December 2013 – Chris Berg

Australia’s March To Free Speech Has Begun

The High Court’s decision in Unions NSW vs New South Wales is one of the most significant decisions for democracy and human rights in Australian history.

It’s on par with the 1951 decision which quashed the Communist Party Dissolution Bill.

It reveals a High Court inching – slowly, reluctantly, unhappily – towards a full-blown recognition of the human right to freedom of speech and freedom of association: the sort of uncompromising liberties expressly found in United States’ First Amendment.

The decision was released just before the Christmas break. The High Court found that the New South Wales ban on organisations donating to political parties and third party political campaigning were invalid, as they violated the constitution’s implied freedom of political communication.

I wrote about the NSW laws in The Drum in February 2012. They were a disgraceful and transparent manipulation of the electoral system designed to cripple the Labor Party and its union-centred funding model.

Of course, like all disgraceful and transparent manipulations of the electoral system, they were dressed up in woolly sentiments about enhancing democracy and reducing corruption.

It is a rare law that can unite in opposition the union movement, the Institute of Public Affairs, and environmental groups (the law was particularly damaging for federated bodies like the Wilderness Society).

But it’s an even rarer law that can inspire the High Court to trigger its free speech veto.

In a series of cases in the 1990s the High Court discovered a ‘freedom of political communication’ buried (‘implied’) deep within the Australian constitution.

Of course, there are no words in the constitution that say any such thing, but in 1992 the High Court decided the freedom was in there.

The court’s reasoning went like this. The Australian Constitution is a democratic constitution. A democracy is predicated on the free flow of communication about political issues. Therefore the document is predicated on the existence of some form of freedom to talk about politics – a freedom of political communication.

But, as the High Court has always at pains to say since, that freedom is not a general right to freedom of speech for individuals. It’s not like the First Amendment. No, it’s about protecting political communication – and political communication alone – from legislative interference. There’s nothing in the Australian constitution to allow citizens to sound off on everything willy-nilly.

Over the past two decades, the court has kept its free speech lid screwed on pretty tight. In recent years it has declined to protect the speech of a group of sidewalk preachers in Adelaide, the Islamist Sheikh Haron, and Lex Wotton, one of the Palm Island rioters.

They’re probably worried where this whole implied freedoms thing will lead.

And rightly so. The court’s foray into the political philosophy of democracy is embarrassingly underdeveloped. Our constitution isn’t just a constitution for a democracy. It is a constitution for a liberal democracy – a country where free and morally autonomous individuals mutually consent to democratic government.

And that implies that those free individuals have rights as free individuals. Australian citizens are not just conduits for electoral debate. Adrienne Stone of Melbourne Law School makes this argument here. As she writes, there is a plausible – I would say fundamental and intrinsic – relationship between personal individual autonomy and liberal democracy. The former is the foundation of the latter.

If the High Court were to recognise this relationship, then the limited freedom of political communication could be transformed into a broader right to freedom of speech.

The constitution doesn’t only imply electoral democracy. It implies individual liberty.

Twenty years ago the judiciary committed itself to divining political philosophy between the lines of the constitution. Perhaps it should not have started down this path. But now that it has, it should go where the path leads.

The Unions NSW case suggests they might be doing so. It is remarkable for a number of reasons.

First, the court has decided that the freedom of political communication applies to the states as well. That’s a big deal. The previously strict bounds of the freedom are being pushed out.

The US Supreme Court only started imposing the First Amendment on state laws in the 1920s. Indeed, the First Amendment only really became ‘activated’ in the twentieth century. It had to grow into what it is today. Australian free speech rights are embryonic – but they’re heading in the same direction.

Second, the court recognised that money can be speech. The way we spend our money is sometimes a form of political expression. This apparently horrifies many people on the left. But it is obviously true. It takes money to buy a T-shirt with a political slogan on it. It takes money to publish a book. It takes money to host a website. To ban the money is to restrain the speech that money was to bring about.

