Bernardi exits stage right: mayhem now, obscurity later


Nick Economou, Monash University

Whether it be due to hubris, courage or vanity, South Australian senator Cory Bernardi has decided to forsake the Liberal Party under whose auspices his political career had been nourished.

He will instead seek to create his own political party, Australian Conservatives. According to the conventions of Australian political science, Bernardi’s new party will be categorised as a “minor” party. This means it will be expected to win a minute share of the vote at the next election, that its only prospect for representational success will be in the Senate, and that it will be expected to last no longer than one turn of the Senate electoral cycle.

The current excitement surrounding Bernardi’s defection from the Liberal Party arises because of the deleterious impact it has on Malcolm Turnbull’s leadership. It also adds to the complex situation in the Senate that is already under the influence of a diverse and often erratic crossbench.

This is a situation that could last for some time. Bernardi, who was the second-placed candidate on the South Australian Liberal ticket in the 2016 double-dissolution election, is what the Constitution defines as a “first-class” senator, and thus entitled to a six-year term.

Even though he was elected as a Liberal candidate, Bernardi is under no constitutional obligation to relinquish his seat, so he will now doubtlessly start work on forming his new party. Somewhat ironically, he will be doing that under elections laws recently changed by the Turnbull government designed to make it harder for new parties to be formed, and restricting their ability to trade preferences with each other in future Senate contests.

If Bernardi does succeed in finding the requisite number of at least 500 bona-fide financial members in each state, and is able to put a national party organisation together, he will find himself in a crowded field.

Much has been made of the extent to which voters have been aligning their support away from the major political parties as a sign of drift to the right in Australian politics. This is true. But right-of-centre politics in Australia is a lot more complicated than the opinion polls indicate.

Most significantly, the rise in the total vote for right-of-centre candidates in the 2013 and 2016 Senate contests occurred alongside an exponential increase in the number of political parties being created.

In 2010, there were 13 parties advocating socially conservative and/or economic nationalist and/or anti-climate change sentiments, and who cross-preferenced each other in the half-Senate election held that year. This collection of parties won a national Senate vote of 3.8%.

In 2013, the number of right-of-centre minor parties had grown to 34, and the vote had increased to 15.7%. In 2016 the number of parties fell to 33, but the total national Senate vote rose to 16.9%.

This national figure includes some major state variations. It does not, though, include the impact of Nick Xenophon in South Australia which, by the 2016 election, had become very significant. In both the 2013 and 2016 elections, only a handful of the many right-of-centre parties won a primary vote above 4% – at which a political party becomes entitled to receive public election funding.

These parties included the Palmer United Party in 2013 (which imploded soon after the election), the Liberal Democratic Party in New South Wales again in 2013 but not 2016. In the 2016 election, there was Pauline Hanson’s One Nation, the Jacqui Lambie Network, and the Derryn Hinch Justice Party. Everyone else polled 3.9% or less.

In other words, the right-of-centre minor party vote is very thinly spread across a large number of competitors. Bernardi’s party would just be another one of these minor players.

Presumably, South Australia would be the organisational focal point for any party Bernardi would seek to create. The problem with that, however, is that Bernardi’s fellow South Australian, Nick Xenophon, has something of a monopoly over voters disillusioned with the major parties in that state.

South Australia is also the home base for the Family First Party. Its vote might not be great, but it seems to do well out of preference flows and usually manages to secure a Senate position. It might be six years before it happens, but Bernardi himself will struggle to hold on to his Senate seat.

The 2013 and 2016 election data do sustain the claim that there has been a swing to the right in the Australian electorate. But they also show that this has caused by a proliferation of right-wing parties, the vast bulk of whom secure a very small share of the primary vote (somewhere around 1%, on average).

The dominant players in the phalanx of right-wing minor parties have been those with high profile leaders or candidates (such as Clive Palmer, Jacquie Lambie, Derryn Hinch and Pauline Hanson). Bernardi may hope that his infamy could match the profile of these leading lights of populist anti-establishment politics.

But the reality is that a new conservative minor party headed by Bernardi would simply be adding to a political arena already saturated with conservative, populist, nationalist, anti-immigration and anti-environmental parties.

Bernardi’s actions do have some short- to medium-term implications, especially for the operation of the parliament, and the standing of the Liberal Party and its current leader. But the prospect of him being an influence beyond his current Senate term is very remote indeed.

The Conversation

Nick Economou, Senior Lecturer, School of Political and Social Inquiry, Monash University

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

The tag is cut: how will the Trump-Turnbull spat damage the alliance?


Alan Tidwell, Georgetown University

When former prime minister Paul Keating said last year it was time to “cut the tag” and loosen the bonds of the Australia’s alliance with the US, who would have thought the man wielding the knife would be Donald Trump?

The public disagreement between the Trump White House and the Turnbull government over the deal to send asylum seekers languishing on Manus Island and Nauru to the US is unprecedented. At no previous time in the history of the Australia-US alliance have things seemed so dire – and got there so quickly.

Past tensions kept quiet

Australian and American leaders over the years have, from time to time, disagreed or said things to cause embarrassment. But for the most part, such disagreements have been kept out of the limelight.

John Howard and Bill Clinton did not like one another. Their discomfort did not, however, seriously affect the alliance. But sometimes discomfort breaks into something stronger.

