15 June 2012

Sinodinos exposed as a lightweight

Arthur he does what he pleases
All of his life his master's toys
And deep in his heart he's just -
He's just a boy
Livin' his life one day at a time
He's showing himself a really good time
He's laughin' about the way
They want him to be

- Burt Bacharach Arthur's Theme
I believed all the commentary about Sinodinos adding some sort of heft to the Coalition's offering on economic policy until I read this paywalled article that I read on Google News. It was standard hackery when real policy substance is so badly needed.

This is a time of promise and opportunity - yes, it is. The biggest criticism you can make of governments over the past ten years or so is that they have mismanaged the opportunities and failed to translate them into tangible benefits for people, including opportunities not provided directly by those businesses which Sinodinos and others regard as "wealth creators". Government has a role in redistributing private largesse across the economy, and the trick is to do so in such a way that it creates more opportunity than the "wealth creator" could have provided had they kept their money.

When I started reading Sinodinos' article, that's what I was looking for: a sense of an alternative future for our country and confidence in the means to make them real. A comprehensive policy document would not be necessary, but a critique that clearly tapped into wider themes would have been nice.

Last week, Joe Hockey made the basic politico-media error of fronting the press without having anything to say. Sinodinos has compounded the error, showing that the Coalition's problems go deeper than a slip by one person.
WAYNE Swan should have used last week's national accounts to reposition the government's economic message.

He should have been upfront with Australians about the reasons for their lack of confidence and should have offered a positive plan for tackling the nation's economic challenges. Australia cannot afford Labor's inconsistent approach to economic management.
As far as I can recall the main news to come out of the Budget was that Swan followed through on a long-standing commitment to deliver a surplus. Of all the criticisms that can be made of Swan, the idea that he was some sort of flake changing with the prevailing winds was a new one. I looked for Sinodinos to back this up - nothing.
The Treasurer's celebration of the economic data may be short-lived. National accounts statistics are necessarily backward looking and are not reliable indicators of future prospects.
That second sentence is more than a little rich when you consider Sinodinos' main schtick is as a nostalgia act for the Howard Government, and that the central message of Abbott is that he can and will reprise the happy days of that bygone era.

As to the first - well it may be, and it may not. Talk about a stinging critique right there. All he has left is a bit of quibbling about messaging, and precious little of that.
Much of last quarter's economic growth occurred in the mining boom states of Western Australia and Queensland, and the Northern Territory.

Non-mining states such as NSW and Victoria continue to experience anaemic growth.
The politics of this is interesting:
  • The state with the worst economic growth, Tasmania, cleaves most strongly to the incumbent Labor government.
  • The next two worst-performing states, Victoria and SA, are pretty strong for the incumbents and highly suspicious of The Situation.
  • NSW, simplistically written off as a "non-mining state", is fifty-fifty for Labor, probably better disposed were its leaders not familiar Sydney types.
  • The parts of the country that do best under this government - WA, Queensland and the Northern Territory - are those parts least likely to vote for the incumbents.
The more the government does what Sinodinos would have it do, the less successful it would be.

This shows why it's all very well to have pollsters telling you what people said in response to the questions they asked them - but never ever should pollsters have any input to policy substance, and nor to the circular process by which messages are crafted and sent to those whom they poll.
Swan has struggled for months with the sluggish state of the non-mining economy. He had publicly agonised over the cost of living, families doing it tough and the patchwork economy.
Substitute "Swan" for "Hockey" in the above and it rings true. The difference is that Hockey has a lot of simplistic answers, and enjoys the luxury whereby journalists don't call him on assumptions like the idea that getting rid of the mining tax will be good for the economy.
Ongoing turmoil in Europe led by Greece and Spain, its impact on the US and Chinese economies as well as the regulatory uncertainty resulting from minority government continue to weigh down on business and consumer confidence. In an era of reduced asset values and wealth, voters are grumpy and do not feel wealthy or optimistic.
Nor has the Coalition given them any reason to feel less so.

Australia tends to be culturally oriented toward Europe and North America while being economically oriented toward Asia. This has been some sort of quirky paradox for decades, but now it's a seismic fault that requires government to lead the cultural reorientation process. Tony Abbott isn't the guy to do that, either.
Rather than lay some basis for hope, Swan has sold aspirational Australians short with his class-based rhetoric, scapegoating the miners and playing at Robin Hood. He should adopt a more positive framework for managing the resources boom. It should be about maximising and spreading opportunities to create wealth rather than stoking the politics of envy.
If you're going to maximise and spread economic benefit beyond the holdings of mining companies and other wealth creators, this will involve some recourse to the tax system. Rinehart and Forrest and Palmer squeal like stuck pigs at the prospect of having to pay tax, and you can anticipate the pantomime of them wailing that the Liberals have sold them out by levying any kind of tax on them at all. That pantomime will be further away than the polls indicate, but the lazier journos can start drafting their pieces on it now.
Empowering workers and entrepreneurs should be the name of the game. People feel more secure the more they have control over their own destiny.

