#turnbullcoalition

At least China has a policy in The Pacific

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Australian International Development Minister Concetta Fierravanti-Wells has attacked China’s aid to Pacific nations. Her argument was that China was lending funds to Pacific nations on unfavourable terms and constructing “useless buildings” and “roads to nowhere” in the region. Even if that were so, doesn’t this expose the Minister’s own inadequate policy? Shouldn’t she be preventing such activity by offering more favorable terms and better advice on infrastructure? Isn’t it China’s business to decide whether it deems such spending a waste?

Fierravanti-Wells said to The Australian,

You’ve got the Pacific full of these useless buildings which nobody maintains, which are basically white elephants … I’ve gone to islands and you’ll be driving along on some back road and all of a sudden you see this Chinese road crew building a road to nowhere and you think ‘hmm, what’s all that about’,”

It is all very well firing pot shots at China for its active Pacific policy but at least it has one. Indeed if the end result is that Pacific nations end up agreeing to China’s influence they do so willingly. The Minister can’t claim that these nations are not happy about the situation. Afterall had the ‘international development’ portfolio team done its homework it could see that China has pursued this policy for decades in Africa, Latin America, Pakistan and the Middle East. Who knew?

China has been a poster child of stepping up and filling the void left by The West. China understands that the nations we won’t deal with on the basis of human rights records, dictatorships and the like make perfect bed fellows which leads to even juicier returns provided said despots get the right ‘incentives’. China is not working to virtues.

How can we be surprised? UN sanctions are slapped on North Korea to bring it to heel. Two weeks later Chinese oil ships are trading with North Korea. No cleaner example of China’s disregard for world opinion. China is a master of strategy. It knows it will be stronger than the US in time. 20, 30 or 40 years  is of little concern. Just get the chess pieces in place. Find vulnerable or willing nations off the radar screen and show them love so they reciprocate in ways that strengthens Beijing’s policy directives.

There should be little surprise with this ‘transactional’ Australian government in allowing this state of affairs to occur. Because Tonga or PNG rate less important than China, Japan or the US in terms of trade dollars we apportion the same relative importance to their strategic value. That is about the level of the thinking.

China has the opposite view. It knows that buying influence in Port Moresby with new roads or bridges allows concessions where they really want them. Naval ports. The Chinese have already got East Timor to agree to a trading port which will accept ‘visits’ from PLA Navy vessels.

Our foreign policy is so poorly thought out that even Obama censured us for leasing a port to China! When we’re getting lessons from Obama on foreign policy what more proof do we want for the clueless ineptitude of our government? We’re too busy trying to bribe electorates with multi billion dollar submarine programs where the contractor isn’t even sure it can design what it promised, not to mention arriving in 50 years!

So the Minister best just understand the world we live in. With 5 prime ministers in 10 years is it any wonder we can’t formulate a coherent long term strategy? Australia can moan all it likes about China but its the smug nature of our political class who need to wake up. Complaining to PNG about it’s wealthy sugar daddy is unlikely to find a soothing voice if we offer nothing in return.

By the way, China will only be inspired to keep at it. If anything we’ve only highlighted how our of touch we are in responding and that must bring smiles all around.

If everything is so great then why is our political scene so broken?

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Queensland’s state election said it all. Both the incumbent parties lost massively even though the incumbent Labor Party looks like holding on to power. While Pauline Hanson’s One Nation party looks like it fared poorly in terms of seats it still got 13.8% of the vote from 1% in 2015. Forget the headline results but think of what the political turmoil In local, state and federal levels is telling us more broadly.

Think logically about it all. If the economy is booming, jobs are abundant and prosperity is on the march then there is little need for governments to be running deep deficits let alone facing hung parliaments and acts of desperation. Surely the incumbent governments of the day can laud their own achievements and their constituents would happily keep returning the status quo. The majority should continue to be happy. More by rights should be winners in such a world of record housing prices, steady wage growth, low unemployment and 25 years of economic growth as experienced in Australia.

Yet PM Turnbull turned on many of the traditional supporters of the conservative wing of his Liberal National Party (LNP) coalition who turned their back on him to hand Labor the victory in Queensland. Not so fast Prime Minister. They didn’t leave the party. The party under your incompetent stewardship left them. At all levels the LNP is divided. There are some quarters suggesting that the Nats may split from the Coalition in the next election in Queensland to leave the stench of the Liberal Party to themselves. This is when personal ambition trumps wish to serve a nation.