Blanche D’Alpuget, Bob Hawke’s then-biographer (and later his wife), recounts that Australia’s former foreign minister, Bill Hayden, and US Secretary of State George Shultz loathed one another. Hayden referred to Shultz as “the German pork butcher”, while Shultz called Hayden “stupid” to his face.

But, unlike the current saga, the Hayden-Shultz spat did not become public until after D’Alpuget published her Hawke biography.

In 2008, the content of another phone conversation between Australian and US leaders became pubic. A brief row broke out when reports emerged of a leaked conversation between Kevin Rudd and George Bush.

As the 2008 financial crisis erupted, Rudd had suggested using the G20 as a way of handling things to Bush in a phone conversation. Bush allegedly replied:

What’s the G20?

The White House angrily rejected the public version of events.

Time to think differently

Members of the US Congress have made a rare intervention in the latest spat in an attempt to counter Trump’s amateurish handling of the issue. Speaker of the House Paul Ryan said:

Australia is a very important and central ally and it’s going to continue to be.

Republican senator Lindsey Graham admonished Trump, suggesting the president “sleep more and tweet less”. Representative Adam Schiff, the ranking Democrat on the House Intelligence Committee said:

Before the president shows such disrespect again, he should consider this: there is only one nation that has stood with us in every war of the last century, from the fields of France and Belgium to the mountains of Afghanistan – Australia.

Trump has handled this situation very badly. In a very short space of time he has undone decades of work in building trans-Pacific security ties between Australia and the US. Other American allies – Japan and South Korea in particular – must look on, aghast at what has transpired.

But the Australia-US alliance was already under pressure before the phone call between Trump and Malcolm Turnbull went awry. The Trans-Pacific Partnership (TPP), a vital element in the Obama pivot to Asia, was headed for the dustbin even before the US election. Within hours of being sworn in, Trump cancelled US involvement in the trade deal.

More ominously, other US security partnerships in the region exhibit severe strain. In an eerie and intemperate foreshadowing of Trump’s outburst, Philippine President Duterte in 2016 called Barack Obama a “son of a whore” and then denounced his country’s security alliance with the US and embraced the Chinese.

While many aspects of the US-Philippine relationship are still in place, it is nonetheless showing signs of strain.

The Australia-US relationship has suffered numerous knocks over the past year. The greatest threat to it has not come from China, the Philippines or Australia, but from the US. Trump’s misguided handling of the refugee issue and his withdrawal from the TPP has combined with external events to place real pressure on the alliance.

Trump has cut the tag. Now Australia must think differently about its relationship with the US.

The Conversation

Alan Tidwell, Director, Center for Australian, New Zealand and Pacific Studies, Georgetown University

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

Newspoll shows Coalition trailing 46-54% at start of new parliamentary session


Michelle Grattan, University of Canberra

With parliament resuming this week, the first Newspoll of 2017 has the government trailing Labor 46-54% on the two-party vote and the Coalition’s primary vote falling four points to 35%.

This is the seventh consecutive Newspoll with the ALP ahead and the worst for the Coalition under Malcolm Turnbull’s prime ministership.

In results that will send fresh tremors through Coalition members who had hoped to start the new year on a better footing, the government’s primary vote is seven points lower than at the election, which the government only just won. It last was this low when the first move was made against Tony Abbott’s leadership, two years ago.

The poll, published in Monday’s Australian, reflects the general trend of disillusioned voters looking for avenues to reflect their protests. It shows a surge in support for independents and minor parties, which have gone from 15% to 19%.

Pauline Hanson’s One Nation, soon to be tested at the Western Australian election, is polling 8% nationally.

Labor remains on 36% primary vote, unchanged since early December; the Greens remain on 10%.

Turnbull’s net satisfaction has marginally improved from minus 23 to minus 21, while Opposition Leader Bill Shorten’s has worsened, from minus 17 to minus 22. Turnbull leads Shorten as better prime minister – 42% (up one) to 30% (down two points).

The government, beset with an expense scandal and the loss of a minister, anger over pension changes and other problems, got no clear air over the summer break. Now parliament resumes amid the fallout from the Trump-Turnbull contretemps over the refugee deal, a push from some Liberal MPs to have same-sex marriage determined by a free vote in parliament, and the prospect of South Australian Liberal senator Cory Bernardi defecting to lead his own conservative party.

Even Turnbull’s own issue of choice for the start of the year – energy policy – is not going as well as he hoped because of a lack of enthusiasm from energy companies and the financial sector for his advocacy of new “clean coal” power stations to be constructed.

In an interview with Network Nine on Sunday, Turnbull repeated he had “stood up for Australia” in dealing with Donald Trump, and said Trump had “absolutely not” asked for anything in return for saying he would honour the Obama administration’s deal to take refugees from Nauru and Manus Island.

Asked about any future military request that might be made, Turnbull said: “We assess all requests for military assistance on their merits, and there is no linkage, no linkage at all, between an arrangement relating to refugee settlement and any other matters.”

Turnbull was again cautious about the telephone call in which Trump was very aggressive.

“I’ve only said three things about the phone call with the president: firstly that it was frank and forthright; secondly that he gave a commitment that he would honour the refugee resettlement deal entered into by President Obama and thirdly that he did not hang up. The call ended courteously.

