John Menadue

  • John Menadue. The price we are paying for the Greens.

    The recent successes of the Greens in state elections in Victoria and NSW show us how populist nonsense can succeed at least in the short term. It has also shown the failure of the ALP to counter the threat of the Greens.

    There are two major issues on which the policies of the Greens have brought disastrous results for Australia. When it really mattered on climate change and asylum seekers, they sided with Tony Abbott.

    The Greens literally shed tears over the plight of asylum seekers. But they must bear a heavy responsibility for what we now see on Manus and Nauru.

    In the Senate the Greens sided with Tony Abbott against the arrangement with Malaysia, which, whilst not ideal, would have been a useful first step in curbing boat arrivals. That arrangement with Malaysia was negotiated with the understanding and broad support of UNHCR. Not only did the Greens side with Tony Abbott opposing amendments to the Migration Act to allow the arrangement with Malaysia to proceed, they embarked on an unscrupulous bashing campaign of Malaysia.

    With the collapse of the Malaysian arrangement boat arrivals in Australia increased dramatically. The result was Manus and Nauru. The Greens cannot be absolved for their populism and the consequences we now see on Manus and Nauru.

    The Greens must also accept major responsibility for the collapse in public support for effective action on climate change. In collaboration with the Coalition in the Senate they opposed the Carbon Pollution Reduction Scheme of the first Rudd Government. If the Greens had supported the Rudd Government’s CPRS in the Senate, the issue of climate change would not have been fully ‘done and dusted’ but we would be in a far better position on climate change than we are today. As a result of the Greens joining with Tony Abbott in the Senate we have no Emissions Trading Scheme, no carbon tax and a fig leaf of a policy called ‘Direct Action’.

    The Greens have inflicted disastrous damage to Australia on both climate change and asylum seekers. Their sabotage on both has set back real reform and decent policies.

  • Julianne Schultz. The Great War and Australia’s future.

    The Gallipoli centenary provides a unique opportunity to reflect on the many wartime legacies – human, political, economic, military – that forged independent nations from former colonies and dominions. Over the next fortnight, The Conversation, in partnership with Griffith Review, is publishing a series of essays exploring the enduring legacies of 20th-century wars.

    It seems poignantly appropriate that the web address gallipoli.net.au, which features the logo, “Gallipoli: The Making of a Nation”, is owned by Michael Erdeljac of the Splitters Creek Historical Group. Splitters Creek is now a suburb on the western edge of Albury, better known for its active Landcare group, and as the home to the endangered squirrel glider.

    In the competitive market for Great War memorabilia, Erdeljac deserves to be congratulated. He has owned the URL for 14 years, well before commemoration became a national preoccupation. He is motivated by his own conviction that “we must remember”.

    The history recalled on the site is serviceable; the list of names of those killed at the Gallipoli landing, Lone Pine and Nek battles heartbreaking; the opportunity to “own a piece of history” well-priced: A$1200 for a framed print of a photo from the front. The photo was donated by the late daughter of Corporal Herbert Bensch, one of the many Australians of German heritage who fought for the Australian Imperial Force (AIF) in the Great War.

    It was in a camera belonging to his mate, who was one of the nearly 9,000 Australian soldiers, 3000 New Zealanders, 35,000 Brits, 27,000 French and 86,000 Turks who died on the peninsula a century ago. Years after returning, Bensch processed the photo and it became a family heirloom.

    It is poignant because it was settlements like Splitters Creek in the Riverina that were home to many of the almost 60,000 Australians who died during that war. As has been graphically captured on the screen, and is now easily accessible in the digital records of those who fought, many of the young men who volunteered to travel across hemispheres were country lads woefully ill-prepared for the slaughter they would face.

    Not all, like Bensch, traced their forebears back to England. For many of those who fought it was a chance to be involved in a great adventure, albeit often with tragic consequences.

    Did the Great War really create Australia?

    The notion that this blooding and the other epic battles of the Great War made the nation has become a truism. But it is one that needs to be examined.

    Australia was already a (teenage) nation in 1914. It was a nation crafted from the time, eager to assert its independence (in most things) from the motherland, infected by a racism made (almost) scientific by Darwinism, egalitarian, protectionist, and, in important democratic domains (compulsory voting), marked by a progressive spirit.

    In many ways, Australia was a world leader – forging both a civic and an ethnic idea of nation.

    In Europe, by contrast, at the beginning of the war, as David Reynolds details, there were only three republics – France, Switzerland and Portugal – but five major empires: the Ottoman and British, and those headed by the Romanovs, Habsburgs and Hohenzollerns. Five years later, all but one of these empires had imploded. There were 13 new republics and nine nations that had not even existed before the war.

    In Europe, the 16 million lives lost and 20 million injured literally created nations. The carnage emboldened a democratic, nationalist and in some places revolutionary, spirit. It led to major political changes in Great Britain, the beginning of the end of the old aristocracy, and eventually the devolution of Ireland. In Australia, by contrast, it slowed and divided the progressive movement, tingeing the country with grief.

    Although the trauma and loss was profound in Britain, Australia and New Zealand, there were no battles on home soil in either the motherland or the dominions. In Britain, the outcomes were less concrete. They were more tied, as Reynolds argues, to:

    … abstract ideals such as civilised values and even the eradication of war.

    In Australia, as John Hirst has written:

    Gallipoli freed Australia from the self-doubt about whether it had the mettle to be a proper nation.

    So, in Australia, the experience of war became shorthand for nationhood. In New Zealand, it marked the beginning of a long journey to even fuller independence.

    It is an ancient notion that equates battle and blood with independence and freedom; that there is life in death. The very idea that war “was the truest test of nationhood and that Australia’s official status would not be ratified psychologically until her men had been blooded in war” is, as historian Carolyn Holbrook persuasively argues, evidence of:

    … muscular nationalism [that] was given legitimacy by Social Darwinism.

    The Great War did not make Australia – that had been relatively cerebral activity, notwithstanding the conflict of settlement, which reached its conclusion on January 1, 1901, when the colonies federated into a nation. The nation began as penal colonies, prosecuted battles of settlement, welcomed people from many lands and crafted a constitution. But like many adolescents it was conflicted, as Holbrook argues:

    … the very nation that it sought to distinguish itself from was the nation whose approval it craved.

    The Great War was not even the first foreign war that Australians fought in alongside Britain – that was in South Africa. But as the legend of Breaker Morant has captured, there were important differences in attitude between Australia and Britain that came to the fore in foreign battles.

    Many historians have argued that the lingering feeling of illegitimacy, of having a chip on the shoulder that needed to be avenged, helped fuel the idea that participation in the Great War was a coming of age. This was proof, as Hirst noted, that Australia really had the “mettle to be a nation”.

    Eagerness to participate was not universally shared. This is illustrated most powerfully in the failure of two referenda to introduce conscription. This was another important mark of an independent nation, of a place where people had the right to make their own decisions rather than being the property of the state. So those of Irish heritage expressed anti-British sentiment, those of German descent were regarded suspiciously, and Indigenous Australians joined the fight. It was complicated.

    Afterwards, the tragedy of loss and grief was palpable. Australia’s progressive spirit was divided and lost momentum.

    And then, in little more than a generation, another war began which layered trauma on catastrophe, left the air full of human smoke, changed global geopolitics and renamed the Great War, World War One.

    In an enduring sense, it was the Second World War that really changed the world. It consolidated the American Century, defined in part by conflict with the Soviet Republic and its empire; triggered the end of colonialism and its multi-faceted implications; created space for the assertion of international law; and provided the framework for the remarkable transformations of the past seven decades.

    How Australia changed

    Undoubtedly, the wars of the 20th century shaped – arguably even made – modern Australia. But this was not because of an ancient blood sacrifice in distant lands or even the closer strategic battles that followed. It was a product of the responses, realignments and decisions that followed.

    Every country has its most symbolic year from each of the world wars, and can trace the consequences of the bloodletting that accompanied the global realignment of the last century.

    In Australia this can be measured in many ways, but three major legacies stand out: increasing independence from Britain, deeper engagement with the rest of the world and more multiculturalism at home. It was in the aftermath of these wars that Australia found its voice in international forums – at Versailles and in the formation of both the League of Nations and United Nations.

    After excluding the Chinese, deporting German residents and treating the first Australians as subhuman a century ago, Australia slowly let down the gangplank and after the Second World War began again to welcome large numbers of people from all around the world. While the legal separation from Britain took much longer to achieve – and is still a work in progress – the reaction to the knighting of Prince Philip on Australia Day, 2015, suggests this is a project nearing completion.

    At a more prosaic level, one of the greatest media empires the world has ever known can trace its antecedents to the wartime reporting (and political dealmaking) of Sir Keith Murdoch. And it was the wartime experiences of Gough Whitlam that shaped his political agenda that was implemented three decades later, and still upholds the foundations of contemporary Australia.

    Not just an intellectual exercise

    It is striking that 2015 is the centenary of the Gallipoli offensive, the 70th anniversary of end of the Second World War in the Pacific, and the 40th anniversary of the end of the Vietnam War. This is a good time to reflect not only on the actions of those wars, but on their consequences and their enduring legacies.

    The battles are important, but the lessons to be learnt in their aftermath need to be interrogated to explain how we got where we are.

    This is essentially an intellectual exercise. Australians generally shy away from such activity, preferring celebration, commemoration and consumption. This year is replete with travel agents offering guided journeys to far-away battle sites (because, apart from Darwin, none of these modern wars occurred on mainland Australian soil), books, films, television series, exhibitions and coins.

    The ballot for places to attend the Gallipoli commemoration was massively oversubscribed. The Perth Mint’s 99.9% gold Baptism of Fire $5050 coin sold outquickly, but there are still plenty of the 99.9% silver Making of a Nation coins for just $99 and others from the Anzac series. The first episode of Channel Nine’s Gallipoli miniseries attracted more than one million viewers before sinking into ratings netherland.

    And the Splitters Creek Historical Group still has copies of Corporal Herbert Bensch’s colleague’s battlefront photo, and the list of many of those who died at Gallipoli 100 years ago.

    You can read a longer version of this article and others from the Griffith Review’s latest edition on the enduring legacies of war here.

    Julianne Schultz is the Founding Editor of Griffith Review; Professor, Centre for Public Culture and Ideas at Griffith University.

    This article was first published in The Conversation on 15 April 2015.

    See also:  http://honesthistory.net.au/wp/investing-our-legacies/

  • Bruce Kaye. Corporate Tax and Ethics Dodging

    The Senate committee hearings with testimony from high profile executives from some very large corporations have brought to notice the strategies to shift profits in order to avoid paying taxes in Australia.  The companies claim that they are acting legally.  The counter claim is that such manipulation of the law is unfair – it is not ethical.

    I am not competent to deal with the all complexities on tax law or the international agreements that are relevant to this problem.  But even those who are competent do seem to suggest that there are problems largely arising from the failure of the law to keep up with changing technology in relation to the jurisdictional character of a nation state.  Trevor Boucher has provided such a contribution on this blog.

    This is not a new problem.  The growth of large corporations in both Europe and the emerging US was greatly assisted by the introduction in law of limited liability for business corporations.  This change enabled the mobilisation of significant capital in order to undertake extensive enterprises.

    Limited liability was a compromise on the part of the community in which the corporation was located to limit liability where it would normally have arisen in order to get things done for the benefit of the community.  However the internationalisation of business enterprises in the twentieth century has complicated the nation state basis of the location and operation of corporations.  This has been vastly accelerated with the growth of the internet and of information technology generally. It is not surprising that the IT companies Google and Apple are in the spotlight in the present debate.

    Within nation states business corporations have gained significant influence on governments.  To some extent, we see that here in Australia but it is a trend that has advanced to a far greater degree in the US.  The capacity of the US government to secure legislation against the interests of business corporations is now very limited.

    There is no ethical reason that should inhibit governments making laws that favour business corporations, or any other organisations such as unions, charities, or a multitude of other corporations as long as those laws serve a discernible good for the community which the government exists to serve.  Such tax concessions are in principle not much different from grants given to organisations or groups in the community.  Enormous subsidies to the car industry over the years have been justified on the basis of a benefit to the community.  That is in essence an ethical judgement.

    Similarly grants to private schools, sporting bodies and a host of other community organisations are judgements made on the basis of a benefit to the community.  Not everyone agrees with every decision made by the government or particular ministers.  But that is part of the democratic character of the society in which we live.  People are free to seek to influence such decisions either to lobby for them or to campaign against them.  If they are to make a success of such endeavours they need to persuade either the broad community or those with authority to make decisions that their case is based on the benefit of the community.  That becomes an essentially ethical question – what is for the good of the community.

    In the current debate there is some talk about whether the corporation is acting unethically – is the profit shifting for tax avoidance unethical, or in its more usual form in the debate is it unfair.  In a number of senses the corporation has some of the characteristics of a person – it can be sued for example.  It has a corporate memory, it has patterns of internal operating relationships that can be seen to be more or less attractive in ethical terms.  It can be seen to have a corporate memory, though like the memory of an individual that does not mean that that memory will or should determine future actions.  However it is hard to see the corporation as in itself an ethical agent in the same sense in which a human individual is.  Nonetheless it remains the case that the corporation is a complex set of internal and external relationships which are susceptible of ethical appraisal.

    The key issue in the present situation is the decision making structure of the corporation, ultimately of the board.  In general board members are required to decide matters in terms of the purpose and well being of the corporation.  They are bound by what we might call an ethical obligation to the benefit of the corporation.  But as individuals they remain ethical agents who are not just board members but also citizens who belong to a community.  Their obligation to the corporation is secondary to their obligation to the community.

    An analogous issue applies to the taxation laws of a country.  Significantly these are related to treaties the country has entered into in relation to taxation and trade.  Subverting the operation of those treaties is surely an ethically ambiguous activity.  In this sense the actions of Google and Apple, if they are indeed legal under our laws and treaties then it is difficult not to see them as thereby ethical.  If, however, those laws no longer satisfy the community benefit or fairness test then it becomes an ethical obligation to campaign to change them.

    When they seem to us to be somehow unfair our options essentially are to work to reform the terms of operating, the law and the treaties.  Trevor Boucher has shown in his blog that this is not any easy task.

    However I think there are two things that can be attempted that might enable a better judgement.  The actual facts of the law (see Boucher) and the details of what the companies actually do should be made transparent to public examination.  That at least would enable clarity of thought. I think it is entirely reasonable to seek to persuade the company to change its practices.  They don’t have to do what they are doing.  So bringing informed pressure on the relevant board members would be an appropriate strategy.

    Clearly we need to persuade our government to address these issues and to seek to bring the law and the relevant treaties into line with the changed circumstances. Again there is nothing like exposure to public gaze.

    In all this however we would be wise to recognise that Australia is a minnow internationally in this and we should expect the international giants to look after their own interests.

     

    Bruce Kaye is an Anglican Theologian currently an Adjunct Research Professor At  Charles Sturt University. He previously taught a course on the rise and role of the business corporation at UNSW. He was formerly General Secretary of the Anglican Church of Australia. 

  • Trevor Boucher. International Tax : Some Constraints

    I certainly would not want to be seen as an apologist for multinational company groups in the current debate on what to do about profit-shifting tax avoidance activities of groups like Google and Apple.

    But there are some significant legal/technical obstacles in the way of solutions.

    Like other countries, Australia taxes each company in a group on the basis of where it is resident. An Australian resident is liable here on its worldwide income, but a foreign resident is taxed by Australia only on income with an Australian “source”. Put simply, profits have a source where the activity that generates the relevant income is located.

    Our taxing rights are affected by the some 40 legally-binding (but terminable) tax treaties that Australia has with other countries. They are part of a world-wide net of such treaties, based on an OECD model. One key rule is that Australia can’t tax the business profits of a company resident in a treaty country unless it has a “permanent establishment” (PE) here. The concept of “permanent establishment” and the terms in which it is expressed –“ a fixed place of business”- were formulated in pre-information technology “old world” days of bricks and mortar, when there was a clear physical place where income producing activity was carried on.

    In defined circumstances an agent in Australia of a foreign company could be a PE of that company, eg if the agent had authority to conclude contracts on its behalf. However with the availability and speed of technology, and no doubt readily available structuring advice, it is not difficult for groups like Apple and Google to so arrange things that their subsidiary that is drawing income from Australia does not have (for them) unwanted PE status.

    The OECD /G20 is looking at this, with (as far as can be seen) attention being given to to patching up the agency rules. International consensus on changes, followed by bilateral or multilateral treaties and domestic enabling legislation is likely to be a drawn out affair. I am not holding my breath. How readily will the US sign on to measures that cause its companies to pay more foreign tax?

    The UK (with a coming election) is going alone, despite OECD criticism, with its own “diverted profits tax” to address the exploitation of treaty provisions. Is Australia to follow with a similar unilateral approach? If one says that profits are diverted there must be a status from which the diversion takes place. If that status is determined by the existing “old world” tax treaties the UK approach might involve going around in circles. Also, each tax treaty has a standard provision that requires that its rules and limitations apply also to any later substantially similar taxes imposed in addition to the existing taxes.

