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overcooked magic pudding…..The phrase of the week – albeit battling for space with “Ash Barty retires” and “I haven’t been at Hillsong now for over, about 15 years” – has been “cost of living”. It promises to be big again next week, featuring in the budget argy-bargy, and then running strong all the way to the looming federal election. “Cost of living” automatically comes with the prefix “soaring” or at least “rising”. It is universally reported as a terrible thing. But while nobody seems to want the cost of living to be higher, it is official policy to push inflation higher than it has been for a decade. Bit tricky to have one without the other. At the government level, it’s rather like saying we want Australians to have higher living standards at the same time as suppressing their real disposable income, which is what the Morrison government has generally been doing in the areas where it can affect wage rises. At least the Reserve Bank is consistent. The RBA doesn’t pretend there’s a difference between higher inflation and the rising cost of living. The RBA wants inflation to be higher. It wants the higher cost of living to force workers to demand bigger wage rises, not the two-point-something pittance they’ve been swallowing for nearly a decade.
Governor Philip Lowe is hoping the present spike in headline inflation will cool down to sit nicely around 2.5 per cent. The idea is that while petrol prices, say, jump and result in higher inflation this year, if they remain at that higher level, they don’t increase inflation next year – inflation falls as this year’s rise drops out of the numbers. In the meantime, if the present spike galvanises workers’ desire for higher wages, that will be a good thing, what the RBA really wants. The falling unemployment rate should be making it easier for workers to do an Oliver Twist – “Please, sir, I want some more” – yet a decade of low wage and inflation expectations is hard to shake, both for employers and employees. The governor spelt out some of the pain of substandard wages growth this week at a Walkley Foundation lunch. “The inflation rate at the moment is 3.5 per cent and will probably go up to 4.5 per cent, who knows, depending on what happens with oil prices,” Dr Lowe said. “Wages are maybe going up high twos, let’s say three, and inflation is 4.5 per cent – that’s a real wage cut of 1.5 per cent, so that will obviously affect people’s budgets.” As usual, Dr Lowe ignored the impact of tax and thus underestimated the extent of the real wage cut in his example. Everybody does, despite The New Daily regularly explaining the mistake. In Dr Lowe’s example of 4.5 per cent inflation and a 3 per cent wage rise, the take-home pay of someone on the median wage would go backwards by a bit more than 2 per cent. The disposable real income of someone on $90,000 would go backwards by 1.9 per cent. Which is why a government that actually cared about the impact of inflation would be doing what it could to push for higher wages instead of suppressing them. It would be making submissions for aged-care workers and nurses to be paid substantially more. It would grant real wage rises to its own employees. It wouldn’t be rushing to loosen the tight labour market by throwing the doors open to foreign labour. Dr Lowe did not sound too worried about real wages falling in the next financial year because households built up savings of $250 billion over the worst of the pandemic. You’re supposed to spend your share of those billions to tide you over wages going backwards – which is fine if you have a worthwhile share of the billions. Unfortunately, while on average we’re rich, several million Australians aren’t and don’t have fat savings. That’s the way averages work. Add the housing crisis pushing up rents and people who aren’t rich suffer higher cost-of-living increases than most.
READ MORE: https://thenewdaily.com.au/opinion/2022/03/26/inflation-cost-of-living/
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Johnny's rot...
The Australian Prime Minister Scott Morrison does not have qualities of leadership. He is unable to act in a crisis, he fades in the face of fire and flood, he demonstrates poor judgement and when challenged he bullies.
The Royal Commission into Natural Disaster was handed down sixteen months ago. Of 80 recommendations Morrison has adopted 14.
It has become apparent that his Prime Ministership is not about seeking best outcomes for the Australian people but rather for himself. He not only ignores climate change, he mocks it. He supports the fossil fuel industry.
Morrison is about smoke and mirrors, rather than substance and delivery. Australia has gone from being a respected member of the international community to a country reviled and ridiculed. His embarrassing performance at COP26 being but one example. He has trashed a very positive Australian reputation which took decades to build. He has angered those who helped create it.
