Australian Politics

Angus Taylor lays foundation for Coalition’s economic overhaul

The Coalition has issued a pre-election warning about the growth of the care economy as it vows to drive productivity by returning to the economic model championed in the 1980s through lower taxes, spending and regulation.

Opposition Treasury spokesman Angus Taylor has used a major speech to declare the nation is at a similar crossroads to the one faced 40 years ago when the Hawke government began deregulating the economy, declaring the “consequences of getting it wrong will burden our future generations as much as the current one”.

While not being specific about the Coalition’s economic policies, despite pressure to do so from Labor, Mr Taylor said a Dutton government would reintroduce a tax-to-GDP cap, slow the yearly increase in spending to below economic growth and target a structural budget balance in the “medium term”.

He also flagged a slashing of business regulations, easing rules on the financial services sector, unwinding some of Labor’s workplace reforms while declaring the Coalition would lower taxes with the first priority being on wage earners and small businesses.

Declaring the nation needed a more “realistic economic framework” to deal with the challenges of the 2020s, Mr Taylor warned that the embracement of Keynesian-inspired spending to stimulate growth was contributing to inflation and doing nothing to enhance productivity.

Jim Chalmers has credited Labor’s spending with saving the nation from a recession, but Mr Taylor said government stimulus was the wrong approach to deal with the looming economic slowdown because “today’s challenges” were driven by structural and not cyclical problems.

“The traditional government response to an economic malaise is to stimulate demand,” Mr Taylor said, delivering the Warren Hogan memorial lecture at the University of Sydney.

“Slowdowns are typically assumed to be cyclical, not structural. But that is the wrong answer for today’s challenges. Structural challenges on the supply side are now hurting us badly.

“Restoring our living standards can only come from an expansion of the productivity capacity of the economy.”

Mr Taylor’s speech came after UBS Asset Management bond veteran Tim Van Klaveren warned that interest rate cuts had been delayed due to the cost-of-living support delivered by state and federal governments.

“We have both state and federal governments, particularly Queensland and Victoria, who are spending more than the RBA would like, which is creating demand in the economy and has kept inflation firmer than it otherwise would be,” Mr Van Klaveren said.

With Queensland voters heading to the polls in nine days, and elections in Western Australia and at a federal level scheduled for the first half of 2025, Mr Van Klaveren added that any additional pre-election spending threatened to further undermine the RBA’s inflation fight.

“The reality is that any new government that does come in will have to act a lot tougher on fiscal policy and spend accordingly,” he said.

Commonwealth Bank chief executive Matt Comyn said Australia was facing a “higher for longer” inflationary environment, as he revealed the bank had handed out 132,000 tailored hardship packages in the past year. He said the economy was “still absorbing the shocks of the past few years”. While inflation was falling, it remained persistent.

In his speech, Mr Taylor said central banks and treasuries across the western world were blindsided by inflation spikes after Covid because they were reliant on “new Keynesian models” that were not adequate at “predicting inflation or delivering structural growth in prosperity”.

Mr Taylor took a shot at the inflation forecasts delivered by former Reserve Bank governor Philip Lowe and Treasury secretary Steven Kennedy, who he lumped among the “economics profession and policy advisers (that) have got it so wrong”.

“The idea that inflation was largely immune to surging demand had become a feature of most economic models, including at central banks,” Mr Taylor said. “But our old enemy from the 70s and 80s had not gone away. Inflation had just been in hiding, only to come back with a vengeance.”

With nearly two-thirds of jobs created under the Albanese government coming in taxpayer-supported “care economy” sectors including health, disability and aged care, Mr Taylor said this was adding to productivity problems. He said there had been “no labour productivity growth in the care economy for 20 years”, with productivity growth in the market sector outstripping it by 17.5 per cent since 2000.

“Rapid growth in public spending is crowding out private sector activity and investment at a time when the supply side of our economy is constrained,” Mr Taylor said. “The majority of employment growth is coming from the non-market sector, where there is direct public employment or jobs indirectly funded by governments, while market sectors are experiencing skills shortages.”

