tag:theconversation.com,2011:/africa/topics/joe-hockey-2997/articlesJoe Hockey – The Conversation2023-09-21T10:35:53Ztag:theconversation.com,2011:article/2140672023-09-21T10:35:53Z2023-09-21T10:35:53ZGrattan on Friday: Albanese government faces an uphill road and angry locals as it drives change to renewables<p>Fire fear is gripping many Australians, with extremely high temperatures for September.</p>
<p>One day this week some 20 schools on the New South Wales south coast were closed, amid rising weather risk. Sydney national parks were shut. Multiple fires broke out in the eastern states.</p>
<p>The nation is bracing. The memory of that horrendous 2019-20 summer is embedded in our psyche. </p>
<p>The Bureau of Meteorology this week formally declared an El Niño event, looking to a hot dry summer. That will put pressure on ageing coal-fired power stations and thus the power system.</p>
<p>Apart from for a small minority, the argument about global warming is over. But the debate still rages about dealing with climate change and, close to home, Australia’s energy transition, which is under way but accompanied by increasing pain and problems. </p>
<p>Labor scored well politically when it issued its pre-election plan for the transition to renewables. It came with an election promise of an average $275 saving on household electricity bills by 2025. The promise will be unattainable, and in the meantime households face sky-high power bills, with only some benefiting from the government’s relief package. </p>
<p>Most people accept our energy system must move from fossil fuels, especially coal, to renewables as soon as practicable. But there are serious obstacles on the ground – literally.</p>
<p>The government uses the “not in my backyard” scare when the opposition proposes nuclear should be added to the energy mix. Now it is confronted by “not in our backyard” resistance from farmers and local communities to the big transmission cables needed to carry the renewable power. As well, there’s a backlash in some areas to wind turbines.</p>
<p>In 2014, then-Treasurer Joe Hockey was ridiculed when he described wind turbines around Lake George (near Canberra) as “a blight on the landscape”. The then opposition environment spokesman, Mark Butler, said Hockey was making “an utterly ridiculous contribution”. Labor can’t afford to laugh anymore. </p>
<p>Climate Change and Energy Minister Chris Bowen was in the NSW Hunter region this week to try to calm anger about the government’s declaration of a zone off the coast for future wind projects. Among their objections, locals have raised the harm to birds, sea life and the view. </p>
<p>The South Australian government has argued the proposed Southern Ocean zone for wind farms, off the coast of Victoria and SA, should stop at the Victorian border. </p>
<p>The rows breaking out over power cables and wind turbines are classic examples of major developments clashing with other priorities, whether commercial (tourism, fishing, agriculture), environmental or aesthetic. We’ve seen these battles for decades with mining projects. They’ve now moved into the age of renewables. </p>
<p>Australia is not alone on this issue, which is rearing its head in Britain and elsewhere. The Albanese government’s difficulty is there will be so many breakouts. It remains to be seen whether citizen discontent will translate into voter backlash in particular seats. </p>
<p>Infrastructure Minister Catherine King has felt the heat in her electorate of Ballarat. In a submission earlier this year, made as the local MP, to an Australian Energy Market Operator’s report on the proposed Victoria-New South Wales Interconnector (VNI) West transmission link, she repeated her long-held concerns about the consultative process. </p>
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<p>As Australia continues its transition to net zero, there will be increasing need for new projects,“ she wrote. "In rolling out these projects, it will be important to engage thoroughly and honestly with impacted communities all throughout the process – from project conception, to construction and beyond.” </p>
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<p>In July, Bowen announced a “community engagement review” to improve engagement on renewable energy infrastructure upgrades and new developments, to report
by year’s end. </p>
<p>The process is tortuous and often fractious. And, as the Grattan Institute’s energy expert, Tony Wood, <a href="https://theconversation.com/unsexy-but-vital-why-warnings-over-grid-reliability-are-really-about-building-more-transmission-lines-212603">has pointed out</a>, investment in renewables is stalled because of the slowness in getting the transmission grid in place. </p>
<p>The implications are substantial. The government is committed to having renewables generating 82% of our electricity by 2030. The present level is 35%. Wood says: “We are nowhere near where we need to be. We are way behind in time and way over in cost.” </p>
<p>The transition problems are making the opposition bolder in pushing its case to have nuclear power on the agenda. It argues if nuclear could replace some of the retiring coal-fired power stations, the existing grid could be used, reducing the disruption by new cables. But it has produced nothing specific on how nuclear will feature in its policy. Nor is it clear how politically risky raising the nuclear option is for the Coalition. </p>
<p>In an attempted political hit, Bowen this week issued an estimate that replacing coal-fired stations with nuclear would cost $387 billion. Given all the uncertainties, numbers mean little, although most experts maintain the nuclear path would not be economically viable any time soon. Even so, the government suddenly sounds defensive when rejecting even lifting the present ban on nuclear. </p>
<p>Pushed on Monday on the ABC’s Q+A about the ban, Bowen said that would be “a massive distraction. It would take a lot of our public debate”. This seems an odd argument. Whether nuclear power should be considered surely rests on two basic questions: whether the market believes it viable and whether the public considers it acceptable. </p>
<p>At least the government this week had some good news on the gas front: the latest estimates by the Australian Competition and Consumer Commission indicate the country will go into early next year with an adequate supply for the domestic market. Treasurer Jim Chalmers was quick to declare the opposition’s “fearmongering” about the government’s imposition of pricing caps had been unjustified. </p>
<p>On the other hand, gas is coming under mounting attack from climate activists, as the government defends it as a transition fuel.</p>
<p>In political terms, the energy transition will put pressure on Labor on several fronts between now and the next election. </p>
<p>The first, and most obvious, is high power bills, feeding into the cost-of-living crisis. </p>
<p>Second, the localised arguments about the infrastructure will continue. </p>
<p>Third, investors will need more reassurance. </p>
<p>Fourth, the efficiency of the energy system must be maintained through difficult times. </p>
<p>And fifth, the government will need to hold the line against the Greens and the more militant parts of the climate movement that will attack it for not going fast enough to meet the climate challenge. </p>
<p>Those are the knowns. One unknown is whether we’ll get a really bad fire season and the implications that would have.</p><img src="https://counter.theconversation.com/content/214067/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Most people accept our energy system must move from fossil fuels, especially coal, to renewables as soon as practicable. But there are serious obstacles on the ground – literally.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2123802023-08-30T01:31:39Z2023-08-30T01:31:39ZWe can talk about a higher rate of GST in Australia, but it will never happen<p>A group of crossbench parliamentarians have revived the idea of increasing the rate of the goods and services tax from 10% or removing exemptions on food, education and health purchases.</p>
<p>The group, which includes Allegra Spender and David Pocock, say increasing the GST rate would raise revenue to lessen government dependence on income tax as the population ages.</p>
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<p>Raising more from the GST is among the perennial candidates. In 2015 <a href="https://www.theguardian.com/australia-news/2015/jul/15/joe-hockey-says-gst-rate-increase-and-base-broadening-must-be-considered">then treasurer Joe Hockey</a> floated the idea <a href="https://www.theguardian.com/australia-news/2015/jul/15/joe-hockey-calls-game-over-on-gst-increase-after-state-backlash">but quickly abandoned</a> it. </p>
<p>It can safely be predicted that this latest push from the crossbench will go the same way – nowhere. </p>
<h2>Premiers must agree to rate change</h2>
<p>The reason dates back to the debate over introducing the GST in the late 1990s, when opponents predicted the 10% rate would soon be raised, as had happened in New Zealand in the 1980s. </p>
<p>Then prime minister John Howard staved off this objection by designing the GST legislation so any increase in the rate required the unanimous support of all state and territory governments, as well as both houses of the federal parliament.</p>
<p>Getting such agreement is virtually impossible, as Hockey discovered. Even in the unlikely event of an agreement in principle, disputes over how the extra revenue should be shared would almost certainly derail any deal.</p>
<p>It might be possible in theory for the Commonwealth to renege on its deal by amending the GST legislation to remove or modify the states’ veto power. But the likelihood of getting such legislation through the Senate (notionally the “<a href="https://peo.gov.au/understand-our-parliament/your-questions-on-notice/questions/what-is-the-role-and-function-of-the-senate/">states’ house</a>”) is almost zero.</p>
<h2>Removing exemptions would increase cost of living</h2>
<p>There remains the option of removing exemptions. </p>
<p>Imposing the GST on health and education would be pointless. For the most part the government would be taxing itself. That leaves only the option of taxing food, strongly supported by free-market economists but rejected by nearly everyone else. </p>
<p>Taxing food would be a bad idea at any time, as it bears most heavily on low-income households. But in a context where the major parties have locked in a massively regressive cut to income tax for the well-off, it would be even worse. And, of course, it would directly increase the cost of living – the exact opposite of what our political leaders are promising.</p>
<p>In the absence of an increased GST, and with many other reforms ruled out following the 2019 election defeat of Labor under Bill Shorten, there seems little alternative but to rely more heavily on income tax. </p>
<p>It has been suggested, with some horror, that the top marginal rate might have to rise to 60%, still well below the rates that prevailed during the boom economy of the decades after 1945.</p>
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Read more:
<a href="https://theconversation.com/inheritance-taxes-resource-taxes-and-an-attack-on-negative-gearing-how-top-economists-would-raise-20-billion-per-year-202630">Inheritance taxes, resource taxes and an attack on negative gearing: how top economists would raise $20 billion per year</a>
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<p>Increased reliance on income tax goes against the neoliberal belief that high marginal tax rates are a strong disincentive to work. </p>
<p>But the evidence for this belief is very weak. The bigger problem in our tax-welfare system is the high effective marginal tax rate paid by many families (often well above 60%) caused by the combined effect of income tax and the clawback of means-tested benefits.</p>
<p>Australia will have to choose between some challenging options to pay for the services we will collectively need in the future. But, for good or ill, an increase in GST is not among them.</p><img src="https://counter.theconversation.com/content/212380/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin was a prominent advocate for the exclusion of food from the GST when it was introduced</span></em></p>While Australia must make some hard choices to pay for services in the future, increasing the goods and services tax is just too hard.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1813272022-04-20T19:57:26Z2022-04-20T19:57:26ZDeals, golf with Trump, and little introspection: Joe Hockey goes to Washington and writes his memoirs<figure><img src="https://images.theconversation.com/files/458729/original/file-20220419-11-ef9vee.jpg?ixlib=rb-1.1.0&rect=66%2C16%2C5467%2C3584&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Joe Hockey visiting Parliament House, 1 December 2020.</span> <span class="attribution"><span class="source">Lucas Coch/AAP</span></span></figcaption></figure><p>Perhaps unfairly, the image most of us have of Joe Hockey comes from his time as federal Treasurer, when he was photographed smoking a cigar with then Finance Minister Mathias Cormann in the aftermath of the 2014 budget. </p>
<p>Hockey tells us that the cuts in that budget were justified, ignoring the inconvenient fact that it broke a number of promises made by Tony Abbott when he won the 2013 election.</p>
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<p><em>Review: Diplomatic: A Washington Memoir – Joe Hockey with Leo Shanahan (Harper Collins)</em></p>
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<p>Hockey believed he would succeed Abbott, but in an internal coup the party chose Malcolm Turnbull, who had promised the Treasury to Scott Morrison to shore up his support. As a consolation prize, Hockey was offered the embassy in Washington and resigned from Parliament. He served as ambassador from 2016 to 2020.</p>
<p>There are both advantages and disadvantages to appointing senior politicians to ambassadorial positions, but at least Australia has not yet emulated the American practice of <a href="https://www.nytimes.com/2020/12/15/opinion/ambassadors-donors-biden.html">rewarding major campaign donors with embassies</a>.</p>
<p>Joe Hockey is the son of an Armenian born in Palestine, and was named after Labor prime minister <a href="https://primeministers.moadoph.gov.au/prime-ministers/ben-chifley">Joseph Benedict Chifley</a>, whom his father honoured for allowing him to migrate to Australia. </p>
<p>He was born in 1965 and grew up in a world dominated by the United States. As a child he travelled to both the US and China, and he writes well about his early experiences there.</p>
<p>As a parliamentarian, Hockey combined tough-minded economic rationalism with social progressivism, a position that few of his fellow Liberals seem to espouse today. Towards the end of his memoir Diplomatic, he describes himself as “a unique and successful politician”. Having waded through 300 pages before I came across this claim, I am not convinced that he deserves the accolade.</p>
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Read more:
<a href="https://theconversation.com/politics-with-michelle-grattan-joe-hockey-on-trump-biden-and-the-federal-election-181270">Politics with Michelle Grattan: Joe Hockey on Trump, Biden, and the federal election</a>
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<h2>The Hockey magic?</h2>
<p>Hockey proved to be a smart choice as ambassador during the Trump years, though he was, in fact, appointed in the last year of the Obama administration. He quickly recognised that one could not assume a Hillary Clinton victory was inevitable. His decision to build links with the Trump campaign appear to have discomforted Turnbull and the Foreign Minister, Julie Bishop, both of whom were convinced Clinton would win.</p>
<p>Hockey is most interesting in his accounts of Trump, with whom he appears to have had considerably more contact than would be normal for the ambassador of a middle-sized power. He claims credit for improving the relationship, which began with the notorious phone conversation where Trump exploded in anger at Turnbull because of the Australian government’s deal to send asylum-seekers detained offshore to the United States.</p>
<p>Trump is, notoriously, a man of short memory and few lasting positions. In time, Hockey tells us, he came to like Turnbull, seeing him as a fellow successful businessman. When Turnbull was overthrown by his party and replaced by Morrison, Trump was disappointed. </p>
<p>“I was just getting to know Turnbull and now you guys have another one,” he complained to Hockey. </p>
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<span class="caption">Scott Morrison and Donald Trump at the opening of Pratt Paper Plant in Wapakoneta, Ohio, 22 September 2019.</span>
<span class="attribution"><span class="source">Mick Tsikas/AAP</span></span>
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<p>Never fear, gentle reader: the Hockey magic went to work and Trump was sufficiently impressed by Morrison’s 2019 victory to award him one of the only two state dinners given by the Trump administration. This was a particular achievement as state dinners are meant to be reserved for heads of state, which the Australian prime minister is not. </p>
<p>Hockey was a strong supporter of a republic during the 1999 referendum, and he clearly relished the opportunity to break that particular tradition.</p>
<h2>Managing the relationship with Trump</h2>
<p>For Hockey, as for his predecessor Kim Beazley, the central aim of the Australian Ambassador is to emphasise Australia’s closeness to the US. Hockey is proud of his success in establishing the Friends of Australia Congressional Caucus and arranging the joint celebrations for the Battle of the Coral Sea, which brought Trump and Turnbull face to face.</p>
<p>There were substantive victories, particularly the exemption of Australia from new tariffs on steel and aluminium. As a believer in free trade, Hockey is very critical of Trump’s protectionist policies. He was outspoken in opposing them. </p>
<p>The most difficult issue in managing the relationship with Trump arose from the <a href="https://www.abc.net.au/news/2019-05-24/mueller-investigation-george-papadopoulos-alexander-downer-speak/11107712">conversation between Alexander Downer, then High Commissioner in London, and George Papadopoulos, an advisor to the Trump team</a>, which became the basis for allegations of Russian interference in the 2016 US elections. </p>
<p>For a period, Trump saw Australia, Britain and Ukraine as all involved in spreading fake news about him. Hosing down these rumours took up much of Hockey’s time. The ambassador, who had played golf with the President, now had to face being snubbed in public at Mar-a-Lago.</p>
<p>Hockey is probably correct in claiming allegations of Russian interference in the election of Donald Trump have been exaggerated, but he fails to explain the strange hold Putin appears to have had over the President. In light of the current war in Ukraine, we can only hope that association will undermine Trump’s control of the Republican Party.</p>
<p>Hockey was relieved when Joe Biden won the presidency and appalled by the attacks on the Capitol by Trump’s supporters. He fails to mention that, at the time of the 2020 election, <a href="https://www.smh.com.au/politics/federal/call-for-patience-as-labor-blasts-hockey-over-fraud-claim-20201105-p56by2.html">he suggested that there may have been voter fraud</a>, a claim he quietly retracted.</p>
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<h2>Unimaginative</h2>
<p>As with many political memoirs, Diplomatic is interesting for the insights it provides into a world of deals and shifting alliances, but short on introspection. Hockey does reveal a certain amount of his own character, although without the ironic self-awareness that made Bob Carr’s <a href="https://www.newsouthbooks.com.au/books/diary-foreign-minister/">Diary of a Foreign Minister</a> (2014) an entertaining read. </p>
<p>What emerges is a portrait of a highly ambitious and energetic man with great self-confidence and little real intellectual curiosity, though at times he displays a sensitivity to injustice that is lacking in most of his former colleagues. </p>
<p>Hockey is particularly interesting when writing about China. He clearly recognises the dangers of beating the drums of war, claiming that “Australia had an engagement with China that was deeper, broader and more sophisticated than that of the United States”. </p>
<p>While Hockey endorses current Australian policy towards China, one has the sense that he believes we could have better managed the deterioration in relations.</p>
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Read more:
<a href="https://theconversation.com/complacency-conflict-and-dodging-nuclear-cataclysm-the-not-so-great-power-politics-of-china-the-us-and-australia-180402">Complacency, conflict and dodging nuclear cataclysm: the not so great power politics of China, the US and Australia</a>
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<p>Beyond his discussion of China, Hockey reflects the unimaginative Anglospheric views of the Morrison government. There are frequent mentions of his good relations with the British, New Zealand and Canadian ambassadors, but those from neighbouring ASEAN countries go unremarked. Like his colleagues, Hockey concentrates on trade and submarines when envisioning Australian security.</p>
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<span class="caption">Joe Hockey regards Labor leader Anthony Albanese as a ‘very decent human being’.</span>
<span class="attribution"><span class="source">Bianca Di Marchi/AAP</span></span>
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<p>Hockey served in the US through the worst years of COVID and is very critical of the American response. He was certainly aware of the ravages of extreme weather and Trump’s refusal to recognise the dangers of climate change. But like Morrison and Minister for Defence Peter Dutton, Hockey seems unable to connect the threats of climate change and fast spreading epidemic diseases to notions of national security.</p>
<p>Yet the failure to think more broadly about global security is hampering Australia’s position in the Pacific, where governments have consistently asked us to do more to prevent global warming. </p>
<p>Mateship with the US is hardly a sufficient basis for a foreign policy in the contemporary world. The constant refrain about our shared values and support for the international rules-based system obscures the reality that the US acts in its own interests, whether or not they coincide with ours.</p>
<p>Joe Hockey is determined to appear non-partisan and largely avoids commenting on current Australian politics. He does, however, make a point of saying of Labor leader Anthony Albanese that “he’s a very decent human being”. Revealingly, he has nothing similar to say about the current Prime Minister.</p><img src="https://counter.theconversation.com/content/181327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dennis Altman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Former ambassador to the United States Joe Hockey considers himself ‘a unique and successful politician’. Dennis Altman is not convinced.Dennis Altman, VC Fellow LaTrobe University, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1812702022-04-13T08:18:54Z2022-04-13T08:18:54ZPolitics with Michelle Grattan: Joe Hockey on Trump, Biden, and the federal election<figure><img src="https://images.theconversation.com/files/457887/original/file-20220413-24-1xe1o4.png?ixlib=rb-1.1.0&rect=871%2C305%2C1647%2C905&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.instagram.com/p/Bg3UH9mB7Mn/?igshid=YmMyMTA2M2Y=">Instagram</a></span></figcaption></figure><p>In this episode, Michelle Grattan speaks with Joe Hockey about his newly-released memoir titled Diplomatic: A Washington Memoir. </p>
<p>Hockey, treasurer in the Abbott government and former Australian ambassador to the United States, picked early that Donald Trump had a good prospect of becoming president and reached out to his team, something that went down badly at the time with the foreign affairs bureaucracy back in Canberra. </p>
<p>But Hockey says: “Diplomacy is just about human relations. It’s countries dealing on the same basis with each other as human beings. So you’re never going to get on well with someone you don’t know. You’re actually going to have to engage.”</p>
<p>Of Trump’s successor, Hockey says: “I think Joe Biden has aged quite a bit in the presidency. He’s only been president for just over a year. He’s really shown he hasn’t had the energy that you would expect of someone as president of the United States.”</p>
<p>Also, “he’s run a very left wing agenda, and that’s completely stunned – completely stunned – middle America, because they thought he was a safe, middle-of-the-road sort of person.</p>
<p>"America is just not tuned into that. They’re not buying that.”</p>
<p>Speaking about the differences between US and Australian politics, Hockey highlights the significance of compulsory voting in this country. “I think the challenge in the United States is, you know, firstly, you try and get your own people to vote. And the more extreme you are, the more you villainise, and radicalise your opponents. It’s easier to get people to come out and vote for you if they’re against something.</p>
<p>"We don’t have that battle for the extremes, and I think that’s really, really important,” he says.</p>
<p>“The political ads and what people say about each other in the United States has no filter, has no boundaries. And as a result, it becomes more fractious, becomes much more aggressive. And I think it’s really, really important that proper defamation laws [exist] that allow someone to go in and protect their reputation so that people cannot make ridiculous, false accusations against others.”</p>
<p>And Hockey’s prediction for May 21? “I think it’s just too close to call, really. I genuinely feel that both parties have a pathway to victory. And then, as so often the case, as events unfold during the campaign, we’ll get a clearer picture of which way […] the events are breaking.”</p><img src="https://counter.theconversation.com/content/181270/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michelle Grattan speaks with former Australian ambassador to the United States Joe Hockey about his new memoir titled DiplomaticMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1235962019-09-17T07:19:29Z2019-09-17T07:19:29ZPolitics with Michelle Grattan: Arthur Sinodinos with some reflections and advice<p>Arthur Sinodinos will soon leave the Senate, and early next year take up the position of Australian ambassador in Washington. A former staffer and one-time public servant as well as a former minister, in this podcast Sinodinos reflects on the challenges of pursuing reform, has some advice for ministerial staff in dealing with the public service, and warns about dangers for democracy and science posed by a polarised media. </p>
<p>A strong ally of Malcolm Turnbull, Sinodinos tells Michelle Grattan that the former prime minister was “prepared to make a stand for what he believed was right - and unfortunately there were others who didn’t seem to be too comfortable with that”. </p>
<p>On the current controversy about Liberal MP Gladys Liu and her past ties to groups with links to the Chinese regime, he says: “I think she’s trying to … make sure that she’s got her memory intact, as it were. And then I’m sure she will as necessary provide further information”.</p>
<p>On the contrast between the roles of staffer and politician: “One of the biggest differences is that when you’re the politician and the front person, the minute you say something … you own it, Whereas when you’re the adviser you give all the advice in the world but there’s not quite the same level of responsibility”. </p>
<h2>Transcript (edited for clarity)</h2>
<p><strong>Michelle Grattan:</strong> Arthur Sinodinos, can we start with your transition from being a senior staffer to a politician, albeit via a time in the business sector. What are the big differences between those two roles? </p>
<p><strong>Arthur Sinodinos:</strong> Well I think one of the biggest differences is that when you’re the politician and the front person, the minute you say something, it’s out of your mouth … you own it. Whereas when you’re the adviser, you give all the advice in the world but there’s not quite the same level of responsibility [as] when you actually have to go out there and say things and take the rap for them. And that is one of the big differences. And that does influence the way people approach the job. For example let me give you a story about the American ambassador. He was one of a number of people in the Reagan administration who allegedly told Reagan around 1987/88, don’t use that phrase “Mr. Gorbachev, tear down this wall”. But it was Reagan’s instinct to use that phrase. Now they were being risk averse, or minimising risk for him, but he had the instinct, and this is what it takes at the end of the day. You have to also go on your own instinct as the front person when something needs to be said or when you need to push the button and change tack on something. </p>
<p><strong>MG:</strong> You’re also a one time public servant. The bureaucrats these days often feel pushed around by ministerial staff. Do you think these staff too often become arrogant and feel everything is political, so therefore good policy is compromised? </p>
<p><strong>AS:</strong> I mean the practice we had in the Howard Government - after some early hiccups when a number of secretaries were fired - was to recognise that staffers and public servants have complementary roles and that the place operates best when there’s a bit of a team in place and each understands and respects the role of the other. And I think that’s always important. And my advice to young staffers or people starting out in staffing who maybe haven’t worked in the public service is get to understand the public service. They’re also your stakeholders and it’s important for people to work together. The public service is a great resource and it’s like any workforce, you’ve got to motivate them. And that’s important to get the best out of them. </p>
<p><strong>MG:</strong> You were one of Malcolm Turnbull’s closest supporters. Indeed you came back, I think, when you were on sick leave to support him in that last week. Looking back on the Turnbull government, do you think that there was any advice you could have given to help avoid the collapse of his prime ministership?</p>
<p><strong>AS:</strong> Unfortunately, I don’t think any advice would have saved Malcolm’s prime ministership in the end. There were just forces at work who I think were just determined to blast him out and unfortunately a series of events came together which brought that to a head. What I do admire about Malcolm is that the irony is in a sense he was blasted out over climate change twice. The first time in 2009 and the second time over the National Energy Guarantee and in a sense it’s admirable that he was prepared - even though at the end he was prepared to defer the National Energy Guarantee for a while - he was still prepared to make a stand for what he believed was right. And unfortunately there were others who didn’t seem to be too comfortable with that. There’ll be debates going on for years about whether Malcolm had the right political instincts. Well my view is these days what you need is authenticity and he was authentic in his own way, but unfortunately he wasn’t allowed I think to do the job that he could have done.</p>
<p><strong>MG:</strong> You’ve been at the political coalface now in one role or another over some four decades. How do you think politics has changed in that time and has it changed for better or for worse?</p>
<p><strong>AS:</strong> I think politics in many ways is much faster now. The media cycle is certainly faster - the 24/7 cycle. I think it’s also much easier for parties to be fragmented because it’s much easier for individuals to get a platform, partly through the way the media itself is fragmented.