But it began before Morrison. It began with John Howard undermining Australian belief in their ability to care and be seen to care with his untruths, constructed for base political gain, of children overboard, re-enforced with another untruth, that of weapons of mass destruction. He sent Australian troops to Iraq, without consulting the Australian Parliament, to support the US which had also lied about weapons of mass destruction. He ludicrously invoked the Anzus treaty in order to justify his offering of Australian troops for service in Iraq to the dullard President George W Bush.
Howard set the tone for what has followed over the last twenty plus years. He has been a significant influence on the LNP, helping determine the type of person running for parliamentary office. Abbott and Morrison being examples of unsatisfactory candidates who received the backing of Howard and who went onto become reactionary and destructive Prime Ministers. All three have ensured that Australia has lost twenty-six years in addressing climate change.
Climate change is the most significant failure of the LNP, indeed of both major parties in Australia. The former Chief of the Defence Force, retired Admiral Chris Barrie has said the forthcoming federal election is the most important in his lifetime. He advocates for a comprehensive nationwide climate and security risk assessment, with an integrated plan for the allocation of resources, taking into account climate change related food shocks and the security consequences that would result from such disruptions. He has also criticised Dutton for putting a muzzle on defence personnel speaking about climate change.
Let me unpack the other major un-addressed or badly handled issues facing Australia.
Racism is the scourge of the LNP. Policies toward Indigenous Australians are paternalistic, certainly racist and in the case of Abbott, a weird missionary noblesse oblige. There is no hint of empowerment let alone respect in any of the government programs and interaction.
Howard set the standard for the treatment of refugees over the past twenty years with his, ‘we will decide who comes here and when’. He locked up men, women and children in what amounted to concentration camps, he turned back refugee boats, in contravention of international and Australian law. Many of the refugees resulted from his joint incursion with the US into Iraq and Afghanistan. He evinced no understanding or empathy with the factors, horror and fear which leads a person to leave home and seek refuge. His policies and attitudes were shared by Rudd, Gillard, Abbott, Turnbull and Morrison (and Dutton). Rudd and Gillard warehoused refugees on Manus Island and Nauru. The policy has been driven by racism, immaturity and fear. Refugees currently remain in detention for no other reason than to feed the prejudice of Dutton and Morrison. Labor fearing the wedge has done little to protest. Illustrative is the difference in approach taken by Morrison to Ukrainian refugees, which he says are ‘at the top of the pile’, compared to Afghan refugees who are quite clearly very low on the government’s priority for resettlement. Compare the government’s reaction to the subjugation of Ukrainians compared to Palestinians which Morrison has endorsed with his agreement to move the Australian Embassy to Jerusalem.
Aside from climate change, water – the lack of it, is the single biggest problem facing Australia. That might sound paradoxical in view of the recent catastrophic floods on the eastern seaboard. Shortage of water is closely linked to climate change. Little is being done on a national level to secure and nurture this scarce resource. Australia’s largest waterway, the Murray/Darling is collapsing through the greed of irrigators backed by wilfully poor regulation.There have been allegations of corruption overseen by state and federal politicians. Due to the poor reporting of local and national media these allegations have only been touched on; they have not been properly investigated. The media, particularly local media, are scared off by bullying from the major irrigators. Australia is a profligate user of this scarce resource. Australia exports cheap water in the form of cotton, wine and almonds.The profit that ensues is not directed toward better practice or conservation. The clownish and self-indulgent leader of the Notional Farmers Party, Barnaby Joyce, advocates dams, but it’s illustrative of his lack of imagination along with others. The answer is better, careful and more thoughtful water use. Mining does not fit any of those categories. Just as people have been encouraged to install solar panels they should, through Commonwealth subsidies, be encouraged to collect potable water in home tanks.
Not one major item of defence expenditure purchased over the past twenty years is either fit for purpose or appropriate to Australia’s defence needs. Partly this is due to lack of proper process, lack of scrutiny and an inability to decide strategic imperatives. Australia does not need heavy tanks. The F35 bought off the plan is fraught with faults. The European fleet of helicopters has been scrapped to be replaced with the US Black Hawk. The Adelaide was laid up in Tonga on a mercy mission with engine water filters apparently not designed to cope with volcanic ash.Believe that if you will.The problem did not bedevil Chinese naval competitors who were in and out of Tonga before parts for the Adelaide arrived.
