Friday, July 2, 2010

Everyone’s A Winner, Except Kevin.

It can be tempting to say “I told you so”. From the very beginning, I predicted that there would be a negotiated settlement between the Federal Government and the mining industry. Despite the insistence of not only the then Prime Minister, but also the Treasurer and now Deputy Prime Minister Wayne Swan that there would be no compromise on the essential elements of the plan, I had no doubt that in the end key items would be altered. I forecast that the threshold set at the Commonwealth Bond Rate would be increased; it has been, to the Bond Rate plus 7%. I forecast that the headline rate of 40% would be reduced possibly to 30%; it has been. I even criticized the original name of the tax. Calling it the “Resource Super Profits Tax” was always dumb, because it was inevitable that such a mouthful would be abbreviated to become known as a “Super Tax”, and nobody in their right mind would like the sound of that. Amazingly, the name has now been changed to the much more sensible “Minerals Resources Rent Tax”, which is suitably dull and boring for a tax which is not going to impact on the pockets of ordinary everyday Australians.

Despite having been right about so many things, what I didn’t expect was that a Prime Minister would be dumped in order to get there, and I still believe that Kevin Rudd would have reached more or less the same conclusion anyway, although that will now remain a matter of speculation forevermore. Of course, opponents of the Government are now describing the agreement as a massive backflip and a cave-in. That’s only to be expected, but the real question is whether it is a good outcome. By any objective assessment the answer has to be “yes”. The miners, who actually supported a profits based tax regime all along, have had all of their major objections addressed. The Government will still receive the bulk of the revenue originally forecast, and the plans to increase investment in infrastructure and boost superannuation remain in place. The only downside is that company tax won’t be cut by as much as originally planned.

It remains to be seen just how the broader business community will respond to the disappointment on company tax which was to have been cut from 30% down to 28%. Instead, it will now be cut to 29%. While one percentage point might not sound like a huge difference, try telling that to anyone in business, or anyone with a mortgage. I wonder just how far the mining industry could have pushed their claims if they were actually going to end up costing the rest of the business community any more. While the mining moguls were all running around telling us the new tax would send them broke and ruin the economy, the truth all along was that company tax across the whole business sector is a far bigger brake on economic activity than the RSPT ever would have been. But again, what would have been will forever remain subject to speculation.

Clearly, the outcome of the negotiations represents a big win for the mining companies. It’s also a win for the Gillard Government because now we can all get over it and get on with it. The Government can go to the election looking forward instead of looking backward, and the business and investment community can see some certainty. There has even been a modest bounce in the polls suggesting that Prime Minister Gillard’s chances at the election have improved. On reflection, it looks like everyone’s a winner… except of course, Kevin Rudd.

Thursday, July 1, 2010

Could Rudd Have Been Right?

While we all eagerly await the outcome of intensive discussions between the government and the mining industry about the proposed Resource Super Profits Tax, it’s difficult to resist the temptation to wonder what the outcome would have been if Prime Minister Kevin Rudd had not had the rug pulled out from under him by his own colleagues. Despite his public protestations that there would be no back down, no retreat and no surrender, it has emerged that he had already reached a tentative compromise in principle with at least one of the major players, which was due to be unveiled the day after he was dumped. While the public tough talk might have given some people the idea that no compromise would be possible, the fact is that in any negotiation giving away your true position is a poor tactic. So, if Kevin Rudd had not been rolled, would he have achieved a resolution?

The answer is almost certainly “yes”, and more importantly it would have most likely been a better outcome than the one that will ultimately be achieved. Why? Because the Labor Government has now put itself into a position where it is more desperate to reach a resolution, and more constrained by the looming deadline of an election campaign, not to mention the self imposed deadline to have the deal done and dusted by the end of this week. Already the mining industry can rightfully claim to have played a role in the demise of a Prime Minister through its energetic campaigning. Now, they could have the chance to get rid of a second one within weeks, because if there is no agreement it would be a disaster for the Gillard government.

With those stakes, it’s a fair bet that the government will now give up more ground than they otherwise would have, possibly to the point where they could no longer afford to deliver the promised cut in company tax, increased superannuation support, and investment into infrastructure. Equally, that’s a failure for the government as it heads into an election. From a negotiating point of view, the federal government has weakened its position. From a political point of view, it could turn out that history will judge the Labor Government not to have lost its way, but to have lost its nerve and backed away from a fight it could have won.