“Now I’ve got nothing more to say about the content of the phone call than that. It’s very important for me to be disciplined, to be calm and to pursue – in a very focused way – Australia’s national interests, and that’s what I do as Australia’s prime minister.”

On same-sex marriage Turnbull slapped down the new push for a free vote. “I’ve got no doubt that all of these matters will be discussed in the party room but I’m the prime minister, the government’s position is that which we took to the election, which is that this issue should be determined by a vote of every Australian in a plebiscite.”

A serious renewal of the same-sex marriage debate within the Liberal Party would be dangerous for Turnbull because it is a signature battle for the conservatives.

Former prime minister Tony Abbott at the weekend cast it in terms of Turnbull keeping his word. He told Fairfax Media: “Malcolm Turnbull made a clear election commitment that the marriage law would only change by way of people’s plebiscite, not free vote of the parliament. I’m sure he’ll honour that commitment. This isn’t about same-sex marriage, it’s about keeping faith with the people.”

Cabinet minister Christopher Pyne said on Sunday that there was no bill before the parliament to address marriage equality at this stage. “What happens down the track is a matter for the prime minister, for the cabinet, for the party room.”

In the Nine interview Turnbull, who gave the Liberals A$1.75 million for the campaign, made the startling revelation that when Tony Nutt became Liberal federal director at the end of 2015, “the party had so little money he had to work for several months without pay”.

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Grattan on Friday: Malcolm Turnbull should walk away from the refugee deal


Michelle Grattan, University of Canberra

It’s the last thing Malcolm Turnbull would want to do, or will do. But what he should do is walk away from the deal he struck with the Obama administration for the US to take refugees from Nauru and Manus Island.

He should then persuade his cabinet to grant a one-off amnesty, and let these people settle in Australia.

It would be a drastic and, for many in the government, a deeply unpalatable course. But the road Turnbull now has Australia travelling – that of the supplicant – is against our national interest. It’s one that sees the unpredictable Donald Trump treating the US’s close ally with near contempt, one that makes the Australian prime minister hostage to the US president’s capricious behaviour.

At the weekend, in their now much-canvassed telephone conversation, Trump told Turnbull it was his “intention” to honour the refugee agreement while, as revealed by the Washington Post’s detailed report, describing it to Turnbull as the “worst deal ever”.

According to the Post, Trump said Australia was seeking to export the “next Boston bombers”; he also told Turnbull “this was the worst call by far” in his round of five phone calls to world leaders that day, which included one with Russia’s Vladimir Putin.

Trump terminated the conversation after 25 minutes – it was expected to run for longer – although Turnbull insists Trump did not hang up on him, but rather “the call ended courteously”.

By Thursday (Australian time), after days of mixed messages from the US administration, Trump was publicly dissing the deal in the strongest terms, tweeting:

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No-one can predict where this imbroglio will now go. As one senior Australian source put it: “We are like a cork bobbing on the sea”.

Logic would suggest that Trump would want to ditch “this dumb deal”, which sits at odds with his suspension of the US refugee intake and must look inconsistent to his rusted-on supporters. But equally, he could go the other way and decide there were pluses – in terms of sway over Australia – in keeping it.

If he does proceed with it, the deal could be scuttled in practice by the US “extreme vetting” process excluding most of the refugees. That would leave Australia, after having endured the diplomatic agony, still with responsibility for the people.

What is clear is that the deal has become a big and damaging issue in the Australian-American partnership.

Turnbull has already come under attack for refusing to criticise Trump’s provocative temporary bans on refugees (indefinite for those from Syria) and entrants from seven majority-Muslim countries, which have been widely condemned internationally. Even if he had other motives, his desire to preserve the refugee agreement was obviously one in Turnbull’s approach.

There could be serious longer-term implications if Trump did go ahead with the deal.

Trump is the ultimate transactional politician. If he does something for Australia, reciprocity will likely be demanded at a later stage – with Trump, whose approach is to bully, having no compunction in putting his foot on Australia’s neck. It could be over anything – such as a further commitment to the Middle East or an involvement if the US escalates pressure on China in the South China Sea.

If Turnbull had received a favour, it would be harder for Australia to resist US pressure to do what it might not want to do. Even if the government were comfortable on policy grounds to go along with some US request there would be the suspicion in the public’s mind that this was a quid pro quo.

Apart from those concerns, it is extremely unfortunate to have this issue, with the fractiousness surrounding it, dominate the start of the Turnbull government’s relationship with the new administration. Trump is known for his vindictiveness. If he keeps the deal but angrily and resentfully, that won’t stand Australia in good stead.

Early sourness could limit the extent to which Australia will be in a position to exert any influence on other matters that are of importance to it, such as trade policy – where there are substantial differences between the two countries – and, in particular, America’s future role in the Asia-Pacific region.

Regional countries will be watching closely how the Australian-US relationship unfolds; much of our clout with them derives from the perceived closeness we have with the Americans.

Critics will claim that if Australia cut its losses, dumped the deal and took in the refugees, all manner of disaster would follow.

In particular, they would say, the people-smugglers would start their trade again.

Turnbull on Thursday reiterated that “the only option that isn’t available” to the refugees “is bringing them to Australia for the obvious reasons that that would provide a signal to the people-smugglers to get back into business”.

