Potential Rorting A Warning For PaTH Program

Allegations of potential rorting of the Victorian Labor government’s ‘Back to Work’ scheme is a warning shot across the bow of the re-elected Federal Coalition government’s own wage subsidy program.  Getting people into work is a laudable aim, but governments of all persuasions need to be careful of rent-seekers lining up to line their own pockets.

The announcement of a “new and ambitious” employment program in this year’s federal budget sounded oddly familiar.  It seemed that the Turnbull government had discovered Victorian Labor’s 2014 election platform.

A promise to create 100,000 jobs over two years was at the centre of Labor’s pitch to make Daniel Andrews the next Victorian premier.  The flagship ‘Back to Work’ announcement included a $100 million fund for wage subsidies of up to $1000 for business that hire unemployed youth, long-term unemployed or retrenched workers.

Similarly, the Coalition’s Youth Jobs PaTH (Prepare, Trial, Hire) program aims to help 120,000 young people take advantage of employment opportunities — a key policy conforming to their election mantra of “jobs and growth”.  The $751.7 million package includes upfront payments of $1,000 to businesses that take on interns, and wage subsidies of between $6,500 and $10,000 to businesses that hire those interns on a permanent basis.

There is no doubt that youth unemployment is a major problem.  According to the ABS, the national youth unemployment rate for May 2016 was 12.4 per cent — more than double the national adult rate of 5.7 per cent.

We need new ideas to tackle this problem.  However, the Victorian Labor government’s strategy of wage subsidies simply hasn’t worked.

Figures from Victoria’s State Revenue Office revealed that only 164 claims were made under the ‘Back to Work’ scheme between July and September 2015.  In response to the slow start, the Victorian government increased payments to up to $12,000.  Fast forward to July 2016 and the scheme is apparently “fully subscribed”.  This is curious given that only about $40 million of the $100 million fund has been spent, and 12,000 jobs had been supported by the wage subsidies — making Victorian Treasurer Tim Pallas’ “stretch target” of 100,000 jobs look like quite a stretch indeed.

Where has all the money gone?  Time will tell, with the Victorian Shadow Treasurer Michael O’Brien alleging rorting, and has written to the Victorian Auditor-General requesting a full investigation.  Allegations that the scheme has been rorted are not surprising.  Rent-seeking is much easier than running a profitable business.  Besides, the subsidy offer provides a powerful incentive for businesses to fudge the paperwork to fit the eligibility requirements, particularly when combined with a government desperate to make its policy a success.

There is no value in these programs if they displace jobseekers that would have been hired without a subsidy, or if employment ceases as soon as the subsidy ends.  For example, a departmental review of an existing Commonwealth program in 2012 found that “81 per cent of employers reported they originally intended to keep employees indefinitely, in practice only 57 per cent intended to retain the employees at the time of the survey”.

There are fundamental questions for the Commonwealth government to confront.  How can the Federal government’s scheme succeed where the Victorian government’s failed?  What safeguards will be put in place?

On budget night Treasurer Scott Morrison said “we must do better than this.  We must try new approaches, not just keep doing the same old thing”.  The problem with the PaTH program is that wage subsidies have been tried, and the problem of youth unemployment has persisted.

The Turnbull government could use its second term to champion a new approach to employment policy by opening up uncompetitive labour markets.  It will be far more difficult than throwing money at the problem.  But it would be in stark contrast to their opponents in Labor and The Greens who would prefer to retain an out-of-date regime that continues to lock young people out of work.

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Abbott's strategy just a blast from the past

Here's the problem.

Yes, Tony Abbott survived the spill.  But that majority vote of support in the Prime Minister was not in spite of his public unpopularity.  It was in spite of his underdeveloped plan for the next year of government.

Everybody is wondering how Abbott might be able to turn the ship around.

And Abbott's plan, offered first at the National Press Club last week and repeated to ABC political reporter Chris Uhlmann the night before the spill, is worryingly insubstantial.

Far too much of the plan for the future harks back to the past.  Not just avoiding the wasteful spending of the Labor years, but reversing or modifying Abbott's personal commitments.  No more prime ministerial picks for knights and dames.  No more paid parental leave.

Stripped of all the rhetoric, the future of the Abbott Government looks like this:

One:  a crackdown on unlawful foreign investment.  "Better scrutiny and reporting" of agricultural sales and "better enforcement of the rules" governing house sales.  Two:  a further crackdown on Islamist radicals in Australia.  Hizb-ut-Tahrir, we're looking at you.  Three:  a families package, probably something to do with childcare.  Four:  small business tax cuts.

This is just not enough to pin the Government's future on.

One of the most revealing and probably most politically powerful stories to come out this week was of a quiet discussion between Malcolm Turnbull and Tony Abbott in the Prime Minister's office during the two-day cabinet meeting.

Turnbull asked Abbott what the plan was.  Abbott repeated the major points from his press club address.  Foreign investment.  Hizb-ut-Tahrir.  Turnbull, it was reported, was "underwhelmed".

The story is drenched in Turnbull camp spin.  But it's very revealing nonetheless.

At the Guardian, Katharine Murphy has a good observation about how Abbott has struggled to define himself in government:  "Abbott didn't know if he was freedom Tony, or security Tony, or austerity Tony, or double the deficit Tony."

But the confusion goes much deeper than Abbott's personal philosophy.  The Coalition came into power with twin but contradictory stories about how it would operate.

The first story was that the Abbott Government would be the restoration of the Howard era, an era of certainty, and relative economic prosperity.  Labor had bickered and bungled around for six years.  Abbott would bring back not only John Howard's governing style, but much of Howard's governing team.  They would be an adult, long-term government.  Politics would fall off the front pages.

Ironically enough, this desire to be an "adult government" actually created some of the problems of the first few months, as I pointed out in The Drum at the time.

Yet against this story of stability and certainty was the policy challenge the Coalition believed it had been elected to fix.  It is relatively easy to abolish the carbon tax and mining tax, and, as Scott Morrison has demonstrated, not impossible to stop the boats, if stopping boats is your sole concern.

By contrast, fixing the budget in an era of economic sluggishness is an incredible challenge.  It requires big, aggressive calls in controversial public policy areas.  It requires revolution rather than stability.  It makes boldness a more necessary virtue than steady competence.

You could see them struggle to balance these two stories all the way through September 2013 to May 2014.

Eventually crunch time came.  Joe Hockey decided to lump all the big calls together in their first budget.  They were presented as deficit reduction measures rather than reform proposals in their own right.  This was a mistake.  Rather than arguing for the budget proposals on their own merits, they stuck with a macro-level Labor-debt-and-deficit line.

Anyway, it all played out very poorly from there.

After many traumatic months nobody imagines that the boldness of the 2014 budget will reappear in 2015.  We're faced with the prospect of Bill Shorten's small-target Opposition facing off against a gun-shy Government trying to compress itself into an even smaller target.

The prime minister's office no doubt hopes the small target approach will stop Abbott from haemorrhaging in the polls, but at the same time it will do nothing to put the Government in a competitive position against Labor at the next election.

Governments, even stable, competent, Howard-esque ones, need a purpose;  a goal, a vision.  Clamping down on foreign investment — even if it was a good idea — isn't enough.

And in the meantime, the nation's finances are only going to get worse and worse.

Turnbull failed to put up his hand for the spill on Monday in more than one way.  The Communications Minister may have been underwhelmed by Abbott's plans but has offered no plan of his own.  He's presented no alternative strategy for righting the Government.

And that is almost certainly the conversation Coalition MPs are having right now.

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Conservatives turn their critical eye on Abbott

You almost never get a natural experiment in politics like this.  Yet now we're in the third prime ministerial leadership crisis in five years.

So let's use this unique and rich dataset (n=3) to draw some preliminary conclusions about Australian political culture.

Crisis 1 occurred in June 2010.  Kevin Rudd was rolled by Julia Gillard.

Crisis 2 occurred in June 2013.  Julia Gillard was rolled by Kevin Rudd.

We could add some nuances here.  Perhaps Gillard's entire prime ministership was one big leadership crisis.  Rudd and his backers had brought the matter to a head twice before the final blow, in February 2012 and March 2013.

Whether Crisis 3 turns into Spill 3 is hypothetical of course.  But we mustn't let details like that hold us back.

In fact, we can't.  It is the nature of these crises that everything is, and will be, interpreted through a leadership lens.  Malcolm Turnbull made a speech about Asia?  Leadership pitch.  Julie Bishop tweets during Abbott's press club address?  Leadership pitch.  Scott Morrison put out a media release?  Leadership pitch.

Once the cat is out of the bag it is hard to stuff back in.  Every press conference is now about leadership.  Even if Abbott pulled off a miracle — even if he is prime minister for 10 more years — leadership questions will fester through everything he and his ministers do.

