The Nationals and the FTA

My column in yesterday’s Fin (subscription required) argues that the Nationals should either return to the old days of the Country Party, negotiating coalitions to form governments but not in permanent coalition with the Libs, or else go the whole hog and merge with the Liberals. I also have a bit more. As website updates are a bit behind at the moment, I’ve appended the whole thing for anyone who wants to read it.

UpdateObviously, my analysis proved compelling. The day after its publication, not only did Queensland National Leader Lawrence Springborg call for a merger with the Liberals, but Trade Minister Mark Vaile admitted the FTA had been oversold and might require amendment to get through Parliament (the latter item only in the AFR report, which isn’t available online. From a government as tightly disciplined as this one, Vaile’s comments are like a shout from the rooftops that Howard made him sign.

After every state election, it’s immediately stated, at least by the losers, that ‘this has no national implications’. There is obviously some truth in this. If votes in state elections could be translated directly into votes in national elections, Kim Beazley would be Prime Minister today. Only six months after the last Beattie landslide in Queensland, the Coalition won 19 of the 27 seats in the 2001 national election.
Nevertheless, the Queensland election results have important implications at the national level, most obviously for the National Party. The Nationals owe their very name to developments in Queensland in the 1970s, where they were so successful in urban seats (notably on the Gold and Sunshine Coasts and in provincial cities) that the name Country Party no longer seemed appropriate. Rather then being a sectional party representing the bush, the Nationals under Bjelke-Petersen presented themselves as an alternative, more muscular conservative party, which could aspire, one day, to lead the nation.
Last Saturday’s election spelt the end of that dream. Although they regained rural seats following the demise of One Nation, the National Party went backward in the rest of the state, losing the Rockhampton seat of Keppel and picking up as little as 25 per cent of the vote in urban seats. This was despite the collapse of One Nation and agreement with the Liberals to avoid three-cornered contests.
Barring catastrophic mistakes by Labor, a National-led coalition will never again win government in Queensland. Urban and coastal voters, even those happy to support Liberal governments, are not going to vote for a government of rural conservatives, any more than they would in Sydney or Melbourne.
The current position of the Nationals, then, is that of permanent junior partner in the national coalition and permanent opposition party in Queensland. This means that the voters they represent are permanently excluded from the selection in Prime Ministers and Premiers and from the formation of government policy on most issues.
The problem here is the policy of permanent coalition, an arrangement which is seen almost nowhere else in the world. From the viewpoint of the Nationals, this is a lose-lose arrangement, giving them neither the leverage of a normal coalition partner, nor the insider status that would go with membership in a unified party.
There are two possible solutions to this problem. The first is to merge with the Liberals. This is the sensible decision in organisational terms, but it would be likely to accelerate the loss of seats to independents, and would raise the risk of a split.
The alternative is to go back to the party’s original position, readopting the name Country Party and offering to support whichever of the major parties offers the best deal to its constituents. Given the conservatism of the party’s supporters, this would presumably be the Liberals most of the time, but the option of switching would give greatly enhanced bargaining power. On the other hand, whenever the Liberals won government in their own right, the Country party would be out in the cold.
The urgency of the problem has been heightened by the (ludicrously misnamed) Free Trade Agreement with the United States announced immediately after the Queensland elections. Had the announcement been two days earlier, the Nationals would surely have lost three or four more seats.
It seems pretty clear that Trade Minister Mark Vaile was ready to walk away from the one-sided bargain proposed by the US, but that he was over-ridden by the Prime Minister’s personal commitment to the achievement of a deal, any deal. Nevertheless, it was Vaile, and therefore the National Party, who had to announce, as a win, an agreement that gained no ground on sugar, and hardly any on dairy or beef. Less obviously, the whole process left the export and production subsidies in the US Farm Bill untouched. Wheatgrowers and others competing with US farm exports have therefore lost just as badly as canefarmers.
It seems likely that the most vocally disaffected producer groups will be bought off, a fact that should give pause to the minority of economists still inclined to support the FTA. But even generous handouts are unlikely to appease voters who have seen solemn assurances thrown overboard.
Unfortunately for the Nationals, with the Agreement already signed and an election less than a year away, there’s little they can do except pretend to be pleased. And if they’re going to do that, they might as well start merger talks with the Liberals straight away.

