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Jan 19, 2015

Coalition’s crony capitalism makes communication harder

The Coalition's economic agenda is straightforward crony capitalism. No wonder they can't explain it to voters.

In its first two terms, a kind of economic vision of Australia emerged from the Howard government. There were some areas, like tax and industrial relations, that amounted to unfinished business from the Hawke-Keating years. But the real Howard agenda was based on a concept that might be called Homo Aspirationis: a voter not merely freed to pursue individual enrichment, but incentivised to do so. Workers would break free of their union-imposed chains and become individual contractors and miniature corporations; they would send their children to private schools rather than rely on public education; they would live in sprawling McMansions funded by family tax benefits, they would use private healthcare instead of “socialised medicine”; they would share in the bounty of privatisation via asset sales targeted at “Mum and Dad shareholders” (the married, heterosexual, child-bearing couple of course being the Edenic state of Homo Aspirationis). Australia would become a shareholder democracy of rugged individualists heavily subsidised by government.

In the last two terms of that government, aspects of this vision lingered, but it was increasingly swamped by Howard’s constant bribing of voters and, once control of the Senate was secured, long-dormant psycho-pathologies such as Howard’s hatred of the union movement, inculcated during the wages explosion of the early 1980s when he was treasurer.

Now, as John Goodman might have opined in The Big Lebowski, say what you want about Homo Aspirationis, but at least it’s an ethos, Dude. There are no signs of any ethos or even coherent thinking within the Abbott government. Its approach to economic policy, rather, appears based on those industries’ sectors that work closely with the Coalition to achieve policy outcomes that benefit those industries, and industries the Coalition seeks to damage or even destroy. Like a feral BuzzFeed editor that’s been granted executive power, the Coalition’s economic agenda is based on lists.

At the top of the list of friends are two of the country’s most powerful industries: the financial cartel and the resources and energy sector. Both sectors have enormous influence with the Coalition. The government burned significant political capital to repeal the Future of Financial Advice reforms at the behest of the big banks and AMP — at one stage even persisting with the reforms when another influential group, financial planners, opposed the repeal efforts. And the enthusiasm of the Coalition for the mining industry is well known — not merely in the repeal of the mining tax, but in the Prime Minister’s obsessive support for the coal industry and all extractive industries, to the extent of attacking ANU for divesting itself of Santos shares (not long before Santos’ share price collapsed).

Both sectors gave generously to the Coalition in 2012-13. Australian Electoral Commission returns show the Coalition scored over $1.1 million in donations and other funding from resources and energy companies, compared to less than $480,000 to the ALP; the finance sector gave the Coalition over $500,000 compared to around $340,000 to Labor.

Another strong Coalition donor, News Corp, has also benefited. News Corp’s support for the Coalition is provided in kind, via editorial and news coverage support, but nonetheless it has done well from the government: the ABC has been hit with significant funding cuts in an effort to disrupt its ability to compete with — and usually beat — News Corp products across TV, radio and online.

“Industries and business leaders with close connections to the Coalition benefit from public policy.”

A small coterie of senior (in both senses) businessmen have also been given the opportunity to craft the Coalition’s policies, not always successfully. Tony Shepherd was tasked to lead the National Commission of Audit, promptly abandoned as politically toxic. Climate sceptic Dick Warburton was tasked to review the Renewable Energy Target, although, inconveniently for Dick, modelling done for his review showed that it would lead to lower, not higher, electricity prices. Climate denialist Maurice Newman heads the Prime Minister’s business advisory panel. Climate sceptic and former banker David Murray headed the banking industry review, although his stubborn independence appears to have produced a far better review than expected.

The close coordination between favoured sectors and the Coalition has had major implications for economic policy. Repealing the previous government’s effective, low-impact carbon price cost the government over $6 billion in revenue over forward estimates and prompted a reversal in the recent fall in Australia’s energy sector emissions. Repealing the mining tax cost the government — according to its own numbers — over $3 billion. And when it dumped superannuation tax measures targeted at the very wealthiest superannuants, it lost a further $3 billion. This revenue was thrown away at exactly the moment government began bemoaning lower revenue and demanding that low- and middle-income earners bear the burden of helping restore the budget to surplus.

If you’re on the other list, however, there are no tax cuts — only pain. Top of the list of government enemies is the renewable energy sector, which has endured a multibillion-dollar collapse in investment as the “open for business” government has undermined the sector while boosting coal and the beleaguered coal-fired power generation industry. Also under systematic attack is the internet industry. The government aims to impose a surveillance tax on the sector as part of a mandatory mass-surveillance scheme, while imposing an internet-censorship and monitoring regime on ISPs at the behest of the copyright industry, another favoured industry that the government has worked hard to satisfy. Communications Minister Malcolm Turnbull has replaced Labor’s NBN with a shits-and-giggles version under which taxpayers are buying back from Telstra — another Coalition favourite, a privatised near-monopoly being the fruit of the Howard government’s loins etc — an absurdly expensive, ancient copper network that we sold less than a decade ago. The government even appears keen to lift taxes on Australians daring to shop online rather than with local oligopolies.

