Impact of coronavirus on the regulatory and legislative climate

Prime Minister, Hon Scott Morrison MP has stated on many occasions that the global coronavirus pandemic has dealt Australia both a health crisis and an economic crisis.

Accordingly, the federal government – together with state/territory governments through the newly-formed yet highly-effective National Cabinet – has been devoting an enormous amount of resources to addressing both challenges.

Now that there are early signs that the threat posed by the pandemic in Australia is easing, the attention of business – if it hasn’t already – is turning to what risks and opportunities involving government will exist in the coming weeks and months.

On the economic front, the Morrison Government, in a significant departure from its centre-right position on the political spectrum, has embarked on what has been perhaps the biggest set of spending initiatives in Australian history, culminating with the announcement of the $130 billion “JobKeeper” wage subsidy initiative late last month.

The JobKeeper program is one of several measures designed to cushion the catastrophic impact the coronavirus is having on the economy. The Government has also announced financial support packages to the tourism industry, aviation and regional media outlets, among others.

Looking ahead, there could be even more spending by the Government to try to keep money in the pockets of consumers and Australians in jobs, but, depending on how much longer the current major restrictions on the movement of people exist, there will come a time when the spending will stop and the Government will commence implementation of a plan to pay off what will be a sizeable public debt.

From this point onwards, the risks to business relating to regulatory and legislative change will markedly increase. Commentators have been claiming that the fastest way to economic recovery will be through economic reform. Such changes will, inevitably, leave some industries worse off – and it will be at the discretion of the Government which industries may be able to cope with such change. The other medium-term question – even given that conservative governments have, traditionally, been reluctant to go down this path – is if any taxes will be increased and/or if new taxes or levies will be introduced.

In a potential post-coronavirus political environment, the most effective way for industries and businesses to address these increased risks is to ensure they have existing relationships with key political and other government stakeholders. Those that do should be far better placed to manage – and minimise – these risks.

- By Hamish Arthur

Movement of votes between the major political parties

Analysis of election results in Australia in the past 10-20 years has, more often than not, focused on the impact of minor parties and independents.

With disenchantment in the major parties seemingly on the rise, there has been a drift of votes to minor parties and independents in many recent elections. However, there is one notable exception.

The outcome of the Victorian state election, which was held in November last year, was the Andrews Labor Government was returned (for a second term) with an increased majority. Labor won 55 of the 88 seats in the House of Assembly (lower house), the Liberals and Nationals won 27, the Greens won three and three independents were elected (in the seats of Shepparton, Morwell and Mildura). But it’s where the Labor Government picked up votes which is of interest. On the primary vote, the swing to Labor at the election was 4.8 per cent. Given the swing against the Liberals was 6.0 per cent (and the swing against their coalition partner, the Nationals, was 0.8 per cent), it’s clear that the majority of votes which shifted in the Victorian election went from Liberal to Labor. This is reinforced by the Greens suffering a swing against them of 0.8 per cent. As for other candidates, including independents, they attracted a collective swing to them of 2.8 per cent. Yes, it was an increase, but it wasn’t anything like the 4.8 per cent swing to Labor.

Away from the statewide figures, the swing from one major party to another was never more apparent than in the eastern Melbourne suburban seat of Hawthorn. Those who follow politics closely would recall the Liberal member for the supposedly safe seat (its margin going into the election was around 8 per cent), Mr John Pesutto, watched it slip from his grasp as he was involved in live television coverage on the night of the election. The end result is that Hawthorn is now held by Labor, the first time this has happened since 1955.

Two other major elections are now upon us – tomorrow’s New South Wales state election and the 2019 federal election, which is expected to take place in May. When the counting of votes concludes after both elections – long after governments have been formed – it will interesting to analyse the movement of votes through the swings for and against, and determine if what happened in the Victorian election is a one-off or if it is the start of a trend.

- By Hamish Arthur

Emergence of trade media cannot be ignored

Digital disruption of traditional media outlets over the past decade has been significant, but one of the consequences which was not necessarily anticipated in the internet age has been the emergence/growth of trade media outlets.