A leak to Kieran Gilbert at Sky now suggests Bishop refused to guarantee she wouldn't challenge Abbott at a meeting between the two on Sunday.  We all know how this plays out.  Things are moving very quickly along a well-worn path.

It's tempting to blame the media for creating the crisis in the first place.  This makes sense.  They're the ones asking all those distracting questions about who supports the PM.

But, as we know from last time and the time before that, all those anonymous quotes that litter our newspapers come from somewhere.  All those public denials are undermined by private briefings to favoured journalists.

Recall that the Labor Senator Doug Cameron was so publicly angry about anonymous leadership stories in the Daily Telegraph in November 2011 that he threatened a press crackdown, accusing News Limited of being "a threat to democracy in this country".  Of course, it later turned out that Cameron was a big Rudd backer.

Peter van Onselen — who has had his fair share of briefings from discontented Liberal MPs — claimed on Twitter that some of the politicians roped into supporting Abbott at a weekend press conference didn't actually support him in private.

Yes, Parliament House is really just a nest of professional liars.

And once a party's stone-faced loyalty has been broken — as it has been, with seemingly every backbencher opening their hearts to every journo that calls them — it's impossible to get back.

There's something else that's blindingly evident when we compare the Labor crises to this one.

Much of the conservative leaning commentariat admired Tony Abbott in opposition.  He talked about the right things.  He offered (many of) the right policies.

But a year and a half in, their critical floodgates have opened.

Now every significant conservative commentator has offered brutal assessments of how things are going.  And they're not just repeating Abbott's "blame Labor" explanation.  See, for instance, Andrew Bolt, Janet Albrechtsen, Piers Akerman, Grace Collier, Chris Kenny, and Miranda Devine.

This is healthy.  When the dust settles — wherever it settles — hopefully conservatives will be able to identify the deeper sources of the Government's malaise.

We saw nothing like this during the Gillard years.

Rather, the story from Labor's media supporters was that Gillard was actually a great prime minister (great policies, great parliamentary negotiation skills) but let down by a mendacious News Limited, the Abbott wrecking ball, the evil Kevin Rudd, and the fact that she was female.

Oh, and those ubiquitous "communications problems".

Now it seems Labor's self-awareness has plateaued:  the bulk of the blame has been laid on Rudd for "stalking" Gillard.

The conservative commentariat didn't create this latest leadership crisis.  But they're reflecting a deeper dissatisfaction with the Government within the broader conservative movement — a dissatisfaction that began with Abbott's slow start in 2013, crystallised with the deficit levy in the 2014 budget, became exposed after the Section 18C promise was abandoned, and spiralled out of control over the Christmas break.

The Prince Philip thing was just the catalyst, not the cause.

And if we've learned anything from the last few leadership crises, once there's agreement on the cause, the consequences are hard to avoid.

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Testing times make for great (and awful) leaders

Tim Fischer, deputy prime minister in the Howard government, thinks John Monash, the legendary Australian military commander during the First World War, deserves a promotion.

Fair enough.  But Fischer has stumbled upon a bigger issue in Australian history — the mendacious jingoistic hopelessness of one of our most famous prime ministers in one of the most important times in the development of the nation.

In his new book, Maestro John Monash:  Australia's Greatest Citizen General, Fischer argues that Monash was denied the rank of Field Marshal because Billy Hughes, prime minister between 1915 and 1923, was both jealous and anti-Semitic.  Monash had both German and Jewish ancestry.

A promotion is not the only honour Fischer would like for Monash.  He would like the main street in Monash's childhood home of Jerilderie to be renamed John Monash Parade.  He'd like a bridge Monash helped build in Benalla to be renamed the John Monash Bridge.  He'd like London's Imperial War Museum to recognise Monash's contribution, and some newspapers that downplayed Australian war efforts a century ago to rectify that error.  Along the way he'd like some WWI battles renamed, for clarity.

(Yes, Maestro John Monash is a very policy-oriented biography.)

Fischer says the idea of promoting Monash to Field Marshal has precedent.  The cause has been taken up by the Assistant Treasurer Josh Frydenberg.

But the real spotlight here has to be on the bad guy in Fischer's story — Billy Hughes.

Historians tend to be most impressed by active prime ministers.  Usually those that govern during war do well on that measure.  Testing times make for great leaders.  Take John Curtin, who has been the subject of more hagiographic praise than any other PM.  (John Hirst makes the case against Curtin's greatness in his 2010 book Looking for Australia.)

Billy Hughes benefited in his lifetime from the patriotic enthusiasms of the First World War.  Now he's largely faded into old Labor legend as the archetypal "rat".  Otherwise he's best remembered for his two failed referendums on conscription during the war.

But in retrospect it is hard to think of a worse Australian Prime Minister than Hughes.

Hughes' record is dismal.  His support for conscription is bad enough.  (Ronald Reagan once described conscription as the "assumption that your kids belong to the state".)

Hughes fostered a split in the Labor Party and created an alliance to hold government united by nothing except aggressive wartime patriotism.  This Nationalist coalition represents the final death knell of classical liberalism as a political force in Australia.

As an administrator he was a failure.  Even as sympathetic a biographer as Donald Horne had to say that Hughes was an "incompetent wartime prime minister".

At the Versailles peace treaty he was the most extreme supporter of German reparations.  He even wanted Germans to compensate Australians who had financed their purchase of war bonds by taking out mortgages.  The final harsh reparation settlement contributed to the later German economic collapse and the rise of Nazism.

Just as consequential was his aggressive and passionate support of the White Australia Policy.  A Hughes biographer, W Farmer Whyte, writes that "nobody had fought harder than Hughes to place Australia's immigration laws on the statute-book".

When Japan proposed in 1919 that the covenant of the new League of Nations should have a clause defending the principle of racial equality, Hughes was the clause's most aggressive critic.  He was worried it would threaten White Australia.

The historians Geoffrey Blainey and Margaret MacMillan have both argued there is a clear relationship between the defeat of the racial equality clause and subsequent Japanese belligerence towards the West.

Either way, there is no doubt that thanks to Hughes, Australia's contribution to world peace at Versailles was an unmitigated disaster.

Poor old Billy McMahon is regularly pummelled as the worst prime minister in surveys (Wikipedia has an overview here).  Left and right like to argue that either Robert Menzies or Gough Whitlam was the worst.

But none of these leaders' flaws can possibly stack up next to Hughes — who was incompetent during the First World War and the biggest supporter of mistakes which led up to the Second World War.

Hughes' incredibly poor leadership is the embarrassing counterpoint to the Anzac heroism we are remembering during the WW1 centenary.

Australians don't have a deep political memory.  We don't debate our political past as, say, the Americans do.  Our newspapers aren't filled with comparisons between political events and their historical precedents.

But our political history matters.  Hughes was an inept leader who benefited from the patriotism of wartime.  He was sustained by a political class who valued his populist touch more than good government.  There are some lessons there we could file away for the future.

So should John Monash be promoted to Field Marshal?  Monash was a great military leader, and deserves to be judged on his merits.

But, then again ... if by doing so it further exposes our worst prime minister for the failures of his time in office, it might be worth it.

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Handing out money is no substitute for reform

Some might think the 2014 Victorian state election was a referendum on the East West Link.  But they overlook the vital $209,000 investment in a mattress recycling facility that would have graced Ballarat had the Napthine government been re-elected.

Sadly, despite the need for serious economic reform, it was the trivial and meaningless that dominated this year's Victorian state election campaign.

The lasting legacy of the Victorian Coalition government is Premier Daniel Andrews and his CFMEU-backed government.  Under the state's new administration, Victoria risks being a drag on the national economy.  But the damaging policies of the Andrews government are only half the reason.  The Coalition's neglect of meaningful economic reform for a full term in government is the other.  An enormous opportunity for economic reform has now been lost over the four years under Ted Baillieu and Denis Napthine.

The only way to grow an economy is to allow enterprise and entrepreneurship to flourish.  Taxation and regulation restrict the ability of businesses to innovate and grow.  Any government that is serious about growing an economy and growing jobs must tackle these impediments to economic success.  Taking money from taxpayers and spending it on projects approved by a government bureaucracy doesn't grow an economy, it shrinks it.  If the opposite were true, Cuba's economy would be a thriving beacon of success.

But these policy areas have been deserted by the Coalition.  The state Coalition government made only minor changes to the regulatory system, despite appointing the eminently qualified John Lloyd to the newly created position of Red Tape Commissioner in January 2013.  Although recommendations were made to the government, only a handful were ever pursued.

Tax has been another area of policy neglect.  One of the only tax policies of the Baillieu/Napthine government was to cut payroll tax cut from 4.9 per cent to 4.85 per cent.  Announced in the 2014/2015 budget, it moved Victoria in the right direction but was incredibly modest, and was not part of a much-needed broader tax policy.  The answers to deeper questions about why the state government imposes a direct tax on employment were never given because the question was never asked.

