ABC The Drum – Page 5

Turnbull Can Learn From Gillard’s Transition

It feels like a new Government, so different is the changed tone from Tony Abbott to Malcolm Turnbull. Yet tone counts for little in any policy sense.

The new Prime Minister may brag about a boost in business confidence but markets don’t run on tone. Optimism can dissipate quickly.

Turnbull’s challenge right now is in many ways a lot harder than that faced by a newly formed government. Just ask Julia Gillard.

A new government carries into office a folder full of election promises. A new government is free to discover the disastrous state of the books, to uncover the horrifying truth about major programs, and just generally remind voters they made the right electoral choice.

Turnbull can do none of that. He both inherits the accumulated decisions of his predecessor and is unable to disinherit them – even if he wanted to. First, half his cabinet signed off on those decisions, including himself. Second, maintaining the decisions of the Abbott government was one of his promises to get into power.

Yet despite limiting his criticism of Abbott before the spill to Abbott’s failure to communicate on economic matters, it is clear that Turnbull wants to alter policy. Hence his recent lines that all policy is subject to scrutiny.

It has been blindingly obvious for months that Turnbull’s issues with Abbott were not limited to his communication style. Take Turnbull’s anti-“death cult” speech from July – while couched in a criticism of the government’s language, it was as clear a signal of policy dissent from a cabinet minister we’ve seen.

Anyway, the policy direction of the Government would have had to change regardless of who is leader. The 2015 budget was a purposeless document unsuited to the times. The Abbott government had been in constant policy retreat ever since the failed spill attempt in February. This was unsustainable.

So right now we’re in a peculiar limbo.

A number of critics of Turnbull have pointed out that his much-praised communications skills can often devolve into waffle – something that was most obvious in his interview with Leigh Sales on 7.30 last week. Policy uncertainty is why Turnbull waffles.

When Turnbull has something to say he is sharp and clear. But the Government hasn’t settled on what to say yet. Indeed, policy change can’t happen quickly if everything has to go to cabinet along with formal submissions.

So when asked about – say – his foreign policy priorities, the Prime Minister fills the air, trying to be interesting rather than decisive. When he defends positions against his better judgment – like the gay marriage plebiscite – he looks unconvinced and unconvincing.

It’s a fine rope to walk, to distance yourself from the prime minister you rolled and still defend their legacy.

How this is done can make or break a government. To say that in 2010 Gillard handled the transition poorly would be an understatement. Voters were never offered any explanation for why Kevin Rudd had to be removed. We were told a “good government had lost its way” but we were not told where the government was supposed to be heading. We were supposed to “move forward” because asking questions about the leadership change would be crass.

Eventually we found out that Rudd had been rolled because his office was disorganised. Politics is a tough business.

Gillard kept policy change to a minimum. She renegotiated the mining tax. She promised to rearticulate the case for Labor’s moribund climate change policy. Keeping Rudd’s cabinet exactly in place underscored a sense of continuity, giving the impression that toppling the prime minister was simply a minor adjustment to the status quo. When she called an election without affecting any substantial policy change, the sense of surrealism was enhanced.

Gillard scraped through 2010 but never recovered from the impression she made in her first days as prime minister.

Turnbull should be studying the Gillard years closely for what not to do. Not only does a new prime minister need to accumulate the power of incumbency – to be prime minister and be seen being prime minister – but they need time to shape the government in their own image.

More importantly, Turnbull needs to bed down all those questions about where his government will differ from Abbott’s. That means working out all those awkward questions about how and whether asylum policy will change, whether climate policy will change, where the government stands on tax reform, the deficit and spending cuts. Those changes will tell an implicit story of why the spill had to occur when it did.

We’re still in a transition period, as one government turns into another government. But as Gillard discovered, this is one of the most dangerous places to be.

Our New ‘Innovation PM’ Needs Policies To Match

While it’s wonderful to hear the new Prime Minister wax lyrical about disruption and productivity, the real test will be putting some policy flesh on those rhetorical bones.

The recently ousted treasurer, Joe Hockey, used to talk a lot about innovation and disruption, and in much the same language as Prime Minister Malcolm Turnbull did announcing his new ministry.

Innovation was Hockey’s theme addressing the National Reform Summit in August. At a small business summit in July he declared that “global disruption is the new black”. When he addressed the Institute of Public Affairs in March, he marvelled at the possibilities and challenges of Uber, Airbnb and ASOS.

But for all that oratory, Hockey’s policy for these new firms was simply to bring them into the GST net, as happened with Uber and all online purchases.

And it’s not immediately obvious what the ideal role for government in innovation is.

We already sponsor, support and subsidise science, engineering, technology, invention and innovation in many different ways. The research and development tax incentive offsets R&D costs against corporate taxation. The patent system is meant to give inventors an incentive to invent things. In 2001 the government introduced an “innovation patent” for incremental changes to business practice.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) receives $750 million a year to conduct scientific research for the good of industry and encourage commercialisation. Then there’s all the money we give to universities for research – which Ian MacFarlane, the now-former industry minister, wanted to tie to commercialisation.