Responding to US pressure Morrison scrapped the French submarine deal, which had Macron pick him in one, calling him a liar. ‘I don’t think he is a liar; I know he is.’ The Americans want to be in charge of their future war against the Chinese, so they gave the French the flick. Australia has been solemnly promised new US submarines in twenty years or so.The Australian media swallowed it, anchor and chain. All this was done under a new defence arrangement known as AUKUS – Australia, United Kingdom and the United States. Why the UK is in on the arrangement is unclear but colonial deprivation seems as good a reason as any.
AUKUS is a smoke screen, along with the non-existent submarine marine deal, for a greater US defence presence in Australia, particularly the north from where they aim to confront the Chinese, if not take them on, thereby rendering Alice Springs (Pine Gap) and Darwin targets. Following the Russian attack on the Ukraine Morrison seeks a Khaki election. Advising the government on this matter is the Australian Strategic Policy Institute (ASPI), funded by American arms manufacturers, the US and Australian governments. With support from Morrison and Dutton it has usurped the advice from Defence and Foreign Affairs without noticeable improvement.
ASPI is currently seeking a new head. Controversy surrounds the appointment with Dutton seeking a captains pick .The board of ASPI have other proposals. The Labor Party shadow minister for defence, Brendan O’Connor has weighed in saying no decision should be made before the election indicating that Labor intends to keep the right wing ‘think tank’, an organisation that, on its advice and associations, should be disbanded.
Preparation for meeting the effects of climate change is woeful. We are hard pressed and ill equipped to meet the vicious and rapidly increasing manifestations of climate change. Australia requires a stand-alone and dedicated full time Climate Change Response Force, (CCRF), air transportable at short notice. Using the ADF for such undertakings is a waste of manpower. Climate change is with us, it must be faced, addressed and dealt with. Morrison is not capable.
Allan Behm in his new book, ‘No Enemies, No Friends’, Upswell Publishing, 2022, pp 203/4, says, ‘The Australian government currently shows no interest in preventing war between China and the United States over the status of Taiwan. This is the result of a combination of complacency, national introspection and self-absorption, lethargy, a lack of national self-confidence, a lack of national ambition, and deep anxiety and insecurity. We are paralysed…We have no plan and we have no vision.’
Successive LNP governments have marginalised neighbouring Pacific Island States. Respectful dialogue has not occurred. These states want Australia to take action on climate change. Abbott, Turnbull, Morrison and ASPI ignored them, only showing interest when China did. Such behaviour is counter-productive and will be difficult for Morrison to overcome. Hopefully Albanese will be seen as more receptive and be able to reactivate old relationships.
The LNP has treated the region with equal disdain. The Prime Minister of Singapore, Lee Hsien Loong felt constrained to deliver a polite lecture to Morrison on the desirability of working with China. It went over Morrison’s head, as you would expect. China’s impact on the region is considerable and growing. Clothing factories in Vietnam, fast rail link in Laos, soon to be extended into Cambodia, Thailand, Malaysia and Singapore. China’s Belt and Road initiative will impact, if it has not already done so, all south east Asian countries including Sri Lanka, Bangladesh and Indonesia and to varying degrees tie them to China. Morrison has turned his back on the initiative and also on accessing Chinese funds. Wracking up debt at the rate he is, mainly in unproductive expenditure, Australia will need to access those funds probably sooner than later. In ten years, the Australian debt has gone from $190 billion to $950 billion. It would be an understatement to say that Morrison lacks vision and administrative competence.
Morrison no longer has a working relationship with China. His Wuhan pandemic remarks were seen as arrogant and crude, designed to take a rise out of Xi Jinping. Morrison is seen as having been primed by Trump. It is believed that Xi has no inclination to improve the relationship for as long as Morrison remains Prime Minister. As if to make matters worse, like dogs at the postman’s heals, Morrison and a number of his ministers have jumped into China for not condemning Putin’s bloody invasion of the Ukraine. Shrill and with moral certitude they evince no understanding of the difficult position China finds itself in, which is no doubt very concerned and looking for ways to get Putin to negotiate a withdrawal. Face needs to be saved on all sides, not least their own.
