Fear and political paralysis

After grabbing as much mileage out of the Budget as possible, Prime Minister Scott Morrison will most like name the election date later in the week or early next week.

It is billed as a contest between a man who doesn’t hold a hose and purports to like Rugby League and beer and a man who has just shed 18kgs and sharpened up his suits and glasses.

It should, of course, be much more than that.

The more important contest here is that between, on one hand, good policy and urgent attention to major problems, and, on the other hand, the desires of corporations and the selfish wealthy to continue muddling along much the way we are.

True, the campaign has not officially started, but all the indications are that for one reason or another neither side appears interested in laying out any clear set of measures to deal with the major problems.

We have to ask what those reasons are.

They are based in fear. And the well of negativity in Australia’s electoral history suggests the fears are well-founded.

Changes that would be for the overall good are doomed if any sub-set of voters would be worse off. Changes that would affect powerful interests will attract powerful, well-funded resistance.

The GST, a worthwhile reform, cost John Hewson the 1993 election and the Coalition’s second attempt in 1998 almost cost John Howard that election.

Labor’s proposal to rein in negative gearing and franking credits probably cost it the 2019 election.

Even if there is no proposal on the table, fear and scaremongering can be effective. Labor almost won the 2016 election with its campaign that the Coalition would end Medicare. The Coalition’s false claim that Labor would introduce death duties helped it win the 2019 election.

These scare campaigns have led to revenue paralysis. Neither side dare suggest a fairer tax system, let along do anything about it, other than handing back bracket creep and cutting taxes for corporations and high-income earners.

The more insidious fear, however, is the political parties’ fear of upsetting the rich and powerful. 

Kevin Rudd copped a swift and effective backlash after he proposed a rent resources tax. It was a sound policy, but the mining industry threw $20 million or so (a tiny amount for that industry) at an advertising campaign against it and Rudd backed off.

That lesson is perhaps more profound than traditional scare campaign.

It stems from the asymmetrical balance of power between corporations and political parties.

The combined income of all Australian political parties in the 2020-21 financial year was $170 million. We only leaned about that from the Australian Electoral Commission last month. We do not know about the parties’ income since 1 July 2021. That will obviously affect the election, but we will not know about it until February 2023 when it will be too late.

Now, $170 million sounds like a lot of money, but in fact it is relatively tiny.

Political parties are not-for-profit. Nonetheless, if you treat that $170 million as “profit” and work out a rough market capitalisation from that for a company we shall call “All Australian Political Parties Ltd” that company would only just make the top 40 on the Australian Stock Exchange.

If you take the economic strength of just the Coalition or just Labor, you can see that they are relative economic minnows with around $70 million annual income each (a bit more in election years).

Oddly enough, they do not really need that amount of income to mount election campaigns. Insofar as they “need” it, it is only to be competitive with the other major party. We would all be better off if the political parties had less money and scaled their campaigns down.

But they won’t. Instead, they go after whatever money they can get, particularly from corporate and union donors.

When you look at the big-ticket areas of policy inaction in Australia over the past 20 years, you can see a correlation with the big companies on the ASX list. They are energy transformation, housing affordability, financial services regulation, health, education, food labelling, aged care, and child care.

In nearly all of these areas, the top four or five companies usually have a combined capitalisation of between $50 billion and $300 billion.

It is nothing for them to chuck a few hundred thousand between them at a political party.

And what do they want in return? Ironically, nothing. They just want existing systems, from which they profit so greatly, to stay in place.

It requires only paltry sums in their eyes to set up industry associations staffed with talented people to get access to those in power to persuade them not do anything significant to cause their policy milch cows to dry up.

Sure, the Government permitted a Royal Commission into banking and financial services, but only after immense public pressure. The commission exposed bounteous malfeasance and criminality, but no-one went to jail. There were a few minor regulatory changes and the banks continue their merry way.

On housing affordability, the property industry just smiles broadly at the myriad of first-home buyer schemes. All they do it pour more combustible banknotes on an already over-heated market. The underlying tax regime which causes the problem remains unchanged.

The do-nothing policy on energy transformation is a joy to the fossil-industry giants. Leaving global heating to one side, the economic case for transitioning away from coal and oil to renewables is unquestionable.

But rather than accelerate the change to solar and wind, the Government wastes money subsidising gas and coal projects. Instead of promoting electric vehicles it hands $1.8 billion to Ampol and Viva to keep the last two Australian refineries afloat.

When that was announced 10 months ago, the share prices of those two companies went up 10 per cent.

Health is a shocker. Waiting times in the public system have blown out further in the pandemic. Last year nearly 9000 people in Queensland either died before their surgery or gave up when they got other more debilitating conditions. Other states and territories are just as bad.

Private health insurance used to enable a patient to jump those queues. But now private hospitals have become expensive factories for elective surgery. Private health insurance is now more an industry than a service. Gap fees for most elective procedures are frightening at best or prohibitive at worse.

Meanwhile, Sonic and Ramsay Healthcare drift up the ASX list each with market capitalisation of more than $10 billion each.

Inaction on food and drink labelling verges on the criminal. The grocery industry refuses to acknowledge there is an obesity problem, let alone that it is caused by pouring unconscionable amounts of addictive sugar into drinks and food. It just donates money and well-crafted industry arguments to ensure nothing is done.

Alas, the two major antidotes to this two-decade paralysis – a tough integrity commission and an end to corporate and secret donations – will hardly get a mention in this campaign.

Crispin Hull

This article first appeared in The Canberra Times and other Australian media on 29 March 2022.

www.crispinhull.com.au

2 thoughts on “Fear and political paralysis”

  1. Well said Crispin , ! We share your concerns for the downward spiral this country is in at the hands of the IPA and the influential wealthy .Keep up the valued conversation please.

  2. The policy list of inaction balances well with the policy list of action. The most recent example would be the penalties created by the NSW legislature against Climate protesters at Port Botany. A $22,000 fine and/or two years gaol was whisked through before a blink. Other examples include quashing gambling reforms through a combined effort by the AHA, Clubs Australia, Clubs NSW et al to ensure the Liberal Party retained government in Tasmania as it was clearly seen as the thin edge of the wedge. Property developers are another donor group that can pick and choose which state has allowable donations. Once the donation is made, it is the party that distributes consolidated amounts across state borders.
    Conduct any analyses and one shall soon recognise the equal and opposite trends across inaction and action lists. It’s so predictable it’s almost scientific!

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