Saturday, November 07, 2015

Saturday Morning Musings - The Turnbull Ascendancy?

In a number of recent posts one of the issues discussed is just what we can expect from Malcolm Turnbull, how might a Turnbull ministry shape itself? In doing so, I have indicated some of my own reservations about Mr Turnbull.

Looking back, similar threads seem to be emerging in casual conversation, in comments on this blog and in some of the polling. One is simply a sense of relief at the departure of Mr Abbott, even among many Coalition supporters. In the end, the Abbott Government was too inflexible, too unstable to survive, lurching from crisis to crisis. There seems to be a common view too that Mr Shorten and Labor having locked themselves into policy positions effectively defined by Mr Abbott's slogans are now left bereft, at sea without a rudder, to use a maritime analogy of the type that now seems to be favoured by Mr Turnbull.

Mr Turnbull has also enjoyed a remarkable media honeymoon, one reminiscent of that enjoyed by Mr Rudd in the first period of his prime ministership. All this has translated into improved polling for the Coalition quite dramatically illustrated in the attached chart from William Bowe's The Poll Bludger. Red is Labor support, blue coalition support. You can see how the two lines have switched.

This is reflected in the betting odds.Here regular commenter 2tanners advices that currently *one year out* Sportsbet has Coalition paying $1.15 for a win and Labor $5.50.

Malcolm Turnbull's recent speech to the Melbourne Institute has been well received, even treated as a landmark speech. This is one example, this a second also from the ABC. I have taken the liberty of reproducing the speech below in full so that you can read it for yourself following my comments.
The first thing to note is that Mr Turnbull was a senior figure in the previous Abbott administration, jointly responsible with others for the decisions of that administration outside Mr Abbott's personal captain's picks.This includes those decisions that have eroded Australian's personal freedoms, that have given the Government an authoritarian flavour. This includes the evolving mess resulting from recent changes to the Migration Act. These provide, among other things, that any foreigners who serve a prison sentence greater than 12 months will automatically have their visas revoked, a change previously defended by Immigration Minister Peter Dutton because it targeted people who were detracting from Australian society, not adding to it.

In the three years July 2011 to July 2014, 372 people had their residency revoked, itself a not insignificant figure. However, since the legislation changed in December 780 have had their residency revoked of which 151 have been deported. The rest are apparently held in immigration detention. On Christmas Island, refugees are being replaced by former residents awaiting deportation, including some very bad eggs indeed.

A core problem with the legislation is that the twelve months is bringing within the scope of power people guilty of relatively minor offences who have spent most of their life in Australia. Apart from tearing families apart, this is a severe form of double jeopardy.

Turning now to the speech and leaving aside the twee use of she for sailor instead of a gender neutral phrasing, the speech continues the distancing process from the Abbott Government while also trying to present the good points, a difficult balancing act The government, Mr Turnbull says, is "not trying to reduce complex issues to slogans." Ouch Mr Abbott, take that. Instead, the Government is charting new directions.

In this context, Mr Turnbull attempts to address two concerns. One is the widely held view that the Abbott Government was unfair, inequitable. Here My Trumbull suggests that we all want Australia to "continue to be a high wage, generous social welfare safety net, first world economy. A nation that is as fair as it is open to opportunity." By the way, like Mr Abbott, Mr Turnbull likes short paragraphs. However, unlike Mr Abbott, some paragraphs actually contain two sentences!

The second concern Mr Turnbull addresses is that of lack of trust in Government. Here he makes suggestions linked to his broad objectives about the policy process itself. This is where I found myself saying yes, yes yes please. How could I not, for these are things that I have been arguing for some years?

