Joe Hockey, the fourth Coalition choice for shadow Treasurer behind Peter Costello, Malcolm Turnbull and Julie Bishop, launched a charm offensive late last week and for his efforts landed a piece by Annabel Crabb and one by Lenore Taylor in the weekend papers.
Everyone around Parliament reckons Hockey’s a nice bloke. Perhaps he is. He certainly doesn’t have much to be grumpy about. He’s a lightweight, and always has been from his days as an ostensibly “independent”, but rather conservative-leaning, student politician, pretty much indistinguishable from the thousands of other mediocre Sydney Uni college boys who go on to make up most of the Sydney Establishment. You know the drill. Rugby, medicine/law/banking, an appropriate marriage, a North Shore/eastern suburbs house, rinse and repeat for the next generation.
Hockey fluked his way into Federal politics because no-one else in his party could be bothered running against Ted Mack when Mack, who remains the exemplar of Australian parliamentary integrity, owned the seat of North Sydney. In 1996, Mack unexpectedly retired — on the basis that he didn’t want to qualify for a parliamentary salary — and thereby gifted the normally conservative seat to the Liberals. Hockey, whose main claim to fame had been as an adviser to third rate NSW Premier John Fahey (Morris Iemma to Nick Greiner’s Bob Carr, if you can follow that), was the beneficiary.
If Labor was so anxious to tar Malcolm Turnbull as some sort of out-of-touch plutocrat, it should double the effort with Hockey, because in his case it’s true. Malcolm Turnbull’s rich because he’s brilliant, financially clever and has a remarkable work ethic. Hockey’s rich because with his background it’s hard not to be. His perspective on economic issues is, accordingly, unlikely to be anything other than that of a frat boy who has never had to struggle for anything in his life.
Toward the end of Taylor’s piece, Hockey demonstrated this perfectly. He attacked the Government’s determination to increase regulation and Taylor asked him to elucidate. “They are laying the ideological foundation for a new wave of government regulation in Australia,” he said. “They haven’t announced the specific regulations yet, they are tilling the soil, they just haven’t planted the crop.”
This has to be one of the more asinine statements uttered by a frontbencher on either side for some time.
We’ll let the mixed metaphor of tilling the soil for the foundation of a new wave go through to the, um, keeper. But the notion that the financial crisis does not demonstrate a case for greater regulation of key economic sectors is one right out of Kevin Rudd’s “all Liberals are Hayekian wingnuts” playbook. As is the suggestion that Australia has achieved some state of regulatory nirvana, departure from which would be a disaster.
For Hockey’s information, here are just a couple of areas in which more regulation is necessary in Australia:
Executive remuneration: An economic system needs the support of its citizens, especially when that system is visibly faltering. It needs buy-in and acceptance from the community. Excessive executive remuneration directly corrodes that support, undermining the basic compact between business and the community. Governments and, oddly enough, business have a stake in better regulation to prevent excessive executive salaries and end payouts that reward failure, either by direct restrictions or by taxation. Malcolm Turnbull told the National Press Club speech last November:
In 2004 the Coalition legislated to allow for the disclosure of senior executives’ and of course directors’ remuneration and for a non-binding resolution by shareholders on those remuneration reports. But if you are going to ask the shareholders, why should their decision be non-binding?
It’s like asking someone their opinion and saying, in the same breath, “I won’t take any notice of what you say unless you agree with me”.
The fact is that many Australians are appalled by the level of executive salaries and even more astonished that shareholders’ opinions can be ignored. The law should be changed so that the shareholders resolution on the remuneration report, or at least that part relating to the chief executive, as well as directors, is binding.
So much for Labor being the ones hell-bent on more regulation.
No taxpayer funding without regulation: When Julia Gillard lambasts the Coalition for “letting the market rip” in Australia’s childcare sector, she’s not indulging in rhetorical excess. The previous Government pumped billions of dollars of taxpayers’ money into the childcare sector with virtually no attempt to regulate the industry. The result was the collapse of Coalition favourite and donor Eddie Groves’s ABC Learning.
The private health insurance industry, in contrast, accepts similar levels of taxpayer assistance in exchange for tight regulation and control of its premiums. As a basic principle, any industry relying on government subsidy should accept extensive government regulation to ensure the investment taxpayers are undertaking is protected and a basic service level is maintained.
Regulation where it matters: For decades, Australian governments have relied on a mix of self-regulation, “co-regulation” and real regulation across the economy. Self-regulation is preferred by governments of all stripes because it costs less. Only where the consequences of regulatory failure can lead to death and injury do governments reflexively put away the “industry codes” and guidelines and directly regulate. But self-regulation and its bastard cousin co-regulation should only be adopted where the consequences of regulatory failure aren’t that important.
The string of financial collapses and corporate scandals in the last decade shows that, despite the Coalition and Labor’s claims to the contrary, Australia still hasn’t got its financial regulation right, even if we’re streets ahead of the manifest failures of the US system. And part of this is adequate resourcing of regulators to enable them to do their jobs.
One of the lessons of the financial crisis is that you get the regulation you pay for.
Real competition policy: Australian businesses and consumers continue to pay for a national tendency to oligopoly and collusion. Bit by bit the Government, via criminalisation of cartels and creeping acquisitions, is moving toward a more aggressive competition law. It’s all a bit post the horse bolting, but perhaps it’s what Hockey is referring to when he complains of the Government “tilling the soil”?
The only problem with the Government is that it isn’t tilling the soil anywhere near enough. It has done nothing to systematically overhaul the regulation of the childcare sector. It has provided extensive support for the major banks and enabled them to reduce competition in the banking sector with no quid pro quo of any kind, even as they slash business lending and keep business interest rates high. And for all his rhetoric, the Prime Minister’s “action” on executive pay was to task APRA with writing some regulations about links between remuneration and excessive risk taking.
If Frat Boy Slim seriously thinks the Government is doing too much regulating then his days as shadow Treasurer are likely to be short and painful. The financial crisis is only one of several reasons why governments have to get more serious about regulation. Even his own leader thinks so.