Category: Oz Politics

More oddity at the Oz

John Quiggin7 Comments

The Oz today has quite a good piece from David Coats, arguing that unions and the Labor party need to focus on the quality of work, extending the focus on rights at work to the broader idea that “good jobs and quality work are an essential driver of both good economic outcomes and good social outcomes”. As he notes, New Labour in Britain signally failed to do this “there is a key lesson for Australian Labor from the British experience. Labour in government in Britain made twin mistakes: the party had no compelling answer to the new questions about work, and it offered lukewarm support to progressives in the trade union movement who did.”

So what’s the lead-in from the Oz? “THE ALP and the unions must learn from British Labour and move beyond class war.”

Groan

John Quiggin75 Comments

It’s taken six months, and there have been some near-misses along the way, but for me, the weekend announcement that the government will be reviewing the collection of GST on the full (excise-inclusive) price of petrol is the Rudd government’s inevitable first big policy failure. I don’t know where to start on this. First, the objection that it’s “a tax on a tax” is just silly. The effective burden of the GST falls, inevitably on inputs of primary factors (labour and natural resources including land). Since both are taxed, the entire GST is “a tax on a tax”. Politically, the government abandons the high ground it occupied on the issue, while not providing serious competition for the Libs on the low ground. It also undercuts Rudd’s correct statement only a few days ago that the government had done all it could on petrol prices. And environmentally, it’s a sign of impending disaster.

About the only consolation is that, like Nelson’s five cent excise cut, it will never happen. The idea is bound to be shot down in the review for the reasons I’ve mentioned. But there are plenty of other opportunities to cave in, and it looks as if this government is going to take them. The only remaining faint hope is that Rudd will pull those who’ve floated this stupid idea into line, at the cost of throwing away the advantages they held over a divided and confused opposition.

Put a fork in him, he’s done

John Quiggin45 Comments

After the fiasco over alcopops, there’s only one reason Brendan Nelson can survive as Opposition leader. All the potential alternative leaders, with the apparent exception of Julie Bishop, have made just as big fools of themselves as Nelson has.

The decision to tax premixed spirit drinks on the same basis as spirits in general was announced weeks ago, without a peep from the Opposition. There are two justifications for the decision, either one of which is entirely sufficient.

First, it closes an obvious loophole in the revenue system. Since most spirits are consumed in mixed drinks of one kind or another, it makes no sense to exempt premixed drinks from the general tax on spirits. If the Opposition thinks spirits in general should be taxed at a lower rate, they haven’t said so, and of course they had 11 years to make the case from the government benches.

Second, the government has made the case that these drinks encourage excessive drinking among young people, particularly young women. AFAIK, no-one has refuted this, and certainly the Opposition has made no attempt to do so. (updatedin fact, tonight’s ABC news has footage of Nelson making precisely this claim in Parliament back in 1996)
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Instant budget reaction

John Quiggin52 Comments

First up, I have to say that it was good to watch a budget without having to put up with Peter Costello. Unlike Howard, I never regarded Costello as having any real substance. Even after 11 years on the job, his mastery of his portfolio was a clever barrister’s mastery of his brief, not a serious understanding of economics. Despite his nervous start in the job, and a delivery of the Budget that wasn’t notable for rhetorical flair, Swan impresses me more as knowing what he is talking about. Turning again to the Opposition for contrast, I didn’t think much of Malcolm Turnbull’s response, claiming (on a basis he never made quite clear) that this was a “high-taxing, high-spending budget”, and edging perilously close to attacking the government for closing the alco-pops tax loophole his own side had created. Clearly the Liberals are still trying to work out what they stand for.

Coming to the main point, the government did a good job in keeping its promises, even if households on incomes over $150 000 may feel picked on. The means-testing of Family Payment B was announced before the election, and the threshold could scarcely have been higher than it was.

IIRC, the Howard tax cuts, largely copied by Labor were announced in nominal terms (without allowing for inflation). If so, the higher than expected inflation bequeathed to Swan is actually something of a gift, since it means that bracket creep will pay for (and justify) much of the promised cuts. Looking at the parameter revisions, most of which have been attributed to “the mining boom” it’s hard to believe that the $12 billion or so the government has gained from this source is all due to real increases in revenue, so I think bracket creep is playing a role here.