The RBA has attributed a surge in government spending – expected to hit a record 28 per cent of GDP by the end of 2025, according to Westpac – as one of the reasons why it does not expect underlying inflation to return to its 2 to 3 per cent target band until mid-2025. Mr Taylor committed to a different approach should the Coalition form government, focusing on “getting the basics right” across five key areas of reform: fiscal management, regulatory reform, and housing, energy and tax policies.

On regulatory changes, Mr Taylor vowed that the Coalition would advance plans to wind back “productivity-draining” requirements across environmental approvals, climate reporting, workplace relations, and the corporations act. “These initiatives risk reallocating resources from generating economic activity to responding to government departments and creating unnecessary conflict,” he said.

Businesses were spending more time on compliance than strategy and investment, he said.

He also flagged easing financial services sector rules.

“We run the risk of becoming under-banked, under-insured, and under-advised at a time our ageing population will demand more financial services, not less,” he said.

Flagging changes to tax settings, Mr Taylor said the Coalition would strive to reduce the income tax burden on families and young Australians but was scant on specifics. Backbench Liberals and Nationals have pressed the shadow cabinet to promise generous income tax cuts at the next election, as the benefits of the stage three tax cuts are unwound due to bracket creep.

https://www.theaustralian.com.au/nation/politics/angus-taylor-lays-foundation-for-coalitions-economic-overhaul/news-story/1bd4b69f6228e14ee7a23f062a6624c8

***************************************************

Australian diary

By Liz Truss (former British PM

It is great to return Down Under after first coming here in 2019 to start trade talks. We closed the deal in 2021 and Australia is now teeming with young Brits on new working holiday visas – no longer having to toil at farms in the Outback as part of the conditions. Tariffs have been removed, righting the wrong of Britain leaving Australia in the lurch to join the European Economic Community in 1973. It wasn’t easy getting the deal past Whitehall bureaucrats who were fanatical about net zero. There were also attempts at sabotage by Conservative cabinet ministers. Graphic pictures of sheep mulesing were circulated to try to denigrate Australian animal welfare standards. But ultimately our unique historical connection clinched it. When it was pointed out that what had by then evolved into the European Union already had the access that Australia was poised to get, Boris Johnson said, ‘Who was on our side at Gallipoli?’ The deal was done.

The deal put the UK on the path to joining CPTPP – the Trans Pacific Partnership. As well as taking on China through defence agreements like Aukus, we also need to challenge its economic power. China has been getting away with intellectual property theft and gargantuan state subsidies that undermine industry in the free democratic world. CPTPP is a bulwark against these practices. Australia, the UK and allies like Japan are showing the way. The EU and US should follow.

I’m here for the Conservative Political Action Conference (CPAC) in Brisbane, masterminded by Andrew Cooper. It’s a pleasant 30-degree respite from rainy Britain. Leading No campaigner from the Voice referendum and CPAC board chairman Warren Mundine is also speaking. He says that 60 per cent of Australians are natural conservatives, as they voted No in the referendum. I quip that the situation is more parlous in the UK where only 52 per cent voted to leave the EU in our Brexit referendum. Nevertheless, both of our countries have a majority that, when given the opportunity, vote against identity politics and unaccountable elites telling them what to do. These voters are ready to vote for the conservative cause – less immigration, less wokery and lower costs. The problem is that too many politicians on the conservative side are chasing after the voters who have left us. We are no longer the establishment. The establishment are left-wing and those voters are not coming back – at least not in the numbers they did before. Conservatives need to turn our attention from the so-called ‘teals’ and liberal democrats towards patriotic working-class voters in industrial towns and rural areas.

A big champion of rural Australia is Nationals party Senator Bridget Mackenzie who gives a firecracking speech about Waltzing Matilda. I learn what a billabong is. Bridget is a top shot. We vow to go shooting in England – before Keir Starmer tries to ban it!

In Canberra, I attend Question Time, which for the Prime Minister is more frequent and less raucous than the UK version. I sympathise with Anthony Albanese about having to appear daily. I think even once a week takes too much time out of the prime ministerial diary! It was good to see leader of the opposition Peter Dutton, who is demonstrating strong leadership on nuclear power and taking on wokery. He must prevail in 2025.

