Coalition flailing on drought
Prime ministers do their best to hide it, but the fact is governing involves mostly flying by the seat of your pants. And this is particularly true for the Morrison administration, now into its sixth month after its surprise election win. It is scrambling to persuade the nation it really knows what it is on about and how it will achieve it. The drought and a stubbornly sluggish economy aren’t helping. Nor is Morrison’s new best mate, Donald Trump.
Journalists who followed the prime minister on his United States odyssey say by the end of last week Morrison was giving every indication he couldn’t wait to escape the Trump bubble. When he was asked to ruminate on the trip’s highs and lows, he gave a lick and a promise to the enduring alliance but quickly added, “The second I touch down, I’ll be taking off again and heading out to drought-affected communities in Australia.”
True to his word, on arrival in Sydney, Morrison jumped from his big jet – “Shark One” – to a smaller one and went straight to the dust bowl that the once-lush Darling Downs have become. There, in trademark fashion, he spoke of the $7 billion for drought relief he had already announced and unveiled another $100 million on top of that. The locals were a tad sceptical. One reporter chimed in, “But you don’t have seven billion in the bank today for drought.” That forced the prime minister to admit the amount “is building up over time”. He said hundreds of millions have already been spent.
Labor is even more sceptical about the $7 billion figure. Shadow minister for agriculture Joel Fitzgibbon says $5 billion of it is the Future Drought Fund, which doesn’t start until next July, and not one cent of the fund goes directly to farmers. As far as Fitzgibbon can see, the total is arrived at by counting $2 billion earmarked for concessional loans – not exactly the sort of relief farmers need, having not pulled an income for several years and with no prospects of doing so for who knows how long.
Fitzgibbon is now calling for the auditor-general to take a close look at the millions the government is spending or says it is. He is convinced much of it is an ad hoc shambles that is pork-barrelling Coalition electorates and ignoring Labor ones. Fuelling his suspicions is the allocation of $1 million of drought relief for the Moyne Shire in south-western Victoria. It was one of 13 council areas nationwide to receive the funding under the Drought Communities Program. At first the government claimed the allocation was based on “the science” in the Bureau of Meteorology’s drought maps. Then it was pointed out the bureau’s maps do not indicate rainfall deficiency for the area.
At its meeting on Tuesday the shire’s councillors unanimously voted not to accept the money. Mayor Mick Wolfe explained, “We are not in a drought down here … We appreciate the offer, but give it to somewhere that really needs it.” The shire is in the safe Liberal electorate of Wannon, held by Education Minister Dan Tehan.
The mayor of the drought-stricken Inverell Shire in New South Wales, Paul Harmon, congratulated the Moyne Shire for its leadership and honesty. He told RN Breakfast it was worth “[asking] the question as to who makes those decisions … That’s probably more the key issue.”
Midweek, Labor leader Anthony Albanese did some pre-emptive drought touring to the southern Queensland town of Stanthorpe, which is rapidly running out of water. He claims he was invited by the locals. His arrival came neatly a day ahead of Treasurer Josh Frydenberg and Water Resources Minister David Littleproud’s flagged three-day drought pilgrimage.
Labor says the government has had a drought taskforce, a drought co-ordinator, a drought envoy and a drought summit. “What we need,” Albanese said, “is actually a drought strategy, and the government simply doesn’t have one.” Agriculture Minister Bridget McKenzie assured ABC Radio she is working on it: a disarmingly frank admission from a government now into its seventh year.
The National Farmers’ Federation is not impressed. It says the country doesn’t have a wide, strategic drought policy. McKenzie bristles at the criticism, saying, “We’re waiting on the NFF to actually provide us with their views around what we should include in a long-term drought strategy before we release ours.” Fitzgibbon says it’s a great pity that one of the first things the Abbott government did in 2013 was tear up the historic intergovernmental agreement steered through the Council of Australian Governments. That process was to review all drought agreements and policies and “start again”.
