Good Politics is not Good Government

Good Politics is not Good Government

There are many instances where politicians and major political parties are more focused on themselves and their own self preservation; than being interested in the well being of their constituents, or engaging good government.

In Australia, this is no more clearly seen than in the Federal Liberal Party. With problems with government revenue and a budget in deficit: the proposal to provide tax cuts to the wealthy and big businesses is but an incentive to attract political donations from the wealthy and major corporations, and an attempt to arrest the current decline of donations by wealthy individuals and big business to the Liberal Party.

The early election date called for the 2nd July 2016 comes soon after the end of the financial year, where political donations made up to the 30th June 2016 could quickly be claimed.

Rather than focusing on good public policy, these donations are seen as necessity by the major political parties: to support a campaign for re-election. The importance of political donations for success at re-election is shown by the recently appointed Federal Liberal Leader, Malcolm Turnbill, who donated up to two million dollars of his own personal money, in an attempt to be successful at the last election.

This raised the spectre of political donations and their influence on politicians and political parties. Many wealthy individuals and corporations donate heavily to political parties; from tens of thousands of dollars up to two million dollars are given. This is to ensure that wealthy individuals and businesses can gain access to politicians of influence and political parties: to promote their own interests. (1)

Many politicians act as political lobbyists, for a fee; and can influence government decisions. The motivation to enter politics should not be based upon accessing lucrative lobbyist fees or gaining future employment as company directors. such as: John Brumby and Alexander Downer who became directors of Huawei (2), Arthur Sinodinos involvement in Australian Water Holdings (3) and Ex-trade minister Andrew Robb gets job with Chinese firm that leased Darwin Port. (4)

In the current economic climate, where individuals and businesses have already borrowed significant amounts of money. The proposed tax cuts to the wealthy and big business will not necessarily result in increased economic activity and higher employment. Profits are more likely to go towards paying down debt or increasing returns to shareholders. If businesses current capacity can meet current demand, then; it is unlikely that businesses will add costs to increase capacity.

It is increased demand that will encourage businesses to expand capacity and increase labour. The stagnation of the economy is largely due to the stagnation of wages over the past decade. As cost of living has increased and wages left relatively unchanged, disposable income has diminished and people have had to cut back on spending to meet the increased cost of essential items.

If you give someone with a salary of one million dollars a seventeen thousand dollar tax reduction, it may not result in much increased spending. But if you increase the income of someone who is struggling to make ends meet or living near the poverty line, it is more likely that the majority of that increased income is spent back into the economy. This would create much greater demand, increase jobs and business investment and increase tax revenue, such as the GST.
With a budget in significant deficit and with diminishing government revenue and increased unemployment: the proposed 50 billion dollars in tax cuts, particularly to wealthy individuals and big businesses is highly questionable. With many sectors of the economy contracting, some of these funds could well be better spent in infrastructure projects to lift productivity, make Australia more competitive and generate employment. (5)

It may also be necessary to keep some funds in reserve, for if an economic shock occurred, such as the GFC – where government spending was required to prevent severe economic contraction: like Old Mother Hubbard, we do not have anything currently in the cupboard.
The IMF suggests that increased investment in infrastructure protect Australia against global economic downturn, boost growth and government revenue – which would assist in reducing the deficit. (6)

It is unlikely that we will vote in a lack lustre political party. Having a significant pre-election war chest of political donations is largely irrelevant. What has the Government achieved in its time in office? Despite the Government rhetoric on innovation: what we have seen is scientists leaving the industry in droves with the reduction of current funding (7); and our education ranking in the world slip backwards. How can we drive an innovation economy with poor educational outcomes? (8) Surely what is needed is good government policy and outcomes, if a government wants to be re-elected. Any Government should keep this in consideration. Good politics is not good government.

 

Links:

1. http://www.abc.net.au/4corners/stories/2016/05/23/4465448.htm
http://www.abc.net.au/news/2016-12-07/political-donations-top-$1b-thanks-to-big-business/8097030

2. http://www.theaustralian.com.au/national-affairs/foreign-affairs/huawei-ties-to-mps-despite-cyber-security-concerns/news-story/e4c4aae20c3b8fd7791acb8b7830f340

3. http://www.abc.net.au/news/2014-04-03/sinodinos-to-give-evidence-at-icac-inquiry-into-awh/5363408
http://www.news.com.au/national/federal-minister-arthur-sinodinos-would-have-made-up-to-20-million-if-a-controversial-publicprivate-partnership-was-approved-icac-told/story-fncynjr2-1226857043643

4. http://www.smh.com.au/federal-politics/political-news/extrade-minister-andrew-robb-gets-job-with-chinese-firm-that-leased-darwin-port-20161030-gse7c8.html

5. http://www.pbs.org/newshour/bb/crumbling-infrastructure-inhibiting-american-productivity/

6. http://www.abc.net.au/news/2016-12-02/australia-should-boost-infrastructure-spending-says-imf/8088152

7. http://www.abc.net.au/news/2016-11-07/lack-of-funding-sees-scientists-leaving-labs-in-droves/7996604

8. http://www.abc.net.au/lateline/content/2016/s4586400.htm

 

 

Picture source:

http://morningmail.org/

 

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