Locking Down Crime

Community safety is the highest priority of the criminal justice system and the NSW government can be proud of the latest batch of crime statistics.

Robbery and theft have declined 13 per cent from the last quarter of 2016.  Other serious crimes such as murder and assault are stable.  This stands in stark contrast to Victoria where serious crime is skyrocketing, up 20 percent over the past two years.

When it comes to reducing crime in Australia, NSW is leading the way.  Building on this success, the government now has the opportunity to launch a wide-ranging criminal justice reform program.

The government is already addressing some known problems in the system.  Fifty-two per cent of prisoners are repeat offenders, and the government is responding by spending $237 million on programs to reduce recidivism.  To deter crime, the state has also committed $57 million for new and upgraded police stations.

The last state Budget committed a record $8.1 billion to criminal justice.  And over the next four years, the government will add 7000 new prison beds at a cost of $3.8 billion;  more expensive than WestConnex.

But the public is entitled to ask:  is all of this money being effectively targeted towards community safety?

Is increasing incarceration the best way to keep the streets safe?

To answer these questions, my new research suggests that NSW can learn from the experience of the US.

Over the past decade, more than 20 American states have taken steps to safely reduce the growth of incarceration.  Texas, for example, has avoided $US3.9 billion in prison spending while seeing massive declines in serious violent, property and sex crimes.

The process begins with punishment reform for non-violent offenders.  In the words of former Texas politician Jerry Madden, we need to separate those criminals we are "afraid of" from those we are merely "mad at".

While violent criminals need to be locked up, many other offenders can be safely punished in the community, with measures such as home detention, community service, fines and restitution orders.

In NSW, the most serious offence of 48 per cent of prisoners was a non-violent offence.  Among these offenders are petty thieves, minor drug offenders, and traffic offenders.  Given the average annual cost of locking someone up is almost $90,000, implementing punishment reform for even some of these people would help to offset the cost of the programs that the government has proposed.

In practice, punishment reform means that much of the money saved by slowing the growth of incarceration still needs to be spent on criminal justice, to pay for case officers, monitoring, and halfway houses.

There is also clear evidence that increased policing is more effective in deterring crime than measures such as making prison sentences longer.

Over time, savings are produced by reducing crime and, in particular, reoffending.  Importantly, the money saved should stay in the criminal justice system.  The government should ignore calls from social engineers to use these redirected funds in any way that treats the criminals as victims and wants to blame society for their crimes.  Criminals are accountable for their actions.  No excuses should be made for them.

Instead, the government should set the expectation that offenders will become productive citizens.

That is in line with both commonsense and the American experience.  Studies have shown the best way to keep people on the straight and narrow is employment.  For this reason, American states have expanded skills education, reduced barriers to employment such as licensing requirements, and offered tax incentives to businesses that hire released prisoners.

To the government’s credit, NSW is already moving in this direction, with increased TAFE study opportunities for inmates and work programs in prisons.  Training should always focus on marketable skills, and not feel-good programs in the arts and music.

For the government, there is also an interesting political observation from the US.  Successful criminal justice reform has been led by conservatives.  Contrary to the view of left-wing commentators, traditional principles of personal responsibility and fair punishment are the bedrock of the criminal justice system.

And only conservatives can be trusted to cut costs rather than throw taxpayer money towards favoured causes.

As the experience of US states such as Texas demonstrates, staying true to our values while addressing the problems and cost pressures within the criminal justice system has been a political victory for conservatives.  It can be a win for the Berejiklian government as well.

Malcolm Turnbull must learn from Breitbart and fight culture wars

Last week when he announced changes to the laws on Australian citizenship and foreign workers, Malcolm Turnbull spoke passionately about "Australian values" and the need to respect our culture and history.

It was a long overdue foray from him into the debate about our changing national identity.  Unfortunately many on the political left demean that debate by labelling it as merely a manifestation of the so-called "culture wars" and as a debate not worth having.  But as the left knows perfectly well, culture is everything.

On Anzac Day the Prime Minister's rhetoric about Australian values confronted reality when ABC presenter Yassmin Abdel-Magied posted inappropriate and offensive comments on Facebook about the day of commemoration.

Turnbull is now facing increasingly strident calls from Coalition MPs for Abdel-Magied to be sacked from her federal government posts.  And MPs are asking the not entirely unreasonable question why the Department of Foreign Affairs and Trade funded her international tour to promote a book she'd written.