The intuition that money and speech are related is why things as disparate as the proposed secondary boycott laws and the ban on David Hicks profiting from his memoirs are equally objectionable. They limit speech by regulating its financial side.

Finally, and most interestingly, the High Court’s decision quietly suggested something very important, even revolutionary: corporations have as much right to speech as anybody else.

Of course corporations are not people. Corporate personhood is just a legal construct to facilitate contracts and lawsuits. Stop hyperventilating.

But corporations are made of people.

And just because people get together to form organisations doesn’t mean they lose their rights once they have. As the Unions NSW case suggests, businesses, unions and non-profit groups have much in common. They are all voluntarily formed by individuals to achieve a collective goal. All legitimately participate in political life.

This is one of the reasons that the US Supreme Court is coming around to an understanding that there is no clear, coherent distinction between ‘commercial speech’ and regular speech.

Of course, Americans have a rich body of case law explaining the extent and limits of the First Amendment. Australia’s free speech corpus is fragmented and arbitrary, and cripplingly limited by the High Court’s reluctance to follow its own logic where that logic leads.

So it’s still not totally clear what our freedom of political communication actually means. But after the Unions NSW case, we know that, whatever it means, it means a great deal.

A Time To Be Thankful For The Market Economy (Really)

The State Library of Victoria holds an engraving from 1865 titled ‘Christmas in Australia’. About two dozen people, presumably an extended family, are having a Christmas picnic in what appears to be Ferntree Gully in Victoria.

At first glance, their Christmas is not too different from ours. Food, family, the outdoors; it looks lovely.

But the celebration depicted in the engraving would have been an enormous, expensive, time-consuming, and overwhelming logistical task.

Ferntree Gully is more than 30 kilometres from the Melbourne CBD, and in 1865 almost everybody lived in what we now think of as Melbourne’s innermost suburbs – Richmond, lower Carlton, North and West Melbourne.

We can see three horses and in the distance a carriage. That wouldn’t have been enough for 20 people. And carriages cost a lot of money.

The journey to Ferntree Gully would have taken hours along very poor dirt tracks. They would have had to bundle up everything: children, rugs, sporting equipment and pets. To say nothing of the food, which would have to be kept safe. (Well, maybe. This was before widespread understanding of the germ theory of disease.)

The journey probably started the day before. Hence the tent in the background.

When we think about how our lives differ from our ancestors, it’s easy to focus on the big things: television, telephones, cars, and electricity.

That is, consumer comforts. The stuff that makes individual life less arduous.

But we forget how economic growth and technological change has made our relationships closer, easier, and cheaper to maintain.

A century and a half later, the classic Australian Christmas is no longer a trip to the bush but a suburban backyard barbecue. That change has only been possible thanks to the market economy and consumer society.

How? Let’s take it one word at a time. Suburban, backyard, barbecue.

Obviously, Australia’s sprawling suburbs rely on cheap ubiquitous motor transport. (Trains and trams can only service a few kilometres either side of their tracks.) A short trip to the developing world should be enough to demonstrate that car ownership indicates wealth.

Backyards, too, are a sign of prosperity.

As the food historian Barbara Santich points out, it was relatively recently – that is, after the Second World War – that backyards were turned over from home food production and gardening to leisure. The reason was affluence, as well as the convenience and availability of supermarkets.

Hence, the 1865 journey to Ferntree Gully. The Australian backyard of our ancestors was an economic asset, not a social setting.

This remained the case well into the twentieth century. A short book from 1928 explains to Britons the difference between Christmas in Australia and in the mother country. The book tells the story of the “long trek” taken by Australians on Christmas Eve to the mountains and the sea. Cars would be heavy loaded with tent-poles and gramophones and food. And, of course, spare tyres. Celebration would start at dawn the next day.

