Politics is often about negotiation and bargaining. It’s a tough skill, especially when vast amounts of money are involved.
This week we saw two negotiations, and two sides get absolute bargains.
This week began with Chris Pyne needing to quickly refute everything he said last week about the school funding. This wasn’t too much a difficulty for a man who, should the situation arise, would gleefully argue that 2+2=5 and that such a statement was not at all contradictory to his saying a week ago that 2+2=4.
But in order to achieve his about face he needed to negotiate with Western Australia, Queensland and the Northern Territory. Negotiations with the states are always tricky affairs for any federal government but particularly new ones, so it was a master work by Chris Pyne to get them to sign up to get a share of the $1.2bn that the ALP government had been offering before the election, but had been unable to secure an agreement.
So how did Pyne succeed where Julia Gillard and Kevin Rudd had failed? Well he drove a tough negotiation – he gave them the money with no strings attached.
Gee.
Talk about playing hard ball.
So are there any conditions on WA, QLD and NT spending the money on education? Effectively none. As Pyne told Sky News’ David Speers the only hope that state governments won’t take the money and then cut their own education funding is because they will act like adults.
Clearly Pyne doesn’t realise that most adults know when they have been given a blank cheque.
Generally you never want to get in the way of the premiers and a bucket load of money. Pyne didn’t just get out of the way, he pushed them towards the bucket. I wonder if they at least waited till they hung up the phone before they started laughing.
Speaking of a bucket of money, Joe Hockey now has unlimited access to Australia’s bucket of debt due to a negotiation he had with The Greens.
Initially the Treasurer wanted to get the debt limit raised from $300bn to $500bn. The ALP and the Greens countered by offering to raise it to $400bn. Joe Hockey said no.
The Greens then twisted Hockey’s arm at the negotiating table, forcing him to drop his demand for the $500bn limit. And instead allowed him to replace it with no limit.
Ouch. However did he bring himself to agree with getting more than what he had wanted in the first place?
So what harsh terms did the Green exact from the government in return for this massive gift? They demanded that the government release a debt statement each time the level of gross debt increases by $50bn.
Yep, Joe Hockey will have to talk about debt, and produce a document every six month or so that will let him makes it look like the ALP is officially to blame for putting every Australian newborn baby into hock.
However did they get him to agree to that?
The agreement does have some useful measures such as including in the budget the reconciliation of the underlying and heading cash balances. But there is nothing that involved Hockey giving up anything.
It was win-win, only in the sense of win-win for Joe Hockey – he got rid of the debt limit, and he also got an opportunity to bash the ALP for being less economic fringe dwellers than the Greens.
The Greens perhaps should have looked at the glee with which Hockey and Abbott talked up the deal to realise in this negotiation, the government got a bargain.
Greg Jericho is an economics and politics blogger and writes for The Guardian and The Drum.
