Time To Tell The Truth About 2020

In his book The Fear and the Freedom ― Why the Second World War Still Matters, the historian Keith Lowe writes about how the nations and individuals who survived through war coped with the emotional consequences of their trauma.

They did two things.  First, they tried to forget what had happened.  Then, what they couldn't forget they created myths about.  The myths and stories they told themselves might have an element of truth, but they were just as likely to be a consequence of individuals wishing for something to have occurred, when in fact it didn't.

The "Spirit of the Blitz" is one such myth.  As is now well-known, in 1940 there was no coming together in the face of shared hardship, rich and poor alike, of the British people in the face of the Luftwaffe's bombs.  The wealthy fled to the countryside or sought refuge in their private bomb shelters while vast sections of the population, particularly in London, were left unprotected.

When King George VI visited the East End in September 1940 he was booed.  An intelligence report of the time from the Ministry of Information recounted the widespread sentiment of East End residents ― "it is always the poor that gets it".

As 2020 draws to a close, many Australians have indulged in their own forgetting and myth-making about how the nation responded to the crisis of COVID-19.

To begin with, the claim "we're all in this together" is not true ― and never was.  The loudest supporters of community lockdowns and business closures weren't affected by any of the policies they were demanding be implemented.  At the same time as Australians working in the private sector were losing their jobs at the rate of 3500 positions a day, the government was employing the equivalent of an additional 100 public servants daily, while ABC employees were voting themselves a pay rise.

During 2020 there wasn't much notion of equality of sacrifice.  The soon-to-be $1 trillion of federal government debt, most of it incurred to pay for the costs of shutting down the economy, won't be paid for by the current generation of taxpayers.

In 2020 many Australians revealed themselves to be willingly obedient to the arbitrary and draconian actions and decisions of politicians and public servants.

In Victoria, Parliament was suspended, basic democratic rights such as freedom of speech were abolished, and the police force was politicised.

The suggestion from much of the Melbourne media that what occurred in the state is somehow a triumph of the collective spirit of Victorians is laughable.  The Victorian government presided over the biggest public policy failure in peacetime in Australian history and then required Melburnians to be locked in their homes for 23 hours a day.  The mental health toll of what happened in the state will not be known for a decade.

This week the Victorian Ombudsman came to the blindingly obvious conclusion that at 4pm on July 4, when 3000 Victorians living in public housing towers were told without any notice or warning whatsoever that from that moment they were forbidden to leave their apartment, that those residents' human rights were violated.  Some of those residents were confined to their apartment for two weeks.

The cruelty of the border closures imposed by the Queensland and West Australian governments was a price voters in those states have seemingly been willing to pay.

When Queensland's Chief Health Officer, who after all is nothing more than a public servant, admitted she ordered schools to be closed to make a political point, even though as she said "evidence showed schools were not a high-risk environment for the spread of the virus", her remark passed largely unnoticed.

In 2020 Australians discovered that when governments sacrifice children's education for the sake of "messaging", to use the term the Chief Health Officer used herself, they will be rewarded with electoral success.

Not everything governments did in 2020 to manage the COVID-19 crisis was wrong and unnecessary ― but the reality is that there is a lot more to regret, if not to be ashamed of, than to be proud of.  When the story of 2020 is told Australians deserve the truth ― not myths.

Modern Labor's Forgotten Workers

What ACTU boss Sally McManus said about blue-collar workers at the National Press Club a few days ago doesn't quite compare with Hillary Clinton describing Donald Trump's supporters as a "basket of deplorables".

But the comments from McManus, nonetheless, provide an insight into the priorities of the ACTU and show how far removed from the opinion of mainstream Australians the union movement has become.

The ACTU used to help Labor get elected to government.  In 2007 the ACTU's campaign against WorkChoices was pivotal to Kevin Rudd's electoral success.  Today unions might still provide Labor with the money and the arms and legs for election campaigns, but the policy preoccupations of the unions' leadership increasingly reflect the concerns of a far-from-representative cohort of the Australian population.

To be fair, McManus was not talking about blue-collar workers as such, for in the context of the debate about the Labor Party's policy on climate change, McManus described the focus of the as-yet-undeclared Labor leadership aspirant, Joel Fitzgibbon on the employment of blue-collar workers as "narrow" and "old-fashioned".

McManus said "Climate change is not an issue that affects just one group of workers ... In many different ways, a whole lot of industries like our tourism industry and others, are going to be affected by climate change.  So whenever we narrow our thinking and we have some idea, old-fashioned idea actually, of blue-collar workers, we are really narrowing who are talking about because climate change affects everyone."

McManus might think the idea of "blue-collar workers" is old-fashioned, but there's at least one million Australians employed in blue-collar jobs.

It's difficult to imagine Scott Morrison talking of blue-collar work as "old-fashioned", which goes some way to explaining the extraordinary result of an opinion survey reported in these pages on Monday.

In a poll in eight Labor-held seats in suburban and inner-regional areas in Queensland, NSW, Tasmania and Western Australia when voters were asked which party was represents "working Australians" 46 per cent of voters said the ALP and 38 per cent the Liberal Party.  That's not an overwhelming outcome for Labor, given it regards itself as the party of the workers.

There was another interesting survey reported this week.  A poll of 1000 Australians conducted by JWS Research showed that Labor's climate change wars are fascinating to party insiders but not very relevant to anyone else.

When people were asked to name three issues that personally interested them and that the Australian government should focus on only 19 per cent of those surveyed replied "the environment-climate change".  Or put another way, climate change is not one of the three most important issues to 81 per cent of Australians.  That is hardly the sort of finding one would expect given the media attention devoted to the topic.

Hospitals, health care and ageing, the economy and finances, and employment and wages are the issues Australians are focused on and will be for sometime yet.

The Morrison government is not one for enacting sweeping philosophical ambitions or developing grand narratives of political economy.  However survey results such as these demonstrate the scope for the Coalition next year and beyond to reshape the country's political and policy landscape.

The development of an agenda for industrial relations reform that's presented, not as a productivity-enhancing measure as was WorkChoices, but as a way to get more Australians into work should not be beyond the capacity of the Coalition.

Similarly, if the Coalition does decide, as it should, to try to repeal the legislated increases in the superannuation guarantee, it will face a ferocious onslaught from the Labor Party, the ACTU and the superannuation industry ― but it's a fight the Coalition can win if it is presented as a necessary response in a post-COVID world.

While Labor spends its time talking to itself about climate change and to the 19 per cent of Australians concerned about the issue, the Coalition is talking about jobs.

In all likelihood if Australians were surveyed and asked to name one economic policy of the ALP they would say opposition to tax cuts.  The reality is that at the moment, as Labor MPs such as Fitzgibbon, and Chris Bowen have basically acknowledged, Labor has nothing much to say to the workers of Australia, whether they're blue collar or not.

Why The Liberals Need A Better Labor Than The One They've Got

It was 13 years ago last week Kevin Rudd as the then-Labor opposition leader announced ‘This sort of reckless spending must stop'.  He said it at the launch of the ALP campaign for the 2007 federal election in response to the claims the Coalition's election promises were extravagant "middle-class welfare".

Unkind critics of Rudd might say that was one of his few positive contributions to Australian public policy.  Rudd succeeded in changing the narrative of the economic debate in the country ― at least until the onset of the GFC.  Whether he actually ever was the "fiscal conservative" he made himself out to be will be is one of the mysteries of Rudd's prime ministership.  As a "fiscal conservative" Rudd won an easy election victory a fortnight later, and after a few months in The Lodge had a 71 percent approval rating.

It's a measure of how much Australia has changed in 13 years that today it's impossible to conceive of any opposition leader, or for that matter any prime minister or premier winning the popular vote by criticising, to use Rudd's words, their opponent's "irresponsible spending spree".

"Irresponsible spending sprees" aren't affordable at the best of times, but they were a lot more affordable in 2007 than they are now.  Then, Australian government gross debt to GDP was 9.7 percent ― now it is 45.1 percent.

The point is that opposition leaders can sometimes be useful.  And sometimes they can influence the terms of the debate.  Occasionally opposition leaders can be too successful in shaping the policy conversation.  John Hewson in 1993, and Bill Shorten in 2019 made themselves and their policies seemingly the central issues of the elections they were fighting.

If Albanese's performance is judged solely against the two-party preferred polls he's not doing poorly, for Labor is within a few percentage points of the Coalition.  But while the Coalition has to guard against arrogance, there's not a Liberal or National MP who doesn't believe, all things being equal, that when Albanese is confronted on the election trail by as formidable a campaigner as the Prime Minister, Labor's chances will wither and die.

