Does Australia have a ‘political crisis’?

This is my last reflection on what Paul Kelly has called ‘the Australian crisis’, his proposition that our political system is now unable to deal with reform of any kind, because the politicians find it just too hard. One cause is that our politics is almost completely adversarial, and another is that the electorate does not understand the  realities of our political economy. We have become too used to annually increasing wealth.

I mentioned in one of the earlier posts that he argues that with respect to politicians we seem to move quickly from adulation to contempt. It may be that we are returning to an era of short-term governments, which enter on their term because of total dissatisfaction with their predecessors, and are in turn tossed out by an equally disenchanted electorate. Nothing much gets done at such times. What is it that has to be done, you ask. To that in a moment.

But we can notice, in support of Kelly, that the Baillieu/Napthine Government in Victoria lasted only one term, that the LNP in Queensland is only marginally ahead of an ALP that was thrown out of office only one term ago, and that the Coalition in NSW will probably get back in its coming election, but with a much reduced majority. Federally, the Coalition is way behind Labor, and is only halfway through its term. Is this a crisis?

Not really. There have been electoral phases like this before, and opinion polling is only a rough guide to outcomes. But we need to consider Kelly’s point about the difficulty of undertaking reform. We are only fifteen or so weeks away from Joe Hockey’s second Budget, and it seems that aspects of the first one are still in contention. What will happen to the second? Perhaps more important, what will the second Hockey budget be about?

I do think that there has been a marked reluctance by the ALP, the Parliament and the mass media to accept that the six-year Labor Government spent far too much, and that it committed future governments to a continuation of that spending. Yes, there was the global financial crisis, and some of that spending was necessary. But when that was over there was no return to economy or thrift. Instead, more was promised, as though the money-tree was having a second crop.

Instead, there was a rapid decline in our terms of trade, our export earnings and government revenue. For too long Treasury kept reassuring the Government that there would be an uptick. It never came. The first Hockey Budget was tough, but you would expect that. The response was that the Budget was unfair, because too much of its economies fell on those least able to afford them. The trouble is, that far too much of the Budget is a transfer system, exacting money from those able to pay taxes, and handing it over, in divers way, to those who don’t, or who pay little. The following graph, which appeared in an earlier post, sets out the problem.

share-of-income-tax-paid_-_FINAL

Societies have a choice in all this. You can ask the people who already pay 95 per cent of the income taxation to pay even more than they presently do, or you can reduce the transfers, or you can increase the GST level. You can increase company taxation. There is anguish whatever you do. Some people depend on the transfers. Those who already pay a lot of taxation (mostly wage and salary-earners, who can’t offset easily) feel angry that they are to pay more. Increase company taxation and you reduce the incentive to create jobs.  Increase GST? Well, the States would get it.

The Coalition is of the view that people pay too much tax anyway. Its position is that we are all expected to have a job and look after ourselves and our dependants. That is the responsible thing to do. The Government’s task is to ensure that the economy is strong and that jobs are plentiful. It can tweak a bit, but tweaking is not the aim of the game. The expectation that tightening our belt is really unnecessary, because Australia is doing well in comparison to other countries, seems a tad on the loony side to me, whoever says it. And it is loonier still when you look at the great decline in mining revenue, and the number of companies in that sector that are closing down mines, laying off people or having other troubles.

The Greeks are congratulating themselves on the election of a government that is going to stand up for Greeks against the perfidious Germans and other Europeans who lent them lots of money, and want it paid back.  No! say the Greeks, you’re wealthy, so you can afford to wipe off our debt. I think that there are echoes of that sentiment across our country, and it’s no more sensible here than it is in Greece.

There is, of course, a way out — for Australia, anyway. If we do not make appropriate reductions in public expenditure there will be a reluctance on the part of overseas lenders to provide loans, our interest bill will become an ever-larger proportion of our government’s budget, and we will soon be back in the dark days. It happened in the late 1920s. it happened again in the stagflation period of the 1970s, and happened briefly in the early 1990s. It’s a bit like war. We have generations now that have no memory at all of the Second World War, the Korean War of or the war in Vietnam. War sounds exciting to some, especially those who have never experienced it.   We have had twenty years of continual prosperity.  Affluence is seen by younger people as the natural order of things. If it is declining, then it must be the government’s fault.

