AUSTRALIA – POLITICS 2021

At The Sydney Institute, on Wednesday 27 January 2021, as a second year of pandemic restrictions complicated Australian politics, Parnell McGuinness, columnist with The Australian Financial Review and communications strategist, joined Aaron Patrick, senior correspondent with The Australian Financial Review, to discuss where they saw the Australian political landscape heading as the nation and the world emerged from the effects of COVID-19. Their talks were followed by a board table discussion with The Sydney Institute’s executive director.

AUSTRALIA – POLITICS 2021

PARNELL McGUINNESS

Today’s topic, “Politics 2021”, fills me with dread. As a rule, predicting anything is fraught with danger.

My very favourite book about political punditry is Philip E Tetlock’s 2005 book Expert Political Judgement. His 20-year longitudinal study of expert commentators and political cognoscenti found that their predictions turned out to be no more accurate than chance, or – as Tetlock colourfully expressed it – no more accurate than dart-throwing chimps.

Today, I will be the chimp leaving my darts on the historical record.

But Tetlock’s study did find one characteristic that ever so slightly improved the accuracy of pundits. He adopted a quote from Isaiah Berlin to describe this characteristic; Berlin in turn had it from the poet Archilochus:

A fox knows many things but a hedgehog knows one big thing.

Berlin’s hedgehogs “relate everything to a single central vision”; his foxes “entertain ideas that are centrifugal rather than centripetal”, they consider many experiences and objects, without “seeking to fit them into…any one unchanging, all-embracing…inner vision”.

Tetlock found that foxes were slightly but significantly better than hedgehogs at making forecasts. Which is a long way off saying that I’m not going to attempt to make grand predictions or reveal some essential truth. Instead, I’m going to draw your attention to a number of currents, big and small, which might influence the course of Australian politics this year. I’ve tried to limit myself only to points which haven’t already been widely examined.

Broadly, these fit into three categories:

• Observations on the Prime Minister and the Federal Opposition leader
• Ticking timebombs in the policy sphere, and
• The social context

Kicking off with issues of government and opposition.

As the polls keep telling us, Australians believe Prime Minister Scott Morrison has handled the Coronavirus pandemic very well. Sadly, nine hundred and nine Australians have died with or from the disease – but this is still a tiny number in comparison to other nations. At the same time, many sectors of the economy were able to remain open. Cushioned by a $500 billion pandemic response, Australians are riding out COVID in relative comfort.

In responding to the pandemic, Morrison once again showed himself in tune with the Quiet Australians. The vast majority of Australians are not traders or travellers. It produces no inconvenience to them if borders are closed internally and externally. According to one survey, 40 per cent of Australians never travel overseas. Another 23 per cent do so only once or twice every few years. Only 18 per cent of Australians travel once a year or more. This means there is very little voter pressure on Morrison to open up borders again – indeed, with an election coming toward the end of this year or early next, there is every reason not to allow travel.

The political downside of an increase in community cases of COVID would be more powerful than the political upside of taking the risk in travel. It is notable that Morrison recently praised as “wise” the extreme caution of Queensland Premier Annastacia Palaszczuk, who ordered a “long weekend lockdown” after one case of the more contagious strain of COVID was contracted by a hotel quarantine worker. Palaszczuk, like Morrison, is happy to keep her borders shut as long as she considers it necessary or expedient.

But Australia can’t stay closed forever – we need the revenue the world brings more than ever. In 2019, the tourism industry was worth $60 billion to Australia and the education industry raked in almost $40 billion. These industries are a significant source of revenue and the consumer spending the economy is missing. It was easy to shut Australia off; this year we will find out whether Morrison is equal to the task of opening up again.

Inevitably, comparisons will be drawn between the extremely cautious approach he looks locked into, and the bolder course taken by New South Wales. Morrison has publicly admired NSW Premier Gladys Berejiklian’s ability to manage infection risk while keeping the NSW economy as open as possible, but he doesn’t look inclined to replicate it.

New South Wales has used the upheaval of the pandemic to embark on a raft of policy reforms that it believes will position it for future economic strength.

In April 2020, Morrison also made much of the need for reforms to support Australia’s pandemic recovery. While waving about the Productivity Commission’s 2017 Shifting the Dial report, he declared that “everything is on the table”. As we approach the anniversary of that declaration, no dial has been shifted and it looks like no productivity dividends will be forthcoming.

Morrison’s planned reform agenda is now reduced to industrial relations reform. And even this looks likely to get stymied by the unions and weaponised by the Opposition. That would leave the Prime Minister with no significant reforms when the need to improve productivity is obvious and acute.

It poses a communications challenge as well as a political challenge, because the government needs positive stories as it gears up for an election. They’ve already blown much of their existing artillery: the Morrison Government has a bad habit of publicly patting itself on the back by giving friendly journalists the “inside story” – often before results are fully known. The paen to the now-defunct COVIDSafe app was a particularly cringe-worthy example. Other than making for some boring journalism as the press gallery is spoon fed by self-congratulatory ministerial media teams, it means that many of the puff pieces the government should be placing like breadcrumbs up to the ballot box are already yesterday’s bird food.

So, it is possible to envisage a scenario in which the NSW reforms lead to a thriving state economy, and the state’s success leaves the Prime Minister looking comparatively ineffective. The good management stories of 2020 will be long forgotten. Labor and the unions will set their internecine troubles aside in order to fight against “Workchoices 2.0”, a familiar battle on familiar ground, which they hope will defeat Morrison as its predecessor defeated Prime Minister Howard.

This fight would be a charm for Anthony Albanese, who is between a rock and a hard place trying to appeal to traditional Labor constituencies while appeasing the climate aspirations and culture wars demands of the left of the Labor party. He would welcome any opportunity to step into a traditional skirmish of the old Labor kind.