One of the dangerous trends has been that the media itself has become a battleground. We used to look to the media to be the journals of record and today much of the media gets dragged into the actual fight and this is a danger for democracy in my view. It’s a danger for science which is increasingly being trampled in the public arena, and I think it’s a danger when we have a situation where people can essentially choose their own facts. And choose media outlets which feed their own version of reality and feed their confirmation bias. I think that’s dangerous for democracy going forward.</p>
<p><strong>MG:</strong> Well the media gets dragged in, or does it opt in? Has it decided to get involved more as participants? Obviously always media were participants, but there’s an increasing trend now.</p>
<p><strong>AS:</strong> Yes there is an element of that. And what that does is every action has an equal and opposite reaction. So if some start to go more one way others start to go the other way as if to try and bring back some balance. But the result of that is that overall it tends to create a greater feeling of partisanship.</p>
<p><strong>MG:</strong> Well let’s cut to the chase here. Do you think News Corp has become particularly partisan?</p>
<p><strong>AS:</strong> I think they have a particular business model, particularly Sky, and that’s attracted a particular viewership. But that also has meant that other outlets, I’ve noticed with the ABC and others, have tended to therefore have to take stronger stands on certain things because they feel they’re pulling against a shift in the other direction. And so that’s the point - that these forces tend to sort of create this more partisan field out there.</p>
<p><strong>MG:</strong> What is that business model?</p>
<p><strong>AS:</strong> I think the business model is to try and corner a particular part of the market and become the champions of that part of the market.</p>
<p><strong>MG:</strong> The conservative right-wing part?</p>
<p><strong>AS:</strong> Yes. As opposed to just trying to cover the field as a whole. </p>
<p><strong>MG:</strong> Do you think it’s harder to get reform these days? As part of the Howard advisory team you were at the centre of the tax debate. Are things more difficult now?</p>
<p><strong>AS:</strong> Often we seem to act as if things are more difficult now and yet I just think if people are prepared to stand up on something and explain it and indicate clearly why people will benefit from something I still think it’s possible to get things through. But we seem to have somehow spooked ourselves overall that somehow the more difficult reforms are not possible these days. I think reform is still possible but it requires a lot of work and because there are many more outlets and many more bases to cover and more stakeholders to consider - and stakeholders who have their own capacity to do research and whatever - that does require a lot of groundwork to be done. Part of the reason the tax reform got through in 1998 was that there had been a whole year of actually putting the thing together and then a commitment at the political level to not only work out the technical arguments, but to try and anticipate the political arguments and have responses to them so that when we were ready to go on that GST reform we thought we had, in terms of the arguments, every base covered.</p>
<p><strong>MG:</strong> The Coalition’s obviously riding high at the moment, but do you think it needs to do more to build resilience for the long term? That is, for the next election, and what should it be doing?</p>
<p><strong>AS:</strong> The impression I get from what the Prime Minister has said particularly in the party room is that he knows that while we’re doing well at the moment relative to Labor, that Labor are not going to lie on the mat forever. There’s just this dynamic in politics that the pendulum swings one way and then it swings back. And so I think he’s very conscious of building resilience, and I think the way he’s doing that first of all is by trying to be stable and certain when it comes to policy. I think he’s sending out very clear signals as to what his priorities are, particularly in terms of who he’s working for. And also I think in terms of the economy he’s indicating that while we’ve put certain measures in place to help get the economy through the current softness that we’re experiencing, they’re prepared to contemplate further measures. For example, in the budget next year an investment allowance has been raised.</p>
<p><strong>MG:</strong> The government’s been surprisingly aggressive I think towards big business at the moment - criticising it for social activism and for not being supportive enough of government policies. Do you think this is a sound strategy or will it just alienate the business sector, and what’s driving it?</p>
<p><strong>AS:</strong> I think what needs to happen is business needs to sit down with the government and work out in terms of where the government is going, the government’s reform priorities, the sort of areas that need to be addressed. In terms of how to explain things to people, how it’s best to do that. I think what Ben Morton and others were saying is that every day as politicians we’re out there trying to persuade the “quiet Australians” to do things they might not necessarily immediately see in their interest. We want business and others to understand the challenge of that and not leave that just for us but to work as partners in that process. And business is vital to the Australian economy. Big business, small business. No one denies that. The question is how we work together to get the sort of outcomes that everybody wants.</p>
<p><strong>MG:</strong> You speak of Ben Morton’s speech and he’s assistant minister to the prime minister and he’s part of Scott Morrison’s inner circle. So this has the Prime Minister’s imprimatur, but it’s almost as though he was thinking that big business should be an extension of the government. That’s not how things work these days. </p>
<p><strong>AS:</strong> Now I think what he was saying is that, look we have certain objectives as a government. When you are dealing with government, please address those objectives when you’re asking for things from government. And I’ve often said this to people who are asking things and come to Canberra looking for things. Always understand who you’re dealing with, always adopt the language of the government of the day, understand where they’re coming from, and pitch yourself accordingly. And I think Ben is essentially saying that, and by putting it out in those stark terms, I think what he’s doing is saying look there’s a bit of a line in the sand here, we’ve all got to get on with this now, and please come to the table and contemplate what we’re saying and why we’re saying it. Please listen.</p>
<p><strong>MG:</strong> The government’s bringing in its so-called “big stick” legislation this week which would allow at the extreme for the divestment of parts of companies in the case of energy companies that weren’t playing ball. What happened to dry economics in the Liberal Party?</p>
<p><strong>AS:</strong> Well I’ve never had the same reaction as some people to say divestment is not something that should ever be considered by the Coalition. It was a feature or has been a feature of the US anti-trust regime for decades and decades. So in the land of the free and the home of the brave, it’s been a feature of the landscape for a long time. So it’s not inconsistent with free market economics. It’s something that deals with areas where there’s excessive concentration and where firms are therefore able to exert market power and do things which frustrate, if you like, the more competitive operation of markets. So I think it has to be seen in that context. The other thing is, to some extent we’ve been driven to take those, what are perceived as extreme measures because there is such a mess in the energy sector and we need to find a way through in terms of making sure that when we take measures to reduce the cost of electricity those measures flow through to consumers and that companies with market power do not take some of those savings for themselves.</p>
<p><strong>MG:</strong> But of course you could have got out to this mess by endorsing the NEG.</p>
<p><strong>AS:</strong> Well look this is like the Irish question. You wouldn’t start from here but here is where we are, and we’ve ended up in a particular situation and we’re trying to work our way through. And what I think Angus Taylor’s tried to do since the election is essentially find ways. And now he’s doing, as I understand it, more talks with the states around how do we facilitate the transition in the energy sector and how do we create a bit more certainty around power supplies and all the rest of it. And I think that’s going to be important to providing a bit of investment certainty and help underpin lower prices.</p>
<p><strong>MG:</strong> Don’t you think that if Bob Hawke [had] brought in the big stick legislation, John Howard would have cried “the socialists are here”?</p>
<p><strong>AS:</strong> Well it depends on the context at the time and I think the context we’re in now has led as I say to these sorts of measures being undertaken.</p>
<p><strong>MG:</strong> On another issue of the day, Gladys Liu has obviously still a lot of questions to answer. Shouldn’t she just call a press conference and answer them?</p>
<p><strong>AS:</strong> As I understand, what’s happening is she is going through her history of donations and getting her information in order. I think she’s trying to sort of make sure that she’s got her memory intact, as it were. And then I’m sure she will as necessary provide further information. She has come under a lot of pressure very early on in her career and even seasoned politicians under the microscope of someone like an Andrew Bolt probably would have had problems. But I think she’ll be able to explain all of this. And certainly I think the treasurer, the prime minister, the minister for home affairs, standing by her is a clear indication that they are confident that there is nothing there that would suggest that she’s somehow been compromised.</p>
<p><strong>MG:</strong> How serious do you think this issue of Chinese interference in Australian politics is? We’ve heard for example from Andrew Hastie saying people often underestimate the broad threat of China. We heard from Duncan Lewis, the outgoing head of ASIO, when he said this is a real problem. He didn’t mention the Chinese of course, diplomatically, but we all know what he was talking about.</p>
<p><strong>AS:</strong> There’s no doubt that there is foreign interference going on and there’s no doubt that the security agencies are reporting to government about the extent of that interference. Certainly in the cyber space, there’s a lot of activity going on and it’s not just from one country. It’s from a number of countries and non-state actors as well. So that is the fact. The challenge for us as a country is, how do we accommodate the rise of China within our region while maintaining some sort of global rules based order? And that requires us to work with the Americans in terms of our traditional alliance relationship to ensure they have a presence in the area. It means encouraging all sides of the debate to come back to the table to a global rules based order as a way of resolving disputes. We don’t want China to fail - a failing China or a stumbling China is a bigger problem than a prosperous and successful China that is taking its place rightfully within the Asia Pacific. But we have these teething problems because they’re the rising power. The Americans, particularly since the 1990s have been seen as the hyper power and they’re having to accommodate the rise of China. And we just have to stand up in the areas where we feel there is overreach, whether they are strategic areas or technological areas. But what we’ve got to do is not throw the baby out with the bathwater. We’ve got a strong relationship with the Chinese. We have a big Chinese community in Australia. We mustn’t make them feel at any stage that they are somehow viewed as a fifth column or whatever. It’s important for us to maintain the relationship and develop it while also at the same time seeking to do what we can to diversify our trading opportunities in the region and our strategic options. </p>
<p><strong>MG:</strong> There are a lot of problems though at the micro level, if you like to put it like that. For example are our universities becoming too dependent on Chinese students?</p>
<p><strong>AS:</strong> Well I think that the universities do have to look at how dependent they are on international education, and certainly the incentives provided by governments over a long period in the way we’ve operated have certainly encouraged that dependence as well. But I think the universities understand that they can’t be too dependent on just one source of international students and I think they’re taking action to diversify. And certainly that should be encouraged.</p>
<p><strong>MG:</strong> Now I want to turn to the United States, to your future.</p>
<p><strong>AS:</strong> Yes. </p>
<p><strong>MG:</strong> Scott Morrison will be in Washington at the end of this week. He gets on very well with the president. But are there any risks for Australia in this closeness?</p>
<p><strong>AS:</strong> Well I think there are no risks as long as we are always very clear about the fact that while our interests are very close they’re not completely identical, given where we are in the Asia Pacific. And we have to keep explaining to our friends and allies what our national interest is. And our interest is, as I said before, in how we accommodate the rise of China in a way which maintains or seeks to restore as far as possible a global rules-based order.</p>
<p><strong>MG:</strong> We’ve signed up to the Middle East operation to protect sea lanes. Are there dangers here though? Firstly we see the situation in the Middle East turning even nastier than previously. And secondly does our involvement compromise the Australian government’s efforts on behalf of Australian citizens who are held in Iran?</p>
<p><strong>AS:</strong> Well it may be a hard thing to say but foreign policy can never be hostage just to the fear that your people may be taken hostage or there will be attacks on your soil. As we saw with 9/11. Your foreign policy can’t be hostage to those considerations. It has to be a foreign policy in your interest and certainly it’s in our national interest for these seaways and laneways to be as open as possible and that’s a principle we’re prepared to stand up for and that’s what we’ve done with the Straits of Hormuz. And it’s true, the Middle East situation is always fragile and as we can see from recent events with the drone attack on the Saudi oilfields, it’s always subject to potential escalation. But precisely because it’s such a strategic part of the world and there’s such strategic significance, us doing things and standing up for principles like freedom of navigation is very important.</p>
<p><strong>MG:</strong> Can I ask you finally about how you’ll approach the job of ambassador, which is a hard one in a place like Washington where you have to be across a whole lot of stakeholders and power is more diffused and so on. Joe Hockey engaged in golf diplomacy, including with the president. I don’t think you play golf?</p>
<p><strong>AS:</strong> I’m not much of a golfer but I used to play. I’m a bad golfer and maybe that’s a good thing.</p>
<p><strong>MG:</strong> Are you taking any lessons?</p>
<p><strong>AS:</strong> No.</p>
<p><strong>MG:</strong> But if golf’s not your go, what will be your way of operating?</p>
<p><strong>AS:</strong> I think the most important thing is to establish personal relationships, whether it’s with the relevant people in the administration or in the congress. Understanding what our national interest is and what we’re actually seeking to pursue there. Identifying some priority areas to pursue. Some of those will come out of the state visit to the US that the Prime Minister’s undertaking now. There’s talk about rare earth minerals, for example, they’re critical minerals. There’s talk around what we do further in space. I’m interested in the whole science and innovation space and what we can do more there. I think the infrastructure space, there’s a lot we can help each other with.