The problem for Labor, and the problem for good policy-making in Australia is that at the moment Albanese is the wrong person for the job.  It's understandable why he does it, and it's because he thinks his constituency wants him to do it, but on nearly every major policy issue Albanese equates the government spending more money with "reform".

"Childcare" now appears to have become Labor's signature policy area and Albanese's "reform" amount to the area amounts to removing the $10,560 annual subsidy cap.

On Wednesday, the Reserve Bank of Australia governor Philip Lowe gave a speech urging the Morrison government to undertake "big-signature moves" to boost productivity.

What Lowe said is not entirely wrong ― even if there's nothing easier than telling someone else what to do.  In this case though the Coalition is the wrong target.  It's the Labor Party that's the problem.  The sort of "big-signature moves" Lowe is talking about, and in particular industrial relations reform that Lowe singled out would most likely be completely opposed by Labor.

The Coalition hasn't yet recovered from the ALP/ACTU WorkChoices campaign against John Howard in 2007.  The paradox is that neither has Labor.  The ALP seems to be forever looking for that WorkChoices magic elixir to deliver it into government again.  That elixir is elusive, which explains why the ALP has lost the last three federal elections.

Albanese was a minister for six years and been in Parliament for nearly 25 years.  From time to time he's had some not-uninteresting ideas but it would be a stretch to describe him as a policy "reformer".  Albanese is best known for his remark:  "I like fighting Tories.  That's what I do".

It might be that what Labor needs, and indeed what Australia needs is a leader who likes fighting Tories a bit less and who likes policy a bit more.

After all, a few months after becoming prime minister, the last Labor leader to win government from opposition was described in The Sydney Morning Herald as proving "you can be a policy geek, and win".

America Is Losing Its Wall Against The Authoritarians

A few days ago Alexander Downer wrote on these pages that if he were American he would have voted for Donald Trump ― but through gritted teeth.

My view is different from Downer.  I would have voted for Trump eagerly and enthusiastically.  You could argue that in 2016 there were arguments for both Clinton and Trump.  Not this time.  In 2020, the case for Trump was overwhelming ― although based on the likely election result, it looks like a majority of the American electorate didn't have quite the same assessment.

Usually when people complain about Trump's personality it's because they refuse to acknowledge the success of his policies.  In October last year, unemployment in the United States was at its lowest level in 50 years.  Trump did more for the job opportunities and economic empowerment of minorities in America than any president since Reagan.  At this election, it appears Trump won a greater share of the minority vote than any previous Republican.

Critics complain about Trump's rhetoric on China but they never explain what they would do differently in the face of an authoritarian and imperialist power.

The suggestion that Trump is some sort of vandal of constitutional propriety is a meme of a media that refuses to countenance that the Democrats might mean what they say and attempt to stack the US Supreme Court.

However, the main reason why I'd have voted for Trump was not because of economics, it was because of cultural values.  Trump offered an alternative to the ideology that started on college campuses and is now engulfing the country that defines individuals according to their race, that regards the democratic political process as a tool of oppression, and uses violence to shut down freedom of speech.

American historian Anne Applebaum in a thoughtful article a week ago in The Atlantic titled 'The Answer to Extremism Isn't More Extremism' asked why 'educated conservatives', who knew Trump's faults would still vote for him.  As she correctly noted, many conservatives, 'educated' or not, are deeply concerned by intellectual trends such as 'an intolerance of opposing views, a vogue for public shaming and ostracism, and the tendency to dissolve complex policy issues in a blinding moral certainty'.

Many conservatives believed that re-electing Trump while not a complete answer to all of this, would have been a start.

According to Applebaum:  "Anyone who actually cares about academic freedom, or the future of objective reporting, or the ideas behind the statues built to honor American democrats in the country's public squares, must hope that Trump loses.  If he win a second term, extremism on the left will not be stopped."

As one of the world's leading historians of authoritarianism and communism, it's perplexing that Applebaum would advocate a form of cultural appeasement.

"I hope that educated conservatives think hard about what will happen if Biden's moderate-left campaign fails:  It is extremely unlike that its adherents and spokespeople will shrug their shoulders and decide that, yes, Trump is right after all.  They are much more likely to move further to the extremes.  Americans will witness the radicalization of the Democratic Party, as well as the radicalization of the powerful and influential intellectual, academic, and cultural left, in a manner that we have never before seen."

It's interesting to speculate whether before the election there was anyone in America urging 'educated progressives' to vote for Trump to avoid the radicalisation of the Republican Party and the intellectual, academic, and cultural right.  Probably not.

Yet for all the potential consequences Applebaum describes of a Trump victory, 68 million Americans nevertheless voted for him;  72 million Americans voted for Biden.

Many commentators before and now after the election have spoken about how deeply divided is America.  That's true.

But many 'educated conservatives' would respond that a country or a community or a family is only as divided as it wants to be.

An 'educated conservative' who voted for Donald Trump would ask what side of politics it was sowing the seeds of division.

The interest of an Australian in the culture wars of America's universities, sports fields, and boardrooms is that inevitably what begins in Berkeley, California ends up in Ultimo, Sydney.

Premier Dan Andrews Divides Victorians Down The Middle

Maybe a majority of Victorians once supported Premier Daniel Andrews and his management of COVID-19 ― not any more.

Victorians are now divided exactly down the middle.  Any sense of community unity and "we're all in this together" has long since disappeared.

Victorians have witnessed first-hand what arbitrary and naked power looks like.  They've seen how a government that rewards its friends and punishes its enemies operates.  In Melbourne, if your job was mowing lawns and you belonged to a trade union the government allowed you to work.  If, however, you did exactly the same job but were self-employed you weren't allowed to work.

When Kevin Rudd attempted to introduce his mining tax there was a lot of discussion about "country sovereign risk".  After what's happened in Victoria "state sovereign risk" is now a real issue.  The Victorian government's contempt for the private sector is demonstrated by the fact Andrews has said he hasn't even read the letter from the chief executives of seven of the country's largest employers urging the state to be reopened.

Earlier this month I commissioned an opinion poll of 1000 Victorians.  When asked to respond to the statement "Daniel Andrews has mismanaged the government's response to COVID-19 and should resign", 41 per cent agreed, 41 per cent disagreed, and the rest were undecided.  Responding to the statement "Daniel Andrews does not understand the impact of his restrictions on ordinary Victorians", 42 per cent agreed, 42 per cent disagreed, with the rest undecided.

Clearly the Andrews government still has support, but it's not overwhelming.  The mystery to Andrews' polling numbers is not why are they now starting to turn, but why they had been so strong for so long.  The much-discussed Melbourne version of "Stockholm syndrome" might be one explanation.  Another might be that, quite understandably, Victorians have not wanted to admit to themselves they've been duped.

In April, Andrews spoke about the need to impose lockdowns to "flatten the curve" of infection to avoid a "pandemic peak" and have Victoria's hospitals overwhelmed, and the number of intensive care unit beds in the state was increased from about 450 to 4500.  He said, "Everything we do now gives us vital time to prepare our health system for what is to come."

DEEP GENERATIONAL DIVIDE

According to the federal Department of Health, two days ago 10 Victorians were in hospital with COVID-19, and none of them were in intensive care.  In fact in the entire country, 16 people were in hospital because of the virus, with one of those being in intensive care in New South Wales.

The response of Victorians to the statement "The lockdowns were necessary and justified early on, but now they have gone too far" reveals a deep generational divide:  48 per cent of respondents agreed, 35 per cent disagreed, and 17 per cent didn't have a view.

But across the age groups of 25-34, 35-44 and 45-54, those who agreed with the statement were a clear majority.  A result that closely corresponds to what we know about the economic and mental health effects of the lockdown.  Fifty-seven per cent of those aged between 25 and 34 thought the lockdowns had now gone too far, while only 26 per cent disagreed.  In comparison, for those aged between 55 and 64, only 38 per cent agreed and 46 per cent disagreed.

When he was re-elected Premier in November 2018, Andrews declared he led "the most progressive government" in "the most progressive state in the nation".

The numbers released this week by federal Treasurer Josh Frydenberg on unemployment in Victoria provide a devastating commentary on the success or otherwise of "progressivism".  Victoria's effective unemployment rate is 14 per cent, compared with 7.5 per cent in New South Wales and the national average of 9.4 per cent.  Victorians are 26 per cent of the country's population, but 40 per cent of the country's effectively unemployed.

When Frydenberg called on the Andrews government to reopen Victoria he wasn't "playing politics" ― he was speaking for every Victorian who doesn't enjoy the luxury of a taxpayer-funded guaranteed income.

Maybe Victoria is an advertisement for "progressivism" like Venezuela is an advertisement for "socialism".

This Massive Debt Is With Us Till 2080

"Insouciance" is a word Australians don't use very often.  Maybe we should.

It perfectly describes the popular reaction to this week's federal budget and the news the country faces more than a trillion dollars of government debt.

Australians are also insouciant about the jobs of a quarter of the nation's workforce now being dependent on wage subsidies from the government.

And the Coalition seems insouciant about the political consequences of government spending going from $549 billion and 28 per cent of GDP in 2019-20 to an estimated $677 billion and 39 per cent of GDP in 2020-21.

To be insouciant is, according to various definitions, to be "apathetic", "carefree", "unconcerned", and "with no feelings of worry or guilt".  That's been the prevailing attitude to the national economy for the past decade, and it looks set to continue.  It's an attitude that's the product of 29 years without a recession.

To take the last point first, eventually it's going to dawn on the Labor Party, as it already has on the Democrats in the United States, that such massive increases in government spending can pave the way for the introduction of a universal basic income (basically a non-means-tested guaranteed government welfare payment for every adult).  A universal basic income is already advocated by the Australian Greens.

Leaving aside the philosophical arguments against the concept, the biggest hurdle to its implementation is what it costs ― if it were paid at the rate of the minimum wage, it would cost at least an additional $100 billion a year in government spending.

Before March, that was an astronomical sum.  Now, not so much.  A universal basic income is a lot closer to reality than it was six months ago.

With the Coalition for all intents and purposes guaranteeing the government would pay at least part of the wages of workers who would otherwise have been unemployed because of COVID-19, it's now not that big a step for Labor to guarantee a "wage" to everyone, whether in work or not ― which is the "income" part of the universal basic income.  (The genius of the left is in describing a welfare payment not as "welfare" but as "basic income".)

BASIC INCOME PLAN COULD CHANGE THE DEBATE

As soon as the ALP declares itself for a universal basic income, all the contours of the country's political debate will change.  Labor will be seen to have a plan, and it will take the policy initiative.

Meanwhile the Coalition will be left attempting to explain why, if it's already willing to increase government debt by hundreds of billions, it doesn't want to borrow just a little bit more to provide an adequate standard of living to the hundreds of thousands of Australians, especially young Australians, whose job prospects and futures have been blighted by the pandemic.

My analysis following the release of the budget reveals that even on the most optimistic assumptions, the federal government will not pay off its debt until the 2080s ― even if future governments wanted to.

While interest rates are less than 1 per cent, it's easy to be insouciant about the consequences of gross debt at more than 50 per cent of GDP.  To expect interests will stay at their current level for the next 40 years is as heroic an assumption as that made by Treasury when, in preparing this year's budget, it assumed "a population-wide Australian COVID-19 vaccination program [would be] fully in place by late 2021".

To all of this the Prime Minister and Coalition ministers respond, not completely unreasonably, "What's the alternative?"

Many of the government's fiscal measures are appropriate and are necessary to maintain the country's social and economic fabric ― especially in the face of mismanagement and parochialism on the part of state governments.

An additional $100 billion of government spending could have bought a lot of reform.

Income tax scales could have been properly flattened, social security could have been redesigned to focus on getting people into work, and state governments could have been given the fiscal incentives to cut their red tape.

The problem with the 2020-21 federal budget is not even so much what's in it.  It's what's not in it that's the problem.

It remains to be seen for how long Australians will be insouciant about their country's economic condition.

Why I Was Right About Victoria's Police State

At the beginning of April, I wrote in these pages that Labor Premier Daniel Andrews, in response to COVID-19, had created a "police state" in Victoria.  The column ran with the standfirst:  "Economic devastation, house arrest and a police state.  Surely there could have been a better way."

I described how under Andrews the most extreme home detention laws in the country had been enacted and enforced without public debate or parliamentary scrutiny, and how the government regulations that controlled every aspect of Victorians' lives were being made and then changed, literally "hour by hour at the whim of politicians and bureaucrats".

In April, Victoria ― and indeed the whole country ― was still gripped by the fear of a virus about which little was known.  Six months ago, as politicians, scientists and the media stoked that fear, those who expressed concerns about the impact of what governments were doing to control COVID-19 on the rule of law and individuals' human rights were dismissed as "irresponsible", and worse.

Hugh Riminton, the national affairs editor of 10 News First, claimed that to question the Victorian government was "dangerous" and "ignorant".

In April, according to Newspoll, 85 per cent of Victorians believed that Andrews was handling the coronavirus "well", compared with 10 per cent who believed he was handling it "badly".  With such approval ratings, it's little wonder that at the beginning of the crisis the media and those organisations claiming they are concerned about human rights applied so little scrutiny to Andrews.  It would have been unpopular.

In June, 10,000 people in Melbourne broke the law to assemble and protest for the cause of Black Lives Matter.  The Victoria Police, for all intents and purposes, endorsed the protest and no one was arrested.  Three of its organisers were later each issued a $1652 infringement notice.

Those who argued a dangerous precedent has been set, as the police appeared to be willing to treat the government's political allies one way and its opponents another way, were largely ignored.

And so it came to pass that three weeks ago Zoe Buhler, a pregnant mother, was arrested and handcuffed by three police officers in her home, in front of her two infant children, in Ballarat and charged with the crime of "incitement", not because she had actually breached any of Victoria's health regulations, but because she had dared express her support on her Facebook page for an anti-lockdown protest.

If Buhler is convicted she will have a criminal record and be liable to a $19,000 fine.  Dozens of anti-government protesters have been arrested by Victoria Police in the past month.

All of this is the context in which the Andrews government's COVID-19 Omnibus (Emergency Measures) and Other Acts Amendment Bill 2020 must be understood.  It has already passed the Victorian Parliament's lower house, where Labor has an overwhelming majority, and it will be voted on in the next new few weeks in the upper house, where independents hold the balance of power.

Two aspects of the law are particularly abhorrent.

The first is the power it gives the government to authorise anyone it chooses to exercise ― without oversight, accountability, or the right of appeal ― the draconian powers of Victoria's health regulations, which include arrest, detention, entry into homes and workplaces without a warrant, and the seizure of property.

The second is the power it gives to those so authorised by the government to arrest and indefinitely detain a person who is suspected of being someone who could potentially breach the health regulations.

Such a law has no place anywhere in Australia, ever.

This week, in a powerful statement to the Victorian Parliament, fourteen of Melbourne barristers, including QCs Michael Borsky, Stuart Wood AM, Philip Crutchfield, Georgina Schoff, and former High Court judge Michael McHugh AC, wrote:  "Authorising citizens to detain their fellow citizens on the basis of a belief that the detained person is unlikely to comply with emergency directions by the 'authorised' citizens is unprecedented, excessive and open to abuse."

To think such a law could even get as far as it has is incredible.  It demonstrates, again, the nature of the police state Victoria has become.

Dan's Debacle Shows Why Democracy Matters

The debacle that is the response of Australia's state governments to the coronavirus pandemic has provoked claims such as "the federation is broken" and "the PM must do something about it".

In Melbourne, at the moment, a much-discussed option (and wistful hope) is that if Daniel Andrews doesn't resign, then somehow he's sacked by either the state's governor or even the prime minister.  The chances of the first eventuality are for the time being close to zero, and for the second two, zero.

Scott Morrison could no more sack Andrews or Annastacia Palaszczuk than the six premiers could sack him ― which is as it should be.

The problem with Australia's system of federalism is not that Canberra doesn't have enough power, it's that it has too much.  If the premiers who have shut their state's borders were to suffer the financial consequences of their decisions, they wouldn't be quite so cavalier about what they're doing.

In the immediate term, the suggestion that Morrison impose financial sanctions on states that don't open their borders or economies is, on the face of it, attractive, but misguided.  Sanctions seldom work and they more often harm the very people they're aimed at helping

Even if there could be some sort of constitutionally valid means of, for example, the federal government not paying unemployment benefits to Victorians as a form of punishment for Andrews, he won't be directly affected.

Nor will any of Victoria's public servants, none of whom has lost their jobs but who all have received pay rises.  Sanctions never hurt the ruling regime ― they hit the common people.  Whether Victorians get a new Commonwealth-funded road or railway shouldn't depend on whether the state's premier acts like a tyrannical autocrat.

RULE BOOK TOSSED ASIDE

In Australia, it's not federalism that's broken;  it's politics.  This, at least in liberal democracies such as Australia, operates according to norms, conventions and customs, nearly all of which have been broken by the coronavirus.  It's not just the economics rule book that has been tossed aside by the pandemic.