I feel like many others with whom I’ve talked. I would be most apprehensive about any return of the Labor Party, given the dysfunctional ALP government of 2007-2013. But I confess to a deal of disappointment with the actions so far of the Coalition Government. I had hoped for a lot better. I accept that the Senate has made things difficult, and  there will be many more who find the position and actions of some of the cross-benchers juvenile and almost intolerable.

But that is where leadership comes in, and we haven’t seen much of it. Yes, we have a crisis, but I think it is a short-term one. Unless there are substantial changes in the Government’s leadership, the outcome will be unpleasant.

I will leave the almost ludicrous BOM/CSIRO report on our future weather/climate until next time.

Join the discussion 16 Comments

  • whyisitso says:

    You say that the Senate has made things “difficult”. The word I would use is “impossible”. They are a bunch of spoilt brats. You know the one – you see them in supermarkets all the time. They put a lolly bar in mum’s trolley and if she takes it out and replaces it onto the shelf, they throw a giant tanty. Not many mum’s of this generation have the gumption to resist. I’d have got a good smack on the bum when I was a kid.

    We are all spoilt brats these days.

  • Doug Hurst says:

    I think we do have dysfunctional federal government, but only some blame rests with the senate – they are simply making populist appeals to all those who think the world owes them a living and the good times will roll forever. The senate obstructionists are just politicians reflecting public opinion for personal and party reasons. The long term can go to hell, they just want to win the next election.

    If public opinion changed, the senate would have to reflect the change. Problem is, short of a serious economic crisis that really hurts, I can’t think of anything that will change enough minds for that to happen. We do not yet face Greece’s economic woes, but the attitudes that created them are everywhere.

  • Neville Hughes says:

    Your comments are very fair.

    How much is due to the influence of the UN?

    If you have space my letter sent to a local paper highlights this aspect (yet to be published)

    “Sorting through the pros and cons of global warming/climate change can be confusing.

    From its scientific, technical and socio-economic reports over its 26 years the UNIPCC has shaped five political ‘Summaries for Policymakers’ (SMP) assessment reports for its 194 member countries to copy in order to create the international climate/environment policy it seeks using the “settled science”.

    In 2007 member countries learned that the real purpose of the “settled science” is “about how we redistribute de facto the world’s wealth”, Dr Ottmar Edenhofer Lead Author AR4 (2007) SPM.

    Now we are learning how the SMPs’ shaping process of the “settled science” is reliant on outputs from unvalidated speculative computer models – “Simplifications and differences in assumptions are the reason why output…… and projections from all models can differ considerably from the reality that unfolds”. Dr Ottmar Edenhofer Lead Author AR5 2014 SPM. i.e. longhand for GIGO “Garbage In – Garbage Out”.

    Governments who have copied the settled science ‘redistribution policies’ have expended hundreds of billions pursuing GIGO SPMs contributing greatly to their depressing economic situations e.g. the European Union.

    Similarly, Australia’s governments – Green/ALP (2007 – 2013) used the “settled science SPMs”as the ‘foundation’ for their policies without disclosing the real purpose, with this result:

    – ongoing interest cost on borrowing equal to 1 x cost of an ABC @ $1.2 billion/month or about $14 billion/year;

    – inordinate borrowings with threatening debt levels; and

    – a depressingly loss of industry and jobs.

    The Abbott Government is now expected to magically recover Australia from this very difficult situation by repaying the capital borrowed, “saving” 1 ABC equivalent each month, whilst stimulating/ creating new industries and jobs.

    A challenge made hugely more difficult by the obstructionism of Green/ALP Senators on behalf of those who blindly followed the ‘settled science’.

    This is dumb!

    Whither trust and honesty?”

