Government in Action (HSC SSCE Economics): Revision Notes

Influences on Government Policies

Government policy-making in Australia involves much more than simply what politicians decide. Economic and social policies are shaped by a complex web of participants including businesses, unions, community groups, the media, and international factors. Understanding these influences helps explain why certain policies are adopted and others rejected.

Parliament and political parties

The parliamentary process

In democratic Australia, economics and politics are closely intertwined. For most major policy changes to become law, they must follow a formal parliamentary process:

1. Cabinet approval: Economic reforms must first be supported by Cabinet, the committee of senior government ministers who make key decisions
2. Parliamentary authorisation: Major policies require passage through an Act of Parliament
3. Dual approval: A proposed law (called a Bill) must be supported by majorities in both houses of parliament

The House of Representatives

The House of Representatives is the Lower House of parliament with 151 seats. Governments are formed by the political party or coalition that wins a majority of seats in this house.

Governments typically face few difficulties passing legislation through the House of Representatives because they control the majority. However, minority governments (where no party has an outright majority) do occasionally occur.

The Senate

The Senate is the Upper House with 76 seats. Unlike the House of Representatives, governments rarely control a majority in the Senate. Typically, governments fall a few seats short of the Senate majority needed to pass legislation.

To secure passage of laws through the Senate, governments must negotiate with:

• Opposition senators
• Minor parties (such as the Greens)
• Independent senators

The Senate acts as a "house of review" that can slow down or modify government legislation. Most Australian voters appear to support this role, as evidenced by their voting patterns. While this slows the legislative process, it also ensures more detailed scrutiny of government policies and may prevent extreme policies from either major party.

The last time a government enjoyed a Senate majority was after the 2004 election, when the Howard Government had a one-vote majority. This allowed it to pass previously rejected legislation including the full sale of Telstra and reduced media ownership controls.

Political party decision-making

Since political parties form governments, they play a crucial role in economic policy-making. In Australia, federal and state governments are usually formed by:

• A single party (such as the Australian Labor Party), or
• A coalition of the Liberal Party and National Party (often called "the Coalition Parties")

Internal party processes:

Technically, political parties develop policy through:

• Local party branches
• State and federal party conferences
• Member participation

Party discipline:

Although Australian parliamentarians technically have the freedom to vote differently from their party, in practice party members almost always vote along party lines. This strong party discipline means that party support is crucial for any policy.

Leadership dynamics:

The Prime Minister or Premier is ultimately responsible for economic policy decisions, though the extent to which they involve other ministers varies. Recent decades have seen decision-making become more centralised in the Prime Minister's Office or Premier's Office, with power concentrated among a small group of senior ministers and public servants.

Electoral considerations

Governments must retain popular support to be re-elected, which constantly influences policy decisions. This requires political leaders to:

• Explain economic policies clearly to voters
• Convince the public that their strategies are effective
• Manage unpopular aspects of necessary reforms

This process is challenging because economic reform often creates both winners and losers. Some groups benefit from policy changes while others face costs, making it difficult to maintain broad public support.

Business

Business influence on policy

Business groups wield significant influence over government policy decisions for several reasons:

1. Economic importance: In a market economy, successful and growing businesses are crucial for national prosperity
2. Public voice: Businesses can participate actively in public policy debates
3. Financial power: Businesses provide substantial donations to political party campaigns

Business lobbying extends across a wide range of issues including taxation, regulation, privatisation, outsourcing of government services, and government spending programs. Political parties are sometimes accused of altering policies in response to business donations.

Recent years have seen several NSW parliament members resign after receiving illegal campaign donations from businesses, particularly property developers who benefit directly from government approvals for construction projects. This highlights the problematic nature of business-political relationships.

Peak business organizations

Australia has three main peak business groups that represent different sectors:

Business Council of Australia (BCA):

• Represents chief executives of approximately 100 of Australia's largest companies
• Focuses on major economic policy issues affecting big business

Australian Industry Group (AIG):

• Represents businesses from diverse industry sectors
• Includes manufacturing and information technology companies
• Focuses on industry-specific policy concerns

Australian Chamber of Commerce and Industry (ACCI):

• Represents chambers of commerce across Australia
• Includes many smaller businesses
• Advocates for broad business interests

Sector-specific business groups

Some business organizations represent particular industry sectors:

• Minerals Council of Australia (mining industry)
• Australian Bankers' Association (banking sector)
• Housing Industry Association (construction industry)

These groups advocate for policies that benefit their specific industries.