Anthony Albanese got sucked into ‘me too’ on China and the Ukraine. There was no need.Instead he might have urged China to use its good offices with Russia to try and bring about a cease fire and a negotiated settlement. Albanese has also swallowed AUKUS with only a hasty shadow cabinet discussion and no consideration by rank-and-file Labor Party members. AUKUS is a big deal, it has the capacity to substantially undermine Australian sovereignty. Monitoring of Australia’s northern sea and air space by the US will likely morph into reporting requirements and then control as the US ramps up its anti-China posture.
What is of concern in a functioning democracy is the felt need by Labor to adopt a low profile, agreeing with the government on security and defence issues and cautiously drip-feeding uncontroversial policies to the media. Justifiable criticism of Morrison over his response to fire, flood, climate change, refugees, women, aged care, secondary education, universities, health and Medicare has been muted.
Murdoch has much to answer for in biased, partisan reporting of all matters relating to the Labor Party. The ABC, under funding pressure from bullying Morrison and Ministers Fifield and Fletcher has sought to appease and, in the process, has lost sight of its charter.
There is no doubt that these instruments are biased against Labor, but that is the challenge that democracy is faced with from time to time. Ask black South African’s living under the oppression of apartheid how they managed a voice in the face of a hostile white press. Albanese and the Labor Party appear to believe that democracy in Australia can be repaired if they get back into office. They act as if the game can still be played under existing rules. They agree that there should be an ICAC. I suspect they have no idea of the extent of corruption in Australia. I don’t see any real urgency or concern on the part of Labor at the rapid pace of climate change and the considerable upheaval this heralds; rather it is business more or less as usual.
I get no sense of crises from either major party at the decaying structures of our society which the LNP from Howard to Morrison have aided and abetted, underpinned by corruption (sports rorts), contracts without tenders to mates, an unhealthy relationship with the fossil fuel industry and a willingness to ignore the law. But it is deeper.They are amoral users of people, exploiters of the poor and disadvantaged illustrated through Robodebt and NDIS. There is no sense that Morrison and his party know the difference between right and wrong.
Morrison and members of his front bench are a disgrace, the likes of which have not been seen in post Federation Australian politics. Many people are angry at being used, with a lack of nurturing for many things held precious, from the environment, to their children, parents, teachers, health and aged care workers. They hate the lack of respect for women, refugees, Indigenous Australians and immigrants, for artists, musicians, creative endeavour and innovation. They hate the selfishness, crassness, lack of courage and vision of Morrison and his LNP and they do wonder why Albanese and his Labor Party are not angrier and more passionate about the collapse of what used to be the structural and ethical norms of our society.
Read more:
https://johnmenadue.com/wake-up-australia-the-rot-began-with-john-howard/
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transport differential...
It is impossible to avoid the conclusion that road spending is way too high, priorities are wrong, and there is a roads empire which is out of control.
For the past few years, posts in Pearls etc. have pointed out national failures in road policy, notably road spending greatly exceeding – by billions of dollars annually – road related revenues. The cause is galloping increases in spending rather than falling revenues.
The statistics are drawn from official reports by the Commonwealth Bureau of Infrastructure, Transport and Regional Economics. Usually, the relevant report is released a few days before Christmas.
The figures are diligently ignored. Indeed, vested interests periodically spread misinformation to the contrary. They argue for increased road spending along the lines of ‘motorists already pay their way’ or ‘the Commonwealth should spend what it collects from roads’ – forgetting State and local governments spend far, far more than they collect.
Those wanting a change are likely to be disappointed. The forthcoming Federal election looks primed for an orgy of ‘community focused’ or ‘nation building’ road spending promises.
The most recent statistics, up to 2019-20 – including the first months of the pandemic, are dismaying.
They show Government spending on roads exceeded revenues by $8.9bn – ($5.9bn if stamp duty is included as a road revenue) for that year alone. For the five years to 2019-20 the total was $34.7bn ($20.6bn), for the decade $52.3bn ($26.8bn).
Real spending increased by 26% over the five-year period. The increase would have been greater but for Covid restrictions impacting construction.
The spending increase vastly outstrips modest increases in road use. In the pre-Covid period to 2018-19, the 5 year and 10 year increases in vehicle kilometres travelled were 4% and 13% respectively. Private car use growth was even slower – 1.6% and 8.8%.
The Covid effect on road use is evident in the 2019-20 figures with a 5% fall in road use, 7% by cars. In contrast, real road spending increased by 1.4% – whatever effect Covid might have had.