It has been odd to read some commentary suggesting that a major reason for the Coalition's defeat at this election was the Abbott government.  This is quite clearly not the case.

Many have pointed to the problems the Victorian government faced in its first two years.  But although there was a recognition that problems existed, the solutions to those problems were never found.  As premier following the 2010 election, Baillieu failed to develop and implement an agenda of economic reform that Victoria still desperately needs.  One of the arguments for switching leaders in March 2013 was that the new leader would have time to turn the ship around before the election in November 2014.

At that time there was more than 18 months until the state election.  But the new Napthine government did not seize the opportunity for reform.  Instead it continued down the same path that got the Coalition into a mess in the first place.

Some of the first acts of the Napthine government involved spending more money.  In his very first week, Napthine announced $200 million in new funding to the TAFE sector and explored the idea of a new government-backed recycling scheme.

Imposing a moratorium on coal seam gas exploration was one of the most damaging decisions the government made in relation to energy policy.  The decision, in November 2013, cut off a market where Victoria could have a very significant advantage.

During the state election campaign, this habit became even worse.  The Napthine government was responsible for a rolling flurry of announcements.  The frenetic pace of spending commitments alone was quite extraordinary.  No sooner had journalists reported on one spending commitment then another, of even greater magnitude, was being made.

If any requests for government funding were rejected during this campaign, you wouldn't know it from the outside looking in.  At the very least, the promise of $283,000 in joint federal-state funding to expand a Reservoir-based ice cream maker suggests that the threshold for releasing taxpayer funds was very low indeed.

The Coalition government does deserve some credit for maintaining a AAA credit rating when other states couldn't, and for its budgets projecting surpluses throughout the forward estimates.

One good thing Napthine has done is call for renewal.  In his concession speech in Melbourne on Saturday night, he said:  "It is time for renewal, it is time for change."

The Liberal Party must learn that outspending the Labor Party, trying to beat them in areas where the ALP has a natural advantage and pandering to special interests, does not pave the path to success.  Committing to the principles upon which the party is based, presenting an alternative to the ALP and putting forward positive reform policies is the only way back for the Coalition.

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Fixed terms made a farce of Victorian politics

It's true that on Saturday the Coalition government became the first one-term Victorian government in more than half a century.

But it's also true that the Coalition was the first government to form under the new constitutional arrangements — the four-year fixed-term system.

The fixed term nurtured Ted Baillieu's instinctive lethargy.  It created an environment in which it was plausible to roll a premier two years into their first term.  And it led to the constitutional crisis that prevented Denis Napthine from regaining any sense of movement.

The Victorian election has already been raked over for its federal implications.  Denis Napthine tried to run an "ideology-free" government.  As I wrote in The Age today, "the risk-averse, moderate, cautious approach to politics favoured by state Liberals is no guarantee of re-election".

Institutions matter.  All this happened under the shadow of the new fixed term.

In 2003, the Labor government under Steve Bracks introduced fixed terms as part of a broader suite of constitutional changes.  The idea was to facilitate long-term thinking and allow governments to get on with governing.

The flip side is that long fixed terms reduce any sense of urgency.

Nobody expected Baillieu to win in 2010.  When the Coalition got into office, there was no agenda ready to go, and no eagerness from the premier to push ahead.  The "star chamber" vetting process for ministerial staff meant that it was months before offices were even working at full capacity.

One line was the Coalition had "hit the ground walking".

Of course, fixed terms aren't unique to Victoria.  They've done nothing to limit the popularity of the New South Wales Coalition Government.

But government is a marathon.  It needs pacing.  Faced with a new and unfamiliar electoral cycle, the Victorian Coalition got the pacing badly wrong.

The fixed term also played a role in the March 2013 leadership change from Ted Baillieu to Denis Napthine.

That spill was remarkable because it came so shortly after the spill of Kevin Rudd, which was being seen by almost all participants as an unmitigated disaster.

With that unhappy precedent, the spill in Victoria was only plausible because of the newly extenuated parliamentary terms.

Julia Gillard became prime minister on the cusp of an election.  By contrast, Napthine had years to run as premier.  A four-year term gives ample time to reset and rebuild a government.

Yet ultimately the Victorian Liberals made the same mistake as did Labor federally — a sudden change in government leader without explanation.

Which brings us to Geoff Shaw, the former Liberal member for Frankston.  Napthine's attempt to reset the government was hostage to the parliamentary soap opera played out between Shaw and another angry rogue Liberal, the former speaker Ken Smith.

The specific ins and outs of this debacle are known only to the participants.

Shaw and Smith created a serious constitutional problem.  The Coalition only had a parliamentary majority of one, including Shaw.  (Incidentally, that tiny margin was the defence Baillieu supporters offered for the early-term go-slow strategy.)

With the Parliament in such a precarious way, Napthine should have called an election.  That's the Westminster way.  But under the fixed term he couldn't.

The only way for an election to be held early was if Labor introduced a motion of no confidence in the government.  (Antony Green outlines the procedure here.)  At one stage Shaw was willing to support such a vote, giving it the majority needed.

Daniel Andrews didn't want an early election.  The worse the Parliament looked, the better it was for Labor when the election was held at its regularly scheduled time.

Instead, we were treated to an obscene and undemocratic debate about whether Parliament should expel or just suspend Shaw, a legitimately elected representative.

It looked terrible.

Every budding reformer has their own pet change they'd like to make to Australia's political system.  Perhaps they'd like elections to be run differently, or restructure the levels of government, or "get money out of politics", or change the preferential voting system, or fiddle with upper houses.

Fixed terms were one of those reforms.  Only a few months after it was introduced in Victoria, Steve Bracks was urging the Commonwealth to follow his state's lead.

But it would be hard to see that fixed terms had delivered the sort of long-term thinking that its supporters prophesised.

Rather, it left Victoria with a sluggish government, encouraged a leadership spill, and turned a tight parliament into a farcical parliament.

There's another sense in which the Coalition loss on the weekend isn't that strange.  The journalist Paul Austin pointed out in 2007 that a premier who lasted two terms would now expect to be in power for eight years (assuming they were not rolled in the meantime).  While most Victorian governments have lasted longer than a single term, few lasted as long as eight years.  Jeff Kennett only managed seven.

The fixed term isn't the reason Denis Napthine lost.  But it's impossible to understand why they lost without understanding how it shaped the Coalition's time in power.

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Liberals shouldn't have abandoned their principles

Losing government after one term is a tragedy for Victorian Liberals.  But they should be even more disappointed that they didn't use the four years they had to implement the Liberal reform agenda Victoria desperately needs.

The Victorian Liberal Party cannot afford to ignore the lessons of this disappointing defeat.  Attributing much of the blame to the federal government is an implausible excuse.  The reality is that the Victorian Liberals trailed their opponents in the polls for almost all of their four years in government, long before Tony Abbott was elected Prime Minister.

One thing is unambiguously clear from the result — the risk-averse, moderate, cautious approach to politics favoured by state Liberals is no guarantee of re-election.  Simply arguing that Liberals will be better managers of services is not a sufficient argument to stay in power.  In fact, by failing to emphasise liberal values of small government, individual liberty and personal responsibility, the Coalition denied itself its best chance of retaining government.

The Baillieu-Napthine era is certainly not without achievement.  Its budget management is the envy of the federation, with a prized AAA credit rating and budget surpluses forecast for the foreseeable future.  It unquestionably delivered on its promise to get tougher on law and order.  Planning reforms have increased the sorely needed supply of housing.  The government's much-maligned vocational education changes were clearly necessary.  Long-overdue reform of the taxi industry was enacted.  The hard line on industrial relations was welcome, although the failure of police to enforce the law in the Baiada Poultry dispute was disappointing.

But the truth is few Liberals honestly believed they were going to win the 2010 election.  As a result, the deep thinking about a policy reform agenda that should take place in opposition largely did not occur.  Renewal of the parliamentary party did not go far enough.  Unsurprisingly, this meant the government got off to a very slow start, and in the absence of their own clear agenda, too many ministers took the lead from their departments with little regard for whether their recommendations were consistent with Liberal principles.

Sadly, this culture affected many areas of government.  In education, the government bowed to union pressure and backed away from introducing performance pay for teachers.  They happily signed on to Julia Gillard's left-wing and substandard national curriculum.  In health, they uncritically advanced nanny-state policies such as banning solariums and smoking outdoors at restaurants.  In transport, they promised "free" tram travel in the CBD — a policy straight out of the Greens playbook.  The government picked an unnecessary and unhelpful fight with the federal government over freedom of speech, and neglected to address widespread concern about the impact of the human rights charter on Victorians' freedoms.

