What a week it was. We saw Venezuela take the high road, our banks profit in crisis, and one man riding an inside joke all the way to the Presidency.
Welcome to this week’s Current Affairs Wrap. We’ve seen the crisis in Venezuela worsen, an overdue State of the Union from President Trump, the fallout from the Banking Royal Commission back home and proof in Eastern Europe that the fourth wall has had a big hole smashed in it.
The ongoing political and economic crisis in Venezuela has exploded into a humanitarian one. Despite being one of the richest nations in South America due to its vast oil reserves, nearly 90 percent of the country currently live below the poverty line.
The primary economic crisis that has resulted in an unbelievable level of hyperinflation can be traced back to 2010 under previous President, Hugo Chavez. A combination of poor policy decisions coupled with corruption, mismanagement and an over reliance on oil exports created the perfect economic storm which has now seen millions of people flee to neighbouring countries. Those that remain face huge food and medicine shortages as well as little access to any basic supplies.
The US has also imposed economic sanctions on the country after also hinting that the country might be added to the dreaded “State Sponsors of Terrorism” list; with some critics suggesting the ultimate aim is a forced regime change engineered by the US Government. True or not, recent developments have seen President Trump and the US Government officially recognise opposition leader Juan Guaido as the legitimate president of Venezuela following the Venezuelan National Assembly declaring Nicolas Maduro’s Presidency illegitimate.
Politics aside, the US and other countries have mobilised to provide aid to the Venezuelan people. However, it appears the internal politics are preventing even that from happening with US aid trucks blocked at the border under orders from Maduro.
US Secretary of State, Mike Pompeo, took aim at President Maduro on Twitter demanding that they let supplies through to help. He said, “…the Venezuelan people desperately need humanitarian aid. The US and other countries are trying to help, but Venezuela’ military under Maduro’s orders is blocking aid with trucks and shipping tankers. The Maduro regime must let the aid reach the starving people”
The US has pledged $20 million in humanitarian aid and Canada has pledged $53 million but unless Maduro changes his tune, it doesn’t appear it will be accepted. Maduro has refused all offers of aid equating the provision of humanitarian assistance as tantamount to foreign intervention.
Unless something changes quickly, military intervention may be the only option despite the fact that Russia and China have both thrown their support behind Maduro.
Back to the US, and President Donald Trump delivered his State of the Union address this week and was unsurprisingly not without incident and controversy.
Possibly the greatest surprise is that Trump managed to make at least one comment that drew applause from the entire room and showed a brief moment of unity. Trump spoke of the increasing role of women in the workplace and proudly told the room, “We also have more women serving in the Congress than ever before”. Nancy Pelosi, Democratic House Speaker and general thorn in Trump’s side stood up and applauded and urged all of her fellow Democrats to do so as well.
Pelosi’s support was short lived, however, with the internet having a field day as she was caught rolling her eyes at a number of Trump’s comments as well as a loud and notable “scoff” when Trump said “If there is going to be peace and legislation, there cannot be war and investigation”. I’d say it’s a safe bet that it’s the first time a US President has channeled Dr Seuss whilst delivering a State of the Union.
An interesting tidbit for those playing at home; the last US President to decry internal investigations during a State of the Union was none other than Tricky Dicky Nixon; who famously resigned months later as a result of the Watergate scandal. During his 1974 address, he concluded his State of the Union with a “personal word”, saying “As you know, I have provided to the special prosecutor voluntarily a great deal of material…I believe the time has come to bring that investigation and the other investigations of this matter to an end. One year of Watergate is enough”.
Here’s hoping that Split Enz were wrong and History does repeat.
The Washington Post dedicated a number of staff to ensure Trump’s least favourite thing occurred during his address – fact checking. In fairness to Trump, whilst much of what he claimed was exaggerated or unsupported, there did appear to be fewer straight out lies than we have come to expect from the US Commander and Chief. I’m sure he’ll be back to his venomous self before too long.
Back home, this week saw Commissioner Kenneth Hayne and commission chief executive Toni Pirani deliver the final report from the Banking Royal Commission to Governor-General Peter Cosgrove. For those that may have forgotten, this is the Banking Royal Commission that temporary PM Scott Morrison fought against for the better part of a decade, describing it as “populist whinge”. Labor number crunchers have reported that the PM voted against the Royal Commission a staggering twenty-six times.
In fairness to Morrison, he wasn’t alone. As Labor continued the calls for a Royal Commission into banking in 2016, then-financial services minister, Kelly O’Dwyer, responded with an opinion piece saying it would be “reckless and ill-conceived” and that we should just leave it to the existing regulator rather than a “one-off, time-consuming and expensive royal commission that will not benefit consumers or the Australian economy”. Former PM and Liberal poster-boy, John Howard, also slammed the idea at the time, calling it “rank socialism” and somehow linking it to the call for a same-sex marriage vote.
