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Ministerial effect on the community – Negative impact on aviation

Ministerial effect on the community – Negative impact on aviation

Good article Paul [below], although with respect it is simplistic to blame the ‘political’ class for our inability to pursue reforms. After all we are all part of the ‘class’, and for that matter it could be argued that the fourth estate should wear a higher proportion of the egg. 

What is unsaid is the seemingly total lack of prudence in the spending habits of the Commonwealth irrespective of which party is in power. For example for the Civil Aviation Safety Authority one unnoticed increase in the aircraft fuel excise introduced by minister Albanese in July 2010, supposedly a one off restricted to four years yielding $89.9, has been rolled over by Minister Truss.

Including forward estimates this will have amounted to an additional $352 million over nine years. The same Authority has been attempting to rewrite the regulations for twenty five years, costing a mere few hundred more millions of dollars much of it garnered from General Aviation which is decining rapidly.

How many other Government agencies, independent government business units not under direct Ministerial control, are similarly profligate?

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Never mind the national interest, this is a no-win game

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Joe Hockey has announced an emerging ‘consensus’ on tax changes.

Joe Hockey has announced an emerging ‘consensus’ on tax changes. Source: News Corp Australia

Australia has become the “rule out” country — stacks of policies that contribute to jobs, investment and the budget are rejected because of the ideological obsessions and electoral calculations of our highly destructive political and media system.

As we watch the Greece crisis with its gobsmacking exposure of a bankrupt political model and fret endlessly about the latest corrections in China we miss the point entirely — the real problem is not Greece or China. The real problem is Australia. But the penny never seems to drop. We cannot control events in Greece or China. We have to live with and manage what they throw up. What we do control are events in Australia where a prudent and responsible nation would prepare itself to succeed in a world riddled with multiple uncertainties and potential risks.

But we refuse to make such preparation, deluded by our ongoing reprieve from economic downturn and in indulgent denial of the need for long-run economic and social policy reform. The sheer irresponsibility of much of the political class is astonishing yet we treat it with mundane acceptance.

There is a litany of ideas — not all necessarily desirable but all worthy of attention — that are ruled out by one side of politics or another. They include GST reform through a shift in the direct-indirect tax mix, pricing carbon, achieving federation reform by better aligning taxing and spending, reducing industrial relations regulation, university fee deregulation, rethinking tax concessions for superannuation and, in many ways the most obvious failure, the inability to agree on policies to restore a budget surplus.

The contours for the next election are now being drawn. There will be no “big bang” reforms. Tony Abbott has essentially decided on the broad strategy — he wants a meaningful reform agenda yet incremental with a premium on avoiding electoral suicide. None of this is a surprise.

Understand why it is happening. As a society we refuse to make compromises any more and are loath to negotiate seriously on outcomes. Politics is dominated by the power of negatives and ideological self-interest. When one side takes a position it is seen not as a policy opportunity by the other side but as the opening for a huge negative campaign. This culture is entrenched. The days of “big bang” reform in this country are gone. The only debate is when and how many years into the future they may return. In the interim it is vital to make the most of what is possible.

This week Joe Hockey announced an emerging “consensus” on tax changes following the recent discussion paper and plans for a tax white paper the government will take to the next election. It was an unsustainable claim.

Within hours the Labor Party detonated any such hopes as it has done before. Opposition finance spokesman Tony Burke said Labor rejected expanding the base or lifting the rate of the GST. In short, we won’t even debate it. Victorian Premier, Daniel Andrews said he would not support any major change to the GST.

The Treasurer said of Andrews: “The federal government is not going to be arguing for a tax change that the beneficiary actually doesn’t want. You can waste a lot of capital in this debate on reform. But if the beneficiary of that reform actually says, ‘No, we don’t want it,’ you’re on your own, it’s effectively game over.”

That’s right, “game over” on major tax reform. The same applies to major federation reform and major industrial relations reform. The Abbott-Hockey position — they would consider GST reform only with the support of every state plus the federal ALP — is an impos­sibly high bar yet understandable.

In the interim, this means you pay more income tax. If you are feeling ripped off by high marginal income tax rates, understand that the political class has conspired to impose this burden on you.

