Cigarettes, weapons – anything for jobs and exports

THE Australian Government should consider setting up, or at least subsidise, a major domestic and exporting cigarette industry in Australia, even if the subsidies go to foreign companies or that the domestic industry is run by foreign companies. It would create jobs and promote exports. If the demand for the product can be boosted both here and abroad, the jobs created would outweigh any downsides.

True, cigarette smoking causes injury and death, but, again, the flow-on job creation in the health industry has to be considered.

True, other than health jobs, cigarette smoking does not have any multiplier effect in producing further productivity down the line, but it is clear that government spending on the cigarette industry would create jobs, growth and exports.

The reason the Government should consider this is because it would lead to an obvious question: Is this proposal very much different from the Government’s new proposal to subsidise and promote the export of weapons and military equipment?

Both industries create things which cause death and injury. Both have little or no flow-on benefits, unlike, say, the subsidised car industry which at least provided economically useful vehicles to take people to work or to move goods around.

Bizarrely, we have trashed a subsidised car industry on the altar of the ideology of the free market to replace it with a subsidised military-export industry – which will be largely for the benefit of the wholly owned Australian subsidiaries of foreign corporations.

The underlying reason is, as Prime Minister Malcolm Turnbull says, jobs. And jobs mean votes. And votes mean winning marginal South Australian electorates which lost out when the car industry folded.

The Government is going to throw $20 million a year at the Defence Export Strategy. It includes direct grants to companies as well as a general campaign.

Further, the Government is going to provide $3.8 billion to the Export Finance and Insurance Corporation to give unsecured loans at 13 per cent to help the cash flow problems of defence-export companies “when your bank is unable to help”.

The interest rate suggests a high default rate, especially if the banks will not go near it. Either that, or the rate is a usurious one in these days of low interest rates.

Given other calls on government spending, the decision itself is questionable. More questionable, however, is the way it was made. It was announced at the end of January, by Prime Minister Malcolm Turnbull and the Minister for Defence Industry, Christopher Pyne. Parliament was not sitting. It does appear even to have gone through the Coalition party rooms.

The decision comes at a time when political donations are being increasingly questioned.

The warning words of Republican President Dwight Eisenhower in 1961 now look like applying to Australia. He said, “This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every State house, every office of the Federal government. We . . . must not fail to comprehend its grave implications. . . . We must guard against the acquisition of unwarranted influence . . . by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

“We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

And that is from a conservative leader.

Many subsidies, tax breaks and other benefits are regularly handed out by Australian governments to corporations and unions – nearly all contrary to the public interest. Those corporations and unions give money to the major parties who hold government.

But the two-way traffic is hugely asymmetrical. The corporations and unions give, on the scale of things, fairly trivial amounts of money to the political parties’ organisational wings. In return the political parties in government hand vast amounts in benefits to the corporations with little or no democratic scrutiny.

It is difficult to work out how much the major parties receive from corporations given that only donations over $13,000 have to be reported; the array of state branches; and the possibility to disguise donations as costs of tickets to attend functions.

Roughly, public funding provides between a third and half the cost of an election campaign. The major parties got about $50 million in total in public funding for the 2016 election, with $10 million more for the minor parties.

So a federal election costs parties around $200 million.

It sounds a lot, but it is not huge when compared to total government spending of about $1350 billion every three years. It is just one 6000 th of three years of public spending, or .016 per cent.

Given the appalling warping of government spending against the public interest that results from corporate donations and even large individual donations, it seems like a good bargain for the public to treble public funding of political parties and to ban all donations.

Freed of having to kow-tow to big donors, political parties would be more likely to use public-interest tests rather than donor-interest tests when deciding policy.

Moreover, corporations and lobbyists would have to engage the public directly and win arguments on merit, rather than relying on donations to get access and influence.

And what’s in it for politicians? The sheer joy and relief of no longer having to engage in the duplicitous pretence of promoting policies as in the public interest when they plainly are not.

Of course, there is a constitutional question – the implied freedom of political communication. But if the restriction is proportional to a legitimate purpose (warping policy creation to favour donors’ interests) the High Court will allow it.

What freedom of political communication is there for people without money when they have to compete with those who can buy access and any amount of internet and media coverage?

Surely, the addiction to political donations can be cured and their pernicious effects neutralised – just as people overcome their addiction to cigarettes.
This article was first published in The Canberra Times and other Fairfax Media on 10 February 2018.

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