    On a different tack, let’s look at what a customer in Australia pays for an Apple device. We have been given to understand that this dealing is with a Singapore subsidiary that does not have a PE in Australia. Even if it did, only a small part of sales receipts would properly be taxable here. The devices are manufactured in another country and employ foreign- developed technology for which some royalty expense can properly be charged. Achievement of sales does not require a big marketing effort in Australia. We in Australia would think it inappropriate if China were to say that the whole or a substantial part of an Australian company’s receipts from the export to that country of Australian iron ore or coal was a profit made in China.

    Turning to Google, if you place one of the ads from which it makes its money you are, apparently, dealing with a Singapore subsidiary that does not have a PE in Australia (see above).Courtesy of the technology you may be interacting with a computer or human being in another country/ countries. These days, that is not all that strange – when we ring up about a phone problem we can find that we are speaking to someone in the Philippines who can deal with it from there. A bank matter may involve use of a person in India. A daily newspaper finds it cheaper to have its sub editing done in New Zealand. In other words, use of overseas-located technology does not in itself speak of tax avoidance.

    Coming at it another way, however, Google’s advertising service offered to Australians does have an Australian character. Technically though, it is a business profit shielded from Australian tax by the PE rule. In 1968, faced with a similar inability to tax know-how and other like payments we developed a new definition of “royalty” , gave royalties a statutory “source” in Australia where they are paid by an Australian resident  or are an expense of  a “permanent establishment” here. Without exception, we excluded them from the PE rule in all subsequent treaties.

    The US itself, home to major multinationals, is necessarily part of any solution. A US parent is taxed there on foreign subsidiary profits remitted home as income, credit being allowed for foreign tax paid. Profits diverted into tax haven subsidiaries and not paid up to the parent are not taxed , although they are available for group use. In 1962, “controlled foreign corporations” laws were introduced to tax parents on income so diverted. (BHP has said that it pays our CFC  tax on income of its Singapore marketing company.) However, the US protective rules have major loopholes which Congress has not seen fit to close. Seemingly, the US prefers the extra tax-free clout that the loopholes give to their corporations over the contribution to its revenue that effective taxation would achieve.

    Were the US to tax effectively, US groups would (because of availability of credit for foreign tax paid) have less incentive to avoid Australian and other foreign taxes.

    The Government’s discussion paper would have us believe that a reduction in Australia’s company tax would lessen avoidance incentives. Well, for companies addicted to tax minimisation it would have to be a very big reduction. A reduction in our rate would do two things: for Australian-resident shareholders it would mean smaller imputation credits and thus more personal tax, while for foreign shareholders the benefit would accrue to them or the Treasury of their country.

    It’s not easy.

     

    Trevor Boucher was Australian Commissioner of Taxation 1984-93. This was followed by two years as Australia’s Ambassador to the OECD.

     

     

  • Judith Crispin. Anzac day, the Armenian Genocide and destruction of cultural heritage in the Caucasus.

    “Generally speaking, genocide does not necessarily mean the immediate destruction of a nation, except when accomplished by mass killings of all members of a nation. It is intended rather to signify a coordinated plan of different actions aiming at the destruction of essential foundations of the life of national groups, with the aim of annihilating the groups themselves. The objectives of such a plan would be disintegration of the political and social institutions, of culture, language, national feelings, religion, and the economic existence of national groups, and the destruction of the personal security, liberty, health, dignity, and even the lives of the individuals belonging to such groups. Genocide is directed against the national group as an entity, and the actions involved are directed against individuals, not in their individual capacity, but as members of the national group.”

    Raphael Lemkin, Axis Rule in Occupied Europe: Laws of Occupation – Analysis of Government – Proposals for Redress (1944)

    As we prepare to commemorate one hundred years since Australian forces landed at Anzac Cove, we might spare a thought for the victims of the Armenian genocide.

    Causal connections between the April 25 Gallipoli landings and the order by the Ottoman Minister of the Interior on April 24 to round up and execute Armenian intellectuals, do not feature in our Government-curated Anzac narrative. To our shame, Australia is not among the twenty-two nations that formally recognise Turkey’s massacre of 1.5 million Armenians as genocide.

    One may wonder why it should matter if Australia continues to exclude the Armenian Genocide from its national story. But there are three good reasons to bring this particular genocide into public discourse and our Anzac commemorations.

    Firstly, genocides are not simply crimes against a specific people, they are crimes against all humanity, and participating in their denial shames us as a nation. Common decency compels us to stand beside the Armenians on April 24 to denounce their historical genocide, as, indeed, we should denounce all genocides. This is my first and most important reason for urging Australia to recognise the Armenian Genocide.

    But it is also worth noting that by continuing to deny the 1915 genocide, we miss out on an opportunity to honour Australia’s extraordinary humanitarian response to that event. Captured Australian servicemen held by the Ottomans in Turkey were unwilling eyewitnesses to the Armenian, Greek and Assyrian genocides. They essentially blew the whistle on Ottoman atrocities in the region.

    Captain Thomas Walter White of the Australian Flying Corps, for example, reported mass Armenian graves in northern Mesopotamia and western Turkey. In the Jordan valley, Australian soldiers rescued Armenian refugees and a famously recounted story tells of Colonel Arthur Mills carrying a sleeping four-year-old Armenian girl to safety on his camel.

    During the war, atrocities against Armenians were reported by Australian newspapers. Returning Australian soldiers, many of whom had assisted Armenian refugees in Turkey, joined the civilian Armenian relief fund. This grassroots movement raised millions in relief funds for the Armenian cause, and remains the largest humanitarian effort in Australian history.

    It seems ludicrous that our Anzac commemorations focus on Britain’s failed Gallipoli campaign, which took almost 9000 Australian lives, but do not acknowledge the extraordinary humanitarian efforts toward the Armenians by allied soldiers and civilian Australians.

    Another compelling reason to talk about the Armenian Genocide is to challenge the assumption that all of this occurred in the past and has no connection to current events. Ripples from the 1915 genocide can be clearly observed in Jihardi attacks on ancient Assyrian/Persian culture that we are reading about right now.

    It must be emphasised that Lemkin’s definition of genocide signifies “a coordinated plan of different actions aiming at the destruction of essential foundations of the life of national groups, with the aim of annihilating the groups themselves.” This coordinated plan, which Lemkin suggests might include “disintegration of the political and social institutions, of culture, language, national feelings, religion” extends beyond the mass murder of an ethnic group in its intentions.

    Genocide seeks to wipe out all traces of a people—physically, culturally and historically. The current destruction of cultural monuments across the middle and near east has its very roots in the 1915 Armenian Genocide. When we watch ISIS destroy Assyrian monuments on You Tube, we are seeing something that was set in motion a hundred years ago—something that might not have occurred if the international world had held Turkey to account over the genocide.

    Why, then, has Australia become an active participant in an effort to conceal the Armenian Genocide? Particularly given that Australia’s humanitarian efforts, and the rescue of Armenians by our soldiers in Ottoman Turkey remain unacknowledged as a direct result. The answer appears to be that Australia has buckled beneath the pressure of conjoined denialist efforts by Azerbaijan and Turkey—denial of both the 1915 Armenian Genocide and the ongoing cultural genocides in their countries. Only by bringing these events into the light of day will Australia regain its own dignified and honest history.

    On the evening of April 24, 1915, sometimes called “Red Sunday”, Ottoman officials arrested 250 Armenian intellectuals in Constantinople before deporting and murdering them. The order, given by Minister of the Interior Talaat Pasha the day before the Allies landed at Gallipoli, marked the start of the Armenian Genocide.

    This murderous campaign was part of a wider extermination program targeting Armenians, Assyrians and Greeks who were seen as obstacles to Turkey’s unification with Turkic tribes in Azerbaijan and the creation of a grand Pan Turkish region.

    The 1915 massacres merged seamlessly into later Turkish-Azerbaijani efforts to eliminate Armenian culture in Nakhichevan, in the early 2000s, and current attacks on Assyrian culture in Iraq by ISIS and their affiliates. The Ottomans went on to massacre between 1 and 1.5 million people in a government organised and systematic genocide.

    Often described by Historians as the precursor to the Jewish Holocaust, the Armenian Genocide was chillingly similar in detail to events engineered twenty-five years later by the Third Reich.

    Armenians were murdered in concentration camps. They were gassed or sent on death marches into the Syrian Desert. Approximately 80,000 Armenians were set alight in haylofts and stables across the Muş plain. Thousands of others were taken into the Black Sea or the Euphrates and drowned. So many Armenian corpses were left in the Euphrates, in fact, that the course of the river was temporarily changed. The New York Times described hundreds of Armenians in crammed cattle trains or driven along Syrian roads “strewn with corpses”.

    Like their Third Reich successors, the Ottoman Empire conducted medical experiments on their Armenian prisoners, injecting them with Typhoid infected blood and overdoses of morphine. Armenian businesses, farms, houses and private property were confiscated and financial institutions were ordered to turn over all Armenian assets to the Ottoman government.

    The 1919 trials and court-martials of Ottoman officials firmly condemned Turkish atrocities against Armenians—and, in 1921, assassin Soghomon Tehlirian hunted down and executed former Turkish Grand Vizier Talaat Pasha in Berlin. The trial of Soghomon Tehlirian, which revealed an undercover operation to kill the architects of the Armenian Genocide, horrified international lawyer Raphael Lemkin. He went on, in 1943, to coin the word “genocide” to describe the Ottoman massacre of Armenians.

    Since the 1920s Turkey has undertaken a systematic and highly funded campaign to oppose international acknowledgement of the Armenian genocide.

    But what has this got to do with cultural destruction? The beginnings of Armenian culture can be traced to Nakhichevan’s founding, in modern day Azerbaijan, during 3669BC. According to tradition Nakhichevan, whose name derives from the Armenian “Nakhnakan Ichevan” (Նախնական Իջևան), meaning, “first landing place”, was established by Noah after the Biblical deluge.

    It was in this land, shadowed by holy Mt Ararat, that the theologian Mesrob Mashtots first created the Armenian Alphabet and founded the earliest Armenian schools.

    In 1605 the population of Julfa, an important Armenian centre in Nakhichevan, were forcibly relocated to Persia by Shah Abbas. The town of Julfa was destroyed to prevent the Armenians returning but, recognising the importance of its historic cemetery, Shah Abbas ordered his soldiers to leave it untouched.

    Julfa cemetery, which graced the banks of the river Arax, once held 10,000 ornate Armenian khachkars (cross-stones) from the 15th and 16th century, inscribed with Christian crosses, suns, flowers and climbing plants. Alongside these khachkars stood tombstones from the late 6th century and undated pagan gravemarkers from even earlier. This extraordinary cemetery, spread over three hills on Nakhichevan’s border with Iran, was home to the largest collection of East Christian cultural monuments on earth.

    In 1920 Nakhichevan was declared part of Azerbaijan, a decision reinforced by the Treaty of Kars. This Treaty created a new border between Turkey and Armenia—ceding Armenia’s holy mountain Ararat to Turkey as well as important cities and the ancient ruins of Ani.

    The last remaining 2,000 Armenians were deported from Nakhichevan in 1989. Official Azerbaijani historical records now state that Armenians did not live in the South Caucasus before the 19th century.

    A premeditated campaign to erase all traces of early Armenian culture in Nakhichevan has been undertaken by the Azerbaijan Government. Of around 280 named Armenian churches in Nakhichevan, few remain standing today.

     

    In 2005, in direct violation of the 1948 UN Convention on Cultural Heritage, Azerbaijani authorities demolished Julfa cemetery’s priceless khachkars with bulldozers, loaded the crushed fragments onto trucks and emptied them into the river Arax. Video footage and photographs taken from the Iranian bank of the river captured almost 100 Azerbaijani servicemen destroying Julfa’s khachkars with sledgehammers and other tools.

    Demands by The European Parliament in 2006 that “Azerbaijan allow missions, such as experts working with ICOMOS who are dedicated to surveying and protecting archaeological heritage, in particular Armenian heritage, onto its territory, and that it also allow a European Parliament delegation to visit the archaeological site at Julfa”, were refused.

    Shortly thereafter, Nakhichevan authorities constructed a military shooting range on the very ground where thousands of human remains lie, still unmarked.

    Despite compelling evidence in photographs, video and satellite images, Azerbaijan has consistently denied the destruction of Julfa cemetery.

    What we are witnessing now, in Australia’s refusal to recognise the Armenian Genocide, is the result of a combined denialist campaign by two politically and militarily allied countries, capable of exerting huge pressure on the international community through Turkey’s NATO role and Azerbaijan’s control of oil.

    This combined effort has effectively silenced discourse around the conjoined events of the 1915 genocide and the ongoing destruction of Christian monuments in Azerbaijan, Turkey and elsewhere. In achieving this goal, Azerbaijan and Turkey have concealed important historical contexts for understanding recent attacks on Assyrian culture by ISIS and their affiliates.

    Turkey and Azerbaijan’s deliberate efforts to blind international politics to past and present crimes against humanity has been tolerated by Australia, ostensibly, for the sake of Anzac Cove photo opportunities in 2015.

    Turkey’s exclusion of NSW MPs from the 2015 Anzac Cove ceremony because of bipartisan support for a Parliamentary motion to recognise the Armenian Genocide, demonstrates a clear intention to use Anzac day to blackmail Australia into supporting Turkish denialism. Treasurer Joe Hockey, of Armenian heritage, called for Federal Parliament to formally recognise the Armenian Genocide while in opposition, yet refuses to jeopardise his dealings with Turkey now that he is in Government.

    But the international tide is turning. In response to Pope Francis’s recent statement that the 1915 massacres in Armenia constituted the “the first genocide of the 20th century,” Turkey recalled its ambassador to the Holy See. Following The European Parliament’s resolution to adopt the same term, genocide, in relation to Armenian history, Turkish President Erdogan stated, “It is out of the question for there to be a stain, a shadow called ‘genocide’ on Turkey.”

    Many eminent Turkish academics presently advocate for genocide recognition, motivated by the same desire for historical truth that should be inspiring Australia’s own stance on the issue. Only by acknowledging this genocide can Turkey honour its past national heroes, the Oscar Schindler’s of the Ottoman Empire—men like Mehmet Celal Bey and others who saved thousands of Armenians from persecution.

    Genocide includes massacres, but is not limited to massacres. Any systematised and organised attempt to erase a people should be considered an act of genocide.

    When a force, such as the Ottoman-Turks and their Azerbaijani allies, seeks to destroy all traces of a people through mass murder, through destroying their cultural monuments and through an extensive and well-funded rewriting of history—there can be no doubt that we are speaking of Genocide. Australia’s role in the Armenian Genocide was humanitarian, admirable and praise-worthy. We should never forget that—but we should never have allowed our legacy to be tainted by Turkey’s efforts to suppress historical truth.

    Perhaps this Anzac Day we will remember that our greatest victory at Gallipoli was not at Anzac Cove. What brought lasting honour to our nation is symbolised in the image of a four-year-old Armenian girl carried in the arms of an Australian camel-mounted soldier, to safety.

    Dr Judith Crispin is the Director of Manning Clark House in Canberra. A practising artist, composer and writer, Judith is an honorary fellow of th Australian Catholic University and part of an international research team working on the digital repatriation of ancient Armenian culture.

     

     

  • John Menadue. Best we forget – the Frontier War and the Maori Wars.

    See below post I made on this subject in October 2013. John Menadue

    Repost.  The drumbeat grows louder. 

    In the lead-up to the centenary of Gallipoli in 2015 the military drums are growing louder. We are expected to cheer it all. In the process we will be encouraged to engage in a lot of mindless myths. Amnesia will also play a large part.

    In an interview published in the SMH on October 5 this year, Brendan Nelson, the Director of the Australian War Memorial, former Minister for Defence and Parliamentary Leader of the Liberal Party, said: ‘The soul of the nation is embedded in many ways in the [Australian War] memorial’. Is it? I certainly hope not. He then added ‘the more obscene the war, the more inexplicable for us it seems today, the more many [young people] admire these men and women who went in our name.’ What an extraordinary thing to say!  In short, he is saying that the more ‘inexplicable’ or dubious the war, the more young people admire the values of those that served in those wars.

    Inexplicable or dubious wars must surely include our involvement in Vietnam, Iraq and Afghanistan. What is the SAS really doing in Afghanistan, in our name? Even the worst of wars like these seem to be an opportunity to burnish the Gallipoli and Anzac legend. In this interview with Brendan Nelson, the correspondent Mark Dapin commented that the kind of ‘rhetoric that you hear today [from Brendan Nelson] lay dormant for decades after the Vietnam War. So there has been a recent militarisation – or a re-militarisation – of the Australian imagination.’

    This growing surge of militarism was triggered by the campaigns of the Hawke and Keating Governments to revive Anzac Day with highly publicised visits and commemorations of the Anzacs at the battle and grave sites in Turkey and France. Interestingly, this campaign to revive Anzac Day did not highlight Australian sacrifices in the Pacific where we live.

