By Denis Bright
Those Morrison years (2018-22) were a crucial turning point for Australians on both strategic and economic fronts. It will take time to recover from those aberrations in our national political life.
Federal budget spending as a percentage of GDP peaked at well over 30 per cent during the COVID-19 crisis in 2020-21. This national emergency brought the highest public sector allocation since the wartime emergency in the 1940s. Adding spending by state and territory governments brought the public sector to almost 45 per cent of GDP during 2020. This public sector spending has flattened to an estimated projection of 35.3 per cent in 2024-25 (Aaron O’Neil for Stastica 3 May 2024).
Mainstream reporting overstates the capacity of incoming governments to change these priorities as shown by data from the Parliamentary Budget Office (PBO):
Current federal spending priorities of 26.4 per cent of GDP for 2024-25 are not exceptional. The federal public sector will drop back to 26 per cent in 2027-28. There is no certainty in this forward estimate in a very volatile global economy presided over by leadership changes in the domestic politics of the USA, Britain and Europe.
In former bastions of the centre-left in France, public option drifted to the populist far-right and to the Left Popular Front in results comparable to elections in the mid-1930s.
Back home, the Albanese Government proceeded cautiously in the management of fiscal policies as noted in Budget Paper 1:
This caution is justified as our key trading partners in Asia confront similar problems which are shown up in projections from the same budget paper.
Of the emergent Asian economies, only China had a capacity for net overseas investment. The Quad arrangements with India, Japan and Canada have little capacity to offer alternatives (LinkedIn). The possibilities of more capital inflow investments from East Asia are lost in strategic rivalries between Japan, China and Taiwan China over the ownership of rock outcrops and atolls.
A combination of domestic and international factors was responsible for the economic setbacks facing the Chinese overseas investment sectors. The setbacks for China had significant impact on Australia’s growth projections as shown by the illustration from Budget Paper 1:
Australia had a quite nuanced approach to achieve a real balance between commitment to the China Australia Free Trade Agreement at a time when commitment to economic nationalism was on the rise in both the Trump and Biden administrations in the USA. There is no evidence that overseas investment in Australia is dominated by China even by the addition of investment originating in Hong Kong and Macao (ABS 1 May 2024):
Keeping the investment multiplier afloat during times of global market instability is state of the art financial policy in the absence of a more highly developed Australian financial sector. Domestic investment delivers 85-90 per cent of Australian capital expenditure as measured by other ABS sources of data. The domestic investment sector was ironically in decline as a full decade of LNP administration commenced in 2013 and long before the arrival of the COVID-19 crisis. An upward trajectory has been restored in the Albanese years but as Jim Chalmers correctly tells us, there are dark clouds on the financial horizon.
Too much emphasis on the argy-bargy of political life and mainstream media reporting of these partisan antics can distract a better understanding of the rationale for current financial policies that are still inadequate to meeting the needs of states and territories for the delivery of essential services and cost-of-living relief.
The financial dependence of the states and territories on federal funding allocations is not widely reported in the mainstream media. In Queensland, the largely Murdoch controlled commercial media offers support to the state LNP in proposing to trim the growth of the state government’s own essential spending. Almost 42 per cent of the state’s record levels of spending, capital works and cost-of-living assistance for 2024-25 is derived from the sharing of GST revenue and special grants from Canberra.
Every dollar lost to ATO through canny tax avoidance procedures by individuals, businesses and of course multinational companies is at the expense of these essential financial allocations from the federal government to the states and territories.
Those less than patriotic military companies like Cubic Defense of San Diego have the resources to keep the ATO waiting for the settlement of tax accounts. These processes extend to 800 multinational companies on the ABC’s annual list of companies with a commitment to tax avoidance (ABC News 8 November 2023).
Tax avoidance also takes from the financial resources of Medicare. Despite increases in Medicare incentives to promote bulk-billing at local clinics, practice costs have increased for skin cancer procedures requiring initial biopsies and excisions. One MBS Item Procedure 31361 attracted a Medicare rebate of $174.70 on an invoice I perused. This resulted in out-of-pocket expenses of $300 with no refunds offered by the private health care insurer for procedures performed in a local surgery for a family paying $6048 a year in private health insurance.
Our political leaders can tone down the divisive argy-bargies in political life by a smoother framing of their own political agendas with an emphasis on commitment to the real needs of the electorate as required by current cost-of-living challenges.
Poll Bludger (30 June 2024) summarises the state of play in national politics from the latest Newspoll:
The Australian reports the latest Newspoll finds Labor recovering a 51-49 lead on two-party preferred, after the last result three weeks ago recorded a draw. However, both sides are down on the primary vote, Labor by a point to 32% and the Coalition by three to 36%, with the Greens up two to 13%, One Nation steady on 7% and others up two to 12%.
Anthony Albanese is down one on approval to 42% and up three on disapproval to 53%, while Peter Dutton is down one to 38% and up five to 54%. Albanese’s lead as preferred prime minister is 46-38, unchanged from last time.
The poll also finds 42% support for Peter Dutton’s proposal of building nuclear power plants in seven locations announced last week, with 45% opposed.
The nimble financial footwork of the Albanese Government and Treasurer Jim Chalmers needs to be supplemented by state-of-the-art framing of the federal government’s pragmatic agendas on our behalf. Something is wrong with the communication outreach of Labor’s spin doctors and mainstream media reporting when winnable federal seats particularly in Queensland are firmly held by LNP members.
Similar seats in NSW like Macquarie in Outer Metropolitan Sydney and the Blue Mountains are firmly held by Labor with an extraordinary vote for local member Susan Templeman. The results after preferences in the Katoomba Booth show just what happens when excellence in political communication confronts a fractured political divide riddled with communication diversions.
Researching this article has given me a better appreciation of the outstanding work of Jim Chalmers and his financial support networks in steering Australia away from All the Way With the USA perspectives on national finances and multinational tax avoidance.
Regional federal electorates from Peter Dutton’s seat of Dickson to Leichhardt can be brought back into the Labor fold with state-of-the-art political communication with a focus on needs-based politics in this cost-of-living era. What Paul Keating achieved at the 1993 election requires a full-rerun of The Victory of the True Believers.
All those hours spent by electors with mainstream commercial networks continue help to implant populist interpretations of our national identity until better models of political communication emerge (Canberra Times 13 January 2024).
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