While traditional media channels, such as major national newspapers and news/talk radio programs, are still, by and large, highly respected and command a large share of people who engage, trade media outlets across many different industries are thriving.

What’s more, the relationship between major companies/industry associations and the trade media outlets which are directly relevant to them is, in many instances, far different to what has and continues to exist between major companies/industry associations and traditional, broader media channels.

As an example, it’s not that unusual for an industry association to have an informal or even formal arrangement, such as a memorandum of understanding, with a trade media outlet which is devoted to covering issues and stories about the industry the association represents. This includes stories about advocacy, developments and other work the association is conducting on behalf of members, as well as announcements and developments involving companies which are members of the industry association.

Consistent with the digital disruption model, trade media outlets do not necessarily have to have a physical presence (e.g. a magazine) – there are several who rely on e-newsletters (daily or weekly), a website and promotion on social media channels. Although depending on the nature of the industry they focus on, some trade media outlets do still print magazines or produce other printed forms of communication because there is still a demand from readers for these channels.

For industry associations and major companies, trade media channels represent a relatively fast and efficient way of broadening communication of key messages. Another positive aspect of trade media is it has the ability to provide broader coverage of issues/developments in the industry it focuses on.

It means that if you are developing a media strategy and if you are developing a government and media relations strategy, then both traditional media channels and trade media channels should be among your key media stakeholders.


- By Hamish Arthur

Unique insights into effective ministerial engagement

Dennis Richardson AO delivered one of the more memorable and entertaining addresses to the National Press Club last week, a speech which also included an enormous amount of extremely valuable advice for anyone who is or who is thinking about engaging with a government minister.

Indeed, the principal points about this which were made by Mr Richardson – who, until his retirement as Secretary of the Department of Defence last Friday, was one of our most experienced and respected public servants – apply to engagement with all key political stakeholders.

In short, Mr Richardson said engaging with a Minister, particularly when communicating information the Minister might not necessarily like, is similar to engaging with a member of your family – carefully consider the person you are about to engage with before doing so. Among other things, think about whether they are a “morning person” or not; think about how and where you will deliver the information, notably what would be the most effective setting. Mr Richardson said it might just be that the message is most effectively delivered halfway through walking the dog.

Mr Richardson went on to state there is virtually no point in getting upset at a Minister. While this may make you feel better, it is highly unlikely you will achieve the outcome you are seeking.

In other words, potentially, the two most important aspects of ministerial engagement are to determine what outcome you are seeking and decide on what is the most effective way of achieving this outcome.

If you are new to communicating with government or even if you have been engaging with government for years, it’s well worth taking time to analyse Mr Richardson’s points – ahead of interacting with all key political stakeholders. His points should directly inform the development of your strategy for engaging with key political stakeholders and at all times during the implementation of the strategy. Doing so will maximise your chances of success.

These rules of thumb certainly served Mr Richardson well in a career in the public service which lasted almost 50 years. We wish him a happy and fulfilling retirement.

- By Hamish Arthur

Transparency for Australian consumers

Australia’s consumer law framework and its watchdog, the Australian Competition and Consumer Commission (ACCC), rarely draw praise.

As is the case with many other areas of regulation, if the laws and the regulator are meeting their objectives, then there is little or no public commentary. However, if there are challenges, the public outcry can, at times, be loud.

On a recent trip to the US, it became apparent that a part of Australia’s consumer laws and the work the ACCC has carried out in this space has many benefits – and it’s important these benefits are highlighted.

Specifically, there is no standard obligation in place across the entirety of the US which makes it compulsory for businesses to display the final price that a consumer will actually pay out of their pocket for a product or service. Therefore, if you are to walk into a café in Washington and ask for a flat white coffee, the cost displayed on price boards inside the café might be, for example, $3.79, however, the amount you actually pay might turn out to be $4.05, once taxes are included.