The first is that all things should be placed on the table, not just those after everything else has been ruled out The second is that policy should be subject to open discussion .The third that policy should be flexible, should change as events change, should change in light of experience. This directly attacks the shopping centre, mandate approach that I have so criticised. The third suggestion is that Governments should explain why they are doing things, including why they have changed their mind.
All this makes life diabolically difficult for Mr Shorten and the ALP, for they have to try to respond in a far more fluid environment without the clear goal posts previously provided by Mr Abbott. Now in fairness to Mr Abbott, he did set up processes that were intended to achieve longer term policy discussion, but those processes were either too constrained in terms of acceptable answers or were simply submerged by events.

Inevitably, the speech included references to new technology. There was something almost breathless here in Mr Turnbull's words. I am skeptical. While I accept and respect Mr Turnbull's business experience, there hasn't been a new Australian policy idea in this area for twenty years. I wait to see if things have changed.

Mr Turnbull's speech follows:

"Economics is often said to be the dismal science.

Well, there should be nothing dismal about today's discussions.

And that's not just because we are in marvellous Melbourne – somewhat damply glowing with joy and pride at the way in which Michelle Payne gloriously despatched first another glass ceiling and then her detractors with a pithy candour politicians can only envy.

We are living in the most exciting times in human history.

Free markets, globalisation, long periods of peace and above all the acceleration of technological change has produced economic and political transformations at a speed never seen before.

In the lifetime of almost everyone in this room, China has gone from barely contributing to the world economy to becoming the single largest national economy.

In just a generation we've seen the Internet and the smart phone connect most people in the developed world and before long most people in the entire world to each other and potentially to all the knowledge mankind has accumulated.

The first iPhone was released only eight years ago; Google was founded 17 years ago; Facebook with 1.5 billion active users - and YouTube with 1 billion users - are ten years old, Twitter is nine years old and Airbnb and Uber are seven and six years old respectively.

Most of the companies reinventing our world would still be at school if they were humans.

And the venerable elder statesmen of the digital age - Microsoft and Apple - are 40 and 39 years old respectively. Think about it.

In the midst of all this change - economic, political, technological - the opportunities for Australians have never been greater or the horizons wider.

But how do we seize those opportunities, how do we ensure that in the midst of this dynamic region, in the midst of so much growth and change, we are able successfully to transition our economy to one that wins and keeps on winning.

We talk a lot about reform, especially here, but that's just a means to an end. Let's talk about where we want to be - a big national goal.

Surely it is that we should continue to be a high wage, generous social welfare safety net, first world economy. A nation that is as fair as it is open to opportunity.

And how do we do that?

Clearly as an open market economy in a much larger, more competitive world, we must be more productive, more innovative, more competitive.

Across the board, we must acquire not just the skills but the culture of agility that enables us to make volatility our friend, bearing fresh opportunities, not simply a foe brandishing threats.

So reform, since that is the topic of your conference, should not be seen as a once in a decade or two convulsion, accompanied by a hyperbolic scare campaign.

Rather it should be seen as a change of political culture that sees us like the sailor, surrounded by the uncertainty of the sea and the wind, who knows only two things for sure - where she needs to go and that she has the skill to get there..

Sometimes the sailor reaches the mark with rapid ease, her sails big bellied in a following wind; sometimes with slow and deliberate tenacity, sails close hauled, tacking into the teeth of a gale.

But her vision is as clear as her destination is certain. How to get there and how quickly is the measure of her skill.

As we focus on our future course, it requires us above all to be open and honest about our circumstances, understanding and explaining both the challenges and the opportunities.

It is fair to point out where mistakes have been made and being only human inevitably concentrating on those made by our opponents while treading lightly past our own.

But over the years I've noticed the public, on whose goodwill all hope of reform depends, is impatient with the blame game.

The first step in persuasion is to understand and respect the intelligence of your audience - in this case that is the Australian people.

We need to explain that every vector, every sinew of our government's policy is designed to deliver better jobs and greater opportunities - in short a more prosperous and secure future for them and their children and grandchildren. And above all that one that is fair both to those who want to get ahead and those who, for whatever reason, are not able to do so.

