Pearls and Irritations

John Menadue

  • John Menadue. Why the ABC is unique and important.

    The BBC is the most successful public broadcaster in the world. It is a good model, not to copy but to adapt to our own needs and circumstances.

    Lord Reith who was Director General of the BBC 1927-38 pithily described the BBC’s purpose in three words…educate, inform and entertain. He was famously determined that the BBC would provide its audiences with something rather better than they thought they wanted. He said,  ‘He who prides himself on giving what he thinks the public wants is often creating a fictitious  demand for lower standards which he himself will then satisfy,’

    Sir Ian Jacob who was DG  1952-59 defined public broadcasting as ‘ …a compound of a system of control, an attitude of mind, and an aim, which if successfully achieved results in a service which cannot be given by any other means. The system of control is full independence, or the maximum degree of independence that parliament will accord. The attitude of mind is an intelligent one capable of attracting to the service the highest quality of character and intellect. The aim is to give the best and the most comprehensive service of broadcasting to the public that is possible. The motive that underlies the whole operation is a vital factor; it must not be vitiated by political   or commercial consideration.’ 

    So much of our media including the ABC is a long way from the approach of Lord Reith or Sir Ian Jacob. Rupert Murdoch justifies what he offers by saying that if viewers or readers don’t like what he offers then they can switch the dial or read something else. This is what Lord Reith would have described as ‘creating a fictitious demand for lower standards which he himself will then satisfy’. When critics say that Murdoch dumbs down the media like this he describes his critics as elitist or snobs.

    One field in which the ABC should be unique and way ahead of the field is in its coverage of our own Asian region. The ABC should be the leader in helping to break us free of our dependence on the news, current affairs and entertainment media houses of New York and London. The ABC is the only media organisation that can help us live with and learn from our own region. When the ABC should be putting Asian coverage as its highest priority it is scaling back dramatically. It is in retreat in this critical area.

    Another important feature of the ABC must be is that it is national. It can help bind and unite the country, free us from state and local parochialism and help form and project our national identity. The only two other major national media organisations are the Australian Financial Review and The Australian.  The former is a specialist service. An important strength of The Australian is that it is national although it is increasingly failing as a serious, independent and professional newspaper.

    Unfortunately the ABC’s coverage out of Canberra, our national capital, falls well short. It should give us less politics and gladiatorial sport and more in depth analysis of policies. God save us from the increasingly bland and glib generalists who know a little about many things but are expert on nothing. The ABC needs to lift its national coverage.

    In its geographic coverage, the ABC cannot be everything to all people. Most of Australian media is focused on state capitals, so I wonder why the ABC needs to be so committed to Sydney and Melbourne where at least there are established and competitive media players. It is different in Brisbane, Adelaide and Perth which are one-newspaper cities with the ABC the only substantial alternative

    The ABC is obviously a very important player in regional Australia. The lack of strong local media in regional cities and towns makes the ABC so valuable for country people in Australia.

    The role of the ABC must be to’educate,inform and entertain’ and to provide a ‘service which cannot be given by any other means’ It does this much better than other media but its own shortcomings and the collapse of other media models requires it  to lift its game.

    The ABC will always be under pressure from governments, both Labor and non Labor. Its independence may be better safeguarded by considering again licence fees which were abolished by the Whitlam Government and replaced by direct funding from the budget.

     

     

  • John Menadue. The smoko continues.

    In April 2012 Greg Dodds and I posted an article on this blog ‘The Australian Century and the Australian smoko’. We argued that while we responded well to the opportunities in Asia for over a decade in the 1980s, we went on ‘smoko’ from the mid-1990s. There was widespread complacency and fear of Asia was promoted. The result has been two decades of failure by business, universities, schools and the media in equipping ourselves for the region. That complacency is still with us and the fear of Asia is promoted by ministers like Scott Morrison.

    Another report has just been recently published which highlights our complacency…

    A recent survey prepared by PwC and reported yesterday by the Financial Review has given us more bad news. PwC undertook a survey of 1,000 Australian businesses. It found

    • Two thirds of Australian companies have no plans to change their approach to doing business in Asia despite the urging by the government and others.
    • Only 9% of Australian businesses have any sort of operation in Asia and only 12% have had any experience in Asia at all.
    • Whilst about a half of large companies are doing business in Asia, only 23% have staff on the ground ‘in market’ and for those companies with an Asian strategy, the total contribution of it to their bottom line was only 12%.
    • Australian companies last year invested more in New Zealand than in all of the ten countries of our South East Asian Region.

    PwC partner, Andrew Parker, said ‘If Australian businesses want a place in future global supply chains and to participate in the growth of intra-Asian trade, we will have to dramatically lift our engagement and investment in the region. Unfortunately Australia is way behind. Asia is passing us by and we need to act now. This may well be our last chance’.

    Australian business profits are booming. Dividends are at record levels. Some major Australian companies are spending their cash in buying back shares. Most Australian companies are awash with cash. But the clear evidence is that they are not prepared to take risks and invest and trade in the fast growing economies of our region.

    In earlier blogs, I have drawn attention to the same disquieting facts.

    • I have yet to learn of a single Chairperson or CEO of any of our major companies who can fluently speak any of the key Asian languages. There are now tens of thousands of Australian born citizens of Asian descent in our universities. But they are unlikely to break into the ‘white men’s clubs’ of our company boards.
    • In late 2013 the Business Alliance for Asian Literacy, which represents 400,000 businesses in Australia, found that ‘more than half of Australian businesses operating in Asia had little board and senior management experience of Asia and/or Asian skills or languages’.
    • Tourism has been booming, but we don’t get much repeat business. We skip from one new market to another, first Japan, then Korea and now China. If we are not getting repeat business it suggests there is something wrong with our product.
    • Many young Australians I knew studied Asian languages in the 1980’s but could not find work with Australian companies. They drifted off to Hong Kong and other Asian cities where their skills were valued.

    The clear failures in our business sector to equip itself for Asia are even more obvious in our media which is still chained to our century old links to media houses in the North Atlantic.

    We talk endlessly about the business and other opportunities in our region, but we sit on our hands when it comes to do anything serious on the subject.

    The government takes pride in trade and investment partnerships that it has finalised with Japan, ROK and China but where are the business people to take full advantage of these new arrangements?

     

  • John Menadue. The scholarship is the real issue.

    Freya Newman has been placed on a two year good behaviour bond  with no conviction recorded  for  accessing the computer system of the Whitehouse Institute of Design concerning a ‘scholarship’ awarded to Francis Abbott.

    Overwhelmingly the media coverage has been about Freya Newman and very little about the substantial issue, the ‘scholarship’.

    The substantial issues seem quite clear. They have not been publicly disputed.

    • The Whitehouse Institute is a private tertiary body.
    • It awarded Francis Abbott, the then Opposition Leader’s daughter, a scholarship which saved her family more than $60,000 in fees.
    • The scholarship was not advertised.
    • Its existence was never made public.
    • The Institute insists it was offered on the basis of academic merit, but has offered nothing to substantiate this claim.
    • The Institute’s chairman was a substantial donor to the Liberal Party and has confirmed that he ‘probably’ recommended Ms Abbott for the scholarship.
    • Tony Abbott did not disclose this benefit as part of his parliamentary obligations.

    Just imagine if the daughter of Kevin Rudd or Bill Shorten had been awarded a $60,000 scholarship in such circumstances. The English language would not have been adequate to describe the criticism they would have received from Tony Abbott and Julia Bishop. The Murdoch media would have gone almost into meltdown over such a scholarship. The Australian would have called for either a judicial enquiry or a royal commission. It would have been as relentless as it was on Julia Gillard’s union connections.

    It is remarkable that a young woman, who chose at very considerable risk to be a whistle blower, has been the focus of public attention, including from Christopher Pyne, while the substantial issue, the ‘scholarship’ has been sidelined.

    It should not have been left to a young whistle blower to bring this issue to public attention. If Tony Abbott had been a member of the Parliament of NSW, Freya Newman and other whistle blowers could bring their concerns to the attention of the NSW ICAC. But there is no national ICAC.

    The real issue is not Freya Newman. It is the ‘scholarship’ and the circumstances under which it was granted. An injustice has been done to Freya Newman. At least Magistrate O’Sullivan got the point about how trivial the case was.  The magistrate said that Freya Newman was not motivated by personal gain or a sense of animosity to Francis Abbott. ‘I accept that Freya Newman was motivated by a sense of injustice rather than a desire for personal notoriety or any desire to embarrass the student (Francis Abbott)’.

    An injustice has been done, but the central issue surrounding the ‘scholarship’ has not been properly examined.

    The issue is certainly not Frances Abbott. There is no suggestion she has done anything wrong.

    New Matilda deserves credit for pursuing this issue whilst almost all other media avoided it or focussed on the whistle blower rather than on the ‘scholarship’.

  • John Menadue. The ABC should stop kicking own goals.

    There is not much doubt in my mind that the budget cuts to the ABC are part of a vendetta against the ABC and to oblige Rupert Murdoch who intensely dislikes quality competition. The ABC is the most trusted media organisation in the country and News Corp is the least trusted.

    But the ABC looks to be kicking some own goals.

    Walter Hamilton, John Tulloh and I have pointed to the very disquieting cut backs in the ABC regional coverage when it should be dramatically increased given the rapidly increasing importance of our region. We still have a ‘white man’s media that clings to the North Atlantic.

    Another own goal is the retreat from specialisation and in-depth analysis of important public issues. In the SMH and the Age recently Quentin Dempster said that a ‘senior manager (at the ABC) had commented on the need to get rid of the stranglehold of specialisation’.

    If anyone is looking for reasons why public broadcasting exists and why we need specialists more than ever, just take a look at Q&A on 29 September this year. Laura Tingle, Christopher Pyne, and Wayne Swan, agreed that there is a problem with current media in Australia: it lacks specialist depth. They all commented on the negative impact of the collapse of current media models, and specifically, the consequent loss of specialist journalism skills in the commercial media arena.

    Tony Jones referred to the point raised by Wayne Swan about journalists ‘not being properly mentored and not being able to do proper analyses’.

    Laura Tingle from the AFR said that media organizations are collapsing from within. She added ‘When I joined the Canberra Press Gallery the various bureaus I was in would have specialist writers who could write and know what was going on in health (or other fields). The AFR is now probably one of the few bureaus that has that sort of specialization. …  Now what does that mean? It means that when a story comes up, whether it’s Gonski, education funding or health funding, you have a whole heap of generalists who go in and say “What does this mean for Labor and the Coalition?” They look at it as a political story.’

    Christopher Pyne said ‘There are very few specialists in the gallery today who actually talk about education policy. But six years ago there were actually quite a lot of journalists in the gallery who were education specialists. … I think Wayne has hit it on the head. It actually takes accountability away from governments and oppositions if you can get away with skating over policy because the questions are not going deeply into what governments are trying to do. … But we then see what the media does. It reports politics as a football game … rather than policy that’s trying to improve the lives of Australians. …’

    They all made the point that as journalists have lost jobs, media outlets are falling back on generalist journalists to turn their hand to whatever story was needed, and this often resulted in a shallow approach to issues. With no real depth of knowledge of the topic the journalist falls back on the Us v Them, gladiatorial, party contest view.

    They all made the point that this loss of specialist journalism was damaging the whole fabric of political and social debate in Australia. Yet, we have ABC management, according to media reports, actively considering taking the ABC down this same shallow generalist path that most of the commercials are well and truly on. What do they think the ABC exists for?

    If politicians as disparate as Pyne and Swan can see this, and argue for it, why can’t ABC management?

    I closely follow the public ‘debate’ about refugees. Many factors have contributed to the cruel position we have adopted. But one important contributor is that the media has few specialist experts who are able to sort the daily politics about boats from major policy issues underlying enormous refugee flows around the world.  The same is also true of health policy that I follow closely. The debate is invariably about short term politics and not policy. Politics is so much easier to report. Health is a complex issue but because there are so few well informed health journalists we get carried away with the immediate political issues like a shortage of hospital beds (when in fact we have too many) and delays in emergency departments. They ignore the more serious and deeper problems in general practice and health prevention. Because many journalists lack in-depth understanding of health issues they are dependent on the handouts and briefings of vested interests that abound in the health field. .

    The public broadcaster, not constrained by the need for ratings to generate income, was designed to have the capacity to provide breadth of coverage, and depth of analysis which the commercial market could not. So why are we ditching it for a model that pushes the ABC  towards formulaic, presenter-driven lifestyle, interspersed with short news breaks, soft current affairs, and personality-based infotainment?