A couple of other examples stood out on this recent trip. One retail outlet in New York charged tax on a cap, yet a similar cap at a similar shop in a similar area did not. It was an almost identical situation for a six-pack of the same type of beer in Los Angeles – at one liquor store, the beer attracted an additional $1 in tax, while at another liquor store less than 200m away, there was no tax on top of the amount paid for exactly the same product.

One of the central themes of the regulatory framework in Australia is transparency. When a consumer drives past a petrol station and sees price boards next to the road, sees a price displayed above (or below) an item at their local supermarket or when they visit an aggregator of travel products online, it should be very clear to the consumer the final price that they will be paying.

The ACCC over-reached a few years ago when it issued a ruling that restaurants would have to introduce different menus on Sundays and public holidays to reflect any different prices they might offer on those days of the week (due to higher staffing costs), but, sensibly, this changed such that as long as restaurants made it very clear to consumers there was a percentage surcharge on top of standard pricing on days when this applies, then this would be acceptable.

Yes, on the whole, when it comes to clarity of pricing for consumers, Australia is doing extremely well.

- By Hamish Arthur

Brief: 2016 Federal Election - 2 July

(8 May 2016)

Election date confirmed as 2 July, campaign is now officially underway

The Prime Minister, Hon Malcolm Turnbull MP, has made a rain-soaked journey through Canberra’s inner-southern suburbs to Government House at Yarralumla to make a formal request to the Governor-General for a double-dissolution election on Saturday, 2 July.

·        Mr Turnbull is aiming to retain power for the Liberal Party-Nationals conservative coalition, while the Leader of the Opposition, Hon Bill Shorten MP, will be hoping to create history and lead the progressive Australian Labor Party back into office after just one term in opposition. The last one-term government in Australia was in 1929-1931.

·        As many Australians are aware, Mr Turnbull forged a successful career as a journalist, lawyer, founder of a large IT company and head of the Australian Republican Movement before entering Parliament in 2004. He was a Minister in the Howard Government and had an unsuccessful stint as Leader of the Opposition from 2008-2009. Mr Shorten worked as a lawyer, political advisor and union leader before entering Parliament in 2007. He was a Minister in the previous Labor Government. Before entering politics, Mr Shorten attracted national headlines as the union leader who assisted two workers who were trapped below ground (and were eventually freed) when a mine collapsed in Tasmania almost exactly 10 years ago, in 2006.

·        It will be Australia’s first double-dissolution election since 1987 (when Labor was returned to office).

Key policy issues

·        Coalition – The economy

The key message used by the Treasurer, Hon Scott Morrison MP, has and will continue to be “jobs and growth”; the Federal Budget, which was handed down last Tuesday, was described as a “national economic plan”.

·        Labor – Education and health

Mr Shorten will run hard on education and health, and is pushing the message he will “put people first”, if elected to the top job.

The first shots

Both leaders held their first media conferences of the campaign a short time ago.

·        Speaking in Canberra, Mr Turnbull emphasised the Coalition’s jobs and growth mantra, saying a return to Labor would result in higher taxes and higher levels of public debt. He pointed to recent major defence and employment announcements, and the importance in the future of services industries, including tourism, and agriculture.

·        Speaking in Launceston, Tasmania, Mr Shorten signalled Labor’s clear attack points, saying it is more united than the Coalition and Mr Turnbull made no reference to climate change during his media conference. Mr Shorten said Labor will focus on education, health and, as part of his climate change commitment, renewable energy.

Opinion polls and betting odds

After wresting the prime ministership from Hon Tony Abbott MP in a leadership coup in September 2015, Mr Turnbull enjoyed a honeymoon period in the polls until the end of last year. The Coalition’s standing has since dropped away to the point where a month ago, it fell behind Labor on a two-party preferred basis for the first time since Mr Turnbull became leader (49-51).

·        The most recent Newspoll, released on 18 April, showed the Coalition still trailing Labor 49-51.

