Counting Australia's democratic blessings

Our politicians do not gerrymander boundaries, or pardon criminal mates, or stack the highest court as Trumpian America does. But we still need a national integrity commission.

When you are thinking that after the bushfires, floods, coronavirus and economic destruction not much more can go wrong in 2020, just turn to the United States for assurance that it can. But whatever calamity the hand of fate delivers us in the future, we Australians can be far more confident of our institutions protecting us against political and criminal abuse than can the American people. Maybe it’s time to count our blessings and ensure they keep flowing.

Let’s start with the democratic process of voting. State governments run the American electoral system. Eligibility to vote and the convenience or difficulty of casting a ballot depends at least in part on the political stripe of their governors and their legislatures. In Australia, in the Orwellian year 1984, the Australian government established the independent Australian Electoral Commission to conduct elections and maintain the electoral roll.

Australia has mostly adopted the principle of one vote one value, ending the practice of gerrymandering where some state governments drew electoral boundaries to their political advantage. Yet a vote in sparsely populated American states is worth more than a vote in the populous states such as California and New York. This helps explain why Hillary Clinton outpolled Donald Trump in 2016 by 3 million votes but lost the presidential race.

These weaknesses in the American system predate Trump. But he has systematically attacked American institutions designed to provide checks and balances against the misuse of political power. The American President has the power to pardon criminals convicted under federal law. Trump’s predecessors have exercised this power, but Trump’s commuting of a 40-month prison sentence for his political ally, Roger Stone, was described by Republican Senator Mitt Romney as "unprecedented, historic corruption."

If an Australian politician sought to influence a court to grant clemency to a friend or ally it would be a national scandal. Australian politicians criticising court decisions can be found to have committed the offence of contempt, a prospect that led to three federal ministers apologising to the Victorian Court of Appeal in 2017 for their adverse comments on a sentencing decision.

During the Black Lives Matter protests in Washington DC in June 2020, Trump called in the military and the police to clear a pathway through the protesters so that he could display a bible in front of a church. Australian media representatives were among those physically attacked by police. America’s top general, Chairman of the Joint Chiefs Mark Milley, wearing his combat uniform, followed Trump to the church. A week later, General Milley issued an apology, stating “I should not have been there.”

Australian political leaders would not countenance deploying the military in this way and nor would our military leaders.

Trump is determined to install a conservative appointee to the Supreme Court to replace progressive Supreme Court Justice, Ruth Bader Ginsburg, before the 3 November presidential election. This would further tilt the Supreme Court to the conservative side.

Australian political practice generally has not been to seek a High Court that is politically biased one way or the other. At least in the modern era, the High Court has not been perceived to be particularly conservative or progressive.

If, compared with Trump’s presidency, Australia is doing pretty well in protecting its institutions and maintaining the separation of powers, where are we faltering?

The Australian National Audit Office has exposed the so-called Sports Rorts scandal that led to the resignation of a minister, its audit raising numerous largely unanswered questions. It also found the infrastructure department had paid 10 times the market value of a block of land at the Badgery’s Creek airport site.

The Auditor General has written to the Prime Minister, requesting the Office’s funding be placed on a more sustainable basis following recent budget cuts and a reduced number of audits. With the budget deficit this year likely to exceed $200 billion, a request for several million dollars to restore the Audit Office’s budget seems entirely reasonable.

Some federal Victorian politicians are alleged to have misused their electoral allowances for branch-stacking purposes. The government has called in the Department of Finance to investigate. Without physically witnessing these transgressions as they occurred, the department will need to rely on written statements that no misuse occurred. Those statements are very likely to be forthcoming. Case closed.

The major parties are committed to establishing a Commonwealth Integrity Commission. Attorney-General, Christian Porter, confirmed in May 2020 the existence of draft legislation, but has indicated its release is being delayed owing to the government’s attention being diverted to dealing with the COVID-19 pandemic.

Release of the draft legislation for public comment would provide assurance that the government is genuinely committed to establishing a Commonwealth Integrity Commission during the current parliament.

Unlike Trump, the Australian government is not systematically undermining the institutions and the separation of powers vital to protecting our democracy. Australia’s democracy would be strengthened by reaffirming the protections put in place by the Constitution, the courts and successive Australian governments. And our hopes and spirits would be lifted by a properly funded Australian National Audit Office and the establishment of a Commonwealth Integrity Commission.

Craig Emerson is a distinguished fellow at the ANU, director of the Australian APEC Study Centre at RMIT and an adjunct professor at Victoria University’s College of Business.

Fear is crushing reform spirits

Productivity-driven reform is impossible when the rhetoric is all about threats to security and sovereignty.