Industrial relations reform may be the policy bomb ticking the loudest. After all, the government’s credibility in business circles hangs in the balance. But there are plenty of other time bombs which preceded the pandemic and are ready to blow.

Ticking timebombs of policy

Thanks to the good ministrations of former Treasurer Peter Costello, every five years Treasury produces a report on “the long term sustainability of current Government policies and how changes to Australia’s population size and age profile may impact on economic growth, workforce and public finances over the next 40 years”. The most recent report was due in 2020 but was delayed so it could incorporate the significant changes to the budget that the COVID response had occasioned. It is now due out in the middle of this year.

In 2015, the Intergenerational Report found that the number of Australians aged 65 and over will double by 2054, with one in a thousand people projected to be aged over 100. By way of comparison, in 1975, there was only one person in ten thousand over a hundred years old.cccc

Australia’s demographic outlook has not improved since the last report. The 2015 report assumed that the birth rate would continue at 1.9 births per woman. In 2019, births per woman were down to 1.7. This creates what some have referred to as an impending “demographic mushroom cloud” – a situation in which there are dwindling numbers of taxpayers supporting a growing number of tax consumers – that is, elderly people – who require more health services and government pensions.

The release of the Intergenerational Report is traditionally greeted with a rise in intergenerational hostility as younger people are reminded of the financial burden that awaits them, while they are already struggling to afford a house and maybe even a baby. One consequence will likely be more “OK Boomer” and Karen-call-the-Manager memes. More gravely, the 2021 Intergenerational Report will bring home just how much debt there is for young people to pay off. We’ll see if the government’s determination to save every life, no matter what the cost, is still popular among young people once they’re presented with the bill for each boomer.

The reminder of our demographic pinch-point will reopen the discussion around migration to Australia. Migrants have, for the past decades, been our primary source of population growth. But before COVID, migration levels had become a concern for many Australians, with around 60 per cent of less affluent Australians believing the intake was too high. In 2020, Australia’s migrant intake dropped by 80 per cent, down from 154,000 to 31,000. Setting a new migration cap could become a source of political contention this year.

Of course, young people could simply decide that Modern Monetary Theory, a fashionable name for printing more money, will push debt repayments into the never never – onto the children they might not have. In which case, why not spend up some more?

JobSeeker is scheduled to return to its pre-pandemic Newstart rate in March this year. There is already a strong case that the previous Newstart rate was not enough to support someone actually looking for a job. The JobSeeker top-up will be a painful loss to many people, who have learnt to enjoy and rely on the extra money. This political landmine could be simply skirted by leaving JobSeeker at a higher rate. But then some businesses have claimed that the higher rate makes potential employees reluctant to accept employment that leaves them no better off financially.

It will be difficult to find a path out of these conflicting pressures without a discussion about what welfare seeks to achieve and whether our punitive welfare system is adequately structured to achieve it. The entire welfare system needs an overhaul to nip intergenerational disadvantage in the bud. That would be another inconvenient distraction for the government, though it may prove inevitable.

Another area of policy which the government does not want to get bogged down in, but which is overdue and possibly unavoidable, is the question of an Indigenous Voice to parliament or some form of breakthrough in the Indigenous space. At the end of 2020, a survey by Reconciliation Australia claimed that over 80 per cent of Australians were in favour of a constitutionally enshrined Voice. The year before, an Essential Media poll had found 70 per cent in favour, so it would seem that there is widespread support for the notion, at least in theory.

Certainly, there is enough activist support to ensure the issue won’t just disappear from the national consciousness, though it is unlikely to be sufficient to sell constitutional change to Australians. There will be pressure to “do more” in the Indigenous space. Moreover, the Liberal Party would be missing a major opportunity to write a new narrative for itself if the first Indigenous Minister for Indigenous Australians is not supported to rack up at least one major accomplishment.

An unlikely ally in this area might be former Prime Minister Tony Abbott. The Institute of Public Affairs announced yesterday that Abbott would join the think tank as a Distinguished Fellow, fighting for mainstream Australian values. Indigenous disadvantage has long been an issue close to Abbott’s heart; as prime minister, he pledged to spend a week each year in a remote Indigenous community, effectively giving communities a direct “voice” into the PM’s ear. In the context of his appointment to the IPA, he again mentioned his interest in Indigenous affairs. He would be well positioned in his new role to help the government create an acceptable model for a “Voice to Parliament” and to advocate for it among those who remain sceptical of its value.

Cultural context

Abbott’s IPA role will also introduce an interesting twist into the “culture wars”.

In seeking election the first time, Scott Morrison refused to engage in the culture wars which had ravaged the Liberal Party as Tony Abbott and Malcolm Turnbull fought for control and leadership of the party. Since being elected, Morrison has governed pragmatically and moderately, often to the irritation of those on the right of the party who believe that the left is winning the culture war. Now a high-profile former prime minister will be stepping into the fray.

This may work well for the government, as the culture wars will be waged at arm’s length. Or it could work out poorly, if Abbott’s focus shifts from influencing culture upstream from politics to influencing politics itself. The latter would draw the Liberal Party back into the turmoil of the last decade. This would work out well for the Labor Party, which has been struggling with its own internal culture wars and would welcome the distraction.

And with that, I believe I’ve about used up my time. Of course, this is just a tiny selection of the cross-currents that will run through politics in 2021 and a few ideas on the ways in which they could affect its broader course. I haven’t even touched on important issues brewing overseas or on many of the debates which are raging in Australia as we speak. But, hopefully, in the spirit of Tetlock, I have contributed a few ideas to the foxes in the audience, who know many things that make them ever so slightly better at anticipating the future.