Job security cannot be mandated. Equipping workers and entrepreneurs with a global mindset and a capacity to cope with change is necessary to create a sustainable competitive advantage.
The existence of the public sector workforce in this country shows that people do and will trade away higher incomes for what they perceive to be job security. As a career public servant, Sinodinos should have more sympathy for that than he exhibits here. That mentality extends into the private sector, too.

I've been a contractor for most of my career and Sinodinos is employed under a kind of six-year rolling employment contract with the public sector, but the fact is that not everyone can or does get the global entrepreneurial mentality that Sinodinos would wish. That mentality is at odds with the hankering for security and stability that pervades your polling, Arthur.

Once you come to grips with that contradiction you will finally understand what we are all up against with the politics of workplace relations.
The costs of providing new infrastructure in Australia are blowing out compared with overseas. The Business Council of Australia estimates the cost blowout compared with the US to be about 40 per cent for resource projects overall. Australian airports are 90 per cent more expensive to build than in the US and for hospitals the differential is 62 per cent.

The BCA study released last week is an important reminder that, in a global marketplace, Australia must benchmark its competitiveness and productivity against not only developed economies but also emerging economies in Asia, Africa and Latin America.
You there, stop sniggering at the BCA.

The USA did not skimp on skills education like the Howard government did, Arthur, and its high unemployment has pushed down the cost of labour. It also doesn't have an undersupply of housing, the resolution of which is pushing up prices here. It, like emerging economies in Asia, Africa and Latin America, also features "burdensome and unnecessary regulatory requirements".
Australian entrepreneurs and companies continue to highlight that, in many industries, the cost of doing business in Australia is anywhere between 20 per cent and 40 per cent higher than for our main competitors.
If returns weren't also much higher, I suppose the capital inflow and economic growth would just stop dead. The fact that these haven't stopped dead should force a rethink, and render the once economically rational Sinodinos embarrassed to spout such guff under his own name.
Firms that cannot pass on new taxes will have to reduce investment or employment. Labor has failed to even acknowledge that possibility. Some businesses have already started reducing their investments and employment levels in anticipation of the July 1 carbon tax start date.
No examples? No sentences beginning with the phrase "Now if the Coalition were in government, we would ...".
Now is a good time to go full throttle on genuine economic reform to grow the supply side of the economy and lift the speed limits on growth.
Yes, it is. This will involve more debt and taxation though. You're up for that, aren't you Arthur?

The Grattan Institute has laid out an economic reform program based on lifting female workforce participation, increasing the retirement age and a big-bang tax reform that builds on the Coalition's reforms under the new tax system. Extending the GST to food, health and education is not politically palatable in the present environment of new taxes.
What he's saying here is that he is not committing to the Grattan Institute proposal, or any other reform really. Still, he thinks it would be nice if Labor went all out so that he doesn't have to.
Dealing with female labour participation requires an examination of how the various family-related payments interact to provide consistent incentives while preserving a capacity to support young children at home if that is the family preference.
This is a work of sheer piffle, doubling back on itself and strangling whatever meaning it may have had. Howard, and any other minister worth their salt, would have sent that back for a rewrite. Sinodinos might have been a legend behind closed doors in Canberra, but even in the safe and shallow waters of The Strain he is exposed.

If it is the family preference to support young children at home, that family had better have the economic means to provide for that preference. Single-parent families and almost any couple living in Sydney will not be able to do this. There is no reason why the social welfare system should provide half-hearted and half-witted measures that nod in this direction but don't actually facilitate it. Conservatives who would provide some part and tokenistic payment for stay-at-home parents and/or domestic nannies have no grounds to claim that they are shrinking the tax burden.

Given that the issue of some families' preference for raising children in the home is a minority one, and not congruent with or particularly relevant to the economic agenda item of increasing female participation in the workforce, let us now understand that childcare is essential. It has to be flexible, given the demands for flexibility in the workforce, and it has to be of high quality. Where are we going to get a whole lot of highly skilled and committed people who care about little kids and who'll work for very little money, Arthur? No, me neither. Thought you'd have some answers by now.