Finally, the barbecue. The barbecue is a remarkably recent invention. Its pre-war equivalent was the “chop picnic”, where meat was cooked on a small fire in the ground. The figures in the background of ‘Christmas in Australia’ are probably having a chop picnic.

When backyards were freed up, Australians started building permanent barbecues out of brick fuelled by firewood. (Nobody wants an open fire in their backyard.)

The free standing portable metal barbecue fuelled by a gas bottle became prominent in the 1970s. Gas barbecues are better in almost every way: they’re cleaner, heat faster, and, as they cool down rapidly, they’re safer too. It was only thanks to better materials, cheaper energy and technological innovation that the free standing gas barbecue became the Australian norm.

And of course, they’re still getting cheaper. The 1978 barbecue shown here cost $670 in 2012 dollars. These days you can pick up the same thing for $90 and a gas bottle for $30.

So our traditions change according to our prosperity. Our relationships do too.

That family in Ferntree Gully 150 years ago were – as European settlers – at least a four-month journey on an iron clipper ship away from the family they may have left behind. Communicating with their relatives by letter would have taken twice that.

In the 1930s the situation was much better. An Australian wanting to travel to Europe could have flown. But aviation was in its infancy. The flight would have been extremely high cost – far too high for a mere holiday – and taken more than a week.

Today we can cross the planet in 24 hours. And, with the internet, communication is instantaneous. That technological change has made seeing and appreciating our family much cheaper.

The cost of sending a gift to a family-member across the other side of the world by sea freight has declined by two thirds between the 1930s and 2013.

Flights to see family members are a tenth of what they were.

An international phone call is one 100th of what it was 85 years ago. If we use Skype, it is effectively zero-price. Letters, too, cost nothing online.

Australia is a very rich country – one of the richest in human history.

And there’s no better time to reflect on how that wealth has made it easier to have stronger relationships than Christmas.

The Coalition’s Budget Decisions Are All Its Own

There was a disturbing detail in a Dennis Shanahan piece earlier this month. Describing concerns within the ministry about the performance of the government, Shanahan wrote, “It’s fair enough to argue that ‘getting to Christmas’ is all that matters now.”

“Getting to Christmas.” Almost an exact mirror of the motif of the Gillard Government, that “clear air” was just around the corner.

Labor was a tired government trying to be optimistic. By contrast the Abbott Government should be – and is – a fresh new government facing many years at the helm.

Not every government is treated to as much wall-to-wall coverage of its hundred day anniversary as the Abbott Government has been. But then, not every Government has had to learn so many lessons in as short a space of time.

One of those lessons is “try to avoid having former National Security Agency contractors leak Powerpoint presentations of Kevin Rudd-era surveillance missions on Indonesian politicians”. But too much of the Government’s pain has been self-inflicted.

The expenses scandal didn’t have to hurt. Yet the government let it stretch for more than a month by refusing to engage.

The Gonski episode – let’s be tactful and call it an ‘episode’ – undermined the Government’s most core promise: that it would not break promises.

But probably the most damaging was Joe Hockey’s decision to deny foreign investment to GrainCorp.

This decision stunk in many ways. First, it suggested that the Nationals tail was wagging the Liberal dog. Second, it implied that the Government’s interest in economic reform was casual at best.

And finally, it showed that the Coalition was no better than Labor for business. It was just as willing to play politics with the economy, and completely unwilling to stand against Australia’s universally reviled foreign investment central planning.

The GrainCorp decision would not have cost the Government any votes. But it cost a lot of goodwill. The Wall Street Journal excoriated the government in an article titled “Tony Abbott’s protectionist retreat”. Even worse was the subtitle: “Australia appears to be closed to some kinds of business.”

GrainCorp has a silver lining. The fallout made it much less likely that the Government would increase car subsidies or buy out Qantas. The Coalition’s free market wing would not be able to stomach that.

After all this drama, it’s no mystery why Tony Abbott’s Government looks older and more tired than it is.

