based on a rational assessment of the circumstances should not be tagged as “Islamic”. Attaching a religious tag to decisions made by the absolute authority of one person, who is not immune to mistakes and failures, will render religion responsible for policy mistakes and failures.
Ultimately, the lived experience of the government born out of the 1979 revolution proved detrimental to Islam. It led to the disillusionment of some Islamists who wished to emancipate religion from the state. As such, reformist discourse failed to propose a tangible alternative to the model of the Islamic state. This, in turn, could partially explain the resilience of the Islamic state in Iran.
Nevertheless, we should not overlook the powerful role of religious backlash in disarming the ruling clergy and delegitimising the theological foundation of the Islamic state. It remains the most formidable challenge to Iran’s ruling clergy to date.
Still, the possibility of a major shift in the country’s political landscape is more complicated and depends on factors far beyond religion-state relations.
In the federal budget, Treasurer Scott Morrison promised tax cuts to all working Australians in the form of an offset and changes to tax income thresholds. But our analysis of Treasury data shows that while the government advertised these as payments to low and middle income Australians, most of the benefits would flow through to high income earners in future years.
If all of the stages of the tax plan passed parliament, there would be a sharp increase in benefits for people earning above A$180,000, due to the reduction of their marginal tax rate from 45% to 32.5%.
Taxes in most countries are progressive. This means that the more you earn, the higher your marginal rate (the additional amount you pay for each dollar earned).
There are good reasons for this – progressive tax systems mean those on a lower income pay a lower average tax rate, while those on higher incomes pay a higher average tax rate. This reduces income inequality – as you earn more, for each dollar you earn, you will pay more in tax than someone on a lower income.
With the 2018-19 budget, the proposal is for a “simpler” tax system from 2024-25. This means a reduced number of tax brackets, and a lower rate of 32.5% to those earning between A$87,001 and A$200,000.
Treasurer Scott Morrison said following the budget:
Well, you’ve still got a progressive tax system. That hasn’t changed. In fact, the percentage of people at the end of this plan, who are on the top marginal tax rate is actually slightly higher than what it is today.
However this new tax system from 2024-25 is less progressive than the current system. It means higher income inequality – the rich get more of the tax cuts than the poor.
As part of the new proposal, low and middle income earners get a tax offset in 2018-19, with high income earners getting very little. This part of the plan is progressive – more money goes to lower income earners.
However, by 2024-25, the tax cuts means high income earners gain A$7,225 per year, while those earning A$50,000 to A$90,000 gain A$540 per year, and those earning A$30,000 gain A$200 per year.
Of course, another factor of tax cuts is that they only benefit those who are employed. Tax cuts don’t benefit people like the unemployed, pensioners, students (usually young people) and those on disability support pensions.
The conversation Australians need to have is how we should be spending the revenue boost we are seeing over the next few years. We can either spend this windfall gain on benefits to high income earners, in the hope that this will flow through spending to everyone else; or maybe we should encourage young people into housing through an increase to the first home owners grant, or increased funding for our schools, universities and health system.
We’ve developed a budget calculator so you can see how your family is affected by the 2018 budget.
Opposition leader Bill Shorten has launched a tax bidding war, promising to top the government’s tax relief for lower and middle income earners, as he prepares to fight a string of byelections in Labor seats.
The Labor alternative almost doubles the budget’s relief for these taxpayers, incorporating the early part of the government’s plan and then building on it.
Delivering his budget reply in Parliament on Thursday night, Shorten pledged to give bigger income tax cuts for 10 million taxpayers. Some four million would get A$398 a year more than the $530 under the government’s plan.
Labor’s “Working Australians Tax Refund”, would cost $5.8 billion more than the government’s plan over the forward estimates.
Labor’s alternative comes as debate intensifies about the latter stage of the government’s plan, when a flattening of the tax scale would give substantial benefit to high income earners.
The ALP hardened its position against that change as modelling cast doubt on its fairness. The opposition launched a Senate inquiry which will report mid June on the tax legislation, introduced into parliament on Wednesday.
The government says it will not split the bill, which it wants through before parliament rises for its winter break, but will be under pressure to do so including from the crossbench.
Under Shorten’s proposal, the ALP would support the government’s budget tax cut in 2018-19. Once in power, it would then deliver bigger tax cuts from July 1 2019, when it began the refund.
In Labor’s first budget “we will deliver a bigger better and fairer tax cut for 10 million working Australians. Almost double what the government offered on Tuesday”, Shorten told parliament.