Innovation policy can easily become as much a boondoggle as any Alice to Darwin railway. State governments have been burning money on wasteful “innovation” policies for decades. Every new premier wants their capital to become Silicon Valley. But who now remembers ComTechPort?

We actually know very little about why economies innovate, let alone how we might encourage them to innovate more.

Take the oldest innovation policy on the books – the patent system. Patents might in fact discourage innovation as much as they encourage innovation. In the classical model of innovation market failure, inventors won’t invest in inventing unless they are protected from free-riders copying their invention for a period of time. Hence patents offer a temporary monopoly.

But if that monopoly is too long or too strict it could prevent new inventions leap-frogging old ones, or prevent inventions being adopted across the economy. We have no reason to believe governments have struck the correct balance here.

Last month the Productivity Commission launched an inquiry into intellectual property. Hopefully under the Turnbull Government this inquiry might be able to make a difference.

My colleague Sinclair Davidson has challenged the idea that there is a market failure even in basic scientific research. The assumptions underpinning the standard blackboard arguments for market failure in science do not hold up. He finds that government spending on science is probably a net drain on the economy – despite the fantastic claims of supporters of science spending.

Whether you accept this or not, the fact remains that while we know that technology and innovation is at the heart of economic growth, there’s no off-the-shelf policy to suit.

Refashioning 1970s-style industry policy with a technology and science focus isn’t going to cut it. Christopher Pyne should be cautious with his new role as Minister for Industry, Innovation and Science. The position could easily become a useless financial black hole.

What’s more prospective is Turnbull’s focus on the “rapidly changing, disruptive environment”.

Ever since he launched his challenge, you get the impression he’s been restraining himself from blurting out “Uber” at every press conference. Over the last year both sides of politics have been trying to grab the future-y high ground of the sharing economy (like Labor’s Andrew Leigh, Clare O’Neil and Tim Watts).

But the lesson of sharing economy firms like Uber is that innovation comes from below. The political battle we’re seeing now between Uber and the taxi industry is a peek at a future where technology butts up against regulation – and the wealthy economic interests that regulation supports.

At the very least a focus on disruption and change is a base on which Turnbull can revitalise the Government’s lagging deregulation agenda. Not just because deregulation will save firms money, as the Abbott government argued, but because it will unleash their potential.

But it’s also a firm intellectual base on which Turnbull can pursue his broader innovation agenda.

Rather than looking to pour more money into government commercialisation and science programs, the new Prime Minister should be looking at this issue from the other side of the glass. What does the Government do right now that prevents industry from innovating itself?

Turnbull opened his bid for leadership with an argument: “Our values of free enterprise, of individual initiative, of freedom, this is what you need to be a successful, agile economy in 2015”.

Fine, heartening words. But it will be quite a trick to turn those words into a reform agenda, let alone a productivity boost.

Without Economic Nous, Abbott Was Doomed

Tony Abbott has never had a taste for economics, and that ultimately was his downfall.

It wasn’t the gaffes, or the self-indulgences, or his loyalty to Bronwyn Bishop, or the aimlessness of the Government since the last budget that led to yesterday’s drama. Each of these could be survived.

It was that his attempts to reset the agenda on “jobs and growth” were empty. It was the right message – finally the right message after so much flailing about. But it was a message without any substance. People don’t want to hear politicians talk about “jobs and growth”. They want actual jobs and actual growth. At the very least they want a credible story about how those jobs and growth will be achieved.

By people here, I mean both the voters and the parliamentary Liberal Party. There is no one in the party room, apart from Joe Hockey apparently, who has really believed for the last six months that the Abbott Government has a jobs plan and that plan is working.

In the back of their mind, this economic vacuum was laying the foundation for a devastating election loss.

For any other government the China-Australia free trade deal would be a minor diplomatic success. For the Abbott Government it became, by necessity, the great lynchpin of Australia’s future posterity.

The Government announced in August that its plan for South Australian jobs was to build ship after ship after ship for the Navy. This is the sort of big government industry policy that would make Labor traditionalists like Kim Carr proud. Government funded ship building is not a plan for growth.

Here so much of the blame for Abbott’s fall has to be laid on his loyalty to his Treasurer. The 2014 budget needed a story and an advocate. But it had no one who could explain the budget’s rationale – outside the old opposition cry of Labor’s debt and deficits – or how it fit into the big economic picture. Abbott wasn’t interested in it. Hockey seemed embarrassed by it.

Liberal parliamentarians knew when they voted last night against Abbott they were casting a proxy vote against Hockey. Abbott has goodwill in the party room. He was an incredibly strong opposition leader. He is an incredibly strong campaigner. Hockey has no such goodwill. An Abbott without his Hockey might have survived.

For the last six months I’ve been reading that Abbott’s parliamentary support was entirely resting on the “right”. This is probably how it has looked from the press gallery, as conservative positions on national security and gay marriage became central to the party room numbers.

But the right wasn’t a very stable platform. Abbott’s relationship with the right has been complicated at best.

Yes, Abbott’s rise to the leadership was on the back of Malcolm Turnbull’s support for Kevin Rudd’s emissions trading scheme, and it was the right that resigned in protest, sparking the leadership challenge.