·        Mr Turnbull has always held an edge over Mr Shorten as preferred prime minister and although the 18 April Newspoll still had Mr Turnbull ahead 47 per cent to 28 as preferred prime minister, the gap is well down on the 39-point margin Mr Turnbull had on this score at the beginning of 2016.

·        A short time ago, bet365 listed the Coalition at $1.33 to win and Labor at $3.25.

Despite the closeness of the polls on a two-party preferred basis, most commentators are expecting the Coalition to win the election – but with a vastly reduced majority (it currently holds 90 of the 150 seats in the House of Representatives and Labor holds 55; the other five seats are held by minor parties/independents). Despite this, Labor can win the election. In essence, this means while the Coalition is favoured to win, an upset is not out of the question.

What’s different this time?

·        Double-dissolution election – All 226 seats in of the House of Representatives and the Senate will be decided at the upcoming election. At “normal” elections, only half of the 76-seat Senate is up for re-election. The double-dissolution election was triggered because the Senate twice failed to pass legislation which would have reinstated a “watchdog” for the building and construction industry.

·        Long campaign – The election campaign will last for eight weeks, making it one of the longest ever campaigns. Many are expecting this will work in favour of Mr Shorten and Labor.

·        New Senate voting rules – The election will be the first to take place under new voting rules for the Senate. The new rules simplify the process of voters filling out voting forms and minor parties are no longer able to swap preferences to secure seats. The new rules will make it more difficult for low-profile independents to win Senate seats.

Key battlegrounds

The key marginal seats where the election will be decided are, by and large, located in north Queensland, outer-suburban Brisbane, northern NSW, the NSW Central Coast, western Sydney, Tasmania, SA and WA. Not forgetting the bellwether seat of Eden-Monaro. Since 1972, this regional NSW electorate, which surrounds Canberra, has been held by the party which has formed government.

·        WA is the State to watch

The Coalition holds all but three of the federal seats in WA, however the conservative State Government is unpopular and with the federal Coalition set to lose seats, the key Coalition-held marginals of Swan, Cowan and Hasluck could be in doubt. A new, notional-Liberal seat (Burt) will add to the intrigue in WA.

The X-factors

·        Former Prime Minister, Mr Abbott

Mr Abbott promised not to undermine Mr Turnbull’s leadership, but this hasn’t stopped Mr Abbott from speaking publicly about policy issues he feels strongly about, creating difficulties for Mr Turnbull. However, in the past few weeks, Mr Abbott appears to have changed his messaging to underline the importance of the Coalition being re-elected. Should the type of internal divisions which sabotaged Labor’s 2010 election campaign after it removed a sitting prime minister surface within the Coalition during the campaign, it could result in the Coalition losing additional seats.

·        High-profile Independent Senator Nick Xenophon

On the strength of his enormous popularity in his home state of SA, Senator Nick Xenophon is set to play a major role during and beyond this election campaign. Under the banner of his new political party, the Nick Xenophon Team (NXT), he will be re-elected and is set to be joined in the Senate by other NXT candidates. There is a strong chance he could hold the balance of power in the Senate in the next Parliament. He could even win a seat or seats in the House of Representatives, most likely in SA.

How Senator Xenophon distributes his preferences among the major parties will have a significant bearing on the outcome of seats in SA.

Engagement during the campaign

Engagement between business and government during election campaigns is usually relatively limited, with the exception of fundraising events and public appearances, however, the unusually long campaign means things could be different in 2016. If a campaign announcement directly impacts on business, then engagement could be both necessary and possible. Given the heightened level of sensitivity which exists in an election campaign environment, engagement – including any public response by business to campaign announcements – must be even more carefully considered and, as always, conducted in a strategic way.

The latest “Guidance on Caretaker Conventions” which has been released by the Department of the Prime Minister and Cabinet states:

“The business of government continues and ordinary matters of administration still need to be addressed. However, successive governments have followed a series of practices, known as the ‘caretaker conventions’, which aim to ensure that their actions do not bind an incoming government and limit its freedom of action. In summary, the conventions are that the government avoids: making major policy decisions that are likely to commit an incoming government; making significant appointments; and entering major contracts or undertakings.”