Yet they didn’t restart their business when the US agreement was first announced, despite suggestions that this could send them an encouraging message.

The government fortified the border further, and the so-called ring of steel around our north would surely be enough to keep boats at bay if it had to take another step. If not, there is something very wrong with our military and coastguard forces.

Politically, there is no question the amnesty course would be extremely difficult for Turnbull, after all the government has said and done.

How difficult? Well, Labor could hardly score real hits against it.

Turnbull would have much more to fear from the conservative ranks in his own party and the right-wing commentariat – and he doesn’t have a lot of gumption when it comes to standing up to these people.

But it would be better to do so, even with the undoubted political risks that it would involve for him, than allow himself and Australia to be subject to the current and future whims of a US president who is raising a great deal of alarm in many places.

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Will the diplomatic aggravation and reputational damage to Turnbull and Australia have been worth it?


Tony Walker, La Trobe University

Let us turn to Shakespeare for guidance to describe the predicament in which Australia’s prime minister, Malcolm Turnbull, finds himself in his interactions with a bullying American president, damned if he does and damned if he doesn’t.

Neither a borrower nor a lender be,

For loan oft loses both itself and friend,

And borrowing dulls the edge of husbandry.

– Hamlet Act 1, Scene 3.

In one of Shakespeare’s most oft-quoted passages Polonius is providing his son, Laertes, with some advice before he embarks for the bright lights of Paris.

It might be a stretch to compare Turnbull and the hot-headed Laertes; he is more like Hamlet in his indecision, it might be said. But in a transactional space he has placed his government in an invidious position by outsourcing a domestic political conundrum.

Neither a borrower nor lender be …

The Trump administration may well honour an agreement struck with the previous Obama administration in its lame-duck phase to take up to 1,250 refugees from Nauru and Manus Island. But the question will remain: will the diplomatic aggravation and reputational damage to leader and country have been worth it?

Turnbull’s spokespeople have been assiduous in their efforts to persuade us that an Australian prime minister stood up to the bully in the White House, and that rather than suffering a humiliating rebuff he gave a good account of himself.

That may be true, as far as it goes. But the point is, we should never have been in a position in the first place where we were relying on America’s good graces to salve an Australian domestic political problem at a moment when an American election was being fought on the refugee issue.

Let’s repeat: a deal of questionable probity was struck with an outgoing American administration in contradiction with the policy impulses of an incoming replacement.

No purpose is served now by arguing that few expected Donald Trump to prevail. That is one argument you cannot take to the bank.

If there is a reasonable explanation for Trump’s behaviour towards a friend and ally it is that he is being asked to sanction an arrangement that is antagonistic towards policies on which he was elected.

Whoever dreamed up this slithery refugees-for-politics arrangement in the prime minister’s office, or that of the immigration minister or the foreign minister, should be held to account for placing Australia’s reputation in hoc to an administration untethered form normal diplomatic niceities.

This proposed refugees-for-politics transaction might be characterised as an attempted end run around various United Nations refugee conventions.

My colleague at The Conversation, Michelle Grattan, has suggested that Turnbull cut his losses, tell Trump the deal is off, and offer those incarcerated on Nauru and Manus a “one-off” amnesty to come to Australia.

If Labor had the guts it would support such a course. But its position is even less principled than that of the government, if that is possible.

Labor both criticises its implementation and runs dead on such a transaction at the same time. This puts it in the position, discreditably, of both borrower and lender in this argument.

None of this is to suggest border controls be loosened, or that measures in place to counter unauthorised arrivals be relaxed. It is simply an argument to deal with an existing problem that has caused enormous rancour in Australia, and one that could be resolved if separated from politics.

Unfortunately, and in the case of a government bereft of an appealing political narrative, the “stop the boats” refugee mantra provides a port in a storm, it might be observed.

This brings us to the broader question of how countries like Australia might deal with a White House like no other in living memory.

If it is any comfort to Turnbull in his mendicant state as far as the refugee deal is concerned, leaders of comparable countries like Canada are faced with the same dilemma, and it is this. To what extent does Turnbull, or Justin Trudeau of Canada, or Angela Merkel of Germany, or Theresa May of Britain, assert their country’s values and at the same time criticise Trump at a moment when America’s own values are being trashed?

Trudeau perhaps provides the better model for an Australian prime minister seeking guidance about how to deal with the Trump phenomenon. Inside and outside the Canadian parliament, Trudeau has avoided direct criticism of the Trump administration, but he has made his views known via social media.

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No such public sentiments have emanated from an Australian prime minister hostage to his party’s unsentimental refugee policy, and a supplicant on the issue to a new American administration.

For her part, Merkel did not dissemble, as might be expected, and in contrast to others, including Turnbull. Her spokesman said:

The chancellor regrets the US government’s entry ban against refugees and citizens of certain countries. She is convinced that the necessary decisive battle against terrorism does not justify a general suspicion against people of a certain origin and a certain religion.

Finally, a word about the Battle of Hamel, of July 4, 1918. In the welter of words written about the Trump-Turnbull contretemps, in which an American president allegedly hung up on an Australian prime minister, much has been made of Australia having been America’s most steadfast ally from the first world war on.

It is true that American troops served alongside Australians under the command of then Lieutenant General John Monash. But it is also the case America’s commander, General John J. Pershing, whittled back American involvement on the ground for operational reasons.