So I’m happy to identify those priorities as well as the more broader issue which is the traditional diplomatic function of representing our interests in the US. And so I’ll go wherever is required, do whatever is required to do that. But everyone does this in their own way. So I think Joe’s done a great job and I have to sort of work out my modus operandi essentially when I get there I think.</p>
<p><strong>MG:</strong> Well you’ll be going into an election year so that’s quite difficult. How do you balance your contacts with the incumbent team and the challenging team?</p>
<p><strong>AS:</strong> Look I think people in the administration would understand that being an election year you do want to have contact with the other side. I mean one of the things that Joe has done is maintain fruitful contacts with both sides of politics because apart from anything else they’re both represented in congress.</p>
<p><strong>MG:</strong> And he said that one of the ways he got in early with the Trump administration was that he reached out to that team during the campaign.</p>
<p><strong>AS:</strong> Yes that’s correct.</p>
<p><strong>MG:</strong> Is that a proper way of operating?</p>
<p><strong>AS:</strong> Well during election years often ambassadors will be observers at the conventions and they’ll get to meet people from both sides, and I think that’s important because as I say ultimately both sides are also in the congress and that’s where a lot of legislation affecting Australia gets done.</p>
<p><strong>MG:</strong> And you’ll be doing it too? </p>
<p><strong>AS:</strong> Yes.</p>
<p><strong>MG:</strong> And do you go to America with some network already in place of contacts from from your previous lives?</p>
<p><strong>AS:</strong> Well I’ve been there through the Clinton era and through the George W. Bush era. There’ll be some contacts still there but there’s probably quite a few that I’ll have to now sort of restart or start anew.</p>
<p><strong>MG:</strong> Well as Malcolm Turnbull might have said, it’s a most exciting time to be there.</p>
<p><strong>MG:</strong> Thank you very much Arthur Sinodinos. All the best for your new life and your new career. </p>
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<h2>Additional audio</h2>
<p><a href="http://freemusicarchive.org/music/Lee_Rosevere/The_Big_Loop_-_FML_original_podcast_score/Lee_Rosevere_-_The_Big_Loop_-_FML_original_podcast_score_-_10_A_List_of_Ways_to_Die">A List of Ways to Die</a>, Lee Rosevere, from Free Music Archive.</p>
<p><strong>Image:</strong></p>
<p>AAP/ Mick Tsikas</p><img src="https://counter.theconversation.com/content/123596/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As Arthur Sinodinos prepares to leave the Senate for his new role as Australian ambassador to the US, he sits with Michelle Grattan to reflect on his time in politics.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1072732018-12-31T21:08:22Z2018-12-31T21:08:22Z1996-1997 cabinet papers show how Howard and Costello faced a budget black hole<figure><img src="https://images.theconversation.com/files/251664/original/file-20181220-45385-17exejd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The newly sworn-in Howard ministry in March 1996.</span> <span class="attribution"><span class="source">National Archives of Australia</span></span></figcaption></figure><p>On the morning of Monday, March 4 1996, the young treasurer in the Howard government, Peter Costello, and his press secretary, Tony Smith – now the speaker of the House of Representatives – took an Ansett flight from Melbourne to Sydney for their first departmental briefing. The treasury secretary, Ted Evans, who had initially asked to see Costello privately, offered his resignation in light of the change of government. Costello assured Evans he wanted him to stay on. </p>
<p>Once the meeting began, Evans had some startling news for his new boss. The budget had an underlying deficit of about A$9 billion. “Costello appeared genuinely shocked”, <a href="https://catalogue.nla.gov.au/Record/2585991">his biographer</a>, Shaun Carney, has reported. The size of the deficit probably did take him by surprise, even if the existence of a deficit of some kind did not. John Howard recalls that he had wind of it before his <a href="http://www.nma.gov.au/explore/features/prime-ministers/john-howard">March 2 election victory</a>.</p>
<p>A submission released today by the National Archives of Australia in its 1996-1997 cabinet records sets out the nature and scale of the problem that the new government saw as its most serious during its first term. But problem would become opportunity. In his autobiography, <a href="https://www.harpercollins.com.au/9780730499640/">Lazarus Rising</a>, Howard would call the 1996 budget “the most important of all budgets” delivered during his almost 12 years in government, as well as “the best and bravest in 25 years”.</p>
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<a href="https://theconversation.com/an-evening-with-the-treasurer-how-governments-belt-out-budget-hits-and-hope-someone-is-listening-95929">An evening with the treasurer: how governments belt out budget hits and hope someone is listening</a>
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<p>Howard is hardly a disinterested party. Nonetheless, there is a persuasive strand of opinion among commentators that the fiscal decisions taken in 1996, while creating political pain for the government and economic pain for voters, were foundational for Howard and Costello.</p>
<p>Some have credited this early decision-making for Australia’s economic resilience in the face of turbulent global winds: the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/CIB/CIB9798/98cib23">Asian financial crisis</a>, the <a href="https://www.businessinsider.com.au/heres-why-the-dot-com-bubble-began-and-why-it-popped-2010-12">bursting of the dot-com bubble</a>, even the <a href="https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html">global financial crisis</a>.</p>
<p>The cabinet submission of March 18 1996 predicted economic growth of 3.75% for 1995-96 and 1996-97, on the back of improved performance from the farm sector as the drought ended. Weak demand was likely cyclical, a “temporary slowdown of the type which often occurs at this stage of the business cycle and that growth should strengthen in subsequent quarters”, as business investment again took off. </p>
<p>Howard’s <a href="https://trove.nla.gov.au/newspaper/article/133336005?searchTerm=five%20minutes%20of%20economic%20sunlight%20John%20Howard">quip</a> from opposition in 1995 – that the recovering economy was “five minutes of economic sunlight” – was effective politics. But it was not supported by the new government’s own records, which referred to a “generally favourable outlook”.</p>
<p>Compared with the skyrocketing interest rates and then the recession the Hawke and Keating governments faced in the early 1990s (or the recession the Hawke government inherited in 1983), these were happy days. </p>
<p>However, unemployment remained high at well over 8% and was projected to stay there in the following year. </p>
<p>The government was also concerned about the drag on economic performance of continuing budget deficits and rising government debt. This was running down national savings, undermining investment and worsening Australia’s current account deficit – the difference between the value of imports and exports of goods, services and capital.</p>
<p>Costello committed the government to reducing the underlying deficit of 3.5% of gross domestic product to 0.5% over three years, thereby reducing public sector lending, relieving pressure on the current account deficit, and returning the budget to a structural surplus. The government rejected the idea of a single massive cut of A$8 billion in the 1996 budget as running the risk “of knocking the economy off course”. It therefore committed to cuts of A$4 billion in each of the budgets of 1996 and 1997, with an eye to less pain in the 1998 budget leading up to an election.</p>
<p>With defence spending quarantined from the cuts, the August 1996 budget was indeed a tough one. The usual suspects – health, welfare, the public service and tertiary education – bore much of the load. Nonetheless, the government’s own polling suggested most voters thought its measures “tough but fair”, dispensing necessary if bitter medicine.</p>
<p>Howard remarked at the December launch of the latest cabinet records release that the government applied to the budget a “fair go” test, although he would ultimately bear pain for his too-clever distinction between “core” and “non-core” election promises.</p>
<p>Tony Abbott was a young parliamentary secretary in 1996, on his way up but still some way from the real levers of power. By 2013, however, he had his own government and with his treasurer, Joe Hockey, faced the problem of framing his first budget.</p>
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<span class="caption">The 1996 effort would have provided a strong clue for Tony Abbott and Joe Hockey to frame their first budget after their 2013 election win.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
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<p>The 1996 effort would have been a powerful precedent for a new Coalition government in 2013 and, at a superficial level, the Abbott government did many similar things. As Howard and Costello had done, it established a <a href="https://www.ncoa.gov.au/">National Commission of Audit</a>.</p>
<p>Costello had complained of the <a href="http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=speeches/2006/008.htm&pageID=005&min=phc&Year=2006&DocType=1">“Beazley black hole”</a> – the deficit bequeathed by Labor’s finance minister, Kim Beazley. Conveniently for the government, he was also the new opposition leader. The phrase lived on as a way of reminding electors of the Labor Party’s weaknesses in economic management and the Coalition’s achievements and strengths. </p>
<p>In 2014, Abbott and Hockey spoke of a <a href="https://www.smh.com.au/politics/federal/what-budget-emergency-abbott-government-ministers-ditch-doom-and-gloom-talk-20150302-13soit.html">“budget emergency”</a>. But whereas the public seems to have bought the “black hole” image – although <a href="https://www.newsouthbooks.com.au/books/howard-government/">described recently</a> by economist Warwick McKibbin as more like a temporary “pothole” – voters appear to have regarded the Abbott government’s “budget emergency” as invented.</p>
<p>One reason for this failure ironically lies in legislative changes that Costello announced at the very time he drew public attention to the black hole. This was the <a href="https://www.finance.gov.au/publications/charter-of-budget-honesty-policy-costing-guidelines%3F%3D1/">Charter of Budget Honesty</a>, which mandated more rigorous reporting on the national finances, including the alphabet soup of MYEFO (Mid-Year Economic and Fiscal Outlook) and PEEFO (Pre-Election Economic and Fiscal Outlook), as well as five-yearly intergenerational reports. </p>
<p>These initiatives, which a Costello cabinet submission of August 2 1996 said were intended to promote “responsible fiscal management”, made it well nigh impossible to spring the surprise of a large deficit on an unsuspecting public and successor.</p>
<p>Unlike Hawke and Keating in 1983, and Howard and Costello in 1996, Abbott and Hockey could not stoke panic to implement unpopular measures and back out of difficult election commitments. The Charter of Budget Honesty meant they could not claim to have been blind-sided by an unanticipated budget deficit.</p>
<p>Howard and Costello also faced a much more helpful set of parliamentary numbers than their Coalition successor. With a massive 94 seats in a House of 148, they had political capital to burn. While few imagined the government would last almost 12 years, equally few considered it could be defeated after one term. </p>
<p>But it is in the Senate that the differences between 1996 and 2014 become clearer. There, the Howard government held 37 seats in a chamber of 76. After the defection of disgruntled Labor senator Mal Colston in August 1996, the government could get its legislation passed without the support of the Australian Democrats if it had Colston and the other independent senator, Brian Harradine, on side.</p>
<p>By way of contrast, the Abbott government faced a Senate cross bench of considerable complexity and diversity. And, as Howard has remarked, dealing with the Australian Democrats was notably easier for a Coalition government than getting Greens support.</p>
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<p>In 1996, Howard and Costello got the politics right. They still paid a political price, but it did not prove fatal. <a href="https://www.newsouthbooks.com.au/books/howard-government/">McKibbin argues</a> that <a href="https://www.abc.net.au/news/2014-05-20/john-howard-introduces-the-gst-2000/5464730">the introduction of a GST in 2000</a> was made easier by the reduction of government outlays and the elimination of the budget deficit in the government’s first term.</p>
<p>By dealing with spending in 1996, the government was able to turn its attention to revenue and taxation in a more favourable fiscal environment for politically difficult reform.</p>
<p>The image remains: as they contemplated their own horror budget, Joe Hockey and Mathias Cormann <a href="https://www.smh.com.au/politics/federal/treasurer-joe-hockey-and-finance-minister-mathias-cormann-pictured-smoking-cigars-ahead-of-tough-budget-20140509-zr8i3.html">relaxed with cigars</a>. Trivial in itself, this clumsiness epitomised the Abbott government’s muddled budget politics.</p>
<p>In 2014, after decades of strong economic performance, few believed that the drastic measures the Abbott government proposed in 2014 were either necessary or fair. Hockey declared <a href="https://www.smh.com.au/national/the-end-of-the-age-of-entitlement-20120419-1x8vj.html">the “age of entitlement” over</a>, but voters suspected this did not extend to politicians or their friends.</p>
<p>The contentious measures in the <a href="https://theconversation.com/federal-budget-deficit-climbs-to-40-4bn-experts-react-35481">2014 budget</a> – such as the Medicare co-payment and the winding back of unemployment benefits – did not pass Howard’s “fair go” test.</p>
<p>But the tough spending cuts Costello announced in 1996, while hardly provoking an outbreak of national joy, were an early taste of the professionalism and toughness that he and Howard brought to their long years at the helm.</p><img src="https://counter.theconversation.com/content/107273/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Bongiorno does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The latest release from the National Archives reveals how the Howard government managed a budget deficit, and presents a striking contrast with the Abbott government’s framing of the 2013 budget.Frank Bongiorno, Professor of History, ANU College of Arts and Social Sciences, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/959292018-05-07T20:18:18Z2018-05-07T20:18:18ZAn evening with the treasurer: how governments belt out budget hits and hope someone is listening<figure><img src="https://images.theconversation.com/files/217873/original/file-20180507-166887-1q5sby7.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Emil Jeyaratnam/AAP/Shutterstock.com</span></span></figcaption></figure><p>Governments, these days, tend to put a lot of political eggs in the budget basket. But this was not always so. The economic historian, Boris Schedvin, reported that the budget speeches of the treasurer for much of the 1920s, Earle Page, “read more like a chairman’s address to the annual meeting of a large public company than the nation’s principal document on economic policy”. Dull as ditchwater and full of facts and figures, issues of policy were effectively obscured.</p>
<p>The rising importance of the federal government as macroeconomic manager provided the budget with greater status and importance – not least as a projection of the image and priorities of the government. Another economic historian, Alex Millmow, has suggested that the <a href="https://treasury.gov.au/publication/economic-roundup-issue-2-2011/economic-roundup-issue-2-2011/percy-spender-an-early-keynesian/">November 30 1939 revised budget</a>, delivered by acting treasurer Percy Spender in the early months of the second world war, was the country’s very first Keynesian budget.</p>
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<p>Some budgets lived on in legend decades after being delivered. Arthur Fadden’s <a href="https://treasury.gov.au/publication/economic-roundup-issue-4-2011/economic-roundup-issue-4-2011/arthur-fadden-treasurer-in-a-golden-age/">1951 budget</a> – designed to deal with runaway inflation – is recalled as “the horror budget”. Perhaps it endured in memory because it turned out to be an aberration in an age of rising affluence. What followed was 20 years of remarkable prosperity, with just a brief blip in the early 1960s.</p>
<p>Budgets are sometimes remembered with a degree of irony. There is no shortage of irony in the responsible budget delivered by new treasurer Bill Hayden in 1975 being the one that the coalition would block in the Senate and use to bring down the Whitlam government, before then relying on that very same budget in its first year in office.</p>
<p>Some historians now recognise in the <a href="http://www.naa.gov.au/Images/economy-1_tcm16-45403.pdf">1975 budget</a> the first hints of “<a href="http://www.uq.edu.au/economics/johnquiggin/JournalArticles99/econrat99.html">economic rationalism</a>”; Hayden’s budget prefigured the more cautious fiscal approach of Labor during the Hawke era. I’ve previously described it as “the granddaddy of pretty much every federal budget ever since”.</p>
<p>The budget of the Hawke era that is best remembered, Paul Keating’s “bring home the bacon” <a href="https://www.sbs.com.au/news/this-was-the-year-to-bring-home-the-bacon">budget of 1988</a>, with its delivery of a surplus, also comes with a large dose of retrospective irony – because what came next was the worst recession in Australian history since the 1930s. That budget can all too easily be seen as a marker of hubris; it is the older sibling of “the recession we had to have”.</p>
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<p>The 1980 budget is recalled because it was <a href="https://theconversation.com/the-art-of-the-leak-how-the-budget-is-strategically-doled-out-for-maximum-effect-77157">leaked to journalist Laurie Oakes</a>, but who can now recall what was actually in it? It was not the first time a budget had been leaked to a journalist, either. Fadden disclosed key details of the 1954 papers to a young press gallery journalist, Hal Myers. But The Sydney Morning Herald boss, Rupert “Rags” Henderson, refused to print them as the lead story, believing such a leak too good to be true. </p>
<p>Governments, early in their term, look to a budget to define their identity, fulfil some election promises while throwing others overboard, and register their seriousness of purpose in tackling the failings of an invariably hopeless and profligate predecessor. John Howard and Peter Costello did this with <a href="https://www.theaustralian.com.au/opinion/coalition-fixed-the-budget-in-1996-it-can-be-done-again/news-story/fdda6cd495e81fa572534d33d91b6704">brutal success in 1996</a>; Tony Abbott and Joe Hockey perpetrated a <a href="https://theconversation.com/federal-budget-2014-the-days-of-borrow-and-spend-must-come-to-an-end-26627">political disaster in 2014</a> on a scale of miscalculation comparable with Ben Chifley’s decision to nationalise the banks in 1947. </p>
<p>Faltering governments – and we have one of those at present – look to a budget to rescue them as they approach an election. They hope for a budget “bounce”. That might involve hand-outs to key constituents. </p>
<p>Sometimes – like Howard and Costello in 2001 – they get their bounce. On other occasions – like Howard and Costello in 2007 – they don’t; or at least not enough of a bounce to turn around a lengthy bad run in the polls and stop an opposition with the wind in its sails.</p>
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<a href="https://theconversation.com/the-art-of-the-leak-how-the-budget-is-strategically-doled-out-for-maximum-effect-77157">The art of the leak: how the budget is strategically doled out for maximum effect</a>
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<p>Malcolm Turnbull and Scott Morrison will this week, of course, be hoping for a reprise of 2001 rather than 2007. Being a historian rather than a prophet, I hesitate to venture my opinion of what they’ll get, but it’s at least debatable whether the budget boost alone – combined with the other concessions that the government of the day rolled out – would have been sufficient to get Howard over the line against Kim Beazley in 2001 without Tampa and 9/11. The <a href="https://researchdata.ands.org.au/australian-election-study-survey-2001/14139">Australian Election Study of the time</a> certainly pointed to the significance of national security as an issue for voters. </p>
<p>The present government is helped by a healthier flow of revenue than any recent government has enjoyed, which should allow some electorally strategic spending. The policy concern must be that a short-term improvement in government revenues gives rise to commitments that are unsustainable and become a burden down the track, rather as the Howard government’s mining boom-funded hand-outs did in the early years of this century.</p>
<p>It is also perhaps rather late in the day for the government to be able to recraft for itself an appealing image via a budget. That said, even the most battered, jaded, drug-addled rock star can make a comeback and play a few of the old hits for the entertainment of an ageing fan base. Whether that comeback is worth the price of admission is, of course, another matter entirely.</p><img src="https://counter.theconversation.com/content/95929/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Bongiorno does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some have set the course for electoral victory, others have tanked. In any case, federal budgets are important moments in the life of governments – especially those that are a little wobbly.Frank Bongiorno, Professor of History, ANU College of Arts and Social Sciences, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/588132016-05-03T20:34:41Z2016-05-03T20:34:41ZMorrison’s message is light on ideology and strong on soothing ahead of the election<figure><img src="https://images.theconversation.com/files/121010/original/image-20160503-19847-sl5c7h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Treasurer Scott Morrison insisted this is 'not an ordinary budget', but a 'plan'.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Who among us, watching Joe Hockey deliver his “lifters and leaners” budget speech just one year, 11 months and 21 days ago, would have thought that this first-term Coalition government would so proudly hand down a budget so light on ideology?</p>
<p>There is ideology in the 2016-17 budget, to be sure. Perhaps the best example of that is the redefinition of a small business, up from A$2 million in annual turnover to $10 million, and the cut in the tax rate to the businesses that will populate that dramatically expanded sector. That’s all part of a ten-year tax plan that ultimately promises an across-the-board company tax cut.</p>
<p>But ten-year promises in a country with a volatile three-year electoral cycle aren’t worth much, and there’s also a slug on the superannuation perks enjoyed by the very wealthy and a harder crackdown than last year’s on tax avoidance by big international companies</p>
<p>It’s a heavy contrast with where this government started.</p>
<p>Back when Hockey thought he had a happy future as treasurer, and was taking on the “age of entitlement” in the Abbott government’s first budget, the “budget emergency” created by Labor necessitated drastic action. Industry assistance was killed. University fees were to be deregulated. Pensions and family payments were to be squeezed. People going to the GP were to be slugged with a co-payment designed in part to discourage them from going to see their doctors so frequently.</p>
<p>And then there were the young unemployed. They were told that if they were under 30 and found themselves out of work they would have to wait six months before being able to get the dole.</p>
<p>It was harsh and unexpected, and it was about remaking the nation, reducing the role and the size of government. Australia would be recast as a nation of self-reliant, self-starting types. Voters weren’t interested.</p>
<p>Last year’s budget, which was fashioned in the wake of Tony Abbott’s (and, by implication, Hockey’s) near-death experience in the Liberal partyroom, was the transitional document to this one. It abandoned the deficit hysteria. It had to, if only to lessen the embarrassment to the then prime minister and treasurer, caught out as they were by their previous budget pronouncements.</p>
<p>It trialled the jobs and growth mantra that is central to Scott Morrison’s 2016-17 budget. It set the pattern for this budget. It was big-spending, big-taxing. The wild predictions of a budget surplus inside this term had been well and truly abandoned.</p>
<p>And it decided to be nice to the young jobless, who have come to act as the canary in the budget coalmine for this government. In this budget, young people who are out of work get even more love and attention, with an expanded work-for-the-dole type program offering them internships that purportedly train them to be job-ready.</p>
<p>There is a clear rhetorical gap in Morrison’s message. On the one hand he is saying that Australians – employers, employees, government – must live within their means. On the other, he is delivering a budget program that, far from eliminating the deficit as promised at the 2013 election, is built on an even higher level of spending than the expenditures associated with the previous Labor government.</p>
<p>Government spending in 2016-17 will be the highest as a proportion of GDP outside a recession. The last budget deficit was $33 billion. In this budget it is predicted to be $37.1 billion.</p>
<p>In an interview soon after delivering the budget, Morrison acknowledged that the economy was “difficult” and it had proved to be hard to stimulate investment.</p>
<p>Clearly, it is not a radical budget. The hair shirt has well and truly been cast off. It definitely contains the key characteristics of traditional pre-election budgets. It is not a spending spree, full of big handouts. But there are some for middle-income earners and small businesses, and it has the optimistic settings that any government looking to be re-elected has to take up.</p>
<p>The message is that everything’s OK, the transition from the mining boom is underway, all will be well, your kids will get jobs. Don’t worry. No-one is being robbed by the government – not anyone that most of you would know, anyway.</p>
<p>Is the optimism justified? Growth is predicted to stay at 2.5% in this budget period, rising to 3% next year and the year after that.</p>
<p>It seems a bold assertion given that while the budget lock-up was going on the Reserve Bank cut the cash rate to 1.75%. Interests rate are at an historic low, which suggests that deflation is a danger.</p>
