Hockey steps in to clean up the mess

Those listening carefully last Friday may have almost caught Treasurer Joe Hockey humming a few bars from “Sadie the cleaning lady” as he announced his innovative infrastructure deal with state and territory treasurers.

For it was left to the Government’s chief budget spruiker to mop up the political detritus left by his colleagues over the preceding week and get the budget expectations campaign back on track.

The Treasurer, formerly known as Sloppy Joe, is painfully aware that his own credibility as well as that of the Abbott Government is vested in how well the public and the media receive his first budget.

That reception is reliant on a campaign of softening up the voters to expect decisions that are tough but fair, and to build acceptance even before the budget is handed down by creating a sense of momentum and inevitability.

Traditionally, the government uses the final week of Parliament before the six-week break leading up to the budget to create that sense of momentum. So a week playing Knights and Bigots was a distraction Hockey could ill afford.

Nevertheless, Hockey took to the clean-up task with relish. On Friday he threw the states and territories a juicy incentive to sell off their assets, under the guise of an almost too clever euphemism “asset recycling“, thereby effecting a workmanlike attempt to draw our eyes away from the car crash that was last week’s Parliament and refocus our gaze on matters economic.

Finance Minister Mathias Cormann rolled up his sleeves and joined in on Sunday, authoritatively re-establishing the narrative about “Operation Repair the Budget”. He attended to a few stray splashes by reaffirming the Coalition had committed only to the first four years of Gonski funding and that the NDIS would be implemented in a way that was “efficient and as well-targetted as possible”.

Cormann devoted considerable elbow grease to the troublesome Future of Financial Advice (FOFA) reforms, hoping to dispel concerns over what he claimed to be inaccurate depictions of the changes. He repeated, again, that he developed the reforms as the shadow minister for financial services and superannuation after extensive consultation and a series of parliamentary inquiries that looked at financial products and services.

This appeared to be as much an effort to distance the reforms from the standing-aside Assistant Treasurer, Arthur Sinodinos, as they were to calm citizens concerned about rampaging financial advisers. The former Australian Water Holdings chairman is due to give evidence to the ICAC on Wednesday, at which time Sinodinos’s many fans may be confronted with uncomfortable truths about the fallibility of their man’s widely-regarded political acumen.

Sinodinos has undoubtedly opened a chink on the Government’s flank, causing them to be at least temporarily circumspect when it comes to dodgy deals and corruption. This became clear when, amongst the many dramas unravelling in Parliament last week, barely a peep was heard about the sentencing of former Labor MP Craig Thomson and former ALP President Michael Williamson, for misusing union funds.

Had Sinodinos not been in the picture, Thomson and Williamson would have been brandished by the Government as further justification of the need for the royal commission into union corruption and used to wedge Opposition Leader Bill Shorten from his union support base.

Instead, the Parliament was subjected to the Prime Minister’s twin indulgences, a Racial Discrimination Act retrofitted to accommodate Andrew Bolt and the reintroduction of an archaic honours system.

Perhaps Liberal voters in Western Australia, who are required to attend a polling booth this weekend for the fourth time in 12 months, consider these relics attractive. It’s more likely they’re interested in jobs, health and education, all of which were barely mentioned by the Government last week.

Ironically, Shorten was more on-song with Hockey than the Prime Minister. In his first address to the National Press Club since becoming Leader of the Opposition, Shorten contributed Labor’s threads to the budget narrative by defending his party’s economic record while in government and helpfully nominating four criteria by which the opposition would (and the media “should”) judge the budget.

Shorten also sounded a curious dog whistle to conservative voters, who are traditionally wary of change, warning that a government’s priorities determine whether people are the victims or beneficiaries of change. Shorten cautioned that Abbott’s “bleak, hopeless brand of Darwinsim” means adapting to economic change will require “deep cuts to services, longer unemployment queues, lower wages and lower levels of government support.” We can expect to hear more of that refrain in the coming weeks.

Parliament may be over until the budget is brought down in May, but Hockey shouldn’t put his mop and bucket away just yet. This time next week, he’ll have to contend with another distraction from the budget as parties and commentators alike paw through the entrails of the WA Senate election re-run.

Depending on the election outcome, political strategies and budget narratives may have to be adjusted. Hockey may have to kickstart the budget expectations campaign yet again to create the momentum needed to consolidate public acceptance. And with less than five weeks to go to the budget, there will be little or no time left to mop up after any further prime ministerial acts of self-indulgence.

‘Weakling’ Labor pulls its punches

It’s six months into the Abbott Government’s first term and there is a growing sense the Labor Opposition just hasn’t been able to lay a blow on the other side.

Apart from struggling to adjust to the uncomfortable but necessarily edifying transition from government to opposition, Labor has seemed singularly unable to capitalise on the panoply of stumbles, gaffes, backflips and dubious decisions that Abbott and his team have manifested in such a short time.

