CANBERRA OBSERVED by national correspondentNews Weekly
Palmer party Senate split stymies government agenda
, December 6, 2014
The divisions which have effectively cut the Palmer United Party bloc in the Senate from four to two are not unexpected, but will make it far more difficult for the Abbott government to get its agenda through both houses of Parliament.
To get legislation through the upper house, the government needs the support of six of the eight minor party and independent senators. The ALP and the Greens usually vote together to block government initiatives.
The support of the PUP bloc was crucial to the passing of several budget measures, including the repeal of the mining tax and the carbon tax.
A number of last May’s budget measures, including the Medicare co-payment, payment for medications listed on the Pharmaceutical Benefits Scheme, and deregulation of university fees, are still to be legislated.
The government’s promised Future of Financial Advice (FOFA) reforms are already a casualty of the divisions in the Palmer United Party (PUP).
Although mining entrepreneur Clive Palmer founded and bankrolled PUP, and his finances were clearly responsible for his election victory in the Queensland seat of Fairfax, and the election of PUP senators from Western Australia, Tasmania and Queensland, it was always difficult to believe that PUP would stay united, particularly with clashes between the headstrong Clive Palmer and PUP’s wilful Tasmanian senator, Jacqui Lambie.
The party’s unity has been fractured by a very public falling-out between Palmer and Senator Lambie, with each of them publicly denouncing the other in personal and extravagant terms.
At the time of writing, it was not clear whether the divisions in PUP would sever the party’s links with the Australian Motoring Enthusiast Party (AMEP)’s Senator Ricky Muir, who joined Lambie to vote against PUP policy, defeating the government’s changes to the Future of Financial Advice regulations.
The memorandum of understanding between Senator Muir and Clive Palmer, signed after the 2013 election, explicitly gave both parties the right to vote independently.
It said, “This Memorandum does not require any party to vote for legislation that is against his or her party’s policies and principles, or against their conscience.”
The financial advice regulations which the Senate disallowed had been foreshadowed by the Liberal Party before the 2013 election.
The background to them was the collapse of two companies, Opes Prime and Storm Financial, where it was alleged that people had been encouraged to invest their life savings in risky ventures which ultimately failed.
The life savings of thousands of Australians were lost in the collapses, and leading Australian banks were implicated because they had made multi-million dollar loans to these companies, and had put them into receivership.
In 2009, the Parliamentary Joint Committee on Corporations and Financial Services conducted an inquiry into the collapses, and issued a report which recommended increased financial protection for investors and increased supervision by corporate regulators.
The following year, the then Labor Minister for Financial Services, Chris Bowen, introduced legislation which went further than the parliamentary inquiry, banning commissions for financial planners giving advice on retail investment products, including superannuation, managed investments and margin loans.
Other reforms included instituting a statutory fiduciary duty so that financial advisers must act in the best interests of their clients, and increasing the powers of the corporate regulator.
While the financial services industry accepted most of these proposals, they believed that some of them went too far, and imposed unnecessary and onerous costs on investment advisers. The Coalition parties promised to amend the financial advice laws on coming to power, and proceeded to do so.
A very intense campaign against the government changes was conducted by community groups and organisations representing private investors, and these eventually succeeded in splitting the PUP senators on the issue, leading to a vote in the Senate to disallow the government changes.
This was the trigger for simmering tensions between Clive Palmer and Jacqui Lambie to erupt, with mutual recriminations, as Senator Lambie announced her resignation from PUP and her intention to serve out the remainder of her eight-year term as an Independent, joining Nick Xenophon (South Australia) and John Madigan (Victoria).
For the Coalition, the implications could be serious. Faced with a serious loss of income from the mining industry, particularly iron ore and coal, federal Treasurer Joe Hockey faces a new multi-billion black hole in the federal budget.
The Abbott government has already foreshadowed a new inquiry into the taxation system, and has explicitly left open the option of increasing the 10 per cent GST, which would require the unanimous support of all states, as well as the federal parliament.
Labor and the Greens have already rejected any increase in the GST, and declared their opposition to other measures to increase government revenues. The divisions in PUP will make tax reform even more difficult, perhaps impossible.