While the LNP was handed the most valuable and recent lesson of the disaster that was the Rudd-Gillard-Rudd internal factional knifing during their time in power, it completely buried its judgement and started following a left leaning press, weak poll numbers and copied Labor’s folly. Now we have a hung parliament (not withstanding the dual citizenship fiasco) with chronically weak and misguided leadership. One that tells voters that they have no clue rather than introspection that the party may indeed be the problem.

It used to be said that Australia enjoyed the most stable politics in the Asia Pacific region. That encouraged foreign investment and gave Australia low interest rates, a superior credit rating and a regulatory platform that ensured trust (important for corporations), the envy of many nations. Yet inside a decade we have had 5 (soon to be 6) prime ministers which has thrown that ‘reputation’ in the toilet. In a world where international capital is more mobile than ever and asset prices are peaking, instability in government eventually carries severe financial market penalties.

For Aussie banks, levered up to the gills with inflated mortgage books on their balance sheets, such things have negative implications for the 40% reliance on global wholesale credit markets to fund themselves in the face of a tightening US interest rate cycle. Do not underestimate the negative connotations of a federal government that has lost its way, no matter which major party is in power. Where the average Aussie can’t bear anymore on the mortgage, a third admitting they can’t pay the home loan if they lose their job for 3 months or more. Almost 1,000,000 Aussie households would be in severe mortgage stress if rates moved 150bps(1.5%). Think of the spill-over effects on consumption which would only lead to a recession and lay offs, exacerbating a cycle, all the while bashing the currency making international funding even more biting. If only we had a stable government that had a decent fiscal position to weather that storm. Oh, that is right we squandered that in 2008.

One Nation in Australia, AfD in Germany, Party for Freedom in The Netherlands, Front National in France, 5 -Star Movement in Italy, Fidesz in Hungary, FPO in Austria, the Sweden Democrats, Vlaams Belang in Belgium,  Progress Party in Norway, Trump, Brexit…these patterns aren’t random. It isn’t just populism but protest votes to establishment parties that aren’t delivering. While we are constantly told how great our lot is, sadly the gap between haves and have nots is widening globally. Politicians who are ditching political correctness and making waves on publicly uncomfortable issues are thriving. Why could that be?

Donkey (informal) votes in Australia have seen numbers soar from 2.2% in the 1950s to over 5.0% in the 2016 election. Some electorates in NSW saw as high as 14% informal votes. These are powerful messages in a country that has compulsory voting, which has slid to 90.9%.

The sad reality is that the electorate is making louder noises every election that things are not pointing in the right direction yet the muppets are still being returned to their box seats on a dwindling majority. Why? Because not enough voters are heeding the warning signs that are sounding in front of them. Of course politicians still continue to sell comforting lies backed by ever more unaffordable promises to keep themselves in power for as long as possible when we all need to be facing the unpleasant truths that will happen whether we like it or not.

Indeed those deplorables who voted One Nation might have spurned the LNP but not without good reason. In time, they will be viewed as the wiser ones. Not because they necessarily believe in Pauline Hanson’s platform but because they believe in Turnbull and Shorten’s even less. It all rings like a Premier League football coach making a litany of excuses for his team’s woeful performance that ignores the fact that the collection of individuals have absolutely no cohesion as a team. All the fans can do is bury their heads in their hands until the point they can’t bear to watch another game until the coach is sacked.

An eerily potent lesson for today

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In 2011 then Polish Central Bank Head Marek Belka spoke about why Eastern Europe understood austerity better than the West ever will. As our governments bloat budget deficits to avoid taking much needed reform and belt tightening he said of Western Europe….

“Because the people here still aren’t used to prosperity. Let me give you an example from my days at the International Monetary Fund. It was at a time when the Latvians had to implement a drastic austerity program, which caused consumer spending to drop by 25 percent in a year. I asked a Latvia negotiator how his country expected to survive this dramatic crisis. He said: What crisis? We had a crisis when the Soviets were sending us to Siberia. Here in Eastern Europe, many still remember why they were once poor, and they’re not afraid of reasonable reforms that are painful in the short term.”

Experience is a great teacher. It gives the test first and the lesson afterwards. Maybe time we prepare to be Latvians.