Up until March this year, it would have been assumed that in Australia federal and state governments attempting to deal with something even as dangerous as the coronavirus would put in place measures that operated according to the principles of basic human rights.  This hasn't happened.  Education is a basic human right but nonetheless schools were shut to "make a point".

The creation of the national cabinet, comprising the PM and the premiers and chief ministers, was another breakaway from traditional politics.  Cabinets by their nature are not transparent and are not open to public scrutiny.

The national cabinet's deliberations imposing unparalleled restrictions on the civil and economic liberties of Australians are confidential as is the information upon which those deliberations are based.

Political partisanship and point-scoring play a vital role in keeping government power in check.  Australians realise this, which is why they so often vote for a different party federally compared with the state level.

The desire of politicians and the media to create an environment of "national unity" has meant that the traditional models of political scrutiny that occur when a prime minister is of a different party to a premier no longer apply.

Nowhere is the effect of this more obvious than for Victoria.  While it might be true that the Victorian state opposition was initially unduly circumspect in its criticism of how Andrews was managing the crisis, to be fair it's difficult for a state Liberal leader to call for a Labor premier to resign when simultaneously the Liberal prime minister speaks effusively about how effectively he and that premier are working together.

The Federal Education Minister, Dan Tehan, said in May about Andrews:  "Sure, take a sledgehammer to defeating coronavirus, but why are you taking a sledgehammer also to the state education system?"

If a few more federal Liberal ministers had attempted to hold Andrews to account earlier, the disaster that is Victoria might have been avoided.  Tehan was prescient.

Because since May, Andrews hasn't taken a sledgehammer only to Victoria's schools ― he's taken it to the entire state.

Dan's Divine Rule Betrays Our History

Most Victorians wouldn't have a clue what you were talking about if you said Premier Daniel Andrews was acting like King Charles I.

Coronavirus or not, the government of the state of Victoria ― with its arbitrary police arrests, the locking of people in their homes and the bankrupting of their businesses by executive decree, and the suspension of Parliament to avoid any measure of public scrutiny of the government's actions ― now has more in common with rule exercised by the imagined authority of the divine right of kings rather than with any notion of liberal democracy.

Because so much of the Melbourne establishment ― including its business elites, its cultural leaders, and particularly the legal profession ― as well as Victoria's media have supported Andrews for as long as they have, they're reluctant to acknowledge this truth.

Paul Keating famously declared the upper house of the Federal Parliament to be "unrepresentative swill", but when Parliament isn't there, you notice it ― which is the situation now in Victoria.

This week, when Andrews, after spending the last six months trying to shut down the State Parliament, said he wanted to recall Parliament so his emergency powers could be extended for 12 months, it started to finally dawn on Victorians that enough was enough.  In a poll of 1000 Victorians, 60 per cent of participants said the Victorian Parliament should continue to sit during the COVID-19 pandemic, 12 per cent said it should not, and 28 per cent had no opinion.

That's an overwhelming result.  But if Australians took their parliamentary democracy more seriously, the poll result might have been even more overwhelming.

Taking the country's parliamentary democracy more seriously requires, for a start, knowing where it comes from.  And that is a topic almost entirely absent from Australia's education system.

Practically every aspect of the Westminster-style parliamentary democracy of the Australian Commonwealth and of the states derives from the English Civil War and its consequences.

Yet in the Australian national curriculum ― which is compulsory for all schools, government and non-government, to teach ― there is no reference to the English Civil War.  There are many mentions of Gandhi, Rosa Parks and Eddie Mabo ― but none of Charles I, or Cromwell, let alone Pym or Hampden.  (It's sometimes forgotten that dead white European males did have some role in the creation of Australia's democracy.)

LACK OF HISTORICAL UNDERSTANDING

Today the average Australian 16-year-old would be shocked to discover that British history is responsible for something other than colonialism and slavery.

The absence of the origins of our parliamentary system from the education of young Australians is not an accident.  One of the authors of the national curriculum notoriously dismissed the relevance of the English Civil War to this country by claiming it was "arguably just a series of confused and confusing localised squabbles that may have a special significance for UK history, but not for anybody else (unless they like dressing up in period costume)".

Comments such as this betray precisely the same lack of historical understanding being bequeathed to Australian students.

There's another reason too why the English Civil War has no place in the nation's classrooms.

It has come to be profoundly unfashionable to argue that democratic rights are not the gift of the governments and the United Nations, but are instead inalienable to a country's citizens.  (As is to be expected, under the national curriculum Australian students are taught a lot about the UN.)

The situation is no better in our universities.  In 2017, I surveyed all 746 history subjects that were taught in the 35 Australian universities that offered history programs.  There were 41 subjects that taught the history of cinema and film, while 69 subjects examined the history of gender.  Seventeen subjects covered British history, and of those only seven dealt in any way with the English Civil War.

In other words, only 1 per cent of all history subjects offered by Australian universities dealt with the period of British history from which our parliamentary democracy was derived.

One of the benefits of that parliamentary democracy is that, compared with the fate that befell Charles I, elections are a better way of dealing with overmighty rulers.

Double Standard At Play As PM Stays Silent On Andrews

If Daniel Andrews were a bank chief executive instead of a state premier, he would have been forced to resign weeks ago.  And the person leading the demands for Andrews' resignation would have been the Prime Minister himself, Scott Morrison.

In 2018 when he was treasurer, Morrison called for, as described at the time, "heads to roll" at Commonwealth Bank after the Australian Prudential Regulation Authority released a report on the failures of the bank's anti-money laundering procedures.  Morrison labelled APRA's findings as "very damning".

In February last year, Morrison called on both the CEO and chairman of National Australia Bank to "consider their positions" following criticism of them by the banking royal commission.

Morrison said:  "Commissioner [Kenneth] Hayne was pretty sharp in his assessment and I think that gives them a lot to reflect on.  I wouldn't be so bold as to suggest [they should resign], but I think Commissioner Hayne was pretty sharp."  Within days, NAB's CEO and chairman had resigned.

Then in November last year, Morrison said the board of Westpac should reflect "very deeply" on the future of its chief executive, after the bank allegedly broke anti-money laundering laws.  Again within days, the Westpac CEO had resigned.

Many Victorians wish the Prime Minister would utter the magic words about Andrews.  Why Morrison hasn't yet, and why he probably won't, is worth reflecting on.  The single most critical thing Morrison has said about Victoria is his acknowledgment of the obvious, which is that the state is experiencing some challenges

It is not as though Andrews' catastrophic failure is not now obvious, not only for all Victorians and Australians to see, but also for the whole world to witness.  Describing what's happened in the state as the greatest public policy disaster in the country's history, if anything, understates the situation.

It's easy for prime ministers to give free advice to bank board members.  Politicians are forever telling CEOs and boards how they can run their companies better.  It's interesting, given how much politicians think they know about private enterprise, that so few of them ever make a successful transition to careers in the productive economy.

And, of course, business bosses never tire of telling politicians how to run the country.  But few of those bosses trouble themselves standing for election to political office.

COMMENTS HASTENED DEPARTURES

Politicians telling CEOs what to do, and vice versa, is a favourite pastime of both because neither is accountable for what they're saying.

While the Prime Minister's comments might have helped hasten the departure of the NAB and Westpac CEOs, no one would assume Morrison had then somehow taken responsibility for running those companies.  Ultimately, it is with the companies' boards of directors, representing the interests of the owners of the company, that responsibility for the operation of the company rests.

It might be that one of the reasons why the Prime Minister is so reluctant to utter a word of criticism of Andrews is that as soon as he does, Victoria's problems become Canberra's.

The lack of scrutiny, up until the past few days, of what has occurred in Victoria is part of the reason for the debacle engulfing the state.

The Prime Minister and his ministers have said practically nothing about Victoria, and the state's metropolitan media have largely toed the Andrews government line.

Meanwhile, the operations of the Victorian Parliament's lower house are suspended at the behest of the government, while in the upper house, which Andrews tried to shut down too but couldn't because he didn't have a majority, his ministers appear but refuse to answer any questions.

Some commentators have claimed about Victoria "now is the not the time for criticism ― we must be constructive" and "there'll be plenty of time later to allocate the blame".

The point is though that, at least in democracies, holding a government to account for its actions, while it is doing them ― and subjecting the government to scrutiny all of the time, not just some of the time ― ensures not only that the government will make better decisions into the future, but the public will have trust in those decisions and respect them.

Which is precisely what's not happening in Victoria at the moment.

