— - Minister Anthony Alabanese on the Coalitions 44th attempt to suspend standing orders in Parliament
Rudd is vanquished…for now. Gillard is still Prime Minister. Swan is still all about jobs. Thomson is still lapping it up with a union credit card. So what’s next for Australia’s oldest political party?
Now that the leadership diversion is out of the way, the Labor Government has a large number of slated reform to tackle. As Gillard has conceded, not only will they need to tackle them, they will also need to communicate them to the electorate to lift their dismal primary vote from 35% to the 40+ mark.
What’s next and what is it?
The National Disability Insurance Scheme
The NDIS is the best thing in the ALP’s eyes since Harold Holt gave up on childhood swimming lessons. Not only has Tony Abbott relegated it from a Coalition priority to something that cannot be implemented “until the budget returns to strong surplus” (anyone seen the long-term economic forecast lately?…), it’s also a genuinely good thing to do.
Following the dismantling of the White Australia Act, the introduction of Medicare, the inclusion of Indigenous Australians as members of the citizenry etc. there are few remaining fights left for those passionate about social welfare. The way disabled Australians are cared for and funded is outdated and has lead to a situation that can only be described as social exclusion.
It was more than evident to all in politics and the disability sector that the current disability services system was not responding adequately to the needs of those it was meant to service. Thus in 2008 The Rudd Labor Government sent the productivity a request to research how best the Australian Government can care for those with a disability. In a comprehensive report the Productivity Commission came up with an answer - the NDIS.
The scheme assures for higher quality individual care for ever Australian in the long-term. It would cost $6.5 billion above current spending (around $295 per Australian. Total expenditure would be around $13.5 billion per annum.
Until very recently, the NDIS has been a piece of bipartisan policy. Since Abbott’s backdown in recent weeks, Gillard has been focusing on Labor’s determination to implement the policy as evidence of their willingness to support every Australian.
The Gonski Report
Businessman David Gonski has finally released his report into the funding system of Australian schools. And the conclusion? Throw $5 billion more dollars into the mix.
An ongoing taboo of Australian politics has been private school funding. Any politician who has hinted at reducing the level that the nation’s most elite schools are funded has been accused of trying to engage in class warfare. So when PM Gillard commissioned Gonski to conduct the review, she declared that no school would lose a dollar - regardless of funding structure.
Whether you agree with this condition or not, it is obvious that the Government must capitalise on the opportunity to reform schools funding and perhaps provide a higher degree of autonomy to public schools.
‘Co-Investment’
Oh, I’m sorry, did I confuse you? I mean subsidising the car industry. Double speak is infectious. There is a large number of blue-collar Abbott converts to be won back with an effective car industry subsidisation policy. Liberal Party principles of free markets and minimal Government interference have assured that no commitment would be made to renewing the Government’s ‘co-investment’ plan with the Australian car manufacturing industry.
The ALP, spearheaded by disenchanted Industry Minster Kim Carr, have shown that they are determined to find a solution.
Once again, big vote winner if communicated efficiently.
Vocational Education
It’s been budgeted and debated, but just not legislated. HECS-style loans for vocational education courses. Gillard still needs to discuss it with the states, but the $1.7 billion already put aside for the scheme will make the convincing a whole lot easier.
The scheme will is apart of the Government’s strategy to address unemployment caused by the alleged two-speed economy.
And the Rest…
The Mining Tax needs to get through the Senate, a solution needs to be found for dealing with boat arrivals, and the Government needs to assure a seamless transition into a Carbon Tax from July 1.
Gillard has proven in recent days that she is not weak. She has to move this perception from the politics to the policy.
A lot to be done in 18 months, let’s see how the ALP handles it. More importantly, let’s see how they communicate it to the people that seem to be so disillusioned with them.
A chronology of arrivals by boat since 1976. Interpret it how you wish, but having a policy appears to be a better deterrent than none at all.
The Minerals Resource Rent Tax (MRRT), the less contentious younger sibling of the Carbon Tax, is a vital piece of legislation in shoring up Australia’s future after the mining boom subsides. It attempts to address the two-speed economy and recognises the fact that the mining boom will not last forever.