FREEDOM TO SPEAK, EVEN IF HURTFUL

Make no mistake.  Abdel-Magied should be absolutely free to say what she said, no matter how hurtful or offensive.  No one is suggesting she be the subject of an 18-month secret investigation by the Human Rights Commission, as Alex Wood was when in 2013 as a student at the Queensland University of Technology he wrote on Facebook "Just got kicked out of the unsigned Indigenous computer room.  QUT stopping segregation with segregation".

But the question of whether what Abdel-Magied did should be unlawful is entirely different from whether it is appropriate for her to hold official government positions and be an ABC presenter.

What the government does about Abdel-Magied remains to be seen.  If the ABC could name among its senior ranks of journalists and commentators a single conservative who admitted to voting for Tony Abbott and to liking Donald Trump, then perhaps Abdel-Magied's position at the national broadcaster would be slightly more tenable.

The person who understood this better than anyone in recent times was Andrew Breitbart, who is renowned for saying "politics is downstream from culture".

Breitbart was one of the co-founders of The Huffington Post, and in 2007 he started the Breitbart News Network.  Steve Bannon was one of the company's original board members and took over when Breitbart died suddenly in 2012 at the age of 42.

The year before his death Breitbart published his book Righteous Indignation:  Excuse Me While I Save the World.

CELEBRITY IS EVERYTHING

Breitbart was quite explicit about the purpose of his network.  He had the aim of starting a site "unapologetically pro-freedom and pro-Israel".

Breitbart had an uncanny understanding of the intersection between culture, the media, and politics.

In an interview on Fox News in April 2011, he talked about Donald Trump.  At the time Trump was considering running for the Republican nomination for the 2012 presidential election.

"Is Donald Trump a conservative?" Breitbart was asked.

"Of course he is not a conservative," Breitbart answered.  "He was for Nancy Pelosi before he was against Nancy Pelosi.  But this is a message to those candidates who are languishing at 2 per cent and 3 per cent within the Republican Party who are brand names in Washington, but the rest of the country don't know… celebrity is everything in this country.  And if these guys don't learn how to play the media the way that Barack Obama played the media last election cycle and the way that Donald Trump is playing the election cycle, we're going to probably get a celebrity candidate."

Breitbart's timing was only four years out.  A few days after that interview Trump announced he would not join the 2012 presidential race.  A public opinion poll at the time showed 71 per cent of those surveyed believed Trump had no chance of becoming president.

If the Coalition wants to win the culture wars it is going to have to start to fight them.  A country's public culture is not only about culture per se.  The fact the Coalition can't pass its cuts to government spending through the Senate is entirely a product of Australia's public culture.

It might be that Malcolm Turnbull has realised the truth of Breitbart's dictum.

We Can't Just Rely On US To Defend Australia

The US missile strike in Syria, rising tensions with North Korea, China's creeping militarisation of the South China Sea, and recent terror attacks all highlight an important reality:  Australia cannot take its security for granted.

For decades Australia and its Asia-Pacific neighbours benefited from a relatively stable region in which open markets, inclusive regional institutions, uncontested freedom of navigation and a favourable balance of power underpinned by the United States' predominant military presence in the Western Pacific were the order of the day.

We and other countries prospered greatly in those conditions:  Australia has enjoyed a dream run of more than a quarter-century of continuous economic growth, China has emerged from poverty to become the world's second-largest economy, and hundreds of millions have joined Asia's burgeoning middle class.

Yet we took our good fortune for granted and mistook hard-won security and economic gains for a birthright.

Today, Australia's economic and national security face increasing threats and challenges.

Terrorism remains a global menace and will endure after coalition forces vanquish ISIL and its "caliphate" in Iraq and Syria;  the threat posed by homegrown terrorists and displaced foreign fighters likely to return to Southeast Asia is significant.

After the Cold War competition between great powers seemed to have been consigned to the dustbin of history, but geopolitics has returned with a vengeance — in Europe, the Middle East and Asia.

Revisionist powers such as Russia, Iran and China are seeking to carve out their own 19th century regional spheres of influence — irrespective of the wishes of their neighbours.

China's growing power and assertiveness pose a particular challenge for Australia and for other countries in our region, not least because of its importance to our economy.