But this support was first tested early on by the paid parental leave scheme – Abbott’s first exercise of the leader’s prerogative. When he abandoned this policy in February to protect himself, it showed he was willing to Year Zero his own leadership in the same way Rudd did with the emissions trading scheme in 2010.

The most devastating blow for his support among the right was abandoning the promise to repeal section 18C of the Racial Discrimination Act in August 2014. The press gallery has never understood how significant this original promise was to Abbott’s prime ministership. Abandoning it – and describing free speech as a “needless complication” no less – was very damaging. Abbott came to realise this. Hence his strong words in the wake of the Charlie Hebdo massacre.

The final test of his relationship with the right was yet to come. His personal support for Indigenous recognition in the Australian Constitution – deliberate constitutional amendment for an uncertain and entirely symbolic end – would have torn his base apart.

Without a credible economic story, without a credible treasurer, and without stable support from the right, Abbott was going to go. Whether this week or next month or next year.

So what does this assessment mean for the new Prime Minister? Obviously Turnbull’s message before and after the spill was that he would bring a renewed focus on the economy. But two phrases stuck out in his press conferences last night. Turnbull chooses his words carefully.

The first was the declarative emphasis on “freedom” as a key to economic growth. The echo of the language of George Brandis and Tony Abbott’s “freedom agenda” in opposition was surely not accidental – and all the more powerful for now being used in the service of economics.

The second was his statement that his would be a “thoroughly liberal government” (assuming he meant “liberal” as opposed to “Liberal”). It’s indicative Turnbull said this publicly after the vote, not before. Abbott’s was an intentionally conservative government. Abbott sought to remake the party into a conservative party.

What these statements mean for government policy is anyone’s guess. Turnbull has promised not to pursue higher climate targets, and he has apparently reaffirmed the plebiscite plan for gay marriage. Turnbull proposes a new tone, but has no agenda that we are aware of. It’s going to be a long road from here.

At the very least, his choice of language is an unsubtle reminder that Turnbull will have to navigate the Liberal Party with far more skill and diplomacy than he did when he was opposition leader.

The Abbott Government’s Real Problem Is That It’s Not Ideological Enough

The Abbott Government is getting bad reviews. This week’s two year anniversary offers a neat little hook for members of the press gallery to take stock of the Government’s performance.

Among the unforced errors and stumbles, we read that the Abbott Government is far too “ideological”. In an encyclopaedic piece, the Guardian’s Lenore Taylor bemoans their “ideological overreach”. This is indeed an old complaint. This time last year Liberal Party strategists were counselling the government “no more ideology”.

But if the Abbott Government is too ideological, then its ideology is of a new species hitherto unknown to political taxonomists.

It’s an ideology that prioritises convenience over consistency, and refuses to spell out the principles which guide its decision-making. That is, the Abbott Government appears to have no distinct “ideology” at all.

One should not be too critical of a government for failing to hem to abstract doctrine – democratic government functions through compromise and conciliation. Political philosophy has to give way to practicality.

Yet even on these forgiving standards, it’s hard to see what picture of the world – or vision of the future – animates the Coalition.

The Government’s apparent “war” on the ABC is often used as Exhibit A for its ideological fervour. This began very early in their term. It seems to have reached its zenith with the prolonged Zaky Mallah affair.

Yet consider the absence of any consideration in this “war” of the role of public broadcasting in an age of media diversity, any critique of the media as a public good, or even a simple comment on the trade-off between ABC funding and lower taxes.

Rather, the Government’s critique of the ABC seems to be nothing more complex than that the public broadcaster has too many left-wing journalists and is insufficiently pro-Australia. Perhaps fair enough. But if this counts as “ideology”, then it is a superficial and empty ideology.

The irony of the Zaky Mallah affair was that it trivialised the substance and intractability of the modern terror threat by making it about the internal organisational structure of the ABC.

A keener focus on the principles at stake – that is, a more ideological approach – might have left the Abbott Government looking less like it was defeated by a chat show.

Taking a more ideological approach in each of these cases would have made the Government seem less obviously self-interested.

Nor has the criticism of the Human Rights Commission chief Gillian Triggs been obviously connected to any ideological perspective on human rights or the Human Rights Commission. The early promise of a debate from the top about the nature of human rights that was the appointment of Tim Wilson to the commission and the establishment of the Law Reform Commission’s inquiry into “traditional rights and freedoms” has gone unfulfilled.

Likewise, any pretence of a serious industrial relations agenda has been abandoned to focus on the Trade Union Royal Commission. The royal commission has revealed some serious wrong-doing in the union movement, and continues to highlight the Labor Party’s relationship with unions. But it is hardly a substitute for a debate about how much the state should be involved in workplace contracts.

Taking a more ideological approach in each of these cases would have made the Government seem less obviously self-interested.

Exhibit B for too-much-ideology is the 2014 budget. Here we have to distinguish between the Commission of Audit – which reported just before the budget was released – and the budget itself.

At the time, the two blurred into one. And it is certainly the case that the Commission of Audit was deeply ideological, in the sense that it applied philosophical principles to policy questions, and did so in a way hopeless ideologues like myself could admire.