  • PeterE says:

    Thanks for this and the comments below. Years of ease have developed a large section of the population who have little idea of what privation and poverty is. At the end of WWII a large proportion of the population were used to living parsimoniously; now only a relative few do so. Most people see plenty as their birth-right and they also demand that the Government do more for the poor. The genius of Menzies was that he could explain simply and cogently the need for action in such a way that a majority could say: ‘that is right,’ and vote accordingly. At present we don’t have a Menzies (although Howard developed splendidly in this regard). There are, though, glimmers of hope. If Abbott can be deflected from some of his more eccentric decisions via full Cabinet and other consultation, he does have good judgement on many other subjects. He needs our support. If he can dig in, get into serious subjects such as preventing jihadists from returning to this country, and consolidate, the polity will settle down and progress will be made.

  • Gordon Watson says:

    I must share article!

  • kvd says:

    Well I would like to see DA’s data points for many of the sweeping statements in this post. Let’s start with “the electorate does not understand the realities of our political economy”: elitist, much?

    Then we have “Yes, there was the global financial crisis, and some of that spending was necessary. But when that was over …”: it’s over?

    “Increase company taxation and you reduce the incentive to create jobs”: haven’t seen any evidence that the one is even remotely connected to the other.

    “Increase GST? Well, the States would get it”: thus relieving the Federal coffers of the need to transfer funds from other sources – surely?

    “The Government’s task is to ensure that the economy is strong and that jobs are plentiful”: and everyone has a blue unicorn. Really, this naive belief that ‘the government’ is a positive contributor to the economy should be taken out the back and beaten with a large stick. Daily.

    “I would be most apprehensive about any return of the Labor Party”: Howard was elected because he was “not Keating”; Rudd because he was “not Howard”, ensuing turmoil; Abbott was elected because he was “not Gillard/Rudd”. And our elites cannot see a pattern? And still like to think “the electorate does not understand”?

    I think they are looking for disinterested philosophers, and are presently just churning through the various pretenders. There is nothing wrong with this; what is wrong is the quality of our elected representatives, and the superficiality of our self-nominated political elite.

    • Don Aitkin says:

      kvd: some of what I was putting forward there was the position, as I saw it, of the Coalition, not my own. Yes, an increased GST would allow the Cwth to transfer some functions to the States, but the States are notably bad at sticking to agreements. Stamp duty is still about though it was to be rolled up once GST came in.

      Some are mine. I don’t think the electorate understands the simple political economy of our society, or it prefers not to know. And it is not helped by the mass media, as DaveW suggests above. What is my evidence? What I read, see and hear. I could be quite wrong. You disagree, and that is fine. But what is your evidence?

      I wat competent governments, from either side of politics. I don’t want great visionaries. The GFC was over for Australia within three years. It is not over for Greece and other countries.

      It’s late and I will be away until Sunday. If I think I could more, I’ll do so then.

      • kvd says:

        “What is your evidence”: ‘the electorate’ has removed a series of non-performing governments at the first and only opportunity presented – the next election.

        “I want competent governments”: as do we all. My apologies if you mistook my ‘disinterested philosopher’ term as meaning anything more than that. But I would add that the occasional visionary is not a bad thing to have in the mix.

        Despite DaveW’s justifiable belief in the bias of our sources of info, I think most people are capable of seeing the disconnects between, say, cuts to medicare in a “budget crisis” being used not to repair same, but directed to a research fund, while also hacking into our pre-eminent research organisation, CSIRO. Just as I think most people understood that our “Future Fund” really should be called “Previously Unfunded Government Employees Benefits Fund”. People really aren’t silly.

  • DaveW says:

    Hi Don,
    Well, as my first Kindle purchase, I am looking forward to reading my electronic copy of ‘Triumph and Demise’ (however, a neighbour just lent me a hard copy of the Margaret Thatcher biography ‘Not for Turning” by Robin Harris and being a good neighbour requires reading and returning that as a first priority). In the meanwhile, I will continue to adhere to my previous conclusion that any crisis in the Western political system is due in large part to the lack of access to alternative views that has devolved from the Left’s deliberate capture of the media, in particular the primary ‘liberal’ organs (NYT, WP, SMH, Age, BBC, ABC, PBS, etc.).