 

Barnaby fought the law and the law won

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Well the High Court has ruled against the Deputy PM Barnaby Joyce. As a dual citizen he has lost his right to serve in parliament. Despite all the assurances from PM Turnbull that the High Court would rule in his favour, the government has lost its majority in parliament. Now the Turnbull Coalition is at the mercy of the independents for ‘confidence and supply’. The Libs must sack Turnbull. He is dead man walking. While Joyce and the other ministers and senators impacted by the ruling were not specifically Turnbull’s fault he helped trade the party unto such a precarious balance that it will be wiped out at the next election. No one needs an eggshell government. So much for the liberal media talking of Turnbull serving more terms than Sir Robert Menzies.  There is a certain sense of schadenfreude to see the end of the Turnbull era. One hallmarked by terrible judgement, duplicitous and delivery on next to nothing.

What we must not forget that Australia’s long held and hard earned reputation as the safest democracy in the Asian region continues to diminish. With the likely 6th PM in almost as many years we are a laughing stock. That is actually a travesty.

Liberal Party of Australia – find a cure

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Margaret Thatcher once said, “such are our achievements that my employees have asked me to stay – twice!

The current crop of the once conservative Liberal Party of Australia (called the Turnbull Coalition) can not attest to that. How Michaelia Cash hasn’t resigned for misleading parliament over the recent AWU scandal is beyond me. Then we have Christopher Pyne saying if the boundaries in his constituency are changed then the other member must make way for him. If a $50bn submarine deal to buy his seat at the last election only just saw Pyne scrape home, what on God’s earth does he think he has done to earn his employees’ faith?

The Turnbull Coalition is a dud in every sense of the word and without question we know that Turnbull will decide to leave the ‘political stage’ in the face of defeat to (in his eyes) an inferior opponent. Such is the fragility of the ego PM’s that he’ll actually view his legacy as paved with countless successes. I am struggling to think of one.  Indeed were his employees happy with him they’d ask him to stay at the next election. Turnbull loves the limelight of being PM. Why would he give that up? Surely if he believes his own BS then he’d be the first to contest again in confidence that he would beat Shorten to The Lodge hands down.

Then we have Foreign Minister Julie Bishop who jets around the world cutting cheques to nearly anyone and pushed hard for the purchase of a seat at the UN on the Human Rights Council. Let us not forget that other parts of the UN thought Mugabe a worthy ambassador.

As a life long Liberal voter, there is no conscionable way for me to help elect these clowns until there has been a proper bleaching of all the stains within. There is hardly any whiff of sensibility within their ministerial ranks. Since Turnbull arrived he has divided a party, destroyed its foundations all the while his ministers have to resort to cheap shots and raids to expose the opposition as fraudsters rather than look within. Are their memories that short? It was only 10 years ago they were trying to smear Kevin Rudd for going to a strip club in New York! Who cares? Try running the country instead of trying to force your set of moral values!

It makes my blood boil to see the incompetence get shown on a daily basis. I will happily vote Liberal Party of Australia again once they come back to me. At present they are so far removed from the principles they once held that ‘Liberal’ is actually more aptly described as the derogatory term we give to the ‘left’ in America.

They need a proper drubbing at the next election to remind them how badly they have stuffed up. So caught in their own echo chamber, so on top of the electorate do they believe they really are they will find out that there is no way the ‘achievements of the government could in any way lead to the employees asking them to stay twice.

57% want him to stay

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How much value do we put in polls nowadays? A left leaning paper like The Guardian likely asked the question in the refectory of a university campus between sociology and philosophy lectures. Having said that the latest news on a Tony Abbott challenge to PM Malcolm Turnbull is spooking the media. Best crank up the “everyone hates you” and “”why don’t you just quit” rhetoric to try to pressure ministers and liberal back benchers to keep Turnbull there. Still the Guardian doesn’t report 57% want him to stay  43% want him to quit!

It is hard not to be amused (but appalled) at the recent gaffes. From Christopher Pyne’s cheap shot address saying the conservative left is in charge and gay marriage (this piece isn’t arguing the rights and wrongs) was going to happen quicker than everyone thinks (i.e. An election promise would be happily broken) to Turnbull saying he’d quit politics if ousted as leader. Turnbull was really trying to give Abbott a hint to return to a life outside politics at the same time threatening his flunkies to tow the line because a by-election in his seat would see the Libs lose the one seat majority they have. Treasurer Scott Morrison talks as if the public has no idea how cordial and united the party is under Turnbull when everyone knows better.