Granted, the ALP is laying claim to the shiny scalp of the sidelined Assistant Treasurer. But in reality, The Australian newspaper’s call for Arthur Sinodinos to stand aside likely had more impact on the Senator’s decision to do so than any of the edicts hurled at him in Parliament.

Without the intervention of Uncle Rupert’s paper, there’s a good chance Abbott would have attempted to ride out the controversy, just as he did when the Assistant Minister for Health, Fiona Nash, was accused of breaching the ministerial code. Abbott held tight, secure in the knowledge that Labor had enough dirt on its hands to be cautious when pointing out the Coalition’s misdemeanours.

The Nash episode was a clear-cut case of whether she did or did not breach the code or mislead the Senate. The Sinodinos matter was, however, anything but straightforward for Labor, with the Opposition having to tread a very fine line when accusing the junior minister of being naïve, foolish or dodgy while chair of Australian Water Holdings.

By implication, Labor risked lapsing into the claim that Sinodinos should have known better than to be even indirectly associated with Eddie Obeid, a mover and shaker in the NSW Labor Party who was later found to be corrupt by the Independent Commission Against Corruption.

In short, saying that Sinodinos was dodgy for associating with a corrupt Labor politician is a bit like smacking oneself in the face.

Corruption in its own ranks is a significant limitation on the Labor Opposition’s capacity to credibly hold the Abbott Government to account on this issue, but it’s only one factor taking the edge off their attack.

Rorts in the union movement is another. The Government has a strategy to hobble the unions, cut off the flow of union funds to Labor, and reform wages and conditions, which spans across this parliamentary term and the next. Part of that strategy is to tarnish the reputation of unions and make Labor guilty by association.

Voters who pay attention to such issues would recall that PM Gillard vouched for the integrity of former Health Services Union head and Labor MP, Craig Thomson, who was subsequently found guilty of using his work credit card to pay for sexual services and make cash withdrawals.

One of the unstated aims of the Royal Commission into union corruption recently launched by the Abbott Government will be to ensure a broader range of voters associate Labor with unlawful activity within unions – regardless of whether that activity is sanctioned by the union in question.

This places Opposition Leader Bill Shorten, a former head of one the unions under investigation, in the invidious position of being seen to protect dodgy union activity whenever he defends the labour movement from what is patently a political witch-hunt. As a result, he keeps such protestations to a minimum and will be constrained in the assistance he can provide.

Similarly, Shorten limits his exhortations on the plight of asylum seekers, placed on Manus Island by way of an agreement struck by the re-ascended Labor prime minister Kevin Rudd to out-bid Abbott on “toughness” and win the anti-asylum seeker vote.

Even now the “toughness as a deterrent” tactic has devolved into terror, Labor’s role in bringing about the sorry situation has left them impotent and unable to fight for a more humane approach.

The ALP’s propensity to pull its punches may make sense within those politically sensitive contexts. But it makes Labor look like a weakling, particularly now that Australian voters have become accustomed to an opposition bristling with fight and negativity.

This is a particular problem for Shorten who has consciously rejected Abbott’s Mr No style and adopted an opposition leader model closer to that of Labor’s Kim Beazley (which itself was modeled on the Liberal, John Howard).

This model involves giving due recognition to sensible government decisions and eschews opposition for opposition’s sake. Inconveniently for Shorten, this moderate stance sits uncomfortably with his union leader past and could unintentionally suggest to voters that he’s not genuine. If that perception takes hold, it could create a whole new world of hurt for the opposition leader.

Labor can’t lay a punch on the Coalition because it is hopelessly implicated in some of the Government’s greatest sins and has shown no inclination to renounce that involvement.

This weakness is one of Abbott’s greatest strengths, and it may well be the key to his Government’s enduring political dominance in the foreseeable future.

Tale of 3 Treasury heads

It’s not a fun time to be a public servant in Canberra. Mounting pressures from an ill-considered hiring freeze paired with squabbles over the merging of different departmental workplace agreements and office space are making it difficult for bureaucrats to keep a clear head, let alone give frank and fearless advice.

Yet three former (or soon to be former) heads of the federal Treasury have reminded us in the past week what a valuable public service bureaucrats can make when they dare to be forthright and bold.

Wombat fancier and tax reform aficionado Ken Henry attracted most of the media spotlight, speaking nearly a fortnight ago to a low-key gathering on competition policy reform at the ANU and then leveraging that engagement into broadsheet column inches and an appearance on the ABC’s flagship current affairs program 730.

Henry’s intervention was considered to be a big deal. Aside from being the Treasury secretary that helped PM Rudd and Treasurer Swann guide Australia through the global financial crisis, Henry worked in different capacities for PMs Keating and Howard with an eye constantly fixed on the changes needed to repair and modernise Australia’s dilapidated taxation system.

