Friday, May 15, 2009

Who’s Bluffing Who?

Amidst a sea of headlines devoted to the Rugby League sexual conduct controversy, it’s easy to forget that there have been other things going on this week. Following Wayne Swan’s second budget on Tuesday night, opposition leader Malcolm Turnbull has delivered his right of reply speech in the parliament. As would be expected of a former high flying lawyer, Mr. Turnbull delivered a well crafted speech with confidence and eloquence. Newspaper headlines responded by reporting that the Opposition Leader has called the bluff of the Government. But has he really given us anything of consequence to consider?

The first point that Mr. Turnbull made was that the Treasurer made no mention of the deficit in his speech. Could it be that Wayne Swan is embarrassed by the sheer size of the $57.6 billion worth of red ink on the nation’s books? It is certainly easy to interpret it that way. Mr. Turnbull then accused the Prime Minister of rushing towards an early election, and then proceeded to provide the ammunition to do so, by promising to block the proposed introduction of a means test for the private health insurance rebate. Not content with offering a possible trigger for a double dissolution election, Mr. Turnbull further proposed an alternative way to find the $1.9 billion savings that the government expects from the private health insurance rebate change. He suggested increasing the tax on tobacco by 3 cents a cigarette.

Reporting this response as “calling the government’s bluff” gives the impression that a game of poker is being played here, and in some senses it is. But the prospect of an early election is a genuine one, and while both sides claim not to desire one, circumstances could easily conspire bring it about. More importantly, there are good reasons to think that an early election would be in the government’s favour, despite the reluctance of voters generally to reward what is often seen as a “tricky” political tactic that costs the taxpayers money and inconvenience. The trick is, therefore, to make it look like the opposition’s fault.

Ever since the idea of an early election first arose when the alcopops tax was rejected in the Senate, I have pointed out that an early election could well suit the government. At that time there was considerable speculation about the Liberal leadership, and the possible intentions of Peter Costello. That is still an unresolved issue, leaving the Liberal’s less than well equipped to present a united front in an election fight, should it be called early. Secondly, the government still holds a clear lead in the opinion polls, and despite what they all say about the only poll that matters being the election itself, it is obviously far better to be in front than to be behind.

Thirdly, and perhaps most importantly, all of the economic indications point to conditions becoming far worse next year in the lead up to the scheduled election. Although this year’s budget was supposed to be tough, next year’s will most likely need to be much tougher. Additionally, while the government still enjoys a great deal of credit for its stimulus policies which are generally perceived to be working, unemployment is still expected to rise next year, and conditions to deteriorate. By the time the scheduled election rolls around at the end of next year, the government may have lost its luster. By then, people may well believe that Malcolm Turnbull was right and that the big spending stimulus policies were a waste of time. By then, more people could well be placing the blame for the recession on the government. On the other hand, if the government is re-elected late this year it could remain in office until early 2013, well after the projected economic recovery arrives.

That’s why an early election could well suit the government. Rush to the polls now, before the really bad news hits the proverbial fan. But in order to get away with it, Kevin Rudd needs it to look like Malcolm Turnbull has left him with no choice. By opposing a measure central to the budget, Malcolm Turnbull could be seen as doing exactly that, which is why so many newspapers used the reference to a bluff. Under the circumstances though, I wonder who’s really doing the bluffing? The popular Prime Minister who is threatening the early election, or the opposition leader who is still well behind in the polls?

I said it a few months ago, and I still have the same view. Don’t be surprised if we are all asked to go back to the polls before Christmas.

Thursday, May 14, 2009

Respect and Responsibility

There are so many different issues thrown up by the Matthew Johns saga that it is difficult to make any kind of definitive assessment of them all. But perhaps we should get back to the starting point, which is the fact that the Four Corners TV program was presenting a report examining the culture of sexual behavior associated with rugby league. It’s not just about Matt Johns and the anonymous participants who joined him and whether or not they did anything wrong, either legally or morally. It is about all of us, and what we collectively consider to be an appropriate way to behave with each other as men and women.

It’s not just Rugby League, but Australian society generally which has a history of double standards, of rewarding outrageous behavior in some circumstances and punishing it in others. We have a history of treating promiscuous men as heroes but treating sexually adventurous women as sluts. A culture of treating sporting stars as if they can do no wrong, and then becoming shocked when they start to believe it themselves. We are encouraged to view fictional characters such as James Bond, a violent sociopathic womanizer, as role models. We live in a permissive and sexualized society where nearly naked women are served up in advertising and entertainment, and raunchy humour is commonplace, while at the same time women are still in many cases made to feel dirty about sex as if it might be wrong for them to actually enjoy it.