    This surge of interest in Anzac has continued. John Howard was proud to note that Anzac Day had been successfully revived.

    In the lead-up to the Centenary of Gallipoli there will be extensive media campaigns and programs in schools. The PR machines in Departments of Defence, Veterans Affairs and the War Memorial will pull out all the stops. Prime Minister Tony Abbott has appointed himself as the Minister for the Gallipoli Centenary. Michael Ronaldson will be the Minister Assisting for the Centennial.

    To help promote the Centenary, the Australian War Memorial will be exempted from reducing costs by providing an “efficiency dividend” like all other Commonwealth departments and agencies.

    Tony Abbott has committed Australia to raise its defence expenditure to 2% of GDP. This can only be directed at deterring China. How absurd it is to suggest that Australia could build a military capacity to deter China. As Mike Scrafton has commented, this is ‘naïve militarism at its worst’.

    World War II was the most critical this century for our future, even survival. But it remains quite secondary to the myth-making about World War I and our service to Britain.

    In World Wars I and II, the fallen were invariably buried overseas and the family notified by telegram or letter from the Minister for Defence. Now the bodies are returned to Australia and their valour acknowledged in a funeral, usually attended by both the Prime Minister and the Leader of the Opposition. One deceased serviceman who accidentally shot himself in Iraq was buried in his home town in Gippsland with full military honours, a three volley gun salute and even a fly past. The Prime Minister and Minister for Defence attended.

    In all this honouring of the valour of service people, we refuse to acknowledge that successive Australian governments have involved us in “inexplicable” and dubious wars. To cover our moral and political failure, we hide behind the valour of our service people. Who was it who said “the sacrifice of brave men does not justify the pursuit of an unjust cause” This hiding behind the valour of others is also a device to hide our slavish adherence to the United States with its militarism both at home and abroad which President Eisenhower warned about over sixty years ago

    In my blog of September 19 ‘Frontier War and asylum seekers’, I pointed out that the most reliable estimates show that over 30,000 indigenous people were killed in this country by police and settlers from the late 18th Century to the early 20th Century.  The killings occurred in small and isolated skirmishes over a long period. It was an epic war for control of a great land mass. In proportion to our population more people died in this war than any in our history.Many more died of disease and a broken heart. We ignore it like the Turks refuse to acknowledge the Armenian genocide. We have memorials all over our land for those that fought against the Turks and Germans in World War I, but not any monuments for the 30,000 indigenous people who died trying to stop the occupation of their land. The Australian War Memorial ignores the Frontier War completely.

    In my blog of April 22 this year, I highlighted that Australia and New Zealand did not first fight together at Gallipoli in 1915. As the State Library of South Australia records ‘between 1845 and 1872, just over 2,500 Australian volunteers saw service in New Zealand. … It took many steps including a local militia and troops rushed in from Australia … to conclude the first Maori war .. In 1860, the grab for land sparked further conflict between Whites and the Maoris … again the Australian colonies were asked for urgent assistance.  The colonies rallied and sent troops. The colony of Victoria even sent its entire navy which comprised the steam corvette HMVS Victoria. NSW also sent gunships to support the troops.’ There was no mention of these events as we celebrated the Centenary of the Australian Navy this month. What convenient memories we often have.

    As we listen to the gathering drum beats that lead us to the Centenary of Gallipoli, we should be careful not to be swept away by militarism and patriotism. We have much to be proud of in our history. We also need to be honest with ourselves.

    As Professor Henry Reynolds put it, we are encouraged to intone ‘lest we forget’ in memory of the fallen For many of our wars the public mood is ‘best we forget’. .like the Frontier War and the Maori Wars.

  • Government White Paper on Energy – the good, the bad and the ugly.

    In the Australian Financial Review on 15 April, Ross Garnaut comments about the Abbott Government’s Energy White Paper. He says that by failing to take global warming seriously, the White Paper discourages solar power, encourages doomed coal investment, hobbles the RET and misses the chance to raise petrol taxes.  John Menadue.

    See link to article below:

    http://afr.com/opinion/columns/abbott-governments-energy-white-paper-fails-to-face-reality-20150414-1mkroh

  • Paul Komesaroff, Alphonso Lingis, Modjtaba Sadria. Julie Bishop can reach out to Iran now that confrontation has failed.

    Foreign Minister Julie Bishop’s visit to Tehran this week presents a rare opportunity for Australia to take the lead in global diplomacy. The publicly stated goal of the trip has been limited to the dubious intention of convincing the Rouhani government to allow Iranian nationals seeking asylum in Australia to return without fear of victimisation. But the implications of the visit are much more important and far-reaching than that.

    The need for a diplomatic initiative to change the dynamic in relations with Iran is obvious. As the mounting crisis in the Middle East reminds us every day, the policy of confrontation has failed. Contrary to the efforts of hawks around the world – including in the US Congress – a more nuanced strategy of dialogue and engagement is urgently needed.

    Hawks have made us less secure

    Not only has the approach based on isolation and unrelenting economic and political pressure failed, but it has been catastrophically counterproductive for all sides. International trade has suffered and security has not improved.

    The withdrawal of countries from the Iranian market under pressure of sanctions policies – as in the case of Japan – has simply opened up opportunities for competitors such as China and Russia. It has played no role in generating meaningful progress on the nuclear issue. The Iranian economy has been brought to the point of collapse, with disastrous effects for ordinary citizens but little impact on the opulent lifestyles of many officials and wealthy businessmen.

    If these facts are not enough, the ongoing, desperately tragic events in the region should be the game changer. The long-term stand-off between the US and Iran has prevented solutions to arguably the most important and dangerous problems in the world today.

    There can be no resolution to the civil war in Syria without the cooperation of Iran. Defeat of Islamic State and its hateful ideology requires the forging of a partnership between Iran and the West. The re-Islamisation of Turkey can only be resisted with support from the secular traditions exemplified in Iranian history and culture. Overcoming the impasse in Lebanon and Gaza associated with the continuing influence of Hezbollah and Hamas will only be possible when Iran considers it to be no longer in its interests to support them.

    What can Australia do?

    Julie Bishop’s visit comes at a perfect time. The recent successes in the P5+1 negotiations in Geneva, in which Iran signalled its agreement to accept significant restrictions to its nuclear program, have for the first time in decades created a climate of genuine hope for change. The agreement is yet to be ratified by both sides – and approval by the US Congress is by no means assured. It is, however, an indication that at least some politicians on both sides recognise the urgency of the situation and the need to go beyond the useless hostility of the past.

    This is where Australia can step in and take the lead. Exactly what political rapprochement with Iran will ultimately look like is uncertain but we can play an important role in shaping it.

    The possibilities could involve an agreement to scale down funding of extremist anti-Israeli organisations and a negotiated transition of power in Syria. In exchange, Iran would get renewed access to world markets and all that comes with active membership of the international community. The possibility of a military alliance to bring a quick end to the Islamic State and to restore stability to Iraq – an idea unthinkable only months ago – should not be ruled out.

    Civil society offers many ways to engage

    Relations with Iran involve more than just interactions between governments. There is also direct engagement between our own civil society and the many non-government groups there. This is the approach we must adopt to forge a new relationship between Iran and the West in order to overcome the grim legacy of the last 35 years.

    Iran is a large, complex society with vast resources and a population close to 80 million. More than 20 million are university students and graduates. The members of the vast, educated, entrepreneurial middle class are the main supporters of democracy; they are the natural allies of Western partners hoping for more relaxed and open social policies in Iran.

    Ironically, the members of this group have been the principal victims of sanctions policies. They have been left exposed politically and as a result of the growing unemployment and radicalisation of youth these policies have produced.

    This is the time for a change in direction in the policies of the world community towards Iran to allow normal economic and cultural intercourse to resume. It is time to scale down the sanctions and to become engaged, openly and generously, with different levels of Iranian society.

    The depth of the past hostility may mean that any changes have to occur incrementally. Both sides will need to test the viability and local acceptance of a gradual re-establishment of exchanges between them.

    The places to start are the safe areas of education, culture and business. All these areas offer exciting opportunities for Australia.

    Educational exchanges could help restore our crisis-ridden educational sector, while assisting Iran in overcoming a critical shortage of high-quality knowledge providers. There are almost unlimited possibilities for two-way cultural exchanges that draw on the thriving Iranian culture industry, especially in film, music and literature. Business people will find an inexhaustible thirst for new products, from electronic goods to fashion, to new techniques for producing renewable energy.

    Western countries have discovered again and again that bullying tactics are often counterproductive but that quiet victories can be won by cultural and economic engagement. In the case of Iran the bullying – in which Australia has been a willing partner — has failed. It is time to try the gentle alternative.

    Iranian society is ready for change

    Iran is a complex modern society that is ready for change. We in Australia can support this process by fostering dialogue and cultural and economic exchanges with Iranian civil society. More positive and constructive policies will create a win-win situation for all.

    If the opportunity is lost, the outcomes will be dire for all the players, not just in the region itself, but also in Europe and the United States.

    Let us hope that in her discussions with the Iranian government the foreign minister is able to move beyond the question of asylum seekers and seize the opportunity to stimulate a movement away from the failed policies of the past towards a more fruitful – and safer – commitment to dialogue, reconciliation and mutual prosperity. All of our futures might depend on it.

    Paul Komesaroff is Professor Medicine at Monash University. Alphonso Lingis is Professor Emeritus of Philosophy at Pennsylvania State Uniersity,  Modjtaba Sadria is Desmond Tutu Reconciliation Fellow,  Director, Think Tank for Knowledge Excellence, Tehran, Adjunct Professor at Monash University.  

    This article first appeared in The Conversation on 15 April 2015.

  • Marilyn Lake. Fracturing the nation’s soul.

    You might be interested in this repost. John Menadue.

     

    During World War 1 Australia lost its way. Its enmeshment in the imperial European war fractured the nation’s soul.

    World War I had consequences for individuals as well as nations. HB Higgins’s life would be deeply affected by the British decision to invade the Ottoman empire in early 1915. As a member of the new federal parliament in 1901, Higgins had opposed Australian participation in the Boer War, fearing that this would set a terrible precedent for involvement in other imperial wars, whose purpose, goals and strategy would always be determined by other powers. He also doubted the legitimacy of the European war, writing to his friend Felix Frankfurter, Professor in Law at Harvard, ‘What do you think of it? … [T]here are higher ideals than attachment to a country because it is my country. I blame our British jingoes…’ Higgins was deeply troubled when his only child Mervyn elected to join British forces fighting in the Middle East.

    When his son was killed in battle on 23 December 1916 Higgins and his wife Alice were devastated. Higgins poured his grief – and his bitterness over the imperial cant that had justified the war – into a new commitment to internationalism and disarmament. The only good that might come out of the war was not national pride, but a new world order. ‘Vengeance is a fruitless thing’, he wrote to Frankfurter. ‘I feel that the best vengeance my dead boy could hope for would be an integrated world, an organized humanity.’ No nationalist flag-waving or eulogies to the Anzac spirit for him.

    We tend to forget the doubts and expressions of opposition to Australia’s participation in World War I in which in fact only 30 per cent of eligible men chose to enlist. The anti-war mobilisations have largely gone unheeded in official and contemporary accounts of the war, which have recast the widespread destruction as a creative experience, one that gave ‘birth to the nation’, conveniently forgetting that our distinctive Commonwealth of Australia, with its world famous democratic reforms, made its name on the world stage in the years before the war, between 1901 and 1914. Australian nation-building was a peace time achievement.

    A decade before the outbreak of the European war, in 1904, an American visitor to Australia, Victor Clark, one of a number of investigators who journeyed south to Australasia, noted that ‘New Zealand and Australia are the most interesting legislative experiment stations in the world and they experiment so actively because their political institutions are extremely democratic’. The colony of Victoria had first invented the idea of a legal minimum wage in 1896, which was later elaborated as a living wage calculated to meet the diverse needs of workers defined as human beings, in the Commonwealth Conciliation and Arbitration Court by HB Higgins, in the Harvester judgment of 1907. Australia and New Zealand had pioneered industrial democracy and women’s political rights. ‘While the principles of democracy were first enunciated in the United States’, noted the historically-minded American suffragist, Carrie Chapman Catt, ‘Australia has carried them furthest to their logical conclusion’. Thus did we take our place on the world stage, not in fighting an imperial war.

    In Australia, it was noted by numerous overseas commentators, the working man and the voting woman advanced together, during the first decade of the nation’s existence, which saw a steady increase in the Labor vote, until the Fisher Government was elected, with majorities in both Houses in 1910. By war’s end, however, the Labor Party had split, conservative forces had triumphed, and the British Empire had gained a new lease of life in Australia. In World War 1 Australia lost its way. Its enmeshment in the imperial European war fractured the nation’s soul.

    Let’s look at this impact further through the experience of Higgins, now a largely forgotten Australian, but one of our unsung national heroes. Henry Bourne Higgins was a member of the Victorian Legislative Assembly in 1896, when it introduced the minimum wage. He became an opponent, as noted above, of the British imperial war in South Africa, a member of the federal parliament from 1901 and then, from 1906, President of the Commonwealth Court of Conciliation and Arbitration, whose path-breaking reforms, shaped by a profound commitment to social justice and the public good, won him renown around the world. In 1914, he was invited by the Harvard Law Review to contribute an article on his innovative jurisprudence which he titled ‘A New Province for Law and Order: Industrial Peace through Minimum Wage and Arbitration’.

    By 1920, however, the conservative backlash unleashed by the impact of World War I and the fevered imperialism of Prime Minister WM Hughes, who sought to by-pass the Arbitration Court by setting up his own tribunals saw Higgins submit his resignation. It would seem appropriate to remember Higgins, the Australian idealist, and others of his generation, as we prepare to deal with the veritable tidal wave of military commemoration, funded already by $140 million, even as our universities face further funding cuts, increased student fees and the number of historians employed to teach students actually declines. Which funding bodies, one wonders, might finance commemoration of those who fought for Australia’s distinctive democratic and political ideals and support projects to carry their ideals forward?

    My current research project on the international history of Australian democracy has highlighted Australia’s high reputation around the world before World War I as a distinctive, pioneering, bold, independent-minded democracy. It was the perspective afforded by distance that enabled American Professor Hammond of Ohio State University to write of ‘the most notable experiment yet made in social democracy’ established in Australia in the first years of the Commonwealth, in the years preceding the outbreak of war.

    In 1902, in the shadow of the South African War, HB Higgins wrote an essay called ‘Australian ideals’ in which he asked prophetically whether the new Commonwealth of Australia was to become a militaristic nation or a progressive one: ‘Australia must make her choice between two ideals – the ideal of militarism and the ideal of equality’. Australians had to choose between the opposing standards of militarism and social reform, he suggested. He and his generation dedicated themselves to the latter, while we in our time seem to have committed to the former. Australian values we are now ceaselessly told are military values.

    One hundred years on from 1914, Australia has seemingly become the militarist nation Higgins warned about. Rather than celebrate the world-first democratic achievements forged by women and men in the founding years of our nationhood, the years that made Australia distinctive and renowned, we are told that World War I, in which Australians fought for the British Empire, was the supreme creative event for the nation. But those who lived through it knew that our nation was not born in the carnage of the world war, which left the country divided, disillusioned, disoriented, desolate and dependent on a resurgent British Empire.

    In the inimitable words of novelist Miles Franklin, writing to her American friend Margaret Drier Robins in 1924,

    it seems to me that Australia, which took a wonderful lurch ahead in all progressive laws and women’s advancement about 20 years ago has stagnated ever since. At present it is more unintelligently conservative and conventional than England and I am sad to see the kangaroo and his fellow marsupials and all the glories of our forests disappearing to make room for a mediocre repetition of Europe.

    Miles Franklin knew that although men could do many things they could not give birth to nations. Only women could do that. And in 1902, Australian women’s political ‘lurch ahead’ had made Australia the most democratic country on earth, an object lesson to humanity.

    Marilyn Lake is Professor in History at the University of Melbourne. 

  • Andrew Elek. Asian Infrastructure Investment Bank is miles ahead of the Trans-Pacific Partnership.

    The Asian Infrastructure Investment Bank (AIIB) is a far more economically efficient option than the Trans-Pacific Partnership (TPP) for integrating Asian economies to each other and to the rest of the world. While the United States is attempting to thwart China’s AIIB by completing the TPP, it is likely to result in net costs to countries other than the US.

    In 2015, very few products face significant transparent barriers — such as tariffs — when they cross international borders. The most important constraints to the flow of products along modern supply chains are due to weaknesses in transport and communications infrastructure. A 2013 study by the World Economic Forum found that supply chain barriers to international trade are far more significant impediments to trade than tariffs. Reducing supply chain barriers could increase world GDP over six times more than removing all tariffs.