Continue reading “Tale of 3 Treasury heads”

For Tassie and SA, it was all about the jobs

While the parties vie with each other to favourably spin the results of the weekend’s state elections – where one Labor government was routed and another may yet cling to victory – one clear lesson is the Greens can become collateral damage when elections are fought over jobs.

For whether the results are attributed to local issues or national ones, seen as a message for the Prime Minister or the Opposition Leader, or simply a matter of a government’s time being up (or not), both election outcomes were predominantly about jobs, or lack thereof.

Protection and growth of employment prospects was always going to be a pivotal issue in both campaigns. Tasmania and South Australia have the nation’s highest unemployment rates, and the apple isle also has the lowest weekly wage. Job insecurity is high across Australia and jobs have become the major parties’ chosen battleground.

So the two considerably divergent election outcomes could generally be explained as being due to local issues, but more specifically the result of voters holding certain parties to account for the poor state of employment.

If there’s a message that Prime Minister Tony Abbott should take from the South Australian election outcome it’s that SA voters don’t take lightly to their slightly dodgy but still famous car manufacturing industry being abandoned and then run out of town by the Federal Government.

Successive industry ministers have recognised over several decades that the perceived importance of car manufacturing jobs extends beyond the directly affected electorates. They threw money at the increasingly unviable industry not out of the goodness of their hearts but to hold off the dire electoral consequences. And now Abbott knows what it’s like to release that particular beast.

While the South Australian count is not yet concluded, there are enough trends evident in the vote counted so far to draw a few conclusions. The SA Liberals achieved a modest swing in their primary vote, but failed to draw a similar amount away from Labor in order to secure enough seats to form government. This suggests some of the 60 per cent of voters who thought the Liberals would win stayed with Labor in protest.

Granted, this protest vote may not have done as much damage if the South Australian Liberals had run a half decent marginal seats campaign, but that is another matter altogether.

Interestingly, according to the ballots counted so far, the Green vote in South Australia increased by almost half a per cent. This trend runs counter to the slew of state, territory and federal elections since 2010 where their vote dropped. The status quo vote for the Greens in South Australia suggests they were neither blamed nor particularly acclaimed for their contribution since the previous state election. For good or bad, the election was about the major parties and the Greens survived by keeping off the jobs radar.

In contrast, on the same day as the South Australian election, the Tasmanian Greens and one-time partners in a Labor minority government lost eight percentage points from their vote and three of their five seats in the state’s lower house.

Undoubtedly many factors combined to produce that result, but there’s no denying that jobs played a significant part. Abbott and the Tasmanian Liberals ran strong on reinvigorating the forestry industry; essentially putting jobs before the environment.

It’s clear from this strategy that the Liberals’ private market research showed voters were ready to seek retribution for what they perceived to be a weak Labor Party rolling over to the Greens’ environmental demands instead of protecting jobs. Labor’s vote dropped by about 10 per cent in the Tasmanian poll, thereby ceding majority government to the Liberals for the first time since the Groom Liberal government was elected in 1992.

If the Greens are perceived to be thwarting jobs in Western Australia they may suffer a similar fate to their Tasmanian colleagues in the WA Senate election re-run that will be held on April 5. Western Australia doesn’t face the same job pressures that bedevil South Australia and Tasmania, though the downturn in the mining boom would be causing some employment anxiety.

Additionally, the Australian Greens no longer have a power sharing arrangement with the incumbent federal government and cannot be held directly responsible for jobs in the way the Tasmanian Greens were.

Yet there’s no doubt the Abbott Government will assist WA voters in recalling that the Greens were responsible for Julia Gillard’s broken carbon tax vow and the “job destroying” impost that resulted from it. The Coalition will likely lay the mining tax at the Greens’ feet too, now that Shorten has conveniently blurred his stance on the failed profit sharing mechanism.

So while the Greens will be campaigning to be given a balance of power position in the Senate to keep the Abbott Government from the worst of its excesses, the Government will press for the Greens to be prevented from being able to block the repeal of “job destroying” laws. Meantime, Labor will quietly do its best to harvest votes away from the Greens with selective preference deals.

The Greens may believe that every time Abbott opens his mouth “the Green vote goes up“, but the opposite effect is more likely.

On April 5, a Greens Senator will be elected (or not) predominantly because of what WA voters perceive their party has done (or not) to protect and foster jobs in that state. Other factors such as climate change, asylum seekers, health, education and sharks may play a role, but it will simply come down to jobs.

Tough reform from the Coalition playbook

Despite confected howls of indignation from the Opposition and the labour movement, the Abbott Government’s mooted Productivity Commission inquiry into workplace laws is an election promise kept, not broken.