<p>Every treasurer believes their budget is the game-changer. Morrison repeatedly characterised his first budget as “not a typical budget, not an ordinary budget”. Instead, he insisted, it was “a plan”.</p>
<p>Australia has seen a lot of plans in recent years. It has also seen quite a few treasurers of late; Morrison is the fourth inside three years. Hockey’s first budget was a plan but that plan crashed. This was a don’t-frighten-the-horses pre-election budget that will probably be subsumed into the campaign a week from now. </p>
<p>Politically, it could have been worse for a government that hasn’t had a good election year so far.</p><img src="https://counter.theconversation.com/content/58813/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Shaun Carney does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After two Coalition government budgets heavy on ideology, this one is a quieter, don’t-frighten-the-horses document paving the way for the election.Shaun Carney, Adjunct Associate Professor, School of Social Sciences, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/573542016-05-02T20:33:53Z2016-05-02T20:33:53Z‘Working families’, ‘Tony’s tradies’ – what will this year’s budget soundbite be?<figure><img src="https://images.theconversation.com/files/120262/original/image-20160427-1341-1gk95bn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Treasurers throughout Australia’s history have used their budget role to reach out to people.</span> <span class="attribution"><span class="source">AAP/Mick Tsikas</span></span></figcaption></figure><p>Government budgets need explaining and promoting – both in the budget speech itself and especially in the publicity before and after. That means soundbites – which all of us know but few profess to love – are indispensable to the economics of government.</p>
<p>Former New York governor Mario Cuomo <a href="http://www.newyorker.com/news/news-desk/postscript-mario-cuomo">observed</a>:</p>
<blockquote>
<p>You campaign in poetry; you govern in prose. </p>
</blockquote>
<p>Budget speeches cleave faithfully to the second half of that formula – even if Australia’s election campaigns rarely live up to its first half. Still, the implication that you can tell a competent government by how well its ministers bore you clearly holds some kind of sway.</p>
<p>To be fair, “Mr/Madam Speaker, I rise tonight to talk about money” makes for a very hard opening if your aim is to entertain or inspire.</p>
<p>But budgets are produced by people who want to be noticed and respected. Treasurers throughout Australia’s history have used their budget role to reach out to people and win some kind of support for their policies.</p>
<h2>The media’s role</h2>
<p>News journalists have been covering Australia’s federal budget <a href="http://trove.nla.gov.au/newspaper/article/64456524">since 1901</a>. And since 1984, treasurers have had an added power of live television coverage to amplify their performances.</p>
<p>The ABC’s TV coverage in 2015 <a href="http://newsonnews.com/story/240515-497">reportedly drew</a> 1.2 million viewers to watch Joe Hockey give his budget speech. An even larger (but harder to count) audience tuned in to excerpted coverage on news and current affairs programs across all stations.</p>
<p>TV in particular has changed much about the nature of the budget speech as a performance. To catch the primetime audience, a budget speech is now strictly compressed into its 30-minute timeslot on a Tuesday evening.</p>
<p>To project atmospherics to the home viewer, government MPs go through a transparently phoney rigmarole of thronging the treasurer with handshakes and kisses when he (never yet she) finishes speaking.</p>
<p>Another change TV has brought is to the content of the speeches. Since treasurers began reaching a direct audience of more than a million and a mediated public of several millions, there has been a lot of pressure to say things that all those people can understand, relate to and vote for.</p>
<p>Rhetoric, the art of persuasion, has been studied and practised since long before the ancient Greeks gave us that word. One of its mainstays is that memorable makes compelling. If audience members can remember the key phrases a speaker uses to make a point, they are much more likely to agree with the point itself.</p>
<p>Journalism has compounded this importance by excerpting the main points that public figures make in their remarks in order to characterise their positions for news reportage. </p>
<p>Researchers since the 1970s have repeatedly shown it is the most poetically condensed phrases that journalists listen and read for when they decide which excerpts to report. That means, when a journalist is looking for quotes, their innate preference is for pithy phrases – using not too many words to say something with a clear stylistic form.</p>
<p>This, in essence, is the soundbite: <a href="https://theconversation.com/cabinet-papers-1989-keatings-bringing-home-the-bacon-budget-35719">“the budget that brings home the bacon”</a>, <a href="http://www.theage.com.au/articles/2003/05/14/1052591833432.html">“a sandwich and a milkshake”</a>, and so on. It is the element that most makes our politicians serve as performance poets – even if many of them are not particularly keen on poetry.</p>
<p>In other words, if a speaker makes sure the most important points are embedded in the most memorable phrases, then the key message gets through to the public. If they do not, then journalists will zero in on phrases of their own choosing. This is a far more risky dynamic for a politician trying to promote a policy logic.</p>
<figure>
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<figcaption><span class="caption">Paul Keating delivers the ‘bringing home the bacon’ budget.</span></figcaption>
</figure>
<h2>Choose your words</h2>
<p>A <a href="https://www.royalholloway.ac.uk/cor/thucydides2twitter/t2thomepage.aspx">recent conference in London</a> discussed the history of the soundbite since 1973 and its far longer prehistory. A constant theme was how much politicians suffer when they get this stuff wrong. </p>
<p>But the main way politicians get it wrong is through not trying. As a political speaker, either you pick your key phrases or they get picked for you.</p>
<p>That is why even such a wooden performer as Wayne Swan could cut through, as long as he stuck to the method – and to his <a href="http://www.budget.gov.au/2012-13/content/speech/html/speech.htm">“working families”</a>. It is why treasurers with an ounce of dramatic timing like Peter Costello or Paul Keating could seem like the apotheosis of wit, even when they were speaking utter inanity (as politicians often must).</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=901&fit=crop&dpr=1 600w, https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=901&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=901&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1133&fit=crop&dpr=1 754w, https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1133&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/120264/original/image-20160427-1341-iqfjpy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1133&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The rhetoric from Joe Hockey’s first budget was later used against him.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
</figcaption>
</figure>
<p>There are times when playing the game can explode in a treasurer’s face. Compare the cynical but effective Joe Hockey in 2015 with the same treasurer 12 months earlier.</p>
<p>In 2014, Hockey ramped up a critique of “the age of entitlement”, only to be <a href="http://www.couriermail.com.au/news/opinion/opinion-treasurer-joe-hockeys-image-goes-up-in-smoke-and-that-cigar-puffing-image-will-go-straight-to-the-pool-room/story-fnihsr9v-1226915007293">photographed</a> with Mathias Cormann smoking conspicuously sized cigars shortly before a budget widely criticised as unfair. “Entitlement” became an albatross around his neck, his own word that others used against him.</p>
<p>In 2015, by contrast, Hockey <a href="http://www.smh.com.au/business/federal-budget/federal-budget-2015-abbott-coins-phrase-tonys-tradies-denies-early-poll-20150512-gh0acv.html">handed down a budget</a> that promised every small business a tax cut. Its headline feature was a no-questions-asked tax write-off for small-business owners. The prime minister, Tony Abbott, rather immodestly dubbed these people <a href="http://www.dailymail.co.uk/news/article-3078988/Tony-s-Tradies-Prime-Minister-s-small-business-owners-ll-able-claim-20-000-tax-expenses-new-utes-photocopiers-coffee-machines.html">“Tony’s tradies”</a> – a catchphrase that duly stuck. </p>
<p>Arguably it was economically irresponsible policy. Certainly it was cynical. But politically it was safe ground to be on.</p>
<p>And that is why the main strategic purpose for the government’s commentary around a budget, especially the treasurer’s budget speech itself, is to carve out voteable rhetoric.</p>
<p>What will they try this year?</p><img src="https://counter.theconversation.com/content/57354/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Clark receives funding from the Australian Research Council. </span></em></p>As a political speaker, either you pick your key phrases or they get picked for you.Tom Clark, Associate Professor, College of Arts, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/532112016-01-20T00:38:48Z2016-01-20T00:38:48ZLeaders weigh up a challenging year of transitions in the Australia-US relationship<figure><img src="https://images.theconversation.com/files/108651/original/image-20160119-29790-1hpabo9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Barack Obama has become adept at welcoming new Australian prime ministers to the White House.</span> <span class="attribution"><span class="source">EPA/Michael Reynolds</span></span></figcaption></figure><p>Malcolm Turnbull has <a href="http://www.abc.net.au/news/2016-01-20/turnbull-speech-to-us-chamber-of-commerce/7099808">held talks with</a> President Barack Obama at the White House on his first official visit to the US as Australian prime minister. With the fight against Islamic State (IS) in the Middle East high on the agenda, Obama had high praise for Australia’s involvement in the conflict.</p>
<p>2016 will be a year of transitions in the Australia-US relationship. Obama, who has become adept at welcoming new Australian prime ministers, has less than a year remaining in office. Against this backdrop of change are three important issues: the fight against IS, the challenges of China, and the passage of the Trans-Pacific Partnership (TPP). </p>
<p>There is also one final important transition – Australia’s enormously popular ambassador to the US, Kim Beazley, will soon be replaced by <a href="https://theconversation.com/mr-hockey-goes-to-washington-so-what-challenges-will-he-face-49642">Joe Hockey</a>.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/otOVe_knC5k?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Barack Obama and Malcolm Turnbull make their opening remarks.</span></figcaption>
</figure>
<h2>Farewell Beazley</h2>
<p>Australians know Beazley as an ALP stalwart, a former deputy prime minister and opposition leader. Americans know Beazley as one of Australia’s most effective interlocutors. Beazley’s knowledge and passion for American history and his love of ideas have made him a Washington favourite.</p>
<p>Beazley also brought to Washington an excellent understanding of Australia’s strategic challenges. He was no mere consumer of others’ strategic analysis; he quite capably generated his own.</p>
<p>What sometimes gets lost amid all this admiration is Beazley’s effectiveness in representing Australia’s cause. His <a href="https://twitter.com/ausambusa">15,700-odd Twitter followers</a> may not rival pop star <a href="https://twitter.com/katyperry">Katy Perry</a>, but his following is more than double than that of the outgoing <a href="https://twitter.com/PeterWestmacott">British ambassador to the US</a>, Peter Westmacott.</p>
<p>Not only was Beazley effective in articulating an Australian point of view, but he did so tirelessly. He will be a hard act to follow.</p>
<h2>Turnbull’s challenges</h2>
<p>Turnbull has already begun to put a different kind of stamp on the Australia-US relationship. </p>
<p>In a speech to the <a href="http://www.malcolmturnbull.com.au/media/australia-and-the-united-states-new-responsibilities-for-an-enduring-partne">Center for Strategic and International Studies</a>, Turnbull outlined his vision for co-operation between Australia and the US. Thucydides and a more nuanced view on how to address turmoil in the Middle East have replaced Tony Abbott’s <a href="https://theconversation.com/abbott-vows-to-shirt-front-putin-as-russian-diplomat-recalls-better-times-32889">more muscular approach</a>.</p>
<p>For some in Washington there may be disquiet over Australia’s decision <a href="http://www.theguardian.com/australia-news/2016/jan/13/malcolm-turnbull-rejects-us-request-for-more-australian-troops-to-fight-isis">not to increase</a> its troop deployment to Iraq. Turnbull explained:</p>
<blockquote>
<p>Other nations with larger economies, larger defence forces and closer to the theatre are beginning to step up their commitments. As they should.</p>
</blockquote>
<p>While other countries must do more to support the anti-IS coalition, Turnbull observed:</p>
<blockquote>
<p>The destruction of ISIL [Islamic State in Iraq and the Levant, another name for IS] requires military action including boots on the ground. But they must be the right boots on the right ground. </p>
</blockquote>
<p>Many in Washington will applaud this call. </p>
<p>In the speech, Turnbull also touched upon the other issue that exercises minds in Washington – China. </p>
<p>Two challenges emerge from China that test the Australia-US relationship. Turnbull turned to Athenian philosopher and historian <a href="http://www.canberratimes.com.au/comment/malcolm-turnbull-and-thucydides-and-all-that-20151217-glputw.html">Thucydides</a> to illustrate the problem. Thucydides described the rising power of Athens leading to Sparta’s intemperate and violent reaction. Will China’s rise come about peacefully or not? </p>
<p><a href="https://theconversation.com/why-the-world-is-wary-of-chinas-great-wall-of-sand-in-the-sea-40070">China’s conversion</a> of water-logged atolls and reefs in the South China Sea into airstrips and harbours provide grounds for concern. Australia’s support of <a href="http://www.bbc.com/news/world-australia-35099445">freedom-of-navigation patrols</a> is an important adjunct to American efforts. Both the US and Australia share an interest in China’s peaceful rise. It is hard to see how the territorial dispute in the South China Sea will be easily resolved. </p>
<p>Turnbull wisely called for calm:</p>
<blockquote>
<p>Australia has no claims in the South China Sea, nor do we make any judgement on the legitimacy of any of the competing claims. We urge all parties, not just China, to refrain from further construction on those islands or reefs, and to refrain from militarisation. </p>
</blockquote>
<p>Whether anybody listens to these soothing words remains to be seen.</p>
<p>The second equally complex threat to international peace and stability is the Chinese economy. China can barely manage its increasingly complex and opaque economy. The International Monetary Fund released its <a href="http://www.imf.org/external/pubs/ft/weo/2016/update/01/">World Economic Outlook update</a> the same day Turnbull met Obama. This projected a weakening Chinese economy, with Chinese growth slowing to 6.3% in 2016 and 6% in 2017. </p>
<p>The questions for the Australia-US relationship are the extent to which the slowing Chinese economy will have a spillover effect, and how deeply a weakening Chinese economy will impact domestic stability.</p>
<p>The final challenge concerns the TPP. The timing of <a href="http://www.theguardian.com/business/2015/oct/05/tpp-trade-deal-obama-us-congress-approval-bernie-sanders-hillary-clinton">congressional approval</a> of the trade deal remains a mystery. In this, a presidential election year, the TPP may not make much progress. </p>
<p>The TPP’s signing is high on Australia’s list of achievements in Washington. Unfortunately, real success depends more on individual members of Congress than it does on anything the White House might want. </p>
<p>Turnbull, in his meeting with Obama, made clear the TPP’s importance. He claimed that “the critical thing is the way it promotes the continued integration” of the Asia-Pacific’s economies, which is an important peg in regional security. Passage of the TPP may well be important, but members of Congress may be more concerned about their own re-election.</p>
<p>Such are the challenges of Washington.</p><img src="https://counter.theconversation.com/content/53211/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Tidwell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>2016 will be a year of transitions in the Australia-US relationship. Against a backdrop of change are three important issues: the fight against Islamic State, China, and passage of the TPP.Alan Tidwell, Director, Center for Australian, New Zealand and Pacific Studies, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/523082015-12-28T20:06:53Z2015-12-28T20:06:53ZSix things you should not have missed in 2015: Business + Economy<p>It’s been another busy year and who has time to keep track of everything? So here are five things a business and economy reader should not - and in fact, could not - have missed this year. </p>
<h2>1) Joe Hockey</h2>
<blockquote>
<p>“The starting point for a first home buyer is to get a good job that pays good money. If you’ve got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that’s readily affordable. More affordable than ever to borrow money for a first home now than it has ever been.”</p>
</blockquote>
<p>Hockey is hard to miss, even if you try - and who would want to? </p>
<p>Because here’s the thing: Hockey was the gift that, for the media at least, kept on giving. Chastened by learning that poor people do indeed drive and that it is best not to be photographed waltzing with your wife and sucking down on a stogie before presenting a budget everyone is going to hate, Hockey tried to craft a <a href="https://theconversation.com/no-pressure-joe-but-you-are-back-in-the-spotlight-38381">more sober profile</a>, announcing the <a href="https://theconversation.com/issues-paper-flags-lower-simpler-fairer-tax-experts-react-39474">Re-think discussion paper</a> and <a href="https://theconversation.com/hockey-looks-to-armies-in-intergenerational-report-experts-react-38372">Intergenerational report</a>. </p>
<p>But <a href="https://theconversation.com/video-michelle-grattan-on-joe-hockeys-blunder-43178">quotes like the above</a> did not help, nor <a href="https://theconversation.com/hockey-shouted-down-in-conversation-about-access-to-super-for-houses-38606">his suggestion that people should be able to use their super</a> to buy their first home. Or <a href="https://theconversation.com/hockeys-defamation-suit-shows-need-for-wider-free-speech-debate-27057">suing Fairfax Media for defamation</a>. </p>
<p>The <a href="https://theconversation.com/infographic-2015-federal-budget-at-a-glance-41423">2015 federal budget</a>, which avoided the swingeing cuts of the previous year and concentrated on a tax package aimed at small business was calmer, but was <a href="https://theconversation.com/after-last-years-crazy-brave-comes-the-hangover-budget-41699">dubbed the “hangover budget”</a>. </p>
<p>Then it was <a href="https://theconversation.com/as-treasurer-hockey-proved-to-be-an-ordinary-joe-49358">all over</a>: </p>
<p>But while Joe has now passed the reins over to Scott Morrison and resigned from Parliament, it hasn’t been all bad for him, with the worst kept secret in Canberra - that Hockey will be Australia’s ambassador to the US - confirmed earlier this month.</p>
<h2>2) The leadership spill</h2>
<p>No-one could really miss this, mainly because Australians who continually nominated Malcolm Turnbull in polls as their alternative prime minister of choice (ignoring the fact he wasn’t on the poll, Bill Shorten was), finally got their wish on the <a href="https://theconversation.com/malcolm-turnbull-ousts-tony-abbott-in-dramatic-party-coup-47512">evening of September 14</a>, with Tony Abbott dramatically ousted.</p>
<p>This pretty much lays out the terrain: <a href="https://theconversation.com/ten-economic-events-leading-up-to-the-abbott-spill-47561">Ten economic events leading up to the Abbott spill</a>.</p>
<p>The new frontbench strode in:</p>
<p>And promptly set about clearing several pieces of <a href="https://theconversation.com/the-unfinished-business-facing-australias-new-treasurer-47634">unfinished business</a> from the previous Abbott-led government.</p>
<p>This included a <a href="https://theconversation.com/super-members-the-winner-in-sensible-financial-inquiry-response-49430">response to David Murray’s Financial System Inquiry</a>. It also announced it would take up the <a href="https://theconversation.com/harper-response-is-good-economics-and-smart-politics-51191">majority of recommendations of the Harper Competition review</a>, which had languished for 12 months under the Abbott government, although it <a href="https://theconversation.com/confusion-reigns-in-options-for-australias-misuse-of-market-power-laws-52195">opted to sidestep</a> the contentious issue of reform to Section 46 in competition law, the so-called <a href="https://theconversation.com/explainer-what-is-the-competition-effects-test-39424">Effects Test</a> recommended by Professor Ian Harper in his review and supported by small business. </p>
<p>Turnbull rolled out his first major policy set-piece, <a href="https://theconversation.com/turnbull-seeks-ideas-boom-with-innovation-agenda-experts-react-51892">the National Innovation and Science Agenda</a> - or for short, the “Ideas Boom”; with Morrison following with the <a href="https://theconversation.com/myefo-2015-at-a-glance-52298">Mid Year Economic and Fiscal Outlook</a>. At time of writing, pathologists who had got it in the neck were sharpening the pitchforks, with suggestions the revenue-saving measure might not make it through the Senate. We’ll have to wait for next year for that. </p>
<h2>3) Tax - multinationals don’t have to pay any, but we may soon pay more GST</h2>
<p>Quick quiz: which multinational company pays less tax than you do? Answer: Most of them. Earlier this year Australians were treated to a long list of executives whose products we use every day fronting a senate committee to <a href="https://theconversation.com/the-government-wants-us-to-worry-about-debt-and-the-deficit-the-real-crisis-is-disclosure-40000">generally dodge answering</a> why they, <a href="https://theconversation.com/close-look-at-tax-avoidance-laws-shows-they-lack-teeth-41887">quite legally</a>, paid very little tax. </p>
<p>The government’s multinational tax avoidance laws forcing multinational companies to disclose greater tax detail were finally struck this month, <a href="https://theconversation.com/close-look-at-tax-avoidance-laws-shows-they-lack-teeth-41887">but were criticised for lacking teeth</a> and a late deal between the Greens and the Coalition allowed private companies with a turnover above $200 million to avoid being forced to disclose their tax arrangements, much to Labor’s chagrin. It wanted a lower threshold. And just this week, the Australian Taxation Office released a <a href="https://www.ato.gov.au/Media-centre/Media-releases/Corporate-tax-transparency-data/">straight-faced list of companies</a> <a href="https://theconversation.com/so-now-we-know-which-companies-did-not-pay-tax-time-to-target-aggressive-avoidance-52490">which pay no tax</a>.</p>
<p>Meanwhile, the federal government continues to <a href="https://theconversation.com/our-problem-is-spending-not-revenue-says-treasurer-morrison-48065">deny we have a revenue problem</a>. Just saying.</p>
<p>In events in no way related, domestically, Australians are being <a href="https://theconversation.com/turnbull-faces-his-most-taxing-test-yet-wooing-the-states-to-overhaul-the-gst-51663">slowly limbered up</a> to accept <a href="https://theconversation.com/leaders-debate-the-gst-what-you-need-to-know-44958">reform of the GST</a>. Because some of us <a href="https://theconversation.com/forget-health-takeovers-heres-how-to-fix-hospital-funding-and-chronic-disease-care-44141">want hospitals</a>, the revenue has to come from somewhere, and the federal government in its 2014 budget pushed this problem onto the states.</p>
<h2>4) Australia signed a bunch of trade agreements</h2>
<p>Fresh from penning free trade agreements with South Korea and Japan, Australia finally bedded down a major <a href="https://theconversation.com/china-australia-trade-agreement-a-compromised-victory-43396">free trade agreement with number one trading partner, China</a>, following a fraught <a href="https://theconversation.com/key-events-in-the-10-year-journey-towards-a-china-australia-fta-32328">10-year process</a> that included 22 rounds of talks, stalled negotiations and the agreement becoming a political football, particularly around <a href="https://theconversation.com/patching-the-flaws-around-chaftas-labour-provisions-48963">its labour provisions</a>. The agreement comes into force this week. But while politicians have spruiked its benefits, <a href="https://theconversation.com/whats-really-at-stake-if-the-china-fta-falls-through-47150">doubts remain</a> about the economic benefits. </p>
<p>Another signing was the <a href="https://theconversation.com/five-things-you-need-to-know-about-the-trans-pacific-partnership-48653">Trans-Pacific Partnership (TPP)</a>. Controversial due to a clause allowing foreign investors to sue host country governments for regulatory changes that “harm” their investments, the TPP is still to be ratified by the United States.</p>
<h2>5) Some things happened around the rest of the world</h2>
<p>Grexit. A <a href="https://theconversation.com/greeces-best-chance-of-escaping-economic-misery-was-a-grexit-44357">made-up word</a> that neatly encapsulated a tense international situation for the Greek government as it teetered on the edge of leaving the European Union. Australians avidly followed Greek finance minister Yanis Varoufakis - a former Sydney University academic - as one of their own. </p>
<p>China’s <a href="https://theconversation.com/how-a-chinese-slowdown-will-hit-global-growth-46655">growth slowed</a>. But noone is panicking. Yet.</p>
<p>Possibly because US interest rates went up for the <a href="https://theconversation.com/experts-weigh-in-on-fed-hike-it-was-the-right-call-but-will-it-work-52196">first time in 10 years</a>, indicating a nascent recovery in what is still the world’s largest economy. </p>
<p>Iron ore prices went down. Way down. That, <a href="https://theconversation.com/turnbull-inherits-an-economy-battered-by-global-headwinds-47473">coupled with historical falls in trade</a>, provides a substantial challenge for the federal government as it moves into an election year in 2016.</p>
<h2>6) Business behaving badly</h2>
<p><strong>Volkswagen.</strong> When an <a href="https://theconversation.com/how-volkswagen-got-caught-cheating-emissions-tests-by-a-clean-air-ngo-47951">obscure NGO busted the global German car manufacturer</a> for faking its emissions, the resulting international scandal saw CEO Martin Winterkorn sacked, a global recall, and a reputation in tatters.</p>