Another support mechanisms for greater workforce participation include national schemes for disability and income support. Shame that Sinodinos' sorry excuse for a leader has put that on the never-never. When your own leader is not serious about mechanisms for increased workforce participation, maybe you need to broaden the scope of your review.

There are other issues behind increased female participation in the workforce, and I haven't asked them either because I'm just a blogger. If I were a Senator for New South wales I'd ask my female constituents the questions that Sinodinos shows no sign of having asked.
Labor's trend towards means testing such payments at relatively low income levels can create poverty traps, particularly for secondary income earners, most often women, wishing to re-enter the labour force or work longer hours. Comprehensive reform of such payments will need to be part of a larger tax reform package.
Yes, I suppose they will. This is not to say that means tests should be abandoned, because that would mean welfare expenditure would blow out and we can't have that.
Increased competitive intensity and more flexible labour markets are central to creating a culture of continuous improvement based on closer links between wages and productivity at the enterprise level.

To increase "competitive intensity" would mean a reversal of the longterm trend in the Australian economy toward oligopoly in many industries; I assume this means a greater role for anti-competitive behaviour on a level that makes Alan Fels look like a piker. You can be competitive and constantly on the lookout for new opportunities, or you can be relaxed and comfortable, Arthur: take your pick.
More competitive markets encourage innovation as firms seek first-mover advantage. This approach should also extend to greater contestability of service provision in the public sector to improve performance.
Australian firms know that first-movers are suckers; the second mouse gets the cheese. For Sinodinos to assert the contrary proves a principle that has to be repudiated if his career is to succeed: that shinybums in Canberra have no idea how things work and are undercutting, not supporting, those of us in the real world with their honeyed words.
Swan should focus on accelerating reform rather than class warfare; no ticker, no start.
That line worked against Kim Beazley 15 years ago, sort of: it might work again, but if not ...?

Arthur Sinodinos should not have let that go out under his own name. Wyatt Roy or some other inexperienced MP might have gotten away with this sort of drivel but better should be expected of Sinodinos, given the sheer gulf between the wraps he gets and the evidence herein. Sinodinos has been exposed as a lightweight; far better to be imposing behind closed doors than to expose yourself on the public record as just another guy who doesn't really think about stuff or talk to many people who aren't already like him.

This guy is meant to be one of the titans in the next Coalition government, one of the people of real substance. Maybe he doesn't respect the public enough to level with them (a charge he levelled at Swan). If you really think Wayne Swan is a hack and a lightweight, then you can't produce a lightweight piece of hackery in response.


  1. archimedes15/6/12 8:16 am

    "As far as I can recall the main news to come out of the Budget was that Swan followed through on a long-standing commitment to deliver a surplus."

    He hasn't followed through on any such thing. All he's done is put forward a budget which forecasts a surplus in 2012/2013. 12 month's ago he did the same thing; forecast a surplus in 2012/2013. Now how did that budget forecast work out for 2011/2012. Not so pretty, in fact pathetic.

    We should have some idea by Sep/Oct how next year's forecast is working out. I suspect another fail and Swan under major attack.

    1. Peter Whiteford15/6/12 4:36 pm

      I admit to being perplexed by the statement that "Labor's trend towards means testing such payments at relatively low income levels can create poverty traps, particularly for secondary income earners".

      The income test that Labor has applied to Family Tax Benefit Part B is that a family is no longer eligible if the primary income earner is $150,000 a year or over - hardly a relatively low income level.

    2. Lachlan Ridge15/6/12 4:48 pm

      Major attack from whom?

      I don't know what circles you move in Archimides, Greek I presume, but the surplus is not a lightening rod issue in suburban Australia that is likely to shift votes unlike, say, losing penalty rates for your casualised job or the cost of running a motor vehicle.

      William Bowe (a source I normally assiduously avoid - pollsters, urgh!) had an article over at the frantically dissembling Crikey showing that the vast, vast majority of Australians (including many coalition voters) support an activist state, are not fussed by deficits and want a regulated workforce.

      The massive disconnect occurring in Australian politics today that has made people so agin' the gummint is largely fed by the absence of a major political party (the Greens are perceived as simply too flakey for most) that can deliver stability and security in people's economic lives. Hence our political homelessness, and why every night we come around to Andrew Elder's refuge.

      The long postwar boom created a mindset now across three generations that such things as housing, a job and recreation were inalienable rights. Whether they are or they are not is a moot point, but look at the popularity of The Castle. We see in that movie us. It seems the only people getting the hang of our brave new neoliberal world are Gen Y (as much as I hate these lazy generational labels) who seek security in a sense of nihilism and self-obsession that would astonish even the punks of earlier generations.