The PC inquiry was foreshadowed prior to the 2013 federal election, partly to placate those in the business community and media clamouring for IR reform. But it’s also part of a bold plan to take WorkChoices Mk II to the 2016 federal election and secure the people’s mandate in order to deliver what the business community wants.

Not that the Coalition’s new IR policy will be called any such thing – for WorkChoices is dead, buried AND cremated. Abbott’s campaign to make WorkChoices-by-another-name electorally palatable will closely follow the blueprint created by his mentor, John Howard, when he successfully took the GST to the 1998 federal election, paving the way for the tax to be established in July 2000.

Keeping in mind that, following John Hewson’s humiliating loss to the unpopular Paul Keating in 1993 predominantly because of the GST, and that he himself had vowed to never, ever propose a GST, Howard didn’t just plonk it on the table during the election campaign and ask voters to trust him. Instead he spent more than a year preparing the ground and shaping voters’ expectations to ensure the new tax had the best chance of success at the ballot.

To counter its rocky past and reputation as a partisan plaything, the GST was first considered and then recommended by a taxation taskforce established by the government to prepare options for tax reform. (Said taskforce was chaired by Treasury official and former Keating staffer, Ken Henry).

Exactly one year after establishing that taskforce, Howard’s treasurer Peter Costello presented voters with a package of tax reforms that included not only a GST but also personal income tax cuts, an increase in the tax free threshold and pensions, and the scrapping of wholesale sales tax, as well as the elimination of nine other taxes imposed at the state and territory level. Then the government blitzed voters with a controversial advertising campaign before immediately plunging the nation into a moderately early federal election.

Abbott is wise to be treating industrial relations reform as carefully as Howard did the GST. While he hasn’t explicitly gone back on an undertaking in the way Howard did, Abbott will be subject to that accusation right up until the next federal election and it has a good chance of getting traction.

Like Howard, Abbott is trying to create a sense of vision, momentum and inevitability around a vexed policy that obliterated one of his predecessors. Instead of sending it to a bureaucratic taskforce, Abbott has chosen to launder the policy by sending it to the economically dry (and therefore reasonably predictable) Productivity Commission, which will simultaneously bestow a sheen of objectivity on the essentially predetermined recommendations to urgently reform Australia’s workplace laws.

The media scandals and union angst generated by the Royal Commission into union governance and corruption are intended to build complementary support in the general community for Something To Be Done and soften resistance to the Government reigning in union power. This should create a favourable environment for the PC recommendations to be handed down in April next year, leaving a year for the government to release its workplace relations policy in response and perhaps run a controversial advertising campaign before calling the 2016 election.

It’s a matter of record that Howard narrowly won the GST election, securing less than 50 per cent of the vote and shrinking his majority from 40 seats to 12. Less certain is whether the GST dragged Howard down or propped him up.

At this early stage it’s equally difficult to determine whether IR reform will be a bane or bonus for Abbott. He has only a majority of 30 seats and consequently less scope for failure than Howard.*

The key is likely a rarely discussed element of the successful GST campaign. Political scholar Richard Eccleston pointed out that particularly influential opponents of the GST in the 1993 election – namely welfare advocates – joined with the business community after the regressive indirect tax increases announced in Keating’s 1993-94 budget in 1996 to find common tax reform objectives. These ultimately included agreement that a low rate, broad-based consumption tax should be part of a wide tax reform package. According to Eccleston:

A combination of changing economic conditions, the Keating government’s consequent deceit in relation to indirect taxation, and the disciplined promotion of the need for reform by the welfare-business coalition from 1996 convinced a majority of voters that indirect tax reform was necessary.

Abbott is going to need a similar convergence of traditionally disparate interests to get his IR reforms across the line in 2016. He’ll need to bring workers and employers together to support workplace reform in the same way that ACOSS and ACCI jointly supported tax reform in 1996. Demonising the union movement and creating a common “foe” for employees and bosses appears to be the chosen way.

Yet 55 per cent of Australians say they’re concerned about job security, 61 per cent think unions are important, and 45 per cent say workers are better off with stronger unions. So it will be interesting to see how Abbott fares with the IR reforms he is prepared to make during this parliamentary term.

The Government introduced legislation last month to implement the Coalition’s Fair Work Laws election policy. The bill aims to amend the Fair Work Act to tighten right-of-entry rules for unions, allow employees to trade penalty rates for more flexible hours and close “strike first, talk later” loopholes.

Of course that won’t occur any time soon because the legislation won’t be passed by the current Senate. Instead the legislation is little more than a platform upon which the parties, unions and employer groups can continue to wage their industrial relations battle.

Abbott and his Employment Minister Eric Abetz may have introduced the legislation purely to create this opportunity to further denigrate unions in the eyes of the public. But if voter sympathy for the labour movement is generated instead, Abbott’s bold plan may well be dashed before it’s even really under way.