    The model ABC management is working towards in both TV and radio would tie the corporation closer to a ratings and market driven model, just when that model is collapsing. This is particularly the case with Radio National, described by ABC managing directors from David Hill to Mark Scott as ‘the jewel in the crown’. The hollowness of that statement should now ring loudly around the ABC board room. The programs targeted for the chop seem to be those that are most content-rich and deeply researched. Where else in the Australian broadcasting landscape is such material available? What sort of Radio National would we have without the depth of content?

    In Australia the ABC desperately needs specialist units in key areas such as climate change, health, education, refugees and economic management. We need experienced journalists in those fields to help us get beyond the special interests that dominate the debate in these fields…

    It is around such specialist editorial units that the future of media will be determined, yet the current decision making process in the ABC reinforces the dated commercial models and old network structures.

    Only the ABC is likely to save us from the stranglehold of glib generalists who invariably avoid the in depth analysis required and give us instead a diet of conflict, politics and personality.

     

  • John Menadue. Our ‘best friend’ in Asia is in trouble.

    Japan now faces its fourth recession since 2008. The Japanese economy has contracted in 13 of the last 27 quarters. In effect, there has been no growth for six years. The Japanese economy has been moribund for two decade.

    So far Abenomics is not delivering as Prime Minister Abe had hoped. His attempt at money-creation on a vast scale to monetise Japan’s enormous public debt is not working.

    Facing failure of his economic policies, Prime Minister Abe has done what many politicians do when they are not sure of their position. He has called an election for next month. He will probably win that election despite the drubbing he received in a bi election a few days ago in Okinawa over US military bases on the island. He will win the December election, not because of any policy success he has had but because of the abject failure of the major opposition party, the Democratic Party of Japan.

    Abenomics had three arrows.

    The first was printing of money on an enormous scale by the Bank of Japan. It was designed to stimulate the economy, particularly consumption and promote inflation which would help monetise the debt and encourage consumers to spend now rather than wait for prices to fall. But the economy has stalled again and prices are not rising.

    The second arrow was budget reform to repair Japan’s enormous government debt. Japan’s gross government debt as a percentage of GDP stands at 238%, the highest in the world. By contrast the Australian figure is 27%, although when we listen to Tony Abbott or Joe Hockey we would think that we face an emergency.

    Prime Minister Abe attempted to address the government debt problem by increasing the GST from 5% to 8% in April, but it stopped consumption in its tracks. Prime Minister Abe has now said he will delay the next increase in the GST from 8% to 10% which was scheduled for October 2015. So budget reform has been put on the back burner. The second arrow has also missed its mark.

    The third arrow involved structural reform which necessarily takes longer to achieve. This third arrow had several features. It is not having much effect.

    • Boosting the role of women in the workforce, but there is no sign yet of any upward trend in participation by women in such a male dominated society.
    • Reform of industries including, importantly, agriculture. But farmers are solid supporters of Prime Minister Abe’s Liberal Democratic Party and he is reluctant to upset them.
    • Immigration to address Japan’s pending democratic disaster. Japan’s population is currently about 127 million. It is projected to fall to about 100 million by 2050. By then the population will have aged dramatically. For decades Japan has talked about migration, but little is done because Japan is culturally apprehensive about foreigners, ‘gaijin’. There are over 500,000 ethnic Koreans in Japan, the descendants of people who were brought to Japan as workers when Korea was part of the Japanese empire (1910-1945). Those Koreans are still ‘outsiders’ in Japan and presently subject to a hate campaign by right-wing nationalists who are attracted to Prime Minister Abe’s policies in such areas as visits to Yasukuni Shrine, denial on comfort women and the Tianjin massacre. There have been a few Asian women who have migrated to Japan to marry farmers who have found it difficult to find a partner. With a culturally exclusive attitude to all foreigners and with Japanese women reticent about marriage and families, Japan is unlikely to break free of its population decline.

    Our ‘best friend in our region’ is in serious trouble.

    In July last year, we signed a much hyped Economic Partnership Agreement with Japan which Andrew Robb said would ‘turbo-charge’ our trade with Japan by reducing tariffs and other restrictions on our goods and services into Japan.

    But twelve months later it is clear that two factors will slow down the alleged benefits of the EPA. The first is clearly Japan’s sluggish economy which is again in recession.

    The second is the depreciation of the Japanese yen which is the direct and intended result of Japanese policy-makers. Since we signed the EPA with Japan in July, the Japanese yen has depreciated over 7% against the Australian dollar, making imports into Japan more expensive. This will reduce the benefits of the tariff reductions that we have negotiated. And Japanese policy-makers are determined to depreciate the Japanese yen even further. The Yen has depreciated 20% in recent months against the US dollar.

    By 2050 China will have a population of about 1.4 billion and Indian 1.6 billion compared with Japan of 100 million. A large population does not necessarily result in economic success and influence. But we are seeing amazing growth in China. Watch this space for India.

    China and India are likely to be increasingly important to Australia’s economic future. Tony Abbott should be more careful about the language he uses about ‘our best friend in Asia’. By 2050 we may have a very different view about who is most important to us in our region.

  • John Menadue. Move over Joe Hockey

    The Julie Bishop media blitz continues. But will it flame out like the media blitz of her namesake, Bronwyn Bishop who was also touted by the media as a possible Liberal leader over a decade ago. Like Julie Bishop now and Bronwyn Bishop then, they had amazing free runs in the media. But in the end substance and not style wins out.

    And on substantial issues as I have mentioned in my earlier blogs, there is little of real achievement… There have been record cuts in overseas development aid, Ebola delays, needlessly provoking China over its island dispute with Japan, failure to achieve real outcomes on MH17 and of course, most recently, playing party politics with the President of the US over climate change.

    Since Joe Hockey hit the hurdle with his first budget, Julie Bishop has obviously seen an opening. The media posturing is so obvious – a range of interviews from Harpers, Vanity Fair and Peter Hartcher in the SMH. There was a round of media interviews in New York which was ideal to project her role as Chair of the Security Council. And of course there was media interest in her jogging in Beijing and elsewhere. She has clearly been impressed by the media which John Howard attracted with his early morning walks and Tony Abbott’s bike riding. But there is not much substance in jogging. She probably decided that shirt-fronting the President of the US would bring her brownie points with her increasingly nervous colleagues and with the electorate.

    Her attack on Tanya Plibersek in yesterday’s SMH also reflects this media drive. It hard to understand how she thinks that flirting with Kevin Rudd adds to her foreign policy credentials. If anything she might consider retracting what she said about Kevin Rudd’s campaign for an Australian seat on the Security Council.  ‘There really has been no justification for the benefits that will accrue to Australia for pursuing a seat [on the Security Council] at this time.’ How ironic that she now projects herself as the Chair of the Security Council that she was so critical of a short time ago. How Julie Bishop also thinks that Tanya Plibersek would benefit by a briefing from her is hard to grasp. Most people would think that a briefing from foreign policy and intelligence specialists, which she received, would be much more useful.

    But what Julie Bishop will be most remembered for is her attack on President Obama to burnish her tough person image as the logical successor to Tony Abbott if opinion polls keep trending down against the Coalition.

    The Coalition was not expecting President Obama’s speech in Brisbane or the deal that President Obama made with President Xi. The Coalition clearly feels badly hurt by the position the US has taken.

    Our Foreign Minister and the government however should not have been surprised. The signs were everywhere that the Obama administration was tiring of the Australian Government’s position on climate change.

    Tony Abbott was due to meet President Obama for their first meeting at the APEC Summit in Bali only a month after Tony Abbott was elected. But President Obama could not attend and was represented by his Secretary of State, John Kerry. On good advice, I understand that John Kerry was not impressed with Tony Abbott on climate change. He asked officials ‘Where does Prime Minister Abbott get this stuff from on climate change?’

    In the AFR yesterday, John Kehoe, its correspondent in Washington spells out very clearly that the Australian Government had been warned about what was coming up in the lift on climate change. Kehoe referred to a speech that John Podesta, President Obama’s climate change policy architect had made. Podesta had been pivotal in President Obama’s landmark deal with China. Kehoe reported that in July this year in a speech ‘to senior Americans and Australians including Finance Minister Mathias Cormann and Opposition Leader Bill Shorten, Podesta bemoaned Australia’s lack of climate policy. After the abolition of a carbon price, attendees say Podesta told the audience the Australian Government did not have a credible climate policy in place, adding he felt he should be honest with Australian friends.’

    According to Kehoe the issue was also spelled out plainly by Caroline Atkinson who was President Obama’s ‘G20 sherpa’ and national security adviser for international economics. Kehoe reported ‘Not once but twice in the lead up to the G20, Atkinson publicly told Washington audiences full of Australian government officials that the US expected to have a proper discussion on climate at the G20. She even suggested that other countries would team up against Abbott to make it happen. For those in Canberra blindsided by Obama damaging Abbott on climate change, they overlooked signals the White House had been sending for months.’

    There is clearly no excuse for Julie Bishop’s ignorance or surprise in what was in train. A minister who was on the ball would not be blindsided like this.

    In recent days we have had The Australian carrying stories designed to help the government in its predicament on climate change. Could we think of it doing anything else! The Australian suggested that Tony Abbott led the pack in standing up against President Obama on climate change in and around the G20. This is patently nonsense and special pleading. The reverse was the case with not only President Obama but Prime Ministers Cameron and Merkel, and President Hollande, and maybe others ringing the carbon change bell on our Prime Minister.

    The relentless media campaign by Julie Bishop tells us a lot about the problems unfolding in the Liberal Party, Julie Bishop’s personal aspirations and how the under resourced Australian media can be so easily manipulated and distracted by personality and celebrity at the expense of examination of policy.

    It is also becoming clear that the government has nowhere to go on climate change, except in reverse.

  • John Menadue. Capitalism, inequality and taxation.

    In his challenging series last week on ‘Is capitalism redeemable’ Ian McAuley drew attention to how growing inequality is the cause not only of serious social concerns, but it is also presenting us with some quite serious economic problems.

    There is not much doubt that in the US, the growing tax concessions for the wealthy and the obstacles placed in the path of low income and poor people to organise themselves through trade unions, has had serious economic as well as social consequences. With companies like Walmart paying poverty wages, low income people don’t have the money to buy goods and services that businesses would like to sell. And despite US companies and the wealthy being awash with money, particularly as reflected in the buoyant US stock market, business is not investing in new businesses and jobs for the chief reason that the demand is just not there. Inequality is a major economic problem.

    The IMF has highlighted the economic damage that inequality is doing. A staff policy paper 2014 found that ‘our work built on the tentative consensus in the literature that inequality can undermine progress in health and education, cause investment-reducing political and economic instability, and undercut the social consensus required to adjust in the face of shocks and that it tends to reduce the pace and durability of [economic] growth.’

    The managing director of the IMF has been even more explicit. She recently noted that the 85 richest people in the world control as much wealth as the poorest half of the global population – 3.5 billion people. She commented ‘With facts like these, it is no wonder that rising inequality has risen to the top of the agenda – not only among groups normally focused on social justice but also increasingly among politicians, central bankers and business leaders. … It is therefore not surprising that IMF research – which looked at 173 countries over the past 50 years – found that more unequal countries tended to have lower and less durable economic growth.’

    The Governor of the Bank of England warned us only a few months ago that unless action was taken on inequality ‘capitalism would devour its children’.

    The OECD in its June 2014 report said that ‘OECD data shows that well into the recovery from the global economic crisis, the distribution of pre-tax and transfer income remains significantly more unequal than it was before.’ In particular the OECD expressed concern about ‘anchored poverty’ particularly amongst the young.

    Ian McAuley has pointed out that because of growing inequality and the unwillingness of corporations and individuals to fund new growth and new jobs, more and more people have to rely on government benefits to tide them over. That in turn results in increased budget problems. We all instinctively know that well-paid jobs in a strong economy are better for everyone than government benefits. We need to address this downward spiral by the poor who become increasingly dependent on welfare with severe personal and social consequences but also serious public finance problems.

    One feature of modern capitalism particularly by global companies is tax avoidance. We are reading about it almost every day. It is not only unfair but has serious economic consequences. As Ian McAuley put it ‘The economist Joseph Stiglitz points out that well-crafted taxes can actually improve a country’s economic performance. Tax regimes which give a leg up to new ventures, which encourage retraining, or which shape depreciation provisions to encourage the uptake of new technologies, can all help improve a country’s economic adaptability. A carbon tax is an example not only of the payment for harm done to others, (negative externalities in the language of economists) but also of an incentive for industries to adjust and modernise their productive methods.’

