Friday, May 31, 2013

Answers to Australia's challenges are closer than London

If you think Julia Gillard's got problems, spare a thought for the British Prime Minister David Cameron.

Ms Gillard only has to endure another 15 weeks until her near-certain election defeat.

Mr Cameron has to battle for another two years until the British general election in May 2015.  His Conservative Party is polling 30 per cent, against UK Labour's 34 per cent, the Liberal Democrat's 10 per cent, and the UK Independence Party at 17 per cent.

Because of history, Australian politicians and especially conservative ones have an emotional affinity with Westminster and they like visiting 10 Downing Street.  The reality is though there's not much Australian MPs or policymakers can learn from the British — and it's been like that for some time.

The last good Tory leader was Margaret Thatcher — and she was deposed by her colleagues more than 20 years ago.  On the Labour side Tony Blair is regarded as a hero for reconciling a party of the left to the benefits of the free market.  This feat was not insignificant, but Bob Hawke had done the same thing a decade earlier.

Australia's challenges over the next few years are not those of Britain.  We have to face the consequences of the end of the mining boom and a cost structure that is unsustainable.  In Britain, the two issues the Conservatives are tearing themselves apart on are Europe and gay marriage.

A fortnight ago, a third of Conservative MPs rebelled against Cameron when they voted in parliament to express their regret that his promise to hold an in/out referendum on whether to be in the European Union had not been written into legislation.

A week ago he stared down an even larger rebellion from MPs over his plan to introduce gay marriage.  Meanwhile, unemployment in the UK is 7.8 per cent and youth unemployment is 21 per cent.  Nearly every Conservative Party activist in the country got to be seriously annoyed earlier this month after they were allegedly labelled as ‘mad, swivel-eyed loons' by the co-chairman of the Party — who also happens to be a close friend of the Prime Minister.

Cameron followed the lead of the left when he talked tough about restricting bankers' bonuses and when he introduced government censorship of the press in Britain for the first time since the 17th century.

The sad fact is that Britain and the European Union probably deserve each other.  David Cameron might be nominally a conservative, but it's increasingly difficult to distinguish him from Europe's social democrats.  His idea of democracy is to give the electorate a say on the biggest issue in British politics — namely, whether to stay in Europe — sometime in 2017.  That's the sort of approach to managing popular opinion that any European politician would be proud of.

In contrast to London, there's a place where Australians could go if they wanted to learn something — it's a lot closer.  It's Wellington in New Zealand.

As the editor-in-chief of The Australian Financial Review pointed out in these pages on Thursday, if there's somewhere Tony Abbott and Joe Hockey should study, it is New Zealand.  In this country there's talk about increasing the rate of GST.  But there's been no corresponding discussion about cutting personal income tax in return — which is what they've done in across the Tasman.  The top marginal rate of personal income tax in New Zealand is 33 per cent and their GST is 15 per cent.  If there is to be a conversation about the GST it has to be in these sorts of terms.  The idea that a newly-elected Coalition government should in September revisit the Henry tax review is a little bit alarming.  The working assumption of the Henry review was that taxes would need to go up to meet society's increasing demand for social services.  Anything that the Coalition does should be based on an alternative assumption entirely — namely that Australia's tax system should aim to make the country as economically productive as possible.

As the retiring Labor MP Martin Ferguson has put it:  ''We need to grow the pie to share it''.  It's statements of truth like that which reveal why Ferguson will be such a loss to the Parliament.

No comments: