On the landslide Labor election loss in Australia...

We've spent this past summer in Australia.  It's a country we love; a country I love.  But having lived some two decades as Australian expat in US, I've always found the experience almost a bit strange and surreal every time we visit.  Australians love talking US politics; most of them follow news in US very closely.  Perhaps to Aussies, it's like talking weather, the politics in US means nothing personal, never anything too messy and too close to home.

The kids love the beach and water, and Sydney has everything to offer.  There is nothing to hate, and everything to love, about the weather.  Imagine a winter when it's warmer than springtime in New England, with rain mostly comes overnight, and all clear blue sky 98% of the time.  But Sydney, where I've spent years there before moving to US, has changed.

Property prices have gone through the roof.  I was floored when told the prices (mid A$600k+ in inner city west).  I have no idea how the locals can afford their mortgage, with prices so high, and mortgage rate 5%+.  Salary generally cannot keep up with the stratospheric rise in property prices, and for some, not even with inflation.  The still red-hot property market reminds me of US in the pre-Lehman days.  Cost of living is so darn expensive.  College education for foreign students is the highest in the world.  Australian private debt load is among the highest in the world.  The country - its government, and by proxy, its people - survive on borrowings.  Sounds familiar (hello, US; hello, Europe)?

One could argue, isn't that so in US or even Greece?  Well, that's quite true.  One could also argue that Australia has done remarkably well in the past 4-5 years since the GFC, as it's called there, almost in an perversely affectionate way.  It's continued to grow amidst downturn and recession in US and Europe.  AUD was riding high. Unemployment was remarkably low.  In general too, Australians are a bit more restrained than Americans when it comes to borrowings. They also have the benefits of a much better social safety net than Americans who have to either sink or swim. What more can one ask for, you would say.

But of course, when one does even just a closer cursory look, cracks are everywhere. Australia, under the Labor government for the past six years, essentially rode the easy wave on the back of the growth of China.  China has effectively gobbled up every minerals and natural resources that Australia has to offer when the rest of the world stops buying.  Australia, as a whole, has it easy and never has to make difficult decisions on how to expand the underlying economy, or cut spending, or make tough decisions or necessary reforms, or a combination of all that.  Most everyone in Australia is drinking the kool-aid that this time they're different, that they really are immune to economic downturn, riding the alternate and staggering wave of the West (US/Europe) and Asia (China/Japan).

If you talk to any local Aussie, most everyone would also tell you how much they hate the carbon tax, so much so that Labor is willing to push Julia Gillard out, and reinstall Kevin Rudd, the guy who himself was pushed out by Gillard only two years before. Yes, that's the kind of craziness that one normally won't see in US, but in keeping with the odd tradition of the British parliamentary system, that can happen quite often.  In any case, that goes to show how shallow the bench is, and the lack of talents Labor Party has.

Australians hate paying the high taxes too, as much as the GOP and Tea Party do, but they also love their medicare, social security, and welfare. Surely, the money has to come from somewhere, and somehow someone has to pay for it.  But no one wants to hear anything of that.  That's why there seems to be this strange affinity of Australians with GOP, even though Australians in general have no idea what the real agenda of GOP really is. No matter. For some unknown reasons, they think GOP is equivalent to the Liberal Party; that might well be the high ideal of John Howard, but it's certainly far from truth.

And then there is the immigration policy, in which Labor is seen as all too weak and lenient to illegal immigrants, all of whom claim to be "refugees," as a matter of course. Hardworking locals feel mightily slighted, seeing their taxes going to fund welfare for the refugees. When immigrants arrive, all they care about is making babies and claiming welfare; that's the general impression anyways. In the suburb where my parents live, which is south of CBD, the demographics have completely changed, so much so that it's now more than 95% Chinese, mostly from mainland China, the rest of which are from Middle East and India.  Surely, they're busy making babies, lots of them.  On one occasion when I went to the local library where a kids' event was held, more than 150 babies and toddlers were there. There was only one white baby (with both Aussie parents); maybe 4-5 Indian babies and muslim babies with their mothers; the rest were all mainland Chinese babies with grandparents (more welfare, naturally) all speaking loudly in mandarin in the library. Yes, that library even has a "Refugee Welcome Zone" banner in front of its entrance.