    But unfortunately Australia is going in the opposite direction with widespread tax avoidance. Companies such as Westfield paid an effective tax of only 8% over the last decade. News Corp tops the list with 146 subsidiaries in tax havens.

    Companies like this are the real ‘leaners’ and not the welfare bludgers that Alan Jones and the Daily Telegraph talk about. But not content to avoid company tax on an enormous scale they have their corporations fund their private travel, private entertainment, and their private boats

    In 2011-12 according to Peter Martin in the SMH on 13 May ’75 ultra-high earners had a taxable income of $1.10 each’.

    Almost every day we have more and more information about tax avoidance and tax havens. What is becoming increasingly clear is that the benefits to the rich are damaging both our society and our economy.  Our four major international tax advisory firms are facilitating this large scale tax avoidance. They call it ‘aggressive tax planning’ or the means to overcome ‘unfair tax competition’, presumably by other tax avoiders in Australia and elsewhere.

    The government is not making it easier to crack down on major tax avoidance by cutting back experienced and professional staff in the Australian Tax Office. The government and the ATO also need information on where profits are being made and taxes incurred by jurisdiction. The ATO needs new legislation to address profit shifting through transfer pricing, thin capitalisation and debt loadings. We hoped that the G20 in Brisbane would address this issue but it seems to have been overwhelmed by other matters.

    The most consistent critic of inequality and concern for the poor is Pope Francis. A year ago he seemed a voice in the wilderness.  But he is now being joined by such people as the managing director of the IMF, the Bank of England and senior politicians.

    We are finding that inequality breeds not only social problems but has serious economic consequences for the future of capitalism.

  • John Menadue. Murdoch and Abbott vs ABC.

    This is a repost of a blog which I initially posted on December 19 last year.

    Tony Abbott has a debt to repay to Rupert Murdoch for the extremely biased support he received in the last election.

    With the help of Senator Cory Bernadi, Tony Abbott is now following the Murdoch Media line in attacking the ABC. He is also following in the steps of the Howard Government that attempted, unsuccessfully, to bring the ABC to heel. During the Howard Government, Minister Richard Alston and Senator Santo Santoro led a concerted campaign against the ABC to force political compliance.

    Last week Tony Abbott joined in the attack on the ABC in the Coalition party room. He particularly took a swipe at the ABC for revealing government spying around the world that has been brought to attention by Edward Snowden. But the ABC was in good company in carrying these stories. The Snowden revelations were carried by The Guardian, the New York Times, the Washington Post and Der Spiegel. Even if the ABC had declined to participate in the Snowden revelations it could not have avoided subsequent coverage of one of the major news stories of the year and possibly the decade. The ABC would have been forced into catch-up for weeks.

    The Chairman of the ABC has announced a ‘bias audit’ of the ABC to counter the campaign by the Coalition and the Murdoch media. I can understand this defensive reaction, but it is all so one-sided. Who is to audit the Murdoch media and the scurrilous campaign that it conducted during the last election? Murdoch even sent one of his New York heavies, Col Allan, to do a hatchet job on the Rudd Government. It was an appalling abuse of power.

    The Murdoch media is critical of the performance of the ABC but is silent on the performance of the Lachlan Murdoch – James Packer performance at Channel 10, to say nothing of the free ride it has given to James Packer for Sydney’s second casino for high rollers.

    The Murdoch media which consistently points the figure at others has been charged with phone hacking and bribery of police in the UK. Rupert Murdoch abandoned his Australian citizenship to take advantage of business opportunities in the US.

    The Murdoch campaign against public broadcasting is not new. James Murdoch, who has been pushed aside because of the hacking scandal that occurred under his watch in the UK, took every possible opportunity to attack the BBC. He alleged that the taxpayer-funded BBC was providing unfair competition to the Murdoch media.

    It is nonsense to suggest that it is only public broadcasters like the ABC that are publicly funded. Ian McAuley in New Matilda on 9 December this year put it this way

    “Commercial media are funded by what is to all intents and purposes, a sales tax. For example, if you buy a new car, around $500 of what you outlay is for advertising. Last year, $13.1 billion was spent on advertising, of which $4.9 billion was for commercial TV and radio, and $2.6 billion was for newspapers. To put these figures into a digestible form, we are paying about $1,500 per year per household for advertising, of which $500 is for commercial TV and radio, and $300 is for newspapers (not including the cover price). By contrast we are paying about $120 a year for the ABC. It is as asymmetric deal: those who use only the ABC pay $500 a year for commercial TV and radio, while those who use only commercial media pay $120 for the ABC. … Perhaps it’s part of our civic contract that those who pay for the commercial media they never use don’t complain, but the commercial media, particularly the Murdoch media when they attack ABC funding, don’t seem bound by such rules of decency.’

    But who does the public really trust in the media? The overwhelming evidence is that the ABC is the most trusted media in Australia and the Murdoch media is the least trusted.

    A recent poll on ABC funding in the Fairfax media drew over 21,000 respondents. 77% agreed that the ABC was an excellent and essential service that deserved more money. Another 12% said that the ABC did good work but the funding was about right.

    Essential Research has just reported about ‘trust in the media’. Once again, the ABC is at the top of the list. Rankings for “a “lot of, or some trust, in the media” were as follows:

    ABC TV news and current affairs                                70%

    ABC radio news and current affairs                           63%

    ABC talk-back programs                                              46%

    Commercial news and current affairs                       38%

    News and opinion in daily newspapers                     48%

    Commercial TV news and current affairs                 41%

    Commercial radio talk-back                                        31%

     

    For particular newspapers, respondents ranked the newspapers in which they had “a lot of or some trust”. The rankings were as follows:

     

    Melbourne Age (Victoria only)                                    68%

    The Sydney Morning Herald (NSW only)                   64%

    The Australian                                                                64%

    Courier Mail (Queensland only)                                  59%

    Herald Sun (Victoria only)                                            48%

    The Daily Telegraph (NSW only)                                 41%

    Trust in the Daily Telegraph has fallen dramatically over the last 12 months with its particularly biased campaign during the last election.

    The Australian Press Council has also noted the performance of some Murdoch publications. The APC publishes guidelines to aid journalists and editors an investigates complaints. One subject which I follow closely has been asylum seekers. The APC reported on a Daily Telegraph story of 26 November 2011 headed ‘Open the floodgates – exclusive: thousands of boat people to invade NSW’. The APC found that this story was ‘grossly inaccurate, unfair and offensive’. It upheld a complaint about a similar story in the Herald Sun on the same day. The APC also found against three articles by Greg Sheridan on ‘illegals’ that appeared in the Australian on 23 and 28 October 2010 and 5 March 2011.

    The ABC does not always get it right. It has had a very ordinary coverage of news on both TV and radio from Canberra for many years. Its Canberra correspondents show little interest or knowledge of policy. I wonder if they can spell the word! I am also amazed that the ABC continues to use ‘experts’ from so-called independent think-tanks like IPA, that refuse to disclose their funding sources. I suspect that those “think thanks” are often fronts for special interests. Cash for comment takes many forms.Unfortunately the ABC also still sees itself as a branch office of the BBC and CNN rather than an independent and involved media organisation in our own region.

    But for all of its shortcomings, what an awful and barren media landscape we would have without the ABC.

    The last people who should be lecturing the ABC about performance and bias are Tony Abbott and the Murdoch media.

  •  John Menadue. Undiplomatic, politically partisan – and wrong!

    Julie Bishop has decided to take on the President of the United States over his comments to an audience at the University of Queensland on the state of the Great Barrier Reef.

    It shows immaturity to jump in so quickly to defend what I think is the indefensible by attacking others without any real basis.

    It is also an example of how the Liberal Party sees the alliance between us and the US, not as an alliance between our two countries, but as a special relationship between the Liberal Party of Australia and the Right Wing of the Republican Party in the US.  Such behaviour does great damage to Australia’s long term relationship with the US

    In attempting to rebut President Obama, Julia Bishop said ‘Of course the Great Barrier Reef will be conserved for generations to come. And we do not believe that it is in danger.’ Yet Australian experts on the subject tell us quite clearly that the reef is in real danger.

    • Ove Hoegh-Gulberg, the Director of the University of Queensland’s Global Change Institute, said that President Obama was ‘right on the money. … He is stating the facts … the reef has already shrunk by half in 30 years, with climate change a factor in the retreat.’
    • Charlie Veron, the former Chief Scientist at the Australian Institute of Marine Sciences, said ‘In the long term, that is the whole of this century, we are going to have the Great Barrier Reef slaughtered … if carbon dioxide emissions keep trending as they are.’
    • Dr Jon Brodie, the Chief Research Scientist at James Cook University said ‘Julie Bishop’s comments contradicted the government’s own report on the state of the reef. … The report found the reef to be in poor condition and the outlook is for continuing deterioration … it’s obviously in danger. … Under the government’s 2050 action plan, the reef will continue to decline.’

    The clear error by Julie Bishop on the Great Barrier Reef follows a pattern of climate change denial by Tony Abbott and the government.

    This undiplomatic response by our Foreign Minister and poor action on policy is becoming part of a pattern as I set out in my blog of 18 November ‘Julie Bishop-substance and style’.

    • In the last Coalition budget she was responsible for the largest reduction in overseas development aid by this country. It was the largest cut in the budget.
    • She unnecessarily sided with Japan against China over the Senkaku/Diaoyu Islands.
    • She sided with Israel against overwhelming world opinion over the continuing expansion of settlements by the Israeli Government.
    • Her megaphone diplomacy over MH17 achieved very little. It was the Malaysian Government that negotiated with the rebels in the Ukraine and secured access to the crash site, the return of most of the bodies and the recovery and return of the black boxes.
    • Despite the posturing in the Security Council on Ebola, we have been very slow,selfish and restrictive in our response.

    And now we are seeing the most diplomatic and gauche mistake of all with the attack on the President of the US.

    I would be confident that this extraordinary  attack  on President Obama would be against the advice of the Department of Foreign Affairs and Trade. It  very likely came directly from the private offices of Tony Abbott and Julie Bishop.  The PM would probably not want to do the job himself, so the media obsessed Foreign Minister  obliged.

    Despite misstep after misstep the media has given Julie Bishop a very free run. Perhaps the media is giving her this free run because it feels guilty about the unfair treatment that it dealt out to Julia Gillard!.

  • John Menadue.   Julie Bishop – substance and style

    According to opinion polls, Julie Bishop’s standing has climbed. In Harper’s Bazaar she has been described as the Woman of the Year. It is suggested that she could be a leadership contender…

    But how much substance and how much achievement has there really been. How has Australia’s foreign policy interests been advanced?

    Before looking at the performance, it is worth recalling that no Australian Foreign Minister could be said to have failed in recent decades, from Gareth Evans to Bill Hayden to Alexander Downer, Stephen Smith, Kevin Rudd and Bob Car. One advantage that Foreign Ministers have is that there is really no domestic constituency that they are likely to upset. At the same time there are numerous media and photo opportunities to do newsworthy things like running around Beijing. The media which is so often about politics and spin rarely looks beyond style and presentation.

    In passing I think there were more real achievements by Gareth Evans than any others.eg peace in Cambodia.

    In terms of the first twelve months of the Abbott Government and Julia Bishop’s performance in foreign policy, what can we deduce?

    The largest cut in the May 2014 Budget was in Julia Bishop’s portfolio. Overseas development aid was cut by 21%. What a failure!

    Julia Bishop unnecessarily involved us in the dispute between Japan and China over the Senkaku/Diaoyu Islands. She said “China doesn’t respect weakness” and that “Australia will stand up to China to defend peace, liberal values and the rule of law”. Perhaps that was just an inexperienced Foreign Minister but hopefully she now reflects that we should stay out of that dispute.

    Julie Bishop has announced a “signature initiative” to promote understanding of our region by supporting Australian undergraduates with internships in the region. She has called it a Colombo Plan in reverse. But there is a problem with this. What she has not explained is how those undergraduates will get jobs in Australia using their regional education and experience. We had a boom in Asian language training in Australia a couple of decades ago, but it fizzled because Australian companies would not employ Australians with Asian skills. As a result these young and Asian skilled Australians drifted away to take jobs in places like Hong Kong. Has Julie Bishop examined this serious problem of Australian companies and their unwillingness to employ people with Asian skills?