In fact, as unbelievable as it sounds now, it was the banks themselves who made the final push to launch the Royal Commission. A letter was sent in November 2017 to the government signed by the chairpersons of CBA, Westpac, NAB and ANZ banks calling for the move saying, “It is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people”
As we now know, the Royal Commission unearthed a myriad of shocking practices that left the entire country shaking their collective heads in disgust.
The final report reportedly includes three books and more than one thousand pages. Within those pages are a number of recommendations from Commissioner Hayne; some of which with potentially far reaching consequences. Treasurer Josh Frydenberg (that still doesn’t sound right) told the media that the government would give in-principle support to all of the recommendations. This roughly translates to – we’ll support those that we want to and that may win us votes.
Treasurer in waiting, Chris Bowen, was a little more definitive indicating that Labor would implement every single recommendation in full when they return to power later in the year. A sound bite i’m sure will be on rotation when he’s in a position to follow through on that guarantee.
Within days, the report had claimed its first high profile scalps with NAB Chairman Ken Henry and NAB CEO Andrew Thorburn both resigning.
The banks themselves, however, were likely celebrating with the share prices of the big four all soaring after the release of the report. Investment analysts all pointed to the lack of powerful recommendations for the rise with global ratings agency Moody’s indicating that the lack of calls for a wide shakeup of banking structures being a “positive for bank profitability”. The mortgage broking industry, however, wasn’t so lucky. The report included recommendations that would see brokers no longer receiving “trail commissions” and possibly even upfront commissions. The change would see the entire $2.1 billion industry be forced into a “fee-for-service” model where consumers pay a commission directly to the brokers rather than them receiving it from the bank. Finance Brokers Association managing director, Peter White, took aim immediately, saying “It’s a very, very bad outcome that has the risk of huge unintended consequences for home loan borrowers…Potentially interest rates are going to go up to compensate for the increased cost”.
Whilst White’s doomsday predictions about interest rates are likely not very accurate, it does seem like the move would force a drastic reshape of the broking industry that would inevitably lead to a significant shrinking. Around 60 percent of settled loans currently come through the Mortgage Broking industry and it employs around 20,000 people. Further to that, the move would inevitably hand a significant portion of that business straight back to the banks. The market sent a clear message with Mortgage Choice shares plummeting more than 30% after the announcement.
Shock news came out of Canberra late in the week when it was announced that Federal MP’s emails and data may have been accessed during a cyber attack on Parliament. If that wasn’t bad enough, it’s also been reported that the level of sophistication in the attack suggests that a foreign government may have been involved.
The Australian Signals Directorate, the government agency in charge of cyber security, launched into action this week to try and lock down and protect the network. House Speaker Tony Smith and Senate President Scott Ryan released a joint statement saying, “The Department of Parliamentary Services and relevant agencies are working jointly to take the necessary steps to investigate the incident, while our immediate focus has been on security of the network and protecting data and users….There is no evidence that any data has been accessed or taken at this time, however this will remain subject to ongoing investigations.”
In addition, they indicated that there was no evidence at this stage that the attack was an effort to “influence the outcome of parliamentary processes or to disrupt or influence electoral or political processes”. Some have quickly pointed out, however, that the timing some months away from a Federal election seems to suggest it’s a very possible motive.
It’s not the first potentially dangerous hack in recent times, and not the first where a foreign government is suspected to have been involved. Last year, the Australian National University which is home to a number of defence-focused research units came under attack. In 2015, the Australian Bureau of Meteorology was also attacked with the Australian Cyber Security Agency concluding that foreign governments were to blame; but they stopped short of indicating which foreign governments.
It’s fair to say that in this modern, wacky world, truth has become much stranger than fiction. The United States is being led by a Reality Show star; closer to home, Clive Palmer has blown up our phones with cryptic messages and taken to television to sprout conspiracy theories that would be more at home on Reddit.
It seems the Ukraine aren’t immune to the new age of ridiculous. One of the most popular shows on Ukrainian television, Servant of the People, sees comedian Volodymyr Zelenskiy play a high school teacher. Zelenskiy’s character is propelled into fame after a video showing him taking aim at government corruption goes viral; and before too long, he finds himself being named President of the Ukraine.
Sounds like an entertaining premise. But it couldn’t happen in real life, surely?
Apparently it can. Out of nowhere, Zelenskiy is currently the leading candidate in the Ukraine’s upcoming presidential election. After twenty years of performing stand up comedy, quite often with expert impersonations of politicians, Zelenskiy may well pull a Trump and find himself as the Ukraine’s next President.
Is it too late to drop Harold Bishop into a safe seat?
That’s it from me TBSers, have a cracking week!