In any negotiation, it is important to bargain from a position of strength, real or perceived. Secondly, it is important not to impose any deadline that is more imperative for yourself than for your opponent. Thirdly, it is important not to give away you cards by making public statements about the outcome which can be used against you by your opponent. Fourthly, it is important not to make concessions too early or too readily or you will simply encourage you opponent to press for more. Fifth, and most important, you must be prepared, if you do not get what you really want, to simply walk away. The new Gillard government has ticked none of those boxes, while the mining industry leaders have played the game like experts. Whatever agreement is reached, and there will be an agreement of some sort, it will less than it might have been.

It’s impossible to ever really know for sure, but it could turn out that history will judge that Rudd was right.

Wednesday, June 30, 2010

Late Fee Is A Bit Rich

They’re a strange mob down Melbourne way. I’m not aware of this happening anywhere in New South Wales, but down in the CBD of Melbourne apparently doctors are charging their patients a penalty fee of up to $50 for being late to their appointments. Forget the Hippocratic Oath, it now seems to be the hypocritical oath as patients are slugged for keeping the doctor waiting a few minutes despite the overwhelming prevalence of doctors leaving their patients stranded in the waiting room for hours on end. And when patients do finally get to see their doctor, the consultation might last barely long enough for a prescription to be scribbled out, before they are pushed out the door to make way for the next patient. No wonder the writing on the prescription form is always so messy.

The doctors involved say that imposing the late fee is necessary to ensure efficiency. Well, it’s not efficient fro me, damnit! I realize that the doctor’s time is valuable, in fact more valuable than most. I realize that the running costs of a doctor’s practice are not cheap, and if there is a no show, it’s lost income for the business. But the fact is that with a dozen or more sick, snuffling, coughing, wheezing, aching, suffering patients all lined up in a holding pattern on a row of uncomfortable chairs reading magazines that were printed sometime before the invention of electric light, there is always another patient waiting to be seen who can be moved up a slot and fill the gap. Then when Joe Blow finally does arrive, he can be told that he lost his place in the queue and he will have to, wait for it…. Wait a bit longer. After all, if latecomers must be penalized surely that is the most appropriate punishment, and those who were on time are rewarded by being seen a little sooner.

But to charge people a fee of up to $50 is just draconian, extortionate, and downright bullying. It penalizes people who might have very good reasons for running late, and who in some cases might not even be able to afford the extra expense. And it’s arrogant in the extreme, assuming that the patient’s time is not also in anyway valuable. The rest of us might not be fancy doctors, with impressive qualifications, and expensive hobbies, but our time is valuable too. We all have busy lives that must be juggled to meet the demands of a cranky boss, clamouring kids, and bills to pay. Most of us don’t have time to spend two hours in the doctor’s waiting room, just to be told “Take two of these and it should go away”.

What would happen if we submitted a bill for our time to a doctor who held us up in the waiting room for so long that we missed picking up the kids from school, making it to the post office in time to pay that bill, and lost our job because we hadn’t been seen in the office since before morning tea? You can bet you’re bottom dollar any doctor given such a bill would laugh and say “I’m not paying that!” Well, neither am I. If doctors in this state ever start trying to do the same as the medicos in Melbourne, I will be billing them for all my time wasted in the wasteland of their waiting rooms.

I reckon at a couple of hundred dollars an hour I could become a pretty rich man, just like some of those Melbourne doctors.

Tuesday, June 29, 2010

Election Could Be Sooner Than You Think

So now the guessing game begins. When will the Federal election be called? Until last week, most commentators were predicting an October election, or possibly even September. Despite the fact that the current government can run through until the end of next February before they are required to confront the voters, there were several other factors influencing the matter. The New South Wales election will be held on the 26th of March next year, because it is subject to a fixed term. It was widely accepted that the Federal government would want to get their election well and truly out of the way before that date to avoid the risk of any association with that almost certain debacle.

December and January are generally considered to be a poor time to run an election campaign because it disturbs the summer holiday plans of too many people, risking voter resentment at the inconvenience, not to mention the fear of all politicians that people might just be too busy with other matters to be bothered paying any attention to their campaign messages. There is another State election in Victoria in November, leaving October as the latest possible time slot which is both practical and politically acceptable. But of course, all that has changed now, and rather than holding back the election for as long as possible, the new Prime Minister has ample reason to bring it on as soon as possible. In fact, she has more or less promised that she will.