In the end, a relatively small number of American soldiers were involved in what proved to be a successful operation in efforts to defeat the German army on the River Somme.

Like the reduced American commitment at Hamel, a Trump administration may seek to minimise its intake of refugees in what has proved to be an exercise in Australian diplomacy that has brought little credit to those involved.

The Conversation

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

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

US embassy says refugee deal stands, but Trump casts new doubt in tweet


Michelle Grattan, University of Canberra

Update

Donald Trump has lashed out at Australia’s refugee deal with the US in an inflammatory tweet.

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Earlier story:

The American embassy in Canberra has been forced to reaffirm that President Donald Trump’s undertaking to honour the refugee deal stands, after new doubt arose following an explosive story in the Washington Post.

Malcolm Turnbull refused to be drawn on a Washington Post report that Trump “blasted” him over the refugee deal in their weekend conversation, which the president told him was his worst call of the day.

Turnbull’s silence was taken as an effective broad confirmation of the Washingon Post story.

“‘This is the worst deal ever’, Trump fumed as Turnbull attempted to confirm that the United States would honour its pledge to take in 1,250 refugees from an Australian detention centre,” the Washington Post reported.

“Trump, who one day earlier had signed an executive order temporarily barring the admissions of refugees, complained that he was ‘going to get killed’ politically and accused Australia of seeking to export the ‘next Boston bombers’,” the story said.

“At one point Trump informed Turnbull that he had spoken with four other world leaders that day – including Russian President Vladimir Putin – and that, ‘This was the worst call by far’.”

The report said Trump had abruptly ended the call after 25 minutes when it had been expected to go for an hour.

It said Trump had told Turnbull it was his “intention” to honour the agreement. Turnbull told Trump that to honour it the US wouldn’t have to accept all the refugees, but only to allow each to go through the normal vetting procedures.

“At that, Trump vowed to subject each refugee to ‘extreme vetting’,” the Washington Post said, citing a senior US official who spoke to the paper.

One of the article’s two authors, Philip Rucker, said the sources for the story were “US officials who have been briefed on the specific details of the conversation”. Rucker is the White House bureau chief of the Washington Post. The other author, Greg Miller, covers the intelligence beat for the paper.

On Monday Turnbull described the conversation as “constructive”.

Peppered with questions at his Thursday news conference in Melbourne called to talk about energy, Turnbull repeatedly refused to be drawn. “I’m not going to comment on these reports of a conversation,” he said.

He did add that: “Australians know me very well. I always stand up for Australia in every forum.”

He repeated that he had received Trump’s assurance that the deal, negotiated with the Obama administration, would be honoured.

A US embassy spokesperson later said: “President Trump’s decision to honour the refugee agreement has not changed and [White House] spokesman Spicer’s comments [confirming this] stand. This was just reconfirmed to the State Department from the [White House] and on to this embassy at 13:15 Canberra time.”

Opposition Leader Bill Shorten said Turnbull should “talk straight to the Australian people” about what was going on. “We don’t want to find out our news from the Washington Post. We should hear it first from our prime minister.”

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Turnbull believes in timely disclosure of donations – just not his


Michelle Grattan, University of Canberra

During his Wednesday appearance at the National Press Club Malcolm Turnbull observed he was not a “political animal” like some of his opponents.

He meant it as a virtue – he was extolling his pragmatism on energy policy. But he failed, to his detriment, to show a political nose on something closer to home.

Having agreed that it would be desirable to have political donations disclosed in a more timely and transparent way (and flagging he opposed foreign donations), he then refused to say how much he had given in the last campaign.

The latest donations list had come out only hours earlier but Turnbull’s contribution – speculated to be A$1 million or $2 million – was missing, apparently because of a timing loophole.

So it was obvious Turnbull would be asked the question, equally clear that he would be called a hypocrite if he supported a general change but took advantage of the secrecy to which he is legally entitled.

What was the point? The story, in the broad, is out there (unless the amount is much higher than suggested). The figure will presumably emerge officially in the next disclosure round – that much closer to the election. And his coyness just diverted attention from his main messages about jobs, energy, education and other parts of his 2017 agenda.

How much he kicked in for his own re-election wasn’t the only delicate point on which Turnbull would not be drawn at the Press Club.

He was notably reluctant to buy into the issue of preferences for One Nation, which is topical in the context of the March election in
Western Australia. This week the Herald Sun reported there had been talks between the WA Liberals and Pauline Hanson about preference swapping.

Asked whether he would encourage WA Premier Colin Barnett to follow the precedent of Liberal predecessor Richard Court who did not preference One Nation, Turnbull said this was a matter for the WA division and for Barnett.

Later he was asked how Hanson’s views might have evolved in the last 15 years that made her “in any way less offensive” than when John Howard put her last. And where would Hanson be on his how-to-vote cards next election?
“I am not a commentator on the political evolution of One Nation,” Turnbull replied.

“We deal with all of the parties in the parliament including One Nation. … We respect every single member and senator… All of them have been democratically elected and we seek their support on legislation.”

In her first iteration, Hanson caused intense debate on the conservative side of politics about how her party should be handled. Many prominent Liberals argued passionately in terms of principle. It’s not like that any more.