    There is no indication that Julie Bishop discouraged Scott Morrison in proceeding with his grotesque proposal to send refugees to Cambodia.

    The Rudd and Gillard Governments opposed the policy of the Israeli Government in expanding settlements in occupied Palestine. Last year Julie Bishop reversed that policy at the UN. 158 countries supported the UN’s call for an end to these settlements. Australia joined with eight other countries in abstaining from a vote.

    Julie Bishop made a name for herself in the recovery of bodies from MH17. She showed us her toughness although she didn’t quite use the rhetoric of “shirt-fronting”. But the real achievement in the recovery of bodies from MH17 was made by the Prime Minister of Malaysia whose government, without fanfare, negotiated directly with the Russian backed rebels in the Ukraine. As a result the rebels agreed to a train with refrigerated carriages carrying most of the bodies out of the crash area. The Malaysian Government also secured access to the crash site and the recovery of the black boxes. In the UN and elsewhere Julie Bishop, in association with the Dutch Foreign Minister, continued to attack the Russians but refused to deal with the rebels. It was good domestic politics in Australia but not helpful in assisting recovery from the crash site. The Malaysians really delivered when it mattered. Julie Bishop,despite the rhetoric,was really only a bit player.

    Julie Bishop and Tony Abbott were completely blind sided by the agreement on carbon pollution between the US and Chinese Presidents.. On this most critical issue,involving  the US, our most important ally and friend,we knew nothing. On such a matter of great substance Julie Bishop was asleep at the wheel. It tells us a lot!

    It is important to distinguish between style and substance.

  • Tony Abbott and the G20

    In the media in the past few days we have been overwhelmed by stories and photo opportunities from the G20 in Brisbane. It will take some time to sort out fact from spin. I have set out below some comments and opinions from observers. It provides a useful but only partial account by observers of the G20. I have not included any comments from News Corp publications. News Corp’s support of the government is entirely predictable.

    (more…)

  • John Menadue.  We pass by on the other side.

    We are one of the richest and most privileged people in the world but our recent performance on Ebola, foreign aid and refugees tells the world a quite different story.

    On Ebola, our response has been grudging and slow. We tendered one excuse after another. We moved quickly however to commit our military to combat again in Iraq and Syria. Our Medical Assistance Teams which we have deployed in humanitarian disasters like the typhoon Haiyan in the Philippines were ready to go to West Africa. They had volunteered and had vaccinations. The AMA urged us to get cracking. After a very lengthy delay the government decided to outsource our assistance. Our tardiness was in stark contrast to the response of countries such as the UK and the US. All the advice from experts was that the best way to address the Ebola outbreak was at its source. We knew that the medical and health facilities and hospitals in Liberia and other countries in the region were closing because the qualified staff were contacting Ebola and dying. Several hospitals were bereft of any staff. Healthcare in West Africa was near collapse but we delayed. Liberia has an income per head of $US454 p.a.; ours is over $US68,000. It is hard to recall a situation where our response has been so miserable.

    The UNHCR told us a few days ago that there were 13.6 million refugees displaced by the wars in Syria and Iraq. That is more than the combined populations of Sydney, Melbourne, Brisbane and Perth, our four largest cities. By our involvement in the war in Iraq we have contributed to this humanitarian disaster. But our refugee intake has remained unchanged at 13,750 p.a. Kevin Rudd had promised to increase it to 20,000 and Tony Abbott agreed before the last election. He then changed his mind and kept the quota at 13,750. If we adjusted our intake according to our population increase since the time of the Indochina refugee program, we would now be taking over 35,000 refugees p.a. which would still be quite small in relation to our migrant intake. Whilst the humanitarian tragedy in the Middle East escalates, we continue to turn our back.

    We are also ignoring our responsibilities as a wealthy country in overseas development assistance. In the last budget, the biggest cut in government spending was in overseas development assistance. We spend more on our cats and dogs than we do on ODA. At the same time that it cut funding for the poor of the world, the government kept in place a whole range of programs that advantaged the wealthy, such as superannuation concessions and subsidies to the mining industry.

    Surely we can do a lot better than this.

  • John Menadue. Media failure.

    Yesterday I posted a story from ‘a former ABC correspondent’ concerning cutbacks in ABC bureaus, particularly in our region. The post was entitled: ‘The ABC:soft targets and collateral damage’.

    Cutbacks at the ABC are a very serious problem and will prejudice Australia’s future in our region. So much of Australian media reflects the pattern laid down more than a century ago and remains heavily dependent on the US and the UK for news and views. These latest developments at the ABC are likely to worsen this dependence on North Atlantic media organisations.  I wrote a blog on this subject on 17 April last year.  Extracts from it are posted below>

     

    Compare the media reports today about bombings in Boston and Baghdad.

    We have a deluge of coverage in all media about three tragic deaths in Boston. Australian correspondents in the US have gone into overdrive with stories and pictures of horror and courage.

    Today we also have reports of a tragedy in Iraq, a situation we contributed to with our support for the invasion and occupation of that country. Tucked away on page 14 of the Sydney Morning Herald is a report that “at least 37 people had been killed … in nearly 20 separate attacks, mostly bombings” in Baghdad and five other cities. In this year alone, there have been over 1,300 civilian deaths from violence in Iraq.

    This contrast in reportage illustrates how our media reflects the pattern laid down more than a century ago and remains heavily dependent on the US and the UK for news and views. An outside and independent observer would conclude that Australia is an island parked off New York/Boston or London

    Even the minimal coverage of Europe in Australia, usually reflects the jaundiced views of English media about Europe.

    This geographical bias is at the expense of important news and comment about our own region. Unfortunately even the meagre regional coverage is often about the unusual, the exotic or the unpleasant.

    Consider the geographic bias of media coverage of some recent events in the last year. These included the extensive, but almost irrelevant coverage of the US Republican primary elections, the saturation of the US presidential election and the suicide of a nurse in the UK as a result of a prank by the Australian media about the British royals. In contrast there was  minimal coverage of some major issues and events in our region – the Chinese National Peoples’ Congress in November last year and the very significant general elections in Japan and in the Republic of Korea in December last year  Blink your eyes and you would have missed the elections altogether.

    But the significance of these events was and is profound in shaping our economic and security future. Just consider the current crisis on the Korean peninsula and how critical it is for China, Japan, ROK and ourselves. .

     

  • John Menadue. ‘No eulogy is equal to such a name’

    In a celebratory Mass for Gough Whitlam, Fr Ed Campion recalled the brief inscription to Machiavelli in the Franciscan Church of Santa Croce in Florence. ‘Tanto nomini nullum par elogium, 1527’.

    Look around and we see monuments to Gough Whitlam everywhere – Medicare, needs-based education funding, recognition of China, no-fault divorce, university education, land rights, an end to White Australia, and …….A eulogy may be superfluous

  • John Menadue. Australian business is ‘too risk averse’

    In August this year the Governor of the Reserve Bank of Australia, Glen Stevens, told a Parliamentary hearing that Australian companies were being ‘too risk averse’ by focusing on sustaining a flow of dividends and returning capital to shareholders rather than investing in future growth.

    Research by Credit Suisse shows that non-financial companies in the ASX increased dividends by $5 billion in the twelve months to June 2014 and cut capital expenditures by $7 billion in the same period. This month the Boston Consulting Group in a new report said that ‘Australian companies paid out twice as much in dividends as their global peers in 2014’. It also commented that ‘Australian companies have been increasingly paying higher and higher dividends over the last four years and therefore investing less over time in their businesses’.

    But these higher dividend payouts are only part of the story. Instead of investing in future growth major Australian companies are engaged in large scale share buybacks. Companies like Telstra, Suncorp and Westfarmers have all been handing back money to shareholders in buybacks.

    These trends in increased dividend payments and share buybacks suggest too much of a focus on short-term returns and lost opportunities for growth.

    A major driver of these increased payouts to shareholders have been executive pay schemes in which remuneration packages are linked to short term business performance and share options. The same phenomenon has been occurring in the US. In the Harvard Business Review of September 2014, Professor William Lazonick at the University of Massachusetts said

    ‘Five years after the official end of the great recession, corporate profits are high and the stock market is booming. Yet most Americans are not sharing in the recovery. … The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S & P 500 Index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings – a total of $US2.4 trillion – to buy-back their own stock. … Dividends absorbed an addition 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees. … The Chairman and CEO of BlackRock, the world’s largest asset manager wrote in an open letter to corporate America in March “too many companies have cut capital expenditure and even increased debt to boost dividends and increased share buybacks…. Why are such massive resources being directed to stock repurchases? Stock based instruments make up the majority of the pay of [senior] executives and in the short term buybacks drive up stock prices. As a result the very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity.”’

    The showering of shareholders with increased dividends and share buybacks is not helpful to the long term development of new capital investment and new jobs, but it provides enormous benefits to senior executives with shares or share options.

    It is called CEO capitalism.

  • John Menadue. Winners in the privatisation of Medibank Pte

    Many would expect that the 3.8 million members or policy-holders of MBP who are arguably the owners of the company, would be the financial winners in the proposed privatisation.

    But not a bit of it. Some of the 3.8 million members will seemingly get some preferential issue of shares. But it will be chicken feed. The two real winners by a country mile will be the numerous advisers to the float, and the senior executives of MBP.

    The once-off winners will be the financial and legal advisers to the float. Together with the brokers, underwriters and sub-underwriters, they will make a motza. Our super profitable and large banks will also make money in the marketing of the shares. The fees and charges by all these intermediaries will run into $50 m plus.

    The long-term winners will be the senior executives of MBP. They are big fans of privatisation.

    There are numerous precedents for the escalation of executive salaries that follow from privatisation. Take the most recent privatisation, Queensland Rail.  The rail company was sold in 2010 and the salary of the chief executive increased from $1.1 million to $5.1 million p.a. His job was largely unchanged, but his salary went through the roof.

    The managing director of MBP George Savvides is already paid $1.2 million p.a.  This is double the salary of our prime minister. Corporate governance analysts estimated that Savvides’ package will increase to about $5 million p.a. MBP’s two other senior executives are now paid $1.85 million p.a. It is estimated that their packages will increase to $3.2 million p.a. each.

    The chief executive, Mark Fitzgibbon, of a much smaller private health insurance company, NIB, has a salary of $1.2 million. But MBP is about four times larger than NIB.

    In the healthcare industry, the top earner is the chief executive of Ramsay Healthcare, earning $8.3 million p.a.

    The senior executives of MBP will be major beneficiaries of privatisation. The 3.8 million policyholders/owners of MBP will get crumbs.

  • John Menadue. Some personal reflections – a light has gone out.

    Gough Whitlam’s death has prompted a quite remarkable bipartisan response in the parliament. And rightly so, for he was a great parliamentarian for over 26 years along with 70 years of public life. His forum was the parliament rather than the street or the protest march.

    He had great respect for the parliament and that is why the subversion of the parliament in November 1975, when he had a clear majority in the House of Representatives, hurt him so deeply. But his bitterness was reserved for one person.

    Listening to the parliament and reading the other media comments I was again impressed by the diversity and the range of changes which he introduced and how institutions and people were changed by the Whitlam years. The comments were more a celebration of his achievements and his vision than a eulogy. He enlarged and expanded Australia in a way that we had not seen before and have not seen since.

    Tony Abbott described him as a ‘giant of our time’. Bill Shorten said that ‘the ALP has lost a giant’. Julia Gillard referred to his ‘highest political courage’. The Governor General called him ‘a towering leader’. Malcolm Fraser called him ‘a great Australian … a formidable opponent’. John Faulkner spoke to the Labor Caucus of ‘Gough Whitlam as a towering figure in our party and in our lives as long as I can remember’.

    Gough Whitlam’s remarkable three years in government didn’t come out of thin air. He spent twenty hard years in opposition thinking, planning and working for what he could do in government. It was a rigorous and tough apprenticeship.

     

    Political and personal courage

    In my blog yesterday I spoke of Gough Whitlam’s courage, energy and determination to keep going despite the enormous obstacles, particularly from the machine men in the ALP who were more interested in retaining power in the party machine than winning elections and helping those in need. Looking back, I pay tribute to his determination to stay the course when he had so many factional and selfish people around him. Sometimes he could have expressed his contempt for them more diplomatically, but they really were ‘f…wits’ as he often called them.  And there are still some remaining.

    One phrase I remember above all others about the problems in the ALP was that ‘the ALP is not a national party. It is a federation of six state parties.’ Progress has been made but the journey he commenced over 40 years ago in party reform towards a national party is still not completed.

