The Wrap with Richard Denniss
‘Continuity with change’ was the presidential campaign slogan from the US satire Veep, and so far it seems to capture the messages emerging from the newly communications focused Reserve Bank of Australia.
The new RBA Governor Michele Bullock, like her predecessor, has spent her whole professional life at the RBA and, like her predecessor, believes increasing unemployment is a good way to control inflation. That’s some continuity for you.
Indeed, before her promotion the new Governor gave a speech in which she actually spelt out that she thought unemployment needed to rise by 4.5% in order to get inflation back under control.
The idea inflation is primarily caused by excess wage growth, and that the best way to stop workers demanding higher wages is to make them scared they will lose their job, is hard-wired into the RBA. So is the confidence to think they know how many more unemployed people are needed to achieve the arbitrary 2-3 percent inflation target.
While it is good news Philip Lowe’s contract wasn’t extended, it’s too early to tell what changes, if any, we can expect from the RBA in terms of the way it sees the causes of inflation and the best way to control it.
Clear evidence of one of the RBA’s blind spots emerged last week when an FOI from former Senator Rex Patrick revealed that, to date, our central bankers have done precisely zero analysis on the inflationary impact of the Stage 3 tax cuts due to commence on July 1 next year.
Phillip Lowe wasn’t shy about telling workers not to ask for decent wage rises or asking the government to boost productivity but when it comes to the size, distribution and timing of the $20 billion per year Stage 3 tax cuts, he was as silent as he was on the role of profits and market power in driving Australia’s inflation.
Speaking of market power, last week I gave evidence to the Victorian Government’s Independent review into Victoria’s electoral and political donations system where I raised concerns about the idea of simple donation and spending caps as a way to improve our democracy.
To be clear, we do need to improve transparency, accountability and truth in political advertising in our electoral system, and we do need well designed limits on donations, especially from corporations, and spending.
But there is a real risk that poorly designed donation and spending limits will make it harder for independents and new parties to compete against the incumbent MPs.
Our research shows an incumbent MP receives around $3 million in public support to help build their profile and campaign for votes.
Giving incumbent MPs with five taxpayer funded staff the same limits on fundraising and spending as an independent MP won’t create a level playing field, it will create an uphill battle for those who want new voices in our parliament.
As Ross Gittins concluded in a recent piece comparing the major parties to a political oligopoly trying to prevent new entrants:
“When the government comes up with its plans to reform election donations and spending, we’ll need to examine their implications carefully.”
— Richard Denniss, Executive Director of the Australia Institute
The Big Stories
5 Questions for RBA Governor Michele Bullock
The Reserve Bank will welcome Michele Bullock as the new Governor, when she replaces Phillip Lowe in September.
As the RBA governs over one of the worst periods of inflation, that has left Australian mortgage holders and households reeling, it has become clear the RBA requires a new way of thinking.
Is Michele Bullock up to that task?
The Australia Institute has identified five key questions Governor Bullock must answer to make it clear that the RBA is heading in a new direction.
What’s the difference?
The outgoing Governor of the Reserve Bank had been in the organisation for 40 years. The incoming Governor has been there for 38 years. How will things be different and how will the new Governor foster much-needed cultural change within the RBA?
Can the new Governor handle the truth about inflation?
Does the new Governor agree with the OECD, IMF, Bank of England and Australia Institute research, that excess profits are a significant driver of inflation?
Will the Governor lead an honest conversation about the economy?
Governor Bullock needs to address the role of runaway corporate profits, spikes caused by COVID supply shock, the Russian invasion in Ukraine, climate change and rapidly rising insurance premiums on inflation.
Is the Governor concerned about the impact of stage 3 tax cuts on inflation?
FOI documents reveal the RBA has undertaken no analysis of the impact of stage 3 tax cuts on inflation. Will the new Governor commission such work as a matter of urgency?
Will the Governor stand up to big business and their mates?
The former Governor was quick to call on workers to tighten their belts in an effort to control inflation. Will the new Governor call on businesses to rein in their profit growth and urge the government to consider new super profits taxes and competition policies to deal with firms with excess price setting power?
Last week, Matt and Richard pondered whether the most recent decision to pause interest rate rises represents a change in thinking at the RBA.
Former ACCC Chair Airs Carbon Credit Concerns in Senate Inquiry
The former chair of the ACCC Professor Allan Fels has expressed concern over the nature and use of carbon offsets by businesses, as well as the Australian Government’s carbon neutral certification scheme ‘Climate Active’ in a submission to the Senate inquiry into greenwashing.
Professor Fels’ submission backs the Australia Institute’s own concerns about misleading and deceptive conduct regarding Climate Active, which has certified “carbon neutral products” from Ampol, AGL, Origin Energy, Energy Australia and Telstra.
Professor Fels added that Climate Active certification did not require companies to reduce emissions, only offsets and that, furthermore, companies could claim to have a carbon neutral product despite increasing emissions.
The former chair of the @acccgovau, Prof Allan Fels has expressed concern over the nature and use of carbon offsets by businesses and over the Australian Government's carbon neutral certification scheme in a submission to the senate inquiry into greenwashing. #climate #auspol pic.twitter.com/hUWY3gMLOX
— Polly Hemming (@pollyjhemming) July 19, 2023
Professor Fels cites the Australia Institute’s complaint to the ACCC that the use of the Climate Active trademark may, in many cases, amount to misleading or deceptive conduct about a company’s carbon neutral status.
The Australia Institute has requested the ACCC investigate whether the Climate Active program and the use of ‘carbon neutral’ claims by companies involved are misleading or deceptive under Australian Consumer Law.