      So what if there is a surplus or not? Do we get a day off for that? When do we get the easier life and greater comfort that progress is allegedly supposed to deliver? Apparently never according to the Grattan Institute.

      Modernism is dead and now we are in the sad slow decline of liberal democracy. As a Gen Xer (there I go again!) it saddens me as I will probably work until I am dead and never know the security of comfort my parents took for granted. Well, boo hoo, but As W.B. Yeats said:

      "this shall be no country for old men"

      In the meantime my Greek friend, pusti malaka to your surplus fixation and open your eyes to your society before it's too late (for you).

    3. Lachlan Ridge15/6/12 10:16 pm

      Correction, it wasn't William Bowe, it was that other font of useful information on how to solve our social problems by running popularity contests, Scott Steel, who blogs under the pseudonym Possum Comitatus at Pollytics, who wrote the article that shows that apparently Australians aren't thrilled about working harder for less. Funny that.

      Anyway, all these pollsters look the same to me.

  2. Heres a good link re: the point you made on the cost of doing business. I find Matt's stuff very convincing, but im a novice at economics.


  3. Sinodinos mentioned poverty traps in the taxation/benefits system (presumably the old effective marginal taxation rates produced through the income tax system combined with the withdrawal of benefits through various means testing), which you kind of glossed over.

    I've seen very little comment about the changes to the income tax scales coming in with the carbon price compensation - raising the tax free threshold to $18k (and then to $20k down the track as I understand it) is the single biggest reform to address high EMTRs at low incomes in a long time. That really does have to be good at encouraging people back into the workforce for those entry-level part time jobs to be basically tax free income now.

    But of course, the government gets no credit for doing something a bit visionary, and people like Sinodinos can ignore actual reform that does what he says he wants and just complain that Wayne Swan and co have dropped the ball on reform.

  4. Think about the real and only activies that initiate economic and social growth- the private tradeable sector-mining,manufacturing, agriculture, tourism and education.
    The combined State and Federal Government debt is projected to reach $555 BILLION by 2014, most of which has been used to buy political support by current and past Labor Governments.About $400 BILION of this debt has been used to support cash handouts,and fund projects such as BER, pink batts, NBN ,cash handouts, budget deficits, none of which are self funding, and therefore are a future tax on taxpayers. The RBa still retains one of the highest interest rates in the first world, and this has led to a high exchange rate and an inflow of speculative foreign capital into the bond market. Swan and Gillard have had little to do with Australia's economic position, rather than build employment on debt funded public sector activities. Most of Australia's has been achieved despite Swan and because of the strength of demand for mineral and agricultural products by China, India, South Korea, Japan.
    The other areas of private sector production in the tradeable sectors of manufacturing and tourism, are being destroyed by the high exchange rate and clear porotectionism and export subsidies in most of the first world and the emerging economies in China, India ,Korea, Brazil and the USA where the Government owns GM and protects and subsidises most agricultural products. Australia does not have the economic or political power to affect these blatant abuses of the free trade principles where the loudest proponents of the concept are the worst offenders. Australia's only choices are the reduction oand eventual elimination of public sector debt which is not self financing and a review of the most effective support of local industry including the vastly expensive defence industry assembling imported high tech components in Australia with virtually no benefit by way of defence independence.Bill Hartigan Robina

    1. Lachlan Ridge16/6/12 10:40 pm

      Sooo, you want more government intervention, or as you put it, effective support of local industry, but without the government, at least the one we've got until the end of next year, intervening?

      Good luck with that strategy Bill.

      And thanks for bringing us up to speed with the fact that domestic companies that compete with global corporations find it difficult in a globalised economy. Well, I hear that business wasn't too brisk for horse carriage makers after the Model T came out as well Bill. It's tricky this change thing. See, If we don't manage it right - say, f'rinstance, chucking taxpayers money at an industry that's got a limited future anyway, like building six cylinder cars - we can end up with the old opportunities falling in a heap and no new opportunities rising to replace them. Then you end up with all sorts of social dislocation and next thing you know everyone's got bars on their windows and the roads have gone to shit.

      And the fact that people have a job through these 'debt funded public activities' compared to say, gee, I dunno, Spain where one in five don't, is bad for the economy how? How would throwing literally over a million Australians out of work have helped things in 2009 Bill? What do you think sunny Robina would be like with an unemployment rate that looked like the interest bill at Cash Converters old son? How safe would your bank deposits be in a system where a quarter of mortgagees defaulted because they'd lost their jobs? What sort of Australia would that look like mate?

      You know that thing holding your ears apart mate? That's called a brain. They're surprisingly useful if used correctly.