China is using its economic muscle to coerce neighbours and is acquiring advanced weapons intended to prevent the United States from projecting power as it has for more than half a century in support of its allies and of maintaining the regional rules-based order.

This is shifting the balance of power away from the United States and its allies and inducing other countries to acquire their own missiles, submarines, modern fighters and cyber weapons — in the process eroding the military capability edge that Australia has relied on in the region.

Add the uncertainty and anxiety triggered in the region by the election of a self-consciously disruptive US president who has questioned many of the longstanding pillars of US foreign policy, and the result is a volatile mix.

Australia should not panic, however.  We have to take responsibility for our own security, and meeting the Government's commitment to invest 2 per cent of GDP in defence will be a minimum requirement.

But we aren't on our own.

The US alliance remains a vital strategic asset and will become more, not less, important.  At the same time, Australia and other American allies will be expected to do more.

Fortunately, partners such as Japan, India, Singapore and Indonesia share our interest in maintaining a peaceful and prosperous region and will also look to do more with us.

Reducing Immigration Won't Solve The Housing Crisis

Cutting red tape, rather than immigration, should be the principled and consistent solution to lowering prices and improving housing affordability.

Unfortunately, it seems politicians are more concerned with suppressing competition rather than freeing our housing markets.

Tony Abbott has said the government could ease housing demand by scaling back immigration "at least until land release and infrastructure can keep up".  Pauline Hanson and several other conservatives like Cory Bernardi and Mark Latham have all floated similar ideas in recent weeks.

This approach is not only wrong, but it is also short-sighted and dangerous.

Yes, reducing immigration will put downward pressure on housing prices, just as any reduction in demand would.  But its effects are overstated:  very few migrants are so cashed up that they are instantly able to purchase a home that would otherwise be bought by a young Australian.  Far from being cashed up, most who migrate here seek a better life for themselves and their families and work hard to achieve it.

My Nonno migrated from Italy in the 1950s.  Back then, he could not speak a word of English, but had particular skills with his hands and was able to find employment as a steelworker on the Snowy-Hydro.  He and his wife were not able to afford to buy a house immediately, but worked hard and were eventually able to afford a home in the outer northern suburbs of Melbourne.

This is a generational story that many Australians share.  It is one that also applies to the migrants of today.  Do we really believe, in 2017, that well off migrants are buying housing stock and keeping us stuck in traffic on our roads?

But there is a more fundamental point which Hanson and Co miss:  immigration policy isn't housing policy.  Equating the two means the massive benefits that migrants generate for our economy and society are ignored.  In Australia, skilled migrants accounted for on average 67.7 per cent of our total immigration intake in 2015-16.  These people make a great contribution to our economy.

The Migration Council of Australia's report on the economic impact of migration found that our migration program up until 2050 will contribute $1.6 trillion to the Australian economy.  Skilled immigrants and student visas in particular, are our most productive of all visa types.

Further, it is passing strange that some of the advocates of cutting our immigration intake to lower house prices, also are the staunchest supporters of free trade.

A growing immigration intake increases the size of the Australian market, and demand for services across Australia.

Free trade is the belief that the exchange of goods and services across borders is fundamental to our prosperity.  But if we believe free trade in goods, we should also believe in the movement of migrants with valuable skills.

Still, there is no doubt housing affordability is a real issue for many Australians, especially for those under 30.  But the root cause of this problem is not excessive demand, it is restricted supply.

Rentals are also under pressure, with a recent report revealing the proportion of Australian households who rent is now 31 per cent, and 63 per cent of those renters are aged 35 or above.

Reducing our migrant intake at first looks tempting to policymakers, both to bring housing prices down and to ease demand pressures in the rental market.  But unlocking more supply is the only credible long-term way to put downward pressure on rents.  And the way to achieve this is cutting red tape and reducing regulation on housing development.

There is hypocrisy on many sides of this debate that deserve to be called out.

The Greens advocate tax increases through changing negative gearing to reduce housing prices.  Yet it is green-flavoured local councils in the inner city of Melbourne and Sydney that mindlessly block all sensible high-density development in the inner city where public transport infrastructure is readily available.

This forces many Australians, particularly the poor, to suburbs in the outer fringe suburbs that require hour-long commutes into the city.  Not only do they frustrate and oppose the building of major roads to these suburbs, but these same greens will also oppose unlocking land in the green wedges of our cities.