But there was little trace of that ideology in the budget.

If Christopher Pyne’s legislative agenda is too ideological for the Australian public to forgive, then the scope of future reform is truly limited.

The two standouts in the budget were the $7 co-payment and the higher education reforms. Only the latter was really ambitious. The Government made the former seem more ideological than it was. For all their banging on about a “price signal”, the co-payment revenue was to be funnelled into a research fund. This hardly counts as devolving health provision to the market mechanism. Neoliberal Friedmanism it ain’t.

Credit where credit is due for higher education. This was – or still is to be – a significant change to the way higher education is funded.

Yet it’s hard to see how the reforms being proposed are really of an order of magnitude greater than previous market-based reforms to tertiary education under past Coalition and Labor governments.

If Christopher Pyne’s legislative agenda is too ideological for the Australian public to forgive, then the scope of future reform – from any side of politics, on any philosophical grounds – is truly limited.

Ideology is of course endemic to all human thought. We all have our frames through which we understand the world. A non-ideological person is a conceptual impossibility.

Yet it is not ideological overreach which plagues the Abbott Government. The Coalition lacks exactly what a clearly ideological approach would give them: not just consistency or narrative, but purpose.

I know nobody who manned polling booths for the Coalition in 2013 in order for Joe Hockey to introduce first a deficit levy, then (as is now being seriously proposed) swap a higher GST for lower income taxes.

Two years into their three-year term, voters must be scratching their heads wondering what this Government is for. That is not a sign of too much ideology. It’s a sign of too little.

ChAFTA: Union Campaign Misses The Point

The union campaign against the China-Australia Free Trade Agreement (ChAFTA) is a mixture of misinformation, confusion and xenophobia.

But it does hide an uncomfortable truth. Labour market protectionism encourages the exploitation of foreign workers. We’ll come to that shortly.

The ACTU argues that ChAFTA will “shut out locals from jobs”. They point to three controversial provisions.

The first is the elimination of labour market testing for Chinese workers in the 457 visa program. Labour market testing requires employers to advertise locally before they employ foreigners on in 457 visas. But the requirement has always been a tick-the-box waste of time. An independentreview last year found it was pointless and cumbersome. There’s no evidence that unemployed Australians in any way benefit from this regulatory hurdle.

Another controversy relates to skills requirements. The unions say ChAFTA means foreign tradies could come to Australia who do not meet Australian standards. But the skills requirements under ChAFTA are exactly the same as for most other countries we accept skilled workers from. ChAFTA just removes a discriminatory higher bar for Chinese workers. (The higher bar still applies to a small number of other developing countries)

The final controversy concerns major projects. A side memorandum to ChAFTA establishes a new type of labour agreement – “investor facilitation agreements” – that allow major infrastructure projects to bring in foreign workers.

But we already have similar labour agreements. The essentials of the law haven’t changed, as the Migration Council’s Henry Sherrell notes. All agreements have to be approved by the immigration minister. And major projects have to pay foreign workers Australian market rates. Claims that ChAFTA changes existing major project wage requirements are simply wrong.

The unions can get away with these fudges because migration law is extraordinarily complicated – a byzantine regulatory environment of quotas and controls. The Immigration Department offers dozens of different types of visas for different types of people. Each have their own criteria and conditions. The Migration Act is a behemoth: currently 1048 pages, not including supporting regulations.

There are lots of reasons for this complexity. But one big one comes from the unions, who want migration to be heavily controlled to protect Australian jobs. If we were more open to migration – if there was wider acceptance of the evidence that immigrants do not steal jobs – then these rigid and regulated visa schemes would not have to exist.

This is the political economy behind union stories of foreign workers being exploited in Australia.

To the extent that there is exploitation in Australian immigration, it is because employers are able to use restrictive visa conditions – demanded by unions to protect Australian workers – as a stick to wield against foreign visa holders.

For instance, on the weekend Fairfax papers and Four Corners uncovered what they say is widespread exploitation of 7/11 workers. No doubt the story has a way to run before we learn all the facts. But notice how many allegedly exploited 7/11 employees are working on student visas.

The visa conditions on one student “gave the franchisees leverage to threaten to go to the authorities to have his visa cancelled if he complained about his salary or working conditions.”

At least student visa holders might be able to find other work. Workers on 457 visas have just a single sponsor, with correspondingly greater leverage.

It is possible to be opposed to foreign workers from China and not be xenophobic. But you’d have to be blind to miss the undercurrent of xenophobia in the anti-ChAFTA campaign. Just as the union campaign against poles and wires privatisation in March this year leant heavily on anti-Chinese sentiment, so too does this month’s spectre of Chinese workers.

Our highly regulated migration system is better than none at all. Immigration is the most powerful anti-poverty tool we have. People who migrate from poor countries to rich countries dramatically improve their wellbeing and those of their families.

We ought to be accepting more foreign workers. And we ought to be reducing the visa restrictions that make them vulnerable to exploitation.

Because when we talk about immigration policy we need to keep the focus on the immigrants themselves – and why they would want to come to Australian in the first place.