On jobs — a key issue for voters — other than modest rebates on payroll tax and Workcover premiums for businesses employing long-term unemployed youth, the government's plan was to hand private businesses grants of taxpayers' money in the hope this would create employment.  This is not only economically ludicrous but also politically unconvincing.  Where was the all-encompassing Liberal pro-growth agenda of tax cuts and deregulation?  An ambitious agenda for reform like this could have captured the attention of the electorate and convinced voters the government had a vision for the future.

Instead, the government's re-election strategy appeared to be to try to convince Victorians that Liberals would be more generous with taxpayers' money than Labor.  That's not a fight the Liberal Party will ever win.

The result was a stunning rejection of auction politics.  The Liberals' efforts to outbid Labor with more lavish election promises were a complete failure.  Premier Denis Napthine's frenetic and extravagant spending announcements clearly failed to save his government, or meaningfully dent Labor's lead.

It's even clearer at a seat-by-seat level that this approach didn't work.  In the marginal seat of Yan Yean, the Coalition's promises tallied an extraordinary $1 billion — almost double the figure pledged by Daniel Andrews.  And yet on the counting so far, the swing against the Napthine government in Yan Yean is actually marginally above the statewide average.  In Shepparton, the Coalition government didn't just promise cash for voters — they already delivered it in the form of a $22 million bailout to SPC Ardmona.  And yet the Nationals have suffered a 32 per cent swing in their second safest seat and look set to lose it to an independent.

Like far too many of the decisions made by the government, the bailout of SPC was utterly divorced from liberal principles.  Thankfully, the next generation of Liberal leaders are more obviously committed to adhering to liberal philosophy.  Both former treasurer Michael O'Brien and former planning minister Matthew Guy are thoughtful proponents of classical liberal ideas.

Whoever prevails in the leadership contest this week, the new leader will need to set a clear example from the first day.  The Victorian Liberal Party needs to explain to voters why their values equip them to bestlead the state.  Every policy must be tested against liberal philosophy.  They must offer an ambitious agenda of reform.

The alternative, of de-emphasising liberal values and instead simply auditioning to be the best service-delivery manager, is a proven failure.

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The problem with green corporate welfare

Efforts by opponents of the first Abbott budget to protect green corporate welfare measures undercuts their portrayal of government policies as inherently unfair.

Over months critics of the Abbott government have waged a highly charged publicity campaign opposing moves to consolidate a federal budget in structural deficit, and to deregulate an economy whose potential is constricted by red tape.

The Labor opposition and the Greens have already sided to oppose several expenditure reduction measures announced in the May budget, while the crossbench Palmer United Party has obstructed the passage of the budget through the Senate.

Reflecting a sense of community animosity against proposed spending cuts, and as a strategy to foment continuing animosity, activist groups organised by trade unions have rallied under the "Bust the Budget" banner throughout our major cities.  It now seems increasingly likely that these political agitations will finally bear fruit, no doubt bitter from the Abbott government's perspective, as senior government personnel look to negotiate concessions with crossbenchers to ensure its fiscal plan passes the upper house.

The government's detractors appear to have reasonable claims that some of their announced measures, such as more stringent job-seeking activity tests for Newstart recipients amid a more tightly regulated labour market and persistently slow economic growth, may need amending.  But when invoking the argument that government policy measures will hurt low-income earners, these groups rely upon a highly selective citation of those policy issues exerting the claimed effects.

Strangely silent are the opposition, the Greens, most Senate crossbenchers, and the Bust the Budget crowd about how some long-standing government policies effectively serve to line the pockets of renewable energy suppliers and other crony eco-businesses, more often than not at the expense of poorer members of our community.

Even worse, the influential Greens have long supported economically wasteful and morally dubious green corporate welfare (as reflected in spending measures, tax concessions and regulatory mandates) as a political imperative, and have won undertakings from successive governments to implement these perverse exercises in redistribution.

Moves by the Abbott government to abolish the Clean Energy Finance Corporation, backed by a $10 billion fund from taxpayers to bankroll renewable energies, low-emissions technology and energy efficiency ventures, has already been frustrated by opposition in the Senate.

The very mission of the CEFC is confused by statements, on the one hand that it aims to assist those projects that cannot attain finances through conventional financial channels, but on the other claiming to only finance projects that can repay investible funds and also achieve a positive rate of return.

It is reasonable to presume that clean energy projects expected to repay borrowings and achieve a good return will be funded by banks and other financial institutions as a matter of course, thus the CEFC threatens to crowd out private financing in its quest to pick politically attractive, yet economically dubious, winners.

There is also active political resistance against the proposed abolition of the Australian Renewable Energy Agency, bankrolled by taxpayers, to the tune of $2.5 billion, in order to redistribute funds towards renewable energy project proponents and other speculative green high-rollers.

And this is not to mention all the other expenditures littered across other federal government portfolios, unrelated to environment or industry functions, and state government green programs including solar feed-in tariffs adding about 3 per cent to the average household electricity bill.  Thankfully the carbon tax is now an unwanted relic of the past, its abolition in itself the subject of drawn-out political intrigues in the Senate.  But it would be a mistake to conceive of green corporate welfare as being limited to the fiscal aspects of governmental activity.

The former Howard government introduced renewable energy requirements for electricity supply in 2001, with the goal of sourcing 20 per cent of Australia's energy from renewables by 2020, including 41,000 gigawatt-hours of electricity for larger wind and solar farms and 4000 gigawatt-hours for rooftop solar installations.

Since unconventional renewable energy technologies generate electricity at costs well in excess of conventional, coal-fired generation, regulatory targets mandating that renewable energies make a greater contribution to the supply mix leads to, other things being equal, upwards pressure on electricity prices passed through to the consumer.

It is estimated that the renewable energy target, currently subject to a government review, and even speculated as a candidate for abolition, adds another 3 per cent to the average electricity bill paid by householders.

Therefore, such green policies effectively transfer wealth from households and other consumers, including through higher electricity prices, to the big renewable industry players, all in the name of addressing climate change trends that Australian taxpayers alone cannot hope to resolve, even if they yearn to do so.

As University of Sydney academic Lynne Chester noted in a 2013 study, rising energy costs have led to low-income families forgoing basic material comforts, such as heating, and confronting other pressing hardships, a true indictment of the impact of green corporate welfare policy if there ever was one.

Randall Holcombe and Andrea Castillo, in their book Liberalism and Cronyism, explain that green-friendly policies typically serve as nothing more than old-fashioned crony capitalism dressed in the new garb of environmentalism, essentially as an appeal to current political fashion.

Environmental policies, in their words, "all share the common characteristic of putting government representatives in a position to choose the economic winners and losers.  Modern environmental policy therefore resembles industrial policy in the sense that the government selects which firms should be favoured under the law."

Prime Minister Tony Abbott has asked Senate crossbenchers, and presumably other parties, to identify alternative savings as part of a fresh round of budget negotiations to secure some political order to fiscal proceedings.

If the opponents of the first Abbott budget genuinely wish to see an end to political privilege, and truly care about the interests of the poor, they should offer green corporate welfare, together with all other forms of fiscal and regulatory favouritism for traditional industries, as the first item for the chopping block.

Not at our expense: Why should taxpayers have subsidised the Soccer World Cup in Brazil?

That a single cent of public money was spent on the Fifa World Cup is a disgrace.  The fact that the Brazilian government has contrived to spend between 15 and 20 billion US dollars on the recent jamboree of football is unfathomable.  Let's make one thing clear:  if sport has long been seen by many as a cash cow, the World Cup is a bovine money-printing machine of truly gargantuan proportions.  Between administrators, television stations, sponsors, sports apparel conglomerates, producers of food, soft drinks, not to mention beer and yes, even players, agents and coaches, there are a multitude of snouts in the trough.  And there's room for them all.

According to Forbes, Brazil 2014 is estimated to generate US$4 billion in revenue for Fifa.  It's not hard to see why.  About 3.2 billion people (46 per cent of the world's population) watched at least one minute of the last World Cup in South Africa in 2010.  In fact, an average of 188.4 million watched each match.  It's not that Fifa needs public money to hold the World Cup, it's just that the tournament would be a little bit more work and a little less profitable without it.  That is not the people of Brazil's problem.

That the World Cup is such a massively profitable, massively popular event is reason enough for it to be considered beyond the realms of public funding.  But the poverty endemic in Brazil is a further reason the World Cup should never have received so many tax dollars.  Eighteen per cent of Brazilians live in poverty.  Indeed, minutes from the Arena Corinthians in São Paulo — a stadium which cost US$450 million — thousands live in tents and under plastic tarps.  The stadium hosted just six World Cup games.  And the cost of the Mané Garrincha stadium in Brasilia blew out to US$900 million, triple the original cost estimate, as a result of fraud.  Outrage over the ties between politicians and contractors triggered protests last year.