The Labor plan would give all taxpayers earning under $125,000 a year a larger tax cut than they would get under the budget plan.
In a speech heavy on the theme of fairness, Shorten said: “At the next election there will be a very clear choice on tax. Ten million Australians will pay less tax under Labor”.
He also pitched his budget reply directly at the campaign for the byelections.
“This is my challenge to the Prime Minister. If you think that your budget is fair, if you think that your sneaky cuts can survive scrutiny, put it to the test. Put it to the test in Burnie, put it to the test in Fremantle and in Perth.
“I will put my better, fairer, bigger income tax cut against yours. I’ll put my plans to rescue hospitals and fund Medicare against your cuts. I’ll put my plans to properly fund schools against your cuts and I’ll put my plan to boost wages against your plan to cut penalty rates and I’ll put my plans for 100,000 TAFE places against your cuts to apprenticeships and training and I’ll fight for the ABC against your cuts.”
In the Labor model, a teacher earning $65,000 would get tax relief of $928 a year, $398 more than the $530 offered by the government.
A married couple, with one partner earning $90,000 and the other $50,000 would receive a tax cut of $1855, making them $796 a year better off under Labor than under the government.
Shorten said Labor could afford the tax cuts it proposed because it wasn’t giving $80 billion to big business and the big four banks. Also, it had earlier made hard choices on revenue measures.
An ALP government could deliver “the winning trifecta” – “a genuine tax cut for middle and working class Australians; proper funding for schools, hospitals and the safety net; and paying back more of Australia’s national debt faster”.
Shorten said that the Liberals were proposing to radically rewrite the tax rules in their seven year plan. Research had revealed that $6 in every $10 would go to the wealthiest 20% of Australians, he said .
“Very quickly, this is starting to look like a Mates Rates tax plan”.
“And at a time of flat wages, rising inequality and a growing sense of unfairness in the community”.
Other initiatives he announced include:
· A plan for skills, TAFE and apprentices costing $473 million over the forward estimates.
· Abolition of the cap on university places, re-instating Labor’s demand driven system, at a cost of $140 million over the forward estimates.
· Reversing cuts to hospitals and establishing a Better Hospitals Fund, seeing an extra $2.8 billion flow to public hospitals. This would cost $764 million over the budget period.
· Invest $80 million to boost the number of eligible MRI machines and approve 20 new licences – which would mean 500,000 more scans funded by Medicare over the course of a first Labor budget.
· Provide $25m to the Commonwealth Public Prosecutor to establish a Corporate Crime Taskforce. The Taskforce would deal with recommendations for criminal prosecution from the banking royal commission.
On Wednesday morning, the High Court disqualified Labor’s ACT Senator, Katy Gallagher. As a senator, Gallagher’s disqualification will not require a byelection; she will be replaced by Labor’s second candidate on its ACT ticket, David Smith.
However, Gallagher’s case was seen as a test case for four House members: Susan Lamb (Labor, electorate of Longman), Josh Wilson (Labor, Fremantle), Justine Keay (Labor, Braddon) and Rebekha Sharkie (Centre Alliance, Mayo).
By Wednesday afternoon, all four of these members had announced they would resign from Parliament and recontest their seats at subsequent byelections. With the Perth byelection that was required last week, there are likely to be five federal byelections on the same date.
All byelections will be held on 2016 boundaries, even if there has been a redistribution in the state in which the byelection takes place. As the incumbent will be recontesting, the byelections caused by section 44 are different from most byelections.
At the 2016 election, Labor gained both Braddon and Longman by defeating Coalition incumbents. Labor’s 0.8% margin in Longman, and 2.2% margin in Braddon do not reflect the “sophomore surge” effect.
If Longman and Braddon were held at a general election, Labor would expect to do better in those seats than nationally, as their new incumbents should receive a personal vote bonus, while the Coalition loses the personal votes of their previous members.
A negative for Labor in Longman is One Nation preferences. In 2016, One Nation won 9.4%, and their how-to-vote cards put Labor ahead of the LNP; Labor won 56.5% of One Nation preferences. One Nation is now more pro-Coalition than in 2016, and is likely to recommend preferences to the LNP at the byelection. However, One Nation’s primary votes are likely to come more from the LNP than Labor, mitigating damage from One Nation’s preferences.
Labor has a 7.5% margin in Fremantle, and the Liberals are more likely to focus on Perth (Labor by 3.3%), where the incumbent Labor member is not recontesting.
