Who prefers the Greens, part 3

As predicted, the Liberals have given preferences to the Greens ahead of Labor, raising the prospect that the Greens might win some urban seats and perhaps hold the balance of power in a hung Parliament. As I’ve observed previously, the Greens have been subject to ferocious attacks, in the course of which they’ve been compared to Communists, Nazis, kooks and vandals. Presumably, a party that would give preferences to Communists or Nazis ought not to be supported by decent Australians.

So will any of those who have denounced the Greens in these terms follow through and advocate a vote against their Liberal allies? Will any of them even condemn the government? I’m not holding my breath.

Like drunken sailors

Paul Krugman, observing Bush’s deficit policy made the observation that the traditional Republican critique of the Keynesian case for using deficits to stimulate the economy (that, once you started running deficits, you’d never find a suitable time to stop) was true, but only as regards Republicans.

Similarly, having been announced his conversion to the cause of social democracy a few days ago, Howard is behaving like an economic rationalist’s caricature of a social democrat, spraying billions of dollars around in a combination of interest-group pork-barrelling and half-baked ideas for micromanagement of everything from the TAFE sector to the taxi industry. Meanwhile, the decision to make the states pay for the National Water Initiative means that basic needs for schools and hospitals will be worse-funded than before. Again, more detail from Chris Sheil

Labor’s correct response here, I would say is not to engage in an item-by-item bidding war, but to announce one big intervention in Medicare, using part of the money already spent by Howard.

Update Monday AM The “drunken sailor” description is irresistibly apt. Crikey used it to, and here’s the Oz editorial

Ho hum

Labor’s long-awaited tax policy has been released, and a quick look suggests there’s not much to get excited about. Labor has taken on both stages of Howard’s budget tax cuts and added a bit more for nearly everyone, but not a lot for anyone.

The most interesting thing in the package is the reform to family tax benefit. I’m not an expert on the complexities, but Labor appears to have achieved a useful simplification and expansion without spending a heap of money.

The other point that may arouse some interest is that the funding calculations include offsets from assumed behavioral response – more spouses going back to work. As the package points out, the precedent for this kind of thing was set by ANTS. Still this will heighten the intensity of the dispute over whether the package should be submitted for costing by Finance under the (ludicrously misnamed) Charter of Budget Honesty. My advice would be to refuse.

Apart from this funding, relies on two more changes to superannuation to add to all the others we have experienced. First, temporary entrants to Australia will no longer get the benefit of the Superannuation Guarantee Charge – this will go to the government instead. Since other countries do the same and those affected are, by definition, not voters, this looks like a sharp political move. The other is to abolish the superannuation co-contribution recently introduced by Howard.

It’s disappointing to see no assault on avoidance through trusts and private companies, nothing on capital gains or fringe benefits, and nothing much on compliance. However, given that the approach seems to be to produce each policy item with an associated set of funding proposals, perhaps there is still something to come.

With luck, this will neutralise tax as an election issue, but Labor needs to come up with something more impressive than it has produced so far in its core policy areas of health and education.

Ingratitude and the Greens

We’ve heard a lot from the conservative side of politics lately about how the Greens are kooks, Communists, Nazis, anarcho-syndicalists and so on (I’m quoting senior politicians and prominent columnists here, not RWDB bloggers).

So how is that a Liberal minority government in Tasmania managed to last two years relying on Green support? It wasn’t comfortable – minority governments rarely are – and the Liberals cut a deal with Labor to make sure it wouldn’t happen again. But if even half of what has been said in the last couple of weeks was true, a government relying on Green support wouldn’t last two weeks before it fell to pieces over some demand for compulsory vegetarianism or the like.

There was also a Labor-Green Accord government a few years before. This also failed, but over the traditional Green issue of forests, rather than any of the nonsense we have heard about lately.

There’s a chronology here from Bob Brown focusing on forest issues. Obviously, it’s not an unbiased viewpoints, but the basic facts about the governments and their duration are there.

Election blogs

The election has stimulated an explosion of new and revived blogs, aggregators and other websites, and has brought others to my attention for the first time. Here are a few that have caught my eye, in no particular order.

The Daily Flute has excellent economic analysis, mostly serious, but currently looking at the continuous misfortunes of the Persian rug shop industry

Psephite is currently running an assessment of pollies’ websites, most of which are awful. Minor gripe: she uses the acryonym IA which I don’t recognise. As PH would say, “please explain”.

Hack Watch (Iain Lygo) criticises the media from a green perspective, and with an olive green background (quite similar to this, actually

The Poll Bludger (William Bowe) focuses mostly on polls, as you might expect.

Mumble (Peter Brent) also does polls and electorate analysis

I’ll extend this post as I get time, and maybe put up a special election blogroll.

Who prefers the Greens?

