As alluded to in my title the end of last week saw a win for the Federal Government with their Income Tax plan passing in full through Parliament. This was a win for the Government as the Labor Party and some key cross-benchers were trying to split the bill and only allow stage one of the tax plan. This is where the split occurred in Parliament because the Government were able to convince senators that if you don’t pass the whole bill you get nothing for low income owners and enough cross-benchers didn’t want to see that. What they have said though is that if Labor win office next year they are happy to repeal parts of the income tax plan in particular stage three of the income tax plan which is to have the majority of workers, those earning $41,001 to $200,000 on the one marginal tax rate of 32.5%. For the rest of the details of the planned Income tax plan please see my Budget blog.
This week sees the next thorn in the government’s side which is Corporate tax cuts of which the details are outlined in (1). Namely the plan is for all companies to pay 25% tax rates by 10 years time. At this stage the numbers appear to be against the government getting their company tax rates passed as key cross-benchers have spoken out against the bill. The primary concern with the bill is that companies will take the tax cuts and line those profits to executives and shareholders rather than passing it on to new jobs and higher wages. Now basic economic theory would dictate that lowering taxes would cause increased jobs and wages but basic Economic theory has not applied since the Global Financial Crisis which is why I’m more in favour of linking Corporate Tax Cuts with companies having to pay staff more and hiring more staff similar to what Japan did. (2) outlines how Japan are only going to lower Company Tax rates if companies aggressively lift wages and then invest in domestic enterprise. Another sensible suggestion comes from Derryn Hinch who proposes that companies who earn under five hundred million get the company tax cut but not businesses over that as that would then preclude the big banks who are currently facing a royal commission for bad dealings. The argument against that though is that if you start precluding companies for bad behaviour where do you draw the line on what is good or bad business behaviour. As Derryn Hinch says however it’s better to get 70% of something than 100% of nothing.
This blog however also looks to look at the composition of the cross-bench over the years particular as key legislation in the Senate will only pass if the cross-bench support. In particular this blog will focus on the cross-bench of 1998, 2008 and now. In 1998 you had a Federal Election which elected Senators that took their seat in 1999 results of which are found in (3). In the senate election 4 Democrats won seats taking the party to 9 seats, one One Nation member won a seat taking them into the Senate and Brian Harradine won his seat as an independent. To join those members in the cross-bench were Bob Brown from the Greens who won his seat in the 1996 Federal Election. After this 1998 election the Government had 35 seats including the Nationals and the Northern Territory Country Liberal Party. That left a cross-bench of 12 seats with the main party to chase being the Centrally aligned Democrats led by Meg Lees. A good history of the Democrats is given by (4) who discuss how the Australian Democrats were founded by a disgruntled ex Liberal Don Chipp who pledged to keep the Bastards honest. They were a Centrist party to begin with but gradually they became a more socialist party as people entered the party who were to the left of centre on social issues such as Same Sex Marriage, abortion and other such issues. The big issue to come after the 1998 Election was the GST bill which with the opposition of Labor, the Greens and Brian Harradine required the support of the Democrats. Now a lot of people see the eventual support of the GST by Meg Lees with the exclusion of fresh food and essential services such as Medicine as the beginning of the end of the Democrats as it caused in-fighting and opened up divides on other issues as outlined in (4). Brian Harradine was an independent Senator who was a Labor member and former trade unionist before being expelled from the party shortly before the 1975 election (5). By 1998-99 he became less useful as a result of the election because the Democrats now had the real balance of power but John Howard still counted his support on several matters as very helpful particularly to his early prime ministership in his first term. Heather Hill the one Nation Senator never got to take her seat as it was revealed she was a Londoner by birth meaning she was a dual citizen and falled afoul of section 44 of the Constitution and her seat was taken by Len Harris who had his six years in the senate with minimal accord. Bob Brown was the Greens member and he was the leader of the new wave of what would in time become the third force in Parliament namely the Greens. He was seen as a charismatic member who drew large appeal of supports due to his laid back nature, while someone who would largely vote with the Labor Party he would gradually see a shift in some Labor policy particularly on social issues to safe guard their seats in both houses from being taken by the Greens.
