January 20, 2018

Horse 2366 - Government Shutdowns Don't Happen In Australia

I watch US politics like a football fan watches a neutral game. I don't really care who wins between the two sides and to be honest, any attempts to prove that your side is better, is just part of the background tumult of boos and yays that happen. The difference between say a Celtic v Rangers match, or "El Classico" between Barcelona and Real Madrid, or Everton v Liverpool, is that after 90 minutes, football fans go home. In American politics, the game is eternal.
This afternoon, I was literally watching a countdown clock in the corner of a screen, when the two sides in the eternal struggle that is American politics, failed to pass the Extension of Continuing Appropriations Act, 2018, and officially the United States Government has now run out of money.
That is, that it no longer has approval to issue any more Treasury Bills to keep on funding the debt which now stands at more than $20 trillion.
$20 Trillion? That's $20,000,000,000,000.
Without a source of any more funding, this basically means that only the essential services of government will continue to function. That means that the military, social security, border security and the postal service which has access to its own money will continue to run but everything else will just stop.

The question I've now been asked five times in the space of an afternoon, is could it happen in Australia? The answer is an emphatic "No."
We don't have government shutdowns for a very very good reason.

1. We don't have a debt ceiling.
Under Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. Since the United States Government has run continuous deficits since about 1835, the only way to keep funding the big show is to keep on issuing debt instruments. The problem is though that issuing debt with no thought or limit is bad, so Congress imposed the Public Debt Acts as a restraint upon itself. Every time that the debt hits the limit, crises happen.
Australia imposed a debt ceiling from 2008 until 2013, when quite rightly it was realised that this is nothing more than a perpetual game which needs to be played. In 2013, under Treasurer Joe Hockey, the debt ceiling in Australia was scrapped because it actually achieved nothing except tie up the legislature.

2. We have a bigger fiscal nuclear weapon

If the House of Representatives passes any proposed law, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, and if after an interval of three months the House of Representatives, in the same or the next session, again passes the proposed law with or without any amendments which have been made, suggested, or agreed to by the Senate, and the Senate rejects or fails to pass it, or passes it with amendments to which the House of Representatives will not agree, the Governor-General may dissolve the Senate and the House of Representatives simultaneously. But such dissolution shall not take place within six months before the date of the expiry of the House of Representatives by effluxion of time.
- Section 57, Commonwealth of Australia Constitution Act 1900

On the 11th of November 1975, which was 6 months and one week after the Appropriation Bill No.1 1975-76 which wanted to spend $6,976,119,000, had failed to pass the Senate because the opposition simply deferred the passage of the appropriation bills which finance governmental operations, the Governor-General Sir John Kerr, under his Section 57 powers, issued a statement to dissolve the parliament:

Because of the federal nature of our Constitution and because of its provisions the Senate undoubtedly has constitutional power to refuse or defer supply to the Government. Because of the principles of responsible government a Prime Minister who cannot obtain supply, including money for carrying on the ordinary services of government, must either advise a general election or resign. If he refuses to do this I have the authority and indeed the duty under the Constitution to withdraw his Commission as Prime Minister. The position in Australia is quite different from a position in the United Kingdom. Here the confidence of both Houses on supply is necessary to ensure its provision. In United Kingdom the confidence of the House of Commons alone is necessary. But both here and in the United Kingdom the duty of the Prime Minister is the same in a most important aspect – if he cannot get supply he must resign or advise an election.
- Governor-General Sir John Kerr, Statement 11th Nov 1975.

More than forty years later we are still arguing the toss over what actually happened that afternoon. This is a tale of intrigue and suspicion over who said what, to whom and when.
What we do know is that at 2:24pm, the bill did pass the parliament and so there was never actually a government shutdown and at 2:34pm there was an announcement in the House that there had been a dismissal of the government. By the end of the day, writs had been issued with dissolved parliament.

The problem with the US congressional system is that the actual head of state is the President; who doesn't have the ability to dismiss or fire the Congress if they fail to pass a budget or debt ceiling extensions. The Governor-General of Australia as head of state does, and on the only occasion where it has looked as though a government shutdown was close, actually did dissolve the parliament. If a President wanted to fire the Congress, all kinds of anger would rain down on Washington.

Australia went through an eleven year process before it came to working out its constitution and it looked at what worked and what didn't work in both the United Kingdom and the United States; in consequence, we have a parliamentary system which is demonstrably better than both of them.The latest government shutdown in the United States, which by the way is the 18th since I've been alive, is in comparison to zero in Australia. It doesn't happen because our constitution works better by design.

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