And the industry superannuation sector, despite persistently and significantly outperforming the retail sector run by the financial cartel, is now being targeted. A former senior executive of the cartel’s Financial Services Council is now guiding super policy as chief of staff to new Assistant Treasurer Josh Frydenberg, who in effect declared war today on industry super.

One of the government’s preferred tools to attack those on its “bad” list is a review. In addition to the ill-fated Warburton review of the RET, it conducted a review of the health impacts of wind farms, a set of claims so thoroughly discredited it may as well have investigated the Illuminati. It recently commenced a “review” of the Bureau of Meteorology at the behest of climate denialists, designed to punish BoM for regularly noting that the climate is warming. The ABC was targeted by Malcolm Turnbull with a review designed to provide justification for the government to break its commitment not to cut funding. Turnbull also used a “cost-benefit analysis” based on Australians’ internet speed requirements actually going backwards to justify his “Copper Magic” broadband network.

There’s a name for this approach to public policy: it’s crony capitalism, pure and simple. Industries and business leaders with close connections to the Coalition, including extensive financial support for the Liberal and National parties, benefit from public policy through tax cuts, direct assistance, “deregulation” and government campaigns against their competitors. Those on the government’s hit-list find that there’s no “deregulation” or tax cuts awaiting them, but reviews and, in some cases, punitively higher levels of regulation. It’s more sophisticated than the naked crony capitalism that is on display in some developing countries, but all the more effective for that.

The problem with crony capitalism, however, is that it’s not any sort of coherent philosophy or vision. It’s simply a list of friends and enemies, a list that can change — mining magnate Clive Palmer has gone from friend to enemy in the space of two years. Homo Aspirationis has been replaced by Homo Listiculous, a playground-level economic theory of who’s in and who’s out of favour. And explaining such a vague motivation, let alone justifying it to voters, is hard enough for competent communicators, let alone this inept government.

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36 comments

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36 thoughts on “Coalition’s crony capitalism makes communication harder

  1. SusieQ

    Excellent and sad at the same time. All we can do is hang in there till the next election and hope there are some viable alternatives.

  2. Wayne Cusick

    Maybe it’s time we all wrote to the Governor-General asking him to put Abbott’s government out of our misery.

  3. Norman Hanscombe

    I suppose we in the ALP can feel proud that despite the ability of Union Powerbrokers to over-ride Local Branch members’ wishes and determine who gets what in seats and other positions, there has been absolutely no attempt to use that power in a way that resembles cronyism?

  4. wayne robinson

    The ANU’s decision to divest itself of Santos shares was financially sensible even at the time it was done. The share price had been on the slide even before it underwent its plunge in December. Retaining the shares even at the time would have been irrational.

  5. David Hand

    Here we have a long meandering piece designed to deliver Keane’s punch-line for the day, “Crony Capitalism”. It doesn’t seem to have occurred to Bernard that the Coalition’s support for coal might have less to do with looking after Glencore and Rio Tinto and more to do with looking after regional towns who will be devastated by the demise of their local coal mines. There are dozens of regional towns across New South Wales and Queensland who are likely to lose their economic mainstay in the next two years.

    I think that coal, particularly thermal coal, is in terminal decline and regional NSW in particular, where most of the coal mined is thermal, is in for a very painful period of adjustment. But I would never expect such policy considerations to make it into a commentary piece in Crikey while the editorial position of your campaigning organ is to paint the government as corrupt.

    Crony capitalism? Ask the residents of regional NSW about that.

  6. Karen

    @David Hand – if the alleged altruistic support of regional Australia is the primary motivation for gifting tax dollars to the mining industries, than what is your theses for the handouts given to the other LNP donating business mates at the absolute expense of everybody else? Or is it simply a coincidence? Give me a break.

  7. Luke Hellboy

    I suppose it will be a coincidence when a bunch of the government politicians get lucrative “consulting” jobs in the finance and resource extraction industries after their parliamentary careers. It’s not corruption if you take your bribe after you leave office.(Alexander Downer at Woodside a prime example.)

  8. Recalcitrant.Rick

    And their might be a ton of work there in renewables, if only Abbott wasn’t so intent on destroying the industry. David, as usual, the sound of one hand clapping. Why don’t you swivel round in your chair and tell Peta that no-one is listening anymore!

  9. Recalcitrant.Rick

    And there 🙁

  10. David Hand

    What tax dollars, Karen? I guess you’re talking about that trusty perennial, the diesel rebate?

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