    This study confirms the experience of business people. For more than a decade they have urged governments to stop obsessing about traditional trade barriers that only affect some agricultural commodities and low-tech manufactures. Those managing ever-expanding supply chains want governments to shift attention to the widening gaps in Asia’s transport and communications infrastructure.

    China’s AIIB initiative responds to these realities. It aims squarely at the real obstacles to economic integration. The new multilateral development bank will mobilise finance from international capital markets to reduce the vast gaps in economic infrastructure. It is a timely move to take advantage of the current low borrowing costs to invest in projects with potentially high economic returns.

    With its vast current financial strength, China could have chosen to go it alone. Instead, it sought to draw in as many shareholders as possible to ensure that it is able to expand urgently needed investment as fast as possible. Drawing in other governments will also help the AIIB to draw on the expertise of existing multilateral development banks to acquire and sustain its own AAA rating.

    The proposed TPP has a very different agenda. It comes from the United States Trade Representative, which responds to the wishes of its domestic business interests. The most widely publicised objective is to eliminate all remaining traditional trade barriers. Even such an impossibly ambitious trade deal would only add 0.5 per cent of income to the nations involved. Paul Krugman believes even that is an overestimate. And any actual TPP outcome will fall far short of fully eliminating all trade barriers.

    There is a more important reason for the US push for the TPP. The US is seeking to impose rules that suit its economy on those that are very different. Much-leaked drafts for the TPP reveal many chapters defining new rules for issues such as intellectual property rights, labour and environmental standards, management of state-owned enterprises and many other matters.

    But even if United States views were appropriate for 21st century commerce, they would not create any new trade. If accepted, they would impose costs on emerging economies, weakening their capacity to compete. In practice, if the TPP is signed, United States producers will be able to challenge and disrupt imports that they claim to contravene any of its rules. ANU economist Philippa Dee has argued that the TPP may lead to net costs, rather than benefits, for participants other than the U! nited Sta tes.

    The TPP is likely to be a multiplicity of bilateral preferential trade deals, adding new layers to rules of origin. It hopes to route supply chains around — rather than through — China, the largest trading partner of Asia Pacific economies. By contrast, the AIIB will finance infrastructure to facilitate the creation of essential new production networks. This is necessary as China’s labour costs will continue to rise and labour-intensive production will shift into other countries.

    When the AIIB becomes operational in 2016 it will certainly boost much-needed economic infrastructure and integration in the region. The TPP is far less certain. Even if it is ever agreed upon, the deal will need ratification by the US Congress and many other legislatures and will not make a significant contribution to the market-driven integration of the region.

    Andrew Elek is Research Associate at the Crawford School of Public Policy, Australian National University. He was the inaugural Chair of APEC Senior Officials in 1989.

    This article was first posted in the East Asia Forum. 

     

  • John Menadue. Murdoch is about ideology not tax dodging.

    There was an interesting exchange between Julian Clarke, News Corp’s local boss, and Senator Christine Milne in the Senate Economic References Committee into Tax Avoidance. Julian Clarke spelt it out very clearly that Rupert Murdoch was running The Australian for ideological purposes. The exchange was as follows:

    “With due respect, I don’t expect you to agree with this, but I consider The Australian to be the finest national newspaper operating in Australia,” [Clarke] said in reply to a question from Senator Milne.

    Milne: We are not agreed.

    Clarke: You are in a minority.

    Milne: Not according to your sales.

    Clarke was then asked if our ‘finest national paper’ actually had any direct competitors. He admitted “no there isn’t. But if The Australian wasn’t there, there’d be no one doing what we’re doing.”

    Milne: Precisely.

    Clarke: We have a difference of opinion about why we’re doing it. But every time you tell me we are doing it to run tax losses, I’ll tell you we’re not.

    Milne: I’m happy to accept you are doing it for ideological purposes.

    Clarke: I’m happy with that.

  • Matthew Beck, Michiel Bliemer. Do more roads really mean less congestion?

    Congestion is a major source of frustration for road users and has worsened over time in most cities. Different solutions have been proposed, such as introducing congestion charging (a favourite of transport economists) or investing in public transport. One solution that is most often put forward is to build more roads, but does this approach work?

    A recent study in the United States identified Los Angeles, Honolulu and San Francisco as the top three most gridlocked cities in the United States. All of these cities use almost exclusively road-based solutions to transport citizens.

    While China has increased its expressway network from 16,300 km in the year 2000 to around 70,000 km in 2010, the average commute time in Beijing for 2013 was 1 hour and 55 minutes, up 25 minutes from just the year before.

    Why, then, do residents of these cities with large amounts of road capacity, not live in a driving utopia?

    Induced demand

    The first concept you need to get your head around is called induced demand.

    Think about the street on which you live. If a new road makes driving to work quicker, you may benefit from that, but this reduced travel time might be enough to encourage two other people in your street to start driving; and two more people in the next street; and two more people in the street after that; and so on. Very quickly the drive to work takes just as long as it ever did.

    In transportation, this well-established response is known in various contexts as the Downs-Thomson Paradox, The Pigou-Knight-Downs Paradox or the Lewis-Mogridge Position: a new road may provide motorists with some level of respite from congestion in the short term but almost all of the benefit from the road will be lost in the longer term.

    Further, while more roads may solve congestion locally, more traffic on the road network may result in more congestion elsewhere. In Sydney, for example, the WestConnex may improve traffic conditions on Parramatta Road, but may worsen congestion in the city.

    Weakest links

    Congestion is determined by the weakest links in the road network. If road capacity expansion does not involve widening of these bottleneck links, congestion may simply move to another part of the network without solving the congestion problem. Moreover, it could potentially make congestion even worse.

    The Braess Paradox is a famous example in which building new roads in the wrong location can lead to longer travel times for everyone, even without induced demand, because such new roads may lead more car drivers to the weakest links in the network. The reverse may also be true: removing roads may even improve traffic conditions.

    This paradox occurs because each driver chooses the route that is quickest without considering the implications his or her choice has on other drivers. Car drivers only care about the number of vehicles in the queue in front of them and do not care about vehicles queueing behind them. This is a classic problem in game theory, very similar to the type for which John Nash was awarded a Nobel Prize.

    What does the data say?

    One US study has shown a strong relationship between the amount of new road length and the total amount of kilometres travelled in US cities, a finding the authors of that study termed “the fundamental law of road congestion”.

    Similar findings are reported in Spain and in the United States, where even major road capacity increases can actually lead to little or no reduction in network traffic densities. It has also been found to exist in Europe, where neglecting induced demand has led to biases in appraising of environmental impacts as well as the economic viability of proposed road projects.

    In Sydney, there is similar evidence from traffic volumes crossing the harbour. The Sydney Harbour Bridge was carrying a stable traffic volume of around 180,000 vehicles per day from 1986 to 1991. The Sydney Harbour Tunnel opened in 1992, and the total volume of traffic crossing the harbour increased in 1995 to almost 250,000 vehicles per day. This 38% increase in traffic can be attributed to induced demand and not to population growth (which was around 4% during this period).

    Empirical observations have also confirmed the existence of the Braess Paradox. For example, in 1969 a new road was built in Stuttgart, Germany, which did not improve the traffic conditions. After closing the road again, congestion decreased.

    Similar observations in which road closure led to improved traffic conditions have been observed in New York City, where upon closing 42nd street (a major crosstown street in Manhattan) it was observed that traffic was significantly less congested than average.

    A recent experimental study confirmed that this paradox still exists by showing that expanding road capacity can result in worse traffic conditions for everybody.

    The theory of induced demand is accepted by a large majority, but not by everyone.

    For example, authors of a 2001 paper have argued that induced demand does not exist. However, UK researchers Goodwin and Noland have criticised this study.

    In isolation, building more roads can certainly improve traffic conditions but these effects may only be local and only in the short run. Congestion may become worse in other parts of the network and experience shows that spare road capacity is quickly filled up with new cars.

    Even without the extra road users that new roads create, if the new roads are built in the wrong locations congestion may actually become worse simply because of the way people behave. Roads alone do not solve congestion in the long term; they are only one (problematic) tool in a transport management toolkit

    Matthew Beck is Senior Lecturer in Infrastructure Management at University of Sydney. Michiel Bliemer is Professor in Transport and Logistics Network Modelling at University of Sydney.

    This article was first published in The Conversation on 13 April 2015.

  • John Menadue. Tax dodging may be legal, but is it fair and ethical.

    Senior executives of companies like Google, Microsoft and Apple have all admitted to the Senate in the last week that they have avoided billions of dollars of Australian tax by a range of devices such as transfer pricing and earnings made in Australia being diverted to Singapore which has a lower tax rate. In every case they have told us that it is all perfectly legal. And apparently it is. Other companies such as Westfield and News Corp have also received earlier publicity because of their massive tax avoidance. But it’s all been legal!

    Michael West in the SMH on April 6, 2015 told us that Rupert Murdoch’s US Empire siphoned $4.5 billion from its Australian business, tax free. The Murdoch media complained to the rooftops about this report. It plays hard ball with all its opponents but really squeals when it is under attack.

    Heath Aston  in the SMH on 1 April 2015   reported that according to the Australian Taxation Office ‘Australia’s biggest 900 companies claimed deductions and exemptions worth $25 billion last year – enough to wipe out two thirds of the entire Federal deficit.’  Yet many of these companies have been leading the charge that the government needs to show some backbone and fix the budget deficit. The Abbott government seems to prefer fixing the budget at the expense of the sick and unemployed.

    Michael West in the SMH, who has been so persistent and effective in revealing tax dodging, told us on Feb. 13 2015 that documents obtained from the ATO under FOI show that ‘Australian corporation taxes are in crisis because of the explosion of tax haven dealings of multinational companies.. one of the most telling FOI finds is a comparison between trade and international-related party dealings. Together Singapore and Switzerland account for 40% of related party trade. That level of related party dealings bears little relationship to real trade’. As Michael West put it ‘In laymen’s terms the purpose of these related party deals is often to siphon profits out of Australia to avoid paying tax’.  Is this fair?

    In the SMH on Feb.9 2015 Michael West estimated that Google ‘is making off with at least $130 million a year that belongs to the Australian taxpayer and rising’. Does that sound ethical?

    Peter Martin in the SMH on May 13 last year revealed that 75 ‘ultra high earning Australians paid no tax at all in 2011-12’. Is that fair?

    Michael West again in the SMH on 20 December 2014 reported that Glencore which has recorded revenues in excess of $10 billion p.a. paid only $400 million in tax over three years.

    According to Roman Lanis of UTS the Westfield Empire paid an effective tax rate of only 8% over the last decade. With its chorus of lawyers and accountants, it was apparently able to make this legal. But was it right?

    We hear a lot about dole-bludgers and welfare cheats but is all this tax minimisation fair and right?

    The Tax Justice Network, in collaboration with United Voice, reported that 29% of Australia’s top 200 companies had effective tax rates of 10% or less. Even worse, 14% of these 200 top companies paid no tax at all. It estimated that these top 200 companies are avoiding tax per annum of $8.4 billion. These figures have not been seriously challenged.

    These massive tax avoiders say that is all legal.  They have the benefit of expensive legal and accounting advice that ordinary tax payers cannot afford. Is that fair?

    These major tax avoiders in collaboration with the Australian Taxation Office refused to have their affairs disclosed for public scrutiny. We are told it is ‘commercial in confidence’. Apparently the ATO thinks it should cosy up to wealthy companies and they will then hopefully cooperate. Does that same concern for taxpayers extend to ‘ordinary’ taxpayers?   There is a lot of unethical behaviour allowed for the powerful and wealthy which is not permitted for ordinary people and Australian companies, large and small.

    We now also know that our four big audit firms are advising these tax-dodgers on how to minimise their tax. It is noteworthy that the European Union has recently enacted legislation curtailing the activities of audit firms who have been giving tax advice. Our ATO is apparently moving in the opposite direction by employing staff from the big four audit firms to replace the loss of experienced ATO staff. Talk about Dracula in charge of the blood bank! Michael West in SMH on 15 December 2014 described this quite bizarre action as follows “The ATO is running a pilot scheme whereby it outsources the duty of tax compliance for Australia’s largest companies to none other than the company auditor….The large taxpayers are to pay their own external audit firms.. read the Big Four… to conduct their compliance work as well as doing the audit’. It is hard to think of a more obvious conflict of interest than this.

    The tax dodgers have clearly got many powerful friends amongst the political, business and professional elites. But they are friendless in the community. In March this year, Essential Research asked respondents how they felt about the tax being paid by various groups. They indicated that the following did not pay enough tax.

    Large businesses- 60% did not pay enough tax.
    People on high incomes- 59% did not pay enough tax
    Mining companies- 67% did not pay enough tax
    Companies- such as Google and Apple 73% did not pay enough tax.

    In a panel of over 1400 readers of the SMH, 83 % agreed that the ATO should be free to name and shame companies suspected of not paying their fair share of tax. (SMH April 11-12 2015)

    The same newspaper also reported that in a survey of marginal seats 90 % of people believe that the government has failed to tackle tax dodgers.

    The Swinburne Leadership Institute Survey released today said that business leaders ‘are perceived to disregard .. the wider public good’.

    The boards and CEOs of these companies have a heavy ethical and moral responsibility and dodging the issue by claiming confidentiality and that it is all legal will just not wash.

    Corporations don’t make decisions. It is individuals who make decisions – and those decisions should not only be legal but they should also be fair and ethical.  That responsibility to act fairly and ethically cannot be avoided by individuals or deflected to someone else. Joe Hockey likes to infer that his business chums are ‘lifters’ but is it true of these tax dodgers!

    There is difficulty in getting international cooperation to address this tax avoidance. A good start however  would be full disclosure including full disclosure of all subsidiaries, full disclosure of all related party transactions and balances and a breakdown of taxes paid in Australia and other countries. Jeffrey Knapp has outlined this in today’s The Conversation.

    How can Tony Abbott seriously expect public support on necessary budged repair when we see such massive tax avoidance by large and wealthy corporations many of which are foreign owned.

    Corporations have been given a privileged position in our society. It is called ‘limited liability’ in that shareholders can only be liable for the money they invest in a corporation and no more. That is an enormous advantage that has been conveyed by the community.  If and when a company goes bankrupt, the community, employees and creditors have to pick up a lot of the debts and consequences. But the advantage that we give to companies is obviously not reciprocated by many companies.

    Business people should act in an ethical manner and not inflict damage on the nation for the sake of short-term commercial or personal gain.

    These companies that are avoiding billions of dollars in tax in Australia take advantage of the infrastructure and services that have been paid for by the Australian taxpayer. They rely on highly trained and skilled Australian staff. Those staff have been educated and supported by Australian taxpayers.  In some instances, these companies have taken advantage of research grants – funded by the Australian government (and taxpayers).

    There is also a matter of trust. As a community we need to have trust in our major institutions including corporations. In recent years the media has been full of comment about our loss of trust in politicians, parliament and political parties. But commercial institutions are also critical in our society and a major loss of trust in them has very serious consequences.

    Many of our corporations are forfeiting our trust. We are getting into dangerous territory both for themselves and for ourselves.

     

     

  • Harold Levien. The Coalition Government’s Bankrupt Economic Policies: 

    The Coalition Government seems to have been fighting the next elections since the day it won Office and using the same misleading tactics.  Throughout the last election campaign, and for months before, the Coalition bitterly attacked both Labor’s budget deficit and government debt. Yet when the Labor Government left Office Parliamentary Library statistics show government gross debt was 19% of GDP. The advanced economies’ international organisation, the OECD, apparently calculates the figures differently showing Australia’s debt as 33% of GDP in 2013. This is still much lower than all OECD economies except for tiny Estonia and Luxemburg. Government debt to GDP in 2013 shown for some leading economies was: Germany 86%, Canada 93%, UK 99%, USA 104%, France 112%, and Japan 224%.  NZ was 40%. These figures place into context the Coalition’s bellowing attack on the previous government for the size of our public debt.

    Australia’s annual budget deficit at 2.4% of GDP compared favourably with the Euro area at 2.5%, the UK at 5.3%, the US at 5.8% and Japan at 8.4%. Our deficit resulted from both the stimulus package to save Australia from the global recession and the decline in many export companies’ income tax payments following the impact of the GFC on their taxable income.

    The US Nobel Laureate economist, Joseph Stiglitz, who visited Australia in September 2013, complimented the Government on its uniquely successful economic policy in saving Australia from the GFC which spread recession throughout Europe, North America and Asia including China. Regarding the latter, Treasury published a statement in 2009 that refuted the Coalition’s argument that the Chinese economy saved Australia from the recession. The GFC hit China hard after a great reduction in exports to Europe and the US.

    Increasing the Deficit 

    Following the elections the Coalition Government quickly and substantially increased the deficit with the apparent aim of attributing to the previous Government “an immense deficit” in order to reinforce its accusation of economic irresponsibility. Here is the evidence.

