Well, 2014 was certainly an interesting year in federal politics.
The Palmer United Party and related Independents were the highlight in my view, providing numerous rebuttals to the orthodox views of the major parties.
No signs of this abating, which means the Abbott Government will be forced to jettison some of its May 2014 Budget settings to get expenditure measures through the Senate.
However the Budget mess is the tip of the iceberg, and unless some drastic realignment of thinking occurs, events during the course of 2015 could seal the fate of the Abbott Government. Outlined below are some areas worth watching.
Commission of Audit
I stated in this column 12 months ago that putting a bunch of zealots together in this Commission would have serious consequences.
I also said ‘Joe Hockey (Treasurer) – doubt he’ll last 18 months. His person skills will be used to better effect elsewhere’.
Meanwhile we have a block of Swiss cheese – huge holes in education, health, industry, and foreign aid.
To be fair, the Abbott Government had a mandate of sorts, but it has clearly over-egged the pudding.
Thinking Australians are not buying the need for a balanced budget by 2018–19 while Defence spending increases.
Abbott’s refusal to ditch the Paid Parental Leave program or to tighten tax treatment of foreign multinationals sit oddly with cuts to Blind Citizens Australia, Deaf Australia, Homelessness Australia and Down Syndrome Australia.
The narrative is being lost because there is unfair and uneven treatment on too many fronts.
Who cares if it takes decades to bring the Budget into balance?
A lesson lies in the Fraser Government.
It began winding back industry protection in the early 1980s.
Anticipating a community backlash, his Industry Minister Sir Phillip Lynch adopted the slogan of ‘predictable gradualism’ for a major program of tariff cuts.
Investors, companies and employees all had time to adjust.
Labor Minister Button pursued the same approach.
Predictable gradualism surely fits our current circumstances.
Industry policy
The Industry Department is worth watching in 2015.
While doubts about its likely disappearance are greatly exaggerated, it is a shadow of its former self – just like the sector it represents.
It’s ironic that the falling Australian dollar means that Australian manufacturing is now relatively competitive in price terms on world markets.
But with much of its engineering capability and skills ebbing away, a broad-based recovery won’t happen.
A ray of hope is Innes Willox, CEO of the Australian Industry Group.
He’s a good operator, and gave a very interesting speech last November on ‘Advancing Australian Manufacturing’ – worth a read if you’re a council looking for an ally to develop niche industries.
Our other hope is that Minister Macfarlane might announce a global value chain program, perhaps via an alliance with his fellow Queenslander, the Minister for Agriculture.
Agriculture policy
Speaking of agriculture, Barnaby Joyce hasn’t delivered the pizzazz we’d hoped.
His heart is in the right place, but his Department is in the grip of Treasury thinking and has forgotten its clients.
We’ve tried without success to engage the Department on regional food branding, food labelling laws, food clusters, further processing, development of a fruit liqueur industry and so on.
We also went in to bat recently for an Indian company looking for Aussie partners to develop feedstock for a pharmaceutical product.
We had the moral support of Austrade and the CSIRO, but the Rural Industries R&D Corporation (RIRDC, the key R&D arm of the Department of Agriculture) advised us that it’s “moving away from a grant style of funding…industries need to do it for themselves”.
Sadly, RIRDC has had a great track record in bringing otherwise unconnected rural stakeholders together via joint funding research projects.
RIRDC also has statutory obligations ‘to invest in research and development that assists rural industries to be productive, profitable and sustainable’.
Defence
Defence is worth watching to see if it’s brought to account.
Kevin Andrews’ appointment as the new Minister might be a stroke of genius.
He has already taken flak from Neil James (Australian Defence Association) for previous comments about having no interest in things military.
Andrews is no shrinking violet (he’s a Gippslander after all), and he could have some things up his sleeve for the Defence hierarchy.
The issue here is that the defence companies, their lobbyists, former military chiefs and certain western allies are masters at getting their own way.
If Andrews is smart, he will bring Defence into the real world by scotching their ludicrous attempts to walk away from the local defence industry, and to extract major efficiency savings like all other portfolios.
An example in this regard is the Defence Materiel Organisation, with a budget of $9.5 billion/year and 6,500 public servants.
Implications for local government
I must sound like a grumpy old bastard.
But there are bright spots on the federal scene, and next month I will focus on the Department of Foreign Affairs and Trade, Austrade and infrastructure where things are tracking relatively well.
There is also a bright spot for local government.
To explain, a broadening of the GST or its upping to 12.5 percent or 15 percent are real options.
However the Abbott Government has promised not to introduce new taxes in this Parliament.
Stop smirking please.
The political reality is thus major GST changes in the next Parliament.
I humbly suggest that local government should work with the States to lobby for a solid share of new GST revenues in line with the New Federalism that PM Abbott has been espousing.
It would involve the devolution of industry, agriculture, environment, education and health programs – and the trialing of regional budgets.
There are lots of votes in this.
Labor figures it invented regional development, so it might get on the bandwagon.
Meanwhile, Canberra will shrink, but so be it.
Please drop me an email if this interests you!
Rod Brown is a Canberra-based consultant and lobbyist specialising in industry/regional development, investment attraction and clusters, and accessing federal grants. He also runs the Cockatoo Network.
Phone: (02) 6231 7261 or 0412 922 559
Email: apdcockatoo@iprimus.com.au
Blog: www.investmentinnovation.wordpress.com (750 articles)