Fast forward ten years and you have now seen the decline of the Pauline Hanson One Nation Party as well as the fall of the Australian Democrats. You had also seen the end of John Howards 11 years in office which were wiped away by Kevin Rudd and the Labor Party. The 2007 Federal Election also saw the rise of the Australian Greens who ensured that the Government majority in the Senate which the Howard Government enjoyed in their final years was no more. July 1st saw the senate take place with the Liberals just under the magical majority of 39 seats with 37 senators once you include the 4 Nats and 1 Country Liberal Party member. The Labor Party had 32 senators and then the Cross bench was filled with 7 members namely being 5 Australian Greens and 1 Family First member from the 2004 Election as well as the eccentric election of Nick Xenophon the independent from South Australia. The election of Nick Xenophon as well as the election of Sarah Hanson Young from the Greens really saw the suppression of the major parties vote in South Australia with both major parties struggling to get much past 35% first preference vote. The rise of the Greens was also felt in the ACT where the Liberal member got a shade under 35% of the vote and was in some danger of losing their seat to a Greens member. Full results of the Senate Election are found in (6). With only one member needed between 2008-2010 the Liberal Party were always in a good position to make life difficult for the new Labor government in the Senate. The policy where that was most the case was the Emissions Trading Scheme in 2009. The Greens are normally dispositioned to vote with the Labor Party on a good majority of the Bills but as outlined in (7) the Greens were not happy with how far the ETS went with them wanting a Carbon Tax and so they voted along with Family First and Nick Xenophon against the Carbon Tax. This voting down on the bill started the cycle that saw the end of Kevin Rudd’s Prime Ministership and has continued policy paralysis to this day. I have outlined the Greens already in my last paragraph and this one but by 2008 they could act as a voting bloc and they would use that bloc in alliance with the other independents to pass legalisation. In this Parliament they didn’t have ultimate balance of power yet because if either of Nick Xenophon or Steve Fielding voted with the Liberal Party then the bill would be defeated. The Family First Party were a right of centre party that a centrist protectionist economic view while being very conservative in their social issues such as SSM, Abortion and other social issues. As a rule the Family First Party would be more inclined to vote with the Liberal side of government particularly while Howard was in government for the first half of Fielding’s term. As (8) outlines though Stephen Fielding saw the merits of the stimulus package to hard working families and so supported the Rudd stimulus package after the Global Financial Crisis hit. Nick Xenophon is a former Liberal member who grew tired of major party politics and became an Independent with a protectionist central approach to Economics and Social policies although he was in favour of prudent management of the budget which put him opposed to some of the measures that the initial Rudd government took that caused the budget to go into deficit. Indeed Nick Xenophon would initially vote against the Rudd stimulus package but would later back the measure on the provision that the Labor government took strong action on Water (9).
Fast forward another ten years and you now have a Senate that is the result of the 2016 Federal Election as well as some “minor” changes to the Senate since that 2016 Election. What made the 2016 election special for minor parties was that it had a few wrinkles that changed how cross-benches would be elected. Firstly the 2016 Election was the first election to be contested under new Senate election laws where optional preference voting was now allowed above and below the line. The above the line voting preferencing meant that rather than just voting for one party and then having the votes be allocated out by the party the voter could choose to just vote for the parties they wanted to above the line stopping preference harvesting by minor parties to try and get elected from a lower vote amount. The below the line voting change meant that rather than having to vote for all candidate below the line which had reached over 100 in some state seats the voter could just number 12 candidates below the line. This measure which was meant to make independents being elected harder was slightly offset by the election being a double dissolution election meaning all 76 Senate spots were up for grabs.
The results of the Senate Election in 2016 are outlined in (10) with twenty cross-bench members elected as you had seen the stabilisation of the Greens as the third party with 9 votes, One Nation returned to Parliament after falling away in the early 2000’s with 4 senators, Nick Xenophon adding to his own representation in the senate with an additional 2 senators and then you had smaller minor parties represented with Family First, Jacquie Lambie, Liberal Democrat’s David Leyonholm and Derryn Hinch.