When unions campaign for Aussie jobs – when they campaign for crackdowns on visa categories, for more rules on who cannot work in Australia, for limiting foreign workers on projects – they are campaigning not against business or “capital” but against people who are less well-off than they and who were born in countries poor than ours.

International solidarity, it seems, only goes so far.

Forcing GST On Imports Doesn’t Stack Up

In opposition the Coalition promised no new taxes or tax increases. On Friday Joe Hockey announced the Coalition’s latest tax increase: eliminating the GST low value threshold on imported goods.

Currently GST is not imposed on imports worth less than the low value threshold of $1000. When you buy books from Amazon or clothes from ASOS, you don’t pay GST. As of July 2017, you will.

Well, you probably will. This is going to be very hard for the Government to implement.

The GST collection won’t be levied when goods are imported. Inspecting packages at the border costs more money than it raises, as the Productivity Commission conclusively found in 2011. (The Assistant Treasurer, Josh Frydenberg, has been saying that “real improvements in technology” make that finding no longer true, but the inspection problem isn’t really a technological one, it is a time and warehousing costs one.)

Instead, Australian Taxation Office officials are going to fly around the world to ask “hundreds” of foreign companies exporting more than $75,000 worth of goods to Australia to levy the GST at their end. Nice work if you can get it.

The politics here is obvious and unflattering.

Friday’s announcement satisfies the retailers who have been lobbying for years to reduce the threshold, claiming it makes domestic goods uncompetitive.

Of course, the GST threshold is a convenient scapegoat for much deeper issues in the Australian retail sector. Even if GST were imposed on all goods, many representative products would still be more expensive sold from Australian shops than foreign ones, as my colleague Mikayla Novak has shown. And international shipping isn’t free.

Friday’s announcement also satisfies Treasury and the state governments who are clamouring for more revenue. Like everything else Hockey has dressed up as a “tax integrity measure”, the elimination of the GST threshold is nothing more than a tax grab.

But, politics aside, let’s look at the low value threshold on its own merits.

Almost nobody in the debate has acknowledged that the threshold has been slowly lowering ever since the introduction of the GST. This is because the $1000 threshold is fixed – it is not indexed to inflation. And a grand isn’t worth as much as it used to.

This is the point the Treasury’s own Tax Board made in 2010, writing that inflation will “reduce over time any potential bias in favour of imported goods over local goods of the same quality and value”.

So Australian retailers have been complaining about a tax distinction that has been constantly and automatically eroding in their favour for the last decade and a half.

And that’s before we consider the fact that the dramatic reversal of the dollar has made domestic retailers much more competitive than foreign ones in the last few years.

The GST is usually described as a consumption tax. It is not a consumption tax because the GST is not levied on consumption. It is levied on sales by firms operating in Australia. In the real world, the GST is a sales tax with an input credit.

That observation might sound pedantic but it has big implications for the import threshold debate. If the GST is in fact an Australian sales tax, then trying to impose it on sales by foreign companies in foreign countries is not a tax integrity measure at all. It is a tax on imports. It is, in other words, a tariff.

Foreign companies do not, and should not, pay Australian taxes – just as companies in foreign countries do not operate under Australia’s regulatory framework or our political institutions.

As the Howard government said when it introduced the GST in 2000, “the government wants to ensure it does not unnecessarily draw non-residents into the GST system”.

And the idea that we need to raise taxes at our border in order to ensure “competitive neutrality” or to “level the playing field” is mercantilist nonsense. In fact, it’s not clear why GST should be levied on any foreign imports at all, apart from a pure protectionism.

In practice, the GST is only going to be levied on foreign companies that a) provide more than $75,000 goods into Australia and b) don’t slam their door in the face of Australian tax officials when they come knocking.

So there’s a non-trivial chance Hockey’s GST move will just encourage Australian consumers to move from bigger websites to smaller websites, trying to avoid the 10 per cent tariff.

On Friday Hockey said he has many “levers” at his disposal to “pressure” companies overseas to collect Australian taxes.

Maybe he does. But if so, that should be recognised for what it is: trying to squeeze money from foreign companies for no other reason than to satisfy retail lobbyists and feed the Government’s apparently unrestrainable spending habit.

There’s Nothing Conservative About Using The Constitution As A Political Trick

The Australian constitution has one great feature. It is incredibly hard to change.

This, obviously, is what Scott Morrison was thinking about when he proposed last week that Australia hold a constitutional referendum to deal with same-sex marriage.

A plebiscite would simply determine the public’s view on changing the Marriage Act via Parliament, but a constitutional referendum would propose adding the words “opposite and same-sex” before the word “marriage” in section 51(xxi) of the Constitution.

A plebiscite would have to simply receive a national majority to be considered decisive. But a constitutional referendum would have a much higher bar: both a national majority and majorities in at least four states.

Australia’s constitutional amendment system is often described as “notoriously difficult”. We are a “frozen continent”, constitutionally speaking.

Only eight out of 44 referendums have succeeded. This often cited figure understates the failure rate. Other possible referendums have been abandoned before coming to a vote. Kevin Rudd dropped Julia Gillard’s local government referendum when it became clear the Coalition’s enthusiasm for change was waning.