In Mayo, the Centre Alliance’s Rebekha Sharkie (formerly Nick Xenophon Team) holds a 5.0% margin against the Liberals. However, Xenophon’s attempt to win the balance of power in the South Australian election failed dismally, as his party won zero lower house seats.
It is likely Xenophon’s failure will affect Sharkie, although her profile as a sitting member will help her. Sharkie’s interest would be best served by running as an independent, not endorsing Centre Alliance policies. The former Liberal MP Jamie Briggs was negatively perceived, explaining some of the swing to Sharkie in 2016.
On a two party basis, the Liberals hold a 5.4% margin against Labor, a 7.2% swing to Labor since the 2013 election. However, some of this swing is explained by Briggs, and Labor is unlikely to be competitive with a better Liberal candidate.
In summary, I think it is likely that Labor will hold all four of its seats, and that Sharkie is the most vulnerable at these byelections.
Essential: 53-47 to Labor
This week’s Essential, conducted May 3-6 from a sample of 1,033, gave Labor a 53-47 lead, unchanged since last fortnight. Primary votes were 38% Coalition (up one), 37% Labor (up one), 10% Greens (down one) and 6% One Nation (down two). This will be the last poll conducted before the budget.
Malcolm Turnbull’s net approval was -2, up one point since April. Bill Shorten’s net approval was -4, up four points. Turnbull led Shorten 40-26 as better PM (41-26 in April).
39% (up six since November 2017) thought the Australian economy was good, 32% (down six) thought it was neither good nor bad, and 24% (steady) thought it was poor.
Since May 2017, there was an 11-point increase in those thinking the budget should increase assistance to the unemployed, and eight-point increases for aged pensions, affordable housing and assistance to the needy. The only large decrease was for public transport infrastructure (down six).
28% thought more funding for schools and hospitals most important for the budget, followed by 22% for supporting industries that create jobs, 17% for personal tax cuts, 12% for building infrastructure and 8% for fully funding the NDIS.
Status quo result likely in Tasmanian upper house elections
Every May, two or three of Tasmania’s 15 upper house seats hold elections for a six-year term. Currently the left has control with eight seats (four Labor and four left-wing independents). On Saturday, elections were held in Hobart and Prosser.
Tasmanian analyst Kevin Bonham has more details. In Hobart, left-wing incumbent independent Rob Valentine defeated another left-wing independent challenger, 61-39, with the Liberals a distant third.
In Prosser, in a field of 13, Liberal Jane Howlett had 26.1%, Labor’s Janet Lambert 22.0% and independent Steve Mav 19.8%. Bonham thinks Howlett is most likely to win when preferences are distributed next Tuesday, the final day for receipt of postals.
If either Howlett or Mav wins in Prosser, the right and left will retain their seats, with no change to the overall balance of power.
In brief: UK local elections, Malaysian election, Australian vs US employment
I wrote for The Poll Bludger about the May 3 UK local government elections. According to the BBC’s projected national vote share, Labour and the Conservatives tied on 35% each. This was the first major UK electoral test since Labour surged back at the June 2017 general election to deny the Conservatives a Commons majority.
In Wednesday’s Malaysian election, the party that had governed Malaysia since independence in 1957 was defeated. Former PM, and current opposition leader, Mahathir Mohamad, will become the new PM, the oldest head of government in the world at the age of 92. The opposition parties gained 54 seats from the government.
I have written about the Australian and US employment figures on my personal website. The current US unemployment rate is 3.9%, while Australia’s is 5.5%, but Australia’s participation rate is 2.7% higher than in the US. As a result, in my opinion, Australia’s employment situation is better than in the US.
In one fell swoop, the High Court’s judgment about the eligibility of Katy Gallagher as a Senator disposed of five members of Parliament.
Not only was Gallagher disqualified, but the consequence was that Susan Lamb, Justine Keay, Josh Wilson and Rebekha Sharkie had no legal ground left to stand on. They had to resign, and they did.
In each case, although they had initiated the procedure to renounce their foreign citizenship before the nomination date at the last election, that procedure had not been completed in the United Kingdom and they were still formally British citizens on nomination day. That was enough to see them disqualified.
A change in the law or a clarification?
The ALP had previously boasted of its rigorous vetting of its candidates, and expressed certainty they were all validly elected.
What went wrong? Has the High Court changed its interpretation of the Constitution or has it been consistent, as the Liberal Party claims?
The answer is that the previous position, as set out by the High Court, was ambiguous and could legitimately have been interpreted in two different ways. What the High Court did was to clarify the law by removing the ambiguity.