<p><strong>7-Eleven.</strong> Disturbing <a href="https://theconversation.com/7-eleven-fallout-what-are-the-moral-obligations-on-franchisors-47197">revelations of exploitation</a> <a href="http://www.walkleys.com/walkleys-winners/adele-ferguson-sarah-danckert-and-klaus-toft/">revealed by Fairfax Media and the ABC</a> has rocked one of Australia’s most popular franchises, causing Chairman Russ Withers and CEO Warren Wilmot to resign from the board, while a company-established independent review led by Professor Allen Fels, <a href="http://www.smh.com.au/business/workplace-relations/7eleven-stores-raided-in-wage-scam-probe-20151216-glpiei.html">continues to investigate</a> allegations of half-paying staff and other breaches.</p>
<h2>Things to watch out for next year</h2>
<p><strong>Tax reform.</strong> The long awaited Tax White Paper auguring tax reform will be released. Changes are possibly due on superannuation, as it turns out that if you plan to retire, it is way better to be an <a href="https://theconversation.com/catch-up-super-contributions-a-tax-break-for-rich-old-men-51116">old white guy</a> than a <a href="https://theconversation.com/why-single-women-are-more-likely-to-retire-poor-51126">woman</a>. </p>
<p><strong>The “sharing” economy</strong>. Watch how the rise of disruptors such as Uber and Airbnb continue to challenge our regulatory environment next year.</p>
<p><strong>Digital disruption</strong>. Especially in the <a href="https://theconversation.com/fintech-might-be-hot-right-now-but-banks-are-still-winning-42053">banking and financial services sector</a>.</p>
<p><strong>Energy markets.</strong> The Paris Climate Summit was lauded as revolutionary by some and derided as mere words by others, but watch out how business responds.</p><img src="https://counter.theconversation.com/content/52308/count.gif" alt="The Conversation" width="1" height="1" />
The key events that made the business community laugh, cheer and despair in 2015.Helen Westerman, Business + Economy EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/496422015-12-07T23:02:09Z2015-12-07T23:02:09ZMr Hockey goes to Washington – so what challenges will he face?<figure><img src="https://images.theconversation.com/files/99763/original/image-20151027-18424-133tv57.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Joe Hockey has been announced as Australia's next ambassador to the United States.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Observers of the Australian-American relationship might be worried. Washington continues to suffer gridlock, with a president <a href="http://www.nytimes.com/2015/08/19/us/iran-nuclear-deal-obama-republicans.html?_r=0">hobbled</a> by a Congress deeply divided <a href="http://thehill.com/blogs/pundits-blog/presidential-campaign/255769-gop-divisions-overshadow-2016-primary">against itself</a>. US foreign policy in the Middle East remains bogged down without clear goals, and China’s growing assertiveness in the South China Sea remains unresolved.</p>
<p>Australia’s <a href="http://foreignminister.gov.au/releases/Pages/2015/jb_tr_151208.aspx">newly announced</a> ambassador to the US, Joe Hockey, now finds himself entering this situation. So will Hockey, a 19-year veteran of the Australian Parliament, be able to navigate an increasingly dysfunctional Washington?</p>
<h2>A unique landscape</h2>
<p>No one candidate for the ambassador job has ever been perfect, though some have been better prepared than others. Each Australian ambassador comes with strengths and weaknesses, and is supported by a professional diplomatic service. Since 1987, the Australian Embassy has been quietly building the capacity to represent Australian interests in the US Congress. </p>
<p>Following the <a href="http://legal.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf">Vienna Convention on Diplomatic Relations</a>, diplomats in most capitals are mandated to work with the host country’s foreign ministry. In the US, however, Congress and the executive are equal branches of government. Diplomatic representation in Washington therefore requires a focus on both branches. </p>
<p>Embassies in Washington that give scant attention to Congress do so at their own peril. Australia has been a leader in tirelessly working the halls of Congress.</p>
<p>Congress is a place that runs on money, relationships and access to information. Current annual spending on lobbying is <a href="http://sunlightfoundation.com/blog/2013/11/25/how-much-lobbying-is-there-in-washington-its-double-what-you-think/">estimated</a> to be as much as US$6.7 billion. Lobbyists representing foreign interests must register under the <a href="http://www.fara.gov/">Foreign Agents Registration Act</a>.</p>
<p>Diplomats, representing their national interest to members of Congress, are not required to register. Foreign governments also cannot make contributions to political candidates. So, by taking money out of the equation, embassies must rely upon developing strong relationships and providing reliable information to members of Congress.</p>
<h2>Successes and challenges</h2>
<p>With a five-member team, the Congressional Liaison Office at the <a href="http://usa.embassy.gov.au/whwh/home.html">Australian Embassy</a> works to follow the sometimes-chaotic events on Capitol Hill while simultaneously promoting Australian interests. </p>
<p>These diplomat-lobbyists have earned a reputation for effectiveness on Capitol Hill. John Lawrence, now the retired chief-of-staff to former House Speaker Nancy Pelosi, said: </p>
<blockquote>
<p>The Australian Embassy has an unusually sophisticated and informed congressional relations operation. Not only are they knowledgeable about the topics before the Congress, but they understand the major (and often the minor) players in the Congress, and they assiduously develop and nurture relationships with key players in Washington which are vital when they need action from the Congress or the Administration.</p>
</blockquote>
<p>The Australian Embassy in general and the Congressional Liaison Office in particular has had demonstrable examples of success over the years. A few of these include the <a href="http://dfat.gov.au/trade/agreements/ausfta/pages/australia-united-states-fta.aspx">Australia-US Free Trade Agreement</a> (AUSFTA), the <a href="http://canberra.usembassy.gov/e3visa.html">E3 visa</a> and the <a href="http://www.defence.gov.au/ustradetreaty/">Defence Trade Co-operation Treaty</a>.</p>
<p>While Australia may not have won everything it was after through AUSFTA, it was an important objective of the Howard government. South Korea pursued its <a href="https://ustr.gov/trade-agreements/free-trade-agreements/korus-fta">free trade agreement</a> at the same time as Australia, yet had to wait until 2007 for the agreement to be signed. Congress finally ratified the South Korean agreement in October 2011, whereas AUSFTA passed Congress in July 2004.</p>
<p>Immigration was not included in AUSFTA. Australia initiated with members of Congress, in particular with the sponsorship of the then-Senate majority leader, Bill Frist, a new class of visa. The E3 gives to Australia 10,500 visa places for “skilled labour”, where skilled means anyone with an undergraduate education. The E3 visa offers a two-year and renewable right to work in the US. This unique class of visa does not have a labour market test. </p>
<p>Since its signing only Australians have use of this class of visa. More recently, Australia’s monopoly on this visa class has come under threat. Republican congressman James Sensenbrenner sponsored <a href="https://www.congress.gov/bill/114th-congress/house-bill/3730">H.R. 3730</a>, which if passed would shift unused E3 visas to Ireland and alter the definition of “skilled labour” to include those who have completed high school.</p>
<p>In 2010, the US Senate ratified two defence trade co-operation treaties – one with Australia and the other with the UK. Prior to its signing the US had placed an embargo on the transfer of US-sourced defence materiel without the US government’s prior approval. The treaty changed this – it permits the transfer of some US-sourced defence equipment without prior government approval. </p>
<p>Exempting Australia from requiring export licences for defence-related items thus signals a high level of trust and a significant upgrading of the alliance.</p>
<p>Numerous other challenges and opportunities remain in the US Congress. The Trans-Pacific Partnership is one test the embassy will have to confront in the coming months. Other undiscovered trials for the Australia-American relationship lurk in the halls of the Congress. </p>
<p>Hockey faces many challenges, but he does not face them alone. Pursuing Australia’s national interests on Capitol Hill is one place where he can best use his parliamentary skills.</p><img src="https://counter.theconversation.com/content/49642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Tidwell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Will Joe Hockey, a 19-year veteran of the Australian Parliament, be able to navigate an increasingly dysfunctional Washington as ambassador to the United States?Alan Tidwell, Director, Center for Australian, New Zealand and Pacific Studies, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/516502015-12-06T19:13:49Z2015-12-06T19:13:49ZHow journalists can start winning the battle against politicians’ lies<figure><img src="https://images.theconversation.com/files/104353/original/image-20151204-29702-1sni7cc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Donald Trump has taken political 'lies' to a new level during his campaign for the Republican Party's presidential nomination.</span> <span class="attribution"><span class="source">Reuters/Evan Semon</span></span></figcaption></figure><p>Politicians lie. To varying degrees, they always have. But it is starting to seem that that truism is more true than it has ever been.</p>
<p>In 2012, American political commentator Charles P. Pierce <a href="http://www.esquire.com/news-politics/politics/a15551/rnc-tampa-night-one-12158408/">claimed that</a> the Republican Party was setting out in search of the “event horizon of utter bullshit” at its national convention that year. It wanted:</p>
<blockquote>
<p>… to see precisely how many lies, evasions, elisions, and undigestible chunks of utter gobbledegook the political media can swallow before it finally gags twice and falls over dead.</p>
</blockquote>
<p>And then along came Donald Trump and Ben Carson, who proceeded to knock things up a notch or two. These two candidates for the Republican presidential nomination for 2016 have appeared to reach entirely new levels of political indifference to the truth.</p>
<p>Carson – who <a href="http://www.theguardian.com/us-news/2015/nov/10/egypt-to-ben-carson-no-the-pyramids-were-not-for-storing-grain">drew mockery</a> for suggesting Egypt’s pyramids were built to store grain – has had several key anecdotes in his autobiography challenged. Meanwhile, fact-checking website Politifact <a href="http://www.politifact.com/personalities/ben-carson/statements/?page=1">has rated</a> only one of his substantial claims during the campaign as “mostly true”. The rest were either “half true”, “mostly false”, “false”, or “pants on fire”.</p>
<p>Despite leading the race, Trump has made so many obviously or demonstrably <a href="http://edition.cnn.com/2015/11/30/opinions/obeidallah-trump-pants-on-fire/">false statements</a> along the way that some experts have been forced to <a href="http://pressthink.org/2015/11/i-will-try-to-explain-why-the-trump-candidacy-has-been-so-confounding-to-our-political-press/">completely re-think</a> long-held assumptions about:</p>
<blockquote>
<p>… the rules [of politics and elections] … and what the penalty would be for violating them.</p>
</blockquote>
<p>In the past, a politician saying something factually inaccurate was cause for humiliation. Now there appears to be few consequences, if any. If journalism is supposed to be a force for truth, accountability and enlightenment in the political process, then it appears to be failing on the biggest of stages.</p>
<h2>Why?</h2>
<p>Thoughtful analyses of this situation almost always point to one of two possible explanations: generally, that the media is “biased”, and/or that politics has become “dumbed down” for easier audience consumption – just like any other kind of entertainment.</p>
<p>Like many others, journalist Matt Taibbi <a href="http://www.rollingstone.com/politics/news/america-is-too-dumb-for-tv-news-20151125#ixzz3t1fFM7bM">blames</a> journalism’s blunted edge on the commercial pressures in the newsroom:</p>
<blockquote>
<p>We in the media have spent decades turning the news into a consumer business that’s basically indistinguishable from selling cheeseburgers or video games.</p>
</blockquote>
<p>Though there is certainly some truth in that argument, it has a couple of major weaknesses.</p>
<p>One is that even if we do accept that there has been an increase in “soft” news, that doesn’t mean that the “hard” forms have gone away. Plenty of journalists are still out there asking the tough questions and undertaking comprehensive analysis. </p>
<p>Another is that the economic climate in the media means journalists need to keep justifying (or funding) their own salaries, and there is no better way of doing so than by “scooping” a rival, or taking down a big political name. Financial pressure often creates more journalistic adversarialism.</p>
<p>It would take a very cynical person to suggest that every working journalist today has sold their soul to corporate interests, or that there isn’t still a huge audience out there for investigative reporting, hard-hitting interviews, and the exposure of political malfeasance.</p>
<p>As proof of this, one only has to think about the extensive <a href="https://newmatilda.com/2014/05/21/leaked-documents-cast-doubt-abbotts-60k-scholarship-claims/">probing</a> around the Whitehouse Institute scholarship awarded to Frances Abbott, or Sarah Ferguson’s <a href="http://www.smh.com.au/federal-politics/political-news/sarah-ferguson-interview-with-joe-hockey-breached-abc-bias-guidelines-review-20150216-13gbmj.html">post-2014 budget interview</a> with Australia’s then-treasurer Joe Hockey.</p>
<p>So, while good journalism is still out there, there are few consequences for politicians who lie.</p>
<figure>
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<figcaption><span class="caption">Sarah Ferguson’s hard-hitting interview with Joe Hockey attracted praise and criticism.</span></figcaption>
</figure>
<h2>An alternative explanation</h2>
<p>If we assume that journalists and politicians are co-dependent adversaries with competing interests (one side with political goals, the other dedicated to facts and truth), then there <a href="http://www.amazon.com/Australian-TV-News-Functions-Futures/dp/1841507172">has been</a> – as my colleague Brian McNair puts it – a “communicative arms race” going on between the two.</p>
<p>Right now, politicians tend to win the battles – not just because they have better resources (such as whole teams of media advisors), but because journalists (their enemy) operate in such predicable ways.</p>
<p>Journalism is an incredibly homogeneous activity. Around the globe, almost without exception, it looks the same, sounds the same, and follows same arbitrary rules. American media professor Jay Rosen <a href="http://pressthink.org/2015/11/i-will-try-to-explain-why-the-trump-candidacy-has-been-so-confounding-to-our-political-press/">uses the term</a> “isomorphism” to describe this, and the consequence is that politicians have slowly worked out how to game their opponents.</p>
<p>For example, genre and production standards mean that if you repeat the same five-to-ten-second soundbite during an interview (no matter the question being asked), chances are that soundbite will survive the editing process and appear in the television news that evening.</p>
<figure>
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<figcaption><span class="caption">Former UK Labour leader Ed Miliband talks in soundbites.</span></figcaption>
</figure>
<p>Similarly, the limitations on space, time and attention, coupled with an obsession with timeliness, mean it is quite easy for politicians to circumvent thorough journalistic analysis while still feigning transparency. This was evident when heavily “spun” pronouncements or weak policies were regularly released just before major newsroom deadlines. </p>
<p>Now, it is commonplace to bury bad news by releasing it late on the Friday before a long weekend – or, as in one <a href="http://www.telegraph.co.uk/news/uknews/1358985/Sept-11-a-good-day-to-bury-bad-news.html">famous example</a>, waiting for a much bigger news story to come along.</p>
<p>Journalists are also heavily dependent on getting exclusives and “insider” information. Politicians can thus easily threaten to limit a less senior reporter’s access if their coverage ever becomes too critical.</p>
<p>All of this is made possible, ironically, by the <a href="https://theconversation.com/objectivity-when-ministers-journalists-and-a-norm-collide-47414">objectivity</a> on which journalists stake their reputations. Taibbi <a href="http://www.rollingstone.com/politics/news/america-is-too-dumb-for-tv-news-20151125">notes</a> that when a lie gains attention, politicians can just:</p>
<blockquote>
<p>Blame the backlash on media bias and walk away a hero.</p>
</blockquote>
<p>Too often this objectivity means journalists will not call out or vigorously pursue a false statement for fear of being seen as biased, and instead rely on one of that person’s political opponents to do the job instead. This leads to “he said, she said” reportage that leaves ordinary citizens little the wiser. </p>
<p>I did an interview recently with a well-known Australian media producer who called this, appropriately, “balance disease”. </p>
<h2>How to fix it</h2>
<p>There are a number of things that may help journalists start winning the battle of truth.</p>
<p>First, and perhaps most importantly, we need to look very closely at the way we train future journalists, particularly in academic contexts. We need ensure that journalism programs are not a homogenising force that leave graduates open for exploitation by clued-up politicians. We should encourage student experimentation, rule-breaking and creativity, not deferential adherence to pre-defined operational standard.</p>
<p>Second – given the failure of “fact checking” as a practice to solve the issue of political lies, and the now widely shared assumption that politicians will lie regularly – journalists need to start paying less attention to “facts” and more attention to the <a href="https://www.washingtonpost.com/opinions/fertility-clinics-destroy-embryos-all-the-time-why-arent-conservatives-after-them/2015/08/13/be06e852-4128-11e5-8e7d-9c033e6745d8_story.html">internal logic</a> of a politician’s own arguments. </p>
<p>Finally, journalists themselves need to regain some confidence. The co-dependence means that politicians need journalists just as much as journalists need access to politicians. If every journalist ended an interview the moment a politician clearly lied, or refused to answer a question, they would quickly realise just how much firepower they really have at their disposal.</p><img src="https://counter.theconversation.com/content/51650/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Harrington receives funding from the Australian Research Council, as a Chief Investigator for the Discovery Project 'Politics, media and democracy in Australia: public and producer perceptions of the political public sphere’ (DP130100705).</span></em></p>If journalism is supposed to be a force for truth, accountability and enlightenment in the political process, then it appears to be failing on the biggest of stages.Stephen Harrington, Senior Lecturer in Journalism, Media and Communication, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/496002015-10-22T19:11:20Z2015-10-22T19:11:20ZGrattan on Friday: The contrasting tales of Joe Hockey and Julie Bishop<p>This week Joe Hockey took his leave of parliament, after a career marked by unrealised promise and ultimate failure and disappointment. Soon, as ambassador to Washington, he will be working for Julie Bishop, the foreign minister who rose as a star in the government while the treasurer crashed.</p>
<p>Their contrasting fortunes form a salutary story about political talent and temperament, and the handling of success and adversity.</p>
<p>Back in February 2009, anyone considering their likely trajectories would have expected things to play out very differently.</p>
<p>Malcolm Turnbull was opposition leader. Bishop, Liberal Party deputy since 2007, had elected to be his shadow treasurer. But out of her depth, she had floundered and the knives were out, with Hockey coveting her job.</p>
<p>It was obvious Bishop wasn’t going to last in the economic post. She could resist the inevitable or jump on her terms. Sensibly, she did the latter. That enabled her not just to remain deputy, but to get the prestigious foreign affairs shadow ministry.</p>
<p>She would have felt humiliated, as well as angry about the undermining but her pragmatism showed a resilient and politically unemotional temperament. Hockey’s temperament was never as good. Pushed sideways in Howard’s 2001 reshuffle, he considered quitting politics.</p>
<p>As foreign affairs spokeswoman Bishop’s impressive networking abilities were obvious as she worked the missions in Canberra, getting diplomats over to Parliament House to meet Coalition MPs.</p>
<p>Meanwhile Hockey had a major setback. When Turnbull’s leadership collapsed in late 2009, Hockey was seen, and saw himself, as the logical successor; even Tony Abbott was willing to back him.</p>
<p>But then his judgement failed. The move against Turnbull had been triggered by his plan to cut a deal with the Rudd government over an emissions trading scheme. Hockey was in a dilemma – he too favoured an ETS. Indecisive, he proposed an improbable compromise – that Liberals have a conscience vote. He was first out in the subsequent three-horse race.</p>
<p>Fast forward to April 2012, and Hockey delivered his “end of the age of entitlement speech” in which he outlined views that two years later would substantially shape the Coalition government’s first budget. “A weak government tends to give its citizens everything they wish for. A strong government has the will to say NO!” he declared. The speech revealed a much more ideological stance than would have been anticipated from this leading party moderate.</p>
<p>Once in government Bishop, after a settling-in period, hit her straps not just by hard work and unrelenting networking but also because circumstances thrust her into the centre of events. Australia’s place on the United Nations Security Council – won by Labor – automatically gave her a higher profile than the foreign minister would normally have. The downing of MH17 in July 2014 then involved much Australian activity on the council – which Bishop spearheaded, winning widespread praise.</p>
<p>At home, Hockey was digging his political grave. Although in his valedictory speech he strongly defended the policies in that draconian 2014 budget – hitting at Medicare, welfare, higher education and other areas – it entrenched fierce opposition to the Abbott government from which it never recovered. The measures also failed in their purpose, because many couldn’t be passed through the Senate. Hockey had unacceptable products and was also a bad salesman.</p>
<p>In contrast to Bishop he often dropped clangers, as in August 2014 when, defending a fuel tax measure, he said “the poorest people either don’t have cars or actually don’t drive very far in many cases”. Bishop had learned over the years to be careful with words, although it is also true, to be fair, that a treasurer is more politically exposed on a day-to-day basis.</p>
<p>At another level, however, Bishop has been both tough and blunt. When Peta Credlin, Abbott’s chief-of-staff, messed with her, Bishop struck back hard, letting the interference be known. Credlin foolishly had taken on one of the few people who was a match for her.</p>
<p>As the deputy Liberal leader notable for surviving regime changes, Bishop was willing to be forthright with Abbott. Late last year she told him many Liberals thought Hockey should be moved out of Treasury, a view she reportedly shared.</p>
<p>The polling figures tell starkly how the fortunes of the two changed. The Essential poll on best Liberal leader immediately before Abbott toppled Turnbull in 2009 had Hockey on 22% (top of the list) and Bishop on 6%. In February 2015 Bishop was polling 21% (only three points behind Turnbull, who topped the poll) and Hockey was on just 5%.</p>
<p>In the early part of this year Bishop was touted as a possible replacement for Abbott and flirted with the idea of running if there was a contest. By September, however, the choice had crystallised to Turnbull versus Abbott, which Bishop understood.</p>
<p>There are many factors in why this tale of two ended badly for one while going (thus far) so well for the other. Hockey can justifiably blame Abbott for a good deal of trouble – his rash pre-election promises, and his actions and statements in government. </p>
<p>But perhaps the central factor comes down to an understanding of power.</p>
<p>Bishop has known when to push forward and when to step back (most recently in leadership ambition). She uses hard power (sometimes in battles with colleagues) while being a master of soft power (cultivating the celebrity image). And of course there is also the power of good performance.</p>
<p>Hockey as treasurer had at his disposal more power than any single minister apart from the prime minister. But he failed to understand its limits. He over-reached, not appreciating how much power the Senate, the voters via the polls, and his colleagues could mobilise against him.</p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/s28be-59a236?from=yiiadmin" data-link="http://www.podbean.com/media/player/s28be-59a236?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/49600/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Soon, as ambassador to Washington, Joe Hockey will be working for Julie Bishop, the foreign minister who rose as a star in the government while the treasurer crashed.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/493582015-10-20T19:31:55Z2015-10-20T19:31:55ZAs treasurer, Hockey proved to be an ordinary Joe<p>Earlier this year, during the Prince Phillip knighthood debacle (dubbed #knightmare by Twitter) <a href="https://theconversation.com/is-it-time-for-treasurer-malcolm-turnbull-37343">we speculated</a> how Tony Abbott could make Malcolm Turnbull his treasurer, in place of the hapless Joe Hockey, and thereby save his prime ministership. Furthermore, we said if he didn’t, Malcolm Turnbull may go one better and take the top prize instead. </p>
<p>Of course, in the end Abbott didn’t make a move to replace Hockey until it was too late, and as a result Turnbull is PM, Scott Morrison is treasurer, Abbott is on the backbench and Hockey is about to leave parliament, having announced his resignation following September’s leadership spill. He gives his last speech today.</p>
<p>We cannot take too much pride in our earlier piece on the Liberal leadership spill and Treasury speculation. It didn’t take Nostradamus to suggest that team Abbott-Hockey was in deep trouble, and that something had to give.</p>