That is why good open discussion and consultation aids the task of reform. Because it is not enough to persuade the public that your motives are good - you also have to demonstrate that you've taken decisions in a thoughtful, open, consultative way, that you've carefully weighed up the various options and arguments.

And that is why we are not trying to reduce complex issues to slogans, why we are not playing the rule in rule out game, that's why we welcome every contribution to this debate.

So, across government, business, the labour movement, the wider community, we need to have a grown up discussion which first clarifies the policy goals and then identifies and removes any obstacles that may be hampering our capacity to generate growth, productivity, investment and jobs.

We need to work practically and in partnership, to anticipate economic opportunities as they emerge and to be brave enough and smart enough to make the most of them.

If a particular policy approach doesn't deliver as required or anticipated, we have to be ready to reappraise it, reset as and when needed so objectives can still be met.

If a policy doesn't work, chuck it out, if you see somebody is achieving your objective in a better way remember the sincerest form of flattery is plagiarism, copy them, take it over. Adjust, tweak, agility is the key, the objective is what we're all about. Remember we are like that sailor of whom I spoke, we know where we want to go. We are surrounded by uncertainties and we have to adjust our course, our tactics, our policies to get there. Agility in today's world, in a world of volatility is absolutely key and that requires a very significant change to the political culture and political discourse.

This new discourse, this new culture that embraces change, which is by the way no more than what the business world does all the time, I mean we have, what we are seeking to do is to talk about policy in the same way practical men and women in the business world have been doing forever. What we need to do is embrace change, be adaptable, flexible, innovative.

Structural shifts in today's global economy are not dissimilar in scale and scope to the transition from the agrarian to an industrial society, but it is the velocity of change that is unprecedented.

It is the velocity of change, the rapidity. The changes that used to take centuries are now taking years, maybe a decade.

Right now, for us in Australia, there is also the challenge of making the transition to the post mining boom era. As you know at the beginning of the last decade, the rapid industrialisation of emerging economies led by China and in particular by China's massive stimulus response to the Global Financial Crisis, drove unprecedented demand for raw materials like coal and iron ore.

Prices rose sharply, they delivered a massive windfall gain to Australian incomes and a boom in new resources projects globally. In Australia alone, mining investment rose from less than two per cent of GDP in the early 2000's to a peak of over seven a decade later.

As this new supply has come on stream, as China is rebalancing to have more consumption, move towards - still a long way to go I might add - move towards a more conventional share of GDP than it is today.

We've seen a sharp fall in our terms of trade. This was always going to happen by the way, this was always going to happen. We can't rely on rapid growth in commodity prices to fuel future income growth.

But there are enormous opportunities available to us and to his great and enduring credit, Andrew Robb, fellow Victorian has opened up the doors to these markets and in particular the China market with the Free Trade Agreement.

It's not so long ago I was in this very room of this hotel with a Chinese online business JD Worldwide, the largest in China which was opening up its virtual doors to Australian businesses. Did you know that the Chinese online commerce market is already larger than that of the United States? The rapid growth of this economy at the consumption level is remarkable. For the first time in 300 years, if you believe Angus Matterson's work, which of course we must, the number of Asian middle class consumers equals the number in Europe and North America combined.

Our services exports have been growing by nine per cent over the last five years which has seen rapid growth in agricultural exports, food and drink and so forth, education, tourism, design - right across China you see the work of Australian architects.

Now these are enormous opportunities. How do we equip ourselves best to take advantage of them? A key focus of our Government is innovation. I said earlier, we need to be more innovative, we need to be more technologically sophisticated. We will deliver next month an innovation statement, a set of policies that will focus on how we attract and retain talent, how we support and encourage start-ups. How we, across the Government and the country, encourage a culture of innovation, ensure that our children are requiring the STEM skills that they need, that they have the understanding or familiarity with machine languages that they will need in the future.