    Mick Young

    Gough Whitlam and Mick Young were unlikely political soul mates but they needed each other. Mick Young was the ex-shearer who knew better than others what it was like to wash your hands in solvol. He was grounded amongst working people, knew the trade union movement well and was active in ALP branches. His feet were very much on the ground. He didn’t have great office systems, but his people and political skills were in his head. Gough said that Mick Young was ‘One of the greatest things that happened to the Labor Party when he became Federal Secretary and National Campaign Manager for the 1972 elections’.  Mick Young had commented that in the past in its campaigning, the ALP had more slogans than candidates! He knew of the dysfunction between the party organisation and the parliamentary leader. But he knew that even ‘It’s Time’ and market research would not prevail without the policy and the vision that Gough Whitlam supplied.

    ‘Dame’ Margaret and Family

    Through good times and bad times, ‘Dame’ Margaret and Gough were together. They had their differences as all strong-minded people would. But their love was deep and abiding. For months after Margaret’s death, Gough would invariably commence our conversation ‘Wasn’t that a great send-off for Margaret?’ Her death was a great blow to Gough.

    He remained close to and very protective of his sister Freda who after retirement as Principal of Presbyterian Ladies College became Moderator General of the Uniting Church of Australia. I recall that at Gough’s 80th birthday, Freda said that when Gough left home in Canberra to go to Sydney University ‘the light went out of the house’.

    Gough Whitlam and Malcolm Fraser

    Gough often said that he and Malcolm Fraser had not had a disagreement for thirty years. It was largely true. Malcolm delivered the Whitlam Oration in 2012 in Parramatta. He commenced the oration ‘Men and Women of Australia’. Gough and Malcolm expressed common views about the importance of an independent Australia within the US alliance. They campaigned together for a Republic, against media monopoly and in favour of land rights for indigenous people.

    I remember Gough saying to me in later years that Malcolm was a ferocious political opponent ‘but he never deceived me’. A few months ago Malcolm called on Gough at his Sydney office. He presented Gough with a copy of his latest book ‘Dangerous Allies’. He inscribed in the book ‘Dear Gough, with great respect and great affection, Malcolm’.

    Visits in later days and the bearer of the flame

    Quite separately and for several years, John Faulkner, Daryl Mellam and I visited Gough in his  office in William Street Sydney. Going to the office three days a week was a very helpful break from Lulworth. His staff, driver Michael, Aaron and Penny were great supporters and in the end, carers. Daryl Mellam invariably brought cupcakes that his sister had made with green and gold icing. I usually brought chocolate mousse although Cathy Whitlam said it wasn’t good for him and she had to wash the chocolate out of his shirt.

    I know that Gough particularly valued the regular calls by John Faulkner. Gough had a great affection and regard for John, whom he regarded as the bearer of the Labor flame. John usually obliged by bringing a few bottles of passiona which were very much to Gough’s abstemious taste.

    A secular treasure

    Excuse me for mentioning it, but when the Japanese emperor awarded me the ‘Grand Cordon of the Order of the Sacred Treasure’, Gough congratulated me but said ‘Comrade, you must understand that I am a secular treasure’.

    He meticulously planned Margaret’s funeral and his own. Having been a navigator in Ventura aircraft during the Pacific War, he asked Angus Houston, the then Defence Chief, whether a Ventura could be found to scatter his ashes over Sydney Harbour. Unfortunately, Venturas were no longer flying.

    Gough was determinedly secular; even though he proudly and often recalled that he had topped the examination in religious studies at High School but could not be awarded the prize because he was not a believer. He often described himself as a ‘fellow traveller’ in matters of religion. He was taken by Winston Churchill’s description of himself as ‘not a pillar of the church, but a flying buttress’.

    By introducing needs based funding for schools he did more to help the education of Catholic kids than priests or bishops ever did.

    He enquired frequently about my joining the Catholic Church. He was always interested and never hostile. He often said that ‘the Catholic Church is the big league”. He spoke to me a lot about matters of faith.

    He didn’t mind being confused with Saint Paul. At Fred Daly’s Requiem Mass he read the letter of Saint Paul to the Corinthians. The letter is one of the most moving and challenging in any language. It is quite beautiful. ’For now we see through a glass darkly; but then face to face: now I know in part; but then shall I know even as also I am known. And now abideth faith, hope, charity, these three, but the greatest of these is charity’. After the service a good supporter of Fred Daly ,who probably knew more about the Labor Party than the scriptures came up to Graham Freudenberg, Gough’s speech writer and said, ‘Mr Freudenberg, that was a great speech you wrote for Mr Whitlam’

    At Nugget Coomb’s funeral at Saint Mary’s Cathedral in Sydney, Gough said of Nugget ‘all Australians can say in the words of Paul’s letter to Timothy “Well done thou good and faithful servant”’.

    It can also be said of Gough Whitlam.

    May he rest in peace..

     

  • John Menadue. Farewell to Gough Whitlam, 21 October 2014

    Few public figures have left their mark on Australia like Gough Whitlam. I knew him for fifty years. He was the most exciting and challenging public person I have met.  Australians owe him a great debt for giving them new opportunities and linking the aspirations of working people with those of the university educated.

    For me two events stood out. The first was his letter to Richard Nixon at Christmas 1972 deploring the bombing of the people of Hanoi and Haiphong. The outrage of the Nixon administration was wonderful to behold. It was great to see that at last an Australian Government had and would express our own views.

    The second was the passing of Medibank/Medicare legislation in July 1974 after a double dissolution and a joint sitting of Parliament. That occurred after years of bitter and self-interested opposition by the medical profession. Medibank/Medicare, like the British National Health Service, has well and truly outlived its critics.

    After the dull, colonial and sexist years of Menzies, it was exciting to feel that at last Australia was an independent country, proud and confident. There was a sea change in the way we saw ourselves and the way others saw us.

    The achievements of the Whitlam Government were legion from ending conscription, recognition of China, needs based funding for all schools, Medibank/Medicare, equal pay and ending British honours. One significant reform which is not often recalled was the abolition of tertiary education fees. Many professional women still remind me of that because, in poor families, often it was only the son who would be sent to university. Gough Whitlam believed that giving educational opportunities to all, particularly women and poor Catholic kids, promoted social mobility and social solidarity. He described education reform as his “most enduring single achievement”. I think Medicare was just as good.

    Almost single-handedly he reformed the structure of the ALP to rid it of the “faceless men” who controlled it from outside caucus. After becoming leader of the ALP in 1967 he created an exciting new range of policies that Australians embraced with increasing enthusiasm. Effectively, he wrote the “New Testament” of the ALP.

    When reforming the ALP, “crash through or crash”, he was saved several times from expulsion by the support he had in the wider community. His goal was to break the control of union and party officials who had little interest in political power. “Only the impotent are pure” he said! He knew that only the parliamentary leader could break the grip of self-serving officials.

    What I found remarkable was his courage and determination to keep going despite the enormous obstacles. I once counselled him against taking too much overseas travel. “Comrade” he said “if I am going to put up with the f…wits in the Labor Party, I’ve got to have my trips”. At the time I thought he was being self-indulgent, but in retrospect I can much better appreciate the pressure he was under from archaic elements of the party.

    The Whitlam Governments are criticised for their economic management. There is some merit in this criticism. Too much was attempted too quickly. But after 23 years in opposition that was not surprising. His governments produced one surplus out of three budgets. During their tenure, Australian government net debt was zero, net foreign debt was minimal and domestic savings were at record levels. However, after the first oil shock, our inflation rose higher than in other countries. Wage increases were excessive. Some policies were clearly unwise, but there was never any illegality or bad faith.

    Gough Whitlam, like Paul Keating and Kevin Rudd had some testy times with Ministers and Caucus but only Kevin Rudd was to pay a high price for it.

    The dismissal of the Whitlam Government had little to do with its performance. Three months after Whitlam’s election victory in December 1972, Senator Withers, the leader of the Liberals in the Senate denied the legitimacy of the Whitlam Government. Withers warned: “the Senate may well be called upon to protect the national interest by exercising its undoubted constitutional power”. He said that the election mandate was ‘dishonest”, that Whitlam’s election was a “temporary electoral insanity” and that to claim that the Government was following the will of the people “would be a dangerous precedent for a democratic country”. More Bills were rejected in the Senate during Whitlam’s three years as Prime Minister than in the 72 years since Federation. Not content just to engineer the dismissal of a democratically elected Government, leading figures set about one after another to deceive the Prime Minister.

    Since then, criticism of the Whitlam Government has been largely designed to exculpate those associated with the horrendous dismissal of an elected government. To justify this foul deed, supporters of the coup keep harping on the illegitimacy and incompetence of the Whitlam Government. These supporters will never concede that his government fairly won two elections. Conservatives piously extol the importance of tradition and respect for institutions. They preach about democracy, free elections, the separation of powers and the independence of the judiciary. But they throw all that aside to hold onto power and privilege. Whitlam was naïve to trust them- as we all were! As more of the secrets of the dismissal are revealed like the clandestine meetings of High Court judges with the Governor General so is Gough Whitlam more and more vindicated.

    Gough Whitlam showed that politics does matter and that it can make a difference. We owe him an enormous debt. He showed that reform is hard, but possible, He shaped modern Australia. His vision and hope is still with us.

    John Menadue was Private Secretary to Gough Whitlam 1960-67. He was Secretary of the Department of Prime Minister and Cabinet under Gough Whitlam 1974-75.

     

  • John Menadue. Post-script from France.

    My wife and I and quite a few members of our family, have been summering in France for a week or two.

    We have enjoyed the history, the architecture and the beauty of the countryside. Not for nothing, France has 37 sites inscribed on UNESCO’s World Heritage list. Many other Australians also feel the attractions of France. We heard a lot of Australian accents in Paris.

    But this year France seemed chillier and I am not just referring to the weather. I sensed a growing malaise particularly with unemployment stuck at around 12% and double that for young people. I did not sense any confidence that France was going to break out of its malaise.

    France is the world’s largest destination for tourists, with over 90 million a year. The number is growing and that pressure of numbers shows. Tourist numbers are placing great stress on the major tourist attractions. In all previous years, I visited the Louvre, but not this year. Large and aggressive tour groups have put me off. On our return through London, I found the National Gallery a pleasant experience. Paris has an excellent Metro but car congestion is a growing problem.

    The Presidency of Francois Hollande is proving lack-lustre and bland. He has an approval rating of 18% and seems confused as to what he could do to revive the economy and his own standing. He has changed his Prime Minister. Like other Europeans he hopes that the German economic engine will help power France and the rest of Europe, but the German economic engine has slowed down considerably.

    Whilst we were in Paris, Air France was continuing its two-week strike brought on by its pilots. The government seemed nowhere to be found, or interested in taking action. France’s sclerotic labour market needs a shake-up, hopefully without doing too much damage to the French social model that I find attractive – that people work to live and not live to work.

    Many French people are voting with their feet with an estimate of 2.5 million now living abroad, with 600,000 living in London. But I suspect that these are temporary exiles who still feel very patriotic about France.

    The biggest social and political issue in France is growing xenophobia over immigration and the resulting embrace of the very right wing National Front. The NF has been growing alarmingly. It has now won two Senate seats in France for the first time ever. There are 14 municipalities with NF mayors. If present trends continue, the Socialists will be eliminated in the first round of the next presidential election. The final round would then be a run off between the NF and the conservative party of the right, the UMP.

    The European Union has been one of the great successes of the second half of the 20th Century. What a contrast the present united Europe is compared with the centuries of European wars that preceded it. But the relatively free flow of people in Europe as part of the European Union has put great strain on the social fabric of Europe particularly at a time of low growth and rising unemployment. This concern about people movements was also shown a few days ago in the UK with the remarkable success of the UK Independence Party which wants to take the UK out of the European Union. The two by-elections in the UK produced an avalanche of support for UK IP.

    Unlike Australia, the major parties of France and the UK have not joined the rush to exploit xenophobia but present political trends suggest that they will need to make adjustments perhaps by introducing immigration quotas or some form of restraint. Hopefully, this can be achieved without great hardship and without prejudicing the European Project.

    With its traditional high rates of employment growth, Germany is handling the flow of people, including asylum seekers across its borders, with greater success than France. Germany also doesn’t have the problem which France has with former colonies in Algeria and Morocco. Increasingly Germany is being called on to provide greater leadership in Europe. But because of its social and political history, Germany is likely to be a reluctant leader. Importantly if it is to show greater leadership it needs a strong partner. France has traditionally been that strong partner, but France’s influence and standing is shrinking.