The Rage Of The Economics Establishment

An article on these pages last weekend by this newspaper's economics correspondent, Matthew Cranston, titled "We need reform like we've never seen before" revealed everything that's wrong with what Australians are told about economics.  And it reveals why many people were apoplectic when Treasurer Josh Frydenberg dared suggest there were lessons to be learnt from the success of Margaret Thatcher and Ronald Reagan.

Cranston discussed the opinions of prominent current and former advisers to government about what was required to improve the country's economic performance.  One of the people whose views Cranston referred to was Bernie Fraser.

As secretary of the federal Department of the Treasury for five years and then governor of the Reserve Bank for seven years, Fraser sat at the pinnacle of economic policy decision-making.  After his retirement from the public service, Fraser joined the board of two large industry superannuation funds.  If there's a doyen of economic policy in Australia, it's probably Bernie Fraser.  (If there were two such doyens it would be Fraser and Ross Garnaut.)  If there's was an "Economics Establishment" in Australia, Fraser would be its president.

It would not be unreasonable therefore to assume Fraser's opinions are not unrepresentative of many, if not the majority of, public servants advising the government on economic policy think.  It would also not be unreasonable to assume Fraser's opinions are not dissimilar to those of many academic and business economists.

Cranston introduced Fraser's remarks with the following:  "He [Fraser] says previous governments have certainly had their chance to reform in the past few decades but have blown it."

And then Fraser himself says the following:  "Howard and Costello had a golden opportunity to use the revenues to invest in productive infrastructure ― some of it went to the Future Fund ― but really they spent it on tax cuts.  They pissed it up the wall even when the economy was building up steam."

If you're someone who thinks, as Fraser does, that the government allowing taxpayers to keep more of their own money is "pissing it up the wall" then of course you're going to be overwrought at the slightest mention of Thatcher or Reagan.  In Reagan's first budget his 1981 Economic Recovery Tax Act cut the top marginal rate of federal personal income tax from 70 per cent to 50 per cent and the lowest rate from 14 per cent to 11 per cent.

The biggest problem with Fraser's way of thinking about the economy and the role of government is his belief that when the government is cutting taxes the government is "spending" money.  No, it isn't.  Only someone who has spent basically their entire working life working for the government could believe that.  But this is how government and how people working for the government now think, and it's an attitude that pervades practically every aspect of economic management and regulation in this country.  ASIC officials, for example, are particularly fond of telling taxpayers how fortunate they are to be allowed to manage their own superannuation.

The belief that taxpayers' money is the government's money is an idea that's been around a lot longer than Bernie Fraser.  It's exactly such a belief that Thatcher and Reagan rebelled against.  And they also had no truck with the implication of Fraser's remark that part of the solution to a country's problems is for the government to spend more money on infrastructure.  Maybe sometimes the government should, but more often than not it shouldn't.  No one knows for sure how much the NBN has cost already, and is still yet to cost ― it's a figure somewhere between $50 billion and $100 billion.  Today only Kevin Rudd would argue it was money well spent, and to this day it's never been established that such "productive infrastructure" could not have been implemented quicker and more cheaply by the private sector.

The point to remember about Thatcher and Reagan is not only the one Frydenberg made:  that their policies were successful.  What's often forgotten about what they did is that cutting taxes was just as unpopular with the Economics Establishment in the UK and the US in the 1980s as it is with the Economics Establishment in Australia in 2020.

There Is No Smoking Sceptre At The Palace

The release of the "Palace Letters" reveals Queen Elizabeth had as much to do with the dismissal of the Whitlam government as did the CIA.

The correspondence, now made public, between Sir John Kerr and Buckingham Palace reveals very little that's new or interesting, other than that Kerr deliberately did not tell the Queen that he was planning to sack the prime minister.  But conspiracies die hard, and no doubt the myth-making about Gough Whitlam's martyrdom will continue unabated.

The relevance of the Palace Letters has less to do with their contents, and more to do with the efforts of some left-wing academics to prove to themselves that the somehow illegitimate actions of Kerr sanctify Whitlam and his government.  The truth is that during the constitutional crisis of 1975 Whitlam had as little regard for constitutional convention as did Kerr, and when Labor was comprehensively defeated at the subsequent federal election, Kerr's decision effectively received a democratic mandate.

The letters are shocking ― but only for those who put so much hope into them.  In a letter dated November 11, 1975 from Kerr to Sir Martin Charteris, the private secretary to the Queen, Kerr wrote:  "I should say that I decided to take the step I took without informing the Palace in advance because under the Constitution the responsibility is mine and I was of the opinion that it was better for Her Majesty not to know in advance."

Charteris' response six days later confirmed the Queen was not informed of the dismissal in advance and noted Kerr acted with "perfect constitutional propriety".

The letters should go a long way in redeeming the reputation of Kerr.  He made the best choice available to him to navigate the political stalemate, while fulfilling his constitutional role and ensuring that the final decision was one made by the Australian people.

If anything, it is Whitlam whose reputation is diminished by the release of these letters.  The letters reveal that following his sacking before the election, Whitlam attempted to have the Queen recommission him as prime minister.  As constitutional expert Professor Anne Twomey of Sydney University has commented:  "So instead of the British interfering in Australia's constitutional system, [it] seems that Gough Whitlam was rather hoping the British would interfere into the system by making him Prime Minister."  This hardly fits the popular stereotype of Whitlam as a proud and independent Australian republican.

The Australian people understood that the cause of Gough Whitlam's dismissal was Gough Whitlam.  At the post-dismissal election in 1975 Whitlam was defeated in the biggest landslide in Commonwealth history, followed by another heavy defeat in 1977.

Despite this, and due in no small part to the angry response to the dismissal, the event has cast a shadow over Australian politics ever since.

No prime minister has changed Australia more than Gough Whitlam.  In a flurry of reform between 1972 and 1975, He established bureaucratic-run healthcare, effectively nationalised higher education with free tuition, and increased public sector numbers and salaries.  He more than doubled the size of cabinet from 12 to 27 to administer all the extra Commonwealth activities.

When the Whitlam-led Labor party was elected in 1972, government spending was 19 per cent of Australia's GDP.  When Labor lost the 1975 election, the same statistic had soared to almost 24 per cent.  In 2019-20 federal government spending was 24.6 per cent of Australia's GDP.

Malcolm Fraser, who was a staunch opponent of the Whitlam agenda in parliament and was in the best position to roll back the Whitlam reforms, left them largely untouched.  Perhaps in response to the rage over Whitlam's dismissal, Fraser ensured his government was largely a continuation of the Whitlam era.  And no government has since challenged the Whitlam legacy in any effective way.

For those who are interested in the future of opportunity and prosperity of Australians, the letters are a reminder of the politically motivated fury that has effectively kept Whitlam's ideas in power for 45 years.

The Palace Letters will not advance the republican cause as it is a niche issue of interest to a relatively small group of people concentrated mainly in academia and the ABC.  Opposition Leader Anthony Albanese is wrong when he said on Tuesday the letters should prompt a renewed discussion about the republic.  Right now the Australian people have far more important things to worry about.

ABC Adept At Playing Cuts Victim

The current behaviour of the ABC's management and staff is a perfect demonstration of just how removed the national broadcaster has become from mainstream Australia.

By complaining the way it has about the Coalition government's failure to index increases in its funding over the next three years, the ABC has succeeded in making the case for its eventual privatisation more powerfully than could ever have been made by its critics.

Australia is in a recession, nearly a million Australians have already lost their jobs because of the coronavirus pandemic, and a third of sole traders report they have lost more than 75 per cent of their income.  Yet the headlines at the ABC are dominated by the news the broadcaster must absorb government "cuts" of $84 million over the next three years.  These "cuts" equate to approximately 2.5 per cent of the ABC's budget over that time.

In the current economic environment any business, anywhere, would kill to be guaranteed to get 97.5 per cent of its pre-coronavirus revenue.  In any case, the "cuts" are not actual reductions in funding.  Government funding of the ABC is continuing to increase ― all that's happening is that ABC funding is not increasing to keep up with inflation, which anyway is at a record low of less than 2 per cent.

The issue of its political bias is one of the problems with the ABC.  Another problem is the justification for a government owning and funding one of the largest media organisations in the country that operates four television stations, four radio networks, and 65 metropolitan and regional radio stations.

It's too late now but the ABC would have got far more sympathy if instead of acting like just another part of the country's privileged elite who believe they are entitled to carry on largely unaffected by what's happening in the real world, ABC management had said something like "The community is hurting and the ABC is part of the community ― and we all have to share the sacrifices that need to be made."