The money spent by the government on the World Cup could be spent on education or health.  Or, even better, left in the hands of the Brazilian people so that entrepreneurs of all shapes and sizes can create jobs and wealth in what is now a sluggish economy after almost a decade of strong growth.  But even if Brazil was the richest country in the world, there is a broader philosophical issue with governments funding elite sport.  Elite sport is a fine thing, but it's not a universally adored pastime.  Though on the surface they may appear to be few and far between, there are many Brazilians who don't care about football (one in four believe the World Cup will harm Brazil's image).  How is it fair that their income has been used, against their will, to finance a luxury they have no interest in?

Unfortunately, this is a situation that is unlikely to change soon.  Governments are lining up to host and fund the World Cup — including Australia.  The bidding process is notoriously corrupt with various Fifa officials removed over the years for accepting extravagant "gifts".

Some, including the government of Brazil, will argue that the economic benefits of the World Cup taking place outweigh the cost.  And it's true that the almost a million fans who partied their way across Brazil will have been a tremendous economic boom for some.  But the economic benefits of big events like the World Cup and the Olympics are generally exaggerated.  For example, Time estimates that Brazil will end up with only about US$500 million in tourist spending — a paltry sum compared to the outlay stated above.

The real reason why governments are willing to fork out such grotesque amounts of their people's hard-earned for a football tournament is that politicians have long since recognised the benefits of being associated with their nation's sporting heroes.  It is no coincidence that Brazil's President Dilma Rousseff chose to formally launch her re-election bid during the tournament.

All of this is not to say that the World Cup is a bad thing.  Far from it, the World Cup is a wonderful sporting event that captures the imagination of the entire globe.  But it is morally untenable that some of the poorest amongst us (or anyone for that matter) end up footing the bill against their will.

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Star Wars cantina: patronising politics strikes back

The independent senators are not a bad cross-section of the community.  So why are they being portrayed as a raucous gathering of aliens from a sci-fi film?

"Senator school", as it's colloquially known, happens every time there is a new crop of senators.  It's an induction process.

The two day course takes new senators through the tedious nitty-gritty of work in the red chamber.  Education in parliamentary skills is a serious thing.

Usually senator school passes without comment.  There's a (slightly shorter) program for new members of the lower house as well.

This year, however, senator school is newsworthy.  It's been talked about everywhere.  The program has been leaked to Business Spectator.  AAP wrote, "There won't be any finger painting but some may have a nap when a dozen new politicians head to Canberra for 'senator kindy'."

It's all incredibly patronising.

The only reason we're hearing about senator school is because six of the new senators (out of twelve new senators in total) aren't from the political class.

The nickname that's been given to the new senate crop is the "Star Wars Cantina" — suggesting the independents are a raucous gathering of aliens, rather than the usual well-disciplined political natives.

(Sometimes the clownish Joe Bullock has been included in the cantina, cast by the press as an honorary independent after he disgraced himself, and Labor, at the election.)

One of the most common complaints in recent years about Australian politics is that it is too clubbish — politicians are drawn entirely from the ranks of political staffers, lawyers, party officials and union reps.

John Howard made this argument last month, decrying the rise of politicians "whose only life experience has been politics".  You hear it from Malcolm Fraser often too.

Here we have, now, a home builder (Bob Day), an agri-business owner (David Leyonhjelm), a military police officer (Jacqui Lambie), a civil engineer (Dio Wang), a footballer (Glenn Lazarus) and a sawmill manager (Ricky Muir).  None are ex-staffers.  Lambie has the most first-hand experience in the practical business of politics.  And all that is a stint volunteering for Labor senator Nick Sherry.

Far from unrepresentative swill, these independent senators are not a bad cross-section of the community.  Compared to the rest of the incoming senator cohort they're much more representative — the other six new senators from the major parties are former union bosses, former mayors, former party directors and former chiefs of staff.

This isn't the first time the press has treated independent senators as if they didn't belong.

In 2005 the Canberra Times reported that Steve Fielding was the only incoming senator going to senator school.

A few days later the paper issued an embarrassed correction that, no, all 15 new senators in Fielding's cohort had to attend.

In other words, the press only find senator school interesting when the aliens take it.

Odgers' Australian Senate Practice, the manual by which the Australian senate operates, is more than 900 pages long.  How many major party senators do you think have read that tome?  That's why politicians have staff.  That's why the parliament has clerks.

Yet we're being asked to laugh at the entirely reasonable statement by Dio Wang that the details of senate practice are "pretty boring ... For things like this it's always better to learn through practice."

If we assume that politicians, being human, have limited time for self-education, perhaps it would be preferable they study unfamiliar policy areas rather than the details of senate procedure.

Recall that the new senators aren't given money for staff and support until they officially enter the senate.

Major party senators have been coddled and cared for by their party organisations while they waited to take their seats.

The micro-parties and independent senators have had to get on with their lives.  They've had businesses to run and livings to make, while trying to fend off the Canberra press gallery looking for a colourful sound bite to fill out dull copy.

Ultimately, the condescension with which the new senators have been greeted is another attack on their legitimacy to sit in parliament.

I argued in The Drum in April that the new senators do in fact represent the will of the voters;  the will of the nearly quarter of the Australian population that chose to vote against the major parties, Greens included.

The major parties are deeply worried that they've lost control over their third senate spot.  Don't imagine it's anything more principled than that.

That raw political calculation explains why the majors have been so patronising towards their new colleagues.

So what explains the media's snobbery?

There's a reason we call it a political class.  When threatened by outsiders, they protect their own.

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Ricky Muir — the Senate's everyman

The great American conservative William F. Buckley Jr. said:  "I would rather be governed by the first two thousand people in the Boston telephone directory than by the two thousand people on the faculty of Harvard University."

The Australian version of that quote would be "A cabinet full of Ricky Muirs couldn't be any worse than a cabinet full of Gillard government ministers."

Ricky Muir, the 32-year-old former timber worker from Gippsland in Victoria, took his place in the Senate on Tuesday for the Australian Motoring Enthusiast Party.  His spot in Parliament is as legitimate as that of any other MP.

The suggestion that somehow he shouldn't be in the Senate because he only received a total of 17,122 votes and was elected as a result of other parties' preferences can't be sustained.

The Coalition, the ALP, and the Greens all had senators elected via preferences flows from other parties.  Likewise, numerous MPs in the House of Representatives are elected via preferences.

It's difficult to argue an MP elected via preferences from four or five other parties has a better right to be in Parliament than someone elected via preferences from 10 or even more other parties.  For as long as Australia has preferential voting, people are going to get into Parliament on the votes from parties other than their own.

The reason why so many political commentators are upset by Ricky Muir's election is not because of the way he was elected.

What's upset the Canberra press gallery is that Ricky Muir is different from them.  And he's different from the politicians, the staffers, and the public servants that the Canberra press gallery spends its time reporting on and socialising with.

Muir doesn't have a university degree.  He's done manual labour.  He's been unemployed.  He hasn't done media training (as was obvious from his infamous interview with Mike Willesee).  And we don't know for sure, but he probably doesn't think the Three Rs — the republic, "reconciliation" and refugees — are the three biggest issues immediately facing the country.

In other words Ricky Muir is like the vast majority of the population.

The disdain and the sneering with which so many political commentators have greeted Muir is palpable.

Perhaps the least bad thing that's been said about Muir was on the ABC's The Drum last month when all the panellists agreed he "wasn't up to it".  None of the panellists explained exactly why they thought this, but the imputation was obvious — Muir wasn't smart enough to be a senator.

EDUCATION V EXPERIENCE

Unfortunately the panellists didn't reveal exactly how smart they thought someone needed to be before they could be in Parliament.  No one on the panel pointed out that if there was a piece of legislation before the Parliament that Muir (or any other MP for that matter) couldn't understand, than perhaps the problem might lie with the legislation not with legislators.

The panel all assumed that government is now so large and so complicated that inevitably laws will be passed which only someone with a university degree would able to understand.

Julia Gillard's last cabinet had plenty of smart people in it.  The 20 ministers had between them no fewer than three dozen university degrees (a third of them in law).  Every single member of the cabinet held a university qualification.

All those smart people in Gillard's cabinet thought it was a good idea, for example, to abolish freedom of the press in this country.

It wasn't education or eloquence that was missing from Gillard's cabinet — what it lacked was any experience of the real world.

In the scheme of things whether or not Muir mangled a media interview is irrelevant.  (Remember Gillard delivered her "no carbon tax" promise impeccably and pitch-perfect.) Muir should be judged on his merits and he should be judged on his policies (or lack of them).