Background
The MRRT is a watered-down version of the Rudd Government’s proposed Resources Super Profits Tax (RSPT). The RSPT proposal itself was one of the key recommendations of the Henry Taxation Review in 2009.
Following the mining industry’s intense scare campaign against the RSPT, Rudd was replaced with Gillard who sought a compromise to end the ALP’s war with the big miners. Announced in July 2010, the MRRT is a very watered down version of the RSPT.
The justification for the MRRT is the idea of ‘economic rent’. Economic Rent is a concept derived by classical economists, including the one and only Karl Marx, and involves the payment for a resource where the availability of the resource is insensitive to the size of the payment received for its use. Thus rents are an excellent source of taxation as the tax does not have any capacity to distort economic activity.
What is the MRRT
Under Rudd’s initial legislation for the RSPT, a tax would be applied to all:
However, following the Gillard Government’s negotiations with the big miners, the new MRRT will be limited to coal, iron ore, and all associated commodities such as coal seam gas.
The rate of the MRRT is 30% in theory, but in practice it is reduced to an effective 22.5% through a 25% extraction factor (0.75 x 0.3 = 0.225). The extraction factor is an offset that recognises the application of specialist skills and secondary factors of production that are separate to the direct extraction of materials.
Criticisms & Flaws
A characteristic of good policy is minimal risk. The MRRT carries few risks but the uncertainty that they provoke is very much real.
The fact that the MRRT covers so few resources (as opposed to its resource rich predecessor), there is a very good chance that extraction could move away from coal and iron ore. It is likely that there will be a shift to commodities that are not covered in the MRRT.
Obviously, miners may choose to invest and develop mines in other countries that do not have a similar tax regime. They could also delay the development of mines in Australia over time.
To these criticisms, proponents of a resource rent tax claim that the global demand will determine production. They also cite the possibility of adding a wider range of commodities in the future.
KPMG and Ernst & Young point to unforeseen complications as the tax interacts with profit-sharing rules and the depreciation regime.
How is the revenue being spent?
The purpose of the MRRT is to alleviate pressure on sections of the economy that are struggling either as a direct or indirect consequence of the mining boom.
Obviously, it won’t be raising as much money as the initial Resources Super Profit Tax was meant to, but the benefits are still very tangible.
The company tax rate will be lowered to 29% and small businesses will be able to write off assets worth up to $6500 and simplifying depreciation arrangements.
The superannuation guarantee will be lifted from 9% to 12% by 2019-2020 and an infrastructure fund worth about $5.6 billion over three years will be established.
Lessons Learnt
Rudd’s attempt to implement the RSPT demonstrated just how easily politicians can collapse in the face of immense industry lobbying.
The mining industry’s large-scale anti-RSPT campaign brought Rudd to his lowest approval rating and would precipitate in his removal as Labor leader.
Interestingly, support for a resources rent tax has always hovered around 60-70%. The failure of the RSPT showed just how vocal any minority can be.
The MRRT is an important step in preparing Australia for a post-mining boom economy. Unless we secure the economic benefits to invest in infrastructure for the future, Australia will recognise an empty town that was bustling with the discovery of oil and bust when it was all gone.
— Wyatt Roy yesterday following an ejection from the house by the very Honourable Peter Slipper
With the resumption of Parliament (and coincidentally my will to post), the new theme of debate has very much been set already.
What is it? The Economy - or as Wayne Swan likes to call it “jobs, jobs, jobs”. Both the ALP and the Coalition are happy with the new battleground. After all, it was a Coalition Government that oversaw surplus after surplus contemporaneously with paying off the nation’s debt whilst it was a Labor Government that navigated Australia through the largest economic downturn since the Great Depression.
In short, both sides see it as exclusively their strong point.
Following a year of both sides flogging dead horse after dead horse I am quite happy to see the predominant national discussion become something, how do you say, policy related. No more Craig-Thomson-Axe-the-Tax-Tear-Down-Tent-Embassy-QANTAS-esque trivial matters…I hope.
