At a Glance
The Federal Parliament is now in recess until the May Budget, with the Government looking to ‘lock down’ it down. The budget remains a major issue for the Government facing the ongoing challenge of ‘debt and deficit’.
Scott Morrison is seeking the political kudos that comes from being perceived as ‘a superior economic manager’, but budget repair is proving ever more elusive.
The Government had a much-needed win. The Senate agreed to company tax cuts for businesses with a turnover of $50m or less, but it came at a cost of just over $200m in a deal with Nick Xenophon. $200m though was probably a small price to pay to achieve this victory in the Senate.
The Senate far from being a rubber stamp, has stamped its authority on a key Government policy initiative, and the crossbench held all the cards.
The new Political Weapon of Choice
You may have heard Senator George Brandis recently complaining about the large number of Senate inquiries.
Coming from the Government Leader of the Senate this was quite significant.
The Prime Minister has recently referred to the Senate acting as a ‘alternative government’.
The simple fact is, Senate inquires have now become the Oppositions most effective political weapon of choice, aided and abetted by the crossbench and the Greens.
In a political environment where big business is an easy target and the term big itself has become synonymous with corporate greed and excess – there is no shortage of targets for the crossbench and non-Government parties looking for a platform.
The banking and insurance industries have shown to be easy political targets.
This year alone there has been or will be Senate inquiries into the following:
- Life insurance
- General insurance
- Banking and insurance
- Rural lending practices
- Private health insurance
As it stands there are currently 134 individual parliamentary inquires, most of which are being conducted by the Senate.
The power of a Senate committee was demonstrated by the inquiry into corporate tax avoidance. This saw a parade of witnesses from the IT, Mining and Pharmaceutical sectors named and shamed in regards to their tax minimisation arrangements.
This inquiry was established by the Greens in late 2014, with support from the ALP and to this day it is still running.
Crossbench Senators, have quickly learnt that one way to gain notoriety and publicity is to establish a Senate inquiry. It allows them a public platform upon which to prosecute an issue.
The target inevitably is an industry sector with a major retail customer base, such as financial services. This allows the Senators to show to their constituents that they are going into bat on their behalf with an industry that the average person feels powerless to take on.
One of the more opportunistic inquiries established thus far is the inquiry into rural lending practices. I say opportunistic because it is chaired by One Nation and is a direct result of a deal done with the Prime Minister last year.
Picture this, the inquiry will be no more than a platform for One Nation to haul bank CEOs before it and ask them, why are banks foreclosing on farmers and throwing them off their land.
This will make for some evocative TV highlights and provide ‘red meat’ for the One Nation supporter base.
It is a naked display of the power of the Senate crossbench and also a function of a Government that governs with a one seat majority. To get legislation passed, it needs every vote it can get in a very fractured Senate, that has 21 crossbenchers.
Despite the protests of Senator Brandis, I predict Senate inquires will continue to flow thick and fast.
For crossbench Senators, particularly those facing re-election at the next poll, it is one way to prove their bona fides and a key way to garner that life blood of all politicians – free publicity!
What does this mean for business?
No industry is immune, and business CEOs with a large retail customer base run the risk at some time of finding themselves face to face with a Senator looking to make a name for themselves at their expense.
CLICK HERE TO WATCH A VIDEO FROM SAM DASTYARI’S FACEBOOK PAGE . Here, Senator Dastyari is calling out Chris Rex, CEO of Ramsay Healthcare for declining to appear before a Senate inquiry.
As you can see it has had over 100,000 views, it was a PR nightmare for the company and political dynamite for Senator Dastyari who is on the political comeback trail.
The Role of Other Parties
While crossbench Senators lack the numbers to establish a Senate inquiry themselves – both the ALP and the Greens are usually more than happy to support them for political gain.
Consider the Senate inquiry into corporate tax avoidance originally proposed by the Greens. It was actually the Opposition that gained maximum political advantage from this inquiry.
Labor continues to call for a Royal Commission into Banks. The various Senate inquiries into the banking industry will keep the treatment of customers at the hands of banks at the forefront of public debate.
The Government in its efforts to deflect calls for a Royal Commission into Banks mandated that Bank CEOs appear before the House of Representatives Economics Committee twice a year.
If it hadn’t been due to the work of previous Senate inquires exposing the litany of financial planning scandals in big banks, it is unlikely that Labor would still be calling for a Royal Commission.
Likewise, it is very unlikely that the Prime Minister would have felt the need to compel Bank CEOs to appear before the House of Representatives committee twice a year.
Power of the Polls
Do opinion polls have a direct bearing on the establishment of a Senate committee? The short answer is no.
They do however impact upon political sentiment. These factors help drive the establishment of a Senate inquiries and how a Government of the day reacts to them.
Let’s put this into context. The latest Newspoll has the Government on a primary vote of 36% and trailing Labor by 6 points on a two-party preferred basis.
For a Government facing a barrage of Senate inquires, imagine the following scenario.
If the Government were polling 50% of the primary vote and Malcolm Turnbull led Bill Shorten by 40% as preferred Prime Minister rather than the current 9%, the Government would have that ‘holy grail’ of politics, political authority to oppose the never-ending cascade of inquiries.
The Government lacks political authority and therefore faces the double-edged sword of being unable to persuade the Senate to reject these inquires and simultaneously avoid the political headaches such inquiries can cause.
Senate inquiries are here to stay. This means for businesses and their CEOs they need to be having a constant dialogue with Canberra, as you don’t want your first discussion to be in front of a hostile Senate inquiry.
With the Government struggling in the polls, beset by a primary vote below 40%, the Senate will continue to flex its political muscles.
The Senate will continue to challenge the Governments mandate, and launch inquiries over ardent objections from the Government.
Remember, the Senate was created as a ‘House of Review’ for a reason and it has honed that role into a fine political art.
With the financial services sector, currently the focus of attention by the Senate, the question is … who might be next?
For more information, in regards to this or any other public affairs issue you may require assistance with please don’t hesitate to contact me or visit the Insight Strategy website at www.insightstrategy.com.au