    First, the Government made an $8.8 billion grant to the Reserve Bank which the Bank had not requested. Second, it reinstated the Howard Government’s fringe benefits tax concession for privately owned motor vehicles, which the Labor Government had cancelled on the grounds it had become a tax rort. This reinstatement reduced revenue by around $500 million a year. Third, it cancelled the previous Government’s very modest 15% tax on superannuation income over $100,000 which reduced revenue by about $600 million a year. (This Labor Government tax was designed both to reduce the inequality of the Howard Government’s abolition of tax on superannuation income and to modestly reduce the deficit.) These measures increased last year’s estimated deficit of $49 billion by nearly $10 billion.

    Additionally the Government’s abolition of the carbon tax will cost annual tax revenue $7.6 billion.  And overturning the mining tax will further reduce government revenue.  (Although estimated at $750 million a year the decline in mineral prices is likely to reduce this amount.)  These measures will increase this year’s deficit by around $8 billion. 

    Manipulating Opinion 

    To develop support for its last budget it appears all Coalition Ministers were schooled to imprint on the public mind the Coalition’s new mantra at each television and press interview: “the debt and deficit mess we inherited from the previous government”.  There’s no mention of the Coalition’s increase in the current deficit.  And it recently intensified this message by repetitive recitation of the dollar amount of annual interest on this (increased) debt.

    The Coalition Government accentuates its deception by failing to mention the economic consequences (let alone the human impacts) if the Labor Government had failed to run these deficits.

    For example, at the height of the GFC in 2008 if the Rudd Government had followed the European example of cutting government spending and leading to zero growth (instead of maintaining its growth trajectory of over 3% so the work force could absorb education leavers, new migrants seeking work and the impacts of increasing productivity) this would have caused well over an additional 300,000 unemployed and reduced GDP by more than $36 billion. A continuation of zero growth in 2009 would have similarly increased unemployment (totalling over 600,000) and reduced GDP further (totalling an estimated $72 billion). Budget tax figures indicate this would have led to a decline in tax revenue of least $24 billion and increased social service spending on the unemployed of over $11 billion by 2009. This total of $35 billion budget burden is many times the increased interest on the public debt, part of the Government’s refrain, generated by these deficits.

    Labor’s budget deficits after 2009 were designed to sustain the economic recovery following declining tax revenue– confirmed in Treasury’s last Budget Paper No.1 (Section 10-page 15).  Yet on the ABC’s Insiders program on May 18 last year, following the Coalition’s first budget, the Prime Minister “explained” their budget cuts were necessary because “Labor spent like a drunken sailor”.

    The Coalition Government is perhaps at its most deceptive when comparing the Howard Governments’ budget surpluses with Labor’s deficits. While the Coalition received billions of dollars in unexpected tax revenue during the mining boom, the recent Labor Governments had to cope with first, the GFC and later, the demise of the mining boom.

    How to Reinstate the Budget Cuts 

    In the coming May budget the Government  has the opportunity not only to reinstate the many unfair and economy-damaging spending cuts in last year’s budget but also to begin phasing out the deficit and reducing government debt. If the Coalition Government axed the Howard Government’s tax concessions on superannuation payments, which go predominantly to higher income earners, this would increase revenue by an estimated $30 to $40 billion this year. As mentioned above they were introduced at the height of the mining boom following its great boost to revenue.

    This additional revenue would permit restoration of the projected 20% funding cuts to universities and cancelling the cuts to science research, the ABC and SBS, Medicare, public housing and many other social services.  And the Government could restore the $80 million funding of Youth Connections’ support programs for the educationally deprived, Labor’s

    preventative health programs and the Coalition’s $8 billion annual cuts to the States’ health and education budgets. It would also enable the Government to fund the entire Gonski schools’ program rather than the Coalition’s highly truncated version. The recent decision for a modest increase in funding pre-school education and child care could be supplanted by a considerable expansion and improvement in this critical area incorporating research findings that the quality of intellectual and emotional input in the child’s early years provides the optimal foundation for future intellectual and personal development.

    In an ABC 7.30 interview on February 9 Treasurer Hockey claimed cuts to services are inevitable stating “we just can’t continue to spend more than our revenue”. But his argument becomes nonsense by ignoring the revenue loss from unfair superannuation tax concessions, tax avoidance (discussed below) and negative gearing (costing revenue an estimated $5 billion this year).

    Counter-Productive Policies 

    Many of the Coalition Government’s policies in this year’s budget (2014-15) are counter-productive and likely to entrench a substantial further increase in the deficit or, if that is unacceptable to this Government, lead to greater cuts in government services.

    Perhaps the most counter-productive policy is the elimination of 3,000 jobs in the Australian Taxation Office –with another 1,700 to come. This will enormously reduce the ATO’s capacity to fight tax evasion by wealthy individuals and national and multi-national corporations.  Among the employees to accept redundancies are some of the most experienced in areas where tax avoidance is an art form. Those who have accepted private sector offers will be able to provide their professional knowledge and experience to the very organisations that deprive the Australian economy of huge tax revenue at the cost of essential government services. A recent report by the Tax Justice Network estimated current tax avoidance by the top 200 companies at over $8.4 billion annually. This figure would be significantly increased if more companies and wealthy individuals were included.

    Another counter-productive policy with enormous potential for harming the economy is the $151 million cut to science funding which includes $115 million cut to the CSIRO. While this is critical to Australia’s science budget it’s a minuscule part of the Government’s $415 billion budget. And it comes at the very time that new high-tech developments in industry (rural, manufacturing and tertiary) are required to help compensate for both the decline of the mining industry and the forthcoming demise of the motor vehicle industry. The latter will have a serious impact on employment since, with component manufacturers   and taking account of multiplier effects, this could displace over 100,000 workers.

    The CSIRO reports that, by June 30 this year, funding cuts will have led to the loss of 1391 workers or 21.5% of its work force including 500 science and research staff. They claim this will lead to the cancellation of vital research and that staff morale has reached record lows inducing many future science graduates to lose confidence in our science future and seek jobs overseas. This could deprive Australia of future transformative scientific developments placing us outside the league of the most highly advanced nations. However, the Government saw fit to provide $90 million to search for MH 370, the Malaysian plane believed to have crashed in the Indian Ocean, and it has now promised additional funding.

     

    A third critical counter-productive policy is the Coalition’s decision to cease funding the Labor Government’s renewable energy agency (Arena). The decision is currently blocked in the Senate by Labor and the crossbenchers.  Industry concern over this policy is held to be the likely reason for the 88% decline in renewable energy investment between 2013 and 2014– from $1.3 billion to $240 million. Apart from impacting on greenhouse gas emissions this will reduce both employment and tax revenue.

    Fourth, the Government has scrapped Labor’s modest $368 million four-year States Agreement on Preventative Health and a $201 million Agreement with the States on improving public hospital services. This appears to conflict with the Government’s concern over increased health spending. Health authorities have long regarded preventative measures designed to improve public health as the most effective way of arresting the escalating health budget—leaving aside improving the quality of life.

    Fifth, the Government has, for the first time, dismissed the Head of Treasury and appointed a replacement from outside Treasury who was an investment banker but worked in Treasury until 1993. The apparent reason for such unique action was the Government’s disapproval with the views of both the dismissed Head and his next in line. The chosen appointee’s macro-economic views appear to echo those of the Government. This is a disturbing precedent for future governments and a perilous path for the pursuit of government policy. The purpose of an independent merit-based public service is to provide impartial, fearless policy advice. The new Treasury Head proclaims support for the free market “austerity” policies of the European Union during and since the GFC –the very policies which have led to massive increases in unemployment in almost every European country. Leading Treasury staff, whose academic background would almost certainly have led them to support economic stimulus in times of rising unemployment which we are now entering, will face a serious dilemma. Will the new appointee lead us down the European path?

    There is inadequate space to deal with many other Government policies that are likely to have deleterious effects on the economy and public welfare. These include the watering down of the previous government’s FOFA legislation to regulate financial advisors; the possible adverse effects of the Trans Pacific Partnership Agreement on some controls over the environment, medications and legislation (existing and potential) concerning tobacco, alcohol and food products; the near-free rein given to foreign investment in housing, farmland and corporation takeovers; and continued government subsidies and loans to the many new profit-based private training colleges, who this year will receive $1.6 billion (the science budget was cut $151 million), despite a flood of evidence (revealed on the ABC 7.30 program from ex-students and staff) of many colleges, including the largest, deliberately recruiting unsuitable students, signing them up for expensive courses, providing little effective training and submitting false documents to the Government; and all this while training-based government TAFEs suffer substantial cuts.

    Conclusion

    This Government has demonstrated massive incompetence in formulating their economic policies and their budget. Such is this incompetence since coming to Office they appear to rely on deception as a principal means of gaining acceptance of their policies. 

    Harold Levien is a freelance writer. After graduating in arts/economics he founded and edited a monthly current affairs journal, Voice, The Australian Independent Monthly. It lasted five years. Following its closure he lectured in economics. He is now retired.

     

  • Alcohol is a bigger problem than ice.

    In the Herald Sun on April 8, 2015, Jeff Kennett, the former premier of Victoria, said that it was time to stop the promotion of alcohol. See link to article below.

    In this article he says ‘If it is good enough to ban the advertising of tobacco products, if it is good enough to make the wearing of seat belts compulsory, surely if the serious about family violence, the road toll, our crime rate, it is time to ban the promotion of alcohol. … The time has come to do what we have done for tobacco – ban all advertising of alcohol products and ban all sponsorships by alcohol companies.‘

    Todd Harper, the CEO of Cancer Council of Victoria tells us in The New Daily of April 10 that ‘There is already a complete ban on alcohol advertising in sport in France and there have been moves to phase out alcohol sponsorship in sport from Ireland, the UK and South Africa.‘  John Menadue

    http://www.heraldsun.com.au/news/opinion/time-to-stop-promotion-of-alcohol/story-fni0ffsx-1227294833309

  • Fiona McGaughey, Mary Anne Kenny. Lashing out at the UN is not the act of a good international citizen.

    The United Nations has again criticised Australia’s human rights record in relation to its treatment of asylum seekers and refugees. A report by the UN’s Special Rapporteur on Torture, Juan Méndez, has raised a number of concerns. These include:

    • Australia’s policy in relation to the detention of asylum seekers on Manus Island breaches Articles 1 and 16 of the UN Convention Against Torture. These articles require that Australia, as a signatory to the convention, not allow acts amounting to torture or cruel, inhuman or degrading treatment or punishment in any place under its jurisdiction. Méndez found that the reports of conditions in the centre – including increasing acts of violence – combined with the arbitrary and indefinite nature of the detention violated the convention.
    • Failing to respond adequately to specific allegations of intimidation and ill-treatment of two asylum seekers on Manus Island following their statements in relation to the violent outbreaks at the centre in February 2014.
    • Recent legislation passed by federal parliament violates the convention as it allows for the arbitrary detention and refugee determination of asylum seekers at sea without access to legal assistance. Concerns were raised that this could lead to an asylum seeker being sent back to a country where there are substantial grounds for believing they would face torture, in breach of Article 3 of the convention.
    • Amendments to character provisions in the Migration Act violate the convention, as an increase in the refusal of visas on character grounds will lead to those individuals being held in detention indefinitely.

    Australia’s response

    Prime Minister Tony Abbott reacted by saying Australians are:

    … tired of being lectured to by the United Nations.

    Méndez responded, saying:

    I’m sorry that the prime minister believes that we lecture … We don’t believe so. We try to treat all governments the same way and deal with specific obligations and standards in international law as objectively as we can.

    Abbott said the government’s policies had stopped people arriving by boat and ended deaths at sea. Méndez pointed out that prolonged and arbitrary detention should not be used as a deterrent.

    Méndez’s role is to assist the government to develop alternatives that abide by its international obligations, such as appropriate screening with appropriate and fair procedures for the determination of claims of people who are fleeing torture.

    Who is the Special Rapporteur on Torture?

    The Special Rapporteur on Torture is one of a number of independent human rights experts who report to and advise the UN Human Rights Council. As part of their activities, the Special Rapporteur can communicate concerns to States on reports of individuals who may be subject to torture.

    These allegations are provided to the State in writing and the state has the opportunity to respond. The Special Rapporteur then reports on those communications and responses annually to the UN Human Rights Council.

    Méndez is well-respected. He is a Professor of Human Rights Law in Residence at the American University Washington College of Law. Like all UN Special Rapporteurs, he carries out his role on a voluntary basis. He is not a UN staff member and is independent from any government. Perhaps most importantly, he is a survivor of torture at the hands of the Argentinian military dictatorship.

    What is the context of Abbott’s comment?

    The UN has made several high-profile criticisms of Australia in recent months. In September 2014, the new UN High Commissioner for Human Rights, Zeid Ra’ad al Hussein, criticised Australia’s asylum policies in his high-profile opening address to the Human Rights Council. He singled out a number of states or regions of concern – Australia was one of the very few Western states highlighted.

    This was followed closely by Australia’s scheduled review before the UN Committee Against Torture in November 2014. The committee quizzed Australia on a number of human rights issues. In its report, the committee made recommendations on Australia’s obligations not to return people to a country where they may be tortured (refoulement), and on the detention of children seeking asylum, which is only to be used as a last resort.

    Abbott’s defensive response to the criticisms is reminiscent of John Howard’s adversarial relationship with UN human rights bodies. Although governments can get touchy about international criticism, engagement between governments and UN human rights bodies tends to be diplomatic.

    Australia has not always read the memo on that one. Then-foreign minister Alexander Downer famously warned in 2000 that:

    … if a United Nations committee wants to play domestic politics here in Australia, then it will end up with a bloody nose.

    These types of comments would be unlikely from current Foreign Minister Julie Bishop. Bishop has performed well in Australia’s seat on the UN Security Council and has her sights set on a seat on the UN Human Rights Council in 2018. She has said:

    Our strong and principled stand on numerous human rights issues in our role as a temporary member of the Security Council will form part of our campaign … We abide by our international obligations and we are confident that our experience and our commitment to human rights protection and promotion makes us a strong contender.

    Is Australia a good international citizen?

    Contrary to Bishop’s view, UN bodies have consistently found that Australia does not abide by its international human rights obligations in certain key areas such as its treatment of asylum seekers.

    At a national level, the bill Méndez mentioned was also found by the Parliamentary Joint Committee on Human Rights to be incompatible with Australia’s international human rights obligations.

    A less-than-perfect human rights record does not preclude a state from Human Rights Council membership. However, it must demonstrate willingness to provide redress and make improvements.

    Australia’s breaches of international human rights law are increasingly coming to the UN’s attention. Abbott’s recent comments are not compatible with a state willing to provide redress and make improvements – and nor are the individual cases brought to UN human rights committees. Australia has acted on the committees’ findings by providing remedies to those affected in only 17% of cases.

    In November 2015, the Human Rights Council will consider Australia’s overall performance in its peer-review mechanism – the Universal Periodic Review. This review will include information such as Méndez’s report.

    In the previous review in 2011, Australia accepted the majority of the recommendations made by other states. It also made a number of voluntary commitments to the council, including establishing a full-time Race Discrimination Commissioner in the Australian Human Rights Commission.

    This time around, it remains to be seen whether Australia will play the role of a good international citizen, keen to secure a future seat on the Human Rights Council.

  • Vicken Babkenian. Gallipoli’s inconvenient ‘other side’.

    Leading up to the Gallipoli centenary, a growing trend emerged in Australia of presenting the ‘other side’ of the story. From popular books, official histories, films and academic conferences, the ‘Turkish’ perspective of Gallipoli became widely told.[1] According to this perspective, as illustrated in a recent article by Dr Jennifer Lawless, the allied landing at Gallipoli was an invasion of the ‘Turkish homeland’ and by the end of the campaign, many more ‘Turks’ (87,000) than Anzacs (8700) died.[2] The campaign is portrayed as an almost wholly Turkish and Australian affair, contributing to the birth of both nations and a symbol of a centenary of friendship.[3] A deeper understanding of the history, however, reveals that many of these narratives are anachronistic interpretations, promoting nationalist agendas with fundamental errors and omissions.

    In reality, when the Anzacs landed at Gallipoli on 25 April 1915, they were part of an Anglo-French invasion of the Ottoman Empire, not Turkey. The republic of Turkey was not established until 1923. Like the British and French imperial forces, the Ottoman Army reflected the multi-ethnic make up of the Ottoman Empire. While most of the officers were ethnic Turks, the army included large numbers of Arabs, Kurds, Armenians, Greeks, Circassians and Jews. According to Australian military historian Bill Sellars ‘two thirds of the troops who made up Colonel Mustafa Kemal’s 19th Division that faced the first wave of the Allied invasion were Syrian Arabs’.[4] A more comparable casualty comparison should be made between the empires and not ‘Turks’ v Anzacs.

    During the war, the Ottoman Empire was led by a dictatorial triumvirate of Young Turks – Enver, Talaat and Djemal. Since coming to power in a violent coup in 1913, the Young Turks had been pursuing a policy of ethnic and religious homogenisation of the empire in order to create a ‘Turkey for the Turks’. The Young Turk participation in the First World War on the side of Germany allowed them to speedily accomplish this goal under the cover of war.