The Australian founders may not have intended it to be this hard to change the constitution. But there are good reasons for constitutional change to be difficult.

Constitutions exist in order to provide fixed rules about what governments can and cannot do. The strength of a constitution derives from the certainty it provides. A constitution that can be easily changed is not a constitution at all, in that it does not offer the stability necessary for long term economic and political management. In the pre-constitutional era, governments did not feel bound by rules. Now they do. That’s a very good thing.

This does not mean constitutions should be impossible to alter. But the danger to the constitution comes from reckless change, not stubborn adherence to the status quo. As Geoffrey Brennan and Hartmut Kliemt have written:

The slowness of the procedure will give us pause and help us steer a steadier constitutional and political course than we would do otherwise.

It’s important to note that the desirability of constitutional rigidity holds true even if we think the constitution is weak, or flawed, or could be amended in an obvious way.

Yes, we all have our own ideas of how statutes and constitution might be rewritten that would make this country more perfect. But just have a brief scan of the previous 44 referendums (Wikipedia has a nice list, with links to the questions themselves). It is pretty clear that Australia is better off, on balance, for having rejected most of them. Almost all were outright and explicit power grabs by the Commonwealth.

With all this in mind, the requirement that a constitutional referendum achieve a double majority – majority of the population and majority in the majority of states – is in fact a relatively low bar for a change to the rules that govern the structure of the government.

After all, what is the alternative? Simple majority voting? Majority voting is not inherently more democratic.

We are more likely to make democratic decisions – that is, decisions that more represent the will of the people – with a higher threshold. When 51 per cent of the population impose their views on 49 per cent of the population, it’s hard to say that imposition has much moral authority.

This is the basic case for constitutional conservatism (couched admittedly in economic terms rather than the usual legal ones). Continuity should be preferred. Change should be resisted.

The Liberal Party used to be the party of constitutional conservatism. Labor has always wanted constitutional reform. The Coalition’s historical role is to hold the line, to espouse modesty and stability; the sort of virtues represented by the Samuel Griffith Society and a long line of conservative judges and political leaders.

Yet under Tony Abbott, the Coalition appears to have abandoned that storied and entirely necessary tradition.

In opposition, Abbott had signed up to Gillard’s local government referendum. He had to be pulled back into line by state Liberal party divisions.

Abbott wants to amend the constitution to recognise Indigenous Australians. You only need observe how the recognition debate has spiralled out of the Government’s control to see how antithetical it is to the conservative mindset.

Now senior ministers of the government are seriously proposing a constitutional amendment for no other reason than to stack the deck against a policy they oppose. And that policy is, we are repeatedly told, a second-order issue.

There’s no reason for a constitutional referendum on same-sex marriage. The High Court has said the Commonwealth Parliament has the power to legislate in this area. The constitutional approach is only being floated because Morrison and others want the measure to fail.

Constitutional conservatism was once a matter of deep Liberal identity. Now it’s just another political trick for short-term gain.

Let’s Be Honest, Question Time Makes Everyone Look Stupid

The importance of the speaker in Australian Parliament is wildly overstated, because the stakes of parliamentary Question Time are wildly overstated.

It is a sign of how far the Abbott Government has lost control of the agenda that the appointment of what is normally a minor administrative position became the centre of Canberra politics.

By now the entitlement saga has spiralled out of control, enveloping every side of politics.

But recall that Labor was delighted when the Bishop helicopter photos emerged. It seemed like a perfect encapsulation of the charge they’d levied at Bishop ever since her appointment. Bishop was hopelessly partisan. Indulgent. Shameless. Here was Bishop’s performance as speaker converted into metaphor and given corporeal form.

That delight was really because Labor’s constant complaints about her speakership weren’t exactly resonating with the public. There’s nothing more inside beltway than complaining about how many people Bishop threw out of the chamber during Question Time.

Of course, you can understand why parliamentarians think the conduct of Question Time is important.

It’s a big part of their parliamentary week. For many of them, Question Time is a theatre where they can try to rise above the undifferentiated mass of other representatives. The person who held the record for being thrown out under Bronwyn Bishop was Nick Champion. Champion is the member for Wakefield and shadow parliamentary secretary for health, hardly a high-profile day job.

Labor types have been tweeting all weekend about the need for a new speaker to uphold standards and restore respect to Parliament. But never mind whether the speaker is biased. What are all these parliamentarians doing yelling and heckling from the back seats, and then blaming the speaker for Parliament’s low reputation? It’s like criminals blaming the police for failing to prevent their crimes.

Back in 2011, Katharine Murphy described the Gillard-era Question Time as the worst “grinding and time-wasting ritual” in federal politics. Murphy wrote that we should “make it matter once again”.

If anything this is too optimistic. Commentators often lament the lack of presence in the current Parliament. They are nostalgic for the great performers of previous generations. We used to have politicians who looked like they owned the room, and by extension, commanded the country. Question Time favours the fast-witted, the biting, and the aggressive. Peter Costello is acknowledged as a great Question Time performer. Paul Keating is known as the master.