    The movement of people in Europe is just one part of a world-wide phenomenon of people on the move. The events in the Middle East are only intensifying that problem. There over 50 million displaced people and refugees in the world and the number is rapidly increasing. Almost all countries are finding that they cannot remain immune to this world-wide movement of people across national borders. Along with climate change, people movements are the two major global problems that we face.

    The coming winter looks like being much chillier in France and Europe.

     

  • John Menadue. Asylum seekers – institutionalised cruelty, the banality of evil and immorality.

    You might be interested in this repost.  John Menadue

    The recent statement by the Australian Catholic Bishops on asylum seekers says ‘The current policy has about it a cruelty that does no honour to our nation … Enough of this institutionalised cruelty … We call on the nation as a whole to say no to the dark forces which make these policies possible.’

    In her book ‘Eichmann in Jerusalem’, published in 1963, Hannah Arendt refers to the ‘banality of evil’. Her thesis is that Eichmann was not a fanatic or sociopath, but an extremely stupid person who relied on cliché rather than thinking for himself and was motivated by professional promotion rather than ideology.  She says ‘The sad truth is that most evil is done by people who never make up their minds to be good or evil’.

    In his post in this blog on February 17, reposted below, Hugh Mackay speaks of ‘international brutality … why not call our asylum policy what it is – immoral?’

    Our policies towards asylum seekers – cruel, evil and immoral- depend on our first dehumanising and then demonising asylum seekers. They are not like us and do not deserve empathy and protection.  It is an attempt to dull and chloroform our consciences.

    • Asylum seekers are illegals and akin to criminals. We launder our language to hide the cruelty and brutality of our policies. Even the Department of Immigration now uses the term ‘illegals’ which they are not.
    • Asylum seekers are so devoid of humanity that they would even throw their children overboard.
    • Journalists are excluded or deterred from visiting detention centres because we might hear of the hopes and fears of vulnerable people.
    • How can we have sympathy for asylum seekers who buy the services of people smugglers?
    • They are Muslims.
    • They are ungrateful foreigners who riot in detention centres.
    • They commit crimes in the community and should be treated and listed like paedophiles.
    • They bring disease and wads of cash.
    • They throw documents overboard and don’t tell the truth.

    As this day by day process of demonization proceeds the spark of humanity, decency or the divine in each of us is snuffed out. We are made to look foolish and soft if we respond to “our better angels”.

    Our leaders are not just determined to dehumanise asylum seekers but play mind games with us by suggesting government policies are designed to save people drowning at sea. If only there was the smallest bit of truth in this the government would be sending out ships to rescue desperate people at sea and ministers would be waiting hopefully for the UNHCR or the Nobel Prize committee to make a humanitarian award.

    Through political spin and by good people staying silent, we are losing our moral compass on what is right and decent. As Lord Lane, the former UK Lord Chief Justice put it ‘Oppression does not suddenly stand on the doorstep with a toothbrush moustache and a swastika armband. It happens step by step.’

    It is happening despite our asylum “problem “being minor compared with other counties and particularly poor countries like Pakistan.

    In allowing evil and cruelty to win our political terrain we could  recall the words of Pastor Martin Niemoller who was imprisoned by the Nazis ‘First they came for the communists and I didn’t speak up because I wasn’t a communist. Then they came for the Jews and I didn’t speak up because I wasn’t a Jew. Then they came for the Catholics and I didn’t speak up because I wasn’t a Catholic. Then they came for me and by that time there was no one left to speak up for me.’

    We don’t seem to care that perhaps in a decade we will be as ashamed of our present asylum and refugee policies as we are now for what we did  to our ‘stolen generation’.

    Where is our anger and concern?

    I recall a speech some time ago by Bill Moyes, the former host in the United States of the Weekly Public Series on PBS. He said ‘What has happened to our moral indignation. On the heath, King Lear asks Gloucester ‘How do you see the world?’ and Gloucester who is blind answers ‘I see it feelingly.’  I feel it feelingly also.  The news is not good these days. I can tell you though that as a journalist I know the news is never the end of the story. The news can be the truth that sets us free – not only to feel, but also to fight for the future we want. And the will to fight is the antidote to despair; the cure for cynicism … What we need is what the ancient Israelites called hochma – the science of the heart – the capacity to see, to feel and then to act as if the future depended on you.’

    And it does depend on you and me.

    We are acting cruelly and immorally. Evil now has an everyday face. But we pretend it is not us. Yet the opinion polls tell us that it is us – that we want to treat asylum seekers this way. Scott Morrison tells us ‘I get so much encouragement when I walk through Cronulla, go down to the beach or up to Miranda Fair’.

    Hannah Arendt said ‘The sad truth is that most evil is done by people who never make up their minds to be good or evil.’  That “sad truth” is happening in Australia today. We are standing by and letting it happen.

     

  • John Menadue. Nelson Mandela’s leadership.

    You might be interested in this repost. John Menadue.

    In all the tributes and stories about Nelson Mandela, there was one that caught my attention. In his book ‘The Long Walk to Freedom’ he said:

    ‘A leader is like a shepherd. He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realising that all along they are being directed from behind.’

    What I think he was saying is that leadership is a set of activities in which the South African people as a group were persuaded to make necessary but difficult decisions and being courageous enough to pursue them until a resolution was found. It was a collective effort. There was no messiah out in front. They were in it together. Nelson Mandela suffered on Robben Island and the young activists were gunned down by white police in Soweto. The pain was shared.

    Nelson Mandela was not about management – coping with complexity and maintaining equilibrium. For him, leadership was much more than that. It involving creating disequilibrium and forcing the South African people out of their comfort zone. He led South Africans until almost everyone believed that change was both necessary and possible. In the end it was change that almost everyone owned. It was as if in their final victory they could say to each other ‘we did it ourselves’. That was the inclusive type of leadership that he pursued.

    Nelson Mandela showed that leadership is not the same as authority. After all you can’t exercise authority in prison for 27 years Authority is usually bestowed or is positional. It is not always earned. A good example is the Bishops in our churches, or the inherited presidency of such people as George Bush. Authority by itself is designed to keep the organisation or country on even keel. An authority figure observes the ceremonials. Such an authority figure usually discourages people who challenge or ask the hard questions. Authority figures like the group to be relaxed and comfortable.

    True leadership is quite different as Nelson Mandela showed.

    • It encourages honest and hard questions. It helps the group to clarify its problems and the way to proceed – like addressing climate change in our time.
    • It is not naïve or dismissive of the problems and risks.
    • It is prepared to create disequilibrium knowing that people don’t change in comfort zones.
    • It doesn’t attempt to solve the group’s problems or make decisions ahead of the group. The nimble ones up front may set the pace, but a solution is only possible when the group as a whole catches up. And that takes time.
    • It doesn’t get lost in detail or attempt to micro-manage.
    • It recognizes that mistakes will be made and that remedial action will be necessary to get back on course.
    • Supporters must be honest and trust-worthy. Ciphers who cling to the old networks and clubs are no help.

    Leadership is also not the same as charisma. Bin Laden had charisma, but he was mad.

    Nelson Mandela gave us inspired leadership with few of the trappings of authority.

    The most moving example for me of his leadership was the celebration of the victorious Springbok rugby world cup team in 1995. Standing with the South African captain, Francois Pienaar, he wore the Springbok jersey and cap. South African Rugby was at the core of apartheid with racially selected teams and refusal to play other teams that were racially integrated. At the world cup and with one gesture of reconciliation he cleansed South African rugby of its awful past. Few could do it with such simplicity and credibility. Words were not necessary. Or as Saint Francis put it “only use words as a last resort” Who could deny a man who sacrificed so much for racial equality?

    It was leadership not authority that won the day. And a leadership that was prepared to forgive but never forget.

  • John Menadue. Insiders and Outsiders.

    You might be interested in this repost. John Menadue.

     

    As social beings, we usually like to be part of the group, an insider. We are cautious about being outsiders, on the periphery. Yet being outsiders has some real advantages.

    Growing up in country towns in South Australia, I felt what it was like to be an outsider. As the son of a Methodist manse, I often felt an outsider in the socially conservative country towns of South Australia where we lived. I was able to join the group however through sport. As a university scholarship holder I also felt different to those in the mainstream. I felt I had to work harder so that I wouldn’t lose my scholarship.

    At the age of 41, working for Malcolm Fraser, I felt very much an outsider. But by that time I found I didn’t really care. I vividly recall a lengthy evening discussion at the Lodge in the early days of the new Liberal Government with Malcolm Fraser and senior members of his private office. The evening was informal and quite friendly, but I had a strong sense that I didn’t belong. But I didn’t feel perturbed as perhaps I would have earlier in my life. Belonging, being an insider, was no longer so important. It was transforming, that if push came to shove I knew that I could survive as an outsider, not comfortably but I could manage.

    As a board member of Qantas and Telstra, I felt the strong pressure to be one of the ‘club’ with my eye fixed on re-appointment. That caused problems and disagreements with the boards of both organisations. But I felt content to be an outsider and as far as possible be my own self.

    I remember many years later at a social gathering I was asked by James Strong ‘how many boards are you on’. It was not a subject which I had ever asked myself but it suggested to me the importance placed on being an insider, being in the directors’ ‘club’.

    I have never felt an insider within the Catholic Church of which I have been a member for over 30 years. In all that time only one Catholic has ever asked me what it was like growing up in the Methodist Church. I am not one of the Irish tribe. But I am content. I often rationalise to myself that being an outsider gives one a perspective that insiders do not have. Popes and the Catholic hierarchy have lived almost their entire lives within institutions of the Catholic Church. This cultural grip is a particular problem for Catholic clergy. Invariably they are brought up in a Catholic home, attend a Catholic school, join a Catholic seminary and then are ordained as celibate priests to serve for the next 50 years. It is hard to break free of the cultural grip of that upbringing. Some do but many don’t.

    The Polish have a proverb that the visitor sees in ten minutes what the host does not see in ten years. The Chinese have a proverb that the mountain is seen best from the plain.

    There are advantages in being an outsider, even if uncomfortable from time to time.

    John Menadue

  • John Menadue. Reform of our banking sector.

    In my blog of May 30, 2014, ‘Are our bankers listening or caring?’ I drew attention to a conference in London on ‘Inclusive Capitalism’.  At that conference the Governor of the Bank of England and the IMF Chief both said that bankers regarded themselves as different and not bound by the need for economic and social inclusion that is essential in a modern society. Both the Governor and the IMF Chief said that the actions of the banks were excluding them from mainstream society.

    Just look at the combined salaries of our four bank CEO’s, $35 m last year to see the validity of those comments

    Money and finance are critical in a modern economy and society. But is the financial sector making a social contribution to match its size, profitability and very high executive salaries?

    Our four major banks made a combined profit of over $27 b last year. They are the most profitable in the developed world thanks in part to government guarantees and lender of last resort guarantees. It is not all due to the skill of our bankers. Australia has a population of only 25m But the Commonwealth Bank of Australia has a market capitalisation that is more than Goldman Sachs or American Express

    The global savings glut in the 1980’s was fuelled by China keeping its exchange rate artificially low and its staggering trade surplus. This created the condition that encouraged US banks to sell more risky products to increase their returns. We saw dubious new ‘products’ like packaged sub-prime mortgages and various “derivatives”. There was excessive profiteering and excessive salaries by dealers.  The selling of shonky financial products out of New York gave us the GFC.

    The financial sectors in many countries have become so large and powerful that governments find it hard to control them. They are too big to fail. So governments inevitably step in to prop them up and in the process reward those who take excessive financial risks. No-one went to goal in the US, but millions of US citizens lost their homes and their savings. .

    In 2001, the Australian financial sector accounted for about 9% of our GDP and less than 4% of our total employment. A decade later our financial services sector had grown to 11% of our GDP. Has there e been an increase in social value to match this growth? I doubt it.

    A lot of Australian business is focused on rent seeking through lobbying rather than real wealth creation. Negative gearing and the discount on capital gains taxes which largely benefits the wealthy are funded by the banks. They have also lobbied successfully to wind back consumer protection in superannuation advice. With their lobbying and networks of influential business and political colleagues they are very powerful.

    Most of the business economists we see on television or read in our newspapers are employed by the banks. They are not likely to side with consumers against the banks in their rapacious fees for superannuation advice or the conflict of advice that banks exploit to the cost of clients; Most of our business economists that we see and hear so much of are caught up in the bank drag net.