Second time round, Hanson has changed a little – but only a little. The Liberals seem to have changed a good deal more. We’ll see what happens at the federal election on preferences but in the meantime, power is power and Hanson, with her Senate position, has quite a lot of it.

For Turnbull, despite abhorring many of her views, the relationship with Hanson and her party is all about transactions.

Just as it is with Donald Trump and his immigration crackdown – on which Turnbull keeps his thoughts to himself – and that deal to take Australia’s offshore refugees.

Turnbull had the refugee agreement, done with the Obama administration, reconfirmed in his weekend phone conversation with the President.
But on Wednesday it become mired in fresh confusion and uncertainty.

White House press secretary Sean Spicer reiterated that the deal, which he said involved some 1250 people, had the green light, while stressing there would be “extreme vetting” of proposed settlers. But then in a clarification to the ABC the White House cast doubt on how firmly it was locked in.

The ABC quoted a White House source saying that if Trump did go ahead with the deal, it would only be because of the United States’ “longstanding relationship with Australia”.

Turnbull remains publicly confident in Trump’s private assurance. The test of this confidence, and of the President’s word, will be how many refugees from Nauru and Manus Island eventually do land on US soil after the “extreme vetting” process. We might be waiting a while before we know the answer.

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

What has Turnbull agreed to do for Trump?


Mark Beeson, University of Western Australia

Let’s hope it’s worth it. Malcolm Turnbull has sacrificed whatever remaining credibility he may still have had as a small-l liberal in a desperate effort to save his tawdry asylum-seeker deal with the US government.

Those hoping for great things from Turnbull will be disappointed but unsurprised, perhaps. What looked like a brilliant political ploy to resolve the running sore of offshore detention has now come back to bite him.

It’s hard to summon much sympathy for his plight. The reality, however, is that it could – and still may – have been so much worse. If the unpredictable xenophobe who currently runs the US and much of the rest of the world shows any consistency, there is no way the asylum seekers on Naru and Manus Island ought to be allowed into the land of the free. After all, most of them are from the countries that have been hit by Trump’s blanket ban on travel from several Muslim-majority countries.

The question is what Turnbull had to say or even promise in his 25-minute phone call with US President Donald Trump to persuade him to honour an agreement forged with his predecessor.

Given that Barack Obama was routinely dismissed as being weak on terrorism, border protection and unambiguously naming supposed threats to American security, getting Trump to agree is no small achievement – if he actually follows through on it. At the very least the would-be asylum seekers will be subjected to “extreme vetting”, which many may not pass.

One assumes that Turnbull must have pointed out the immense political damage that reneging on this deal would do to him personally and to perceptions of the alliance relationship with the US more generally. For the first time in recent history there is a serious debate about Australia’s alliance with the US, and a repudiation of the deal would have been a political nightmare for Turnbull.

It would have been extremely difficult for him to mount a continuing defence of a relationship that is regarded in such a cavalier, instrumental and seemingly expendable fashion by the US.

Trump’s “transactional” approach to allies is entirely dependent on what benefit they bring to the US, not the stability of the international system, much less the wider collective good. It is not even clear whether Trump or many of his key advisers would actually recognise the idea of a collective interest at the international level as a meaningful concept.

The question, therefore, is what Turnbull had to offer as his part of a deal between two famously successful businessmen.

Not criticising the Trump regime would be a given in such circumstances, and Turnbull is dutifully fulfilling his part of the bargain, tacit or otherwise. Giving a running commentary on the domestic policies of other governments is not part of his job, apparently – something the likes of Kim Jong-un and Rodrigo Duterte will be delighted to hear, no doubt.

More immediately, has Turnbull given an explicit or in-principle commitment to support the Trump administration in whatever actions it may decide to take in the “war on terror”, or – more consequentially for Australia – “standing up to Chinese aggression”, as key Trump advisor Peter Navarro might put it?

The stakes here could hardly be higher, especially for Australia. It is not simply because Australia is bound to be adversely affected by any deterioration in the bilateral ties between our principle strategic and economic partners, but because there is the very real possibility that the relationship could descend into actual conflict.

Despite the fact that Australia could make absolutely no real difference to the outcome of such a conflict, there is every chance that it could get sucked into it as a compliant, ever-reliable and obliging American ally. Australia’s propensity to do America’s bidding is high at the best of times.

The worry is that Turnbull has, as the Americans say, doubled-down on our implicit strategic obligations with a renewed commitment to act – whatever policy the Trump regime embarks on. It is the very least Trump would expect in return.

The asylum-seeker problem is nightmarishly complex and offers no easy solutions. While it is possible to have some sympathy for a problem that wasn’t entirely of the Turnbull government’s making, it is difficult not to see the “American solution” as yet another illustration of the dangers of strategic dependence. It reeked of dubious political expediency under Obama; it is fraught with dangerous uncertainty under the Trump regime.

The growing band of critics of the alliance will feel vindicated and emboldened. If the relationship with the US causes Australia to become embroiled in yet another questionable and unnecessary war on behalf of our supposed protector, it can only be a question of time before wider public confidence in the relationship is eroded, too. That really would be a problem for the Turnbull government.


This piece was originally published on John Menadue’s blog, Pearls and Irritations, and is republished with permission.

The Conversation

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

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

What economists and tax experts think of the company tax cut


Jenni Henderson, The Conversation

Prime Minister Malcolm Turnbull and the Treasurer Scott Morrison are still trying to sell their plan to cut the company tax rate to 25% by 2026-27. The current rate is 30% and has been since 2001.