Of course, there are some boxes to tick before rushing to the polls. First, there is the Government’s decline in the opinion polls, now arrested by the dramatic change of leadership. Support for Labor has risen dramatically after the departure of Kevin Rudd, so consider that box ticked. Uncertainty about climate change, immigration and asylum seeker policies has already been addressed by soothing words from the new Prime Minister with the promise of imminent announcements to illuminate these matters. Box almost ticked. And the big one, the Resource Super Profits Tax. It was front page news today that both the Prime Minister and the mining industry have set an informal deadline to have the matter resolved by this Friday. If that happens, then that box will have been most emphatically ticked.

If those boxes are ticked by Friday, is there really anything stopping Prime Minister Gillard from driving over to Yarralumla on Saturday and asking the Governor General for an election? In the present mood, I suspect that striking while the iron is hot would present the Government with a significant tactical advantage over an opposition whose plans for fighting an election campaign against Kevin Rudd are now in complete tatters. After the whirlwind of last week’s historic events, the Government now has considerable momentum, and if all the lights turn green in the next few days, why would they hit the brakes? An August election is now the hot tip, and if that’s the case, I suspect it will be closer to the beginning of the month than the end.

But if the next few days see all those boxes ticked, I wouldn’t be entirely surprised if it’s even sooner, so don’t make any plans for the last Saturday in July.

Monday, June 28, 2010

An Excellent System (Part 2: A Good Government Losing Its Way)


An Excellent System (Part 2: A Good Government Losing Its Way)

On Friday I spoke about our Westminster Parliamentary System of democracy after many people expressed the feeling that the manner of Kevin Rudd’s departure from the position of Prime Minister was in some way wrong. As I pointed out, we the people do not elect a Prime Minister, we elect a Party to Government, and it is the Party which decides who fills what job. Nonetheless, there is a valid argument that when a Party goes to an election with a particular individual selected as Leader, then the people should be entitled to vote on the basis that he or she will continue to be the leader. That’s why, even though we do not directly choose our Prime Minister, many people nonetheless feel cheated by last week’s events.

As I pointed out, our constitutional arrangements actually provide an important safeguard against any single individual attaining too much power, by ensuring that any leader must continue to enjoy the support of his or her colleagues. It is good democratic practice. However, despite the soundness of the structure of our system of government, there is another question which arises. It might be an excellent system, but is it also a system that can be or has been abused? Despite the value of having a mechanism whereby a Party can remove a Leader who has either fumbled or failed, is there also a risk that those who are making such decisions might be tempted to misuse or abuse that power?

The short answer is yes. Of course it is possible, and already the comparison with New South Wales has been made by many commentators, pointing out that the desperate manoeuvers of the Party Executive battling against plunging opinion polls has seen a revolving door installed in the State Premier’s office, while that Government has lurched from one crisis to the next. All the while, plans and policies are announced, only to be shelved again and replaced with new plans, often at great expense. The lesson from the New South Wales experience should be clear, and the idea that the same malaise should infect the Federal sphere is unsettling. The fact that one of the key power brokers in Rudd’s downfall, Senator Mark Arbib, was the New South Wales Party Secretary is no coincidence. Of course, the Federal Opposition is already running this line of argument, but what makes it interesting is that the past victims of this process including Former New South Wales Premier Maurice Iemma have made the same criticism.

In his departing address to the Caucus, former Prime Minister Kevin Rudd firmly made the point that sometimes good policies and necessary reforms which are in the best interests of the nation can be unpopular, and if a Party dumps a leader every time the polls take a turn for the worse, no brave but necessary decisions will ever be made. It is a course of action which can lead to a moribund “do nothing” Government, too frightened of losing the next election to actually do anything important, which of course could very well be a description of exactly what has happened in New South Wales. But this is where we find the Catch 22 of Australian politics, especially as it applies to the Labor Party where respect for an incumbent leader is more readily dumped in favour of preserving the good of the Party itself.
The Members of Parliament, elected by the people, and appointed to their Government roles by the Party, have a primary responsibility to govern for all Australians. They have the responsibility to devise and implement good policy in the national interest. The Party powerbrokers on the other hand have a different responsibility. Their priority is to win elections. How they do that is secondary, and as Graham Richardson famously said, they will do “whatever it takes”. Presumably that includes dumping good leaders, and overturning good policy. In the end of course, the fundamental problem is that no Government can deliver good policy if they lose the election, so winning at all costs becomes the priority.

Unfortunately, that also means that instead of winning being the means to the end of serving the national interest, it easily becomes the end in itself. When that happens, a good government really does lose its way.