The West is run by the left and it is weakening us. We need to start turning the tide. Keir Starmer is running Britain into the ground. In only 100 days he has given away the Chagos Islands – a vital strategic British interest, let criminals out of jail early and taken away heating allowances from the elderly. Debt is over 100 per cent of GDP for the first time since the 1960s, we have the world’s highest rate of millionaires leaving the country and the highest energy bills in the developed world. We’re not talking about the last one to leave Britain turning off the lights as there won’t be any lights to turn off.

Although Tony Abbott can’t compete with me for shortness of time as prime minister, he too wasn’t in office nearly long enough. He is a true conservative and prepared to do the tough stuff. At the Australian launch of my book Ten Years to Save the West in Sydney we talked about the challenge posed by conservatives in name only in our own parties and leftist institutions. I saw this in ten years as a government minister and as prime minister. After fourteen years of Conservative rule, taxes were at a 70-year high, immigration was at record levels and the state was spending 45 per cent of GDP. When I tried to change things in 2022 in the Mini-Budget by allowing fracking, keeping taxes low and restricting increases in welfare, I faced a huge backlash from the leftist economic establishment.

The day before the Mini-Budget, the Bank of England announced the sale of £40 billion of gilts and did not inform us about pension funds’ exposure to LDIs, derivatives that depended on interest rates staying low. There was then a spike in the gilt market which required intervention. The Bank of England subsequently admitted that two-thirds of the spike in gilts was down to trading in LDIs, for which they had oversight responsibility. By then it was too late. My government had been forced from office.

Having gone through this, I am now convinced that in order to get conservative change we are going to have to change the system. We have to drain the billabong.

https://www.spectator.com.au/2024/10/australian-diary-74/

******************************************************

‘Reconciliation’ agenda might make us feel good. But it does nothing to close the black/white gap

Janet Albrechtsen

The demand for “reconciliation” from Indigenous elites a year after the voice referendum reminds me of a famous courtroom exchange involving esteemed orator and English criminal barrister Sir Edward Marshall Hall KC.

Judge: “Mr Marshall Hall, is your client familiar with the doctrine res ipsa loquitur?

Marshall: “My Lord, in the remote hills of County Donegal from where my client hails they speak of little else.”

How many Indigenous people living in squalor and disadvantage speak of reconciliation?

The man from County Donegal could at least learn that res ipsa loquitur is Latin for something that speaks for itself.

Reconciliation doesn’t have a settled meaning. It’s a slogan, a deliberately vague catch-all phrase often used by Indigenous elites to harvest white guilt for a broad “rights” agenda that included the now failed voice proposal.

There are two Indigenous projects on foot in Australia. One is called “reconciliation”. The other is called “closing the gap”. The former demands special rights for Indigenous people in the name of reconciliation. The second demands equal opportunities for every Australian.

Reconciliation secures nice job titles, influence, headlines and newspaper inches to a small group of educated and well-positioned Indigenous people. Closing the gap is dedicated to getting disadvantaged Indigenous people into jobs, making sure they live in safe homes, go to school, finish school, have access to health services, train or study for a job that will enable them to live as other Australians do, so they are equipped to take responsibility for their lives, and the families they will have.

Reconciliation premises “self-determination” on special rights, that, by their nature, divide the nation in two. Closing the gap is the richest and most empowering form of self-determination; it aims to equip Indigenous Australians with opportunities so they can determine their own life – just as other Australians can do.

To the extent that it means anything, reconciliation conjures up images of two warring parties in need of a settlement. But that is not Australia. A small fringe of activists – Indigenous and non-Indigenous, people such as Lidia Thorpe and a host of academics – may choose to think they are at war with what the High Court has said about Australia as one sovereign nation, when they demand co-sovereignty. But that’s a fringe dispute; it gets the juices flowing at UN gabfests or inside Australia’s law schools where law has been trumped by politics.

None of this helps disadvantaged Indigenous people. We know that because official Closing the Gap numbers are still bleak. It’s much easier for big Australian companies and government departments to fall for the reconciliation racket and trot out “reconciliation” slogans than it is to show genuine interest in finding solutions to Indigenous people who die younger, leave school earlier, end up in prison and live in unsafe homes at higher rates than non-Indigenous people.