In principle, road revenue should substantially exceed spending, to suppress and deal with the adverse ‘external’ effects of road use including pollution, loss of amenity, noise, and congestion. Australia is well along the wrong path.
The figures indicate the rot set in around 2007-08. Prior to then, road revenues more or less covered road spending. Since then, road finances have been an ocean of red ink – the aggregate financial deficit being over $63bn – averaging over $4.5bn a year. These unwarranted subsidies dwarf most Commonwealth programs, probably including submarine acquisition and sustainment.
Worse, many observe a deterioration in the roads they use. There is a significant maintenance deficit for local and – at least in NSW – State roads.
Further, the trucking industry is still frustrated by obdurate road bureaucracies who impose their own border rules, without good reason, preventing the most efficient freight vehicles using the roads. Such inertia is part of the dividend from governments spending $63bn of your money – on top of what you pay in charges.
It is not as if there is much evidence of any gain from such largesse. Many of the published ‘economic assessments’ of road proposals – like WestConnex – are suspect to say the least. None consider the overall fiscal position of the sector. Road users are locked out of decision making. Reasons for decisions on projects are usually opaque and cloaked by unjustifiable ‘confidentiality’ claims by Governments.
It is highly likely these facts reflect institutionalised rorts and appeasement of the infrastructure club – something a Federal corruption commission would be unable to address if it focussed on individuals or particular cases.
Of course, the Commonwealth is not entirely, directly, to blame for the disgrace of Australian road policy. States control the roads and most of the spending. However, the Commonwealth Government is supposed to lead the Federation – as Prime Minister Hawke did when all the States agreed to a national heavy vehicle registration and charging process. There has only been backsliding and failure since covered up by endless bureaucracy.
The statistics indicate the national failure is bi-partisan. The deficit got out of hand when Mr Albanese was Infrastructure Minister. His other road legacies have become problematic.
The national heavy vehicle regulator was part of his deal in which Commonwealth investment in better roads would lead to higher freight productivity via simpler and better rules for the thing that really matters – truck access to roads. Yet it remains – after a decade – a front for State-road agencies and their innumerable different and perplexing heavy vehicle access rules. The National Transport Commission continues its ineffectual pursuit of arcanum much as it has for over three decades, after being put ‘back in its box’ for daring to try to influence substantive policymaking under Mr Albanese.
Coalition Ministers have aided and abetted this travesty of bureaucratisation, boosting bad projects and promising reviews that never happen.
What then of the recent increase in fuel prices – over 210 cents per unleaded petrol litre – and calls for Commonwealth excise ‘relief’ to deal with cost of living pressures?
The excise, 44 cents per litre, has increased by less than 1 cent since last year. The recent petrol price rises are almost entirely due to international factors.
Were the excise to be reduced, other road charges would need to increase or the problem identified above would worsen. Road bureaucracies have made proposals for new types of road charges – like vehicle mass-distance charges – to replace the excise etc, and to be collected and kept by them instead of treasuries, and allowing them to operate ‘commercially’ – so-called ‘road reform’.
However, the above facts point to an issue that make such proposals unacceptable – charges levied by road agencies would collect vastly more than before – cost of living pressures would worsen.
The solution to that issue is road-user rights and independent regulation of road agency spending. The bureaucracy has spent the better part of twenty years assiduously avoiding that solution, putting up unacceptable charging proposals in the sure knowledge Governments will prefer to continue current arrangements which have them as protected species. The heavy vehicle regulator and National Transport Commission fiascos (above) – denying the most important users any say about roads – are but part of the dreadful bum-steer the bureaucracy is giving Governments and the community.
It is impossible to avoid the conclusion that road spending is way too high, priorities are wrong, and there is a roads empire which is out of control. It is going to take real courage and skill to tackle this monster before it causes even more enduring damage to Australia.
Promises to spend more on roads, or to advance pet projects in this environment, would be evidence of a lack of the qualities Australia should expect from its leaders.
READ MORE:
https://johnmenadue.com/dont-believe-what-you-hear-about-fuel-excise-and-road-funding-in-the-forthcoming-election-campaign/
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desperate lollies...
Scott Morrison is gone. Anthony Albanese will win the election. Josh Frydenberg is fighting to save some of the furniture.