When the Government first came to power, Coalition spinners proclaimed Abbott wanted to slow down the news cycle, keep politics off the front pages, and restore calm to national political life. Unlike his Labor predecessors, the Prime Minister would only talk when he had something to say.

This plan was fundamentally misconceived. The news cycle isn’t something that can be sped up or slowed down from Canberra.

It wasn’t the Prime Minister’s Office that built the content-hungry 24-hour news networks. The Prime Minister’s Office hasn’t been hollowing out the newspapers’ ad revenue base. Nor is it to blame for the technological change that moved our news consumption online and created the demand for a constant flow of information.

No, the 24-hour news cycle was not Kevin Rudd’s fault.

Don’t get high on your own supply. It’s a saying that applies as much to political spin as it does to selling drugs. And it’s a saying worth remembering as the government tries to manage its way through today’s release of the Mid-Year Economic and Fiscal Outlook.

Getting the budget under control is the central task this government was elected to perform. More than stopping the boats, and more than the carbon tax, it was Wayne Swan’s budget mismanagement which created the aura of policy dysfunction emanating from Labor.

But now the Coalition is talking, as it did at the tail end of the election campaign, about being unable to get the budget into surplus for another decade.

If that turns out to be the case – if the Coalition run deficits for 10 years, longer than the Labor government did – the failure won’t be Wayne Swan’s, it will be Joe Hockey’s.

MYEFO is not “Labor’s last budget statement”, as the Prime Minister claimed yesterday. It is the Coalition’s first.

The Government has been on the back foot virtually since it was sworn in. Its agenda was set by Julia Gillard and Kevin Rudd: boats, debt, carbon tax.

And fair enough, of course, at such an early stage in the electoral cycle. But its fixed agenda has left them struggling with the issues like foreign investment, car subsidies, and education.

What sort of government will the Abbott Government will be? Unfortunately, after 100 days, that has become more uncertain.

Scrapping The Debt Ceiling Is No Victory

Sometimes great things happen by accident. The debt ceiling was one of those things.

Back in June 2008, then-assistant treasurer Chris Bowen pushed through Parliament the obscurely named Commonwealth Securities and Investment Legislation Amendment Bill.

The worry at the time was that the demand for Australian government debt was out-stripping the supply. (The past is another country, as they say.)

There were only $50 billion worth of Treasury bonds on issue, and the financial sector wanted more. So the government complied. But, as this was the era in which Kevin Rudd was an economic conservative, the government put an economically conservative cap on the increase: $75 billion.

Thus was born the debt ceiling. It had a short and unhappy life.

The ceiling was bumped up to $200 billion to accommodate the big stimulus package in February 2009, and bumped up again in 2012 to $300 billion.

Yesterday, the Coalition government and the Greens abolished it entirely.

This makes sense from the Greens, for whom fiscal prudence is not one of the higher political virtues. But the Coalition has spent the past half decade banging on about debt and deficit. And now they have eliminated one of the few tools to get the budget under control in the long term.

The debt ceiling was a rare example of a fiscal rule in Australia, an explicit constraint imposed on the government’s financial power.

The purpose of a debt ceiling is to fight the natural proclivities of government to run persistent deficits. There’s every incentive in politics to spend money but very little to save it. I explained this dynamic in the Drum during the election campaign. Because spending is popular and taxing is not, deficits are the inevitable result.

Yes, the debt ceiling wasn’t much of a ceiling. It didn’t stop government spending more than it earned. Labor raised it twice, and – if the Greens had not pushed for its abolition – the Coalition would have raised it again.

But that’s not the point. A debt ceiling is an assurance that going further into debt has at least some political cost. It helps at the margin.

And in that sense, Australia’s debt ceiling was very effective. From the opposition benches, Joe Hockey and Tony Abbott tore strips off the hapless Wayne Swan when he raised the limit in 2012. It confirmed everything the Coalition had been saying about the irresponsible Labor government. Swan would not have enjoyed asking Parliament for his increase. The debt ceiling helped keep his budget troubles in the news.