    ‘Gallipoli’, derived from the Greek word for ‘beautiful city’, was historically a Greek peninsula but had been absorbed by the Ottoman Empire in the 15th century. Just two weeks prior to the Anzac landings, the Ottoman authorities deported about 22,000 of the peninsula’s native Greek population into the interior of Anatolia (current day Turkey). [5]Many would die of harsh conditions. This was only a precursor to the larger persecutions to follow. Triggered by what many scholars argue was the impending landing by the Anglo-French forces on the Gallipoli peninsula, the Young Turk government arrested some 250 Armenian intellectuals in the capital of the Empire, Constantinople (now Istanbul), on 24 April 1915. This marked the beginning of what Henry Morgenthau, the United States ambassador to the Ottoman Empire in 1915, described as a ‘campaign of race extermination’. As a representative of a neutral nation, Morgenthau stood at a critical juncture in the flow of information. His key informants were US diplomats, missionaries and businessmen stationed throughout the Ottoman Empire.

    In almost every town and village in the Empire, the Armenian population was arrested and deported by orders from the central government in Constantinople. The men were in most cases killed just outside their towns and villages. A much worse fate awaited the women and children. After being uprooted from their homes, they were forced to walk southwards in huge convoys to the burning deserts of northern Syria. Most would die of starvation, murder and disease. In the Ottoman war theatre, Anzacs witnessed the Armenian tragedy—some even helped rescue survivors of the death marches. Many Anzac prisoners captured by the Ottoman Army were held in abandoned Armenian churches and homes and they became key eyewitnesses to the unfolding events.

    Every major newspaper in Australia covered the genocide with regularity—the Melbourne Age having published more than 40 articles on the event in 1915 alone. Headings such as ‘Armenians Butchered’, ‘Million Armenians Massacred’ and ‘More Armenians Massacred—girls sold in open market’ were indicative of the tone of the articles being published around this time.[6] By December 1915, the United States consul in Syria reported that some one million Armenians had died and another half-a-million destitute refugees were scattered in or around his consular district. Australian prisoner of war, Private Daniel Creedon of the 9th Battalion AIF, wrote in his diary just two months later: ‘The people say that the Turks killed 1¼ million Armenians.’ Creedon was held captive in an isolated internment camp in the Taurus Mountains of Anatolia and died a few months after he made his diary entry. His figure was close to the figure accepted for the death toll of the massacres and suggests that the magnitude of the outrage was known and discussed by the Anzac prisoners of war.

    The story of Armenian suffering evoked a strong humanitarian response in Australia at the time leading to the establishment of the Armenian Relief Fund, which began in Victoria in 1915, spread throughout the country, and continued its work for over a decade. The Victorian state war council recognised the Armenian fund as a ‘patriotic fund’ – one considered as having been formed for the purpose of supporting Australia’s allies as well as its own soldiers. The relief movement culminated in the establishment of an Australian-run orphanage for some 1700 Armenian orphans in Beirut, Lebanon.

    When the war ended, the victorious Allies arrested over a hundred Turkish officials for their role in the ‘Armenian massacres’ and the ‘ill-treatment’ of Allied (including Anzac) prisoners of war. However, the subsequent rise of a new Turkish nationalist movement headed by Mustapha Kemal (Ataturk) succeeded in revoking the post-war Treaty of Sevres which had stipulated an international trial of the Turkish offenders. When the new Turkish republic was established in 1923, the multi-ethnic Ottoman Empire had become a mostly homogenous Turkish nation state.

    By the mid-1930s, the Armenian genocide had largely faded from the world’s collective memory. It was an observation not missed by Adolph Hitler when he made his infamous remark in 1939: ‘Who, after all, speaks today about the annihilation of the Armenians?’ Raphael Lemkin, a Polish Jewish lawyer who lost 49 members of his family during the Holocaust, coined the word ‘genocide’ in 1944. Lemkin cited the Armenian case as a defining example of what the word meant. International jurist Geoffrey Robertson calls the event an ‘inconvenient genocide’ because recognising and remembering the crime in many countries often results in harsh diplomatic reactions from Turkey. In the case of Australia, the Turkish foreign ministry banned some NSW MPs from visiting commemorations at Gallipoli after having voted in favour of an Armenian genocide resolution in the NSW parliament in 2013.

    It was not until 1967, some 50 years after Gallipoli, that Turkey and Australia formally established bilateral relations. Since then, the relationship between the two nations has developed rapidly with frequent high-level visits and expanding bilateral trade and investment.[7] On the issue of the Armenian genocide, the Australian federal government has been faced with a moral dilemma. For decades, the government has maintained a policy of non involvement in ‘this sensitive debate’. However in 2014, for the first time, Australia’s foreign minister, Julia Bishop, expressed her Liberal government’s position on the issue in a letter to the Australian Turkish Advocacy Alliance organisation. She wrote that the Australian government does ‘not … recognise these events as “genocide”’ adding further that ‘Australia attaches great importance to its relationship with Turkey, which is underpinned by our shared history at Gallipoli, and by the recent cooperation in the G20’.[8] Diplomatic cables between Ankara and Canberra obtained under Freedom of Information laws revealed that last year the matter arose in a letter from Ms Bishop to her Turkish counterpart, Ahmet Davutoglu. Ms Bishop wrote that ‘recognising the important interests at stake for both countries, I assure you that there has been no decision to change the long-standing position of successive Australian governments on this issue’.

    It seems that our nation’s collective memory of Gallipoli and the government’s position on the Armenian genocide are influenced more by current economic and political relations than a true reflection of the past. If, as some historians have suggested, that telling the honest truth about Australia’s First World War experience is the best way to honour our war dead, than it’s time for a more truthful representation of the ‘other side’ of Gallipoli.

    Vicken Babkenian is an independent researcher for the Australian Institute for Holocaust and Genocide Studies, Sydney. He is the author of a number of articles on Australia’s humanitarian response to the Armenian genocide.

     

    [1] Russell Crowe’s movie, The Water Diviner is an example.

    [2] See Dr Jennifer Lawless, ‘Gallipoli: A Turkish Perspective’, Teaching History (NSW), March 2015.

    [3] http://www.abc.net.au/news/2015-02-28/friendship-wall-unveiled-at-auburn-for-gallipol-centenary/6270026

    [4] http://www.aljazeera.com/archive/2004/01/200849135129326810.html

    [5] http://honesthistory.net.au/wp/wp-content/uploads/Greeks-of-Gallipoli-1915.pdf

    [6]http://trove.nla.gov.au/newspaper/result?q=armenian+massacres&exactPhrase=&anyWords=&notWords=&requestHandler=&dateFrom=1915-05-01&dateTo=1923-12-31&sortby=dateAsc

    [7] http://www.dfat.gov.au/geo/turkey/Pages/turkey-country-brief.aspx

    [8] http://www.dailysabah.com/politics/2014/07/23/australian-fm-armenian-case-not-genocide

  • Mike Steketee. Our missed opportunity to tackle wealth inequality

    The Abbott Government has promised a “comprehensive and inclusive” review of the tax system, but appears to have ignored a major issue: rising inequality of income and wealth, writes Mike Steketee.

    The Abbott Government committed itself last week to a “comprehensive and inclusive” review of the tax system.

    But the tax discussion paper it released to kick off the process does not find space in its 196 pages to canvass some of the major issues.

    The rising inequality of income and wealth in developed nations has come into sharp focus in recent years but it does not seem to have made its way on to the Government’s radar, even though it is the tax system that potentially can play the largest role in influencing the trend.

    Remember the Occupy movement that staked out Wall Street and spread to other countries? “We are the 99 per cent,” they said, pointing to the 1 per cent of Americans who held 40 per cent of the nation’s wealth. According to Nobel Prize winning economist Joseph Stiglitz, that was a rise from 33 per cent in about 1985.

    The trend in Australia is the same, even if it is not as severe. On the latest figures available, the median net worth of Australian households – that is, their assets minus their liabilities – was 54 times higher for the top 20 per cent than for the bottom 20 per cent in 2011-12. That was up from 45 times higher in 2003-04.

    If you prefer that in dollars, median household net worth increased from $27,508 to $29,600 over this period for those at the bottom, after taking into account inflation, while at the top it rose from $1.24 million to $1.59 million. That is a $2,100 increase compared to $350,000.

    Bear with me for one more statistic: in 2003-04, 2 per cent of households had a net worth of $3 million or more – that is in current dollars, after adjusting for inflation. By 2011-12, that had risen to 3.1 per cent.

    What we should do about such a trend is a value judgment. But hopefully the debate will go beyond declamations about class envy.

    In his landmark study on inequality, Capital in the Twenty-First Century, French economist Thomas Piketty shows that the rate of return on wealth over most of history has run ahead of world economic growth. Although two world wars and a depression reversed the figures during the last century, he argues that all the signs are that wealth is increasing significantly faster than economic growth during this century and will continue to do so. He estimates 4-5 per cent for the rate of return on capital, versus barely 1.5 per cent for world economic growth.

    It is a system that feeds on itself: the more wealth accumulated, the more that can be re-invested at relatively high rates of return. Piketty says world wealth per adult grew at an average annual rate of 2.1 per cent between 1987 and 2013 but at the very top it grew by 6.8 per cent. Bill Gates increased his fortune from $4 billion to $50 billion in the 20 years to 2010, according to estimates by Forbes magazine, while the French heiress Liliane Bettencourt saw her wealth increase from $2 billion to $25 billion.

    Piketty calculates that if the top one thousandth of wealth holders achieve a 6 per cent annual return, compared to average growth of 2 per cent, the top’s share of wealth would more than triple over 30 years and represent 60 per cent of the world’s wealth. That is, not the top 1 per cent owning 40 per cent, as in the US now, but the top 0.1 per cent owning 60 per cent of global wealth. Such disparity, he argues, is hard to imagine under existing political systems “unless there is a particularly effective system of repression or an extremely powerful apparatus of persuasion or perhaps both”.

    It may be that Piketty’s projections turn out to be inaccurate, as economic forecasts and projections often do. But he has documented in great detail a clear trend in rising inequality and there is little reason to think it will stop in the short term.

    Back in Australia, the tax discussion paper argues that our income tax system is highly progressive – more so than most other developed countries and particularly when government payments are included. This is mainly because of Australia’s mean tested welfare system, compared to the flat rate social security contributions levied in many countries.

    However, income tax has become less progressive in recent times, due mainly to the succession of income tax cuts during the Howard boom years. According to The Australia Institute’s Matt Grudnoff, only 3 per cent of taxpayers are in the top tax bracket now, compared to 13 per cent 10 years ago.

    Nevertheless, the effect of a progressive income tax is to moderate the trend towards rising inequality of incomes. But it is a different story when it comes to rapidly rising wealth inequality. This is an area that is taxed very lightly in Australia.

    The capital gain on the family home is not taxed at all, while that on other assets is taxed at half the rate of savings such as bank interest. Superannuation is taxed at a concessional rate that provides the largest benefit to higher income earners. The combination of the 50 per cent capital gains tax and negative gearing makes investment housing an attractive option for many, particularly higher income earners, while lower income earners are increasingly shut out of the market.

    Unlike other developed countries, Australia has no wealth tax, inheritance tax or gift duties, although they potentially provide the most direct means of curbing rising wealth inequality. These options are given short shrift in the discussion paper – two paragraphs in 196 pages. “These taxes generate relatively little revenue,” it says. “…Furthermore, such taxes can be difficult to administer effectively.”

    Piketty argues that the risk is that inequality in wealth will continue to rise unless there is some kind of global tax on capital. He says that a progressive annual tax on wealth at modest rates – for example, 1 per cent on wealth of between one and 5 million euros and 2 per cent above 5 million euros – would affect only about 2.5 per cent of Europe’s population but raise significant revenue – 300 billion euros, equivalent to about 2 per cent of total European GDP.

    He concedes that the risk of evasion is high unless countries share bank information – something governments at least are talking about. But a progressive tax on capital would make it possible to avoid “an endless inegalitarian spiral” that he argues ultimately would undermine democracies.

    If governments in Australia are not prepared to contemplate such a move, at least tackling the gross inequity of the superannuation concessions would be a start. Something approaching a political consensus appears to be emerging on this issue, although that is not to say it could not easily be derailed by the inevitable backlash from those affected.

    Even agreement that superannuation should be used to fund retirement, rather than as a wonderful way to minimise tax and accumulate wealth to pass on to the kids would be a step in the right direction.

    Mike Steketee is a freelance journalist. He was formerly a columnist and national affairs editor for The Australian.

    This article first appeared in The Drum on 6 April 2015.

  • John Menadue. The miners may have been better off with a super profits tax.

    As a result of the lower iron ore prices there is a dramatic shake-up coming amongst our iron ore companies, the largest of which are foreign owned.

    These companies conducted a vociferous campaign against the Resources Super Profits Tax. They were successful. As a result of the failures of the Rudd and Gillard Governments to effectively tax the mining companies, the state governments particularly of Western Australia and Queensland stepped in with very large increases in royalties. The Western Australian Government could hardly have believed its good luck in the royalties it extracted from the iron ore companies in Western Australia as a result of the China export boom.

    But that has now all changed. The mining companies are stuck with these very high royalties whilst their profits have been reduced or eliminated. There is not much doubt that companies such as Fortescue would be now much better served if there had been a Resources Super Profits Tax rather than the large increases in state royalties that they continue to pay. Professor Flavio Menezes, Professor of Economics at the University of Queensland, said in The Conversation on 7 April 2015 ‘Fortescue Metal Group’s Andrew “Twiggy” Forrest was one of the most vocal opponents of the super profits tax. Fortescue’s financial position is currently under significant pressure due to falling iron ore prices caused by oversupply, and the slowing Chinese economy. Ironically, it would likely be better off today under a well-designed RSPT than under a royalties regime.’

    In my blog of 17 October 2013, I pointed out the short-sightedness of the miners and the likely problems that they might face as a result of reduced profits and increased state royalties. See link below.

    https://publish.pearlsandirritations.com/blog/?p=827 

    I drew attention in that blog to the report of the GST Distribution Review of October 2012 that ‘Well designed rent-based taxes are likely to be more economically efficient than royalties, particularly in periods of low commodity prices or high costs. … Other factors, such as the size, variability and timing of the return received by government, as well as administration and compliance costs are also important considerations when choosing between alternative resource charging regimes.’

    Guest blogger, Dr Michael Keating in a post ‘The mining tax debacle’ of 14 September 2014, commented that what was surprising is that the Labor Government did not elect to just extend to all minerals the existing Petroleum Resource Rent Tax (PRRT) which also had a 40% tax rate. This would have been much easier to explain and as acknowledged by the Henry Review, the PRRT can approximate the impact of the Resources Super Profits Tax.  See following link to Michael Keating’s post.

    https://publish.pearlsandirritations.com/blog/?p=2424

    An appropriate mining tax regime is still a matter than needs addressing in Australia. The efforts of the Rudd and Gillard Governments were clearly in the right direction, but very badly managed. The miners took advantage of their lobbying power. Their action seemed to be of great benefit to them at the time, but many miners now and in the future will pay a heavy price for a failure to set up an appropriate taxation regime for miners in Australia.

    The miners are very likely to lament their action in destroying the Resources Super Profits Tax which was levied on profits. In its place, they have been levied with very high royalties by state governments which do not have a direct relationship to profits.

     

  • John Menadue. Cafes and restaurants are booming despite penalty rates.

    Despite the booming café and restaurant industry, the special pleading by employers on penalty rates and minimum wages goes on and on.

    Employers seem to have little appreciation that there is a difference between the market and society. The latter is much more important. The right to a decent wage and time off for recreation and relaxation with family and friends is essential. Markets are important, but they are a means to an end.

    Speaking of penalty rates, Peter Martin in the SMH  said ‘This Easter give thanks for penalty rates, they keep us human. Easter has become sacred even for the non-religious and the non-Christian.’

    Many employers who call for cuts in minimum wages or penalty rates have little appreciation of the difficulties for low income earners. Attacking the low paid is easy pickings.

    Workplace researcher Professor Barbara Pocock warns that cutting weekend penalty rates will erode the time Australians spend on informal relationship building with friends, family and neighbours. As soon as we take that wage premium off we make all time the same and we will see a lot more squeezing of that informal social time on Saturdays and Sundays.

    One of Australia’s great achievements in nationhood was in 1907, the living wage. But employers keep pleading that minimum wages are too high and they should be reduced to increase employment and presumably profits! But there is no conclusive evidence to support that proposition. Late last year more than 600 US economists, including seven Nobel Prize winners, signed an open letter to Congress calling for an increase in the minimum wage. They said that the weight of evidence showed that increases in the wage had little or no negative affect on the employment of minimum wage workers.

    The Chamber of Commerce and Industry in Australia has recently been encouraging businesses that were closed over Easter to put signs in their window saying that it was because of penalty rates that they could not open. The Small Business Minister, Bruce Bilson, repeated this line of special pleading.