How anyone can push a special rights agenda camouflaged as “reconciliation” when Indigenous kids continue to commit suicide at higher rates should be a cause for shame. This national shame is compounded by the fact that failed policies continue to dominate the Indigenous policy area. This shame will only end when every program, activity or other measure or current action is rigorously tested for success with a simple question: Does it close the gap for those in need in any meaningful way?

The Albanese government is in hiding. It talks about reconciliation and closing the gap, and is doing neither. It tried the voice and failed. It refuses to take the advice of Jacinta Nampijinpa Price and conduct a thorough and brave audit of all Indigenous programs and policies. That nationwide audit should include Reconciliation Australia and its monopoly over these things called “Reconciliation Action Plans” that 2700 companies and other groups have embedded in their workplaces.

After writing about this organisation on the weekend, I have learned even more about the separatist sentiment at the heart of the “reconciliation” industry. I heard from many, many readers who work in companies that have a RAP.

One described it this way: “It’s the … equivalent of the Monty Python sketch of monks hitting themselves in the head with a block of wood in time with their Gregorian chants.” Another asked how disadvantaged Indigenous people can “gain self-determination and a bright prosperous future when everything is controlled and won by land councils and other organisations”. Another said that “reconciliation is something you want when you’ve been to uni”. It’s not front and centre for people who don’t even have personal safety.

I learned too that Gary Johns, a former Labor minister in the Keating government, has been trying to advise companies that many RAPs sanctioned by the reconciliation police at Reconciliation Australia are worse than worthless; they divide the country with a separatist agenda and do nothing to improve the lives of Indigenous people who genuinely need help.

Johns, chairman of Close the Gap Research, surveyed 62 RAPs and recorded the results earlier this year. He found a “significant” failure among many RAPS to mention closing the gap, while many focus on RA’s separatist agenda. Johns said they “favour identity over solutions”.

Johns found that the Civil Aviation Authority’s RAP introduced Indigenous language lessons and distributed Acknowledgement of Country cards to more than 800 of its staff members, while property group Stockland includes an annual “Cultural immersion” experience for staff in its RAP.

Johns wants companies and other groups to answer a simple question: Does your RAP close the gap? He found that the Office of Parliamentary Counsel, the department responsible for drafting laws, says it has adopted a RAP because “the majority of Australians are the direct beneficiaries of the removal of land and power from Aboriginal and Torres Strait Islander people”. Johns says that “despite (this department) being on their reconciliation journey since 2007, not one of their 100 staff identified as Aboriginal”.

Johns found the reconciliation journey of Victorian law firm Hives Legal includes making radical statements that sovereignty has never been ceded, “but employed no Aboriginal person on their professional staff”. “Instead, it purchased artwork for the office and children’s books for its staff.”

Johns found that some companies are doing terrific work. The Education Department in South Australia is running intensive family services programs to re-engage kids with school. But why is a RAP necessary for such work, asks Johns. “And why is this a reconciliation activity?”

Other RAPs, says Johns, are “painful to read”. They are full of sweeping assertions and radical statements that bear no relationship to their workplaces. Johns says Lend Lease’s RAP states that “data” continues to show the most successful programs to generate ‘closing the gap’ outcomes are created and delivered by First Nations community-controlled organisations”. That sounds terrific. Except, Johns notes, that “there is no evidence that this is true”.

Johns’s conclusion is that welcomes to country, acknowledgements of country, snippets of language, radical statements endorsing separatism, and Disney-like cultural training “are not likely to close the gap or reconcile anyone to anything”.

He told me this week that he has spoken with around 20 organisations that are thinking of doing a Reconciliation Action Plan. He suggested they “stop and ask: Does it close the gap?”.

Ultimately, he was met with silence. They would rather tick a box with a RAP.

Noel Pearson once addressed the need to expose the “the soft bigotry of low expectations”. It’s high time we exposed the same bigotry of low expectations pursued by groups that span big and small Australian companies, aviation authorities, government departments, local councils and even the parliamentary drafting office in Canberra.

https://www.theaustralian.com.au/commentary/reconciliation-agenda-might-make-us-feel-good-but-it-does-nothing-to-close-the-gap/news-story/6aad6c196120edbe2a1b6048664c6483