Don't get me wrong; I'm not racist. I'm Asian descent afterall. But I can quite understand why the local Aussies (even those who were immigrants themselves, like myself, and moved here decades ago) feel the angst, the kind of powerlessness when one is under siege. Forget about assimilation.  Forget about multiculturalism. It's more like colonization.

On the economic front, with the evaporating surplus and the impending slowdown in China (that drives the Australian economy largely fueled by commodities) and boat people (that most can hardly be called "refugees") arriving all too frequently, changes are afoot.

It's not hard for even a 5-year-old to figure out that there'll be voters' revolt in the September election. Afterall, Liberal Party has always touted itself as a better steward in economic policy. Tony Abbott, its current Liberal leader, pledges to get tough on illegal immigrants (starting with towing of the rickety boats that they largely come from before they make landing).  He also pledges to do the mission impossible of not raising taxes and growing the economy and returning to surplus (at some undefined point in time in the future) at the same time. I highly doubt that he can deliver. I'm flabbergasted when I learn of his proposed six-month maternity leave worth some A$75k, aimed no doubt at wooing female votes. If you don't call it desperate attempt, I don't know what is. In any case, anyone with just passing knowledge of simple mathematics (like my grade school kids do) would tell you that he's just pledging the same kind of voodoo economics that is not meant to be.

Sadly or not, this is extraordinary times.  Australians are desperate to do something - anything - different.  Disgusted by the infighting and weak leadership of Labor, they'll try anything, anyone who would offer a different story (like the ones that Abbott is trying to sell), however unbelievable it is, they would buy it.

And so, the story goes, that Labor suffers landslide lost, and Liberal takes office, for a change.  But as Bob Hawk has aptly pointed out, this election is not an election that Liberal wins, but an election that Labor loses.  Given the weak leadership in Abbott and even weaker leadership in Rudd, I'm not surprised at all. Is that the best that the Australian parties can offer, I often wonder.

The saddest part to me, is that Australia has squandered away opportunity after opportunity in remaking itself, to expand its economy beyond what it has always been. And I'm not talking about just Labor, because Liberal shares plenty of blame during those times. For decades now, I'm still waiting for progress to happen.

This time around, when we visited Sydney, on the eve of the election, I see significant demographics changes (which suggest an immigration policy that does not care much increasing the quality of its human capital, but more in line with keeping Australia increasingly as a "refugee zone" for humanitarian high ideal). Property prices rise. Sky-high cost of living. It's turning into a mini-Hong Kong that is overrun by the dual flow from mainland China: hot money that chase up the property market, and unskilled labor looking for more handouts. This is all while salary level remains stagnant, in real terms. There are cafes in almost every 2-3 shops on street level - forget about Starbucks in US, do Australians these days really drink that much cappuccino that costs at least A$3.50 a pop, the equivalent amount of which has become the running joke (or not) of the yuppie class in US who can afford that much for a coffee, and the rest of the populace who can't?  In Australia, it's become the norm. There are also a medical clinic or doctor's office one every few shops on the street or in the mall, milking the federal medicare system. Public transportation like trains has become so expensive, costing more than A$4 one-way going to the city, that I might as well rent a car. Those are the changes I see. How do locals survive all these?

What I don't see, is any material changes in the Australian economy.  Oligopoly still dominates in banking, telco, retail, even mining.  There is scarcely any new industries sprouting, like the IT boom that fuels the rest of the world for the past decade.  When I look at the public companies trading on ASX, it's still mostly the same old, same old trading symbols. If Abbott (or anyone, for that matter) wants to talk economy, I would love to post the question "Where do you see the new jobs to be coming from?" In comparison, at least Obama tries, albeit backfiring badly his attempt in nurturing the green energy sector. What has Australian government done in this regard that's worth noting?

As the economic boom in China is fading into lower growth (perhaps at a more sustainable pace), it's going to cut off the legs of Australian economy below its knees. For all the talk of the two-speed economy (the mining boom in western Australia, and everywhere else), even that mining boom is sputtering. What's the next step? Can Abbott provide some insight on that, rather than just some vague notion of being business friendly, or pro-market?

I'd say, reducing taxes - and reducing taxes alone - won't do much to encouraging new business growth, Mr Abbott. It's no secret that the big guys never pay taxes, same in US, same in Australia, the way Google Australia pays zilch taxes is the same as GE in US. Big corporations in every sector are good at extracting resources, making profits, then do a bit of financial engineering to vaporize the profit in thin air, so you shouldn't look to them for tax support.