    In 1972 Professor Tobin proposed a tax to ‘throw some sand into the wheels of international markets and to reduce speculation’. But the problem was how national governments could impose an effective and a comprehensive tax on international transactions.

    However eleven leading countries in the EU have now signed on to developing by 2016 a financial transactions tax to raise money but also to limit risky market speculation. Good luck!

    The G20 meeting in Brisbane in November will be also considering higher capital requirements for the banks to strengthen their balance sheets.  These increased capital requirements would also require the amount of capital to be adjusted according to the riskiness of the bank’s assets. In principle this should remove the financial incentive to back risky investments.. Also on the ‘too big to fail’ problem the authorities are seeking to ensure that while deposits are guaranteed, the value of bank shares are not. In other words shareholders cannot be expected to be bailed out in the future and that will also mean that executives that destroy shareholder value will be dismissed and their stock options being worthless.

    These reforms would need to be carefully managed. For example the Europeans are worried that if the repair of bank balance sheets too quickly it might lead to a drying up of bank lending and so damage the fragile European recovery.

    The interim report of the Financial Systems Inquiry made some useful suggestions but major concerns are likely to continue. Three of the five members of the inquiry are former senior bankers. David Murray was CEO of the CBA for 13 years. What do they know of banking who only banking know! There must also be a major governance concern when RBA Governors and Treasury Secretaries join major bank boards after leaving office. Three have done so.It all sounds very incestuous.

    We have a long way to go in banking reform. The biggest obstacle will be the banks themselves and the powerful networks they have constructed.

  • John Menadue. Stuck in a closed information loop

    Conservatives who read and listen to News Corp media have a problem. They are encouraged to believe that the world is really like News Corp says it is. The inevitable result is a loss of reality.

    Paul Krugman in the New York Times on September 23 wrote of the problems of right-wing Republicans who keep complaining about the lazy jobless. He said

    ‘In a nation where the Republican base gets what it thinks are facts from Fox News and Rush Limbaugh, where the party’s elite gets what it imagines to be policy analysis from the American Enterprise Institute or the Heritage Foundation, the Right lives in its own intellectual universe, aware neither the reality of unemployment nor what life is like for the jobless. You might think that personal experience – almost everyone has acquaintances or relatives who can’t find work – would still break through, but apparently not.’

    That closed information loop also operates extensively in Australia through the same News Corp. Australian conservatives are encouraged to think that the unemployed are dole-bludgers, that Muslims are terror suspects and that poor people don’t need to drive cars.

    News Corp says in its outlets that the war in Iraq was justified and that climate change is nonsense. They are probably the two most important issues of the last decade. On both News Corp has been on the wrong side of history.

    In the short term conservatives get a ‘sugar hit’ out of reading The Australian, The Daily Telegraph, The Courier Mail and The Adelaide Advertiser, but in the long term they become divorced from reality.

    These publications are not as extreme as the old Pravda, but rusted-on party supporters feel affirmed in their ideological correctness. But gradually they come to the view that they are being told nonsense and that the world of political unreality does not match their own experience.

    As Daniel Moynihan, the former US Senator said, ‘everyone is entitled to their own opinions, but no-one is entitled to their own facts’. And News Corp keeps pushing opinions of issues such as climate change denial and pretends that they are facts. Scientific advice is overwhelmingly telling us that climate change is occurring and that human activity is responsible for that change. But News Corp keeps telling its conservative readership that climate change is nonsense.

    Think tanks, like the Institute of Public Affairs adds to this closed circuit information loop. The IPA is secretly funded, apparently by big Tobacco and the foreign miners, but pretends it is an independent and intellectually honest think-tank. Just like News Corp it is a propaganda vehicle which helps conservatives to affirm their view of the world.

    In the long term, ideological institutions like News Corp who feed into and from their ideological base do a great disservice not only to serious conservatives but also to the long-term interests of a diverse and informed community.

  • John Menadue. Great Teachers

    There has been a lot of recent comment about the importance of good teachers; how they can be recruited, trained and rewarded.

    Let me tell you about two teachers who turned my life around. Many of us have had such experiences with great teachers.

    Professor W.G.K. Duncan at Adelaide University taught me Political Science in 1958. I was used to lecturers and teachers presenting facts and interpretations for me. I would write down my lecture notes with the intention of reproducing them at examination time. I was a passive learner. But in WGK, I had a lecturer who asked question after question. I found it very frustrating for the whole first term. What was this fellow all about? He wouldn’t tell me what was correct, right or wrong.

    Should inheritance or property have any special rights in a democracy? How do we draw a line between individualism and collectivism and so on? In all these carefully crafted questions, he never provided me or other students with anything that looked like an answer.

    It took me a whole term to get over my frustration and irritation with him. But it was brilliant and challenging teaching. There is a kernel of truth to be found, but we have to work to get inside the shell to find out what it is. But once we find it, the truth is our own. I found that exploring, challenging and finding answers is where life’s energy comes from. Unknowingly WGK had helped me draw the link between social justice and faith which I had learnt in the Methodist manse of my father.

    WGK’s lectures were transforming.  He motivated me to think for myself. Both my head and heart were engaged. His own identity was clear and I felt a connection to it.

    There was also an earlier experience with a head master at Naracoorte (SA) High School in 1949. My family were Methodist improvers, but not particularly academic. My mother never went to university and my father never went to high school.

    I coasted along as a student, played a lot of sport and sitting comfortably in the lower half of every class. My father enquired about a job for me as a PMG linesman or bank teller.

    In my Intermediate Certificate year, the head master Alex McPherson decided that our examination class didn’t have a sense of urgency and direction. In effect, he became our teacher in almost all subjects for the last term. He was determined to get good results for us and the school in the external examinations the Intermediate Certificate.

    The change for me was dramatic.  McPherson was so enthusiastic and dedicated, even fearsome. He carried us with him. We respected him. He was known around the school as the ‘Iron Duke’. He shook us up. He pushed himself to the limit and expected teachers and students to do the same. His commitment to me and others was infectious. Dull subjects came to life. He showed us how the area of a circle, the formula ‘Pie R squared’ could be demonstrated by cutting the circle into thin slivers, patching them together to make a rectangle, which was easily measured. He challenged me when I said that ‘the sun rises in the East’. He asked me how that could be when the earth moves around the sun and not vice versa. He clearly loved his subjects and he also respected and loved his students.

    Alex McPherson stirred and enthused us. He was a colourful and charismatic teacher who cared for us but demanded a lot from us in return.

    To my great surprise, I got good results in the Intermediate Certificate year. I learned for the first time that I had reasonable ability and that if I applied myself I could get good results.  Most importantly I learned that when it all came to push and shove, any success was basically up to me.That lesson stayed with me in later education and in my career. When doubts arose, I recalled my experience with Alex McPherson.

    WGK Duncan and Alex McPherson both turned my life around. They both worked in the public sector and as you would note from their names they were both Scots. They were great advocates and exemplars of public education. They were both great motivators and leaders. They loved their students and their subjects.

    We all need teachers like them!

     

     

  • John Menadue. The dubious trade deal with Korea

    In earlier blogs – See July 6, 2014 ‘Turbocharging our trade or mainly hype’ – I drew attention to the exaggerated benefits of bilateral free trade agreements. We now have 7 of them with more under negotiation, including with China and two signed but not yet in force.

    These FTAs are third-rate in promoting trade compared with multi-lateral agreements.

    The recent September Report of the Joint Standing Committee on Treaties on the FTA with Korea confirms my doubts about the net benefits of these arrangements.

    Peter Martin in the SMH of the 5th September 2014 said ‘A government dominated investigation of the proposed Australia-Korea Free Trade Agreement damned it with faint praise saying its benefits are “minimal” and that the intellectual property provisions lack “recognition of the broader public interest”.’

    Peter Martin added further ‘The unusually luke warm endorsement of the committee headed by Liberal National MP Wyatt Roy reflects concern about the incorporation of so-called investor-state dispute settlement (ISDS) mechanisms.’

    The two ALP members of the committee and the Green member said that they could not support the agreement at all.

    Doubts about FTAs feature in the Report which said ‘The World Trade Organisation cautions that, although such agreements can complement the multi-lateral trading scheme there are a number of concerns.’ The Report then elaborates on these serious concerns like trade diversion and confusing country of origin rules.

    The Report noted that ‘The Productivity Commission found that commercial benefits for Australian businesses from bilateral Free Trade Agreements were limited as the agreements did not address the non-tariff barriers that prevented market access.’

    The Report queried the economic modelling of the likely benefits to the Australian economy of the agreement with Korea. The Report noted ‘that the Committee’s attention had been drawn to the Productivity Commission’s findings that the general equilibrium model used to establish the figures is generally over-optimistic – overstating the gains and underestimating the losses.’

    On investor-state dispute settlement arrangements the conclusion of the Committee was equivocal. It said ‘The evidence suggests that the escalated use of ISDS mechanisms has produced unintended consequences for governments globally …’ The Report noted that the Department of Foreign Affairs and Trade had advised that Korea would not have signed the agreement without the ISDS mechanism.

    There will undoubtedly be some important benefits for particular Australian export sectors but on balance the report is suggesting that considering the downsides and the over-optimistic estimates, the benefits will be marginal.

    This agreement with Korea like the agreement with Japan received acclamation from Tony Abbott and Andrew Robb as a great break through. This all party committee of the parliament has given it a very cool reception

    In his chairing of the G20 meeting in Brisbane in November the Prime Minister would best serve our trade interests if he can persuade other countries to put life back into the Doha Round of multilateral trade negotiations that have lost their way. Our interests are best served in multilateral trade negotiations, as difficult as they may be, rather than spending so much time obtaining marginal benefits from bilateral free trade arrangements which are really preferential rather than free trade deals.

  • John Menadue. Postcard from Copenhagen – I went to the ‘wrong’ church.

    I fronted up for Mass last Sunday – or so I thought. The web had described the cathedral as small case ‘c’ catholic rather than upper case ‘C’ Catholic. It was the Protestant/Lutheran cathedral in Copenhagen. I missed the Eucharist but it was a moving encounter with my ‘separated brothers and sisters’.

    In 1536 when the absolutist Danish monarchy decided to follow Luther rather than Pope Paul III, they arrested the Roman Catholic hierarchy and almost swept the state clean of Roman Catholics. In a population of only five or six million in Denmark, there are now only about 40,000 Roman Catholics, mainly foreigners. The historic old Roman Catholics churches, such as the 12th Century UNESCO listed cathedral in Roskilde, became Lutheran or Protestant churches.

    But I found the Sunday morning service instructive. The organ music and choir were superb. The congregation sat for hymns and stood for prayers. In the pew behind us sat Queen Margrethe II of Denmark. She was dressed informally in jumper and skirt, with no obvious security.

    The sermon or homily was preached from a side pulpit – those at the front had double seats, so we could switch our view to the back. With the sermon in Danish, I obviously couldn’t understand much of it but it gave me time to think how offensive it has been that the Christian churches have been divided for so long.

    The first major break was in 1053 as the Roman Church, on quite trivial issues, waved farewell to the Eastern Church based in Constantinople. This split was confirmed in blood in 1204 when the Fourth Crusaders under the Pope sacked Constantinople.

    The early Christian communities had been established in what is now Greece and Turkey, but we have been divided ever since.

    Then came the great divide in Northern Europe with the Luther Reformation in the 16th Century. Luther was right on two basic issues. The first was the corruption and selling of indulgences in the Catholic Church particularly under Pope Sixtus IV and Alexander VI. The second was the doctrinal insistence by Luther that believers were sanctified by faith and not by good works, although there was common agreement that good deeds should follow faith. The Augsburg Declaration of 1999 acknowledged that Luther and the Lutheran churches had been correct on this doctrinal issue. The Declaration was signed by both the Roman Catholic Church and the Lutheran Churches of Germany. But everyone was polite enough not to emphasise that Luther had been right.

    And so Christendom was split again in Western Europe in the 16th Century, a disruption that triggered wars, persecution and the counter-reformation.

    Every person and every institution is in need of reform, but we all cling to the power and security which familiar institutions bring. The Luther reforms were necessary, but it is regrettable that the reforms could not have been contained within the Catholic Church. What a difference it would have made if the necessary reform of the Catholic Church had occurred without the enormous and damaging Christian schism of separation.

    The Catholic Church faces similar problems today – how to reform? But the barriers will be, as they have always been – leaders, hierarchies and institutions that are more concerned about maintaining their power. They have a lot to lose personally from reform. So they resist.