We’ve heard at length in the last few days how the Greens plan to ruin the economy, make vegetarianism compulsory, institute world government, and so on. Presumably, for those making such claims, the worst conceivable outcome from the forthcoming election would be a minority Labor government dependent on Green support (or maybe even forced to go into coalition with the Greens).

This is unlikely, but it could happen if the Greens win some inner-city seats, most held by Labor leftwingers. But the only way the Greens can win is on Liberal preferences. So I’d be interested to know who among those running the anti-Green scare campaign is advocating a policy of putting the Greens last, as Labor did in relation to One Nation[1]. I haven’t seen anything on the Liberals preferences yet, so this is a genuine question – if anyone has the answer, I’d be grateful.

fn1. Except, IIRC, in the 2001 Queensland State election, where, rather opportunistically, they exploited optional preferential voting by advocating a vote for Labor alone with no preferences.

Interest rates, part 2

As everybody knows, low interest rates are a mixed blessing for homebuyers. That’s because they have contributed (along with government policies like the reduction in capital gains tax rates) to the massive boom in house prices that has made houses just about as unaffordable now as they were in 1989 at the peak of the last interest rate cycle.

Everybody knows this except, apparently, John Howard. In his scare campaign against Labor, he calculated the impact of Labor’s peak interest rates applied to the average mortgage prevailing under the Liberals. Not surprisingly, the result is horrific. But Howard is as much to blame for this as anyone else.

Interest rates

Another silly feature of the election campaign is Howard’s claim to have delivered low interest rates (and, by implication more affordable housing). The variable home mortgage rate has barely moved over the eight years from 1996 to 2004, and (IIRC) it was lower in 1996 than when Howard handed over the Treasury in 1983.

It’s true of course that in between those dates, interest rates rose to stupendous levels, as high as 17 per cent. But to the extent that Labor made this mess, Labor cleaned it up. Howard had nothing to do with it (moreover, throughout Labor’s term in office, both Howard and Hewson were consistent monetary policy hawks),

This experience also showed that the link between budget deficits and interest rates (via crowding out) is not all that strong. It’s true that, if you move from large surpluses to chronic deficits, as Bush has done, you can expect an eventual interest rate response (though no such response has appeared as yet). But improving the budget balance by a few billion dollars will have no visible effect.

So, I’m disappointed to see Latham running with the government line and promising to keep interest rates low through fiscal policy. Given that world interest rates are likely to rise over the next few years, thanks to chronic deficits in the US, it’s doubtful he can deliver on this. And while it’s good to maintain surpluses on the cash balance over the course of the economic cycle, it’s silly to promise a surplus every year.

Sheridan on the Greens

The bizarre campaign of distortion against the Greens continues with an extraordinary piece by Greg Sheridan, though one that is something of an embarrassing reminder of Sheridan’s long-standing support for the Suharto military dictatorship and its occupation of East Timor.

As with previous pieces in this genre, the modus operandi is to misquote Greens policy, take an extreme interpretation of the misquote and run with the resulting scare. There’s only a marginal difference between Sheridan’s treatment and the full-blown black helicopter fantasies being peddled by Steve Edwards.

Sheridan’s first point of criticism reads

For example, they assert that Australia should force the Indonesian Government to bring all “war criminals in its ranks” to justice by withholding military co-operation, which wildly overestimates the importance of Australian military co-operation to Indonesia.

The actual policy reads

using (along with other governments) continued military cooperation with the Indonesian military as a bargaining counter to convince the Indonesian Government to bring all war criminals in its ranks to justice before an international tribunal instead of trying them before the Indonesian-controlled Jakarta Human Rights Court.

There’s certainly room for argument as to whether Indonesia can be convinced, but it’s clear that Sheridan has misrepresented a policy that most Australians would endorse. The Greens aren’t asserting that Indonesia can be forced to act at Australia’s behest, as Sheridan claims. The rest of the article is no better – for example, a policy on Israel-Palestine is criticised because, while condemning suicide bombings, it doesn’t specifically use the word ‘terrorism’.

The Oz editorial picks up the same line and the Fin has another, rather rambling. piece from Gary Johns.

I’m still puzzled by the politics of all this. Commenters have suggested that it’s aimed at the Greens’ Senate vote, but that would mainly help Labor. Besides, devoting the opening days of a tight election campaign to a strategy aimed at marginal improvements in the Senate outcome seems misguided.

It still seems to me that the results of all this will be, first, to reduce the flow of Green preferences to the Liberals and, second, to benefit Labor at the direct expense of the Liberals. After all, there are only so many buckets you can tip in an election, even with a long campaign. By the time Sheridan and others get around to attacking Labor, a lot of people will already have tuned out.

Update: More on this from my blogtwin , Tim Dunlop