But to what end? YouTube helpfully has Keating’s most famous performance: the “I want to do you slowly” response to John Hewson’s question about an early election. It’s great fun, sure. On the other hand, strip it back and Keating was just hurling a barrage of insults. Nothing wrong with that, but we shouldn’t pretend that it was a great democratic contribution.

Even at its most legendary – even in its most memorable, brightest moment – Question Time was just entertainment. Entertainment for an infinitesimally small portion of the population.

More commonly, Question Time is just the forgettable recitations of the lines of the day – short term Capital Circle obsessions intoned as if they were matters of great Shakespearian substance.

It’s true that there was a previous era in which Question Time was not the farce it is today. As this guide to parliamentary practice notes, Question Time evolved out of the ad hoc custom of asking ministers questions without notice. The earliest Commonwealth parliaments would only feature a few such impromptu questions. Questions would be asked when there were questions to be asked.

Have a look at this “question time” from July 1915. The questions were simple and unadorned. The answers were direct (“I shall make inquiries into the matter” was the sum total of one response by the Assistant Minister of Defence.) There’s little of the modern preening and bluster.

The standing orders that govern questions without notice have changed many times in the last century. Many proposals to reform Question Time focus on these standing orders. But the problem isn’t with the rules. Nor is it with the speaker. No doubt Tony Smith will be a great improvement on his predecessor. But Bronwyn Bishop didn’t wreck Question Time.

Question Time is farcical because it is an empty ritual. It adds nothing. It distracts the press gallery. It distracts our politicians. It undermines the more serious work that goes on in Parliament. It is divorced from the actual business of government, the actual business of legislation, and the practical needs of democratic accountability.

Let’s be honest, Question Time makes everyone involved look stupid.

Bronwyn Bishop’s accidental contribution has been to illustrate just how ridiculous this feature of Australian politics truly is.

Entitlements Review: This Is A Problem Of Definitions

To be a parliamentarian is to have a strange job. To be speaker of the house in federal Parliament is to have an even stranger one.

Recall that Bronwyn Bishop’s first line of defence was to say that she flew to the Liberal fundraiser in Geelong to talk about the role of Parliament. Is that really what she is employed to do? Does that count as party business or political business or parliamentary business? Should we be paying for it?

It’s easy to say we want to reform the entitlements system. But it’s much harder to decide what constitutes “official” business that taxpayers should support, and “political” business that taxpayers should not. There’s not always a bright line separating the two.

Yes, a helicopter to Geelong, or charging taxpayers for attending a wedding, clearly crosses the unacceptable line. But what about arranging meetings in Melbourne to justify attending a party function the night before, as Tony Abbott did in August last year? I challenge you to write a rule that prevents tricksy scheduling.

Unsurprisingly, a 2010 review into parliamentary entitlements concluded that there were “unclear and sometimes inconsistent definitions” of what constitutes parliamentary, party, electorate business.

So let’s start with first principles. In the business world, employees’ expenses are covered on work trips. The job of employers, or their human resources staff, is to monitor employees to ensure that the firm and its shareholders aren’t being ripped off through extravagance. Our parliamentary entitlement regime tries to ape this private sector practice.

But parliamentarians aren’t employees. They have no boss. Yes, when they’re ministers or parliamentary secretaries they report to the prime minister. But as representatives, they answer only to voters, and they only answer every few years.

In fact, parliamentarians are much more like sole traders, who, through an election, win contracts to represent us – to act as our agent in the legislature.

This is a distinctly unromantic vision of the work of a politician. But if we’re trying to figure out what politicians are “entitled” to we should first figure out what their job is.

This subtly amusing parliamentary fact sheet tries to derive the “job description” of a parliamentarian by observing how parliamentarians exercise their time. They do parliamentary work (voting, committee hearings), constituent work (pressing flesh, going to fetes) and political work (party conferences, branch meetings, scheming).

But just because politicians do a lot of things doesn’t mean we should pay for those things. We elect them to represent us in federal parliament, not to visit fetes. They might enjoy being local celebrities but why should we pay for them to campaign?

A few years ago my IPA colleague Sinclair Davidson spelled out in The Australian an alternative model for dealing with expenses. Politicians should be well paid – probably a lot better than they are now. But once they’ve received that lump sum, they should pay their expenses themselves, just like any independent contractor would.

Those expenses – not “entitlements”, expenses – would then be treated as work-related deductions. Under that model, if Bronwyn Bishop wanted a helicopter ride she would have declared it not to parliament but to the Australian Taxation Office in her 2014-15 return.

(Ministers’ expenses – who actually are employees of the government – would be strictly controlled but covered in the same way employees have their expenses covered.)

This model has many advantages over the present system.

First, it would keep expenses in check. It’s easy to be loose with taxpayers’ money. It’s harder to be loose with your own.

Second, it avoids the interminable debate about what counts as parliamentary or political expenses. Either way, it all constitutes work-related expenses for tax purposes.

Third, it leaves subjective questions of whether spending is extravagant to the politicians themselves. Bishop wants a helicopter? Up to her.

Fourth, it leaves the question of what constitutes work-related to the tax office. I said politics is a weird job but it is not so weird that the ATO wouldn’t be able to handle these questions. They have a lot of experience here. Anyway, we’re at the mercy of the tax office. Our representatives should be too.