<p>Now with speculation that Hockey will be appointed as Australia’s ambassador to Washington, it’s a good time to assess what went wrong for him as treasurer. For Tony Abbott there’s talk he’ll be appointed to the UK or the Vatican, which would not be unprecedented in Australian politics as former prime ministers George Reid, Andrew Fisher, Joseph Cook and Stanley Melbourne Bruce were High Commissioners in London, and a former Deputy Prime Minister Tim Fischer ended up at the Vatican. </p>
<p>And with Malcolm Turnbull riding high in the polls in middle Australia (some say he is the best Labor prime minister since the Hawke-Keating era) it’s unlikely that Abbott will make a political comeback.</p>
<p>Hockey’s experience as treasurer illustrates a few fundamental points about how to do the nation’s top economic job. It’s one thing to be a capable financial services or tourism minister; but treasurer is quite a step up. Being an affable retail politician is not enough. It takes a combination of political and economic nous.</p>
<p>In some ways we were spoiled in Australia to have had such a strong performer as Paul Keating as treasurer for so long in the economic reform period. Keating had it all as a great economic reformer, master story teller and advocate, great political salesman and someone who drew the community into Australia’s great economic debate. People became interested in economics as Keating dominated the airwaves on the legendary John Laws program (where he made his famous “Banana Republic” comment) as much as he did in Parliament. Keating was one out of the box and we’ll never see the likes of him again.</p>
<p>And even after Keating, we had Peter Costello for 11 years - a powerful parliamentary performer with a barrister’s skill in mastering a brief and excellent economic instincts. But it could be argued that after the reforms of the Hawke-Keating government that helped open Australia up to Asia - and the massive resources boom fuelled by demand from China that followed - a drover’s dog could have run the Australian economy successfully in that period.</p>
<p>And we’ve also had Ralph Willis, who was sound technically but not a high profile salesman, the pedestrian and inept Wayne Swan, and then Joe Hockey who was pretty much gone after the disastrous 2014 budget. Hockey allowed himself to browbeaten by Peta Credlin to the extent that the highly respected Treasury Secretary, Dr Martin Parkinson, with whom Hockey worked well with and respected, was moved on by an Abbott-Credlin decision. </p>
<p>Hockey lost control of the 2014 budget process, got blamed for its catastrophic PR campaign in the community and then he added further insult to injury with his gaffes about “poor people not driving cars” and his “lifters and leaners” rhetoric. It was the opposite of “close, but no cigar” in every respect. </p>
<p>Hockey, like Abbott, thought repeating a few slogans was enough, when economic salesmanship requires a thorough understanding of the Australian economy, an ability to craft an economic narrative and vision for the country, and an ability to persuade the community of the wisdom of your vision. (Don’t forget, John Maynard Keynes was a great persuader when explaining his economic ideas and was as comfortable writing a column for the Evening standard in London as he was at a seminar in Kings College Cambridge).</p>
<p>Joseph Benedict Hockey was named after Joseph Benedict Chifley, a great Labor war time Treasurer and Post War Prime Minister of the 1940s. In fact, Hockey in his early days could have ended up Labor instead of Liberal. It’s said that Hockey, Abbott and Brendan Nelson could have easily ended up Labor MPs but instead of fighting a tough preselection in the west or the inner city, they ended up taking the easy option of a nice safe Liberal seat on Sydney’s north shore. </p>
<p>But Joseph Benedict Hockey was no Joseph Benedict Chifley as Australia’s Treasurer. As Australia’s principal economic leader, Hockey proved to be an ordinary Joe who just wasn’t quite up to the job. Let’s hope for the sake of his own reputation, and the country’s, that he makes a reasonable fist of the Ambassador’s gig in Washington. As Hockey himself said when suing Fairfax media, the only thing you are left with on politics is your reputation, and a sound performance as Ambassador to the United States may salvage what was lost in a turbulent and frustrating two years in charge of the nation’s finances.</p><img src="https://counter.theconversation.com/content/49358/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Harcourt is a former Chief Economist of the Australian Trade Commission and Research/Officer advocate for the ACTU. </span></em></p><p class="fine-print"><em><span>Richard Holden is an ARC Future Fellow.</span></em></p>Joe Hockey thought repeating a few slogans was enough; but selling the economy is harder than it looks.Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW SydneyRichard Holden, Professor of Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/489952015-10-12T11:28:39Z2015-10-12T11:28:39ZFormer cabinet ministers Billson and Macfarlane considering whether to quit at the election<p>The first thing you notice after walking into Tony Abbott’s new Parliament House digs is the bicycle. In good times and bad, cycling has become his motif: the pollie pedal, the rides with VIPs and mates and, the other week, the photograph of wife Margie wheeling a bike out of Kirribilli House post coup.</p>
<p>There are large works of Aboriginal art, from the national collection, on the walls of the backbench office. Abbott the Anglophile has a bust of Winston Churchill, and a painting by Churchill that he and John Howard before him had in the prime ministerial office.</p>
<p>A framed telegram from Churchill to John Curtin on VE Day and a page of a first world war British soldier’s letter talking about the magnificent Australian troops were gifts from British Prime Minister David Cameron.</p>
<p>Over the receptionist’s desk is a photo of the G20 leaders. Abbott recently told Ray Hadley the 2014 Brisbane meeting was “one of the highlights of my time” as prime minister.</p>
<p>The G20 was a political lifetime away when on Monday Abbott walked into the House of Representatives for the first time since being deposed.</p>
<p>The backbench member for Warringah sat beside Joe Hockey, soon bound for Washington and said now to be relatively positive about his future, and across an aisle from long-time supporter Kevin Andrews, still angry at Turnbull dumping him from the ministry.</p>
<p>Some government MPs came up to greet Abbott and shake his hand. He joined the applause for newly sworn-in member for Canning, Andrew Hastie, for whom he’d campaigned on the eve of the coup he couldn’t believe would be attempted before the byelection.</p>
<p>Bill Shorten asked an obvious but effective opening question.</p>
<p>Shorten referred to the praise Malcolm Turnbull had heaped on Abbott at Saturday’s New South Wales Liberal Party council. Given his admiration for Abbott’s great achievements, why had Turnbull overthrown him a month ago?</p>
<p>It would have been unsurprising if Turnbull had fobbed off the ploy. But Turnbull is an orator, actor, and barrister, and the House is his stage and courtroom.</p>
<p>He was “delighted” that Shorten “showing his gallantry has given me the opportunity once again to praise the member for Warringah. A prime minister and a leader who took us out of opposition, took on the Labor Party, brought to an end the most dysfunctional government in Australia’s history, brought to an end a period of reckless spending and dysfunctional management and brought in a Coalition government.</p>
<p>"We have done great things together. We have fulfilled our election pledges of abolishing the carbon tax and we have … been able to once again restore the security of our borders … The trade agreements are a tribute to his leadership. So I say to the leader of the opposition that we are proud of the member for Warringah. I am proud, as prime minister, to honour my predecessor.”</p>
<p>For most of Question Time, which saw new ministers and ministers in new portfolios strut their stuff, Abbott, aware all eyes and cameras were on him, attended to a great deal of paperwork. As did Hockey.</p>
<p>Earlier, Treasurer Scott Morrison had told Hadley (they’re best of mates again) that he and Abbott had shaken hands and “exchanged a few words” at the Liberal council. “I said g’day and I had sent him a little note last week. So, I am sure we will catch up,” Morrison said, but he was coy when Hadley probed what Abbott had replied. “Well, mate, that’s just between us but he said g’day.”</p>
<p>In the House, ministers had a lightness about them – an air that everything has changed and the future looks good. A 50-50% two-party vote in Monday’s Newspoll showed a lot of work was still ahead but Turnbull had trounced Shorten 57-19% as better prime minister.</p>
<p>For losers out of the changes, such as former cabinet ministers Bruce Billson and Ian Macfarlane, there is little to look forward to in politics.</p>
<p>Then there is that earlier loser, former speaker Bronwyn Bishop, who turned against Abbott in the leadership ballot because he had finally accepted she must go over the entitlements affair. She is having to adjust to life without the luxuries of office. In a peculiar twist, Abbott and Bishop now have neighbouring offices.</p>
<p>The losers are coping with their circumstances in varying ways. Hockey is headed for the green fields of diplomacy. Both Andrews, who already has his preselection, and Bishop have indicated they want to run again. Bishop is doing the rounds of her branches and is said to have the numbers.</p>
<p>Billson, who declined to accept a junior ministry, says “the summer break will provide a good opportunity to … consider my next steps in a thoughtful, optimistic and clear-minded way”. Macfarlane says he will decide his future by March.</p>
<p>Abbott is not making up his mind before Christmas. In the meantime, he’s off to the UK to deliver the second annual Margaret Thatcher lecture in the Great Hall of London’s Guildhall. The Margaret Thatcher Centre describes him as an “iconic conservative leader”.</p>
<p><strong><a href="https://theconversation.com/politics-podcast-jamie-briggs-on-the-infrastructure-needs-of-australian-cities-48383">Listen to the latest Politics with Michelle Grattan podcast with guest, Cities Minister Jamie Briggs, here.</a></strong></p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/fwe48-591058" width="100%" height="100" frameborder="0" scrolling="no"></iframe><img src="https://counter.theconversation.com/content/48995/count.gif" alt="The Conversation" width="1" height="1" />
The first thing you notice after walking into Tony Abbott’s new Parliament House digs is the bicycle. In good times and bad, cycling has become his motif: the pollie pedal, the rides with VIPs and mates…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/476322015-10-09T02:31:14Z2015-10-09T02:31:14ZBook review: Takeover – Foreign Investment and the Australian Psyche<figure><img src="https://images.theconversation.com/files/97400/original/image-20151006-7349-1nuroej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">China is Australia’s most important trading partner and a growing source of investment.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Some things never change. One of the perennial features of Australia’s economic and political discourse is how to deal with foreign investment and ownership. Given Australia’s historical reliance on foreign capital to fund national development, this is more surprising than it might seem. </p>
<p>David Uren is one of Australia’s best economic commentators. His excellent analysis of Australian attitudes toward foreign investment in <a href="http://www.blackincbooks.com/books/takeover">Takeover – Foreign Investment and the Australian Psyche</a> explains how the frequently conflicting views of free traders and protectionists – whether on the political left or right – have shaped public policy. </p>
<p>The <a href="https://theconversation.com/the-end-of-the-national-interest-21467">“national interest”</a>, at least as far as economic policy is concerned, has always been a contested compromise and a consequence of the relative political influence of these domestic forces. This is an important conclusion that emerges from Uren’s detailed exploration of Australia’s economic history.</p>
<p>If there is one criticism to be made about the book it is that Uren is at times surprisingly reserved about spelling out the implications of his own analysis. Dispassionate disinterest has its merits, but it is somewhat surprising that someone whose day job is writing for The Australian is not more forceful in spelling out the book’s central argument about a liberal investment regime’s possible merits.</p>
<p>As it is, the book has a rather “academic” feel, at least as far as the content is concerned. One of its strengths is in making clear just what a long-standing part of Australia’s economic and political history anxiety about foreign investment actually is, and how this has shaped domestic political debates and attitudes.</p>
<p>As Uren points out, when Joe Hockey <a href="https://theconversation.com/hockey-kills-graincorp-takeover-by-adm-experts-react-20941">blocked</a> the takeover of GrainCorp by the US multinational Archer Daniels Midland in 2013, he employed precisely the same sorts of arguments that were made to justify protectionism in the 1850s.</p>
<p>That the Abbott government could snub a company from the US – Australia’s closest strategic ally – is indicative of the domestic political sensitivity of foreign investment. It’s also a reminder of the Nationals’ enduring influence on trade and investment issues. The rise of China as Australia’s most important trading partner and a growing source of investment adds an additional layer of complexity to the task of deciding what’s in Australia’s supposed national interest.</p>
<p>In this context, at least, Uren is unambiguous. The way questions about the national interest are decided in relation to investment is “a travesty”, he argues, and “lacks transparency, predictability and accountability”. He is especially scathing about the way policy toward Chinese investment has been handled.</p>
<p>And yet, concerns about the nature of China’s form of “state capitalism” are not without foundation. Market forces and a concern about short-term profitability are not the sole determinant of investment decisions by state-owned enterprises. Even if such policies are ultimately misguided and destined to fail, it is important that other governments recognise their potential impact on economic and even strategic outcomes.</p>
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<a href="https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=919&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=919&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=919&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1155&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1155&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97366/original/image-20151006-29235-lgh57a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1155&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">Black Inc</span></span>
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<p>Uren gives this possibility short shrift. But even if he’s right about the largely beneficial impact of foreign investment, it might have been useful to give more consideration to the origins of inward capital flows. </p>
<p>It often does make a difference where it comes from, how foreign multinationals operate, and what their relationship is with their countries of origin. Japanese multinationals really did try to shape the resource trade in the 1980s and the possible implications of that experience have not been lost on China’s policymakers.</p>
<p>The key question Australian policymakers have to consider is about the long-term impact of investment decisions that are made elsewhere, but which ultimately help to determine the structure of the national economy. This is no easy task. Some observers think the national economy no longer actually exists as a discrete entity over which policymakers can exercise control. </p>
<p>But even if “globalisation” has transformed an increasingly integrated international economy, politics remains relentlessly local – and so do most people’s jobs.</p>
<p>So while Uren might be right to highlight the rent-seeking behaviour of foreign multinationals in the car industry, for example, the reality is that they provided relatively high-skill, well-paid jobs for many Australians – not to mention the backbone of a national manufacturing capacity.</p>
<p>The problem with letting footloose multinational capital make all the decisions about where investment occurs is that Australia may end up with an economy that is narrowly focused and overly reliant on activities that are prone to cyclical booms and busts. That is precisely where Australia finds itself.</p>
<p>If the national economic interest means anything, it must surely refer to policies and outcomes that benefit the majority of the population who live in a particular place. </p>
<p>It is already clear that the vast wealth generated by the resource boom was squandered. It is also evident that the effort to tax the primarily foreign companies that were the resource boom’s principal beneficiaries was, according to Uren:</p>
<blockquote>
<p>… one of the greatest failures of public policy in the history of Australian government.</p>
</blockquote>
<p>It is not necessary to agree with Uren’s concerns about the possibly negative impact of nationalist sentiment on investment policy and decisions to recognise that this book is a significant contribution to our understanding of why foreign investment remains a contentious area of public policy.</p>
<p>As no less a figure than Malcolm Turnbull declares on the back cover, the book:</p>
<blockquote>
<p>… explains the lay of the land today.</p>
</blockquote>
<p>Indeed it does, prime minister – even if the author could have been a bit more forthright about his conclusions.</p><img src="https://counter.theconversation.com/content/47632/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Beeson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The “national interest”, at least as far as economic policy is concerned, has always been a contested compromise and a consequence of the relative political influence of domestic forces.Mark Beeson, Professor of International Politics, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/478312015-09-20T12:05:24Z2015-09-20T12:05:24ZTurnbull has moved beyond the Howard era in some respects, and returned to it in others<p>Malcolm Turnbull has gone for broke in his <a href="https://theconversation.com/turnbulls-clean-sweep-in-reshuffle-with-hockey-likely-for-washington-47833">dramatic overhaul</a> of the Coalition team. The new prime minister is using this moment of high authority to “renew” to the max – unlike Tony Abbott’s ill-judged timidity in the past.</p>
<p>By his changes Turnbull has sent strong messages to women and to younger generations.</p>
<p>He’s moved beyond the John Howard era in some respects, and returned to it in others.</p>
<p>Those who helped him seize the prime ministership have been predictably rewarded. Some enemies are out but others firmly in the Abbott camp, such as Mathias Cormann – who rises to deputy Senate leader while keeping his key finance portfolio – have had their abilities acknowledged.</p>
<p>Economics and innovation will be at the heart of the Turnbull government’s priorities, as the Australian economy faces its difficult transition after the mining boom.</p>
<p>Turnbull will himself take on much of this debate, in which Abbott was found wanting. Scott Morrison as treasurer will be able to sell the government economic message better than Joe Hockey did. And a big message it seems likely to be, with Turnbull affirming that “certainly my government has a major focus on tax reform”.</p>
<p>The economic team is also being strengthened in other ways, with the new assistant treasurer, Kelly O'Dwyer, given a cabinet spot. Previously the post was in the outer ministry. Christian Porter will also be in cabinet – he takes the social services portfolio but as a former West Australian treasurer he is well qualified to help with the economic heavy lifting.</p>
<p>Christopher Pyne’s mettle will be tested in his new portfolio of industry, innovation and science. Over the years, under both Coalition and Labor governments, many promises have been given to make Australia an innovative society. Actually delivering on the hype is always more difficult.</p>
<p>What will happen to Pyne’s proposed deregulation of the universities, which the Senate has refused to pass, was not clarified by Turnbull on Sunday. He’s anxious to stress that cabinet has to consider policies.</p>
<p>Turnbull’s despatch of Kevin Andrews, who departed with loud complaints, and Eric Abetz, both old-guard conservative Abbott loyalists, was not unexpected.</p>
<p>Bruce Billson is rather a different matter. His profile had been high after the “small business” budget. Turnbull was willing to keep him, but in the outer ministry rather than the cabinet. Billson was foolish to reject the offer.</p>
<p>Hockey had been expected to be retained in the team while losing treasury. But instead he has opted to quit parliament and is bound for Washington as Australia’s ambassador. It will be a good transition for him, probably to a business career later. If Abbott had persuaded his treasurer to take that post a few months ago, he might have shored up his own position.</p>
<p>Female representation in cabinet has jumped from two to five, with Marise Payne being elevated from human services to defence.</p>
<p>Payne, a moderate, has been publicly one of the quietest ministerial voices in the government. But in human services, which delivers social and health-related payments and services, she has administered a huge and complex bureaucracy and apparently done it very competently. The challenges in defence are enormous but she made it clear it was a job she wanted.</p>
<p>The boost to women’s frontbench representation has been a matter of pushing them up to higher levels, rather than a significant expansion of numbers. There is only one extra – Anne Ruston, a Liberal from South Australia, who will be assistant minister (the new term for parliamentary secretary) with responsibility for water resources. This is an appointment aimed at offsetting SA concern at water moving from the Liberals to the Nationals under the Coalition deal Turnbull did last week. </p>
<p>It is understood that Nola Marino, one of the whips, will be promoted to chief government whip, a position now held by Scott Buchholz.</p>
<p>Turnbull’s creation of a minister for cities and the built environment, under Jamie Briggs, is a good move politically. He is injecting the government into a debate that has been more often Labor ground, most recently emphasised by Anthony Albanese in his Saturday Light on the Hill address in Bathurst.</p>
<p>Turnbull said: “We often overlook the fact that liveable cities, efficient productive cities, the environment of cities are economic assets”. An inveterate user of public transport up to now, Turnbull does not share the roads fetish that has marked the Coalition government; in his mind “there is no place for ideology” when it comes to infrastructure and various modes of transport.</p>
<p>Arthur Sinodinos’ appointment as cabinet secretary is part of Turnbull’s attempt to recreate the style of cabinet government he recalls from the Howard era, when he was a minister.</p>
<p>“The gold standard of good Coalition cabinet government was during the Howard government and … Arthur was at the centre of that as John Howard’s chief-of-staff for over a decade,” Turnbull said.</p>
<p>Sinodinos is confident that the Independent Commission Against Corruption when it reports will not cause problems that will affect his position.</p>
<p>Turnbull’s changes and strategic thinking can only strike more fear into the opposition. It is no good Bill Shorten just rushing out and reacting – he needs to look carefully at how his own team can be re-shaped to improve its ability to deal with a government that has potentially considerably more firepower.</p>
<p>In politics what goes around can sometimes come around very quickly. And so it was on Sunday afternoon, when Turnbull rang Tasmanian Liberal Andrew Nikolic to tell him he was no longer one of the government whips. The call came just over a week after Nikolic had texted Turnbull to try to force him into a public statement ruling out a challenge to Abbott.</p>
<p><strong><a href="https://theconversation.com/politics-podcast-arthur-sinodinos-on-why-australia-needed-a-new-prime-minister-47696">Listen to the latest Politics with Michelle Grattan podcast with guest, Arthur Sinodinos.</a></strong></p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/3ct6d-58c544" width="100%" height="100" frameborder="0" scrolling="no"></iframe><img src="https://counter.theconversation.com/content/47831/count.gif" alt="The Conversation" width="1" height="1" />
Malcolm Turnbull has gone for broke in his dramatic overhaul of the Coalition team. The new prime minister is using this moment of high authority to “renew” to the max – unlike Tony Abbott’s ill-judged…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/475612015-09-15T05:45:04Z2015-09-15T05:45:04ZTen economic events leading up to the Abbott spill<p>Coalition governments have taken pride in maintaining a reputation of being the natural managers of Australia’s economy. But in launching his successful leadership bid, new prime minister Malcolm Turnbull said the Abbott-led government had not been capable of providing the economic leadership the nation needed. </p>
<p>What went wrong? Here are ten steps along the rocky economic path that led to the Abbott spill.</p>
<p><em>To navigate the timeline below, hover your mouse on the right (and on the left to move back). If you can’t see the timeline, click refresh on your browser.</em></p>
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Tony Abbott says sound economic management is in the DNA of the Liberals. So what went wrong?Charis Palmer, Deputy Editor/Chief of StaffEmil Jeyaratnam, Data + Interactives Editor, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/468672015-09-08T01:11:43Z2015-09-08T01:11:43ZWhat is it about a republic that stumps our leaders?<p>As in international sport, so too in national flags: those nimble New Zealanders have moved ahead of their near neighbours once more. Just as the republic debate in Australia <a href="http://www.smh.com.au/comment/beneath-the-southern-cross-we-stand-a-sprig-of-wattle-in-our-hand-20150826-gj8agm.html">splutters</a>, the New Zealanders have organised a <a href="http://www.smh.com.au/world/final-four-new-zealand-flags-revealed-20150831-gjc7ts.html">national plebiscite</a> on choosing a new flag to replace their traditional Union Jack and four-starred Southern Cross.</p>