Lobbyists

Professional lobbyists represent individual companies and advocate for the interests of specific firms. They work on issues such as:

• Taxation policy
• Industry regulation
• Privatisation opportunities
• Government service outsourcing
• Government spending programs

Lobbying regulation:

Concerns about lack of transparency in lobbying prompted the Government to establish:

• A Lobbying Code of Conduct (2008)
• An official Register of Lobbyists (2008)

These measures aim to increase accountability in the lobbying process, though debates about lobbying influence continue.

Unions

Union role and influence

Unions are among Australia's largest membership organizations, representing workers' interests. However, union influence has declined significantly as membership has fallen from a peak of 55% of the workforce in the 1970s to around 14% today.

Despite lower membership, unions remain active participants in policy debates. They:

• Represent members' interests in individual workplaces
• Participate in government consultations on policy issues
• Issue reports and contribute to public debates
• Focus particularly on industrial relations and labour market policies

Peak union organization

The Australian Council of Trade Unions (ACTU) is the peak body of the Australian union movement. It:

• Coordinates campaigns across the union movement
• Advocates for policy positions nationally
• Represents the collective voice of unions

Important regional groups also exist, such as Unions NSW, which operates at the state level.

Political relationships

Unions have closer relationships with Labor governments than Coalition governments:

• Provide major donations to Labor Party campaigns
• Have greater input into Labor government policies
• Focus on policies affecting lower-income workers

Unions concentrate particularly on:

• Labour market policies
• Specific industry policies
• Measures affecting people on lower incomes
• Workplace rights and conditions

Climate and environmental groups

Environmental advocacy organizations

Australia has several major interest groups dedicated to climate action and environmental protection:

• Australian Conservation Foundation (the peak environmental group)
• Friends of the Earth
• Greenpeace
• Wilderness Society
• World Wildlife Fund

These organizations engage in multiple activities:

• Conducting research on environmental issues
• Providing educational information to the public
• Lobbying governments and companies
• Advocating on local, national and global environmental issues

Methods and influence

Environmental groups employ various tactics to influence policy:

High-profile protests: Groups like Greenpeace are known for dramatic protest actions such as blockading forestry workers or nuclear warships. While these protests attract media attention, environmental groups use many other methods to influence policy.

Policy engagement: Environmental organizations participate in:

• Government inquiries and consultations
• Policy development processes
• Public education campaigns
• Research and evidence provision

Growing impact:

The environmental movement has successfully made the environment a priority issue for economic policy-makers. This is evident in several ways:

• Political parties now compete to demonstrate environmental commitment
• Industries such as mining face much tougher environmental standards than in the past
• Substantial government spending on environmental initiatives
• Environmental considerations integrated into economic decision-making

Political representation

The Australian Greens party places especially high priority on environmental concerns. As the third largest party in Australia, the Greens have enjoyed significant Senate influence in recent years, allowing them to shape environmental policy through their voting power on legislation.

Welfare agencies

Representation of disadvantaged groups

Welfare organizations advocate for the most vulnerable members of society:

• Aged people
• People with disabilities
• Carers
• Unemployed people
• People on low incomes

Peak welfare organization

The Australian Council of Social Services (ACOSS) operates as the peak welfare lobby group, coordinating advocacy across the welfare sector and representing broad welfare concerns to government.

Types of welfare groups

Other welfare organizations include:

• Community legal centres (providing legal assistance)
• Charitable organizations (delivering services and advocating for change)
• Specific advocacy groups (focusing on particular disadvantaged groups)

Influence methods

Welfare groups participate in policy-making through:

Formal channels:

• Participation in government inquiries
• Submissions to policy reviews
• Direct lobbying of government ministers
• Expert advice and research

Public engagement:

• Using media to publicize issues
• Public campaigns to raise awareness
• Building public pressure on government
• Highlighting disadvantage and injustice

The media

Dual role of media

Although the media's primary role is reporting news, it also significantly influences government policies. The media landscape is evolving with the rise of social media and new digital platforms, changing how media influence operates.