The tax cut was introduced in the 2016 federal budget. The government indicated small to medium businesses turning over less than A$10 million would pay a company tax of 27.5% initially. The company turnover threshold for the tax cut would then increase over time from A$10 to $25 million in 2017-18 to A$50 million in 2018-19 and finally A$100 million in 2019-20.

But before any of this happens, the government needs to convince the senate crossbenchers to pass the legislation. It seems the government hasn’t won over tax experts and economists with this policy, here’s some articles that explain why.

Don’t expect an instant wage increase

In a national press club address Malcolm Turnbull justified the tax cut by saying, “company tax is overwhelmingly a tax on workers and their salaries.” It follows that cutting it would increase salaries right?

However there’s a whole lot of decisions businesses need to make before they even consider raising wages. It’s not just as simple as the government makes out, as professor John Freebairn from the University of Melbourne notes:

Individuals benefit from lower corporate tax rates with higher market wages. But the higher wage rates will take some years to materialise, and the magnitude of increase attributed to the lower corporate tax rate, versus other factors, is open to debate.

Businesses would need to consider the savings of international investors, what resources the business might need, what the return for investors would be on these. All of this before it would consider a wage increase for its workers.

The enlarged stock of capital, technology and expertise per worker becomes a key driver of increased worker productivity. In time, more productive workers are able to negotiate higher wages. Via this chain of decision changes, employees benefit from the lower corporate tax rate.

Any modelling on how much a tax cut could be worth to our economy is up for debate

Modelling is sensitive to whatever assumptions the government makes and these assumptions can be oversimplified. ANU principal research fellow Ben Phillips points out that tax reform like this inevitably has winners and losers and is influenced by powerful lobby groups.

In thinking about tax reform it is important to keep in mind that the gains from modest tax reform are not likely to be a revolution in Australia. The models themselves only estimate relatively small gains from tax reform.

Here’s a little something to bear in mind when hearing any figures thrown around on how much a company tax cut could be worth:

Over the past 25 years Australia’s living standards have increased by around 60% whereas the sorts of gains estimated from tax reform are expected to be little more than 1 or 2%. It remains important that in securing such modest gains we don’t ignore fairness.

The benefit to the domestic economy won’t be that big

The idea behind the cut is that companies will be motivated to provide jobs and other economic benefits because they are receiving a tax break. In theory this kind of tax should boost the economy in the long term, but as John Daley and Brendan Coates from the Grattan Institute explain it’s not that simple.

In Australia, the shares of Australian residents in company profits are effectively only taxed once. Investors get franking credits for whatever tax a company has paid, and these credits reduce their personal income tax. Consequently, for Australian investors, the company tax rate doesn’t matter much: they effectively pay tax on corporate profits at their personal rate of income tax.

The Grattan researchers point out that if companies pay less tax then they might reinvest what they save, but in practise most profits are paid out to shareholders. So the tax cut won’t have much of an impact on domestic investment.

They also pick holes in the Treasury’s modelling on the tax cut’s boost to Gross National Income (GNI).

Treasury expects that cutting corporate tax rates to 25% will only increase the incomes of Australians – GNI – by 0.8%. In other words, about a third of the increase in GDP flows out of the country to foreigners as they pay less tax in Australia. And because most of the additional economic activity is financed by foreigners, the profits on much of the additional activity will also tend to flow out of Australia.

It doesn’t make much of a difference

Another argument for cutting Australia’s company tax rate is to deter companies from shifting their profits to other countries where the tax rate is lower. Recently President Trump promised to cut the United States federal corporate tax rate from 35% to 15%.

Antony Ting, associate professor at the University of Sydney notes most countries have been reducing their company tax rates over the past two decades. This hasn’t changed the incentive for multinationals to avoid taxes.

The tax-avoidance “success” stories of multinational enterprises such as Apple, Google and Microsoft suggest this argument is weak. The fact is that the profits these multinationals shift offshore often end up totally tax-free.

A FactCheck by Kevin Davis, research director at the Australian Centre for Financial Studies, reviewed by economist Warwick Smith, says there’s no point to comparing Australia’s company tax rate with other countries anyway.

Australia’s dividend imputation tax system means that any comparison of our current 30% rate with statutory corporate tax rates elsewhere is like comparing apples and oranges.

Small and medium businesses actually lose out

Due to the way the proposed company tax cut is structured, foreign investors get a windfall while local employers including small and medium businesses cop a cost because they remain uncompensated.

Economist Janine Dixon from Victoria University modelled how the cut would play out.

Local owners of unincorporated businesses are taxed at their personal tax rate. Because of Australia’s dividend imputation system, Australian shareholders in incorporated business are also taxed at their personal rate, not the company tax rate.

She explains that 98% of small businesses (employing four or fewer people) are wholly Australian owned and because of this are indifferent to the cut, but 30% of large businesses (employing more than 200 people) have some component of foreign ownership.

An increase in foreign investment is generally understood to be a driver of wage growth. This is the basis for the argument that at least half of the benefit of a cut to company tax flows to workers… We find that benefit to foreign investors will exceed the total increase in GDP. In the domestic economy, benefits to workers will be more than offset with a negative impact on domestic investors and the need to address additional government deficit.

