How business-as-usual and vested interests won out

The 2019 election will go down as an excellent demonstration of how powerful interests fought back against efforts to curb their influence, and confirmed that the Australian neoliberal model of rule by vested interests remains intact despite a serious buffeting over the last term in parliament.

Between 2016 and 2019, Australia’s most powerful industry, financial services, lost much of that power after the massive scale of its abuses united a sufficiently varied group of opponents to overcome its ability to control policy via the Liberal Party. The energy and gas industries suffered a similar fate: companies once able to literally dictate policy found their privileges being overridden and regulation being imposed.

But other powerful industries and interests were able to stave off efforts to end their privileges and rorts by effectively prosecuting fear campaigns.

The property industry was the most successful in thwarting Labor’s negative gearing and capital gains tax reforms, which would have ended tax distortions that direct extra, taxpayer-subsidised demand into housing, skewing investment decisions and inflicting massive social costs by pricing younger and low-income Australians out of the housing market.

For a time there appeared to be bipartisan consensus to end this distortion: then-treasurer Scott Morrison said there were “excesses” in negative gearing and asked for Treasury work on addressing them. His predecessor Joe Hockey, in his valedictory speech, effectively endorsed what became Labor’s policy, saying “negative gearing should be skewed towards new housing so that there is an incentive to add to the housing stock rather than an incentive to speculate on existing property.”

Nonetheless, the property industry swung its considerable resources to bear into scare campaigns against Labor in both the 2016 and 2019 elections. Real estate firms like Raine and Horne even lied to renters about the impact in the campaign just ended, and the Coalition devoted much of the last week warning, without any basis, that existing homeowners as well as renters would be harmed by the policy.

The industry, via property developers like Meriton, mortgage brokers like Yellow Brick Road and peak bodies like the Property Council, are also generous donors to the Liberal and National parties.

The funds management industry was another powerful interest that got its way, working closely with the Coalition to attack Labor’s proposal to end the lucrative franking credits rort for wealthy retirees, claimed by some to be the key reason behind Labor’s defeat. One of the principal industry campaigners for perpetuating the rort, Geoff Wilson, saw his firm gain over $100 million in value with the defeat of Labor.

It’s noteworthy that the primary victims of both the property industry campaign and the funds management industry campaign were younger Australians, who will face worse housing affordability and subsidise wealthy retirees’ tax-free incomes through the tax system. In fact Australia’s political system is waging war on young Australians, and the 2019 election was yet another victory by powerful industries and wealthy older voters at the expense of the next generation.

Climate change was another battlefield and another painful loss for our young people, with the success of a party that simply refuses to have a meaningful climate action policy of any kind, and which actively supports and subsidises fossil fuel use. While extractive industries had a relatively low profile in the election and, for the gas and electricity industries the Morrison government is as much of a villain as Labor, both the energy and minerals industries continue to donate heavily to the Coalition in support of its climate denialism — for the three years to 2017-18, the minerals and energy sector has donated at least $900,000 a year to Coalition parties.

Employer groups like the Business Council, the Australian Chamber of Commerce and Industry and the Australian Industry Group are probably be the biggest winners of all from the election, with the Coalition’s policy of wage stagnation set to continue.

Labor had proposed to restore cut penalty rates, support a significant minimum wage increase and consider industrial relations changes to make it easier for unions to bargain for wage increases. Scott Morrison warned that ACTU president Sally McManus would be sitting on every board in the country. As a result, policies that have delivered wages growth stuck at 2.3% will remain in place, delivering a colossal windfall for employers that purport to want higher wages but actively oppose anything that might actually deliver them.

With Australia’s quarterly wages bill at around $135 billion, growth of 2.3% instead of 3.3% will deliver employers around $5 billion a year in extra profits.

It’s a great win for vested interests able to achieve their policy goals via the Liberal Party. The rest can shift for themselves.