When the issue was first dealt with in the 1992 case of Sykes v Cleary, Chief Justice Mason and Justices Toohey and McHugh rejected a strict reading of section 44(i) of the Constitution on the ground that it would:
result in the disqualification of Australian citizens on whom there was imposed involuntarily by operation of foreign law a continuing foreign nationality, notwithstanding that they had taken reasonable steps to renounce that foreign nationality.
They considered that it would
be wrong to interpret the constitutional provision in such a way as to disbar an Australian citizen who had taken all reasonable steps to divest himself or herself of any conflicting allegiance.
Their Honours pointed out that even at federation, Australia was a nation of migrants, and that:
it could scarcely have been intended to disqualify an Australian citizen for election to Parliament on account of his or her continuing to possess a foreign nationality, notwithstanding that he or she had taken reasonable steps to renounce that nationality.
The ambiguity was whether the “reasonable steps test”: (a) only applies where the person would otherwise be disbarred from parliament because he or she was unable to renounce the foreign citizenship by any reasonable means; or (b) applies to all categories of dual citizenship, including those that can readily be renounced by following a reasonable procedure. This would mean that a candidate need only take all the reasonable steps within his or her power to renounce the foreign nationality prior to the nomination date, even if the formal renunciation did not happen until after that date.
Either view about what the court meant could have been fairly taken, but on balance most scholars favoured interpretation (b) because their Honours went on to apply the test of “reasonable steps” to two candidates who had dual citizenship with countries that permitted renunciation.
It was therefore unsurprising that the ALP, in its legal advice to candidates, took interpretation (b), with the consequence that some of its candidates undertook the renunciation process before the nomination date, but not sufficiently early for the renunciation to be completed prior to nomination.
While this approach was legitimate, it was not the most cautious one, as it involved a risk of invalidity if the High Court later decided that (a) was the correct approach.
Doubts arose about this interpretation when the High Court handed down its judgment last year in relation to Barnaby Joyce and the other “citizenship seven” in the Re Canavan case.
There, when discussing the “reasonable steps test”, the High Court did so solely in the context of the “constitutional imperative” to avoid the “irremediable exclusion” of citizens from being capable of election to parliament.
This left lawyers wondering whether the reasonable steps test applied more broadly, and the court had simply not mentioned it in that context, or whether the Court was confining its application to circumstances where the foreign citizenship could not be renounced at all.
What the High Court decided in the Katy Gallagher case
We now have an answer – the court took interpretation (a) above. It held that the “reasonable steps test” only applies where it is impossible or not reasonably possible to renounce the foreign citizenship.
In such a case, the person must still take all reasonable steps within his or her power to renounce that citizenship (but not the “unreasonable” ones). Once this is done, the person can stand for Parliament even though the foreign citizenship continues.
But if the impediment is simply slow processing, or that renunciation is a matter of discretion, this is not enough to trigger the exception. The process of renunciation has to be completed in accordance with the law and procedures of the foreign country before the person nominates as a candidate in a Commonwealth election.
Has this now resolved all the problems?
We now have more certainty than we did a year ago. We know that a person can be disqualified for holding dual citizenship, even when it was inherited through parents and the person holding it did not know of its existence. Ignorance is no excuse. We also now know that a person has to complete the process of renunciation of that foreign citizenship before he or she nominates to stand for parliament, even if it takes a long time to complete it.
The only exemption will be if it is impossible to renounce the foreign citizenship or the steps for doing so are unreasonable, such as a requirement that would involve a risk to the person, such as residency in a dangerous country.
It is in this area that there may yet be litigation. Some countries make it very difficult to renounce foreign citizenship, and the court may have to decide in the future about the point at which that difficulty becomes unreasonable. So this may not necessarily be the last of these cases.
What are the ramifications?
In practice, it will mean that political parties need to complete their pre-selection processes well before an election to allow sufficient time for any renunciation. If there is a snap election, or where casual vacancies or byelections occur and a candidate is needed quickly, those with dual citizenship may have to be passed over if there is not enough time to renounce the foreign citizenship.
It is also likely that arrangements will be made with some countries, such as the United Kingdom, to fast-track processing of renunciation to deal with this problem.
But in other countries, this will not be feasible, so some potential candidates will have to renounce a long time in advance in order to be ready to nominate if the opportunity arises. The message to every aspiring politician is to check your family tree, identify any foreign citizenship you may have and renounce now.
Can this be fixed?