This is compounded by direct costs governments place onto landowners through taxation, planning red tape and stamp duty.  In addition, the array of government commands is becoming more bizarre all the time:  some new houses need a certain percentage of the house made of glass;  some need high energy efficiency standards;  and others require two car parking spaces.  And all the while prices keep ratcheting up.

Cutting red tape on development and unlocking housing supply to meet our demand is the most sensible long-term policy prescription in this debate.

Cutting our immigration intake to reduce housing affordability is a reactionary populist policy that plays on the fears of Australians.

GST Change Is A Plain And Simple Tariff, Scott Morrison

The Turnbull government's proposal to eliminate the $1000 threshold before the GST is levied on imported goods is not a tax integrity measure.  It is a tariff, and one that will have serious repercussions that the government does not seem to have considered seriously.

The end of the low-value threshold was first flagged by the government in December 2014.  It formed part of last year's budget.  Now there is actual separate legislation before parliament, and a Senate committee inquiry that will give its verdict on the legislation the same day Scott Morrison releases his 2017 budget.

By July, if everything goes to the government's plan, the commonwealth will be receiving a stream of GST revenue from every global internet retailer that supplies Australian customers with a total of more than $75,000 worth of goods.

That's the plan, anyway.  This proposal is no more convincing now than it was two years ago when it was first announced.

In 2011 the Productivity Commission concluded that inspecting low-value imports at the border to assess their GST liability would cost more money than it would raise.  So rather than getting Customs to collect the GST, the government wants to convince foreign online retailers to do it for them.

Let's imagine this ploy works.  Some of the consequences are easily predictable.  First, many Australians will substitute away from well-known online sellers — such as eBay and Amazon — that have built excellent reputations for facilitating and protecting trade, to those less well-known sellers that are likely not to charge the GST.

Doing so will expose more Australians to online fraud and lead to them purchasing less reliable products from unreliable suppliers that may not meet our high quality and safety standards.  It also will expose more Australians to the more unsavoury sellers on the internet, possibly leading to an increase in unlawful imports into the country.

At the very least, a 10 per cent increase in the cost of digital goods will make intellectual property ­piracy just that little bit more ­attractive.  This is a real cost of the policy that must be fully accounted for.

Second, the way the government proposes to implement this measure constitutes an exercise in extraterritorial power.  The commonwealth Treasury does not have jurisdiction over eBay (headquartered in San Jose, California) or Amazon (headquartered in Seattle).  Attempting to rope them into our tax system will place the Australian government in conflict with our major trading partners.  At the very least this should generate trade disputes at the World Trade Organisation.

Doubly so if our trading partners read the Treasurer's second reading speech introducing the legislation, which makes it clear that this is a protectionist measure to benefit the Australian small businesses that have been "unfairly disadvantaged" by the fact they pay taxes that firms in other countries do not.

This is the nub of the issue.  Transactions that occur in foreign countries should not be liable to the Australian GST.

The GST is usually described as being a "consumption tax" but in fact, for practical reasons, it is a tax on sales.

When Australian consumers purchase goods online from, say, a company based in Britain, the sale does not occur in Australia — it occurs in Britain.

The money is exchanged in Britain, the order is produced in Britain, the sale is processed in the Britain and the dispatch order is made from Britain.

The fact the goods are subsequently imported into Australia does not mean those goods should be liable to an Australian sales tax.  A tax levied on imports is a tariff.  This legislation is an embarrassing reversal of Australia's longstanding free trade agenda.

Morrison pointed out in his second reading speech that his legislation is a "significant world first".  That is not something of which he should be proud.

In the realm of tax administration, at least, Australia is showing itself to be a bad international player.

Rather than introducing a new tariff to protect Australian business from international competi­tion, the government should focus its efforts on those features of the Australian business environment that impose such high prices on local consumers.

Working to lower company tax, high wage structures and reducing red tape would benefit Australians far more than protectionist measures for their small-business constituency.

Young People Need Hope And Jobs, Not Gesture Politics

Calls from two Nick Xenophon Team parliamentarians and Independent Member for Indi Cathy McGowan to establish a Federal Minister for Young People proves that bad ideas in Federal politics are not the exclusive domain of the major parties.

NXT MP Rebekha Sharkie has justified the idea by claiming that "children and young people feel like they're being spoken at, not spoken with by the federal government," "Justin Trudeau is also the Minister for Youth in his country" and this is "not just a left wing idea."