    I am glad I went to the Lutheran Church in Copenhagen. But I missed the Eucharist and the sense that I get, particularly when I am travelling outside Australia, how universal the Catholic Church is.

    The barque of Peter has taken a lot of water particularly as a result of the division of Christendom in the 11th and 16th Centuries. But the barque sails on as the keeper of the Faith.

    As a Catholic, I still feel a very good Methodist! ‘Reform’ is in my genes.

  • John Menadue. Why health reform is so hard. It’s about power.

    You may be interested in this repost.  John Menadue.

     

    I have been actively involved in health policy for over twenty years. Throughout that period Medicare has been the shining light that has well and truly stood the test of time. But necessary health reforms are hard. They are deferred or avoided.  Without ministerial leadership there is an enormous lethargy in the health system.

    The major reason I suggest for reform being hard is the power of “insiders” and the way they exercise that power. At one level there are those insiders that administer health services. Health is a highly technical, large and complex field that is difficult for outsiders to come to grips with. This gives disproportionate power to health administrators on the inside. Then at another level which is ‘joined at the hip’ with these administrators are the vested interests or rent seekers who batten on the health service and dominate the public debate. It was the same type of vested interests who so selfishly led the opposition to Medicare in 1975. They are still with us today but in a different guise.

    .These vested interested who can delay or veto reform must be recognised for the power they exercise.– the AMA, the Australian Pharmacy Guild, the private health insurance funds, Medicines Australia and the state and territory health bureaucracies..

    The AMA is opposed to reform of the perverse incentives of the fee for service system of remuneration.FFS is not appropriate for chronic care; it encourages over servicing, over referrals and over prescribing. The financial incentive should be to keep people healthy through contracts and capitation in general practise and not financially reward doctors when the patient is sick.  .

    The AMA is turning a blind eye to the growing corporate takeover of general practise and the associated vertical integration into radiology and pathology. The health sector is seen as easy picking by business, if only the government would get out of the way.

    No government will lightly challenge the AMA

    The Australian Pharmacy Guild stands in the way of competition and the need for pharmacists to become more health professional and less like shopkeepers. The APG often threatens to use its power through pharmacies across the country.

    The private health insurance companies are expensive financial intermediaries who receive a $7 b annual taxpayer subsidy. PHI’s benefit the wealthy and most importantly weaken the power of Medicare to control prices. Gap insurance has underwritten an enormous increase in specialist fees. Now PHI’s want to move into general practice.  Government subsidized PHI is a major threat to health care in Australia as it has become so disastrous in the US. PHI sees governments as a relatively easy pushover.

    Medicines Australia, that represents the manufacturer and distributor of drugs charges Australians $2b per annum more pa than New Zealanders for equivalent drugs. It is a powerful lobby group.

    We have 8 state and territory health bureaucracies supported by their ministers that are very concerned to protect their own turf at the expense of an integrated national system. The federal government is reluctant to stare down the parochialism of the states

    Unless we take the health debate to ‘outsiders’ and break the power of the insiders-the  rent seekers and vested interests-, we are unlikely to see significant progress in health reform. The vested interests invariably win out over the public interest.

    There has been incremental change in response to political and budgetary pressures, but that has produces a patchwork set of arrangements that lack guiding values or principles. The debate is about ‘managing’ the health system and not about the values and principles that should drive it.

    Eight years ago, Ian McAuley and I in New Matilda suggested some key reform that we believed were necessary to ensure universality and the improvement in both the equity and efficiency of our health sector. Those suggested reforms were.

    • To focus program delivery in primary healthcare which can provide an integrated range of services?  But the debate is focussed on iconic hospitals.
    • To move to a single, universal insurer and to avoid going down the US path.
    • To organise healthcare programs around the needs of users rather than in response to providers.
    • To rationalise user payments so as to achieve equity and not distort resource allocation.
    • To retain Commonwealth responsibility for funding and standard-setting and deliver programs through joint Commonwealth/State administrations.
    • To involve citizens in healthcare to counter the strong lobbies of service providers/vested interests.
    • To focus ministerial concern on health rather than health services because many of the key services to advance the health of the population are outside the health portfolio. E.g. poverty, diet and distance.

    The public ‘debate’ on health is between the powerful rent-seekers with their well-funded public relations machines and the minister. The public is excluded from the debate and the media is ill-equipped to undertake the important examination of key policy issues. Under-resourced journalists are forced to rely increasingly on handouts by the rent-seekers.

    Commonwealth  Ministers  for Health are very dependent on the Department of Health and Ageing, particularly, as is often the case with ministers who are not across the issues and don’t have a clear policy program themselves. Unfortunately ministers who rely on the DHA will be disappointed. The Department is ill-equipped .It is structured in ways that reflects the interests of providers, e.g. doctors and pharmacists, rather than structured on the basis of community interests, such as acute care, chronic care or demography.  DHA has little economic expertise. One very senior Commonwealth official said to me, DHA does not have any strategic sense in health policy. It doesn’t effectively integrate the Commonwealth’s own expensive programs, let alone make any real progress in bridging the Commonwealth and State divide. During the difficult negotiations with the states on health reform during the Rudd Government period, the Department of Prime Minister and Cabinet effectively had to step in because DHA was not up to the job.

    The role-out of e-health by DHA is an expensive mess. DHA sees Medicare as a funding vehicle and not a policy instrument. Medicare is not even within DHA. The Department clearly sees its major role to keep the peace and keep the minister out of any public brawl or argument.  Health reform and health policy is an after-thought.

    The Ministerial/Departmental model in health has failed. It is incapable of contesting the power of the rent seekers.

    Governments are invariably captured by their own health insiders who are people of good will and professional skills but they have often spent their whole professional lives working in the health sector. Take the example of the appointment in 2008 of the National Health and Hospital Reform Commission. The Commission was overwhelmingly composed of health insiders with their limited horizons. The Chair was a senior executive of BUPA. Not surprisingly NHHRC produced very little worthwhile reform. Labour governments as well as Coalition governments like to smoodge the powerful vested interests and avoid political trouble.

    I have been urging for many years two ways to overcome the problem of the powerful insiders and vested interests.

    The first is to bring the Productivity Commission and Departments of Treasury and Finance into active involvement in health policy. The rigour and the outside view that they can bring is essential.

    Secondly, because of the failure of the ministerial/departmental model which is intensified by the poor performance of DHA I have proposed the establishment of a Commonwealth Health Commission composed of professional and independent people to take responsibility for health policy administration, subject to government policy guidelines. The Reserve Bank has shown the value of an independent and professional body that can lead public debate on important issues and implement government policies. And not get waylaid by powerful vested interests.

    Unless the governance problem in health is addressed we can forget serious reform. As part of this governance reform we need to drastically cut the power of lobbyists, both third party and in house lobbyists. Secret discussions and deals by vested interests with politicians and senior public servants must be stopped.

    Health is too important a matter to be left to the health insiders.

    What do they know of health who only health knows?

    If there was one word I would use to describe the obstacle(s) to health reform it would be ‘POWER’

     

     

  • John Menadue–We stopped the boats; we will now stop the jihadists

    You may be interested in this repost. John Menadue

     

    By linking boat arrivals and jihadists in the one sentence, a couple of weeks ago, Tony Abbott sounded very much like a dog-whistler that we can expect to hear more from in the future.

    He knows there is widespread, although a mistaken perception, that most boat arrivals were Muslims and that Muslim jihadist are a threat to Australia. A lot of dog-whistlers are going to feed on that perception.

    Scott Morrison has shown us what is likely to be in store. He told Jane Cadzow in the SMH that he had urged the coalition partners ‘to ramp up the questioning … to capitalise on anti-Muslim sentiment’.

    In my blog of December 31 last year ‘Are most asylum seekers and refugees Muslims?’ I wrote about the refugee settlement figures for two years that were then available – Calendar year 2010 and April 2011 to March 2012. With some qualifications, the figures showed that in the first period 51% of refugees were Christian, 26% Muslim and 23% ‘other’. In the second period, 42% were Muslim, 34% Christian and 24% ‘other’.

    In assessing refugees of course, no religious test is or should be made. Further the figures will vary from year to year on religious background depending on the asylum flows and countries of violence and persecution, e.g. from the Middle East, Myanmar, Africa or Sri Lanka. The Christian outflow from the Middle East is likely to continue as Christian minorities face continuing persecution and death.

    The figures that I mention above do not show that most asylum seekers are Muslim.

    It is also a mistake to suggest in any way that most Muslims are Jihadists. Some will be, but every group has its extremists and hot-heads that must be managed.

    I have not yet seen any figures to suggest that the Jihadists from Australia now fighting in the Middle East were former asylum seekers or refugees. Many of them look to be Australian born converts with very non-Middle Eastern names. Converts often have a habit of being more extreme. Every community has social misfits ,seeking notoriety and looking for excitement.

    It is the responsibility of the Australian government not to act with political opportunism over this problem, but to very forcefully and deliberately deal with extremists who leave this country to fight battles overseas that have got nothing to do with Australia. Where appropriate citizenship should be denied, passports withdrawn and breaches of our laws resolutely pursued. We can’t build a diverse and strong multi-cultural Australia if some of our number is allowed to abuse our hospitality and fight old battles overseas.

    In gathering intelligence on jihadists we will depend on ASIO and ASIS. Although my experience with these two organisations is dated they don’t give me much confidence.  They do attract a lot of odd bods, with little effective review of their performance. My experience was that ministers and senior officials are easily seduced into the unreal world of information and misinformation, facts and untested gossip.

    The Muslim leadership in Australia also has to bear a heavy responsibility in helping to manage the hot-heads in their communities. It may be apocryphal but I heard that during the Balkan War of 1991-99, Paul Keating summoned the Serb and Croat leaders in Australia, and warned them if violence continued between their communities, he would ‘knock your f… head’s off’. It sounds very Keatingesque – blunt and to the point. But to me it highlights the responsibility of leaders of our new communities to their new country.

    I have seen warnings but no evidence that Australians have involved themselves in the Israeli/ Gaza conflict

    I hope we can keep the dog-whistlers at bay, who will want to make the link between boat arrivals, Muslims and Jihadists. It is a sensitive issue and must be handled in a sensitive and resolute way without political opportunism intervening.

    Firmness is required by both the Australian government and its agencies, and the Muslim leadership in Australia.

     

  • John Menadue. What does Labor stand for? Part 5

    Democratic Renewal

    At the same time as addressing overarching ‘Labor’ principles that could guide Labor policies and programs, there are two immediate issues which must be given high priority.

    The first is democratic renewal in our public institutions, including the ALP

    Our democratic systems, almost everywhere, are under great challenge.

    We are increasingly alienated from our institutions. This suits the conservatives who implicitly seek to protect private corporate interests from public intervention. Loss of faith in parliament inevitably leads on to denigration and a loss of faith in government. Those that Labor has traditionally represented and the wider community are the losers.  In the last parliament the Coalition deliberately set out to destroy faith in our public institutions, public policy and politics. The government was ‘corrupt’ or ‘illegitimate’.

    The signs of democratic decay and lack of respect for politicians are everywhere. According to an ANU Social Research study 43% of Australians believed that at the last election it did not matter which Party was in power. Young people have particularly expressed disillusionment with politics. About 20% of eligible people did not enrol at the last election, did not vote or voted informal. According to a recent Lowy poll 40% of Australians did not believe that democracy was the best form of government.

    Executive governments monopolise information flows and policy advice. Policy advice is increasingly given by ministerial advisers while the public service is co-opted into providing political support to government.

    Governments are overly-influenced by powerful lobby groups and donors, e.g. miners, developers, licensed clubs and hotels. We have seen in the NSW ICAC enquiry how wealthy donors are corrupting our democratic system. Politicians are being bought with money.

    The health ‘debate’ is not with the public, but between insiders – the Minister and the AMA/pharmacists/private health insurance companies.

    Because Labor does not have a consistent principle-based set of policies – some would say a ‘narrative’ – it has little capacity for defence or explanation when its policies are misrepresented or misinterpreted in the media.  In the last Parliament Senator Conroy bungled a very modest attempt to limit media power and abuse

    Labor is no longer representative of those that vote for it or has empathy with it.

    The concentrated media does not properly expose abuse of power and directly skews the public debate towards personalities, the whims of proprietors, conflict and celebrities, rather than serious policies. We had an enquiry about the failure of our intelligence agencies over Iraq, but the greater failure was in the media, particularly News Corp.

    Democratic renewal is urgent – reform of the parliament, political parties, party factions, lobbyists, donors and the media.