View from the Peak: Good Governance

Sometimes less is more – especially when it comes to good governing, writes Max Mack following recent elections in Hong Kong.

 

As I write, the Aussie dollar is hovering around US$1.03, which is prompting a lot of discussion about value, purchasing power, the mining boom, and China’s soft landing.
 
While the strong AUD makes for great travel bargains, it also hurts Australia’s export markets.

This is the double-edged sword. You can reverse the arguments if you travel back in time to 2001 when the Aussie sank to 48 cents. Australian exporters were making heaps of money, but tragically forced to holiday at home.

 
I guess it is true what they say, you can’t have it all. After all, where would you put it?
 
But sometimes I want less. Certainly, less than I pay for. Especially when it comes to government.
 
In Hong Kong we’ve just been through an “election” to decide the next chief executive. It seemed to drag on and on. I paid passing attention, mainly because, whilst interested in the outcome, (1) not much will change, as Beijing seems to prize stability over all else, and (2) it is not a popular vote where each citizen casts their vote. Instead other elected people in turn elect a leader. Sound familiar?
 
This election has seen allegations of using tear gas against protestors; allegations of illegally constructed basements in a primary residence (candidate’s response was that his wife took care of bills, shopping and illegal construction of basements – and he had no knowledge of it); and the incumbent’s admission that he accepted private jet rides with tycoon “friends” (although he paid the lowest economy class fare equivalent, so that’s OK).
 
Sometimes it was difficult to decide which was funnier: the candidates’ responses, or the straightness of the face with which they delivered them.
 
Noticeably absent from the political landscape over the past four months has been any substantiative policy initiative or direction. Yes, this is the recycled observation that you only actually get “n minus one” years of government, where n represents the number of years per
term, because up to a year is devoted to getting re-elected.
 
I suppose I could wear that, except that the n-minus-1 years haven’t exactly blown me away with innovative policies aimed at positioning Hong Kong for a better future, addressing (never mind alleviating) poverty, or lessening the division between the rich and poor.
 
I know that sentence is shocking, but yes, there’s poverty in Hong Kong too.
Instead we got a budget that returned HK$6,000 to every voter, I mean “eligible person”. If that’s the best policy they can come up with, I’m suddenly wishing they spent more time campaigning and less time on policy formulation.
 
But when the population only pays up to 16 percent tax, you get what you pay for.
 
What’s interesting in this example is that the current Chief was not running for re-election. He could introduce policy unfettered by the constraints of popularity. Instead he chose to abstain. Excellent value for money that.
 
Australia, on the other hand, has a top personal tax rate of over 40 percent. And there’s an extra layer of government between federal and local, namely state government.
 
With all that extra government and all that extra tax revenue, the policy formulation must be the envy of governments around the world.
 
From an overseas expatriate perspective, the past four months in Australia appear to have been dominated by Gillard v Rudd, an unpopular mining tax and an untimely carbon tax.
 
Julia Gillard’s second disposal of Kevin Rudd showed a remarkable capacity to take feedback and listen to the electorate. First time she was accused of despatching an (un)popular leader in the shadows with the aid of faceless men. She attempted to portray herself disingenuously as a reluctant inheritor.
 
This time, she did it openly, with no help from faceless men. Her key supporters, like treasurer Wayne Swann, were open and vocal in their support.
 
Whilst I look forward to the next round of Gillard v Rudd, I’m afraid that this will have to pass as progress for now.
Then we have a mining tax. The right premise – that some of the spoils should pass to ordinary Australians – but I am appalled at the implementation.
 
Why tax the profits of the miners? Why not tax a proportion of their revenues instead? Why does the government want to be exposed to the efficiency of the miners? Effectively a profits tax doubly penalises inefficient miners.
 
And where does the money go? Why doesn’t it go straight to the Future Fund to build an endowment that would truly benefit all Australians in perpetuity? To put that tax into general revenue benefits the current year only.
 
Costello had the right idea with the Future Fund. A fund that would operate like an endowment, where the interest earned would subsidise tax revenues in future generations. Like a person planning for retirement, but instead it’s a country.
 
The Carbon Tax – where to begin. It comes into effect on July 1, when 500 of the largest carbon consumers will be levied. I don’t object to a penalty for polluting. But I object to a scheme that arbitrarily taxes some and not others, and a scheme that creates, rather than removes market uncertainty.
 
There is a white paper doing the rounds. “Australia in the Asian century” which I hope the government takes seriously. These policies, being the very best money can buy, appear ignorant of the implications and perceptions attached to them abroad.
 
The old adage that you only get what you pay for is as apt as always. It’s just that in some cases, I wish I got less. And in some cases a lot less.
 

It seems that price paid is not a good predictor of good government. 
 
 

*Originally from Sydney, Max Mack is a long-time expat and banker currently living in Hong Kong. Contact the author at:
MaxmackHK@gmail.com
 

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