The problem with this proposal is not whether it is said to be left or right wing.  The problem is that it is just a bad idea.

There are currently 42 executive officeholders (ministers and assistant ministers) in the Australian Government with a total of 54 portfolios.

While this is broadly in line with recent Coalition and ALP governments, there is no comparison with the 19-member Menzies Ministry of 1949 or the nine-member Barton Ministry in 1901

Then again it could still be worse.  Bill Shorten's current Shadow Ministry has 48 officeholders and a whopping 84 portfolios!

There are now eight ministers in the Prime Minister's department including the PM, and ministers assisting the PM for the public service, cyber security, counter-terrorism and cabinet, as well as one who is just the Assistant Minister to the Prime Minister.

There is an Assistant Minister for Cities and Digital Transformation who also reports to the Prime Minister, as well as a Minister for Urban Infrastructure who confusingly reports to the Minister for Infrastructure and Transport.

A total of four ministers occupy the social security portfolio, there are also four in foreign affairs and trade, and while there is a Minister for Communications there is also a separate Minister for Regional Communications.

It is little wonder that Federal Government spending has accelerated from $140 billion in 1997-98 to $441 billion in 2016-17, and gross debt is set to pass $500 billion later this year.

The more ministers, their staff and bureaucracies that exist, the more certain it is that they will look for more to do and more places to spend taxpayer money.

Rather than asking how many extra positions we can create, taxpayers should instead be asking what we can eliminate.

For example, why does there need to be two federal education and training ministers when the federal government doesn't run any schools, or three health ministers when hospitals are run by the states?

Why does there need to be a Minister for Urban Infrastructure given that planning, land management and transport are largely State responsibilities, and how many of the Environment Minister's responsibilities could be returned to the States or allocated to the Industry portfolio?

As well as the Cabinet-level ministers for foreign affairs and for trade do we really need a federal Minister for International Development and the Pacific and an Assistant Minister for Trade, Tourism and Investment?

Given the extent to which the Federal Government has already displaced the private sector and State Governments over the last thirty years, the current, unwieldy Administrative Arrangements Order would be a good starting point for serious moves to begin peeling back federal red tape.

Young people need a taxation system that acknowledges and rewards savings and investment, an education system that gives them the skills to cope with a competitive international marketplace and most importantly of all, a state that sees them as individual citizens with amazing potential rather than another disadvantaged group to be "represented" by politicians.

It is the uncontrollable growth of government and the consequential stifling of entrepreneurship and burden of debt, which has done more to damage the prospects of younger people than anything else.

A new Youth Ministry would create jobs in Parliament House and the bureaucracy to be sure, but that is about it.

Criminal Justice Reform Does Not Start In Jails

The new WA Government has said that it cannot afford to build a new $600 million prison planned by the previous government.

But this cost cannot be avoided simply by letting people out of prison.  Criminal justice reform must always be about maximising community safety.

The Government is right to look for inefficiencies in the criminal justice system.  WA has the country's fastest growing prison population, increasing 14 per cent over 2015-16.  The State has one of the highest incarceration rates in the country at 314 per 100,000, a 30 per cent increase over the past 10 years.  This figure rises to 3997 per 100,000 for indigenous Western Australians.

The annual per prisoner cost of incarceration in the State is $130,000.

WA is not the first jurisdiction to face rising incarceration costs.  Over the past 10 years, more than 20 American states have implemented reforms to lower the cost of incarceration while reducing crime and re-offending.  The American experience yields some useful lessons for WA.

The first lesson is to implement punishment reform for non-violent offenders.  In the words of former Texas politician Jerry Madden, we need to make a distinction between those offenders we are "afraid of" and those we are merely "mad at".  For the latter group, Texas expanded community-based punishments and treatment programs.

In practice, punishment reform means a significant portion of the money saved by not building new prisons still needs to be committed to the criminal justice system, to pay for case officers, halfway houses, and monitoring.  Research also shows that police spending is effective for reducing crime.  And in WA, the high level of indigenous incarceration may require special attention.

The real savings come from a longer-term reduction in crime and recidivism.  Texas has avoided more than $3.9 billion in prison costs.

Serious property, violent, and sex crimes fell 12.8 per cent between 2003 and 2010.