Of course since 2016 we have had a number of defections and suspensions from Parliament that have affected the cross-bench. From the Greens two members fell to Section 44 of the Constitution on dual citizenship and have since been replaced by Andrew Bartlett a former Democrats member and Jordon Steele-John who replaced Scott Ludlum. One Nation have had issues with Section 44 on two fronts with Bankruptcy and Dual Citizenship affecting them with Rod Culleton replaced by Peter Georgiou and Malcolm Roberts replaced by Fraser Anning. Defections have also hit One Nation with Fraser Anning becoming an Independent originally and then subsequently joined Bob Katter’s Australia Party. Brian Burston just last week stepped down from One Nation and will now be a United Australia Party member as part of Clive Palmer re foray into politics. Nick Xenophon decided to resign from Parliament after his brush with Section 44 to go back to SA Parliament where he was unsuccessful in contesting a lower house seat. He was replaced by Rex Patrick. Skye Kakoschke-Moore also ran into dual citizenship problems and was replaced by Tim Storer who subsequently chose to sit as an independent. Family First member was the first senator to really bring into highlight Section 44 of the Constitution have filed for bankruptcy and being an officer under the crown. He was replaced by Lucy Gichuhi who was not pleased at the Family First Party being disbanded and has since joined the Liberal Party. This in part offsets Corey Bernadi the founder of the Conservatives Party leaving the Liberals to start his own party. Jacquie Lambie is the last of the 2016 elected independents to fall into citizenship strife with her leaving allowing the replacement Steve Martin to take her place and when he refused to step aside for her return he defected to the Nationals Party. That means the cross-bench is now (11):
This now means that the government need 8 out of 10 votes from the non green cross-bench to pass legislation. As a rule on most policies they can count on Pauline Hanson’s One Nation, Liberal Democrat’s, Conservatives, Katter’s Australia Party and United Australia Party which then means they just need the Centre Alliance who were the Nick Xenophon team to pass legislation. Of course a straight coalition of the Greens and the Liberal could pass legislation but this is unlikely in most cases. One example of a contentious bill passing the parliament with Coalition and Greens dual backing was the backpacker tax where the Greens backed a 15 percent rate for people doing farm work while holidaying overseas in exchange for extra funding to Landcare. Details of this package are found in (12). People are quick to criticise some of the cross-bench for doing “grubby” deals with the government to get legislation through but that ignores a few points. Firstly that government introduces almost all legislation in Parliament so in order for parties to get anything through it’s usually going to involve a deal with the governing party of the day. It also ignores that parties such as the Centre Alliance who are more Centrist in their views will often start in opposition to bills and then use their negotiation position to get laws softened to a reasonable juncture. Such examples being the Governments workplace reform and building regulations and a good chunk of social budget reforms on Childcare and Welfare provisions.
Lastly there are two things I want to touch on. Firstly what do I think of the differences in the Senate today versus twenty years ago and what will the Senate Cross-Bench look like at subsequent elections. It’s hard to deny that the Senate now is a much more difficult proposition than 20 years ago. Not because of the lack of majority in the Senate that’s a rare thing and I can’t see the Howard majority after 2004 being replicated any time soon but it’s the pure arithmetics of the senate cross-bench. In 1998 the senate had 12 members which while some people will point to not being that different to 20 it’s the amount of different parties you need to deal with. You can be dealing with an economic legislation and have finally convinced the economic conservatives you have good legislation only to find you have peeved off the protectionist independents who are now asking for extra legislation. When you are dealing with bloc’s of parties you have an easier task as well because as a rule if one person in the party is voting one way then you have the whole parties support, obviously when you deal with individual parties they can have varying views on an issue by issue basis.
So do I think going forward things will continue to be so messy, the short answer is no because while I think the trend of the major parties going from getting 80 percent in 1998 to only 65 percent in 2018 will continue the senate reforms that passed in the last election will start to kick in at future elections that are only doing half elections. I say it won’t be messy overall because I do see things being difficult for future Coalition government because my read of the senate rule changes is the main parties and the Greens will do well as will the political parties that have name recognition and the net impact will be the Greens will have the balance of power of most future Senates. (13) and Antony Green the Election Yoda agree with my take with the next election to cut the cross-bench in each state. In NSW he predicts only the Greens will get a senator of the cross-bench with the LDP and One Nation predicted to struggle. Victoria should see the Greens and Derryn Hinch back as Hinch has a strong name recognition. Queensland will likely see the Green returned but Fraser Anning will be struggling to get back as a Katter Australia member. South Australia and Tasmania are the interesting cases as while Tim Storer will be lost from SA he might be replaced by a Nick Xenophon member, meanwhile Tasmania may see Jacquie Lambie returned although I’m hesitant on that given they flopped at the Tasmanian election. A good quote to finish this blog off from Antony Green is that while Independents are at an all time high in voter appeal the vast majority of them struggle to have long term support which Nick Xenophon found in SA and One Nation seem to again to be facing 20 years on.
Thank you reading my blog.