I was disappointed, if not very surprised, that the budget savings were made up almost entirely of odds and ends, with big targets like the dependent spouse rebate and the FBT exemption for cars left pretty much untouched (the rebate was subjected to the 150K means test). That said, there was enough fat left over from the previous government that it was possible to cut $7 billion or so without causing any obvious pain. It won’t be so easy next time, and I think it would have been better to take some pain this time around. Still with a surplus of 1.8 per cent of GDP, it’s unsurprising that they didn’t feel the need to cut further.

The one big new thing in the Budget (new in magnitude, but not in concept) was the announcement of $40 billion in infrastructure funds, building on the Future Fund and the Higher Education Endowment Fund. This seems promising, especially as the money seems likely to be invested in a mixture of equity and other assets, allowing the government to keep on issuing at least some debt.

Overall, this Budget is reasonable as regards its macroeconomic settings, cautious but reasonably sensible in fiscal terms, and likely to be politically successful (first budgets usually are). But it’s left some hard decisions to be taken later and, with a three-year term, there will only be one more chance before the next election year budget.

A question for readers

John Quiggin43 Comments

I’m working on a piece for the Fin, and, in my current draft, I say that John Howard never actually used the word “non-core”. Rather, he said he had delivered his “core” promises and we were left to infer that the rest were non-core. Can anyone protect me from error by pointing to an occasion when Howard used “non-core”, or, better still, support me in my contention?

Substance and symbols

John Quiggin17 Comments

I don’t have much comment on the government’s measures to remove a wide variety of discrimination against same-sex couples, except to observe that this ought to put an end to the canard that the Rudd government is “all about symbolism”. This is an issue where Howard tried hard to push the symbolism of gay marriage as a wedge, and deservedly failed.

Keating haters

John Quiggin45 Comments

Throughout the days of the previous government, its media cheer squad denounced anyone who dared to criticise the government as a “Howard-hater”. This seemed to me to be either a silly piece of rhetoric or just plain wrong. To the extent that it was simply a label for anyone who disliked the government’s policies and therefore disliked the government and its leader, it was just a silly piece of hyperbole. A more natural reading is the claim that people who had no particular quarrel with the government’s policies opposed it because of a personal hatred of Howard. This seems to me to be just plain wrong. I don’t think I ever met anyone who liked the government’s policies but strongly disliked Howard himself (by contrast, other government ministers like Abbott and Costello were widely disliked on a personal basis). It’s notable that the only hostile nickname for him that ever really stuck (the Rodent) was due to one of his own backbenchers and didn’t emerge until 2004. The flipside was that very few people loved Howard in the way that many other political leaders have been loved. Liberal supporters stuck to him as long as he won elections, and forgot about him as soon as he lost one.

The only personal hatred that has any real force in Australian politics is hatred of Paul Keating. This emerged very clearly in relation to the 2020 summit but it’s true more generally that Keating has remained an energising figure for right wing culture warriors more than a decade after his departure. Whenever they go on about the chardonnay-sipping or latte-drinking elites it’s patently obvious that this stuff bears no relation to the current generation of Labor leaders. I have no idea what kind of drinks Kevin Rudd or Anna Bligh or any of the others favor, and Rudd is certainly more intellectually cultivated than Keating ever was, but the idea that they are members of some cultural class distinct from the ordinary Australians is patently silly.

Update: I posted this partly completed, there’s more over the fold now
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Elites

John Quiggin108 Comments

The most amusing outcome of the 2020 summit has undoubtedly been the spectacle of Alexander Downer, grandson of Sir John Downer, son of Sir Alexander Downer, old boy of Geelong Grammar, former Director of the Australian Chamber of Commerce, former Foreign minister, now enjoying retirement on full salary at the expense of the Australian taxpayer, denouncing the participants as “elites”.

Of course, Downer has been backed up by his leading rival in the “anti-elitist” toffee-nosed snob stakes, Professor David Flint.
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