If ABC management didn't want to put itself in the shoes of ordinary Australians, then at least it could have considered its brethren in other media organisations.  One hundred and fifty newsrooms have shut across the country.  Prime Minister Scott Morrison was right when he said "if you are a journalist today, the safest place for you to be is actually the ABC because your revenue is guaranteed in that [organisation] by the government".

What that guarantee has created at the ABC is a sense of entitlement and perhaps even an unconscious bias.  Perhaps only someone working at the ABC, who was its chief economics correspondent no less, could do what Emma Alberici did so infamously when at the height of the coronavirus pandemic crisis she tweeted "Stop talking about the economy".  Only someone removed from the economy could say such a thing.  And only journalists removed from the real lives of ordinary Australians could be as surprised as they were when the Coalition won the last federal election.

It's funny that for someone so intent on avoiding any involvement whatsoever in "the culture wars", that it's actually Morrison who, deliberately or not, has allowed the ABC to put itself one step closer towards privatisation.  All that it's taken for the ABC to demonstrate everything about itself that its critics claim is for the Coalition to not index the ABC's funding.

Eventually too, mainstream Australians are going to realise there's a reason the ALP, the Greens and GetUp! campaign so strongly for more money to the ABC.  One of Labor leader Anthony Albanese's promises made during the campaign for the Eden-Monaro byelection on Saturday is that a future Labor government would reverse the Coalition's "cuts" to the ABC.  Albanese said:  "This Saturday, the people of Eden-Monaro have the chance to send the government a message.  Don't cut ABC jobs, regional news or emergency broadcasting."

When so many people have lost their job or know someone who has, it might be that his appeal to protect jobs at the ABC reveals Albanese and the Labor Party to be just as out of touch with ordinary Australians as is the ABC itself.

The Tyranny Of The Righteous Mob

"Like Saturn, the Revolution devours its children" is a phrase relevant to what's happening to universities, media organisations, and even to fashionably "woke" comedians.  Another apposite phrase is to be "hoist by one's own petard".

The demand to remove from public life any acknowledgment of anyone or anything identified as potentially racist has existed in various forms for a number of years but has gained impetus in recent weeks through the Black Lives Matter movement.

The call to remove statues in the United States of Confederate generals, in the UK of slave traders, and in Australia of Captain James Cook is one aspect, and in the scheme of things is just one minor aspect in an intellectual project attempting to do nothing less than refashion our understanding of modern society, and by extension our understanding of ourselves.

In broad terms that project involves replacing the idea that the world we live in is, or should aspire to be, one built upon concepts such as political liberalism, egalitarian democracy and a market economy, with a different idea, namely that differences between people and peoples according to class, race and gender, and the oppression that's resulted across history because of those differences, have created an irredeemably and fatally flawed society.

Therefore the conclusion that follows from this claim is that only a fundamental restructure of society can eliminate the class conflict, and the racism and the sexism which are the foundations of the modern world.  This in a nutshell and without too much exaggeration, is what every undergraduate Arts student at every Australian university is today taught to believe.

The problem with this perspective on the world is that it is created by the very system that the woke view as illegitimate.  It is akin to attempting to disentangle the Liar's paradox of "this sentence is false".

Another problem with the perspective is that it knows no boundaries and allows no room for the application of judgment, and an understanding of the reality that human history encapsulates both the best and worst of what it is to be human.

Yes ― Winston Churchill believed India should be ruled by the British.  But 80 years ago he alone was the difference between a Europe of civilisation, or one of Nazism.

It was Jacques Mallet du Pan, an 18th-century Swiss journalist, who in the midst of the French Revolution talked about revolutions consuming their children.  Revolutions are rarely things of half-measures.

Until recently few Australian university vice-chancellors would have contemplated the possibility that after years of telling students that Australia is a racist country, eventually someone would take them at their word, as the Chinese government did a few days ago.

If those journalists at The Guardian who cheer the toppling of statues of slave traders were consistent in their beliefs, they would accept the newspaper they work for should be toppled too because it was once financed by profits from spinning slave-picked cotton.

The British philosopher John Gray, who once described himself as of the left, but who now quite correctly argues that in modern politics "left and right" are largely meaningless, a few days ago wrote perceptively about the assault on values of the modern world.

"Woke activists … have no vision of the future.  In Leninist terms they are infantile leftists, acting out a revolutionary performance with no strategy or plan for what they would do in power."

As Gray points out, the rejection of democracy and liberal freedoms "concludes with the tyranny of the righteous mob".

Mobs are dangerous at the best of times and righteous mobs ― whether in the streets or on social media ― are the most dangerous of all.

Gray concludes:  "As the woke movement spills over into parts of Europe and the UK [and Australia], it should be clear that this is no passing storm.  The paroxysm we are witnessing may be remembered as a defining moment in the decline of the liberal West.  Perhaps it is time to consider to strengthen the enclaves of free thought and expression that still remain, so they have a chance of surviving in the blank and pitiless world that is being born."

We Need To Do Reform, Not Talk It

With the economy in recession, Prime Minister Scott Morrison should spend less time trying to be popular and attempting to be everyone's friend and more time advocating for the policies that will get Australians back into jobs.

When he stood up at the National Press Club last week, the Prime Minister could have announced corporate tax cuts, or reductions in red tape, or, if he had really wanted to be bold, that Australia was going to develop a nuclear energy industry.

Instead he talked about organising five working groups to have employer groups and the ACTU talk about industrial relations reforms they might each eventually agree to.  Zoom chats between bosses and unions organised by the government might well fulfil what pollsters claim is the public's desire during the coronavirus crisis for "consensus" politics and an end to partisan bickering.  But what will be the real outcomes is at this stage difficult to envisage.

To get Australia out of the recession we're now in will require the government to do more than say "we tried".  It will need a clear-eyed and hard-nosed understanding of what want to achieve

As was reported this week, Steven Kennedy, the secretary of the Treasury, said at a private meeting of the working groups "it could take five to seven years to bring the economy back to its pre-pandemic state" and with unemployment at up to 9 per cent by 2021.

Given that Australians are constantly being told "we're all in this together", presumably Kennedy will find a forum to share with those 86 per cent of Australian workers who are not a member of a trade union the insights he's willing to discuss at closed-door meetings of bosses and unions.

If there does happen to be something bosses and unions agree on it probably would have happened by now.  If there is low-hanging fruit it would have fallen to earth already.

In recent weeks the ACTU has had two opportunities to show it was interested in a different way of doing business ― but it didn't budge an inch.

The Federal Court decision allowing some casual employees access to the entitlements of permanent staff could affect more than 2 million workers, and require employers, many of whom will be small businesses, to make up back pay of up $8 billion in total.  As businesses struggle to stay afloat this is the very last thing they need, but of course it was a decision the ACTU welcomed.  According to a Roy Morgan poll, one quarter of the businesses that were surveyed said the decision will "deter them from hiring casual employees.

And when the NSW state government attempted in institute a 12-month pause in pay increases for state public servants in return for a guarantee of no job losses, the proposal was rejected out-of-hand by the ACTU.  Michele O'Neil said it was as "an insult to thousands of essential workers who had worked to get the state through the coronavirus crisis".  It's true that many essential and health workers have performed an incredible job, but NSW has 410,000 public servants.  Some are nurses and teachers, and some are administrative officers writing up diversity and inclusion plans.

Admittedly it's early days ― but so far the unions have given up nothing for their privileged seat at the table.  On the other hand, as a show of "good faith", the Coalition has shelved the Ensuring Integrity Bill to reform the administration of employer and union organisations.  What once the Coalition trumpeted as legislation to protect the interests of Australian employees it is now willing to treat as a mere bargaining chip and a political exercise ― which is what the unions have claimed all along.

No doubt there'll be some good photo opportunities when the Minister for Industrial Relations, Christian Porter, shakes hands (or touches elbows) across the table with ACTU secretary Sally McManus.  But the likelihood is that unless McManus experiences some kind of Damascene conversion towards accepting reform to nearly every aspect of Australia's industrial relations system, nice photos is all the Coalition will get from this process.

It is true that talking about reform is better than not talking about it ― but talking isn't doing.

Voice Of Small Business Is Silent On The COVID-19 Commission

Senator Michaelia Cash is the Minister for Employment, Skills, Small and Family Business in the Morrison government.  It's one thing for a minister to have such a title.  It's another thing entirely for the government to take that title seriously.

It might have been that the minister was absent when the Morrison government was busy selecting the members of its National COVID-19 Coordination Commission.

The commission was announced by the Prime Minister in March and it has six commissioners.  Its task is to "ensure the government receives the most comprehensive advice to meet the challenges ahead to cushion the economic impact of the coronarvirus and help build a bridge to recovery".