Whether Ricky Muir has the character, the judgment and the sensibleness to be a good parliamentary representative it is too early to tell.

But the fact that he's upset so many people simply because someone like him is in the Senate means he's already made an excellent start to his parliamentary career.

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Shining a light on the dangers of royal commissions

Royal commissions are said to have coercive powers to uncover "hidden truths", but their lower standards of procedural fairness mean they are just as likely to uncover untruths.

Last week, the Senate Standing Committee on Economics called for a royal commission into the Australian Securities and Investment Commission and the Commonwealth Bank over the financial fraud scandal.

In other words, the key recommendation of one parliamentary inquiry is that the government should establish an even bigger inquiry.

Royal commissions have an almost magical, mythical status in Australian politics.  They have become less a means to an end, and more an end in themselves.

There are already three royal commissions ongoing at the Commonwealth level:  one into institutional responses to the sexual abuse of children, another into the Rudd government's home insulation scheme, and the third into trade union governance and corruption.

It's been 20 years since there have been this many commissions going at the same time.

Yet there's only one real public policy reason to choose a royal commission over any other form of inquiry — their coercive powers.

Royal commissions awkwardly span the gap between executive government and the judiciary.  They're formed by the government of the day according to its whim.  See, for instance, the royal commission into pink batts — an incredible precedent for new governments to punish the policy decisions of previous governments.

But while royal commissions are creatures of the executive — that is, driven by politics — they're also empowered with the sort of coercive powers only granted to apolitical courts.

They can summon witnesses.  They can compel those witnesses to produce documents.  They can force testimony — even self-incriminating testimony, eliminating the right to silence in the process.  They can apply for search warrants.  (In the Northern Territory, no warrant is even needed.  Any member of a commission can enter any building they want and take what they please.)

As the Law Council of Australia told a 2009 inquiry into royal commissions, the Commonwealth Royal Commission Act "removes or significantly dilutes the traditional common law protections usually afforded to witnesses".

This makes them exceptionally powerful.  Even for undoubtedly worthy subjects of investigation (and who could question the virtue of an inquiry into institutional responses to child sexual abuse?) it should be of serious concern that royal commissions throw basic legal rights out the door.  Even the worst people have rights.

Do these coercive powers uncover "hidden truths", as many advocates of royal commissions suggest?  Maybe.  But royal commissions have lower standards of procedural fairness than courts.  They can admit hearsay, for instance.  They are as likely to uncover untruths as traditional courts are to miss hidden truths.

In his book Royal Commissions and Public Inquiries in Australia, Scott Prasser distinguishes between royal commissions whose purpose is to advise on policy questions and those that are inquisitorial;  that is, those which investigate and expose wrongdoing.  All three current commissions take the latter form.

But we already have elaborate and expensive law enforcement and judicial systems to investigate, expose, and finally prosecute wrongdoing.

Every inquisitorial royal commission is a tacit admission that the existing legal system isn't working.  More prosaically, every inquisitorial royal commission should be focused on law-enforcement failure.

One survivor told the child abuse royal commission that "the police don't listen to children".  Another was told by police "we can't do anything" and that the issue of sexual abuse was too much of a "hot potato".  Whatever comes out of that royal commission, changes in the way the police handle abuse allegations are likely to have the most long-term importance.

While the ability to coerce testimony may be the only real policy reason to form a royal commission, there are a whole lot of political ones.

Nobody ever made headlines by calling for an interdepartmental review.  When a government appoints a royal commission, it is trying to tell the public that there is no limit to how seriously it takes a given issue.  The government looked at its menu and chose the crown jewels — a royal inquiry.

When the royal commission into union corruption was announced earlier this year, the unions were quick to denounce it as a witch-hunt.

The metaphor was more correct than was perhaps intended.  Once formed, royal commissions are impossible to control.

Usually governments have a good idea about the result they'll get from an independent inquiry.  They write the terms of reference.  They choose who heads the inquiry.  Did anybody doubt that the Gillard government's inquiry into media regulation would propose new media regulation?

By contrast, the Fraser government wouldn't have expected its royal commission into the Federated Ship Painters and Dockers Union to delve into corporate "bottom of the harbour" tax evasion schemes.  Royal commissions are fishing expeditions, and heavily armed ones at that.

So why a royal commission into ASIC and the Commonwealth Bank?

ASIC is one of our most heavily empowered regulators.  If any regulator deserved to have its feet held against the fire, it would be ASIC.

Yet, as the Coalition Senator David Bushby pointed out in a dissenting appendix (page 457 onwards), we already have an inquiry looking at the structure of financial regulation.

The Financial System Inquiry isn't draped in the Queen's regalia, sure.  It can't coerce testimony.

But isn't that a good thing?  The cultural status of the royal commission has obscured its very real dangers to the rule of law and civil liberties.

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Tides to turn for Shorten on debt, boats and tax

Bill Shorten is romping ahead in the polls right now, but being in opposition is a long-term goal and the tables will turn on three big policy areas before the next election.

Bill Shorten has one of the worst jobs in Australian politics — first opposition leader after a loss of government.

Just ask Brendan Nelson, Kim Beazley, Andrew Peacock, and Billy Snedden.

Yet, thanks to the Government's disastrously bad selling of the budget, Shorten has an impressively winning poll position.  If the election were held tomorrow, Labor would romp it back in.

Unfortunately for Shorten there are no federal elections scheduled for tomorrow.

Opposition is a long-term game — almost certain to be longer term for Shorten than most, as Labor's new party rules make it virtually impossible to spill him before the next election.

In the Sydney Morning Herald on Sunday Mark Latham claimed the "right-wing hunting pack" is targeting Shorten because he is too successful.  (This is the sort of canny judgment that made Latham such a success himself.)

But polls go up, polls go down.  If we look out two years from now to the next election, Labor's political profile is very different.  Where Shorten looks strong now, he is vulnerable in 2016.  Where he looks vulnerable, he is actually quite strong.

Let's take the big issues of last year's election:  debt, boats, and the carbon tax.

The debt is Shorten's biggest weakness.

This seems paradoxical, perhaps, because the Coalition's budget — that is, its solution to the debt problem — is deeply unpopular.  According to an Essential Poll earlier this month, just 23 per cent of voters think that Labor should support university deregulation.  Just 27 per cent think Labor should support the pension changes.  Just 32 per cent think Labor should back the Medicare co-payment.

These are gimmes for Shorten.  Yet opposing the specific proposals will do little to rebuild Labor's economic reputation.

Wayne Swan destroyed Labor's standing on the economy when he was unable to wrestle the budget back into the black.  Year after year Swan claimed that the budget was returning to surplus.  Year after year we got deficits.

It's easy to free ride on public dissatisfaction with government policy.  Voters might be hostile to the Coalition's individual budget measures but voters are not stupid.  Shorten has to suggest — perhaps just hint, allude, imply, give us a knowing wink — that there could be a better way to fix the deficit.

That's the difference between being a time-serving opposition leader and a viable potential prime minister.

If Shorten is strangely weak on the budget, he is strangely strong on boats.

Labor has careened from one side to another on the asylum seeker issue.  Last week a few in caucus tried to engineer a shift back to the left again.  Quite apart from the morality and practicality of the policy, Labor looks hopelessly divided and confused.

But will it in two years?

Right now, Labor will be secretly crossing its thumbs that the boats have, in fact, stopped, and stay stopped.  It is in Labor's interest to get boats off the front page;  to remove asylum seekers from the centre of Australian politics.  A weakness isn't a weakness if nobody is talking about it.

For Labor, the carbon tax is neither vulnerability nor strength.

This is strange, perhaps, because the carbon tax has been one of the defining policies of the last decade.  Elections have been won and lost on it.  Prime ministers and opposition leaders have fallen at its altar.

Yet much of the heat dissipated from the carbon tax debate after it was introduced.  Kevin Rudd smothered what remained when he announced he would transition from the tax to an emissions scheme.  This is a rare example of trying to confuse voters as a deliberate political strategy.  (I outlined the farcical nature of this announcement on The Drum when it was made last July.)

Climate activists have tried to respark climate change as a political issue — every once in a while the Climate Institute puts out a poll to try to get momentum going again, as they did yesterday — but realistically the issue is on hiatus.  All sides have dug in.  It isn't a positive.  It isn't a negative.  It just is.

It is often said that the Coalition didn't win the 2013 election, Labor lost it.

In other words, it was the Rudd and Gillard government's faults that were highest on the minds of voters as they faced the September ballot, rather than Tony Abbott's virtues.

This is true as far as it goes, but those faults were made powerful because of the Coalition's dogged prosecution of them.

Abbott made the carbon tax into a political liability.  It wasn't before.  Same with the boats.  And Abbott and his predecessor Malcolm Turnbull made Labor wear its deficit spending.