WA Corrective Services Minister Fran Logan said he would like to focus on the remand population, which makes up 30 per cent of WA's 6600-strong prisoner population.  But the most serious offence of 46 per cent of WA prisoners was a non-violent offence, showing the potential for wider reforms.  The second lesson is to reduce re-offending through skills training and employment.

About 60 per cent of WA prisoners have been imprisoned before.  Research in Australia and the US has shown a strong correlation between unemployment and re-offending.  While the Government will likely face some pressure to address crime through the welfare system, no excuses should be made for criminals.  The Government should set high expectations for released offenders.  This means insisting people become productive members of society and targeting assistance to that goal.

Texas and other American jurisdictions have tackled re-offending by expanding skills education, reducing barriers to employment and offering tax incentives to businesses that hire former prisoners.  In Australia, the high minimum wage is a particular barrier for higher risk potential employees.

The Commonwealth should consider an exemption for ex-prisoners.

Whatever programs are put in place to reduce offending, they must be tracked and evaluated.  This means that administrators and researchers must have reliable data.  In the US, criminal justice reform typically begins with a top-to-bottom independent review of the system's operation and oversight mechanisms.

The State Ombudsman has experience in conducting reviews of government administration and would likely be able to perform this function.

Finally, the Government should take note of the politics of criminal justice reform.  In the US, reform has been led by conservatives, with an emphasis on community safety and fiscal responsibility.  Even more importantly, reformers have been able to bring the public with them by pursuing reforms consistent with traditional moral principles like personal responsibility and just punishment.

The public, rightly, will not support any reforms that undermine their sense of right and wrong.

Criminal justice reform is therefore not simply about reducing incarceration.  It is about reducing crime through cost-effective, data-driven punishment reform, thereby lowering costs while making the community safer.

Business Bosses Hide Out In The Qantas Chairman's Lounge

Liberal Party pollster, Mark Textor recently gave a penetrating insight into the hopelessness of the policy advocacy provided by many of Australia's business leaders.  Business leaders, he said, had "deskilled" themselves when it came to communicating to the community, and had "retreated further into their bubble".

According to Textor representatives of big government, big business, and big unions "all meet each other in Qantas lounges and have the occasional manufactured blue on the stage of a forum.  And yes, they do have some fundamental differences, but my contention would be that it's not as big as the differences between small and big businesses, not as big as the differences now between the public and political class."

Textor is correct.  The role of big business in the Australian economy and in national politics is the subject of my forthcoming research paper.  Coincidentally it's entitled Australian business and the Chairman's Lounge syndrome.

The Qantas Chairman's Lounge is probably the most exclusive club in the country.  Membership is by personal invitation of the chairman.  It's tucked away behind a private door in airports across the country.  Unlike the Qantas Club, you can't buy your way in.

Too many of this country's corporate leaders suffer from the syndrome.  Its symptoms include an intense desire to be accepted by one's peers, fear of controversy, and preferring what's comfortable and safe.

THE PERFECT METAPHOR

Membership of the Chairman's Lounge is elite, small, and hermetically sealed from the rest of the world — a perfect metaphor for the leadership of big business in Australia.  As with all such groupings of limited size, the pressure to conform is high.  The global business elite have Davos at which they can assuage their guilt for getting paid many multiples of the average wage for doing not much at all.  In Australia we have the Chairman's Lounge.

A feature of those who speak for big business in this country is how homogenous it is.  There might be a degree of diversity when it comes to gender or ethnic background — but not when it comes to politics.

Even if the CEO of an ASX 100 company believed that Donald Trump as President of the United States will be good for the world — they wouldn't dare say it.  But the point is they wouldn't think it in the first place.  It's easy for Chairman's Lounge members to adopt social and environmental causes because most of the time they're not affected by what they preach.

Few Chairman's Lounge members would notice if their family electricity bill went up by $100 a year because of climate change policies.  And because government red tape hurts small business much more than big business, which is one of the reasons why so few business leaders talk about the need to reduce excessive regulation.

A CEO of a big business in Australia is most likely to have attained their status, and therefore their membership of the Chairman's Lounge, not because of their creativity or their skills of entrepreneurship for example, but because they can play corporate politics.  The reality is that many CEOs of big businesses in Australia are company bureaucrats.  And the companies they work for are bureaucracies that have a culture of bureaucracy.

