Late last month, it was revealed that the Albanian government had signed a contract worth almost $422 million over three years to run Australia’s offshore detention center in Nauru.
The Guardian, which reported the story, noted that there were between 65 and 70 people walled up in Nauru – down from a peak of 1,200 people who were once confined there. Those who are still there “live in the community of Nauru, but cannot leave the island”.
“The Australian-controlled detention center is empty but awaiting future arrivals,” The Guardian said.
So taxpayers are paying $420 million for an empty facility.
This week it emerged that someone had allowed Nauru’s designation as a regional treatment country (which has all sorts of legal implications) to expire in October, prompting a rushed decision when Parliament returned to address failure.
In justifying the ten-year extension of the designation, Home Secretary Clare O’Neil told Parliament that: “In the last election our Prime Minister spoke of the need to be strong on the borders without being weak on humanity”.
“Regional treatment is about both.
“I understand that there are people in this place who think very differently about this issue, but I would point out that regional treatment has been an established policy on both sides of politics for over a decade.”
The crux of the problem
And here’s the crux of the matter: foreign detention (ie, “regional treatment”) is “an established policy on both sides of politics.” Neither of the two political camps will deviate from the policy of turning back ships and offshore detention.
Unfortunately for the status quo, it’s not about ‘established politics’ on the cross parliamentary benches – the spoilers of a whole range of ‘established politics’ in recent months, from a zero net issue to a national commission anti Corruption.
It’s not that the crossbench wants to immediately tear up the policy. But its members question whether overseas detention is really a deterrent – citing research that shows it’s really boat pushbacks that deter asylum seekers from coming here by boat.
More importantly, they point out that regional processing is meant to happen quickly; that people should be assessed within months, not left to rot in Nauru for years.
Coincidentally, on the very day Parliament was dealing with the status of Nauru, there was a once-inconceivable visit to the building by Kurdish-Iranian refugee and journalist Behrouz Boochani, who in 2019 was accepted as a refugee by New Zealand after having endured the horrors of the Isle of Manus. for years.
Both events have refocused attention on the issue of asylum seeker policy at a time when it would be fair to say it is ‘established policy’ on the benches of government that they would rather not talk about. .
The government needs to reframe the issue
The Albanian government has a lot on its plate, with a delicate but important referendum to be conducted throughout the year, a faltering economy, a crisis in housing affordability, climate change and budgetary problems, to name a few. only a few.
But there is an element of political post-traumatic stress in the constraints Labor feels when talking about asylum seeker issues, climate change, taxation – all the issues he had been sliced and chopped over over the years. years by the Coalition. But also all the problems he will have to face – if only rhetorically – sooner or later.
Politics can so often be determined not by what you do but by your ability to reframe the issue. Take John Howard and the GST as a classic example. But also how Paul Keating dramatically pivoted into “fiscal stimulus guy” in 1991 and 1992 in the depths of a recession and as he rebuilt himself for his foray into the helm of Bob Hawke.
It turns out that not only can politicians survive such reversals, they can actually thrive. Political dexterity is applauded and rewarded by voters who are willing to be convinced that politics should be able to change over time.
Labor had an equally traumatic relationship with interest rates. In Keating’s time, the government set interest rates. Record high interest rates have ravaged the economy in ways that many will never forget.
One of the resulting changes was that the Reserve Bank came out of the shadows to make its own pronouncements about what it was doing, an arrangement later formalized in a bank independence charter.
From a time when it said literally nothing public about what it did, the RBA – primarily through its governors – has become a regular contributor to public debate.
As COVID loomed in Australia, senior RBA executives were giving up to 50 public presentations a year. Transparency is the obvious first argument for why the bank should be public.
But as the conduct of monetary policy has developed over the past two decades, central banks around the world have discovered the benefits of “jawboning”: using statements to help set expectations both on interest rates and the broader economic outlook.
This sometimes meant that central banks did not have to act to change interest rates as they otherwise would.
RBA’s public statements are not helpful
In Australia, given the very long periods since 1990 when monetary policy has assumed a disproportionate burden in setting economic conditions – due to political obsessions with “debt and deficits” or equally political caution with the use of tax and spending policies to affect economic activity – the Reserve Bank took center stage, often when it should not have been there.
The most effective task for a central bank is to fight against inflation. And for the first time in a very long time, we have faced inflationary shocks.
Unfortunately, public statements by the current Reserve Bank Governor, Philip Lowe, in trying to boost confidence during COVID by saying that interest rates weren’t going to rise for a few years, caused all sorts of heartaches to individuals, and for that matter, to Lowe’s credibility.
His statements this week also didn’t help. By announcing another (expected) rate hike, he set about changing expectations about the next direction of interest rates. That is to say, they had a long way to go up before coming down.
Given the immense pressure already exerted on households by the rate hikes to date and Lowe’s admission that the effects of the rate hikes to date are yet to be felt, it may not be – be no surprise that we started to see the torches and pitchforks go out for the governor among our politicians this week.
Australia’s inflation story has turned a chapter
He will face their wrath when he appears at a Senate Economics Committee meeting on Thursday.
Central to the questions should be why he felt he had to apply a sledgehammer to expectations as the RBA’s own monetary policy statement on Friday repeatedly noted that inflation appears to be peaking globally and that inflationary expectations and wages do not rise. spectacularly.
The greatest inflationary pressures now come from a severe affordable housing crisis – something the bank does not have the direct ability to address – and international forces. Same.
However, in much of the commentary on the RBA’s latest measures, other crucial predictions are overlooked: that unemployment will drop from 3.5% to 4.5% by mid-2025 and that the economy slows down.
These indicators, at the very least, suggest that it is time to change the “established” anti-inflationary tone.
Laura Tingle is the main political correspondent for 7.30.