Let me say a little about tax, it is much in the news but the Treasurer will be speaking later. The object of the taxation system is plainly to raise the revenue the Government needs for its services it provides. But it must do so in a manner that backs Australians to work, save and invest, that backs them in rather than holds them back. That has, in the language of the Melbourne Institute, the minimum dead weight loss, the minimum handbrake on economic activity.

Now of course any set of tax reforms must be fair which is why picking off one of the by now very venerable reform proposals, I am waiting to see one that hasn't been around for a decade or so. We need a new idea here. I am looking at Chris Richardson, in particular. Surely there must be one!

They have been kicking around for a while and there is no harm in that. That is why picking off one of these by now venerable proposals in isolation to others is always going to be misleading. I think you understand the point I am making there. A reform package must at the very least, raise the revenue we need, share the burden fairly across the community and do so in a way that incentivises employment, investment and innovation. Fairness I repeat is absolutely critical. Any package of reforms which is not and is not seen as fair will not and cannot achieve the public support without which it simply will not succeed.

There are many other elements of reform in this field and I'll just touch on one of them the Ian Harper report – that will not gather dust. It poses important challenges for all Government, especially, or including if not especially State Governments. There are very big - still very big structural breaks on growth. I heard the Chairman of the Productivity Commission talking this morning on the radio about the supply side constraints on development and planning. The Federal Government's arms are a long way from those levers. Nonetheless, it is something we have to recognise.

It is one of the reasons why we have a Minister for Cities and the Built Environment, why we are engaging with cities, with States on matters of infrastructure in a thoroughly non-ideological manner. Why we will support and indeed invest in infrastructure based on what it delivers, analysed in a rigorous, cost benefit manner and without discriminating between one type of infrastructure or another.

I have outlined a few ways here where we are seeking to deliver those goals. A high wage, generous social welfare net first world economy, one that is more innovative, more competitive, more productive.

That is the goal of the Government. That is what we are seeking to do in this field. We will use every measure that we can to achieve that. Everything we do will be assessed by that test.

Is this making Australia more prosperous? Is this making us more competitive? Is it enabling us to compete more effectively? Is it enabling us to seize the opportunities of the future rather than, as some would have us hiding under the doona, shuddering at the changes around them.

We are living in the best times in human history. There has never been a more exciting time to be an Australian. The challenge for our Government is to do everything we can, with your help, with all of the ideas and the advice, with all of the consideration and thought that you and so many other Australians can muster, to do all we can to ensure that we enable Australians to do their best, enable them to realise those opportunities, seize that future, confident, optimistic, proud and strong. This is a great era of opportunity. We are a great nation with a great future. Thank you very much"



Anonymous said...

Jim, just a couple of observations on two words used here: innovation and fair.

I wonder how the carriage builders of old felt about the innovation of the car? Or if Australia Post thinks the introduction of the fax, and email, assisted its business model and service? Or what the last guy to pay $1M+ for a Sydney taxi plate thinks about the fairness of Uber? There are always winners and losers from any innovation; innovation, by its very nature, demands that.

And then there's fairness. As MT said of the tax system "Fairness I repeat is absolutely critical". Well, I'd like a definition of that four letter word before thinking about any changes.

For instance, we are told that GST is a 'regressive' tax, and I accept the economists' reasoning for that label - but while it may affect lower income earners more than higher, it is also 'fair' to point out that the majority of that specific tax is used directly to support government services which more directly benefit those same people - health, education, social services. So what is 'fair' and unfair in this case?

Be interested to have your follow up thoughts on these two 'masthead' words being bandied about.


Jim Belshaw said...

Good morning, kvd. I am not sure that innovation always involves losers, although I would agree that it normally does. The word innovation itself is actually quite a slippery term. In its simplest term, it just means something new. However, Mr Turnbull's usage carries a whole baggage of linked ideas - technology, major shifts, the idea that a constantly changing society or economy is of itself a good thing. I don't think that it is any coincidence that innnovation has become such a popular buzz word and especially in government circles over just that period when Australia has arguably become more self-centered, rigid and less innovative.