As for Labor’s reformist credentials, the page remains blank. ALP leader Bill Shorten is trapped: the party can’t ditch carbon pricing but can’t sell carbon pricing. And it can’t solve this dilemma. Its spokesman, Mark Butler has worked hard but Shorten is missing in action as an agent of ALP climate change reformism.

The moral this week from the comprehensive leak of its policy draft to The Daily Telegraph is that Shorten sounded desperate and clueless when it came to explaining, let alone selling, plans that involve an emissions trading scheme, phasing out coal generation for renewables, tougher vehicle emission standards and higher consumer costs giving Abbott his new “carbon tax” negative campaign.

Because the political and media system rewards negativity, the extent of stalemate runs far beyond these immediate examples. This is an alarming situation and the context for the joint initiative announced this week that sees The Australian and The Australian Financial Review, papers from opposing media corporations, jointly sponsoring a one-day summit meeting in August to try to identify common principles for economic and social reform.

In their separate statements announcing the summit the editors-in-chief of the papers, Chris Mitchell and Michael Stutchbury, both argued that the nation’s living standards and the sources of economic and social progress were at risk.

There is widespread and undisguised alarm about the inability of the political system to deliver the national interest policies. The aspiration of the summit is to identify where there is common ground and, where there is not, to create a basis for dialogue.

The political parties should welcome this initiative. Many vital stakeholder groups will be involved: the ACTU, the Business Council of Australia, the Australian Industry Group, the Australian Council of Social Service, the Australian Chamber of Commerce and Industry, National Seniors Australia and the Council on the Ageing. Several policy experts will participate from a range of think tanks.

ACTU secretary Dave Oliver said it was imperative to work together to prioritise investment, skills and growth industries for the future. BCA chief Jennifer Westacott said: “Anybody looking at the news from around the world and then looking at the figures on Australia’s competitiveness, on productivity, on unemployment and on wages who denies the existence of a burning platform for reform is living in fantasy land.”

The “gotcha” nature of the political process was brilliantly revealed this week when Environment Minister Greg Hunt, on the run in an interview with Alan Jones, put approval of the Chinese-owned Shenhua Watermark coalmine back in the melting pot.

Under pressure, Hunt said: “I will do something today that I have never done before, that I am not required to do by law” — and pledged to refer the management plan to an independent expert committee saying that if the committee was not satisfied then final approval would not be given.

It is a stunning example of politics triumphing over due process, though it remains to be seen whether this signals a policy reversal or a better basis to defend the original approval.

What is required now is a variation of Bill Clinton’s triangulation: a new way of seeing policy that escapes the entrenched left-right ideological divides. At present politics is a dialogue of the deaf — talking past set positions and achieving nothing.

Many of the stakeholding groups coming to the summit are already seeking broader agreements and new approaches among themselves. Too much of the current debate is about one-off measures. Labor, for example, proposes to reduce the tax concessions for superannuation yet opposes pensions changes. The government has legislated pension changes but rejects any change to superannuation.

This is a variation of another tactic: using third best reform options to play politics. The truth is obvious: the more items and different policies that are on the table, the more scope for a grand bargain that makes a difference. Yet grand bargains are obtainable in the present political climate.

On Tuesday Hockey said the lesson from the European crisis for Australia was “if you don’t undertake the necessary reforms to get your house in order when you can, then ultimately the pain will be much more significant down the track”. Most people endorse this as a principle — but it doesn’t deliver agreement on measures. The Treasurer called on all governments to engage “openly and constructively” on tax reform. Reality, however, is different. By Thursday Hockey was saying: “I don’t think there’s going to be any big bang tax reform that might have occurred when the GST was introduced or when there was previously a taxation summit under Hawke and Keating. I think this is going to be more gradual reform.”

Welcome to Abbott government reality. Exactly the same can be said for reform in health, education and industrial relations. Now gradual reform is better than no reform. These more limited hor­izons are imposed by the nature of the existing political leadership and the inherent difficulties within the political system.

The public, however, are not mugs. They know politics is becoming dysfunctional. The deeper this realisation, the more scope exists for the political class to focus more on policy merits rather than short-term politics. Shifting this balance won’t be easy but, sooner or later, it must happen.

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