The commissioners, by virtue of their role, are now some of the most powerful people in the country.  They're advising the government on nothing less than the future of the Australian economy.  And when you design an economy, you design a society.

The six commissioners are Nev Power, who was chief executive of Fortescue Metals Group;  David Thodey, who was chief executive of Telstra;  Greg Combet, who was secretary of the ACTU and a minister in the Rudd and Gillard Labor governments;  Jane Halton, a career public servant;  Paul Little, who was managing director of Toll Holdings;  and Catherine Tanna, who is managing director of an energy company.

That's four commissioners from big business, one from the public service, and one from both the trade union movement and the Labor Party.

Missing from the commission is the voice of the sector that accounts for one-third of the economy, that provides more than 40 per cent of the jobs in the private sector, and that is the foundation of a free enterprise economy.  That voice, of course, is that of small business.

It is small business and the families of the owners of small businesses ― not big business and not the public service ― that are bearing the brunt of the government-imposed shutdown of the economy.  Seventy per cent of small businesses are family-owned.

My analysis of Australian Bureau of Statistics data shows that over the past three months jobs in the private sector have been lost at 4½ times the rate of job losses in the public sector.  Most of those lost jobs will have been from small business.

In fact the government is doing everything it can to ensure public servants are untouched by what's happening in the rest of the economy.

Although nearly 75 per cent of Australians support pay cuts for politicians and public servants earning more than $150,000, the Prime Minister has categorically ruled out any such reduction.  The biggest sacrifice Scott Morrison has offered is to delay pay rises for some public servants.

It's incredible that a perspective from the sector that employs 4.5 million Australians (or at least did until March) is not represented on the commission.

If and when the unemployment rate reaches 10 per cent or more, the vast majority of those who will have lost their jobs will be small business employees.  By the end of March, approximately 8 per cent of small businesses had already stopped trading because of COVID-19 restrictions, while 61 per cent of small businesses have applied, or will apply, for wage subsidies from the government.

The Australian economy won't recuperate and employment will not grow in any meaningful way until small business recovers from the economic shutdown.  The future of small business should be front and centre of the government's attention, not an afterthought ― if that.

It's frightening to contemplate, but maybe what happened is that those who picked the commissioners thought if you're deciding how to save the Australian economy, the only people you need an opinion from are those who inhabit the cosy club of the Qantas Chairman's Lounge:  big business bosses, public servants, and former union officials and Labor politicians.

It is revealing these are the sort of people the Morrison government picked to advise it.

Presumably, no one in the Coalition thought to ask the cafe owner in Parramatta who has just laid off all their staff, shut their business and lost their livelihood, whether they would like to be on the National COVID-19 Coordination Commission.

Why JobKeeper Cannot Be For Keeps

Last week the Australian Bureau of Statistics reported that Australia had a 6.2 per cent unemployment rate.  Based on the collapse in hours worked, however, I guesstimate the jobless rate is closer to 9 per cent.  An increase from 5.2 per cent unemployment to almost 9 per cent in just one month is a catastrophe.

To be fair, things could be worse.  The federal government has committed to borrow an eye-watering sum of money and is subsidising businesses to maintain employees on their payroll.  Right now a lot of people are still receiving an income, despite not actually working.

JobKeeper is not the most finely calibrated assistance package an Australian government has ever produced.  But given the circumstances and the radical uncertainty government faced in the early days of the COVID pandemic, it is a pretty good effort.  In principle, it could be fine-tuned, but that would be mean-spirited.  Promises were made and promises should be kept.

One promise, in particular, should be kept:  JobSeeker ends in late September.

Some have suggested that JobKeeper be maintained or that it evolve into a Universal Basic Income (UBI).  The intellectual case for a UBI is bolstered by the fact that even free market economists such as Milton Friedman and Friedrich von Hayek supported the idea.  But UBI is a solution looking for a problem to solve.  Right now the economic problem Australia faces has a different solution.

The economic response to the COVID pandemic has been the greatest economic intervention in human history.  Governments ― Australia included ― have tried to freeze their economies in place, until the medical crisis is under control, and will then attempt to unfreeze their economies.  The hope is that the economy will "snap back" into place and then all we need do is pay off the public debt.

Many economists at this point talk about V-shaped recoveries, or "swoosh" recoveries and so on.  If the economy doesn't immediately pick up, the argument goes, maybe we should keep JobKeeper for longer.

Well, no.

JobKeeper, at the very best, can only be a temporary solution to a temporary problem.  It worked to prevent Australia's social fabric from unravelling in the face of a medical emergency and a policy-induced economic catastrophe.  Over the years and decades to come, we will debate the necessity and urgency of those decisions.  Right now that debate is a luxury we cannot afford.

JobKeeper will do nothing to restore our prosperity.  In fact, the traditional tools of public policy are exhausted.  Public debt has already blown out and monetary policy is ineffective.  The economic challenges facing Australia ― and many other countries too ― are just starting.

The bottom line is that we as a nation simply cannot afford to pay people to sit at home and not produce.  Now some economists will tell us that JobKeeper is a transfer and not a cost and so we have nothing to worry about.  Others might tell us that public debt doesn't really matter because we're really just borrowing from ourselves.  Whatever.  The economy is not a perpetual motion machine running on fairy dust or unicorn farts.

The economic challenge that we now face is getting Australians back to work.  Sit-down money had a place in securing our health ― but won't help in the next phase of recovery.  Our economy is a lot smaller now than what it was at the beginning of the year.  Australians are a lot poorer than what we were.  The JobKeeper payments largely are disguising that loss of wealth.

Many government regulations, policies, and dare I say it entire agencies are now luxuries that we might have been able to afford in January, but not now.  Anything that impedes employment or investment in the economy should be jettisoned.  Australian governments have already done a fine job in suspending regulations and some taxes for the duration of the crisis.  That just tells me that they already knew which regulations were unnecessarily burdensome on the economy.

Australians don't just want to recover from the crisis ― we want our pre-COVID prosperity restored.  That means a long sustained period of high economic growth ― to pay down our increased public debt and restore household balance sheets ― not to mention income statements ― to their pre-COVID levels.  That can only be done in a low-tax environment with appropriately reduced levels of regulation.

Why It's Time To Get Back To Point-Scoring

The sooner politics in Australia returns to normal the better.  A national cabinet of the Prime Minister and premiers was a good idea at the time, but it has now served its purpose and should be wound down.

The former Liberal leader John Hewson is right when he says the national cabinet has for the moment at least, suspended the "point-scoring and blame-shifting" of traditional politics.  Everyone on the national cabinet likes to pretend that, regardless of their politics, they agree with each other and are united during this national crisis.

But the essence of democratic politics is point-scoring because that's how governments are held accountable.  Point-scoring has a purpose.

At this time when governments are exercising unparalleled power over people's lives and livelihoods, Australia needs the accountability, the scrutiny, and yes the point-scoring, of traditional politics back as soon as possible.

The federal and state parliaments should be sitting, oppositions should be opposing, and the media should stop being so complaisant to politicians and public servants.  There's been remarkably little debate on things like the size and scope of the government's fiscal response, how and when the lockdown should be lifted, and even the efficacy of the telephone-tracing application.

Other than being successful political theatre, it's not clear what the supposed unity of the national cabinet has achieved.  The two premiers who have been most extreme and most unreasonable during the crisis, Gladys Berejiklian and Daniel Andrews, appear to be doing what they want anyway.

When the crisis began, around the country the response of governments was 100 per cent determined by health considerations ― as it should have been.  Now a few months later it looks suspiciously like some governments' policies are being decided according to considerations weighted 50 per cent to health and 50 per cent to politics.

Schools is where politics is most obviously being played.

There's no medical reason why schools can't reopen.  As the Queensland chief health officer acknowledged a few days ago, schools are not a high-risk environment but "If you got out to the community and say, 'this is so bad, we can't even have schools, all schools have got to be closed', you are really getting to people.  So sometimes it's more than just the science and the health, it's about messaging."

In other words children can't go to school to make a symbolic gesture.  It's a gesture that the Victorian government is keen to make as it refuses to follow the other states and reopen its schools.

Education Minister Dan Tehan was completely right when he said "The question to Daniel Andrews, sure, take a sledgehammer to defeating coronavirus, but why are you taking sledgehammer to the state education system".  But in order to maintain the façade of the false bonhomie of the national cabinet, Tehan was forced to apologise to Andrews for "overstepping the mark".

The way in which the Victorian government has been so quick to highlight and publicise every outbreak of the virus to justify its draconian lockdown law, but then refused to identify a meatworks company at the centre of the state's biggest virus outbreak, which also happened to have well-known Labor Party links, demonstrates how the Victorian government is willing to operate.