By contrast, Shorten is just along for the ride.  He's been gifted the budget backlash.  He'll likely be spared the need to take a stand on asylum seekers.  And he's been excused from boldness on the carbon tax debate.

Shorten might be polling well now, but if he wants to be competitive in 2016 he'll have to be more proactive than that.

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Ray Evans: A quiet shaper of the right's ideas

Ray Evans, who died in Melbourne on Tuesday at the age of 74, had more influence on politics and policy in Australia than 95 per cent of MPs who have been in the federal Parliament, and 99 per cent of MPs who have ever been in a state Parliament.

In some way or another, Evans was involved in, and helped shape, the course of every major policy debate in Australia of the last 30 years.  And he did it all as a private citizen who volunteered his own time for the public good.  He was the epitome of a concerned and engaged member of the community.  And because the causes Evans pursued were not of the left, his efforts were without the assistance of government funding.  It's easy being a public intellectual when you're employed at the ABC or have a tenured professorship.

As ever more attention is devoted to the daily and often trivial goings-on of the Australian Parliaments, Ray Evan's legacy is a testament to the fact the public and intellectual life of a nation is not, in fact, determined by what happens in the parliamentary chamber.  Making the laws under which people are forced to live is certainly important, but the ideas which give birth to the laws on which politicians vote don't originate on the ministerial benches.

In 1986, Evans together with John Stone, Peter Costello and Barry Purvis, founded the HR Nicholls Society.  Evans was president for 21 years.  At the first meeting of the society, Hugh Morgan spoke of how industrial relations system of the time penalised efficient industries that competed in world markets.  While farmers and miners suffered, the rest of the economy was insulated from "the discipline and vagaries of the marketplace".  This statement of an obvious truth was so controversial that prime minister Bob Hawke labelled the society "political troglodytes and economic lunatics".

Evans also founded, or was a central figure in, The Samuel Griffith Society committed to upholding the rule of law, the Lavoisier Group which questions the prevailing wisdom on climate change, the Bennelong Society which focuses on indigenous affairs, and the Galatians Group which examined the role of religion, and especially Christianity, in modern society.  All of these organisations were non-government, voluntary groups sustained by the individual efforts of their members.  The influence of these organisations rested on nothing more and nothing less than the power of the ideas they espouse.

Evans was an electrical engineer by profession and taught at Melbourne's Deakin University before going to work at Western Mining Corporation.  He had been a member of the Australian Labor Party and, in the 1960s, was a union delegate to the Victorian State ALP Conference.

It was morality that motivated the passion of Ray Evans.  For example, he wanted a worker to have the freedom to work for a wage that was chosen by the worker themselves — not the government.

In 1997 Evans delivered the funeral eulogy for the great tariff reformer, Bert Kelly.  Kelly was only briefly a minister in the Holt and Gorton governments.  After his ministerial career, Kelly had a weekly column as the "Modest Member" in this newspaper.

"Those Friday columns came to exert great influence throughout Australia, and each successive Friday came to be dreaded by the Canberra lobbyists whose job was defending and expanding the tariffs which their industries enjoyed," Evans recalled.

What motivated Ray Evans was what motivated Bert Kelly.  In the case of protectionism, Evans pointed out that Kelly was opposed to protectionism not just because it was economically inefficient — but because it was morally wrong.

"[Protectionism] created a situation in which governments, in the person of ministers or officials, granted arbitrary and capricious favours to some, who were thus greatly enriched, at the expense of others."

Evans said of Bert Kelly that he "was the great embodiment of Edmund Burke's dictum that 'politics is morality writ large' and if the application of the moral principles which has been inculcated into him from childhood led to economically sensible conclusions, that was an additional benefit".  Ray Evans was also a great embodiment of Burke's dictum.

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Why protecting the pension is a political con job

You'll only make it in politics if you are willing to be completely shameless.

On Tuesday Social Services Minister Kevin Andrews flagged a major review into Australia's welfare system.  One in five Australians now receives income support payments — 5 million people.  That's a lot, and the Coalition believes it is too many.  The budget has to be balanced.  We don't want to become like Europe.

So far, so good.  Yet 2.3 million of those people — nearly half, and the largest cohort — are on the age pension.  And Kevin Andrews has specifically quarantined the age pension from his review.  So, it isn't quite the major budget-repairing review it sounds like.

Bill Shorten confidently insists that ''the Abbott government is proposing to reduce the rate of increase of the age pension''.  (Never say Shorten isn't trying his little heart out.)

This comically absurd little spat over the pension reveals a lot about Australia's welfare system and the political system in which it operates.

The list of beneficiaries and the conditions placed on those benefits are not organised by any noble principle of need or fairness or morality, but calculations — often highly crude ones — about voting blocs.  Of course it is all dressed up in the language of social justice.

Despite being the largest beneficiaries of the welfare system, pensioners are a protected species.  Remember there's no guarantee a review would recommend a cut to any particular welfare entitlement, nor any guarantee the government would follow through if it did.  No, the pension is too sacred to even be studied.

Australians like to say they're concerned about middle-class welfare.  Defenders of the status quo argue our rate of middle-class welfare is relatively low by international standards.

But this week's little pension quarrel reveals something more fundamental — the modern welfare state is, itself, a project designed to benefit the middle class above all others.

Middle-class welfare isn't a bug or aberration.  It's the defining characteristic of any democratic welfare state.

This observation is known as Directors' Law — named after economist Aaron Director, who argued that redistribution policies in a democracy will benefit the largest voting blocs.  Invariably this is the middle class.  The primary function of a welfare state isn't to keep people out of poverty.  It's to transfer money to the powerful middle class.

Sometimes the system taxes the middle class to provide benefits to that very same middle class.  Such ''churn'' is a political confidence trick that relies on citizens' ignorance of their true tax burden.

You'd be hard pressed to find a philosopher, economist, sociologist or political theorist who could support such a distorting, wasteful, politically motivated transfer system on principle.  But that's what we have.  All the big political flashpoints of Australia's welfare policy — baby bonuses, family tax payments, parental leave — are disproportionately generous to the middle class.

Nor is the age pension solely to protect the poor.  Eighty per cent of people above pension age receive a part or full pension.  By excluding the family home from its income test, the pension protects elderly home owners from having to use the savings they've accumulated in their house to fund their retirement.  And, a bonus:  it protects the inheritance of their children.  No wonder it's popular.

Welfare is a political compact.  Sociologist Gosta Esping-Andersen famously distinguished three models of welfare state capitalism:  liberal, corporatist-statist, and social democratic.

Liberal welfare regimes view income support as a safety net.  Think the United States, where welfare is an emergency, often short-term measure.  The corporatist-statist regimes (found in Germany, France and Italy) uphold traditional class divisions.  Scandinavian countries have a social democratic regime where welfare is less about poverty and more about citizenship.  All classes get something.

Usually Australia is grouped in the liberal camp.  This reflects our English political origins, with a focus on individual rights rather than collective belonging.  And welfare for the rich seems to offend the antipodean sense of the fair go.

That's the theory anyway.

The Abbott government seems intent on destroying the last vestiges of what makes our system liberal.

There's something deeply alien — well, Scandinavian — about the Coalition's paid parental leave scheme.  The government will pay as much as $75,000 to new mothers for 26 weeks, according to their previous income, not their need.

The Coalition insists the parental leave scheme isn't welfare, it's a workplace entitlement.  Nonsense.  But the philosophy behind this talking point is deeply illiberal.  It suggests the state is as responsible for providing your income as your employer is.

Even more symbolic:  just two days after Kevin Andrews announced the welfare review, he also announced the government would give young couples $200 for marriage counselling.  The average Australian wedding costs upwards of $35,000.  Yet the party of free markets and individual responsibility feels the need to chip in another few hundred dollars.

Of course, a review into Newstart and the Disability Support Pension is a good thing.  The latter has grown rapidly in recent decades.  The chief executive of Mission Australia has said hundreds of thousands of disability support recipients should be helped into work.  The social and psychological benefits of employment are unarguable.  This is more than enough justification for an inquiry.

Nevertheless, any serious review of Australia's welfare system must be a review of the entire system.  Even the popular bits.

Joe Hockey has been unable to commit to returning the budget back to surplus until 2023.  But if the government can't slay — or at least scrutinise — some sacred cows, this deadline looks far too optimistic.

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A peer funding model for the arts?

A recent paper by five mathematical computer scientists at Indiana University (published in EMBO Reports, a forum for short papers in molecular biology) proposes a clever new model for science funding that makes use of collective allocation (peer-funding) rather than expert-panel-and-peer-review funding mechanisms.  I want to consider whether this might also work for arts and cultural funding.