There, it’s been said.
The commentariat generally is too scarred from getting the 2019 election wrong to call it, carefully hedging their collective bets.
Something similar happened in 1996 after Paul Keating’s surprise 1993 “true believers” victory, but the polls and the national mood have had enough of the Morrison government in 2022 as they had had enough of the Keating government in 1996.
The majority of the electorate perceives the Coalition as tired, cynical and short of talent after nine years in power – not fit for purpose.
The hole left by the “moderate” Liberal leadership quitting Parliament before the last election has not been plugged. And the successful manoeuvring by Scott Morrison/Alex Hawke to ensure more “captain’s picks” this May is likely to make that worse.
At the presidential end of the election, the “liar” tag has stuck to Scott Morrison the way the “untrustworthy” tag stuck to Bill Shorten three years ago.
How on the nose is Mr Morrison?
“Prime Minister Scott Morrison will steer clear of the Liberal Party’s most marginal Sydney seat during the election campaign, leaving it to his more popular Treasurer, Josh Frydenberg, to help first-term MP Dave Sharma in the battle for Wentworth,” reports the Sydney Morning Herald.
So with the election lost, the next federal Liberal Party leader Josh Frydenberg (if he doesn’t lose his seat), will use the promise of taxpayers’ money on Tuesday night to try to limit the extent of the loss and burnish his own standing with the party.
When you’re desperate and you don’t have to worry about actually doing anything you promise, nothing is off limits.
Good heavens, “carporks” are back on the agenda, along with more smoke-and-mirrors infrastructure pledges – an extra $1 billion a year for 10 years to concoct another “record” spend. (In real terms, it’s not an increase, but watch most media fall for the ruse again.)
And while the Reserve Bank is to start lifting interest rates to take a little warmth out of an economy supposedly overheating from $250 billion of excess savings, Mr Frydenberg will “cash splash” millions of electors.
But for a single example of how cynical Mr Frydenberg is prepared to be, the prize goes to his promise to extend the 50 per cent reduction of self-funded retirees’ minimum superannuation drawdown for another year.
“In a bid to win the retiree vote ahead of the upcoming election budget, Treasurer Josh Frydenberg has pledged the Coalition will not touch superannuation tax and will extend minimum drawdown reductions brought in during the pandemic until June 2023,” correctly reported the Canberra Times.
And that’s all the measure is.
It defies the declared purpose of the many tax breaks superannuation enjoys – providing comfortable retirement.
Instead, Mr Frydenberg is underlining the actual purpose of super for many wealthier retirees: An estate planning tool.
Of course the Treasurer trotted out some verbiage about providing “retirees with greater flexibility and certainty over their savings”, but that’s a lie – it’s just pandering to the comfortable base and any retirees silly enough to mistake their interests with those of that base.
And that, in Mr Frydenberg’s own words, is trying to ride the sentiment whipped up about proposed franking credits reform three years ago: “At this election, we are again saying to retirees – under a Morrison government there will be no increased superannuation taxes.”
Labor isn’t game to touch super either after last time, but that’s not the point.
The stupidity of Mr Frydenberg’s policy is that a retiree aged 81 will only be required to withdraw 3.5 per cent of their super balance. A 74-year-old retiree only has to withdraw 2.5 per cent.
Any retiree who only requires 2.5 or 3.5 per cent of their super balance to live comfortably has done extremely well out of the best tax haven this side of the Caribbean.
Any half-competent super account has enough cash in it not to require selling assets to meet minimum withdrawal requirements.
And it would have to be a very poor super fund not to be earning more than the discounted withdrawal requirement anyway.
Mr Frydenberg is telling us he has the same attitude towards super as did Peter Costello and John Howard when they went over the top in pandering to the wealthy in providing super lurks and perks, seriously damaging the integrity of the system and putting an unsustainable strain on the budget.
Such is Mr Frydenberg’s integrity, his degree of fiscal credibility.
Ironically, it was Scott Morrison as Treasurer who curtailed the worst of the Howard/Costello excess.
Now as a failing Prime Minister, he’s overseeing a little degradation.
The desperate will do anything.
READ MORE:
https://thenewdaily.com.au/finance/2022/03/29/michael-pascoe-scott-morrison-josh-frydenberg/
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