Of course, if we are going to talk about the long term, it is simply crazy that a more serious commitment to climate change action is not also in the mix. The conflict the Nationals in particular have – between their coalminers and their farmers – goes a long way to explaining their science-denying myopia.
The economic impact of the drought is not expected to show up until the cropping season in December and January. But even so, agriculture accounts for only 2 per cent of the economy; other factors are at work in the Reserve Bank’s decision this week to drop the official cash rate to a historic low of 0.75 per cent. This is the first time the rate has dropped below 1 per cent, and it is a long way below the 3 per cent “emergency levels” the Liberals scoffed at during the global financial crisis.
Treasurer Josh Frydenberg tried to assure the nation everything was under control – which goes with his job description as booster in chief. Economist Stephen Koukoulas says the figures don’t suggest we are heading for a recession. That has been mightily helped by our strong export performance in “volume and prices”. Some believe this should have been enough to stay the Reserve Bank’s hand, especially in light of warnings from former treasurer Peter Costello and business figures that the downward spiral of interest rates would hurt confidence and may even revive unsustainable debt by way of a reinflated housing bubble.
On this last point the treasurer seems oblivious. His first reaction to the rate cut was to urge the banks to pass it on in full. There is a marked reluctance to do so, and this has a lot to do with their need to attract depositors by not cutting the rates on offer to investors. On that point, the government will be under renewed pressure to adjust the deeming rates it uses to calculate pension payments. At present the rate is 1.75 per cent up to a certain income threshold, and 3 per cent once that threshold is passed. Seniors’ groups say the deeming rates were already too high before this latest cash rate cut, meaning pensioners are hit by a lower government benefit as well as a lower rate of income from any savings they have.
Frydenberg is resisting calls to do more to stimulate the economy, saying he is sticking to his economic plan. That boils down to waiting for the already paid tax cuts to somehow begin flowing into spending – they haven’t yet – and to talk up the 10-year $100 billion infrastructure spending. In broad terms, that’s $10 billion a year, but in a $1.9 trillion economy it is not as much as it sounds. Labor says much of that infrastructure spending should be brought forward, along with the next tranche of tax cuts. But the other part of the plan is a budget surplus next year, which as far as the government is concerned will happen come hell or high water.
That surplus is supposed to be the touchstone of the Liberals’ superior economic management. But unless the economy begins translating into higher wages and more work hours for those with jobs, there won’t be much political dividend. Underemployment is now at 8.6 per cent; a year ago it was 8.1 per cent. That’s the slack in the labour market the Reserve Bank governor, Philip Lowe, keeps talking about.
The handling of the drought and the economy doesn’t quite match the government’s hype. Nor does the management of our relationship with our biggest ally, the US. Or, more precisely, with President Donald Trump. One of Australia’s most experienced diplomats and a former ambassador to Washington, John McCarthy, believes the Morrison government has appeared too eager to embroil itself in US domestic politics. He told RN Breakfast it has landed itself in “a spot” it should have avoided. He is critical of our willingness to assist Trump in his mission to discredit the Mueller investigation into Russian interference in the 2016 presidential election campaign.
In Trump’s sights is Australia’s former high commissioner to Britain Alexander Downer, for passing on to Canberra the boast of then Trump aide George Papadopoulos that they had Russian-supplied dirt on Democrat candidate Hillary Clinton. As a Five Eyes intelligence partner, Canberra passed that on to Washington, which triggered an FBI investigation. Trump sees it all as a political plot to damage him.
But McCarthy’s fears may be premature. The fact that Trump called Morrison on September 5, about three months after Australia’s ambassador to Washington, Joe Hockey, promised to provide “all relevant information”, is a strong indication Australia was not providing enough.
In a Sky News interview, Morrison threw almost no light on “his brief conversation” with Trump. He tried to say there was nothing extraordinary in the president calling for “a point of contact between the Australian government and the US attorney”. The whole unbelievable tone was “there’s nothing to see here”. Evidently, he was just doing his best to fly by the seat of his pants.
This article was first published in the print edition of The Saturday Paper on Oct 5, 2019 as "Beyond the shadow of a drought". Subscribe here.