Public science and research funding in Australia, as in most of the world, is based on a process that has remained largely unchanged for 60 years.  This begins with calls for submissions of reasonably detailed project proposals.  These then pass through expert panels (e.g. the Australian Research Council) and then on to the peer review process in which carefully selected ''peers'' evaluate the proposals and write detailed reports, before passing these back to the panels for final judgement.  The high-level of process and accountability makes this the gold standard for taxpayer-sourced public funding of research (philanthropic trust funding often mirrors this architecture).

But it is expensive to run, and onerous to all involved.  Perhaps one in ten projects proposed will be funded.  The amounts of time and effort invested by all those seeking funding will tend toward the expected value of the grants, meaning that once overhead costs to panels and reviewers are added in, these function to a considerable degree as a redistribution mechanism.  Rob Brooks wrote about this on The Conversation last year.

The new model the computer scientists propose bypasses this expert-panel-and-peer-review system altogether by simply taking the whole public lump of funding, and allocating it unconditionally (yes, unconditionally) to all ''eligible'' scientific researchers.  It would thus function like a kind of ''basic income''.

They calculate that if the National Science Foundation budget in the US were divided among all who applied for funding, it would deliver about US$100,000 per scientist.  The problem with this, apart from an expected blowout in the number of people who claim to be scientists, is that we've just lost oversight, accountability and peer review.

So here's what the computer scientists propose:  everyone who receives funding gives some fraction (say 50% of their previous year's funding) to other scientists whose work they like or think particularly interesting and valuable.  That fraction can be distributed among one or many.  The idea is that this works as a collective-allocation mechanism that basically crowd-sources peer review, and with the added advantage that it funds people, not projects.  It also gets the incentives right for scientists to concentrate on clear communication of their findings and the value of research.

This method replicates the good parts of the previous model:  those with higher peer regard will receive more funding;  and those same people will have a larger say in the overall allocation (the pledge is a fixed fraction of the previous year's funding).  There would, obviously, still need to be confidentiality and conflict-of-interest avoiding mechanisms, along with careful monitoring to ensure that circular funding schemes are identified and punished.

But it also avoids the bad parts:  in providing a guaranteed basic income, it liberates researchers from continual wasteful cycles of grant-writing by furnishing autonomy and stability of funding;  it avoids the overheads associated with process and review;  it enables a continual updating of funding to reflect the preferences and priorities of the scientific community, without getting caught in legacy priorities or political cycles.

Now might this also work for public funding of arts and culture?  The main reason to think it might is that the same inefficiency arguments apply in arts and culture as they do in science:  namely that those seeking grants spend considerable time and effort writing and preparing grants;  face high uncertainty about funding outcomes;  proposals tend toward conservative trend-following of agency preferences;  projects, not people, are funded;  and all the while arts funding bodies and panels (and the peer review process) consume sizable overhead.

On the flip-side, it's not as neatly obvious who would be eligible.  Research scientists can be reliably identified by the high-hurdle of having PhDs, prior publications, and full-time appointments at accredited institutes.  But let's suppose we can come up with an acceptable solution to that long-list problem.  (I'm not suggesting this is trivial;  just that that's not what I want to focus on here.)

I think that this would, potentially, be a substantial step towards a more open and effective funding model (peer driven, not bureaucratically or politically driven).  It would enable creative resources to be more directly spent on artistic production and public communication, with less time and effort wasted on endless rounds of grant-writing and reviewing.

And while still some distance from a decentralised and fully-incentivised market ideal of ''consumers voting with their own dollars'', it is at least closer to that model in reflecting the preferences and judgements of the actual community of practising producers of culture (which is not always identical to appointed ''expert'' panels).  Like the Oscars, in a way.

Might collective allocation of arts and cultural funding be superior to expert-panel based solutions?  What do we think:  crazy or not?

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Barack to the future

Barack Obama and his supporters in America and abroad are understandably thrilled after winning a remarkable electoral victory.  They are entitled to gloat over those of us who doubted he'd win or deserved to win.

Throughout the year, Obama seemed in danger of following Herbert Hoover in 1932, Jimmy Carter in 1980 and George H. W. Bush in 1992 as a one-term president.

He presided over skyrocketing levels of national debt and the most sluggish economic recovery since the Great Depression.  Polls showed that between 60 and 70 per cent of the American people believed the US was heading in the wrong direction.

But yesterday the President won far more than the 270 electoral-college votes needed to win the election.  Republicans and conservatives are already blaming hurricane Sandy, which helped freeze the Romney momentum in October.  Perhaps.  But there are more fundamental explanations for Obama's victory.

So, how did a US President win re-election at a time of widespread anxiety and even widespread dissatisfaction across the nation?

Well, it will take time to study the exit polls in detail.  But here are a few preliminary observations.

• Changing demographics:  Whereas Republicans predominantly represent middle-aged and older whites, Democrats are increasingly making bigger inroads among Hispanics (a rapidly rising minority) and African Americans as well as younger voters, who are consistently well to the left of their elders (abortion rights, gay marriage, less interventionist foreign policy).

  Democrats did a good job of encouraging these groups to turn out to vote, and more than enough did in the all-important battleground states to swing the contest in Obama's favour.

  Such trends could portend big dangers for the Republicans:  as the minority populations increase (especially in Colorado, Florida and even Texas), the share of the white vote will continue to decline in future presidential elections.  This is especially the case so long as Republicans continue to adopt a hardline stance on illegal immigrants from south of the border.

• Mitt Romney:  The former Massachusetts governor, by temperament a moderate, always seemed uncomfortable with the conservative and Tea Party agenda.  When he addressed social issues or championed entitlement reform, he seemed insincere, and people sensed it.  Since the divisive primary contest a year ago, the Republican base had always been suspicious that Romney was not one of them.

  To be sure, conservatives were more energetic in 2012 than 2008, just as many Republicans had predicted.  But it was not nearly enough to match the enthusiasm of young predominantly Democratic voters (aged between 18 and 29) and minorities (especially Hispanics and African Americans).

  Meanwhile, Obama's auto industry bailout, and Romney's equivocal response, influenced enough white, working-class voters in Michigan as well as Ohio, the battleground of battleground states, to win the rust belt.  These are the so-called Reagan Democrats — or, in Australian parlance, ''Howard battlers'' — and they help swing national elections.

  In fairness, it's a fair bet Romney's cautious and reasonable demeanour helped attract more independents in the political centre than any of the other more conservative Republican primary candidates — Santorum, Gingrich, Paul, Perry — whom he faced in a bitter primary contest earlier this year.

  Indeed, the available polling evidence indicates that Romney drew even with Obama among independents.  Ultimately, it did not matter, because the rank-and-file Democratic turnout remained nearly as strong as it was four years ago.

• Republican brand:  The spectre of George W. Bush haunts the Republican Party.  Despite his best efforts to distance himself from the Bush era throughout the campaign, Romney failed to convince enough crucial battleground state independents, who straddle the political centre, that today's Republicans mark a repudiation of the war party that dominated Washington during the Bush era.

  The Bush reputation is tainted by two costly wars, big spending policies and the Federal Reserve's housing and mortgage mania, which led to soaring debt, budget deficit and the financial crisis.  US economic growth has been lacklustre ever since, and there is little hope of a rapid return to vigorous growth.

  The exit polls suggest that by a margin of 53 to 38 points, Americans are far more likely to blame Bush than Obama for today's economic ills.

  To add insult to injury were a couple of divisive Republican Senate candidates in Missouri and Indiana, whose strident remarks on abortion and rape aggravated political centrists, especially small-l liberal women, and cost the Republicans two Senate seats.

  In coming days, the twin flanks of the party's conservative base — the free-market Tea Party as well as social conservatives — will be subjected to a great deal of criticism.  By adopting a doctrinally purist stance on economic and social issues, both groups alienate rising segments of middle America that is increasingly more progressive.

So what now for Barack Obama?

The history of second-term presidents is sobering.  Some such as George W. Bush are early lame ducks (post-hurricane Katrina);  others such as Richard Nixon (Watergate), Ronald Reagan (Iran-contra) and Bill Clinton (Monicagate) are prone to scandal.  In fairness, Reagan redeemed himself, for he primarily focused on legacy (tax reform, winning the Cold War) and history records him as one of the greatest or at least most consequential presidents.

That is why Obama is unlikely to sit on his hands, even though he still faces a Republican House of Representatives.  Whatever you think of the 44th President, he can hardly be accused of thinking small.  His first term was all about large projects (big spending stimulus, nationalised healthcare).  He will continue down the path of vastly expanding the size and scope of the federal government.

In 2008, he campaigned that he would be a ''transformational'' president.  Translation:  just as Reagan had presided over an ideological realignment in the 1980s and in the process made America a more conservative place, Obama would reshape the political landscape a generation later and move the US in a more progressive direction.  Expect the re-elected President to try to complete that course.

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