US DIFFERS

In America it's different.  In America the five biggest companies by market capitalisation are Apple, Alphabet (Google), Microsoft, Berkshire Hathaway, and Amazon.  And Facebook is number six.  In Australia our biggest companies are the four banks and the two miners.  Our biggest company, the Commonwealth Bank, used to be owned by the government.  So did two other companies in our ten largest, CSL and Telstra.

Consider what happened when the American executive Sol Trujillo was CEO of Telstra between 2005 and 2009.  Trujillo was not an internal Telstra hire who had spent a career with one jealous eye on the Chairman's Lounge entrance.  He was described as "combative".  But by "combative" people seemed to mean that he firmly stood up for his firm's policy interests in public.

Such forthrightness and policy engagement was not appreciated by his peers.  Trujillo left the country nearly a decade ago.  These days too many of this country's business leaders prefer the peace and quiet of the Qantas Chairman's Lounge to the rough and tumble of fighting for something in the public debate.

No Escaping Brexit Lesson

But that is what will be required of British Prime Minister Theresa May and her European Union counterpart, Donald Tusk, as they navigate what will be the world's most complicated and expensive divorce settlement over the next two years.  Added to that, the EU will need to get its remaining 27 member states to agree to the terms of the divorce, an exercise tantamount to herding cats if previous experience of EU decision-making is any guide.

Regardless of the naysayers and the doubters who still campaign to this day for the UK to remain in the EU, have no doubt the Brexit divorce will go ahead.  By 2019, the UK will be out and free to be a major player on the global stage once again.

Brexit is good news for Australia, but it won't all be plain sailing.  We will need to be as nimble as the UK in making the most of the changing geopolitical landscape.

The most obvious benefit for us is a quick and comprehensive free trade deal with the UK as soon as it exits the EU in 2019.  We can expect wins for our exporters as the UK leaves the protected EU market and opens up its market to our Aussie beef, lamb, wine and fruit.

For most of us, as consumers, we should benefit from cheaper British cars and manufactured goods.  Hopefully we'll get a better deal when it comes to visas for those who wish to live and work in the UK.  The past decade has seen a sharp decline in the number of Australians living in the UK, which can be put down to the British Government's attempt to rein in non-EU migrant numbers.  Out of the EU, the UK will have control over its migrant levels and Australians should expect a return to more favourable treatment in recognition of our shared ties of history, culture and values.

Free of the shackles of the EU, which consumes so much of the UK's diplomatic time and energy, the UK will look to the world.  That goes against the narrative of the ardent "Remainers" that Brexit is a return to a nativist Little England.  Prime Minister May has been quite clear:  post-Brexit UK will be open and global.  Old friends, like Australia, will be back in vogue and we should expect the UK to be focused on our shared interests, especially in the Asia Pacific region where the UK has been largely absent for the past few decades.

The UK will look for new friends too, especially Asian powerhouses like China, Japan and Korea.  We can be part of those new friendships.

The biggest challenge posed by Brexit will be navigating our relationship with the EU.  The EU without Britain means an EU without our most like-minded partner, without its most liberal and outward-looking member state and without its second-biggest economy and contributor.

Without the UK, the EU will be poorer, more introverted, less trans-Atlantic and less internationally engaged.  Coupled with the blow of losing Britain, it will continue to grapple with intractable problems:  the Eurozone crisis and high levels of government debt, systemic low growth and ageing populations, as well as the migrant crisis with its serious ramifications for internal security and social cohesion.

Let's be clear.  An EU distracted, depressed and without British leadership will mean it will be harder for Australia to negotiate its dawdling FTA with the Union.  Without free trade-loving Britain, the much more protectionist French and Italians will be less interested in doing a deal with Australia and more interested in protecting their own farmers.

NOW is a turning point for the EU.  Without Britain, the EU must reshape itself to ensure its own survival.  Elections this year, including in France and Germany, could see Eurosceptic leaders in place, putting the future of the EU in doubt.

EU leaders need to heed the lessons of Brexit — that democracies work when governments stay connected and responsive to people.  Respecting the national sovereignty, identity and values of member states should always trump the interests of the EU and other supranational bodies.  Ultimately, standing up for the common good only matters if it's for the common good of people and not the institutions that profess to serve them.  Losing sight of people means losing their faith.  If you do that, recent history shows they won't be afraid to show their displeasure at the ballot box.

Such is the enduring power of democracy.  That is surely the lesson for the EU and globalism more broadly.