Fairness does raise some of the same issues. We can think of it in terms of both what is done and how it is done. All government actions involves winners and losers. In tax, it is who pays, who receives, what are the consequential impacts? Mr Hockey's budget was seen as unfair both in the way it was done (broken promises, lack of consultation) and in its specific pattern of winners and losers (take from the poorer, give to the better off). It doesn't matter whether those perceptions are right or wrong, they existed and had consequence.

I agree that both "masthead" words require further analysis.

2 tanners said...

I was amused to see Malcolm Turnbull essentially say "And if Labor comes up with a good idea we'll steal it". I was relieved to hear him recognise that reform is a process, not a goal, and the goal must justify the process.

And yes, kvd, I think a successful Turnbull reform package (and it will be a package, I think he's pretty clearly signalled that) must have taxes and revenue directed to structural reform, to health and education and quite probably, if we are honest, to the elderly of whom we are going to have a lot more proportionally speaking.

Side note: It's one of the reasons I think our policy against economic migrants makes no sense at all - don't we want entrepreneurs who will risk everything to come here for a better life? If they pass police and medical checks of course.

Anonymous said...

Thanks Jim. I was thinking while writing earlier that a cynic migth be justified in observing that our present PM has simply replaced the three-word slogan with a couple of one-word ones :)

tanners, that word 'reform' could also do with qualification: not all reform provides change for the better imo. But I do agree with you about the case for economic migrants.


Jim Belshaw said...

Laughed at you reference to one word slogans, kvd. True.

Unknown said...

Turnbull is all.too plausible in the bad sense of the word. Well I wd say that wdnt I? :D

Jim Belshaw said...

You would indeed, Michael! Laughed!

Evan said...

My sense is that one impact of Tony's time was to leave voters more focused on policy. And that we are waiting to see what Malcolm comes up with as far as policy goes before we make up our mind.

Jim Belshaw said...

That is a strikingly left field comment from my perspective, Evan, but one that made me wonder. The run up to the last election was effectively a policy free zone that a variety of non-party interest groups tried to fill. Then, following the election, you had that campaign from business groups supported by the Australian Financial Review among others, trying but really failing to set the agenda. As the Abbott Government unfolded and the surprises started to emerge, people became much more focused.

Does this mean that voters were left more focused on policy comared to simply suspicious about policy? You may be right. I would certainly agree that there is a considerable wait and see attitude with Mr Turnbull despite the strength of the polls.

2 tanners said...

No, I go back to the relief thing. Australians are comfortable with the same-old, same-old, just so long as it is surprise free and wrapped up in flattering (treat like adults) and soothing (fairness, first and foremost) terms. David Pope (Canberra Times cartoonist) has summarised it particularly neatly.

Unless MT stuffs it up, or the hard right decide to take the party on a crash through or crash course, or Labor finds a credible policy (hint: you might have left it at the bottom of the schoolbag some years ago, next to the half eaten apple) then it should be smooth sailing. It won't be as strong as the polls currently suggest, much less the betting markets, but it should be a clear LNP victory.

Just as a mild observation, compare Howard's "never, ever" with MT's "everything is on the table". Boy, has he left himself room to manoeuvre.

Anonymous said...

Labor's possible 'policy' move might be to join with the Greens. I think a possible Shorten-di Natali (sp?) government would be attractive to the electorate.

Major difference btw Libs and Labs is MT is a better talking head. Lord knows there's not much of policy difference. So, it's not a done deal, but my thought is Labor would never countenance power sharing - so maybe it is?


2 tanners said...


Just look at how Labor moved all of its attacks in NSW to the Greens, rather than to the coalition. They'd sooner lose government than join the Greens. While I think a Labor-Green alliance could definitely have electoral apppeal, I can't see Labor *ever* going for it and I'm not really sure the Greens would have it any other way.

Jim Belshaw said...

2t, I think that the Greens rather than the Liberals are Labor's natural enemies!