Why our politics aren't working

To understand why political parties promote division and oppose each other seemingly for the sake of it, we need to dig deeper and appreciate the subterranean dynamics at play. Oppositionist politicians are being rewarded not so much for obstructing their opponents across the chamber, but for opposing the underlying economic system, while the system's champions are being punished for supporting it. Just ask Hillary Clinton, Malcolm Turnbull, the major French political parties and, now, Theresa May. To fix the system of oppositionist politics, we need to fix the broken economic system that lies beneath it.

Although Donald Trump is America's most unpopular president, only 2 per cent of those who voted for him now regret doing so. For the overwhelming majority of his supporters, a vote for Trump was a vote against the system.

And here, Australians are losing faith in a system that their forebears had supported. In Western democracies, an unwritten agreement was reached in the early post-war years: it was OK for the rich to get richer as long as the bottom and the middle got richer, too. That agreement has been broken. Thanks to a well-targeted social security system, inequality in Australia isn't as bad as in the US, but Australians at the bottom and in the middle are definitely feeling the squeeze.

At the same time, the top is flaunting its wealth.

From the 1960s to the late 1980s, CEO salaries were consistently 15-30 times average workers' pay in Western countries. In the US, they exploded in the 1990s, rocketing to 300 times the average. The situation in Australia is less extreme, but the behaviour of the big four banks in particular has prompted Labor's call for a royal commission and the government's decision to impose a bank levy, both of which have resonated strongly with the community.

The Turnbull government's disposition, however, has been to support an economic system that is failing to support the majority of working Australians. The casualisation of the workforce, under the Coalition banner of "workplace flexibility", has resulted in steadily rising underemployment throughout the 2000s. Although in work, the growing numbers of casuals and part-timers cannot secure the hours they need to make ends meet.

Yet, as workers struggle with stagnating wages, the Coalition has had no trouble finding a lazy $65 billion to give a tax cut to multinational corporations, many of which most Australians, rightly or wrongly, see as tax cheats. And while the government says it has no money to lift the Newstart allowance, it is open to providing a $1 billion subsidy to a global mining company for a new coal mine.

The brightest idea business lobbies have been able to come up with to deal with falling real wages is to cut Sunday rates for casuals and part timers in retail, hospitality and fast food and to seek to extend the treatment to hairdressers and other occupations. In these endeavours they have government support, on the pretext that the umpire's decision is always final.

The widening gulf between profits and wages has rightly been the subject of concern for the governor of the Reserve Bank and the secretary of the Treasury. The Coalition government should be worried, too. Instead, it has decided to confine tax relief to those earning more than $180,000 a year.

The last time workers' real wages were cut was when John Howard introduced WorkChoices, and that didn't end well for the Coalition. The Turnbull government will receive another popularity jolt when the phasing down of penalty rates begins on July 1.

Add to that the extravagances of politicians catching helicopters instead of taking a one-hour car trip and using taxpayer funds to inspect investment properties to bolster their bulging portfolios and it becomes totally understandable why voters are furious with the political establishment.

The pattern is unmistakeable: politicians who rage against the economic system do well while those who support it struggle. This won't change unless the system changes. And that will require co-operation, not conflict, between workers, employers, the underprivileged and politicians. As prime minister, Bob Hawke – a consensus seeker – told me he would never use divisive language. But divided we are these days. And until we clean up the economic system, oppositionism will continue to pay handsome political dividends.

Almost two years ago, a few of us were able to convene a National Reform Summit supported by The Australian Financial Review and KPMG and aimed at reaching consensus on a new economic and social reform agenda for Australia. That such a summit would be unthinkable today is testament to how far we have fallen in such a short time.

Source: http://www.afr.com/opinion/columnists/why-...