Realistically, the only way of removing this problem is by way of a constitutional amendment approved by a referendum. There have been many past proposals to repeal this disqualification, or to replace it with a requirement that all candidates be Australian citizens, or instead to give parliament the power to deal with the issue by legislation.
It would not be necessary to abandon the principle that members of parliament have sole allegiance to Australia. Instead, this could be achieved by legislation that puts control over renunciation of foreign citizenship into Australian hands.
The biggest problem with the current provision is that both the law as to who is a foreign citizen and the procedure to renounce it are outside Australian control.
Would such a referendum be successful? I have my doubts. It is likely to be perceived as something to help politicians, not the people.
But this High Court judgment will make it more difficult for people from some countries to become members of parliament, and that unfairness may provide a stronger argument to support a referendum to change the system.
What lessons can we take from this year’s outcome? After two years in Canberra, I haven’t discovered a magic key to the Federal coffers. But here are my general observations.
Intrinsic value is not sufficient
We can’t assume that the broad public support for science will translate into support for specific proposals unless we do the work to explain the benefits, including more jobs and better health.
Being intrinsically valuable is not sufficient. Clarity about what we can deliver is essential when science is competing with spending proposals with obvious and immediate benefits – like more hospital beds.
It helps to remember that most politicians aren’t experts in science policy. I’ve wrestled for years with the term “national research infrastructure”. People I talk to outside the research sector simply don’t understand it. A small change to saying “national research facilities” turns the lights on.
It’s important for politicians to see the outcomes of public investment. They see the dollar figures in the budget papers but they don’t necessarily connect the research breakthroughs they read about in the newspapers years later to the programs that made them possible. It is important to help local members, irrespective of their party, recognise the impact of previously funded programs working for Australians.
Review and communicate
Take stock of progress and give credit to what has been achieved to date before heading back into the arena for the next round. As custodians of public funds, researchers should be proud to share their achievements with the taxpayers who ultimately make them possible.
Finally, I’ve always found politicians to be far more receptive to funding proposals when they see commitment from other quarters. It’s not just the Commonwealth that needs to step up. It’s business. It’s state and territory governments. It’s philanthropists.
If we reach out widely, we can strengthen our advocacy with new allies, and at the same time, help government to focus on the things that only government can do.
Below I highlight some key areas funded through Budget 2018.
I am encouraged that the government has committed to review the investment plan every two years, in recognition of the importance of keeping this discussion firmly on the national agenda.
In addition to these funds, the budget acts on an urgent priority flagged in the Roadmap – high performance computing. $70 million for the Pawsey Supercomputing Centre in Perth adds to the $70 million previously committed to the National Computational Infrastructure in Canberra.
This builds on the $119 million announced for the European Southern Observatory in the previous budget.
The ISA mission to preserve the Great Barrier Reef is supported by $100 million in new investment for coral reef research and restoration projects, as part of a $500 million package announced last month.
The ISA mission to harness precision medicine and genomics to make Australia the healthiest nation in the world is backed with $500 million over the next ten years from the Medical Research Future Fund.
A scaffold for the genomics revolution was provided by the Australian Council of Learned Academies (ACOLA) in the recent Precision Medicine Horizon Scanning report, commissioned by the Commonwealth Science Council.
A forthcoming Horizon Scanning report, on artificial intelligence, will likewise inform the $30 million commitment to AI and machine learning in the 2018 budget. The funding includes a national ethics framework for AI – a welcome development that will position Australia well in the global AI standards debate.
Over four years, $36 million will be provided for the Antarctic science program.
An amount of $4.5 million over four years is aimed to encourage more women into STEM education and careers, including a decadal plan for women in science.
With a focus on GPS technology, $225 million is allocated over four years to improve the accuracy of satellite navigation, and $37 million over three years for Digital Earth Australia. The goal of this funding is to make satellite data accessible for research, regional Australia and business.
There is also $20 million for an Asian Innovation Strategy, including an extension of the Australia-India Strategic Research Fund for four years.
In the business arena, changes to address integrity and additionality (that is, driving R&D to levels beyond “business as usual”) in the Research and Development Tax Incentive (RDTI) will reduce by an estimated $2.4 billion the money the scheme delivers to industry.
As one of the authors of the “3Fs” review of the RDTI – with Bill Ferris and John Fraser – I support the rebalancing of Australia’s business innovation budget. We are a global outlier in our heavy reliance on the indirect pull-through achieved through the tax system, instead of mission-driven direct investment.
With money recouped from the RDTI, scientists and research-intensive businesses should be making the case for more and better-targeted programs. Work remains to be done.