Not since the World Trade Center bombings almost two decades ago have world events conspired to create such a climate of fear. In the coming election year, conservative forces will stoke fear in the Australian electorate with the aim of persuading voters that a change of government is too risky. It’s a tried and proven copybook, but it will have high costs for the country: essential economic reform is impossible when people are so frightened that they bunker down and cling onto what they’ve got.

Consider a couple of chapters from the playbook. Just weeks before Al Qaida’s attack on the World Trade Center, a Norwegian vessel, the Tampa, sailed into Australian waters under the guidance of the Australian rescue coordination centre, carrying asylum seekers it had rescued from a sinking vessel.

The Howard government introduced the Border Protection Bill, which deemed lawful any action taken by officers or agents of the Commonwealth. Labor opposed the bill on the basis that no one should be exempted from Australia’s laws relating to assault and murder, however unlikely those crimes would be committed.

Speaking on the bill in Caucus, I concluded: “This will cost Labor the election, but we must oppose it.”

I was right. The Howard government warned there might be terrorists on those vessels and Labor was portrayed as traitors to the Australian people.

Throw forward to the period leading up to the 2013 election. Labor’s market-based carbon price would wipe Whyalla off the map, force up the price of a leg of lamb to $150 and jack up electricity prices to unimaginable levels.

Then in the 2019 pre-election period, Labor’s support for the Medevac legislation, possibly allowing up to a couple of dozen sick asylum seekers to be treated in Australia, would cause a flood of “murderers, rapists and paedophiles” who would take the places of Australians in public hospitals and on public housing waiting lists.

These fear campaigns were not conducted exclusively by the Liberal and National parties; they were assisted and funded by Facebook groups and conservative supporters including NewsCorp outlets.

Labor, too, has run effective scare campaigns, its 2018 claim that the Turnbull government planned to privatise Medicare helping it gain 14 seats. But in the modern era it hasn’t resorted to race-based politics.

For a government keenly searching for a bogeyman, Chinese spies and their Australian sympathisers seem ideal. To be clear, China has been behaving appallingly in the last few years, in the South China Sea and Hong Kong, threatening Australian exporters with reprisals for Australian government national security measures, launching spurious anti-dumping actions and harassing Australian journalists in China.

But if the Australian government has a national security announcement to make, it should hold a media conference instead of tipping it out the previous evening to its favourite NewsCorp newspapers so they can spin it as anti-Chinese, complete with mugshots of suspicious Chinese academics.

And if national security officers are going to raid the home of a state Labor MP, or any elected official for that matter, perhaps it would be prudent that the media not be invited to accompany them.

Notice that in the US Presidential election campaign Donald Trump refers to his rival as “Beijing Biden”, to China as “Chin-ah!” and to COVID-19 as the “China virus”?

Now that all those Sudanese gangs the Liberal Party claimed were preventing Melburnians from going out to restaurants have disappeared, conservatives will be keenly looking for a new group to vilify.

A restraint on the Liberal Party doing this is its hold on the marginal seats of Chisholm, Reid and Banks, which have large numbers of Chinese-Australian voters. But that won’t stop the Liberals’ conservative proxies and NewsCorp.

After a couple of early slipups, where Prime Minister Morrison appeared to take on the mantle of deputy sheriff to Trump, he has been adroit in his public statements about the Australia-China relationship. Foreign minister, Marise Payne, and trade minister, Simon Birmingham, have been excellent. So, too, has the Labor leadership.

But in a climate of fear engendered by COVID-19, its economic aftermath and the fractured relationship with China, words such as “security” and “sovereignty” are appearing every day in the government’s economic rhetoric.

By way of example, security and sovereignty have provided the political context for Liberal interventions in gas markets.  

In a climate of fear, productivity-raising economic reform, vital to Australia’s future prosperity, will be impossible. The landmark reforms of the Hawke-Keating era to fashion Australia’s open, competitive economy, though undertaken in challenging economic circumstances, nevertheless were sold to the Australian people in a spirit of optimism about the future.

At a time of great-power rivalry, when the global trading rules are being flouted, the main political parties should reject the political allure of turning inwards, protecting industries under the banner of sovereignty and intervening unnecessarily in markets. And the Coalition’s proxies and media allies should refrain from further damaging Australia’s trade relationships by stoking Sinophobia.

Craig Emerson is a distinguished fellow at the ANU, director of the APEC Study Centre at RMIT and adjunct professor at Victoria University’s College of Business.

Protectionism won't make Australia great again

Trump-like tariff shelters for 'strategic industries' would shrink the economy and make genuine reform impossible to achieve.

If some business representatives had their way, a few microeconomic changes such as cutting the company tax rate and putting workers on individual contracts would place Australia on the road to redemption following the recession triggered by the COVID-19 pandemic. Tariffs, too, might be making a comeback, with a key member of the Federal government’s National COVID-19 Coordination Committee, Andrew Liveris, having defended the Trump tariffs as part of a “long game” against China.

