While the Prime Minister’s economic reform speech at the start of the week is now disappearing into ether as far as the media is concerned, it’s still worth considering what Scott Morrison thinks is important for getting the economy moving, versus reality. Being an assemblage of neoliberal clichés, his speech dwells on the importance of deregulation. As part of that, Morrison offers this bizarre take on the US economy:
While reducing taxes has had a major impact in the United States, it was actually the Trump Administration’s commitment to cutting red tape and transforming the regulatory mind set of the bureaucracy that delivered their first wave of improvement in their economy.
I’ve noted before that Scott Morrison is outstanding even in his chosen profession for his blatant lying. He lies fluently and eagerly; and not obscure, minor lies, but major, easily checked lies. This was another. Reducing taxes hasn’t had any impact in the United States except for the trillion dollars in share buybacks handed to US investors. Not even The Australian Financial Review, an enthusiastic spruiker throughout 2018 of Trump’s tax cuts, tries to claim they had any economic benefits.
“Analysis of the US tax cut shows it’s done virtually no economic good”, the AFR reported in May about a report from the nonpartisan Congressional Research Service about the impact of Trump’s tax cuts. But more egregiously, the idea that “the first wave of improvement” in the US economy came under Trump must have come as a shock to American workers, given unemployment was below 5% in the final months of the Obama presidency.
But nonetheless, Morrison’s point is that deregulation is a good thing, and he wants business to lead the way in identifying what regulations need to be removed: “Step one is to get a picture of the regulatory anatomies that apply to key sectoral investments. Step two is to identify the blockages. Step three is to remove them, like cholesterol in the arteries.”
That’s the rhetoric. The reality is, shall we say, somewhat different. Let’s take up Morrison’s challenge to “get a picture of the regulatory anatomies that apply to key sectoral investments”.
One key sector is financial services. What’s the regulatory anatomy there? In financial services, it’s less about removing cholesterol and more about cutting out the massive tumours that proliferated under the deregulatory approach of recent years that allowed major financial institutions, having donated generously to the major parties and Morrison’s party in particular, to rip off and gouge customers virtually untroubled by any regulatory impediments. In the wake of the Hayne royal commission, Morrison committed to a laundry list of major new regulatory initiatives in financial services. Not exactly Gutbusters stuff there, Scott.
Another key sector is energy. What’s the regulatory anatomy there? The best metaphor is Frankenstein’s monster: a stitched-together freak composed of the rotting corpse of neoliberal orthodoxy, the stolen brain of political expedience and the stitched-on limbs of interventionism. To be fair, this monstrosity is the creation of governments of both sides, and it has merely fallen to the current government to kill it off. But whatever you might call Angus Taylor’s threat to fine AGL $100 million unless it keeps a decaying coal-fired power station open, or the government’s power to break up power companies if they misbehave, it’s about as deregulatory as a torch-bearing mob of villagers.
Or there’s gas, where the government has finally woken up to the threat higher prices pose to manufacturers and is threatening gas exporters with export restrictions — less removing cholesterol than clamping off the whole artery. What about the internet, another key network? Not much deregulation going on there — in fact the government has a punitively regulatory approach to the internet in which companies must be forced to secretly destroy their own software products, comply with kneejerk censorship laws and surrender control of infrastructure to the government in the name of an endlessly expanding police state.
Aged care? Safe to say that there won’t be too much deregulation happening in that sector anytime soon, not with a royal commission underway into abuses in the sector and regular announcements of strengthened regulations around the treatment of nursing home residents. Education? Well the government was — correctly — boasting in the previous parliament that it had stepped in to impose strict new regulations and funding restrictions in vocational education in response to ongoing abuses in that sector occasioned by deregulation — for which Labor was every bit as responsible as the Coalition. Or there’s franchising, where just last week the government announced a taskforce to consider further regulations to protect franchisees — not to mention the 2017 bill to hold franchisors accountable for workplace rip-offs.
Finance. Energy. Education. The internet. Aged care. Retailing. The government is in the throes of an extensive re-regulatory project driven by major structural failings in key sectors, all the result of the failure to effectively regulate them in the first place.
And that’s before we get to the most significant regulatory failure of all, building standards regulation. A bipartisan creation of state governments, that may inflict colossal economic damage in the construction sector up and down the east coast as buyers realise the nightmare they may be signing up for when purchasing recently built strata title properties. If there’s a regulatory anatomy in building standards, it’s that of a snake that stretches from crooked property developers and builders into the pockets of state and local politicians on both sides to constrict the impact of laws designed to protect consumers.
Still, let’s worry about all that cholesterol in the arteries clogging up business investment. Consumers can’t wait to enjoy the benefits.