Australian politicians like to say Parliament should be supreme and sovereign. It has been claimed in recent weeks that a debt ceiling is somehow anti-democratic – Parliament has an absolute right to spend as it sees fit without any roadblocks being placed in its way.

Well, they would say that.

But that this argument has been seriously entertained across the political spectrum goes to show how poorly the commentariat understand – or are even aware of – elemental political theory.

For one, such an argument gives the legislature a moral authority it does not deserve. Governments need rules which govern their operation. A government without rules is an autocracy.

That’s what constitutions are for. The Commonwealth Constitution is really just a long list of things the government can and cannot do.

Some fully democratic constitutions place even stricter limits on what democratically elected politicians may do. The Bill of Rights in the United States constitution violates the sovereignty of the legislature by preventing politicians from interfering with the liberties of its citizens. That’s no bad thing.

A bill of rights and a debt ceiling are both imposed to keep a government from doing things that governments tend to do: restricting liberties and spending more than they tax.

No wonder governments are reluctant to adopt such rules.

The US debt ceiling has been raised more than a dozen times since 2001. It has been a constant focus of intense partisan wrangling and brinkmanship. Every time the ceiling is approached, the Congress and White House go into crisis mode.

This is how it should be. The periodic battles over whether to raise the debt ceiling are the only time in which the Congress and White House seriously come to terms with how badly they have ravaged US government finances over the past decade.

The debt ceiling isn’t to blame for this chaos. No, the real crisis is that caused by the Bush and Obama administrations’ financial gluttony.

Abolishing the American debt ceiling would only allow US politicians to pretend the debt problem doesn’t exist. Just as abolishing the Australian debt ceiling has released some of the pressure on the Coalition to get the budget back into line.

And if there isn’t enough pressure, it simply won’t happen.

Coastal Shipping Reform: Industry Saviour or Regulatory Nightmare?

With Aaron Lane

Executive Summary: On July 1 2012, the Gillard Government passed the most extensive suite of changes to coastal trading since the Navigation Act 1912 in the form of the Coastal Trading (Revitalising Australian Shipping) Act 2012 and its associated Acts.

They come on top of the Fair Work Act 2009, which imposed Australian labour standards on foreignregistered ships operating with foreign crews in the Australian coastal shipping trade.

The combination of these changes have negative effects for the Australian economy and for Australian businesses and consumers.

These changes are intended to reduce the number of foreign vessels currently carrying coastal freight, and to make Australian ships more competitive. They do so by significantly increasing the regulatory burden on foreign-flagged ships.
Foreign-registered ships temporarily operating on the coastal trade must undertake at least five voyages in twelve months, and the loading dates, origin and destination, cargo types and volumes are specified at the start of that period.
Foreign-registered ships can only carry cargo if there are no Australian-flagged ships (or foreign-flagged ships transitioning to Australian flags) that can do so.
Foreign-flagged ships carrying foreign crews have to pay Australian award wages, which are far in excess of International Transport Workers’ Federation rates.

These changes are aimed at encouraging the use of vessels that employ solely Australian resident crews. In doing so, the changes have the effect of significantly reducing the flexibility in the coastal shipping trade, and squeezing foreign-flagged ships out of the market. As a result of the 2012 changes alone, the net present value of the coastal shipping industry’s net economic benefit to the Australian economy is between $76 million and $150 million less than it would be in the absence of these changes.

It is clear that the changes will increase transport costs. This could result in bulk commodities being sourced from cheaper overseas markets, thus negatively affecting Australian commodity producers.

Increased transport costs could also be passed downstream to consumers. This paper examines the broader economic effects that seem likely to arise as a result of these changes.

Finally, this paper asks what ought to be done about coastal shipping. It concludes that a marketdriven, open regulatory framework should instead govern Australian shipping, and it calls on the Abbott Government to implement changes as a matter of priority.

Available in PDF here.