Most of us still believe that the best relationship is the committed, and exclusive relationship between two people who love and respect each other. Such people are unlikely to be caught in an embarrassing situation because they simply would not get involved in such a thing in the first place. Life sure would be a whole lot easier if everybody felt the same way, and we all followed the same rules. But this is a free country which accepts that there are other people who have different sexual orientations, and different sexual preferences. There are people who enjoy swingers clubs, partner swapping, casual relationships, and yes, even group sex. The majority of people might find those things distasteful, or even disgusting, but so long as people conduct their activities among consenting adults, they have every right to quite literally do whatever turns them on.

And let’s not deceive ourselves. The number of married people, both men and women, who have extra marital affairs is enough to indicate that there is a significant level of hypocrisy in the community about making a promise to be faithful, while secretly indulging whatever fantasy might make itself available. In fact, attitudes towards sex are so divergent and confused, and the messages so mixed, that I am astounded that we aren’t even more screwed up about such things than we already are.

The truth is that there is a considerable amount of evidence to suggest that people who are tempted to engage in some of the more extreme sexual practices are not as happy about it as they thought they would be. While some people no doubt enjoy themselves, others try what seems to be a lifestyle choice, only to discover that they are left feeling unfulfilled, empty, even used. The willingness to make yourself the play thing of others can often be a sign of much deeper problems, which may not be immediately evident on the surface.

So, where is the common sense in all of this? Surely the beginning point has to be respect for each other, not just between men and women, but as human beings generally, as well as a well developed self respect which recognizes that we can only value ourselves if we also value others. This is the point which is at the heart of the concerns about the supposed culture within rugby league circles, a culture which lacks respect for women, objectifies them, and demeans them. There has certainly been plenty of evidence to support that belief, but the truth is that it is a culture that is encouraged beyond simply the boundaries of Rugby League, or even sport generally, and still exists in many parts of the broader community. Equally, there are people passionately committed to Rugby League, and sport generally, who are just as horrified about the problems as the rest of the community.

Those are the people who will have to institute change within the game if it is to overcome the taint of this long list of scandals. The whole problem with changing a culture is that those people who are inside it find it very hard to see things the same way as do people on the outside. It is a feature of any culture that its members see it as normal. That’s why there has been so much denial, and disbelief. That’s why people accused of being in the wrong are so often tempted to see themselves as victims, and have such difficulty seeing who the real victims are.

As for Matthew Johns, it seems that he has been left to carry the can for a problem that extends well beyond his own involvement. Everybody makes mistakes in their lives. At least he seems to have accepted responsibility for his.

Wednesday, May 13, 2009

So how was it for you?

So how was it for you? Did the earth move and fireworks fly? Or was the whole thing a massive anti-climax? After the barrage of pre-budget leaks there were no significant surprises in Wayne Swan’s second budget with the exception of the announcement that the eligible age for the age pension would increase from 65 to 67. It was a bolt from the blue, and was greeted with an outburst of laughter in the parliament. Then came the detail that it would be phased in over time from 2017 until 2023, so that people already over 57 won’t be affected at all, and those over 50 will only be partially affected. As far as surprises go, it wasn’t exactly a showstopper. Nevertheless, it will leave some people with the feeling that the goal posts have been shifted.

While the future viability of the pension is important, the immediate needs of today’s pensioners are more important. The increase of $32.49 per week for single pensioners is in line with expectations and anything less would have been a monumental breach of faith. But it still doesn’t ensure a decent standard of living in retirement. As much as we would all like to guarantee pensioners a much more substantial income, the real solution for the long term is to continue building up the superannuation system. For the first time since compulsory superannuation was introduced, concessions and benefits have actually been reduced. While the reduction of the allowable salary sacrifice contribution for high income earners arguably only impacts on people who will most likely be wealthy in retirement anyway, the supposedly temporary reduction in the co-contribution payment for lower income earners is a negative step which undermines the purpose in having superannuation in the first place.

The superannuation system remains in need of further improvements in order to deliver on its purpose of providing adequate retirement incomes for most Australians. By achieving that, the age pension would perform its proper function as a social safety net, and with fewer people relying on it there would be scope for it to be a little more generous. Of course, the superannuation system is included in the current Henry review of taxation, and it is to be expected that some reform will come out of that, although it remains to be seen if the system will ever be allowed to fulfill its potential and realize the long term vision of Paul Keating.

The opposition is focusing on the record budget deficit, and the long term debt which arises from that deficit, warning that we will be paying it off in future generations. Worse, they are questioning the optimism of the Treasury predictions for a strong recovery to 4.5% growth for an extended period of time after the recession ends. If they are right, it would be reasonable to expect the deficit, and the debt, become even bigger than forecast. But that’s the trouble with forecasting… none of it is certain. Just look at last year’s figures projecting a surplus of over $20 billion and only a minor economic slowing but no recession. None of them were even remotely accurate, so in these strange days who’s to say just what might be in store by this time next year?

In that light, the important thing is to keep people in jobs, and to support the needy. Despite the enormous deficit, I suspect this budget may not be enough to do that, especially in the light of international conditions.

