When Governments Suck This Hard
Several people sent me this link yesterday. It obviously hit its mark because lots more were posting it upon Facebook. It's a veritable talking point sort of article, obviously because it sums up what most people have thought and continue to think of this sorry government.
How to explain the trainwreck that is the last three years of the federal government? The debacle poses a challenge that will dog journalists, policy wonks and historians for decades to come. The explanations for its dysfunction and sustained under-achievement are complex, but there are at least two distinct theories worth considering.
In Malcolm Turnbull’s second ministerial reshuffle in February, Alex Hawke was promoted to the office of assistant minister to the treasurer. In 2005, the then young Liberal office holder prophesied that conservative politics in Australia would move increasingly towards an American model. Hawke explained that: “The two greatest forces for good in human history are capitalism and Christianity, and when they’re blended it’s a very powerful duo.”
Can the relentless incoherence and incompetence of the current government be attributed to a particular blend of capitalism and religion that has found favour in the US? Perhaps. British author Will Hutton argues that a malaise has swept the political right throughout the west and that it has given up on the Enlightenment and in doing so has rejected “tolerance, reason, democratic argument, progress and the drive for social betterment as cornerstones of society.”
If there is a serious contest about capitalism being waged in Australian politics, it is invisible to most of us. To the extent that there is a debate, it focuses on neoliberal capitalism. Perhaps Hawke’s invocation of capitalism is another way of expressing an opposition deep within the modern Australian conservative; an opposition to taxes and to government itself. Despite the rhetoric, the recent experience of conservative governments including the current government is that they levy more tax than their Labor counterparts.
And so on it follows. Anybody with a modicum of education and a sense of fairness would find this unsurprising. Yes our government is unrelentingly crass and incoherent, and it's totally impossible to work out what exactly they came to power to do given their contradictory (mostly self-contradictory) positions on things.
China Boom Is Over, She Says (She's Probably Right)
The slowdown in China's rapid economic expansion and "rebalancing" away from resource-intensive construction activity towards domestic consumption has dramatic ramifications for Australia's quarter century of uninterrupted economic growth.
In the official lingo, Australia is being forced to "transition" away from the mining boom. But to what?
Julia Gillard began grappling with the "challenges and opportunities" presented by China's maturing economic development in 2012 when she released Treasury's 'Australia in the Asian Century' white paper.
It too extolled the opportunities that would flow for Australia to replace record iron ore exports with shipments of health and financial services, meat, wine and dairy.Of course Ms. Irvine goes on to argue that services exports from Australia are nowhere near lucrative or competitive as to what our mining exports were able to do during the Mining Boom.
Add to this list cherries from Tasmania and crayfish from Geraldton, Mr Turnbull this week told a "gala lunch", while extolling the virtues of the recently signed China Australia free trade agreement. "The early export gains have been extraordinary," he claimed.
It's a special kind of mess when a Liberal Government can't point at its own record to make the point that the people are better under their economic care. It's also sad that short of thinning exports, was we have to offer Chinaware primary produce - things that are well and truly the part of the commodity trade and where prices are always in deflation.
This probably doesn't need a refresher but the problem with the Gillard Government was that without a solution it opted to double down on the Property Bubble; which, if you think about is no solution at all because it pays no attention to the economy on the other side when ultimately property prices recede back to historic norms, and there's still no industry to replace the mining boom.
The clear and obvious idea lay in the value-add that Australia could provide, so science and technology would be your front line areas to secure an industrial future for Australia beyond the Mining Boom. But of course there aren't any typical union jobs in the ranks of science and technology so the ALP in its worst moments of self-interest would not pursue such a path (And frankly I can't think of any other motive).
The subsequent Coalition Government has been worse in that it helped shut down car manufacturing Australia (because those jobs are unionised) and managed to gut a good portion of the secondary industry while wielding a budgetary axe to science and technology as well as compromising the NBN. So just in case you're wondering, Malcolm Turnbull hasn't been a panacea for the extreme Stupid which befell the Coalition Government under Tony Abbott, any more than an ALP victory might be of any help if they should squeeze past this terrible government at the next election.
Why Pay Tax When You Can Do This?
Glory be. How in God's Green Earth do these big companies get away with not paying tax?
In case you've wondered ho, here is the explanation:
Once upon a time, multinationals had proper 'bodies corporate'. Typically, they had six or eight directors who made decisions in the interest of their Australian entities, a director's duty.
Shell Australia for instance used to be called Shell Australia. It had a full board, board meetings were generally attended. After every year end, the company would produce a glossy annual report, its financials there for all to see. A press conference, though meagrely attended, would be held.
Now the Anglo-Dutch giant refers to itself as "Shell in Australia". Its statutory financial statements are nowhere to be seen. If you fork out $38 a pop to the Australian Securities & Investments Commission (ASIC) you can find them. Net, they have paid no corporate income tax on $60 billion in revenue in three years.
Shell is a big one but the pattern is clear. Thanks to tricky financial structuring, multinationals regard paying income tax as optional. "Leakage" they call it in the land of tax lawyers.
ASX companies, such as Woodside, Shell's peer on the North West Shelf, are bound to file their accounts publicly, and free of charge. They are visible, and they are filed – unlike Clive Palmer's accounts of yore – on time each year.
Compliance, generally, has been in freefall over the past decade. Even the Business Council of Australia, which pontificates to government on good business practise, has only managed to get its accounts in on time in eight of the past 16 years.
The question needs to be asked of multinationals: what is the economic reality?
Is Shell a little piece of London, and Chevron a little piece of America, which has been given carte blanche to plunder Australia's resources, pay little (in royalties in the case of Chevron) for them and bank all the proceeds of their sale in foreign head office bank accounts?
Once Chevron has paid the money it pays to real Australians (during construction Gorgon & Wheatstone), there is not much in the way of ongoing economic benefits for Australians.
Are these really Australian exporters? Multinationals used to run subsidiary companies and the money earned by those companies was banked in Australia and circulated in the Australian economy while the parent waited patiently for a dividend.
What a joke. The kind of money being discussed seems to be the kind of money needed to properly fund the NDIS and the Gonski Reforms and a whole lot more. It's not that these things are unaffordable, it's that our government both ALP and LNP has let their corporate donors run roughshod over the tax office. What we want is for the ATO to start going after these multinationals. That should be the platform parties run on if they want us to take them seriously about things like the budget deficit.
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