<p>It has been 16 years since the attempt to forge an Australian republic <a href="http://www.abc.net.au/archives/80days/stories/2012/01/19/3423918.htm">failed</a>. Interest in the project has significantly waned since then. A <a href="http://www.roymorgan.com/findings/finding-4709-201302140352">Roy Morgan poll</a> of mid-2011 showed support for a republic had fallen by 20 points since the <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/CIB/CIB9798/98cib11">1998 constitutional convention</a>, down to 34%, while the monarchist position commanded a majority of 55%, up 17 points over those years. Other, <a href="http://www.essentialvision.com.au/tag/republic">more recent polls</a> generally show little or no recovery in support. </p>
<p>There are many possible explanations for the loss of support for a republic. As memories of 1975 recede, concern about the danger of having an unaccountable governor-general has diminished. My American friends remain convinced it was their government that pulled off the <a href="http://whitlamdismissal.com/what-happened/overview1">Whitlam dismissal</a>; they point to Malcolm Fraser’s <a href="http://www.economist.com/blogs/prospero/2014/05/malcolm-fraser-australian-foreign-policy">late anti-Americanism</a> as more proof that he knew the true source of his sudden promotion to the Lodge. </p>
<p>The governors-general since <a href="http://www.smh.com.au/federal-politics/political-news/sir-john-kerr-came-off-worse-in-the-dismissal-of-gough-whitlams-government-20141021-119egt.html">Sir John Kerr</a> have all been excellent, across years of inconsistent prime ministerial performance, further assuaging Australian feelings on 1975.</p>
<p>A second factor is the multicultural one. As Australia becomes a wonderfully more mixed society, the imagined connection with a distant monarchy provides a touchstone for many immigrants and minorities seeking a point of identity. People fleeing oppressive regimes find the Windsors relatively benign. Every time someone suggests sharia law could be used in Australia, British law seems better by comparison.</p>
<p>There is also, I think, a compelling economic explanation. Over the past 16 years Australia has scooted along very nicely in sheer economic terms. Why fiddle with the existing political and constitutional arrangements? When Treasurer Joe Hockey <a href="https://theconversation.com/joe-hockey-to-co-chair-a-parliamentary-friendship-group-for-a-republic-46684">declared himself</a> in favour of reviving the push for a republic last week, the <a href="http://www.news.com.au/finance/economy/tony-abbott-puts-joe-hockey-back-in-his-place-over-new-republic-role/story-fnu2pwk8-1227501049463">response</a> was to demand he stick to his day job of running the economy.</p>
<p>And therein lies the rub. The best arguments that will work to awaken the republican sentiment in suburban Australia are going to be economic. Arguments about national maturity, political independence and having our own head of state have limited impact in the ‘burbs while things are going well (and while Queen Elizabeth II is alive). There must be an economic argument inside these philosophical arguments.</p>
<h2>A declaration of our place in the world</h2>
<p><a href="http://www.theage.com.au/news/National/Al-Grassby-father-of-multiculturalism-dies/2005/04/23/1114152363110.html">Al Grassby</a>, the colourful Whitlam minister for immigration, tried one. He used to say that the nation’s economic potential would be more fully realised if the creative energies of Australia’s minorities were set free, and that this could be better done inside a republic. It was a nice argument, but not persuasive enough for most Australians.</p>
<p>I want to suggest a refinement of this argument. A republic, I argue, would give us greater independence in a globalised world now criss-crossed more than ever with free trade agreements. We need what our friends in advertising would call “brand recognition”.</p>
<p>Much of our trade is with Asia. For many of our neighbours, our obsessions with the Queen and the Union Jack are anachronistic. What we see as judicially and constitutionally wise, they see as emblematic of the old White Australia.</p>
<p>Two changes are imminent. One is the death of the Queen, a popular figure in Australia. Another is the growing significance of the new economy – those creative, cultural and symbolic industries that will gradually replace Australia’s dependence on mining, agriculture and other old economy enterprises. </p>
<p>As the mining boom recedes, new green technologies will emerge. New ways of educating students from diverse backgrounds around the globe will prosper. New communication technologies will carry our stories to a global audience.</p>
<p>Striking out as a young republic would send a clear message to potential partners in these ventures about Australia’s new confidence in world affairs. A republic tells its own stories, speaks about its own history and charts its own potential futures.</p>
<h2>Why a new flag matters</h2>
<p>A step towards this new confidence would be a new national flag. Not all republicans want a new flag, but a <a href="https://theconversation.com/au/topics/australian-flag">debate about the style of flag</a> we could adopt would be one way of thinking about this new national “brand” and what it might comprise.</p>
<p>Flags matter. Geoff Gallop, the outgoing head of Australia’s republican movement and a convention delegate back in 1998, is presently travelling in France. He writes that everywhere he goes he loves seeing the potent symbol of Liberté, Egalité, Fraternité on all the French government buildings.</p>
<p>Our traditional flag sums up our present dilemma. The Union Jack part is rectilinear, signalling an invasion of the open space of the rest of the flag from the north-west (whence the British came). Yet the heartland of the flag positions us as aspiring to live freely under the <a href="http://www.smh.com.au/entertainment/eureka-flag-heralds-winds-of-change-20141125-11t7sz.html">Eureka flag</a>.</p>
<p>That Union Jack in the corner of our flag does not help. When young Australians drape themselves in our flag at Anzac Day ceremonies, it is the Union Jack we see, not the stars that make up the Southern Cross. It is our British past, not our Antipodean future.</p>
<p>A new flag with greater prominence paid to whatever Antipodean symbols our cleverest designers can produce would be a useful first step in persuading our politicians that a future republican Australia is both possible and preferable to the monarchist present. The <a href="https://en.wikipedia.org/wiki/Great_Canadian_Flag_Debate">Canadians in 1965</a> and the New Zealanders today have shown it is possible.</p>
<hr>
<p><em>In 1995, Robert Pascoe helped produce a CD-Rom entitled Australia: Reflections on a Republic.</em></p><img src="https://counter.theconversation.com/content/46867/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Pascoe does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It has significant public support across party lines, but politicians who advocate Australia becoming a republic are likely to have their priorities and even their right to do so questioned.Robert Pascoe, Dean Laureate and Professor of History, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/468832015-09-07T00:48:53Z2015-09-07T00:48:53ZG20 growth goal not helped by Hockey’s ‘boring’ budget<p>G20 finance ministers met in Turkey on the weekend, where they <a href="https://g20.org/wp-content/uploads/2015/09/September-FMCBG-Communique.pdf">admitted</a> global growth had fallen short of their expectations. </p>
<p>The host is keen to shake off perceptions that these meetings are just a talkfest. The problem is they are. If you happened to be paying attention last year, Joe Hockey came up with the <a href="https://theconversation.com/g20-finance-ministers-agree-to-growth-target-experts-react-23566">unverifiable plan</a> to “lift our collective GDP by more than 2% by 2018 above the trajectory implied by policies in place … in 2013”.</p>
<p>The focus of that summit was on reforms and infrastructure spending across the G20 to raise growth. The problem is that most advanced economies have problems with public debt that make significant increases in infrastructure spending unaffordable. </p>
<p>Australia has enough problems enacting reforms to product and labour markets, but in other advanced economies with even worse structural problems the difficulties seem to be greater.</p>
<p>Prime Minister Shinzo Abe in Japan has not been able to make progress on any significant structural reforms in that economy, even though these reforms are critical in getting Japan out of its long secular decline. European economies have similar problems, but in many cases these economies are going backwards rather than forwards. Even Germany has cut the retirement age, which is at odds with efforts to raise participation and deal with rising pension costs.</p>
<p>Since the G20 meeting last year economic growth has slowed everywhere. Global growth slowed in the first half of 2015, with manufacturing, investment and trade all weak. A key problem is weakness in business investment and, as a recent <a href="http://www.bis.org/publ/qtrpdf/r_qt1503g.htm">Bank for International Settlements report</a> makes clear, the problem is uncertainty about the future state of the economy and profitability. </p>
<p><a href="https://theconversation.com/what-the-latest-capital-expenditure-figures-tell-us-about-the-economy-42477">Business investment</a> is a key indicator of expectations about future growth, and businesses are telling us that they don’t expect to see growth enhancing reforms any time soon.</p>
<h2>Reform still required</h2>
<p>The IMF is expecting growth to pick up in advanced economies in the second half of this year and into 2016. The finance ministers said:</p>
<blockquote>
<p>“We have pledged to take decisive action to keep the economic recovery on track and we are confident the global economic recovery will gain speed.”</p>
</blockquote>
<p>This is wishful thinking. Without reform and without business investment, growth will continue to be weak. </p>
<p>The IMF is concerned about slowing emerging market growth, but the reality is that the real drag on the global economy is the major advanced economies in Europe, Japan and also the United States. It is in these countries where the need for reform is the greatest, but the progress is nowhere to be seen.</p>
<p>G20 meetings probably do no harm, but they don’t seem to do much good either. For Australia the issue is to make progress on our own structural reforms, <a href="https://theconversation.com/pms-infrastructure-plan-failing-growth-and-cost-benefit-goals-37164">infrastructure bottlenecks</a>, <a href="https://theconversation.com/government-calls-for-tax-rethink-but-reform-answers-abound-39436">tax</a> and spending problems. Dealing with these issues is a priority irrespective of what other G20 countries do. </p>
<p>Having pledged to raise global growth last year, Joe Hockey delivered a “boring” budget in 2015 that did nothing to raise Australia’s growth, or address any of these issues. But we could say the same about most of the other 19 G20 countries.</p><img src="https://counter.theconversation.com/content/46883/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Crosby does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Without true structural reform and business investment the G20 economies will be unable to deliver on their lofty growth ambitions.Mark Crosby, Associate Professor of Economics, Melbourne Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/467972015-09-06T20:09:12Z2015-09-06T20:09:12ZTwo years in, even supporters despair of Abbott’s feeble government<figure><img src="https://images.theconversation.com/files/93714/original/image-20150903-24484-m117zg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What Tony Abbott himself claims as his government's achievements are all reversals of previous policies.</span> <span class="attribution"><span class="source">AAP/Paul Miller</span></span></figcaption></figure><p>The Abbott government marks its two-year anniversary of <a href="http://www.abc.net.au/news/2013-09-07/tony-abbott-claims-election-victory/4943606">winning office</a> today, September 7. I was tempted to begin by claiming that Tony Abbott has established himself as one of Australia’s more successful prime ministers, but I struggled to find a second sentence. </p>
<p>The headlines in the opinion pages of August 29’s Weekend Australian show that even Abbott’s supporters despair:</p>
<blockquote>
<p><a href="http://www.theaustralian.com.au/opinion/columnists/why-the-australian-economy-is-going-to-hell-in-a-handbasket/story-fnbkvnk7-1227503353505">Why the Australian economy is going to hell in a handbasket</a> [Judith Sloan] </p>
<p><a href="http://www.theaustralian.com.au/opinion/columnists/shazam-me-some-faith-because-im-losing-it-with-the-liberals/story-fnkdypbm-1227503354317">Shazam me some faith because I’m losing it with the Liberals</a> [Grace Collier]</p>
<p><a href="http://www.theaustralian.com.au/opinion/columnists/forget-reforms-fear-and-loathing-will-decide-the-2016-election/story-fn53lw5p-1227503356127">Forget reforms, fear and loathing will decide the 2016 election</a> [Peter van Onselen]</p>
</blockquote>
<h2>Mixed messages on domestic policy</h2>
<p>What Abbott himself <a href="http://www.abc.net.au/am/content/2014/s4144024.htm">claims as achievements</a> are all reversals of previous policies: stopping the boats, repealing the carbon and mining taxes. </p>
<p>Abbott now tells Australians the government is <a href="http://www.news.com.au/national/breaking-news/abbott-confident-jobs-growth-to-accelerate/story-e6frfku9-1227368425453">firmly focused</a> on jobs and growth, and points to <a href="http://www.theaustralian.com.au/national-affairs/treasury/tony-abbott-plays-to-small-business-on-tax/story-fn59nsif-1227327519407">small-business tax incentives</a> and <a href="http://www.abc.net.au/news/2015-06-17/australia-and-china-sign-free-trade-agreement/6552940">free trade agreements</a> as proof of success. But all governments spruik jobs and growth. Good economic management is the lowest common denominator for governments, even if few achieve it in the long run.</p>
<p>The Abbott government has been remarkable for its mixed messaging. Last year the greatest economic challenge was a <a href="http://www.theguardian.com/business/grogonomics/2014/dec/16/the-coalitions-rhetoric-on-the-budget-have-come-back-to-haunt-them">ballooning deficit</a>; now it is more tax cuts. Treasurer Joe Hockey <a href="http://www.smh.com.au/federal-politics/political-news/hockey-calls-end-to-age-of-entitlement-20140203-31xgl.html">proclaimed</a> the end of the age of entitlement, but <a href="http://www.afr.com/news/policy/budget/federal-budget-2015-well-never-change-super-says-tony-abbott-20150512-gh0czj">rejects</a> substantial changes to a superannuation system that perpetuates intergenerational inequality.</p>
<p>If the Liberal Party combines elements of both conservative and liberal philosophy the Abbott government has shown itself unable to satisfy either. A truly conservative government would see environmental degradation and climate change as central challenges, rather than embark on hollow – and expensive – <a href="http://www.smh.com.au/federal-politics/political-opinion/has-greg-hunts-direct-action-scheme-fixed-climate-change-policy-in-australia-20150427-1muorr.html">minimalist solutions</a>.</p>
<p>A truly liberal government would treat <a href="https://theconversation.com/the-boats-may-have-stopped-but-at-what-cost-to-australia-30455">asylum seekers</a> with compassion, and be very cautious in expanding the state’s role in the <a href="https://theconversation.com/national-security-gags-on-media-force-us-to-trust-state-will-do-no-wrong-32103">surveillance of its citizens</a>. Nor would a liberal government <a href="https://theconversation.com/abbott-delivers-to-the-conservatives-on-same-sex-marriage-but-at-what-cost-45977">refuse</a> a parliamentary vote on same-sex marriage, and risk clouding the much-needed constitutional debate about <a href="https://theconversation.com/constitutional-recognition-two-steps-forward-after-one-step-back-46424">Indigenous recognition</a> with a face-saving and unnecessary <a href="https://theconversation.com/with-no-coalition-free-vote-where-to-now-on-the-road-to-same-sex-marriage-46009">popular vote</a> on same-sex marriage.</p>
<h2>Abbott overshadowed on foreign policy</h2>
<p>As the world becomes increasingly enmeshed in global forces our politics become ever more parochial. Abbott has been largely absent as an international figure, which has allowed Julie Bishop to <a href="https://theconversation.com/julie-bishop-shows-the-boys-how-its-done-33206">create the persona</a> of a successful foreign minister.</p>
<p>Like Abbott, Julia Gillard came to power without much involvement in foreign policy, but she quickly grasped the centrality of the world to any Australian future. Abbott, who had the enormous luck to inherit both a UN Security Council seat and the G20 chairmanship on taking office, has yet to make that transition.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=914&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=914&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=914&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1148&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1148&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93719/original/image-20150903-24473-1narut7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1148&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Julie Bishop is perceived as having success on matters of foreign policy.</span>
<span class="attribution"><span class="source">AAP/Lukas Coch</span></span>
</figcaption>
</figure>
<p>In opposition, Abbott spoke of the importance of the <a href="http://www.aspistrategist.org.au/the-anglosphere-and-tony-abbott/">Anglosphere</a> and of his <a href="http://www.economist.com/news/asia/21590600-more-jakarta-means-more-trouble-tony-abbott-no-surprises">desire</a> to turn Australia’s attention back to Jakarta and away from Geneva.</p>
<p>In practice, the opposite seems to have occurred. This is in part due to unexpected events – the <a href="http://www.abc.net.au/news/2015-04-29/andrew-chan-and-myuran-sukumaran-executed/6426654">execution</a> of Myuran Sukumaran and Andrew Chan in Indonesia, and the <a href="http://www.bbc.com/news/world-europe-28357880">downing of MH17</a> – as well as his foreign minister having been more successful in the halls of the United Nations than in fostering closer ties with Indonesia.</p>
<p>While Bishop has taken a strong interest in the Pacific, she has spent much of her time explaining the government’s position on asylum seekers. It is unlikely that the region’s countries are impressed by attempts to <a href="https://theconversation.com/why-resettling-asylum-seekers-in-cambodia-is-fraught-with-risk-23591">move refugees to Cambodia</a> – one of the poorest countries in Asia – or Abbott’s <a href="https://theconversation.com/australia-can-do-better-on-asian-boat-crisis-than-nope-nope-nope-42255">response</a> to the Rohingya fleeing persecution in Myanmar.</p>
<p>Australia is allied with its North Atlantic allies in attacking Islamic State (IS) militants in the Middle East, but there are major gaps between Abbott and the American and British leaders in attitudes to climate change and international development assistance. Yet climate change and stark inequalities are a greater threat to Australia’s long-term security than is IS.</p>
<p>And while Abbott seeks support for <a href="https://theconversation.com/australian-bombs-wont-bring-peace-to-syria-so-why-do-it-46674">increasing airstrikes</a> against IS, his government seems oblivious to the humanitarian crisis in Syria, which will require Australia to greatly increase its refugee intake. This is where we can make a far more meaningful contribution to helping end the suffering of the Syrian people.</p>
<h2>Failure to unite and inspire</h2>
<p>Successful prime ministers find means to unite the nation and move it forward in new directions. We remember them for moments when they brought the nation together around difficult policies. John Howard did it in his <a href="http://www.vox.com/2015/8/27/9212725/australia-buyback">tough line</a> on guns; Kevin Rudd in his <a href="http://www.australia.gov.au/about-australia/our-country/our-people/apology-to-australias-indigenous-peoples">apology</a> to the Stolen Generations; Gillard with the introduction of the <a href="http://www.abc.net.au/news/2013-05-15/gillard-cries-while-introducing-disability-legislation/4690692">National Disability Insurance Scheme</a> and the <a href="http://www.abc.net.au/news/2013-06-26/gonski-schools-plan-pass-the-senate/4782554">Gonski school funding reforms</a>.</p>
<p>So far, Abbott has failed to position himself as <a href="https://theconversation.com/shorten-abbott-and-the-trap-of-being-a-negative-opposition-26353">anything more</a> than an opposition leader who has been given power and is unsure what to do with it. </p>
<p>Two years after being elected, the Abbott government continues to campaign against its predecessors, explaining virtually everything it does in terms of the alleged failures of its predecessors.</p>
<p>The government’s negativity is poisoning political debate, encouraging a response from its opponents that can be childish in its automatic rejection of all government policies. But, increasingly, the prime minister carries the burden – and the opportunity – to appeal above party lines to the best instincts of the nation.</p>
<p>The Left has consistently underestimated Abbott. He may still win re-election. For now, one is tempted to recall the <a href="http://www.goodreads.com/quotes/268677-nothing-turns-out-to-be-so-oppressive-and-unjust-as">warning</a> of Edmund Burke, one of Abbott’s <a href="https://quadrant.org.au/magazine/2010/01-02/the-political-philosophy-of-tony-abbott/">favourite philosophers</a>, that: </p>
<blockquote>
<p>Nothing turns out to be so oppressive and unjust as a feeble government.</p>
</blockquote><img src="https://counter.theconversation.com/content/46797/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dennis Altman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>So far, Tony Abbott has failed to position himself as anything more than an opposition leader who has been given power and is unsure what to do with it.Dennis Altman, Professorial Fellow in Human Security, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/470442015-09-03T20:09:50Z2015-09-03T20:09:50ZGrattan on Friday: Two years on, pugilist Abbott leads divisive and divided government<p>At a Liberal function in his Warringah electorate last Friday night Tony Abbott, just back from his indigenous trip, was in full campaign mode. “Geed up, determined, positive,” said one party attendee, adding “he’ll fight to the last breath to be re-elected”.</p>
<p>Fight is what Abbott does best – but this penchant for pugilism is his great weakness as well as a strength.</p>
<p>The prime minister, who won power two years ago on Monday, is most at home in combat, whether on the domestic campaign trail or escalating Australia’s commitment to a battle abroad.</p>
<p>A Liberal parliamentarian, highly critical of Abbott, describes his current approach to government as “doing what comes naturally – he’s trying to be a warrior. He’s relying on a small circle of advice; he’s going back to areas he’s comfortable with.”</p>
<p>The great failure of Abbott’s leadership is that he had not been able to transcend his innate instinct for conflict. He leads a divisive government, which has become an authoritarian one.</p>
<p>Not just current opponents but those vanquished and off the field must be pursued. Critics not only have to be discredited but demonised. The culture wars are at a new intensity, with the <a href="https://newmatilda.com/2015/05/04/tony-abbotts-war-journalism-media-union-scathing-annual-press-freedom-report">“media wars”</a> a dominant sub-set. Internal dissent is defined in the first instance as disloyalty – until it turns threatening and the rebels need to be bought off with promises to listen and be more responsive.</p>
<p>In the Abbott government’s second year, the them-and-us tribalism and high degree of ideology that marked its first have become even more noticeable, whether the “out-tribe” is in the community, the media, the cabinet, or the Liberal Party.</p>
<p>We observe this in such diverse examples as the <a href="https://theconversation.com/qanda-affair-has-become-theatre-of-the-absurd-44370">absurd obsession</a> with the ABC’s Q&A program, together with the unabashed use of News Corp’s Daily and Sunday Telegraphs and The Australian as bulletin boards (the latter cheerfully referred to in the bureaucracy as the “government gazette”); the <a href="https://theconversation.com/brandis-and-dutton-play-some-dirty-pool-in-their-fight-with-gillian-triggs-42948">excessive attacks</a> on Human Rights Commission President Gillian Triggs; and the marginalisation of the full cabinet, where critics have voices, on too many occasions.</p>
<p>The past 12 months saw two first-term state conservative governments despatched, an alarming reminder to a struggling federal administration. Policy retreats from the first year’s budget have included the Medicare co-payment, while the push to deregulate universities has failed to clear the Senate. The upper house remains generally difficult, although a softer second budget and improved negotiating skills have led to some steps forward.</p>
<p>Two years into power, Abbott’s approach is “whatever it takes” on issues of policy and survival.</p>
<p>The way Abbott <a href="https://theconversation.com/abbott-delivers-to-the-conservatives-on-same-sex-marriage-but-at-what-cost-45977">handled same-sex marriage</a> gave a sharp insight into his political character. It was not the fact that he punted it off. It was that, when the pressure came on after the Irish referendum, he encouraged Liberal supporters to get together a cross-party bill, while privately making it clear he intended to stifle the issue. </p>
<p>It showed a level of trickiness that was not obvious, at least to this writer, when Abbott was a Howard government minister.</p>
<p>In February a deeply disillusioned Liberal backbench, angry at the command-and-control style of the Prime Minister’s Office (PMO) and especially chief-of-staff Peta Credlin, fearful about the bad polls, appalled at the Prince Philip knighthood “captain’s pick” and shocked at Campbell Newman’s Queensland defeat, gave Abbott a huge scare <a href="https://theconversation.com/abbott-left-deeply-wounded-by-narrow-victory-37339">with a spill motion</a> that mustered a substantial 39 votes, to the 61 against.</p>
<p>In September, the polls are still bad, the governing erratic and the PMO as powerful as ever. Abbott’s <a href="https://theconversation.com/how-much-public-outrage-can-tony-abbott-wear-for-bronwyn-bishop-44853">over-long clinging</a> to Bronwyn Bishop was regarded as the most recent bad “captain’s call”.</p>
<p>The disgruntlement in the cabinet has grown, with the disaffected willing to air their policy differences through leaks and public comments, as happened with the citizenship changes and same-sex marriage.</p>