Quotable quote

In yesterday’s “Weekend Australian” newspaper, a former Chief of Staff to Mr Turnbull, Chris Kenny, highlighted the challenges facing the Coalition:

“The Government is defensive, ill-disciplined and vague. If this doesn’t improve, the Coalition will lose.”

What’s next?

·        Major announcements – The Federal Budget was very light-on for major spending commitments for an election-year financial statement. Therefore, expect the Government to make many significant funding announcements throughout the campaign, particularly in key marginal seats.

·        Election advertising – Election advertising will bombard our screens (including on the internet and social media), radio programs and newspapers. Much of it will be negative, i.e. it will focus on the deficiencies of the leaders and the policies of the major parties.

Major parties take on the new team in town

One of the most intriguing aspects of this year’s Federal Election will be how much of an impact the new political party which is being led by Independent South Australian Senator Nick Xenophon will have.

The “Nick Xenophon Team” (NXT) was launched in December 2014, but it’s only in the past three months that its activities have gone up a gear with the unveiling of many of its House of Representatives and Senate candidates.

When Australia goes to the polls – most likely in the second half of this year – it’s almost certain that the biggest splash the NXT makes will be in Senator Xenophon’s home state of South Australia. At the last election in 2013, Senator Xenophon attracted more than 250,000 votes – almost 25 per cent of the overall vote in SA, ahead of the Labor Party which secured just under 23 per cent.

A major part of Senator Xenophon’s appeal is that, to the average Australian, he comes across as being a voice of reason within the Parliament, while the overwhelming majority of other MPs and Senators are seen as being “just another politician”.

Soon after Hon Malcolm Turnbull MP seized the leadership of the Parliamentary Liberal Party in September last year – therefore becoming Prime Minister – he quickly demonstrated that he was aware of the threat that Senator Xenophon and the NXT could pose to the Liberals in SA. Realising that the NXT is a real chance of winning the prize Liberal seats of Sturt (held by the Minister for Industry, Innovation and Science, Hon Christopher Pyne MP) and Mayo (held by Hon Jamie Briggs MP), the then new PM said on ABC Radio in Adelaide in October: “Nick will be running Nick Xenophon Team candidates; they are not robots, they are not clones of Nick Xenophon, they are individuals. And whether they can actually in practice represent his values or work as a team remains to be seen.” Mr Turnbull also highlighted the falling out Senator Xenophon had with another candidate who ran on his ticket and was elected to the SA Parliament’s Legislative Council, as well as the difficulties mining magnate and current Member for Fairfax, Mr Clive Palmer MP has had holding together his Palmer United Party.

Now Labor has gone public with its attempts to discredit the NXT. Last Wednesday, just before the House of Representatives adjourned for the evening, the member for the SA seat of Wakefield (and the Shadow Parliamentary Secretary for Manufacturing), Mr Nick Champion, gave a short, but detailed speech raising questions about the NXT. Of Senator Xenophon, Mr Champion said: “Is he independent? Is he leader of a party? Is he convenor? Is he all three? It sounds like a recipe for confusion and division to me…confusion and division that the nation cannot afford.” Mr Champion then used seemingly conflicting statements on the NXT website and within its constitution to say it was unclear whether NXT candidates would be bound by NXT policies or whether they would be free to exercise a conscience vote when it came to making decisions.

Mr Champion then went a step further, telling Parliament that a reference in the NXT constitution which covers the death or incapacity of Senator Xenophon was “like something out of a Woody Allen film”.

Whether you agree with the Prime Minister and Mr Champion or whether you are a supporter of Senator Xenophon – and by extension, other members of the NXT – it is now very clear that both of the major parties have redirected some of their guns away from each other and towards Senator Xenophon and the NXT. However, Senator Xenophon has shown that both at state and federal government level, he will be a formidable foe, largely because of his popularity in the electorate.

- By Hamish Arthur