The main problem with the “Turnbull Coalition” (evidence enough it’s all about him) is that it is Labor Party lite. His backers could in reality serve in either party such is their ideological similarity. Turnbull could have joined the Labor Party but his Point Piper mansion and Goldman Sachs links make him unpalatable to the working class battler.

So now true conservatives have no real choice but to abandon a Coalition ship that no longer sails in their direction. Instead of minimalist government and laissez-faire policies of a true conservative party, the Turnbull Coalition wants more government and higher deficits. While a feral Senate makes passing austerity bills tough, Turnbull champions his achievements (what little there are) with no thought to the extra billions required to buy off  his elites.

Tony Abbott is a man who is sick of seeing the party he’s dedicated decades to be hijacked by the left. He wants the party to go back to its core principles. Would he win the next election as leader? Probably not but he’d save many more seats than Turnbull who boasts he’ll win the 2019 election. Sadly the damage done to the Libs is monumental. The party is divided and voters are sick of it.

A PM Bill Shorten is almost a guarantee, not so much because he is a popular choice to Turnbull (he isn’t) but the fact the Libs stench is too foul. Even at the local level, support (i.e. membership) for the Liberal Party is collapsing. Take Senator Cory Bernardi who split from the Libs to set up the Australian Conservatives – “In South Australia, we already have one half the number of members in the Liberal Party, which is pretty good after a month, and about two-thirds of what the Labor Party has, and that’s just in this state. So we are building from a very strong position.

What we do know is that Turnbull has turned out exactly as thought. He is the complete opposite of what he told us he would be when the coup took place and somehow polls don’t matter for him when they were the key reason to shoot Abbott. Abbott on the other hand cares for his party as much as he’s accused of being a wrecker he wants to provide a real alternative to Labor as the mass defections to One Nation and Australian Conservatives demonstrate. If I had to put money on a winner there will be none. On a who loses less basis, Tony Abbott has principle on his side and sadly Turnbull’s lack of judgement will see him put almost every foot wrong.

What people forget is that politicians are supposed to serve their constituents not themselves. Sadly Turnbull’s ambition to be PM was for his own ego but he will not to go down in history as one of the greatest leaders of our country. In fact I’m struggling to see who is worse – Turnbull or Gillard. In terms of party wrecking ball, Mr Turnbull takes the wooden spoon.

Dick Turpin Turnbull will chase away foreign capital

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I was asked by a client this week on what I thought of Australia’s political climate. I said to him, “if you asked me 15-20 years ago I’d safely argue that it was the only country in the region which could boast incredibly stable government, sensible economic policy and a safe place to park your money. Today I can’t say with hand on heart that this is the Australia you are investing in today. What I will say is that you should keep your powder dry because it will become a ‘pound shop’ in the not too distant future with a weaker currency, higher rates and fire sale asset prices.”

He asked if I could elaborate. I replied “we have had 5 prime  ministers in almost as many years. Before that we never saw anything like that. Our political climate is vile and volatile. We now have a government that is seeking to put in place knowingly unsound policies to arrest poll declines rather than try to fix an out of control deficit. What they are failing to see is that bashing big banks (especially for a conservative Coalition government) out of the blue chases off investment (Alan Joyce and Don Argua are right about that). Foreign investors must wonder whether they may fall foul of knee-jerk regulations and decide the risk is not worth it. So in answer to your question the current climate is going to offer some fantastic opportunities down the line because all of the political turmoil will eventually force change and buying into the market leading into that will be your best bet.”

So with our Dick Turpin highwayman robber at the helm we invite unwelcome flight of capital. If you want to create jobs, growth, stability and invite foreign investment you do so by providing a platform that supports it. It isn’t won by bashing industry, cranking up public spending and hiking taxes. It is done by making yourself the safest place to invest and all the while that happens the risk falls meaning capital is not only cheaper but more abundant. This isn’t trickle down economics but sound policy. Sadly talking of net debt isn’t going to save this government and what is worse Opposition leader Bill Shorten wants to outspend a budget that makes the Sultan of Brunei’s giveaways look like Venezuelan austerity measures.