<p>The team has begun to cannibalise itself. Senate leader Eric Abetz <a href="http://www.sbs.com.au/news/article/2015/07/02/abetz-any-fronbenchers-gay-marriage-should-resign">suggested ministers who disagreed</a> with the Coalition’s marriage policy should quit. House leader Christopher Pyne is no longer rusted onto Abbott. There have been <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-being-urged-to-consider-dumping-joe-hockey-and-calling-a-march-election-cabinet-ministers-20150830-gjaysw.html">reported leaks from cabinet sources</a> promoting the need to replace Treasurer Joe Hockey as a way of protecting Abbott if Canning goes badly. Hockey has hit back at “fringe whingers”. “Everything is pretty fractious,” says a frontbencher.</p>
<p>Abbott’s reading of the riot act more than once over high-level ill-discipline has had no effect, except to expose his impotence.</p>
<p>Normally ministers chide unruly backbenchers. Queensland Liberal Ewen Jones turns this on its head: “The government is functioning solidly; the backbench is rock solid in prosecuting the message; the cabinet appears to be the trouble. If ministers have a problem, ‘fess up and move on.”</p>
<p>By his manoeuvred outcome on same-sex marriage, Abbott increased his support in the right-dominated party room. The conservatives will support him, if he backs positions important to the hardcore “base”. This makes his position safer, as does the fact that there is not one alternative, but two or three (Malcolm Turnbull, Julie Bishop, Scott Morrison), and the enormity of replacing a first-term prime minister after what happened under Labor.</p>
<p>But while more secure, Abbott’s position is not “safe”, <a href="http://www.abc.net.au/news/elections/2015-canning/">with Canning being cast</a> as a test, the polls bringing constant markers and electoral panic a powerful force.</p>
<p>In Canning, which the Liberals are expected to win – they have an 11.8% margin – diehard Liberal campaigners report very bad feedback on Abbott.</p>
<p>Despite the government’s weaknesses and troubles, in the higher reaches of the Liberal organisation there is a level of complacency. They think they’ve seen it before, in 2001, when Howard came back from the political dead. But Howard was a deft strategist and assisted by special circumstances as well as his own efforts. Abbott himself is said to retain a good deal of self-confidence.</p>
<p>There are flashes, occasionally, of another Abbott. Liberal MP Warren Entsch, who has had his moments with the leader, said after observing him on the Indigenous trip: “I’ve seen him at his absolute best this week. You could see the real Tony Abbott. He gets down; he gets dirty; he works with [the Indigenous people]. It’s a very different Tony Abbott to what is generally being projected in the national media.”</p>
<p>Among those deeply disappointed with Abbott are many in the business community. Despite the government’s early talk, it is having trouble delivering much of what business wants. One source says: “The business community is dying for him to succeed. But they are concerned at the lack of consistency and clarity. A lot of division has opened up in the government. And people are not listening to the treasurer.”</p>
<p>Another business source says pithily: “Business wants a little less conversation – a little more action. Business is wondering, what’s the point of having a sympathetic government if it’s not prepared to deal with the substantive issues?” </p>
<p>A third says: “We seem to have forsaken policy for politics. They’re having trouble getting a message together, let alone out.”</p>
<p>What the government intends to propose on taxation, reform of the federation or industrial relations is anybody’s guess, as is how it can deal with repairing the budget in the foreseeable future.</p>
<p>Talk about changing the GST goes up and down like a yo-yo. The government can neither rein in the parrot-shop chatter about “reform”, or deliver on the multiple demands from stakeholders who insist, and they did at the recent “summit” which filled a vacuum left by the government, that they support change. But mostly, it might be added, only if it does not hurt their interests too much.</p>
<p>On economic reform Abbott and Hockey are a dysfunctional couple, while time is running out to get a blueprint together for the election.</p>
<p>Hockey has displayed poor judgement, minimum political nous and an inability to convince either the public or crossbenchers.</p>
<p>One Liberal makes the obvious but astute point: “A lot more could have been achieved if the first budget had been thought out by adults.” The hubristic unreality of that budget, which alienated the public and threw the government off track, has blighted the Coalition’s first term so far, despite its more benign successor.</p>
<p>A senior Liberal says: “It’s like in two years they’ve got to the stage of an exhausted government.”</p>
<p>The traditional mantle the Liberals have relied on – that they are competent economic managers – has become very thin. This week’s<a href="http://www.afr.com/opinion/editorials/national-accounts-we-can-do-better-than-this-20150902-gjdkpo"> national accounts</a> – with growth at a tiny 0.2% in the June quarter and a low 2% annually – underline the government’s problems. It is confronted with a sluggish economy and inadequate revenue, when it is committed to “lower taxes”.</p>
<p>Abbott is putting much political dependence on national security – it has “almost become a crutch”, as a government MP puts it – but even some in Liberal ranks think this hand is being overplayed. </p>
<p>For all the talk of the “death cult”, which Abbott suggests is worse in some regards <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbotts-nazi-reference-shows-his-penchant-for-alienating-voters-20150903-gjeccu.html">than the Nazis were</a> – “the Nazis did terrible evil but they had sufficient sense of shame to try to hide it; these people boast about their evil” – there is nothing like the alarm that September 11, 2001, and the Bali bombings generated among the public. So far, Abbott’s efforts to force Bill Shorten to peel off on security issues, whether tougher domestic measures or deeper engagement against Islamic State, have failed.</p>
<p>Abbott became the accidental leader when in opposition he defeated Turnbull by a single vote in 2009. He has never transformed himself into the natural leader. He walks with a permanent political limp.</p>
<p>If Abbott survives to the election and then manages to win it, he’d likely still continue to be dogged by leadership speculation. Assume he was returned with a narrow majority: can anyone doubt there would soon be pressure to replace him in the second term?</p>
<p><strong><a href="https://theconversation.com/politics-podcast-canning-byelection-special-47041">Listen to the Canning by-election special episode of the Politics with Michelle Grattan podcast here, or on iTunes</a>.</strong></p>
<iframe id="audio_iframe" src="https://www.podbean.com/media/player/stxie-5873fd" width="100%" height="100" frameborder="0" scrolling="no"></iframe><img src="https://counter.theconversation.com/content/47044/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tony Abbott, who won power two years ago on Monday, is most at home in combat, whether on the domestic campaign trail or escalating Australia’s commitment to a battle abroad.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/470362015-09-03T20:06:31Z2015-09-03T20:06:31ZAustralia’s economy is slowing: what you need to know<p>Australia’s economy grew by just 0.2% in the June quarter, below expectations of 0.4%, largely as a result of reduced mining and construction activity and a decline in exports of 3% during the quarter. </p>
<p>Nominal Gross Domestic Product grew by 1.8% during the year, which the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5206.0Main%20Features2Jun%202015">Australian Bureau of Statistics said</a> was “the weakest growth in nominal GDP since 1961-62”. Despite this, Australia has now recorded 24 straight years of growth. </p>
<p>The news has some analysts and economists spooked, and politicians blaming each other for the slowdown.</p>
<p>Treasurer Joe Hockey said:</p>
<blockquote>
<p>At a time when other commodity based economies like Canada and Brazil are in recession, the Australian economy is continuing to grow at a rate that meets and sometimes beats our most recent budget forecasts.</p>
</blockquote>
<p>He also said it was “factually wrong” to say it was the weakest growth since 1961.</p>
<blockquote>
<p>The fact is that the economic growth we had in the last quarter was in line with expectations. Of course it bounces around from quarter to quarter, but it was in line with our overarching expectation to have two and a half per cent growth in the last financial year.</p>
</blockquote>
<p>Shadow Treasurer Chris Bowen said:</p>
<blockquote>
<p>Growth has flat-lined since the Abbott government’s first damaging budget last year and cost of living pressures are continuing to increase. This is the biggest quarterly decline in living standards since the global financial crisis.</p>
<p>This is a very weak set of figures and for the government to cast around for international comparisons to try and make it sound better is a pretty pathetic excuse.</p>
</blockquote>
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<p><strong>The Treasurer says Australia is still doing better than Canada, Brazil, the US and New Zealand. How should people view these numbers in a global context? To what extent is the slowing rate of growth due to global economic headwinds, and to what extent is it due to domestic factors?</strong></p>
<p><em>Griffith Business School Professor Fabrizio Carmignani answers:</em></p>
<p>In the past, the Australian economy has proved to be quite resilient to global economic shocks. Today we are facing what could be potentially a perfect storm. </p>
<p>For one thing, international commodities prices are very volatile and have resulted in a sharp contraction of Australian’s terms of trade. For another, China is going through a complicated economic phase and it is not, at this moment, the same solid anchor for the Australian economy as it might have been previously. So, it is not surprising to see that on a seasonally adjusted basis, quarterly growth in Australia has been oscillating between 0.2% and 0.3% for the last five quarters. </p>
<p>We owe it to some good old Keynesian stimulus on the demand side (read: government consumption and to a lesser extent public gross fixed capital formation) if we are not entering a technical recession.</p>
<p>The comparison with Canada, on surface, is favourable to Australia. Canada has officially entered a recession after recording two consecutive quarters of negative GDP growth in the first half of 2015. This is essentially due to low oil prices. However, according to media reports, Canada is still committed to achieving a target of annual growth of 2.5% this year, which is exactly what the Treasurer has stated for Australia. So, it seems to me that the difference between Australia and Canada here is thinner that what might appear at first sight. A fraction of a percentage point below or above the zero growth line is not really indicative of substantially different structural positions. </p>
<p>Both Australia and Canada are facing similar challenges in terms of diversification. The current “crisis” to me shows that these challenges are still far from being fully addressed in both countries. </p>
<p><strong>Australia has had 24 years of consistent growth. How much of this can we attribute to the mining boom? And given the cyclical nature of the economy, can we expect a downturn?</strong></p>
<p><em>Griffith University Professor Tony Makin answers:</em></p>
<p>Australia has performed relatively well compared to other OECD economies over recent decades, though did actually experience a recession during the GFC according to income and production measures of GDP. </p>
<p>Taking population growth into account, Australia’s economic performance since the global financial crisis has been worse than the raw GDP numbers show. On a per capita basis, national income has grown on average below one per cent per annum, less than half the almost two and a half per cent per head per annum average rate in the decade before the GFC.</p>
<p>The extraordinary boost to the terms of trade from the world commodity price hike, especially between 2005 and 2011, substantially raised Australia’s international purchasing power. However, GDP growth during the mining boom was actually less than during the economic reform era from the mid-1980s through to the end of the 1990s when commodity prices were fairly flat. </p>
<p>The main culprit for Australia’s sub-normal economic growth in recent years has not been falling commodity prices, which have undoubtedly played a role, but Australia’s underlying competitiveness problem, combined with a productivity slowdown that began from the turn of the century. </p>
<p>While the recent depreciation of the dollar will go some way to restoring Australia’s competitiveness and help stave off recession, genuine productivity-enhancing reform focusing on the economy’s supply side remains as important as ever for returning GDP and income per head growth to long-term average rates. </p>
<p><strong>One journalist at Wednesday’s press conference said the new data showed “the weakest growth since 1961”, but the Treasurer said that was factually wrong. Who is right?</strong></p>
<p><em>UNSW Australia Professor Richard Holden answers:</em></p>
<p>The statement that it is the slowest growth since 1961 seems, to me, to be false. We have had recessions in the 1990s and 1980s, which is two successive quarters of negative growth. And yesterday we had positive growth, so it was a slowdown but not the worst we have seen since 1961. I think the journalist’s statement doesn’t seem correct to me, on the face of it. I think the Treasurer is right.</p>
<p>It is possible the journalist was referring to the Australian Bureau of Statistics comment yesterday that:</p>
<blockquote>
<p>GDP growth for 2014-15 was 2.4%. Nominal GDP growth was 1.8% for the 2014-15 financial year. This is the weakest growth in nominal GDP since 1961-62.</p>
</blockquote>
<p>Nominal growth and growth are not quite the same thing. <a href="http://www.businessinsider.com.au/australias-economy-just-posted-its-worst-nominal-growth-since-1962-2015-9">Nominal growth</a> means GDP growth that is not adjusted for inflation.</p>
<p>But yes, yesterday’s numbers are still below projected growth. It is below market expectations. I think the Treasurer saying we have projected 2.5% annual growth this year and this is basically on target is a bit disingenuous. This is slow growth, it’s actually very troubling.</p>
<p>I understand the Treasurer can’t talk down the economy so his comments are understandable and he is in a difficult position. But the low rate of growth is genuine cause for concern. </p>
<p>I have <a href="https://theconversation.com/forget-about-a-currency-war-well-have-bigger-worries-off-a-weaker-yuan-46072">written before</a> about the concept of secular stagnation, which is the idea that growth of advanced economies looks like it has slowed down dramatically. The figures yesterday are further evidence of that theory.</p>
<p><em>Victoria University Senior Research Fellow Janine Dixon answers:</em></p>
<p>While it is factually correct that real GDP – the volume of production in the economy – has grown, the low growth in nominal GDP points to an underlying weakness in the economy. This is our exposure to the very large fall in commodity prices. When we translate real GDP into real income, we take into account that fact that the prices of the things we produce for export have fallen relative to the prices of the things we consume, some of which are imported. This has been a very important determinant of real incomes in the last few years.</p>
<p>Real net national disposable income is a better measure of our living standards than GDP. As well as adjusting for prices, we take into account the fact that some of the income generated domestically actually accrues to the rest of the world if the factors of production are foreign owned. We also deduct the value of capital that is “used up” or depreciated during the year. </p>
<p>Real net national disposable income per person has now failed to grow for 14 quarters in a row. This represents the most sustained fall in standards of living in the last 50 years.</p>
<p>What’s especially interesting about this period is that falling incomes have not been associated with falling output or particularly high unemployment. In the 1990-91 recession (the one we had to have) or the early 1980’s, incomes fell, but the solution to the problem was fairly clear. More than 10% of the workforce was unemployed. Fixing unemployment would boost production, incomes and living standards.</p>
<p>This time around, incomes are falling because commodity prices are falling. Commodity prices, set on world markets, are largely out of our hands. The labour market is much more flexible these days, and unemployment is 6%, not 10%. We are left with just one way to turn things around. In the words of Nobel laureate Paul Krugman, “Productivity isn’t everything, but in the long run it is almost everything”.</p>
<p><strong>Is GDP really in line with expectations, both of the government and the market?</strong></p>
<p><em>Griffith University Professor Ross Guest answers:</em></p>
<p>These GDP expectations are continuously being revised down as new information comes to hand.</p>
<p>The projected growth is lower than nearly everybody expected and everybody is having to revise downward their expectation. </p>
<p><strong>What will the slowing annual growth mean for the federal budget, which had forecast growth for 2015-16 of 2.75%?</strong></p>
<p><em>Ross Guest answers:</em></p>
<p>If growth were to remain at its current level of 2%, the budget deficit would be A$15 billion larger, in ball park terms, than the government projected. To put that in perspective, the total amount we spend on unemployment benefits is A$10 billion.</p>
<p>Australia living standards and the Australian government budget are being hit by a perfect storm of lower commodity prices and lower productivity growth.</p>
<p><em>Victoria University Senior Research Fellow Janine Dixon answers:</em></p>
<p>The GDP growth forecast for 2015-16 is fairly subdued at 2.75% and the budget not overly ambitious – a deficit of 2% of GDP. The trouble lies in 2016/17 and beyond, when annual GDP growth is forecast to be above 3%.</p>
<p>Over the next five years a couple of downside risks exist that will make it unlikely that GDP will grow this strongly, and consequently the budget’s return to surplus will be more difficult to achieve.</p>
<p>If the terms of trade fall further than allowed for in the budget forecasts, and if productivity growth remains weak, as it has been in recent years, real national income could be 3% lower than forecast by 2020. Roughly, this means the tax base for the government will be 3% smaller than expected. Rather than having a balanced budget by 2020, we would still be running a deficit, of around 0.75% of GDP or $12 billion in today’s terms.</p><img src="https://counter.theconversation.com/content/47036/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Holden is an ARC Future Fellow. </span></em></p><p class="fine-print"><em><span>Fabrizio Carmignani receives funding from the Australian Research Council for a project on the estimation of the multivariate piecewise linear continuous model and its applications in macroeconomics.</span></em></p><p class="fine-print"><em><span>Ross Guest has received ARC funding in the past.</span></em></p><p class="fine-print"><em><span>Tony Makin is affiliated with the Centre for Independent Studies and has previously consulted for the Minerals Council of Australia.</span></em></p><p class="fine-print"><em><span>Janine Dixon does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia has had 24 years of consistent growth. Is it all about to come to a crashing end?Richard Holden, Professor of Economics, UNSW SydneyFabrizio Carmignani, Professor, Griffith Business School , Griffith UniversityJanine Dixon, Senior research fellow, Victoria UniversityRoss Guest, Professor of Economics and National Senior Teaching Fellow, Griffith UniversityTony Makin, Professor of Economics, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/467312015-09-01T03:44:48Z2015-09-01T03:44:48ZSocial stability is the missing link underpinning economic growth<figure><img src="https://images.theconversation.com/files/93405/original/image-20150831-15790-1ddjy3g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Joe Hockey's approach to reform would be to treat voters as consumers, with promises of lower taxes and more wealth.</span> <span class="attribution"><span class="source">AAP/Dan Himbrechts</span></span></figcaption></figure><p>Can governments plan Australia’s future just by improving selected economic indicators? Will a focus on creating more jobs, cutting taxes and growing GDP be enough to ensure well-being? These are the core agenda items <a href="http://www.theaustralian.com.au/opinion/columnists/jobs-and-growth-mantra-wont-fly-without-clear-policy/story-fnbkvnk7-1227484185455">being pushed</a> by the Abbott government. Yet they may prove to be much too limited to be the main items for policy decisions about Australia’s future.</p>
<p>A <a href="http://www.theaustralian.com.au/business/in-depth/national-reform-summit-live-coverage/story-fnwjr2ka-1227499161885">recent summit</a> on future policy needs, auspiced by The Australian Financial Review and The Australian newspapers, accepted these items as setting its main direction. </p>
<p>Although the summit discussed more than the government’s slogans of growth, tax changes and jobs, it failed to address the need for setting a broader agenda that deals with social cohesion and the need for increasing trust in the political system. </p>
<p>The above approaches assume any recognition of equity needs could only be achieved by post-hoc redistribution: after productivity gains were sufficient to provide the extra resources to be shared with the community. </p>
<h2>The failure of markets</h2>
<p>There are considerable problems with this approach. The clear assumption is that if the government gets the economic growth factors right, everything else will fall into place. This set of beliefs assume the materialism of voters will create political acceptance.</p>
<p>This was clearly highlighted in Treasurer Joe Hockey’s <a href="http://jbh.ministers.treasury.gov.au/speech/028-2015/">presentation</a> to the summit about recognising the real sovereignty of consumers as potential drivers of growth. The pitch is clearly electorally driven by a widespread belief within major parties that approaching voters as consumers, via lower taxes and more wealth, will allow them to win and retain office. </p>
<p>This belief seriously undervalues voters’ capacities and beliefs. While an increasingly globalised market has led to increased GDP and net wealth over the past 30 years, all is not rosy. </p>
<p>The global financial crisis and current market sluggishness and irrationality show markets may not continue as main wealth creators. They face new risks from increasing inequality, climate change and domestic and international conflicts. </p>
<h2>Trust in politics</h2>
<p>Time may be running out for political agendas that offer material rewards but not social well-being. More evidence is emerging of continuing damage to social stability and cohesion. There is <a href="https://theconversation.com/european-movements-could-mark-the-end-of-representative-politics-42369">increased support</a> for outlier parties, leaders and policies on both left and right – pushing populist social concerns – in Europe.</p>
<p>The over-emphasis in Australia on economic policies and market models could explain data that show signs of loss of trust in political processes and current major parties. Informal votes are rising and many young people are failing to enrol. </p>
<p>This year’s <a href="http://www.lowyinstitute.org/publications/lowy-institute-poll-2015">Lowy Institute poll</a> recorded the lowest feeling of safety among Australians and a sharp decline in optimism about the nation’s economic performance. Meanwhile, the think-tank’s 2014 poll <a href="http://www.lowyinstitute.org/news-and-media/press-releases/2014-lowy-institute-poll-confirms-australians-ambivalence-about-democracy">found that</a>:</p>
<blockquote>
<p>… only 60% of Australians, and just 42% of young Australians 18-29 years of age, believe that “democracy is preferable to any other kind of government”. </p>
</blockquote>
<p>When asked later their reasons for not supporting democracy, the strongest responses were that “democracy is not working because there is no real difference between the policies of the major parties”, and that “democracy only serves the interests of a few and not the majority”. </p>
<p>A recent <a href="http://www.essentialvision.com.au/trust-in-professions">Essential Research poll</a> asked voters which professions they trusted most and least. Politicians came in last – just 1% of voters had a lot of trust in politicians; 10% had some trust. And 49% said they had no trust at all in politicians. As political journalist Bernard Keane <a href="http://www.crikey.com.au/2015/07/17/pollies-with-snouts-in-the-trough-set-back-reform/?wpmp_switcher=mobile">commented</a>:</p>
<blockquote>
<p>… any politician spruiking reform is coming from the difficult position that most voters don’t trust them or believe them before they even open their mouths.</p>
</blockquote>
<p>Other evidence that the current mix of policies on offer fails to build public confidence was shown by the public rejection of many 2014 budget cuts as <a href="http://www.smh.com.au/business/federal-budget/federal-budget-2014-tough-and-unfair-its-business-as-usual-20140513-3882r.html">unfair</a>. This showed a continuing belief in an Australian <a href="http://www.theage.com.au/news/national/australians-value-a-fair-go-highest/2006/11/11/1162661949374.html">“fair-go” compact</a>, which no-one in power is recognising by prioritising social policies that are seen as fair and trustworthy. </p>
<p>This sets up serious problems if some of the gloomy predictions come true and expected growth and profits fail to appear. Neither major party seems to have any plan B. Both assume that further equity, progress or stability will require increased GDP to fund them. This ignores serious needs to redistribute current resources fairly to retain social cohesion and good order. </p>
<p>Australians need policies that rebuild community trust and reassure voters that their quality of life does require collective goodwill, not just growing GDP. Good governance depends on citizenship and leadership as well as policies that meet public good/common good and fairness tests. </p>
<p>Perhaps we need a Social Policy Summit to revisit wider societal needs and reinstate public trustworthiness, so Australia can deal with coming policy difficulties as well as possibilities. Politicians need to gain approval from an electorate that doesn’t trust business any more than government. </p>
<p>Quite apart from its other benefits, we need to remember that good societies with secure public systems will increase investment much faster than company or personal tax cuts.</p><img src="https://counter.theconversation.com/content/46731/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eva Cox does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Good societies with secure public systems will increase investment much faster than company or personal tax cuts.Eva Cox, Professorial Fellow, Jumbunna IHL, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.