Big Government
There is a new idea stalking the Australian economy and it’s something that we had all better get used to – it’s the idea that the Government knows best.
Technically, we haven’t had a government that’s behaved this way since 1983. Both the Hawke/Keating era, and the Howard era were fundamentally driven by small government pro-market middle ground economic reform; but that all came to a shuddering halt with the arrival of Kevin O7.
The thesis for small government is clear – it means strong beliefs loosely held, it means creating the circumstances for personal prosperity and then building a framework for people to work it out for themselves.
But that has all ended. Since the moment of the plebiscite in early 2008 when the Labor party first asked the people about what they thought they wanted from Australia, rather than form opinions of its own – we have been lurching towards big government at a shattering speed.
The thesis for big government is clear. It means a single vision, articulated to a people, policed by a government, which develops the greatest good for the greatest number and requires a visionary leader who behaves like a benign king.
This means rather than have the market form a view of what they want, what they value and what they pay for – the Government forms that view.
So far the results of that type of behaviour are in; this idea fronted by Kevin Rudd (and ably supported by a Kitchen Cabinet of Gillard, Tanner and Swan) lost favour so fast with the voters that the most visible personality was dismissed from office after only 30 months in the job – making history as the first Prime Minister of Australia to be ousted in the first term.
But his legacy still remains and just what that means to the industries which were thrown into great uncertainty by the ‘government knows best’ policies of the Rudd administration is pretty unclear.
What is clear is that the attempt to hijack the mining industry has been somewhat derailed as the Government is now forced to negotiate with them after a very public campaign from their lobby group.
But what isn’t known is what this all means for financial services.
As burningpants has written about before, there are a series of proposed reforms and recommendations to the industry – a working party and a consultation party from Treasury - and no decisions until 2012, until which time the industry is encouraged to do nothing; because the Government has stated it’s not sure what it is doing yet.
Long timelines like this aren’t particularly helpful because the hints that the Government has given mean that there will almost certainly be big changes to the way in which financial services businesses charge fees.
The hints that have come so far suggest: there will be no more commissions; time-based fees will be the norm; there will be a small number of large super funds, those funds will invest in infrastructure; in the advice industry there will be a tiered service model – and that’s just the start.
What we want to see now is if this is the clear direction of the new regime and how long the Government intends to maintain the mysterious air of uncertainty around this reform.