And fifth, it would be a hell of a lot less complicated than what we have now. The Finance Department says there are 300 separate entitlement codes in the existing entitlement management system, belying the complexity and confusion that surrounds political compensation.

There’s a deeper problem revealed by the Bishop affair.

Tony Abbott has been eager to blame the vagueness of the rules about entitlement use for the scandal. But all that means is the current system rests largely on individual judgment.

And if our parliamentarians are unable to exercise their individual judgment in a way that accords with the expectations of voters, then we have a serious problem.

Politicians are expected to make some of the biggest decisions affecting our lives. We place them in positions of great trust to act on our behalf.

What does it say about representative democracy if our politicians don’t even have enough judgment to prudently and responsibly arrange their own travel? Nothing good.

Please, Just Give Us A Real Growth Strategy

Every once in a while something brings the nonsense of daily politics back down to earth.

Last week Reserve Bank governor Glenn Stevens suggested that the slow growth we have seen over the last few years might not be a temporary post-Global Financial Crisis aberration. It might, actually, be the new normal.

Rather than the three or so per cent growth each year we’ve come to expect, we might have to get used to 2 per cent GDP growth.

For Stevens, this lower growth is a hypothesis, not a prediction. But even so it’s a big worry. In the long term, lower GDP growth means lower living standards for everyone. There is nothing more responsible for our historically unprecedented prosperity than our relentlessly growing economy. Growth is critical. Growth is fundamental. A richer society is a happier, healthier society.

Even if your taste in economic philosophy is less free market than mine, growth is the foundation on which government social services are built. Growth pays for the National Disability Insurance Scheme and helicopter flights to Geelong alike.

We can debate how much tax the government should impose. But you can’t tax income that doesn’t exist.

Yet neither party has any idea – let along any proposal, plan or program – for how to boost Australian growth back up to three, let alone four per cent per year. They’re not even talking about it.

Given that the most effective way to bring the Commonwealth budget back to balance is to increase growth (and therefore tax receipts) this silence is all the more stark.

A quick survey of the economic proposals on the political table is disheartening. Labor wants to boost taxes on savings (cracking down on so-called superannuation “concessions”). The Coalition wants to boost taxes on consumption, by raising the GST and imposing it on online and digital transactions. Labor wants to tax greenhouse gas emissions again. New taxes are not pro-growth.

Tony Abbott was widely ridiculed a few weeks ago when he responded to a question on the Greek turmoil by referring to the Government’s grocery code of conduct. This was all very funny but Abbott’s tone-deaf response hinted at the much deeper issue facing the Government: it has no central economic agenda.

That the Government can propose higher taxes and proclaim its desire for lower taxes in the same breath isn’t a failure of messaging, it reveals an absence of purpose.

The deregulatory drive of the Coalition’s first year, as inadequate and insubstantial as it was, is now a memory.

And abolishing the carbon and mining taxes was good. But somebody is going to have to pull the Abbott Government aside and quietly tell them economic management is about more than righting the wrongs of the Rudd and Gillard governments.

What would a pro-growth strategy look like? It’s not like there isn’t any low-hanging fruit for governments to grasp.

Our absurd and anachronistic restrictions on foreign investment should be eliminated. Competition law should be liberalised and reformed to allow firms to take advantage of economies of scale. The four pillars policy – which prevents mergers between the big four banks – is unjustifiable on any grounds apart from populist anti-bank sentiment.

Business formation is a proxy for economic dynamism. We need regulatory and workplace law to encourage business start-ups, rather than hinder them.

Some of our largest and most potentially-innovative sectors are held back by bureaucracy and regulation. A pro-growth political platform would have healthcare reform at the centre. Innovation policy needs serious change so innovators can bring ideas to market sooner.

And given the importance of education to growth it is embarrassing that the debate over education policy has devolved into a squabble over a shrinking pool of government money. The last big idea implemented in education was the introduction of HECS in 1989.

A pro-growth platform would liberalise Australian trade barriers without waiting for multilateral or bilateral trade deals to endorse them.

And a pro-growth platform would look at the teeming mass of skilled and unskilled labour around the world and see opportunity, rather than threat. Economic powerhouses have been built on immigration. Australia, with our abundant space and stable institutions, is uniquely placed to attract their entrepreneurial energy.

The economist Mancur Olson once described the progress of human society as an accumulation of special interests who defend the status quo. A country slides into stagnation as more and more groups grab privileges that hold back necessary structural change.

Olson’s is a pessimistic story. Let me amplify that pessimism. Australian policy debate is constrained most by the tyranny of the status quo – a refusal by the political class to consider anything but the most moderate, marginal adjustments to existing policy settings.

It’s obvious that Canberra still believes it has the broad strokes right. After all, they think a grocery code of conduct counts as reform.

Perhaps in the parliamentary triangle it looks that way. Right now, all special interests are being nicely catered for. Rents are sought in an orderly fashion.

But, from outside Canberra, it looks like the economy is slowly grinding into stagnation, and our political class is apparently powerless to do anything about it.