5 thoughts on “The Nationals and the FTA

  1. “…lost just as badly as canefarmers.”

    is completely false. they didnt lose anything, they are exactly as good or bad off as they were before the free trade deal.

    im still yet to understand what your economic opposition to the free trade deal is. or do you just really dislike howard and the liberals…

    at any rate, who would the nationals have lost the extra seats to? labour…? it seems unreasonable that these same country conservatives would suddenly jump to the left wing.

    (maybe theyd irrationally go independant, but then theyd just be voting for a non affiliated country conservative wouldnt they…not really a swing)

  2. ” they didnt lose anything, they are exactly as good or bad off as they were before the free trade deal.

    This is silly, as is the suggestion that I’m only opposing this marvellous deal because I dislike the Liberals. The majority of economists are opposed to it, and even those who supported it are having second thoughts now that they’ve seen the terms.

    To respond to your point, until now the government has been offering a range of concessions in return for (among other things) the removal of unjustified restrictions on access for Australian sugar. It’s now signed a deal with terms which run over 20 years in which it gives the concessions, while accepting the status quo for sugar. Obviously they are worse off.

  3. finally were getting somewhere.

    you’re saying that we had a deal on the table, of which we gave greater access to the united states (your concessions) in return for sugar. we didnt get sugar but we’re still giving the US their half.

    if this is the case, it is silly. why would the government give away the concessions it had earmarked as swaps for sugar.

    also, how does giving away the concessions that were swaps for sugar make the sugar farmers worse off. it might make us worse off collectively, but unless something is directly happening to sugar i fail to see this.

    finally, why is everyone talking in such vague terms about the FTA. is it because the government hasnt released the full deal. if this is the case, then how can anyone be very opposed or not opposed to it.

    anyhoo, i wasnt saying you disliked the FTA because of howard, just floating the idea whether you thought a howard FTA would be bad in light of no firm information. i was saying i cant understand (as in the literal sense, not the emotional sense) what the point is to oppose about the FTA. why hasnt anyone just come out and said, “were giving away too much for not enough in return” and then describe why this is the case. all anyone has said so far is “oh we didnt get sugar” which as far as the benefits or not of the rest of the deal is a moot point. (unless as pointed out above we were specifically giving something away in return for sugar, and still are, despite not getting sugar access)

    i dont think the deal is marvellous, because no-one can explain so far what is really going on. but since theres so little real information, other than people just saying everyone is opposed to it.

    why are they opposed to it?

  4. I’ve avoided getting involved in any FTA debates until I see what it actually involves. In general terms I favour greater opening up of the Australian economy – but when we see the detail we may find the current FTA is the wrong way to go about this.

    But I do want to chip in on the argument that canefarmers are “exactly as good or bad off as they were before the free trade deal”. John raises the “lost bargaining chip” argument; another important argument IMHO stems from the fact that there already appear to be negative elements of this agreement. There are those which will have a negative impact economically on Australia as a whole (for example changes to copyright laws), which FTA proponents could argue will be offset by overall positive gains elsewhere – although as John indicates, this is highly arguable amongst economists. But there are also some which could have a particularly negative impact on farmers – especially any de facto watering down of quarantine restrictions. I at least have not seen the detail of how the arrangements are proposed to work but the reporting suggests this is planned. If farmers as a whole suffer these negatives, then those grops such as canegrowers who miss out on positives in return are in net terms worse off.

  5. “But don’t waste any tears on our canegrowers. Their industry ought to be efficient but isn’t, thanks to decades of assistance from state and federal governments. Their present outrage is the raving of a drug addict with withdrawal symptoms. Their threats have worked and John Howard says he’ll resume giving them money to feed their habit, which you and I will pay for via higher prices for everything that’s sweet.)” gittins on the sugar farmers…

    which was my point all along.

    you may well be right that gains are minimal and the costs greater. although isnt a bad bilateral agreement just a small unilateral tarriff reduction in disguise.

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