    For example, you state that the “electorate does not understand the realities of our political economy” (I’m not sure if this is your conclusion or a summary of Kelly’s). Yet how would one expect the electorate to make a balanced decision when their access to information is so one-sided? Before giving up on the electorate, I would look for structural changes that guaranteed access to unbiased (or at least balanced) information to the public. It is a disgrace that the ABC has been allowed to degenerate into a political organ of Left Labor/Greens. Fairfax seems to be digging its own grave, and Murdock is at best a pallid alternative, but a fair and balanced ABC would go a long way towards enfranchising any Australian voters that actually cared about the issues.

    On Saturday I will be walking 3.7 km to my closest polling booth and casting a sweaty ‘least bad’ ballot for the Liberal Party. This will be a first for me, before it was always a ‘least bad’ for Labor, no matter how much better the Liberal candidate may have been. In this case the Labor candidate seems a better person than the slimy Liberal anointed, but I’ll be damned if I’ll vote for Labor again after the mess they made the last time (including almost destroying the ecology of the Mary River).

    I don’t like voting in reaction and I would much prefer to be able to make a logical choice based on the records of the candidates (and not their party affiliations). But without reliable sources of information, just how is an average voter supposed to make their decisions? Taking back the ABC from the audience-losing Mark Scott’s of the world and returning the public broadcasters to the public seems like a good first step to me.

    Cheers DaveW

    • dlb says:

      Dave W,
      I think you would be lucky to have 20% of the electorate take any interest in media such as Fairfax and the ABC. I try to avoid the tabloid media but from what I can see there is very little politics on commercial TV, let alone agenda pushing, except of course political advertising. The Murdoch tabloids are an exception with their front page making a blunt statement that even a 10 year old could grasp. There are some commercial radio stations into discussing politics but again I see not much evidence of them supporting the left leaning intelligentsia 🙂
      My thinking as to why so much of the electorate is disengaged with politics is that they follow such dumbed down media.
      You must have had a hot walk to the polls today? Labor destroying the ecology? perhaps, but from what I can see the Qld LNP has not lost any of its form here.

  • nofixedaddress says:

    I would like to see both ‘commonwealth’ and ‘state’ taxation completely revised.

    Return ‘income tax’ to the ‘states’, albeit with ‘commonwealth’ oversight.

    Stop the ‘states’ from charging a fee for the transfer of assets.

    Stop the ‘states’ from charging a fee for employing people.

    Stop ‘local council’ from making decisions outside their remit.

    Enforce the law of the ‘states’ and stop the Hawke/Richardson/UN expropriation.

    Basically defund the ‘commonwealth’ as it is a failed state.

  • BoyfromTottenham says:

    Does Australia have a political crisis? Well, after last night (see: Qld Election result), I think it does now! IMHO many Queenslanders seem to have given up voting for their favourite major party and now just vote out whichever party has policies they dislike (Is this a Facebook thing or something?), and 20% swings in 2 consecutive seem to show this. Both major parties must be pondering this sea change – if not, I think they are heading for trouble. Interesting times!

    • dlb says:

      Interesting how the green vote in inner city electorates was 18 – 22% while out in the bush it was less than 5%. My guess the inner urban green vote is from the young and idealistic that that have migrated to apartments in such areas over recent years. Most probably DINKS.

  • margaret says:

    Obviously we are seeing that we have a political crisis now. I enjoy reading this blog from an American writer who has had a career in education and local politics and I think this most recent entry is right on the money.

    http://www.booksbycarolinemiller.com/musings/social-concerns/government-deserve/

  • […] else who has an interest in this issue, I have views. I have been responding to Paul Kelly’s Triumph and Demise since I read the book, and what is happening today is in keeping with what he predicted in that […]

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