Eventually Scott Morrison will realise that Andrews and the Victorian Labor government are not his friends.  In the lead-up to last year's federal election, the Victorian government ran a taxpayer-funded campaign against the federal Coalition about hospital funding.  Outside of the constraints of a national cabinet, federal government ministers are going to be free to point out, as Victoria's state government debt triples over the next few years, that the state risks becoming what it was in the early 1990s ― the sick man of Australia.

Hewson's hope that the national cabinet could be used to pursue policy reform in the wake of the crisis is unlikely to be realised for the simple reason that the political interests of the state and federal leaders are simply too different.

It's nice to think that in a few months' time a new spirit of unity will have transformed Australian politics.  Realistically the chances of that happening are close to zero ― and politics returning to normal won't be an entirely bad thing.

This Silent Deregulation Must Become A Pillar Of Recovery

The government has hurriedly dumped a large number of costly business rules.  Why would we now want to bring them back?

The COVID-19 pandemic has seen a massive expansion of the power of the state ― heavy-handed police action and huge increases in government spending are just the most obvious.

But at the same time, the crisis has also seen a major retreat of state power in other areas ― a wave of deregulation across the economy that has almost no historical parallel.  And these regulatory reforms offer us a path back to prosperity.

The most obvious regulatory reductions have been on the medical frontline.  Some controls over the production and use of medical face masks, ventilators, virus testing and pathology have been relaxed.  Supervision requirements have been reduced for nurses re-entering the workforce.  Regulations have been eased to allow distilleries to produce alcohol-based hand sanitiser.

But the most consequential deregulations have been intended to keep the economy afloat.  Night-time curfews on delivery trucks have been lifted to ensure supermarkets can be more easily restocked, and trading and operating hours restrictions for essential retail have been eliminated.  Liquor licensing has been relaxed to allow restaurants and bars to do home-delivered alcohol.  Construction work can now be done on weekends and public holidays to make up for productivity losses that might come from trying to build while social distancing.

Other reforms have involved the government relaxing its most burdensome regulations.  The Australian Prudential Regulatory Authority has eased capital requirements on banks.  The Australian Competition and Consumer Commission is reducing its enforcement and surveillance program, announcing that it would now "carefully consider the impact on businesses already under pressure" (this is great, but at the same time reveals a lot about their attitude before the pandemic).

The Australian Securities and Investment Commission has even put a hold on the program that embeds bureaucrats in private companies.  This is the program introduced after the financial services royal commission that has government-appointed psychologists observing the ethical standards of senior management.  It was widely derided as "shrinks in the boardroom" ― and it is no longer active because of COVID-19.

THE RULES WE DIDN'T NEED

Even more astonishingly, the communications regulator has suspended Australian content requirements on commercial television and pay TV.  It would be hard to nominate a more heavily defended and politically sensitive bunch of regulations.  And they have now been shelved with almost no comment.

For the past two decades Australian governments have repeatedly announced red tape reduction programs.  Regulatory reform has been a major plank of the Coalition government's agenda.  It was a major plank of the Labor government before it.  But none of those heavily promoted programs have had as much scope and scale as the COVID-19 deregulations.

Those earlier red tape reduction programs focused on the sorts of regulations that nobody was interested in defending.  They tended to eliminate lots of minor rules rather than significant ones.  The guiding principle has been quantity not quality.  Ultimately they were less major economic reform and more tidying up the statute books.

But this time is different.  The regulations that have been suspended are precisely those that are most burdensome.  They are the rules that are most costly to comply with but also least essential to support a functioning economy.

In other words, they are the rules that governments worried about the effect of over-regulation on productivity and economic growth should be very reluctant to reinstate.

This is the conversation to have now.  The pandemic is moving from urgent crisis stage to risk-management stage.  The Reserve Bank governor warns that we are looking at the greatest hit to the economy since the Great Depression.  We need to start thinking about what policy settings will be able to revive the relative prosperity we enjoyed at the end of 2019 ― and pay for all the spending that the government has committed to.

DEREGULATIONS MUST STAY

Making these temporary deregulations permanent should be one of the pillars of recovery.  We cannot assume that the economy will happily bounce back once social distancing controls are lifted.  The damage inflicted by the shutdown on business models and supply chains has made this naïve hope impossible.  The economy needs to adapt to the post-pandemic world ― quickly.  Regulations that prevent this rapid adaptation or prevent firms from establishing new sustainable business models need to be culled.

In a 2016 paper published in the European Journal of Political Economy, the economist Christian Bjørnskov looked at how economic freedom (that is, low taxes and minimal regulation) affected how different countries performed during an economic crisis.  He found that how heavily a country was regulated predicted how quickly it recovered from crisis ― the less regulation, the quicker the recovery.

A lot of the growth in government is likely to survive after the COVID-19 pandemic.  It will be politically hard to abolish free childcare or to return Newstart payments to where they were.  But we're going to need a much more productive and prosperous economy to pay for it all.  So the deregulations done during the crisis should be locked in too.  And the principles that have been established during this crisis ― that many politically popular regulations make it hard for businesses to adapt to unexpected circumstances and keep people employed ― will be needed to guide our policymakers when they return.

As Scott Morrison has said, all workers are essential.  But not all regulations are.

We Cannot Tax Our Way Out Of Debt

These days probably the best way to guarantee the federal Coalition government won't do something is to have Malcolm Turnbull suggest it.  So when Turnbull on the publicity tour for his book raised the prospect of further tax increases on superannuation and investment income, he might well have done enough to ensure they are unlikely to happen.  And nor should they.

Jobs and debt are the two fundamental challenges confronting Australia in the wake of the COVID-19 health crisis.

The only way of addressing these two challenges is by getting as many Australians back into work as quickly as possible.  Increasing taxes does nothing to reduce unemployment that will most probably peak at more than 10 per cent.  Last month, in one week, 780,000 lost their jobs out of a national workforce of 13 million people.

And while tax rises in the short term help pay off debt, in the long term they won't generate the productivity growth required to pay down what could be a total of $1 trillion of federal government debt within three years.

To put the federal government's interest repayments on that number into perspective, at current rates of less than 1 per cent on government bonds, the interest cost equates to about $400 a year for every Australian.  If and when interest rates normalise, at say 3 or 4 per cent, interest payments will equate to $1200 or $1600 per person to be paid every year for decade upon decade.  That soon becomes real money.

Some might say that Malcolm Turnbull and current Labor leader Anthony Albanese have more in common than just the fact the seat in the Federal Parliament the former had, and the latter has, are both in the inner city of Sydney.

FAR TOO MUCH RED TAPE

Turnbull was wrong to float the idea of higher taxes, Albanese is wrong to dismiss the prospect of lower taxes.  "What we need to make sure is that arising out of the crisis, we don't have the government go to the bottom drawer and say, 'What we need is labour market deregulation.  What we need is more tax cuts' for people who don't necessarily need it," Albanese said yesterday.

On the contrary, these policies have sat in the Coalition's bottom drawer for far too long.

As usual, former treasurer Peter Costello got it right when he warned of the "high-tax cheer squad" who will use the current crisis to permanently lift taxes.  As Costello said, far from contemplating tax increases, the Coalition should be aiming to bring forward its personal income tax cuts.  And as he pointed out, "the downturn has highlighted how much red tape we have burdened our society with, in particular financial regulation".

My research released last month revealed that since the late 1970s, while Australia's population has grown annually at an average of 1.6 per cent, and the economy at 2.5 per cent, federal government red tape, measured by the number of rules imposed by government authorities, has increased by 10 per cent a year.

The battle lines of reform are beginning to take shape, and so far the signals from the Coalition are encouraging.

When the Prime Minister, in ruling out a "coronavirus repair levy", said that "increasing taxes doesn't always grow the economy", he was right.  He could even have gone further and said it's a lot easier to find evidence of tax increases shrinking the economy rather than growing it.

Changing the structure and mix of the tax system is important, but it's a medium-term goal for Scott Morrison's next term of government.  A 20-year argument about tax isn't going to be resolved in the next six months.

Instead, the beginning of a reform agenda looks like this:

1. Cut the taxes that already exist ― by bringing forward the government's planned personal income tax reduction.
2. Cut red tape (or at least stop its growth) by implementing a 12-month ban on all new federal government regulation.
3. Make it easier for small business to employ workers ― by exempting small business from parts of the Fair Work Act.

That isn't only an agenda for reform.  It's an agenda to provide what Australia needs most at the moment, which is hope for a more prosperous future.