Liveris has advised Trump on manufacturing and trade policy. Upon his appointment to the  Coordination Committee, Liveris signalled https://www.afr.com/politics/liveris-calls-the-start-of-the-on-shoring-era-20200408-p54i37 the advice he would provide: "Australia drank the free-trade juice and decided that off-shoring was OK. Well, that era is gone," adding “If I can achieve anything like what we achieved in nine months with Trump, I'd call it a massive success."

There’s been lots of talk about self-sufficiency in strategic industries. Oh, to be considered a strategic industry! I warned here two weeks ago https://www.afr.com/policy/economy/road-out-leads-back-to-productivity-20200420-p54lbe, beware the ideologues, especially the rent-seeking variety who purport to champion free enterprise but in truth favour private enterprise financially supported by taxpayers.

Genuine microeconomic reform is impossible in a shrinking economy. Try explaining to workers, the unemployed and people dependent upon government support that yes, a policy reform is sending them backwards, but they should be grateful since they would go backwards even further in the absence of reform.

Reform is possible only when a government is helping make the pie bigger and everyone gets a share of it. That was the recipe of the Hawke-Keating reforms. And it worked. A Productivity Commission report https://www.pc.gov.au/research/ongoing/trade-assistance/2018-19/trade-assistance-review-2018-19.pdf released last week, but overwhelmed by the blanket media coverage of COVID-19, reported on Australia’s tariff reductions that began with the 25 per cent across-the-board tariff cut by the Whitlam government in 1973, accelerated by the Hawke and Keating governments, with the Howard government applying the finishing touches.

Labor governments took on supporters of tariffs who had no problem with the Fraser government’s effective rates of protection of 140 per cent on cars and 250 per cent on clothing and footwear.

The Productivity Commission explains: “As a result, Australia has become a more globalised and competitive economy, generating vast benefits for consumers.” Those benefits have come in the form of lower prices for cars, whitegoods, shoes and clothes, especially the cheaper shoes and clothes bought by poorer people.

The Labor Party of the 2020s hasn’t turned its back on those reforms, as confirmed recently by its shadow trade minister, Madeline King https://www.afr.com/policy/economy/why-free-trade-can-save-us-20200427-p54ngt but the rent seekers within the business community are back. A virus pandemic is just the tonic for the rejuvenation of protectionism.

While manipulators of industry policy flirt with tariffs and subsidies for designated strategic industries, let’s not forget the free-trade agreements Australia would be violating with the United States, ASEAN, China, Japan, Korea, Malaysia, Indonesia, our Trans-Pacific partners, the members of the Regional Comprehensive Economic Partnership and those fuddy-duddy nations in the 164-member World Trade Organization.

As we breach the agreements we have negotiated and signed in good faith, please spare the outrage and indignation when our trading partners retaliate, blocking off access to their markets as they seek to create their own strategic industries.

It’s true that President Trump is getting away with violating the global trading rules by slapping tariffs on steel and aluminium imports not only from China but also from the European Union and other allies, on the pretext of national security. The US has invoked an otherwise dormant national-security clause in the 1947 General Agreement on Tariffs and Trade, the predecessor to the World Trade Organization.  

Trade Minister, Simon Birmingham’s push back last week https://www.afr.com/world/europe/trade-minister-takes-aim-at-european-push-to-bring-supply-chains-home-20200430-p54oss against renewed European calls to re-shore industries behind new tariff walls was refreshing, a voice of reason in an international sea of insanity. Have the Europeans forgotten the lessons of World War II and the reasons for establishing global trading rules shortly thereafter: to help prevent World War III? 

In the absence of accommodative monetary and fiscal policy, there will be no V-shaped recovery. Many heavily indebted companies, burdened with the massive loss of revenue from the shutdowns, will collapse when creditors can no longer carry the weight. Workers, fearful of their job prospects, will refrain from discretionary spending. Under pre-existing policy settings, businesses, already refusing to invest before the COVID-19 crisis, will not take chances with risky, new investments.

Reducing or removing the disincentives to invest inherent in Australia’s company tax base is essential. Cutting the rate doesn’t do that. Rather, it confers a windfall gain on profits from all prior investments made at the 30 per cent rate. And companies are gifted the tax rate cut regardless of whether they commit to new investment.

Getting the macroeconomic settings right to grapple with a recession of a magnitude not seen since the Great Depression is paramount. But if policy makers delve into the Trump playbook and seek to make Australia great again in a return to our protectionist heyday, they will impoverish a generation of our most vulnerable citizens.

Craig Emerson is a Distinguished Fellow at the ANU, Adjunct Professor at Victoria University’s College of Business and Director of the Australian APEC Study Centre at RMIT. He was an economic adviser to Bob Hawke.