At this early point in the race, the ALP seem to be communicating their point a lot more clearly. I do not mean to say that I believe them to be the more fiscally responsible managers of the economy. I only mean to say that for once in this Government’s history, they are succumbing to less blunders than the Opposition.
Recent days have been embarrassing for the Opposition. Shadow Treasurer Joe Hockey appears to have gone on ABC’s Q&A without knowledge of the fact that Shadow Finance Minister Andrew Robb had cast doubt over the Coalition’s capacity to return the budget to surplus in its first year if elected. When questioned on the $70 billion dollar black hole in the Coalition’s budget costings, Hockey cast doubt over the figure. The figure was provided by none other than his counterpart Robb.
The Coalition will inevitably recover. With the implementation of the Carbon Tax approaching, the issue will become hot again (it never really seemed to cool in Abbott’s mind). The talk of cost of living increases and lowering of net GDP per capita will put Team Abbott on the front foot again.
In the mean time, Abbott and Hockey should consider sitting down over a cup of tea every morning and sharing some facts and figures.
— Guy Rundle’s opinion piece, ‘Where’s Labor’s Brain?’ published in the Sydney Morning Herald on the 01/01/2012. Available here: http://www.smh.com.au/opinion/wheres-labors-brain-20111231-1pgfx.html
Rather than writing a summary of the year in politics, I thought I would look ahead to 2012. No, I am not going to predict what is going to happen in the world of politics, but rather, summarise what we would all like to see from our politicians.
Obviously, there is always a great disparity between what the public want to see and what they do in fact get to see.
Nonetheless, here’s for a better 2012:
What We Want From Our Politicians
Julia Gillard
Tony Abbott
Bob Brown
Julie Bishop
Kevin Rudd
Christopher Pyne
Wayne Swan
Chris Bowen
Scott Morrison
Senator Sarah Hanson-Young
Tanya Plibersek
Bob Katter
— Opposition Leader Tony Abbott on how quickly he believes he can relocate an entire primary school and environmental organisation that now operate full time in the old detention centre facility.
Once again, Alan Jones has brought out the worst in people. The debate on ‘selling off the farm’ (an idiom that would not have otherwise been used in political discourse had Jones not used it on his show) essentially surrounds the level of foreign ownership of land.
The debate leads to numerous questions: How much land is foreign owned? Who is buying it? Who should be buying it? Should food security be compromised by medium term gains?
Granted, food security is a very important debate, the ‘selling off the farm’ argument has been tainted with an almost boat people debate style racism.
Last December, the Australian Bureau of Statistics was commissioned to write a report detailing the exact figures into the level of foreign ownership of Australian land. The specific focus was ‘agribusiness’, perfectly fitting with the theme of food security.
More than 11,000 farm enterprises were surveyed. The ownership status of not only their land assets and business was conducted, but also their water entitlements.
The report demonstrated that the overwhelming majority of agricultural businesses in Australia are still Australian owned.
Specifically,
At the present time, the levels of foreign ownership of Australian land and agribusiness are not as concerning as portrayed in the media.
However, there is a strong argument that they should come under strong legislative review.
At the moment the Foreign Investment Review Board are only required to investigate agricultural investments above the $231 million.
However, with the population of the world to hit over 9 billion by 2050, food security will continue to escalate in importance. It is naive to think that countries will not shore-up supplies by purchasing foreign land.
Whilst the levels at the moment are obviously not as significant as the sensationalism of right-wing media portrays them to be, they still indicate a trend.
The most concerning statistic that makes me personally support the idea of legislative review is the fact that there has been a 10-fold increase in foreign investment in ownership and control of agricultural supply lines in the past three years.
We should be implementing tighter controls on the sale of land to all foreign purchasers. The overwhelming majority of Australian land and business should continue to be owned by Australian people.
This is not to say that we should halt the sale of land, water and business altogether. We should return to the system of 99 year leases so that in the very long-term, the Australian people will continue to be the masters of their own land.