    These businesses must have decided to enter business knowing what the penalty rates were. Didn’t they factor that in to their business plans?

    I suspect that a lot of special pleading on penalty rates is to divert attention from bad business decisions. It is so easy to blame ‘the system’ rather than acknowledge one’s own business mistakes.

    In the last five years, spending at restaurant and cafes has climbed 36%. According to the ABS in 2013-14, the net growth in the number of cafes and restaurants was 7%. For all businesses it was 1%. The café and restaurant business is booming, but still the sector keeps complaining about penalty rates.

    Employers who keep up their special pleading on minimum wages and penalty rates should really address the way they run their own businesses, and not always want to get the system changed to their advantage. They need to stick to their knitting.

    If the last 20 years has taught us anything about industrial relations, it is that continual change is costly for all concerned. In 1993 the Keating Government abandoned our centralised IR system. In 1996 Peter Reith downgraded the role of IR tribunals. In 2005 John Howard gave us Work Choices. Then in 2009 Julia Gillard gave us the Fair Work legislation. Now the present government wants more changes. But what we really need is more stability in our industrial relations framework because in the end good relations at the work level are necessary to improve productivity, effective local management and employee participation.

    The vested interests that want to cut penalty rates claim that we have an inflexible labour market that results in high wage costs. But all the evidence is that the annual rate of wage growth has declined substantially and that our labour market is showing considerable flexibility.

    Clearly we need to review penalty rates and minimum wages and all industrial relations from time to time but we seem fixated with the need for change and more change, mainly for ideological reasons or perhaps to hide business failure.

    Whilst employers and governments continue with their special pleading on penalty rates, the attitude of the public is very clear. According to Essential Research in January this year, 81% of voters think that people who are required to work outside normal hours should receive a higher hourly rate. 68% said that they would oppose cutting weekend and public holiday rates for hospitality and retail workers.

    The public seems to have good sense in these matters, which employers and the government would be wise to heed.

  • John Menadue.  Alcohol and junk food – winning at the expense of our health.

    If you seriously follow almost any major Australian sport as I do, you will be conscious of the saturation alcohol and junk food advertising.

    And in the run up to the centenary of Gallipoli there are no holds barred to link heroes and booze… VB now have a new television advertisement filmed at Melbourne’s Shrine of Remembrance which tells us to bow our heads to the 16 th Battalion,AIF at Gallipoli and raise a glass of VB to their heroism. How tacky can you get!

    This is a re run of the campaign that VB have been running since 2009. The 2012 campaign was fronted by General Cosgrove  now our Governor General. He sits at a bar and tells us how good VB is in supporting veterans and their families. There is an explicit link between the military, heroes and alcohol.

    The evidence is clear that  alcohol and junk food are causing long-term damage to our health. We cannot  ignore it.

    The Council of Australian Governments’ (COAG) National Partnership on Preventative Health was established because of the alarming increase in preventable chronic diseases as a result of people’s lifestyles. As Nanny Endovelicus pointed out in this blog in October last year and reposted on 22 and 23 January this year ‘These lifestyle issues – in particular smoking, poor nutrition, alcohol misuse and physical inactivity already account for some 40% of potentially preventable hospital admissions. … The growth of lifestyle diseases worrying those watching health expenditure were primarily in diabetes, various cancers, COPD, strokes and other preventable cardiovascular system diseases.’

    Alcohol Consumption

    Latest statistics are that about 20% of the population continues to drink at levels risky to their long-term health – pretty well unchanged from the ABS results in 2007-08; half of males and one third of females drank riskily for single occasion risk.  The estimated economic and social cost of alcohol is over $30 b. per year.. The good news is that since the 1970s our per capita alcohol consumption has declined although it remains above the OECD average.

    Obesity

    By mid-2012 almost two thirds of Australians over 18 years were over overweight or obese according to the ABS, a significant increase from a decade ago. The current combined level for obesity and overweight is 63% for adults.  Of children between the ages of five to 17, about 18% are overweight and 8% are obese. This is very bad news. Australia is now in the top league tables in the obesity stakes, still lower than the US, but we are catching up fast.

    Smoking

    We have clearly made progress in reducing tobacco consumption despite the activities of The Australian newspaper and Institute of Public Affairs in defending. Big Tobacco. In 1980, 35% of our population smoked. In 2012 it was down to 20%. It has been a success story and major contributing factors have been the bans on tobacco advertising on TV and radio, and major public education programs.  It is quite a success story in showing what can be done although smoking amongst our indigenous communities and country people is still high.

    We have a job ahead of us to address poor health, particularly as a result of alcohol addiction and junk food, including sugary drinks that are driving our obesity epidemic.

    But the signs are that the federal government is turning its back on the problem. .

    In the last federal budget, Program 1.2 for the Health Department which deals with drugs like alcohol, education against illicit drug use and tobacco was reduced from $224 million in 2013-14 to $161 million in 2014-15. According to the forward estimates it will be down to $131 million in 2017-18.  In money terms this is a reduction of 40%.

    The COAG Partnership on Preventative Health with the states has been abolished together with some $400 of promised funding. The programs that will be mainly affected were focused on children, community exercise, nutrition, education and lifestyle risks.

    The Australian National Preventative Health Agency was abolished in the 2014 budget.

    The Australian Institute of Health and Welfare which provided invaluable data on health risks and preventable disease has been abolished and its functions transferred to a large productivity and performance authority.

    The government’s  compromised position  on prevention was also clearly shown a year ago when the Assistant Minister of Health Fiona Nash hired a junk food lobbyist as her Chief of Staff. She tried to wipe out the industry’s voluntary food-star labelling system. With control of ministers’ staff by the Prime Minister’s Office this appointment of a junk food lobbyist could not have been a misunderstanding..

    This all adds up to a story of short term success for the alcohol and junk food industries with the complicit national sports organisations, sports people and the broadcasting media.

    It is also a good example of budgetary cuts for financial short term advantage which have long term and damaging consequences for our health. The bad health consequences of alcohol and junk food consumption don’t show up immediately. But the consequences down the track are clear and horrible.

     

    In this post I have drawn heavily on earlier posts by Nanny Endovelicus, Preventing Prevention.

  • The speech that Rupert had written for Gough.  30 November 1972

    The following is the speech that Rupert Murdoch had written for Gough Whitlam’s final election rally in St Kilda in the 1972 election campaign. It was written by Evan Williams.who at the time was a senior journalist on The Australian.

    Gough Whitlam decided not to use ‘Rupert’s speech’

    . What a journey it has been for Rupert Murodch from 1972 to 2015! 

    John Menadue

    Everywhere I have gone in this campaign one thing has been clear and unmistakable above all else : the Australian people are crying out for a new deal. They are crying out for leadership. They are crying out for a government that will put the needs of the people first – that will unite and inspire us, rekindle the energies of the Australian people, and lead this country forward to the greatness it deserves.

    For 23 years the Liberals have had total control of the resources and purse-strings of this country; time and opportunity to shape this nation during years of world peace and growing trade and prosperity abroad.

    Yet what is the result? The result is that, in every basic area of human need, the Australian people are deprived and wanting, and lagging behind other comparable nations.

    We have a health scheme that denies protection to thousands of Australian families, with health insurance funds growing fat on reserves that could be spent for the development of our country.

    For the great mass of our children we have schools that are over-crowded and under-staffed, while their parents pay taxes to give extra swimming pools to schools already wealthy and privileged.

    We have dirty, antiquated, inefficient public transport, forced to raise the fares higher and higher because the Commonwealth will not accept its proper responsibility.

    We have galloping land prices pushing up the cost of homes beyond the reach of thousands of young families.

    We have over-crowded, polluted cities, sprawling suburbs lacking the basic amenities of a decent life, without sewerage, without footpaths, without pre-school centres.  We are content with a wasteland of stunted opportunities and suburban impoverishment for huge numbers of our people.

    Yet these are things which are the fundamentals of a decent civilised life. Australians are entitled to them – as a right.  We will provide them – as a right.

    The Prime Minister has talked a lot in this election about women and about youth.  Let us look at what this government has done for women and done for youth – and done for all of us.

    How can this government boast about its concern for youth? – a government that is content to see thousands of school-leavers – young Australians – thrown onto the labour market without jobs; a government that forces the youth of this country to pay through the nose for a university education that we believe is the birthright of every young man or woman who is academically fitted for a university career; a government that has broken the solemn promise of the last Liberal Prime Minister that 18-year olds would have the vote in this very election!

    No wonder they’re not given the vote. This is the Liberal recipe for the youth of Australia : Condemn them to rising land prices when they want a home; make them pay for their education; put them on the dole when they leave school; conscript them by lottery; deny them a vote.  That is the government’s charter for youth, and I leave you to  judge it for yourselves.  A government that dares talk of winning the support of youth on a record such as this is more to be pitied than condemned.

    Then we hear of the Liberals’ concern for women. But what has this government done for women? It has forced thousands of mothers to work to support young families and pay their household bills.  For their children there are no pre-schools or child-care centres for mothers and children who need them. It has done nothing – absolutely nothing – to give women equal pay for equal work. It has allowed the value of the housewife’s dollar to be whittled away by the worst inflation for 20 years. It has condemned thousands of widows, pensioners and deserted wives to hardship and suffering because of social services that are utterly inadequate to the needs of human beings in a modern society.

    And, like everyone else in the country, the women of Australia suffer every day from rising prices, unjust taxes on the lower and middle-income groups, poor suburbs, inflated land prices, everything that makes more difficult and unattainable the basic and simple need of millions of women everywhere – a stable, happy, decent home for themselves and their children.

    The central ambition of an Australian Labor Government will be to unite all sections of our great community in a common resolve, to forge a new spirit of common purpose that will let us meet the challenges ahead with new confidence, new determination and new strength.

    The real threat to our future lies in the sapping of our national resolve, the crushing of our people’s spirit under an apathetic government that cannot give leadership or inspiration, the erosion of our pioneering spirit under a government with a vested interest in apathy, selfishness and materialism, the steady take-over of our land, our industries, our resources by overseas interests – while this tattered, broken and demoralised government does nothing, asks nothing and believes in nothing. How can Australia be saved by a party that cannot save itself? How can we get leadership from a party that cannot lead itself?

    My fellow Australians :

    I say to you tonight : Under the Liberals, Australians have almost lost their own country. We have almost lost it to foreign economic interests. We have almost lost it by foolish, dishonest policies abroad. We have almost lost it by timid and dependent diplomacy. We have almost lost it by a deterioration in the quality of government which has become a laughing stock abroad. We have almost lost it by economic mismanagement, by a ramshackle social welfare system that is a disgrace to a country that once led the world, by an education system that rewards the privileged and fobs off the needy. We have almost lost it by allowing spurious divisions among ourselves, turning group against group, religion against religion, parents against children.

    Men and women of Australia :

    Every move the Liberals have made in this election has been designed to perpetuate this weakness and this disunity.

    Every move the Australian Labor Party has made in this election has been designed to remove this weakness and repair this disunity.

    We want a strong, united Australia. A proud Australia. We do not have to be an uncertain and fearful people.

    We are living in the midst of history. All around us, and in our midst, historic changes are taking place.

    We say in the Australian Labor Party that there is no need to shrink from these changes. We say in the Australian Labor Party we want to take part in these changes.

    We say in the Australian Labor Party – let us take Australia back into the real world and let us bring Australia back to ourselves.

    We, the people of Australia, need a vision to help us as a nation. Ben Chifley spoke of the light on the hill.

    The light has almost gone out.  Let us set it aflame again.

  • John Menadue. Who and for what are we fighting in Iraq.

    Australia has sent troops to fight in Iraq Wars I, II and III. Our participation has been disastrous in each.

    The latest news tells us that in the battle to oust IS from Tikrit the victory belonged to the Shiite militia controlled by the Iranian Revolutionary Guard Corp. So our ‘allies’ in Iraq against IS are now Shiite militia led by Iran. This is a sectarian war in Iraq into which we should never have blundered. What side are we on now? Presumably it is the Shiite militia who have a cruel record as bad as IS.

    Perhaps the US will let us know what side we are on.

    We should get out of Iraq as soon as possible.

    See link below to an article in the SMH today by Paul McGeough about the sectarian nature of the war in Iraq.  John Menadue

    http://www.smh.com.au/world/is-crisis-brings-iraq-divisions-into-focus-20150403-1me1n1.html

  • Greg Smith. Australian Tax Reform 2015

    Why are we discussing tax reform again, and what really are the priority issues?

    The Federal Government has released a wide-ranging discussion paper on the Australian tax system, yet Australia has been reforming its tax system for the past 35 years.

    The last major reform in 2000 – then called the New Tax System – included the introduction of the Goods and Services Tax (GST). For several years afterwards, the tax system looked efficient, robust, and fair, and met the Government’s wider policy objectives.

    So what gets us to this point of reassessment again?

    Australia’s tax reforms have had one key theme. They have broadened tax bases so as to lower tax rates. This is true for taxes both on income and expenditure

    This theme has three main purposes.

    First, maintaining tax revenues often requires base broadening because economic activity shifts over time from higher to lower taxed activity, reducing the revenue robustness of the system.

    Second, broader bases and lower rates reduce economic distortions and so are more economically efficient.

    Third, without adjustment the fairness of taxes declines over time as some taxpayers learn to exploit any rate and base margins in the system.

    Over the past 15 years, while the new tax system largely stood still, social and economic change has continued. This has meant that pressure for tax reform has rebuilt for each of its three main purposes.

    The most significant developments have been:

    • Overall revenue robustness has fallen. As a share of national economic output, the tax system is collecting less now than in the several years after 2000.
    • The consumption tax share of revenues has fallen. The GST share has fallen because households save more than previously and because consumption patterns have shifted towards exempt items like education, health and overseas purchases. Fuel taxes have not been maintained in real terms, consumption shares of excised products has fallen and import taxes have been reduced as part of trade reform.
    • Fairness of saving and investment taxes has been challenged as more taxpayers exploit the margins. Concerns regarding the cost and distribution of the concessions for capital gains and superannuation, and to some extent the interface between company and personal tax systems, has increased.

    These developments are already entrenched and have very little to do with broader fears about the future. They are not much about the globalising economy or about the future intergenerational health and ageing agenda.

    The fact is that there has been little change in the openness of the Australian economy over the last 15 years and there will be relatively little impact of intergenerational change over the next 15.

    The main issues we face now are really more basic ones of getting the right calibration of policy to stay on our generally good economic track.

    The aggregate revenue task and the decline in consumption taxes point to much the same response.

    The decline in Commonwealth indirect tax collections as a share of gross domestic product (GDP) translates to around $20 billion per year. If we do nothing, this gap eventually will be met by increasing personal income tax mainly on wages, through ongoing bracket creep.

    Key issue number one, then, is whether to restore indirect taxes instead, through base broadening and perhaps some rate increases.

    There is also within this an issue of timing and the relationship with fiscal policy – should restoring indirect tax revenues contribute to budget repair or should it wait and be applied only to future personal tax cuts? The answer to this goes beyond considerations of tax reform alone.

    The third emerging problem, addressing increased exploitation of the tax margins, provides both challenges and opportunities in the crafting of tax reform packages.  Many of the key margins relate to the taxation of different forms of saving and investment.

    The challenge in this area is that saving and investment are vital to Australia’s long term social and economic future.

    Australia has built a very strong society and economy, often with innovative policy in areas like occupational superannuation, means testing of age pensions and dividend imputation. Policies have also supported home ownership and competitive business and markets.

    At the same time, the exploitation of tax features in these areas mainly benefits those on higher incomes who have the greatest capacity for saving and investment.

    So key issue number two, then, is whether and how to adjust the tax margins in areas related to savings and investment to preserve growth while reducing undue exploitation.  In essence, while the fundamental provisions should continue, some adjustments could contribute to maintaining revenue, increasing investment efficiency and fairness.

    Particular issues have already been canvassed in studies like the Henry Tax Review, including:

    • Whether the capital gains tax discount should be reduced, or perhaps abolished in the case of superannuation funds already taxed at concessional rates.
    • Whether superannuation concessions should be scaled back especially for those on high incomes and superannuation access better targeted to retirement purposes.
    • Whether any reductions in company tax rates should be funded by other or broader business or investment tax bases.

    Australia has a broadly effective tax system, and it was calibrated to closely match fiscal and other public policy objectives in the several years after 2000.

    It is not now quite as closely matching those objectives and if we could agree on that, we could reasonably proceed to make the updates necessary to restore key performance levels.

    Of course, some will want to pursue other objectives, and that will bring greater controversy and risk. But I suggest the priority now is just to get back onto the previously established performance track.

    To do that the priorities are: first, to steadily restore aggregate revenues as a share of GDP; second, to do this mainly through restoring the post-2000 indirect tax share; and third to maintain both fairness and ongoing revenues by moderately scaling back tax concessions to capital gains and superannuation.