Memo to RBA: To bring down inflation, we must bring down profits
Jim Stanford, director of the Centre for Future Work, penned a piece for the New Daily in which he discussed the importance of addressing corporate profits as a direct measure of tackling inflation and restoring real wages.
“Will Ms Bullock more honestly consider this evidence, and adjust her policy approach accordingly?
This is not just a matter of intellectual debate or rhetorical finger-pointing. Understanding what causes inflation is vital to properly designing the remedy.”
Stage 3 Tax Cuts to Keep Interest Rates High
As the discussion around how the RBA will control inflation continues, the start date for the government’s Stage 3 tax cuts, July 1 2024, is looming large.
Richard Denniss appeared on the Today Show to explain that not only are the Stage 3 tax cuts inflationary, but they are likely to lead to further increases in interest rates.
New and Young Australians Giving Hope to the Voice
The Australia Institute surveyed Australians about their attitudes towards the upcoming Voice referendum and found that younger Australians and migrants are the most likely to support it.
Our research shows a whopping 73% of young people (aged 18-29) support a Voice to Parliament.
This demographic could play an important role in spreading the message among older demographics, who have been shown to be less likely to support it.
Overall, more than one in two Australians (52%) say they will support a Voice to Parliament.
Universities In Need of Greater Funding
Research from the Centre for Future Work has found that the dual effect of fiscal restraint and corporatisation has impeded the public university sector’s ability to provide equitable education and services.
Reduced government funding has undermined democratic governance, job security, education quality, and affordability.
As the Federal Government’s Universities Accord – designed to act as a government funded reform plan – nears its end, Eliza Littleton discusses what needs to be done to repair our damaged university system.
“We are labour and we stand tall! And we demand respect, and to be honoured for our contribution. Share the wealth! Because you cannot exist without us!”
— Fran Drescher, Sag-Aftra union president in a speech to the writers and actors of Sag-Aftra.
As Greg Jericho writes in the Guardian:
“It’s a call that workers here in Australia should be echoing.
It might appear that the strike is just about actors and writers and can be ignored by others, but Drescher rightly situated it as affecting all workers.”
Barngarla Traditional Owners Win Fight Against Nuclear Dumping
Barngarla traditional owners have succeeded in stopping the Federal Government from building a nuclear waste facility near Kimba, on South Australia’s Eyre Peninsula, ending a legal challenge that began in 2020.
The facility would have covered 211 hectares with ties to the Barngala people and their history.
The lawyer for the group, Nick Llewellyn-Jones, said “Our clients had to dig very deep emotionally, spiritually, financially to take on the government in this matter.”
Australia Institute research, conducted in 2020, found that a clear majority of South Australians believed more consultation should have been undertaken with the community before the decision was made about the site.
‘No’ Pamphlets Highlight Risk of Misinformation
The pamphlets containing the Yes and No cases for the Voice to Parliament have been released exactly as they have been received – without being edited or fact-checked.
While this, according to our research, was a perfectly legal move by the Australian Electoral Commission, the choice leaves fact-checking to media and political parties, giving room to potentially mislead people in the lead up to the Referendum.
The Yes pamphlet provides examples of how the Voice could work, examples of successful Indigenous-led decision making and focuses on how the current approach wastes money.
In contrast, the No pamphlet relies on fearmongering around the unknown.
In a referendum as important as this one, it’s essential that voters aren’t exposed to lies or misinformation.
“We’ve missed a huge opportunity,” Richard Denniss told Crikey,
“Unfortunately, rather than improve the quality of our electoral debate before having a big electoral debate about the referendum, we’ve chosen to do it in the other order. And that by definition must mean there will be more disinformation, more misleading information around the referendum than there needs to be.”
We Need to Talk about America: Australian Foreign Affairs | 1pm Thursday, 3 August 2023
We Need to Talk About America looks at the future of the alliance in an era in which the US’s global role and stature – which once seemed so constant – are becoming less stable and less certain.
Join Dr Emma Shortis and Sam Roggeveen for an in-depth discussion with Allan Behm, International & Security Affairs program director at the Australia Institute.
Integrity & Accountability with Bridget Archer MP | 1pm Monday, 14 August
Bridget Archer is known for her expressing her views on integrity related issues, even when they do not align with Liberal Party policies.
She joins Australia Institute Tasmania director Eloise Carr and Australia Institute deputy director Ebony Bennett in a webinar for a discussion about integrity and accountability in politics.
National Manufacturing Summit | 2-3 August 2023
The National Manufacturing Summit gathers leading representatives from all the major stakeholders in Australia’s manufacturing sector—business, unions, universities, the financial sector, suppliers, and government—to discuss the sector’s prospects, and identify promising, pragmatic policy measures designed to support an industrial turnaround.
With the theme of ‘Manufacturing the Energy Revolution: Industrial Opportunities from Renewable Energy’, the aim of the Summit is to leverage the opportunities currently available in the manufacturing sector, and translate these into action.
Wednesday 2 & Thursday 3 August 2023, Old Parliament House Canberra
Global Worker Solidarity for a Peaceful Sustainable World | 6pm Wednesday, 16 August 2023
The 2023 Laurie Carmichael Lecture will be held at 6pm Wednesday August 16, at RMIT University in Melbourne.
Sharan Burrow, former General Secretary of the International Trade Union Confederation (2010-2022) and President of the Australian Council of Trade Unions (2000–2010) will speak on ‘Global Worker Solidarity for a Peaceful, Sustainable World, ’ and then answer audience questions, facilitated by ACTU Assistant Secretary Joseph Mitchell.
6pm Wednesday, 16 August 2023, RMIT University Melbourne
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