Bold initiatives possible despite political torpor

The Good Oil by Rod Brown*

The nation is in a political torpor. Labor can’t lay a glove on the Coalition. A recession less 13 years, the soothing, fatherly figure of John Winston Howard, and middle Australia in mostly conservative mode. But I am tipping that the Howard Government will surprise with some bold initiatives during 2006.

The health and education sectors are especially ripe for action due to a convergence of factors:

  • the electorate is getting sick of the Federal-State blame shifting
  • the Feds have a sizeable budget surplus to play with
  • Ministers Nelson (Education) and Abbott (Health) aren’t there to make up the numbers, and both have been dropping big hints about radical surgery
  • the Feds won’t mind kneeing some groins in the run up to various State elections.

There may also be action on the industry front. There is a need to show that the Government is not besotted with the minerals and energy sector, and that there are plans to deal with the trade deficit in manufacturing. Accordingly, a major policy statement on manufacturing policy during 2006 is possible. While those Treasury acolytes doubling as financial reporters will be hoping this will be a bland document, the fact remains that there is a role for industry policy.

Industry Minister, Ian Macfarlane, can’t keep trotting out Treasury dogma as he did last August, with ‘The best thing I believe a government can do for business is provide the stable economic super structure of low interest rates and low inflation. Then, step back and allow business to get on with business’. He and his Department have a great opportunity to show leadership on issues such as raw material processing, purchasing policy, pharmaceutical pricing, biotechnology, robotics and the future of CSIRO.

On the tax front, a long awaited review of the tax legislation and income tax scales now seems imminent, thanks to Malcolm Turnbull.

In the transport portfolio, there is a possibility of a bold policy announcement to boost AusLink expenditure, and thereby speed up construction of the Pacific Highway and similar high priority works. The Department of Transport and Regional Services is also well positioned to move on a wider infrastructure agenda if it so wishes. But I think I’m dreaming. Regional development and agriculture look pretty bland too.

On the international front, Alexander Downer is expected to stand out. While one can quibble with our subservient alignment with the USA, Downer has positioned us well with those nations that count, namely China, Japan and Indonesia. His challenge in 2006 is to extricate us from Iraq, steer clear of looming issues with Iran and Israel, and ensure we’re getting real benefits from the FTA with the USA. Actually, by the time you read this, Robert Hill may have been announced as the next Ambassador to the USA, with Nick Minchin taking over as the Minister for Defence.

In concluding, it is unwise to equate the current conservatism of middle Australia with a lack of interest in bold government policies. My reading is that Howard is well aware of this, and thus willing to chance his arm in education and health policy. If they do not, they could lose the policy debate to Labor. Lindsay Tanner, by the way, is looking like the next Labor leader.

Broadband socialism – Local Government active in wireless internet service

The people of New Orleans need all the help they can get in reviving their devastated city. So it was considered a significant boost when Mayor Ray Nagin recently announced plans to install a municipally owned wireless internet system that would be free for all to use. The initiative, which relies on donated equipment, was seen as a way to lure businesses and residents back to the Big Easy. Philip Mattera, a US based analyst, says that not all parties are pleased with idea. Regional phone giant, BellSouth, was so angered at this public sector incursion into its business bailiwick that the company threw a hissy fit. Hours after Nagin’s announcement, BellSouth withdrew an offer to donate one of its buildings for use as a new police headquarters. To his credit, Mayor Nagin, a former telecommunications industry executive, is proceeding with the introduction of wireless broadband – popularly known as wi-fi (short for wireless fidelity).

BellSouth’s action was not an isolated act of retribution. Across the country, the phone companies formerly known as the Baby Bells and the large cable TV providers have been fighting moves by a growing number of cities, large and small, to provide free or low cost wireless broadband service to their residents. In an era when privatisation is the order of the day, the spread of publicly sponsored wi-fi is an interesting move. We are seeking further details – contact us if your Council is toying with something similar.

Aussies lead WTO reform analysis

Australia has been a longstanding advocate of freeing up world trade in agriculture. While there is obvious self interest, we have shown leadership by stripping back our tariffs on agriculture and manufactured goods. It was thus interesting to note the Aussie backdrop to the Doha trade round – which agreed last month to eliminate export subsidies on farm goods. It transpires that the critical World Bank research document for the negotiations, Agricultural Trade Reform and the Doha Development Agenda (November 2005) was coauthored by Will Martin, lead economist in the Bank’s trade research group (ex Sydney Uni) and Kym Anderson (ex UNE and Adelaide Uni). They argued that abolition of tariffs, subsidies and domestic support programs would boost global welfare by nearly $300 billion per year by 2015. They also claimed that two-thirds of these gains would come from agricultural trade reform, because agriculture is so much more distorted than other sectors.

Indeed the World Bank argues that billions of aid will NOT bridge the poverty gap. It depends on freeing up trade. For example, as a result of recent tariff preferences granted to Rwanda, it now has the capacity to wash and grade coffee and sell quality beans at a premium. Increased coffee exports are a key factor in Rwanda’s six per cent growth rate, which has helped address its rural poverty. See www.worldbank.org

Kerry’s legacy

Among the tributes to K. Packer was this gem.
‘Tell you what should happen, son. These governments are always passing these new laws, right? Every day there’s some new law. Now I’ll tell you the law I’d like to see passed. Goes like this: every time the government passes a new law, it has to repeal an old law. Be good, wouldn’t it?’

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* Rod Brown’s Canberra based consultancy group, Australian Project Developments Pty Ltd, specialises in industry/regional development and government liaison. For further information telephone (02) 6231 7261 or email apd@orac.net.au