Tuesday, May 12, 2009

Temporary Deficit Is A Good Thing… So Long As It Is temporary

Be alert, but not alarmed, when the Treasurer Wayne Swan delivers the bad news tonight. Not that there can be much bad news that we don’t already know. It’s a safe bet that the cavalcade of significant changes announced in a flood of budget leaks will come to pass more or less as reported. Increased payments for single age pensioners, reduced payments for the Medicare safety net, means testing for the private health insurance rebate, a reduction in the allowable salary sacrifice into superannuation as well as a reduction in the superannuation co-contribution, and the latest leak, a wind back of the taper rate to reduce the amount of part pension paid to so called “wealthy retirees”.

While the need for cost saving measures in recurrent spending is clear, and the extent of so called “middle class welfare” makes it an obvious place to start, it is still going to seem like a Jekyll and Hyde budget with substantial spending directed at infrastructure and nation building programs. There seems to be an inherent contradiction between the idea of having just recently handed out cheques for $900 to almost everybody with a postal address, and then turning around and turning off the tap for things like the private health insurance rebate. Already the opposition is making plenty of noise about that apparent paradox, but it ignores an important distinction.

The difference between the cash handouts and the spending cuts is that the cash bonus is a once only expense. The programs targeted for expenditure cuts are ongoing programs, and the savings gained will be ongoing savings against the budget bottom line. A good analogy might be to compare the situation to a family where one partner has lost a job and it is clear that income is about to drop. In that case it might be quite sensible to withdraw some savings to pay for some household maintenance and perhaps fix the family car now, so that the family is better equipped for the changing circumstances, while at the same time cutting the weekly grocery budget to accommodate the reduced income on an ongoing basis.

In the same way, plotting a course to steer the Federal Budget back into surplus has to begin with making cuts to recurrent or overhead spending, while at the same time providing funds to invest in infrastructure for future productive capacity. Of course, with the loss of revenue which has resulted from the economic slowdown, it becomes more difficult to actually find those funds and going into deficit is unavoidable. That is, unless we accept even greater cost cutting which would see the end to government services we all depend upon. Sure there would be no deficit, but millions of Australians would be left in the streets without work, without income, without shelter, without hope. Do the words “Great Depression” mean anything to you? That’s why a temporary deficit is a good thing… just so long as it is temporary.

If we want to see a return to prosperity, now is the time to invest in the future in terms of infrastructure, productive capacity, education, training, and health. Later, when the benefits of that investment are realized, the level of government revenue will rise significantly on the back of greater economic activity, just as it has fallen away now at this time of Global Recession. When that happens, the deficit will right itself and become a surplus once again. Hopefully, this time around, we will have learned to employ the fruits of prosperity more usefully than we have in the past.

Monday, May 11, 2009

Is There Anything That Hasn’t Been Leaked?

Are you sick and tired of the Federal Budget yet? It hasn’t even been announced yet, but already there are signs of “Budget Fatigue” in the wake of an extensive series of leaks to prepare us for the big night tomorrow. It’s not uncommon for a government to let the bad news leak out early so that when the official announcements are made they don’t come as a shock, and possible even as a relief if things turn out to be not as bad as expected. This year there seems to have been a strong case of budget leak fever, with daily headlines for the past week warning us of what to expect.

The private health insurance rebate, the Medicare safety net, the tax concessions on superannuation salary sacrifice, have all been among a number of measures tagged for cutbacks of one kind or another. The latest item to be apparently confirmed, although not officially, is the introduction of a paid parental leave scheme, although not until after the next election. Less ambitious than the model put forward by the Productivity Commission, it is set to cost $260 million a year, but by 2011 when it begins the economy should be moving in the right direction again.

What’s more interesting than the things which have apparently been leaked, are the things that we don’t know. In particular, we still don’t know if the Government might choose to extend the First Home Buyers Grant increase beyond the June 30 cut off date. While there has been speculation that only the money for new construction be continued, we have been warned consistently that the boost will cease on schedule. There is a great deal of pressure coming from the property sector for the scheme to be retained on the grounds that it is working, and that removing it now will weaken the property market and in turn the economy.

However, there are serious problems with extending the program. There is plenty of evidence to suggest that the grant really only helps to inflate prices, especially at the lower end of the market, which effectively cancels out any benefit. At the same time, research shows that 30 percent of people who purchased a home in the past year are experiencing mortgage stress, and 21 percent of new home owners expect to have difficulty making payments. There’s a nasty vicious circle in the making here which could see sizable numbers of people unable to keep their homes, and unable to sell them for what they paid. The catch 22 is that removing the grant money could be a trigger for price falls that feed that spiral.

I have already said previously that rather than simply cutting the money off completely, the government should consider phasing it out. A few weeks ago it appeared that the government was set to retarget the scheme so that the focus is on new construction, thus providing ongoing support to the building industry. Either way, it is better than simply cutting it off abruptly. But in the light of the spate of budget leaks this past week, all of which have related to other policies, I wouldn’t be at all surprised to see the First Home Buyers Grant extension get a reprieve, at least for a while.