Other things are just as important

Even if some businesses are keen for a tax cut, meaning more money in the kitty, it’s how these businesses spend this money that counts.

Jana Matthews from the Centre for Business Growth at the University of South Australia says many CEOs are uncertain about what to do in order to grow their business and are fearful of making the wrong decisions.

We need to focus as much attention on the management education of founders, CEOs and MDs [managing directors] of medium-sized companies as we do on providing them with more money. Once they learn how to grow their companies, they will definitely need money to become the engines of growth, and they will certainly hire more people, creating the jobs we all want.

The Conversation

Jenni Henderson, Editor, Business and Economy, The Conversation

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

What did Galaxy’s poll tell us about freedom of speech and 18C? Not what the IPA said it did


Andrew Jakubowicz, University of Technology Sydney

In evidence to the parliamentary inquiry into freedom of speech on Tuesday, the Institute for Public Affairs (IPA) think-tank tendered a statement based on a survey it had commissioned from Galaxy Research. The Australian newspaper covered this polling as a front-page “exclusive”.

The second paragraph in the IPA’s media release claimed – without evidence – that there was set to be much surprise among the media and the political class that 95% of Australians think “free speech matters”.

The release then reported that 48% of people supported removing the words “insult” and “offend” from Section 18C of the Racial Discrimination Act.

The IPA actually wants the whole of 18C removed. But the way forward since then-prime minister Tony Abbott baulked at the gate on the changes proposed by his attorney-general, George Brandis, in 2014 has been this apparently minor surgery to the less serious end of the unlawful quartet (the others being “humiliate” and “intimidate”).

But is the IPA’s statement a fair reading of the Galaxy polling? And was the research fair to start with?

Questions of methodology and polling

According to a Galaxy spokesperson whom I spoke with on Tuesday, no attempt was made to ensure the sample included a representative component of Indigenous and non-Anglo or overseas-born Australians.

Such data was not collected as part of the study as the client (the IPA) had not asked for it, so the results could not be profiled on these criteria. Yet these are the people 18C is mostly designed to protect.

Chances are that an average online panel (the Galaxy polling was done mainly online) won’t include many Indigenous people, people with poor English, or people from minority refugee communities – that is, the primary targets of race hate speech. We had to work hard to ensure our online survey on a similar issue included enough minority-group Australians to ensure statistical accuracy.

The IPA research was two questions in the regular Galaxy omnibus survey, which seeks to control only for age, gender and region. It also looks at shopping patterns.

The first question was:

How important is freedom of speech to you?

This was designed to position the respondent positively to the question and its point of view.

The second question was:

Do you approve or disapprove of the proposal to change the Racial Discrimination Act so that it is no longer unlawful to “offend” or “insult” someone because of their race or ethnicity? It will still be unlawful to “humilitate” or “intimidate” someone because of their race or ethnicity.

This aims to deliver the coup de grâce that reinforces the desired outcome.

So, more than 95% of those polled thought freedom of speech was important. This is a no-brainer. Had the question been – as other surveys have put it – “Is freedom of speech more important than freedom from hate?”, the percentage of those in favour may well have come down significantly. Or if that question were to be reversed, even more so. But we will never know.

Then the question of removing “insult” and “offend” was put. Less than half of any group supported this. Given the preparatory question and the lack of information about the implications or impact, this is less than one might have predicted.

However, neither Galaxy nor the IPA discussed the most interesting data.

Youth responses show IPA conclusions invalid

In the Galaxy poll, the 18-24 age group had the highest commitment to freedom of speech but the lowest support for removing “insult” and “offend” from 18C – by a long way.

So, a suggestion that a commitment to freedom of speech necessarily carries with it support for amending 18C is simply false. There is no simple correlation. They appear to be independent variables, though mediated by some other factor – probably social media use.

There is a much better explanation which neither Galaxy nor the IPA evoked.

The 18-24 age bracket comprises the true digital natives; a very high proportion are regular users of social media. Our research shows they have the highest rate of encounters with racist hate speech. They are usually witnesses, though sometimes are targets. Most encounters with online hate happen on Facebook (40%), YouTube (20%) and in comment threads on news media site (15%).

Digital natives value freedom. But they also want vulnerable people protected and civility enhanced. And they don’t trust sites like Facebook, YouTube or Google to do that – nor, it must be said, government.

In our research, young people were among the least likely to want offending someone on the basis of race to be lawful, just like those surveyed by Galaxy for the IPA. However, they were more likely to hold a neutral position than older people; they were more reluctant to force regulation, but more aware of what racism did to its targets.

The people most in support of retaining 18C in our study but not in Galaxy’s were the older group, who are far less likely to use social media and thus encounter cyber-racism. In our study, the people most likely to want the right to offend people were those who identified themselves as authors of racist material.

So, it follows that the less racism you encounter that you don’t want to see, the less likely it is that you’ll worry about it. The more you want to freely offend people, the more likely it is you author racist material.

Lucky I read the report – or you’d never have known quite what the IPA was selectively trying to slip through to the inquiry and the press. Be sure, though, that the claim most Australians want 18C gutted in the name of freedom of speech simply is not supported by evidence.

The Conversation

Andrew Jakubowicz, Professor of Sociology, University of Technology Sydney

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