More often than not, I find the discontent (hatred, even) of the carbon tax rather silly (irrational, even).  Most everyone dislikes it as robbing-mary-and-helping-paul type of wealth redistribution.  But then, so is everything else that really is going on in Australia, when most everyone receives some kind of "handout" from government, even if they would not admit it.

Is Australia going down the same path of Greece, appeasing voters with handouts, funded by more and more borrowing, and an increasingly bloated government, all while the country is falling further and further behind in competitiveness and productivity?

As slight digression, why would anyone consider John Howard the great Liberal steward (supposedly) in economy when he hasn't really done anything much memorably, except introducing GST, allowing pest like Pauline Hanson to fester, and being the lap dog of George W Bush in terms of foreign policy?  For all that everyone praises about Howard, all I saw in this guy was a racist bigot, pardon my french. Abbott might not be as overt as Howard, but he's a cut from the same cloth.

I don't expect to see any material changes from the new Abbott government. Sure, Rudd the big-ego clown should go, but Abbott is no white knight. It's more like the lesser of two evils. The Liberals never have a plan; much like idiotic Bush who never had a plan when he started the war in Iraq.

It is on this, that I worry most for Australia. Yes, the government is changing hands, but is Australia going to be better off? Decades later now, when I look at Australia, amidst all the growth (albeit with ups and downs) around the world, Australia seems to be just treading water (on top of its pile of minerals). How long can Australia milk on that, I always wonder. I long for the day when Australia can break out of that easy life, and to become competitive in the real world, and not just rest on its laurel to be the surf dude.

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To round out my private pet peeve...

I'm mighty peeved about the high costs of broadband that I have to pay while I'm visiting. I cannot believe myself, when I had to keep tab of how much bandwidth I used, so as not to exceed the 15Gb threshold of the 4G wi-fi I bought. I couldn't even do any real work at home. It's 21st century, for goodness sake. Australians deserve better than this. Why wouldn't Australians question the status quo?

I'd love to see more funding going to research efforts like CSIRO rather than just stuffing dollars in refugees' pockets to keep them afloat.

As to what Australia should do with immigration policy, it has to be a bit more selective. Apart from its valuable minerals and natural resources, a country is all about its human capital (just look at what Singapore can do with its small but versatile population and sensible policy). I also strongly believe in assimilation, the process of which would stop if the amount of new migrants of the same race/ethnicity, legal or otherwise, reaches some tipping point (probably when it gets to 60% or so from a single ethnicity in a single area). The indigenous and locals would start moving out, leaving behind only the new migrants who don't have to assimilate at all. Australia must do something about this. Here, I'm not even talking about specific race. This could be Chinese, or Arabs, or Greeks, or Indians, or Brits, or Irish, or Italians, for that matter. If you want true multiculturalism and real assimilation, you have to avoid that from happening. You don't want permanent under-class from festering, like those happening in various European countries, which is one sure way to foster terrorists who feel marginalized by society.

Expanding tax basis is generally a good thing (hence, the praise for GST, about the only contribution by John Howard), and it's irrational why everyone is so dead set against the carbon tax. Although with the poor job of marketing and executing the carbon tax by the Gillard/Rudd government, it's not surprising at all.

For all the great nature in Australia, it should take the lead in climate change. Oddly enough, most Australians are not tuned to even basic recycling as a conservation effort. That's really shameful because Australia will probably be among the first countries to get affected by climate change like the rise in sea level.  (Remember the ozone hole, anyone?) While I'm no fan of Julia Gillard, I see the beauty in carbon tax. Previously, Australia is the highest emitter in the world on a per-capita basis; yet after the carbon tax, it's gone down to a 10-year low, all achieved within a year's timeframe. Gillard deserves praise and guts for doing the right thing and showing leadership in that. Those Gillard haters are just being inert and regressive, as simple as that. A lot of Australians blame carbon tax for increasing the cost of living. But I'd say, if they have not already jumped up and down about the issue of high cost of living prior to carbon tax, they really have no say in it, because that's already high enough. All they're seeing in the carbon tax and Gillard are just the right scapegoat for the wrong reason.

Is anyone listening??? I kinda doubt it...