Multiple levels of influence

Media influence on policy operates at various levels:

Agenda-setting: The media determines which issues receive public attention. By choosing what to cover and how extensively, media outlets shape what the public and politicians consider important.

Framing: The media influences how issues are presented and understood. The same issue can be framed differently depending on editorial choices, affecting public perception.

Anticipatory influence: Political leaders anticipate media reactions when developing policies. If leaders expect heavy criticism, they may:

• Modify their proposals
• Change their plans entirely
• Adjust how they communicate policies

Conversely, leaders may pursue policies primarily because they will generate positive media coverage, even if the policies have limited actual benefit.

Opinion and reporting

The distinction between factual reporting and opinion is often blurred in media coverage. Some popular media personalities are considered highly influential in shaping:

• What voters think about issues
• How voters cast their ballots

Media bias debates

Debate about media bias is a longstanding feature of Australian politics. In 2018, these debates intensified after Prime Minister Malcolm Turnbull was removed as Liberal Party leader following sustained criticism from:

• Radio personalities Jones and Hadley
• Parts of Rupert Murdoch's media organization, News Corporation

Changing media landscape

Traditional media influence is being reshaped by:

• Social media platforms
• Online news sources
• Direct communication between politicians and voters
• Citizen journalism and commentary

These changes are altering how media influences policy, though traditional media outlets retain significant power.

Interest groups

Nature of interest groups

Interest groups form when people with shared concerns, interests, or expertise organize to work toward common goals. These groups vary widely in their focus, size, and methods.

Types of interest groups

Local focus groups: Interest groups sometimes concentrate on local issues:

• Resisting development proposals
• Raising community concerns
• Addressing local environmental issues

Single-issue groups: Some groups organize around one specific issue:

• Australian Republican Movement (constitutional change)
• Campaign groups for specific policy changes

Sector representatives: Many interest groups represent particular sectors or demographics:

• National Farmers' Federation (agricultural sector)
• National Union of Students (student interests)
• National Roads and Motorists' Association (motorist concerns)

Public interest groups: Some organizations represent broader public interests:

• Choice (formerly Australian Consumers' Association) - consumer rights and product testing
• GetUp! - online political advocacy on progressive causes

Influence methods

Interest groups employ various strategies to influence policy:

• Direct lobbying of government officials
• Public campaigns and protests
• Research and evidence provision
• Media engagement
• Coalition-building with like-minded groups
• Legal challenges to government decisions

International influences

Financial markets

Since the early 1980s, international financial markets have emerged as a significant constraint on economic policy. Particularly important is the foreign exchange market, where currencies are traded globally.

Policy constraints:

Governments exercise caution when making decisions that might displease international financial markets. If markets lose confidence in government economic management, potential consequences include:

• Falls in the exchange rate
• Higher interest rates on government borrowing
• Negative media coverage
• Capital flight from the country

Global financial crisis example

Financial markets can force governments to change policies dramatically.

Recent years:

Financial market influence has been less visible recently because government policies (especially in Australia) have generally aligned with market preferences. However, this doesn't mean the influence has disappeared—it simply reflects successful government anticipation of market reactions.

Global economic integration

As Australia has become more integrated with the global economy, national government power has been constrained in several ways:

Trade agreements:

As a World Trade Organisation (WTO) member, Australia faces restrictions:

• Cannot provide direct subsidies to exporters
• Can only offer general industry assistance
• Must avoid export-specific support programs
• Must comply with international trade rules

International policy trends

Australian governments are influenced by policy approaches in other developed nations, particularly those in the Organisation for Economic Cooperation and Development (OECD). Most industrialized nations face similar challenges:

• Globalization pressures
• Aging populations
• Growing demands on government services
• Pressures to reduce taxation

Sharing these common challenges, governments often adopt similar policy responses, learning from each other's experiences.

Organizations influencing policy

International organizations that influence Australian policy include:

• World Trade Organisation (WTO) - trade rules
• International Monetary Fund (IMF) - economic policy advice
• World Bank - development policy
• Organisation for Economic Cooperation and Development (OECD) - policy research and recommendations

These organizations conduct research, publish policy recommendations, and create frameworks that shape national policy debates.

Remember!