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


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

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

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

What’s being proposed?

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

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

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

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

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

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

Definition disputes

Defining small business goes beyond an academic debate.

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

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

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

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

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

What small businesses actually need

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

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

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

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

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

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

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

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

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

The Conversation

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

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

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


Michelle Grattan, University of Canberra

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

https://www.podbean.com/media/player/8vd69-67798f?from=yiiadmin

https://www.podbean.com/media/player/zf38q-677342?from=yiiadmin

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

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

Coalition slump in Newspoll gives Labor 54-46 lead


Adrian Beaumont, University of Melbourne

The first Newspoll of 2017 has Labor leading by 54-46, a 2 point gain for Labor since the final 2016 Newspoll, conducted in early December. Primary votes are 36% for Labor (steady), 35% for the Coalition (down 4), 10% for the Greens (steady) and a high 19% for all Others (up 4). It is Labor’s first primary vote Newspoll lead since Abbott was PM. This poll was conducted Thursday to Sunday from a sample of 1730.

We are told that One Nation had 8%, but this is not reported in the tables. Newspoll is still asking for voter choice between Coalition, Labor, Greens and Others, and then questioning Other voters further. In the past, this method has underestimated the support of significant minor parties, and One Nation is probably in at least the double digits.

Last Friday’s WA Newspoll, on the other hand, asked about One Nation support in the initial readout, finding 13% support for One Nation.

Turnbull’s satisfied rating was up one point to 33%, and his dissatisfied rating down one point to 54%, for a net approval of -21. Shorten’s net approval was -22, down 5 points.

An additional Newspoll question asked whether Australia should adopt a similar policy to the US in “making it harder” for those in 7 Muslim countries to immigrate, finding 44% in favour and 45% opposed. This question wording is somewhat deceptive, as Trump is not “making it harder”, he is outright banning.

In the months after Turnbull deposed Abbott, the Coalition had a large lead over Labor. As Turnbull’s policies became more right wing, the Coalition’s lead diminished, and they only barely won last year’s election. Since the election, Turnbull, at the urging of the hard right of his party, has abandoned positions that once made him appealing to mainstream voters. There is no evidence from the polling under either Turnbull or Abbott that Australians want a hard right government.

Essential at 53-47 to Labor

In this week’s Essential, primary votes were 37% Labor, 36% Coalition, 10% One Nation, 8% Greens and 3% Nick Xenophon Team. Voting intentions used a two-week sample of 1785, with other questions using one week’s sample.

49% disapproved of Trump’s immigrant ban, with 36% approving; the strongest support came from Other voters (mainly One Nation), who approved 66-25. When asked whether Australia should institute a similar ban to the US, 46% were opposed, and 41% in favour. 53% agreed with Turnbull’s response to the US ban, while 36% disagreed.

50% thought technological change was making people’s lives better, and 25% thought it was making people’s lives worse; in November 2015, it was 56-22 in favour of better.

Bernardi resigns from Liberals

Cory Bernardi has left the Liberals, and will form an Australian Conservative party. Bernardi was No. 2 on the Liberals’ SA Senate ticket, and thus received a six year term. His term will not expire until June 2022, barring a double dissolution.

Bernardi’s exit will not change the Senate situation much, as he will seldom vote with Labor against the Coalition. I do not expect Bernardi to perform well, as he does not have a high profile with the general public, and will be competing in much the same ideological space as One Nation.

Trump’s US ratings, and why impeachment is very unlikely

According to the Gallup daily tracking poll, 42% of Americans approve of Donald Trump’s performance as President, and 52% disapprove. Trump has made no effect to be bipartisan, and so those who voted against him disapprove, while the 46% who voted for him are satisfied with his performance.

Those who voted for Trump mostly did so because they approved of his efforts to shake up the system, including his 90-day ban on immigrants from seven Middle Eastern countries. Unless Trump does something that angers his support base, his ratings are likely to remain roughly where they are. Much will depend on whether Trump’s economic policies displease the white working class voters.

Impeachment of a President requires a majority of the House and a 2/3 majority of the Senate. The Republicans hold a 241-194 majority in the House, and a 52-48 Senate majority. Assuming all Democrats voted for impeachment, 24 House Republicans and 19 Republican Senators would need to vote for impeachment.

Most of Trump’s policies, such as anti-abortion measures and removing regulations on big business, are strongly supported by establishment Republicans. Trump’s Supreme Court nominee, Neil Gorsuch, satisfies the conservative base of his party. The Senate confirmed Trump’s controversial Secretary of State, Rex Tillerson, by a 56-43 margin, indicating that Republicans are in no mood to impeach Trump.

Impeachment is a drawn-out process where the Senate effectively tries the President with the Chief Justice of the Supreme Court presiding. Trump would rally his fervent supporters against any serious move to impeach him, putting pressure on Republicans that supported impeachment.

Midterm elections will be held in November 2018, and these give the Democrats a chance to take control of the House and Senate. However, the Democrats are defending 25 Senate seats in 2018, while Republicans defend just 8, so the Democrats appear likely to go backwards.

Section 4 of the 25th Amendment to the US Constitution allows a majority of the Cabinet and the Vice President to remove the President. If the President protests, a 2/3 majority in both the House and Senate is required to remove him. This runs into the same problem as impeachment: Republicans generally will not remove Trump, and his hand-picked Cabinet is even less likely to remove him.

If Trump does something so dreadful that even Republicans rush to impeach him, it may already be too late.

The Conversation

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

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

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.