    Greg Smith was a member of the Henry Future Tax System Review Panel. He has also been head of the Treasury Tax Policy and Financial Institution Divisions and of Treasury Budget and Revenue Groups. This article was first published by CEDA.

  • David Zyngier. Australia should follow Chile’s lead and stop funding private schools.

    Australia is one of the very few countries in the OECD that publicly funds private schools. More than 40% of Australian secondary children now attend private schools – either so-called independent or religious schools. Australia has one of the most privatised school systems in the OECD.

    Prior to 1972 no private schools received any government funding whatsoever in this country. While most OECD countries have a private school system, very few of them receive public funding. Think about England, the home of the elite private school, and the exclusive private schools in the USA: not one cent of taxpayer’s money goes into their budgets.

    Chile’s divestment in private schools

    It’s time to rethink this mistaken inequitable policy and, like Chile, stop all public funding to private schools and redirect it to disadvantaged public schools.

    Chilean President Michelle Bachelet announced a radical set of educational reformslast year that will dismantle the market-based approach in primary and secondary schooling.

    Due to the market structure imposed in the 1980s by Chilean dictator Augusto Pinochet, the education system is the most socioeconomically segregated in the OECD, favouring private, for-profit schools with nearly 52% of enrolled students attending them. The same thing has occurred here in Australia – not imposed by a dictator – but under our very noses.

    These Chilean reforms include the end of public funding to private, for-profit schools, to make all primary and secondary education free of charge, and prohibit contested selective practices used in school admission processes. Their education reform bill is an upheaval of the system in order to change the benefits of education from being for an affluent minority to the deserving majority. These reforms are to be paid through new taxes on the wealthy and business.

    So where is our (public) education money going?

    New figures from the Productivity Commission show that government funding increases between 2008-09 and 2012-13 massively favoured private schools over public schools.

    Funding for private schools in Victoria, for example, increased by 18.5% per student, or eight times that of public schools. Across Australia, the dollar increase for private schools was nearly five times that for public schools. The average increase for private schools was A$1,181 per student compared to only A$247 for public schools.

    Other research indicates clearly that the equity gap between our school systems has continued to grow since the Gonski review in 2011.

    Each private school pupil now receives, on average, a non-means-tested public subsidy of over A$8000 per year at the expense of the less privileged public school student. So much for the end of the age of entitlement.

    In addition, pupils with disabilities in public schools receive up to A$12,000 of extra support while those in some private schools get more than A$30,000.

    Do private schools outperform public schools? Is there a return on this public investment?

    Parents can spend up to A$30,000 a year on private education. According to the Australian Scholarship Group, the forecast cost of sending a child to private school in Melbourne is $504,000 over 13 years of schooling after tax, in addition to the massive public subsidy these schools receive.

    A new analysis of school NAPLAN test results shows that the results in like public schools are just as good as those in private schools. The analysis reported:

    The often-presumed better results of private schools are a myth. Public schools are the equal of private schools. Public, Catholic and Independent schools with a similar socio-economic composition have very similar results.

    Other research found similar results for HSC in NSW:

    If you’re just looking at academic results, it probably isn’t worth paying all that money for an elite private school.

    But don’t private schools save public money? We all pay taxes!

    The private school lobby often makes this spurious claim alongside the claim that those who choose private schools already pay taxes so should receive at least a contribution from their taxes to pay for that education choice.

    Independent Schools Victoria claims that sending a child to a private school is actually a saving to the taxpayer of A$5000 per student.

    This is akin to the Automobile Chamber of Commerce suggesting the use of private cars not only saves public money on public transport but actually wanting their members to receive a subsidy on the purchase of their new Mercedes or BMW.

    Similarly, no one believes that those choosing to use private toll roads should receive a subsidy for the use of the toll instead of driving on the public and free road system that their taxes have funded.

    The massive ongoing disparity in funding increases for public and private schools is a national disgrace and scandal. The learning needs of disadvantaged students are being ignored by the priority given to funding more privileged sections of the community.

    Unacceptably large percentages of low socio-economic status, Indigenous and remote area students do not achieve national standards in literacy and numeracy. There are huge achievement gaps between rich and poor schools.

    More than 80% of low socio-economic and Indigenous students are enrolled in public schools. Only the full implementation of the Gonski recommendations would ensure that we improve educational outcomes in our under-resourced public schools without additional drain on the budget bottom line.

    Given there is an ever-shrinking tax base, we need a discussion about gradually reducing public funding to private schools by 25% every four years until it is zero. This should give these schools time to get their budgets in order. Prior to 1972 they were doing quite well without public support.

    Chile plans to present further legislation to Congress that would bring the country’s public schools, currently run by local municipalities, under direct control of the Ministry of Education. The legislation would also establish a national teaching policy and make higher education free to all but the richest families.

    On the signing of the education reform bill, President Bachelet said:

    Today we are fulfilling what we promised Chile, to begin a process of deep transformation of our education system, which will ensure quality, gratuity, integration and an end to profit-making in education. It is not fair that the resources of the Chilean people, instead of enriching our education, enriches private individuals.

    If only such a commitment would be made by Australia’s political leaders.

    David Zyngier is Senior Lecturer, Faculty of Education at Monash University. This article first appeared in The Conversation on 25 March 2015.

  • Patty Fawkner. Leading by flipping the omelette.

    Pope Francis’ leadership differs markedly from that of his predecessors. He models two clear principles that our political leaders and, in fact all of us who lead in some capacity, would do well to emulate, writes Good Samaritan Sister Patty Fawkner*.

    “We’ve got to flip the omelette”, Pope Francis told a group of religious leaders from Latin America in the early days of his papacy. Why was it, he asked, that it’s world news when the Dow Jones moves up or down a few points, but not when an elderly person dies of cold in the street? If we are to be faithful to the Gospel, he said, we’ve got to change and turn this around.

    A brief two years ago from his very first appearance on the balcony of St Peter’s Basilica with his warmly shy “Buona sera”, Pope Francis has been flipping the omelette, particularly in regard to papal leadership style. Catholics can feel the difference. And business leaders are taking note. Witness the growing number of business magazine articles and booksexploring what’s been described as the Pope’s “radical” leadership style.

    The how of Francis’ leadership differs markedly from that of his predecessors. He models two clear principles that our political leaders and, in fact all of us who lead in some capacity, would do well to emulate.

    The first principle: allow yourself to be vulnerable.

    Instead of an infallible monarch, what we first recognise in Pope Francis is his humanity. I see him as a vulnerable human being. Francis exposes himself when he speaks without guile and without fear or favour about the problems besetting the Curia and each time he speaks off the cuff at a spontaneous press conference – surely to the angst of his media minders. Without the security of slogans, spin or vetted questions, he speaks colloquially and transparently. He maintains eye contact. He listens. He doesn’t mince words. He makes mistakes.

    One small example. Catholics “needn’t breed like rabbits”, Francis said in a press conference on his flight back to Rome from the Philippines. To my ears this sounded refreshing, but not everyone thought so. A week later Francis said he was “truly sorry” that his comments had caused offence to large families.

    Popes have been humble, but it’s not apparent that being vulnerable has appeared in any papal ‘job description’. An aura of certainty and infallibility have ruled – but not now, with a what-you-see-is-what-you-get Francis.

    American social worker Brené Brown has become a YouTube star with her TED talk on research into vulnerability.“The Power of Vulnerability” has subtitles in 49 languages and nearly 19 million views, suggesting that Brown is onto something.

    Vulnerability is painful, Brown says, and so we “armour up”, to avoid it. Like Tony Abbott, we “shirtfront” our disputant.

    Or else, according to Brown, we blame: “This is all the previous government’s fault”, or we make out our actions are perfect and pretend they are benign.

    The response to the Australian Human Rights Commission Report on children in detention is a case in point. Would there have been some omelette flipping from either side of politics!

    Perhaps mindful of their own culpability in regard to a harsh mandatory detention regime, the Federal Labor Opposition remained fairly mute, while both the Prime Minister and his former Immigration Minister discounted the disturbing findings of the evidenced-based report and proceeded to shoot the messenger, the HRC President Gillian Triggs. Mr Abbott felt no empathy, no guilt – “none whatsoever”, he said, about the findings of the report which documented the mental illness and sexual abuse of children in detention. He preferred to gloat over the government’s success in “stopping the boats”. Nameless, vulnerable children were once again ignored and thus further abused.

    Last week the blame game was evident once again in Australia’s response to a United Nations report which found Australia’s treatment of asylum seekers breaches international conventions. Instead of addressing the substance of the report the Prime Minister blamed the UN for having the temerity to “lecture” us.

    Painful though vulnerability is, Brown says that it is the birthplace of joy, compassion, creativity, connection and, ultimately, love. We can only really connect with others if we allow ourselves to be vulnerable, when we fess up that we’ve made mistakes and when we allow ourselves to be seen, not as we should be seen, but really seen.

    Vulnerability unleashes its creative potential, Brown says, when we love with our whole hearts, even those who may not respond; when we practise gratitude and “lean into joy”; and most important, when we believe that we’re enough and, by extension, that those around us are enough. Take a bow, Pope Francis.

    The second principle: believe that reality is more important than ideas.

    In a recently published biography, The Great Reformer – Francis and the Making of a Radical Pope, Austen Ivereigh, one-time deputy editor of The Tablet and former press secretary for British Cardinal Cormac Murphy-O’Connor, documents the Pope’s consistent campaign against any form of ideology.

    As Provincial of the Jesuits, Jorge Mario Bergoglio warned the Jesuits about a “fascination for abstract ideologies that do not match our reality”. Then as Archbishop of Buenos Aires, he stated that a key principle for good government – both secular and religious – was that “Reality is superior to the idea”. Social change, the future Pope said, must be people driven, not driven by “the arrogance of the enlightened”.

    Ideology is defined as “a set of beliefs that affects our outlook on the world. Our ideology is our most closely held set of values and feelings, and it acts as the filter through which we see everything and everybody”.

    The Pope’s disdain for ideology arises from his recognition that it coerces reality to fit into an idea of the world and then turns people into instruments to achieve particular ideological ends. It filters out diverse and plural voices, perspectives and experiences. Francis had experience of this with Argentine politics. It seems that he has experienced it in the Church.

    He highlights his belief that realities are greater than ideas in Evangelii Gaudium. Ideas, he says, must be at the service of the real needs of real people; if not we are left with rhetoric and “manipulated truth” – in other words, with “spin” (Evangelii Gaudium, #231-233). Instead of being ideologically driven, Pope Francis believes that government has a deep and noble purpose: “to serve the common good, to protect the vulnerable, to build up bonds of trust and reciprocity”.

    Last year Australia’s Treasurer, Joe Hockey, attempted to massage his first budget as the government’s preparedness to “take the tough decisions”. But when these decisions are disproportionately “tough” for the most vulnerable among us, surely there is an unhealthy ideology at play.

    And so too, within the Church. Faith can become a rigid ideology, Francis says, which “chases away the people, distances the people and distances the Church of the people”. The Pope’s counterweight to this is simple: rediscover Christ. Don’t only listen to the clerical elite and the learned, but discover Christ first among the poor. Be wary of any religious culture that gets in the way of living the Gospel.

    Pope Francis reminds us that God accepts reality as it is. Jesus became human and rather than adopting the ideology of the religious and political leaders, responded to people in their here-and-now neediness and unworthiness. Francis’ words and actions echo Thomas Merton’s insight that “God can only be found by sinking into the heart of the present as it is”.

    Governments and religions could learn from Francis’ two leadership principles. But what about me? What do I take from these two leadership principles?

    First I have to admit how easy I find it to pick ideology in others but not in myself. You have an ‘ideology’; I have a ‘worldview’. Am I prepared to do some serious soul-searching and honestly concede that my left-of-centre, feminist ‘perspective’ may be more biased and ideological than I care to believe? Am I able to listen, really listen, to diverse perspectives? Am I predisposed to engage in the hard slog of genuine dialogue rather than arrogantly dismiss the one who disagrees? Am I willing to see the person behind the ideologue? Can I have the courage to be vulnerable, to be imperfect but authentic?

    If I can say yes to but one of these, I certainly will have flipped the omelette.

    * Good Samaritan Sister, Patty Fawkner is an adult educator, writer and facilitator. Patty is interested in exploring what wisdom the Christian tradition has for contemporary issues. She has an abiding interest in questions of justice and spirituality. Her formal tertiary qualifications are in arts, education, theology and spirituality.

    This article was first published in the March 2015 edition of The Good Oil, the e-magazine of the Good Samaritan Sisters. http://www.goodsams.org.au/good-oil/leading-by-flipping-the-omelette.

  • ICC Cricket World Cup: Alcohol-drenched culture needs to change.

    Many media outlets today have drawn attention to the alcohol influenced behaviour of Australian cricketers as they celebrated winning the International World Cup. At the celebration in Federation Square in Melbourne yesterday morning, the Australian captain Michael Clarke seemed to be proud of the fact that all the team members had hangovers.

    In the link below Michael Thorn, the chief executive of the Foundation for Alcohol Research and Education, in today’s SMH, draws attention to the influence  of the alcohol lobby,the alcohol consumption of the Australian cricket team and advertising. See link below.

    Michael Thorn comments that ‘It is time to roll back Australia’s toxic drinking culture. ‘

     

    http://www.smh.com.au/comment/icc-cricket-world-cup-alcoholdrenched-culture-needs-to-change-20150330-1mau4y.html

  • Peter Day. He is Alive: the Spiritual ‘Big Bang’

    I love science. It takes us to different places: places of pure logic, of non-emotion, of rational intelligence, of majesty and beauty – sometimes even to places beyond our wildest imaginations.

    Just think: 13.78 billion years ago our universe is thought to have begun as an infinitesimally small, infinitely hot, infinitely dense, something. After its initial appearance, it apparently inflated (the “Big Bang”), expanded and cooled, going from very, very small and very, very hot, to the size and temperature of our current universe. It continues to expand and cool to this day and we are inside of it: incredible creatures living on a unique planet, circling a beautiful star clustered together with several hundred billion other stars in a galaxy soaring through the cosmos – and all this out of nowhere, from nothing, for reasons unknown. 1

    I love Easter. It takes us to different places: places beyond logic, beyond emotion, beyond rational intelligence, of majesty and beauty – sometimes even to places beyond our wildest imaginations.

    Just think: 2,000 thousand years ago a young Jewish man was crucified and died on a cross. Not long after a stone was rolled across His place of burial, perhaps Three days, something remarkable happened, something that defies all human logic: He rose from the dead (the “Spiritual Big Bang”), appearing several times to His friends. An inexplicable ‘cloud of unknowing’; an intense, Divine presence and energy – GOD – changed the natural order of things. This GOD, this Ultimate Reality, continues to pervade the cosmos and we are inside ‘It’: incredible creatures living on a unique planet, marinating in the Divine, destined for love – and all this from out of nowhere, from no-created-thing, for reasons unknown.

    Peter Day is a Catholic Priest in Canberra.

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    1 Material about the Big Bang from “All about science” (see http://big-bang-theory.com/)

  • John Menadue   We still need to address the defects in our constitutional arrangements that November 11 1975 revealed.

    We have rightly been remembering the achievements of Malcolm Fraser on human rights and race.

    But we should not forget the enormous damage that the events of November 11, 1975, did to Australian public life and trust in our institutions. Conservatives keep highlighting the shortcomings of the Whitlam governments in order to hide their complicity in the deceit and Vice-regal intrigue, even with High Court Judges, that brought about the dismissal of the Whitlam Government that had a clear majority in the ‘people’s house’, the House of Representatives.

    In speaking kindly of Malcolm Fraser in later years, Gough Whitlam said that ‘Malcolm was a ferocious opponent, but he never deceived me’.  He correctly stopped sort of absolving John Kerr of deceit.

    In my autobiography, ‘Things you learn along the way’, published in 1999, I wrote.

    ‘Governments can’t legislate for trust and decency. Those values are not anywhere in the Constitution. But they underpin the whole foundation of how we operate in a civilised community towards each other. Those values are the glue that holds us together. On 11 November, what was expedient became more important than doing what was right. Trust in ourselves and our institutions was dealt a severe blow.

     There was something quite unfair and dangerous about it all in a way that I could not accept then or now, almost 25 years later. An accelerating decline in trust in politicians, the political system and public institutions began in 1975. Conservatives had damaged state parliaments in NSW and Qld by refusing to follow the convention that casual Senate vacancies were filled by a member from the same party. Led by conservatives, the Senate broke a convention of centuries that governments are made and unmade in the ‘people’s house’. The High Court, through the political intervention of its Chief Justice, was compromised. The media, through News Ltd particularly, abused its power. The Governor-General’s Office was damaged more than any other institution. I never again felt the same confidence in our institutions. …

    The Palace was not amused by what Kerr had done. I learned of this later from a note from Tim McDonald, the Official Secretary at Australia House, London, who relayed to me a discussion he had had  with Sir Martin Charteris, who was personal secretary and political adviser to the Queen at the time. The discussion that McDonald had with Charteris was within a few weeks of the dismissal. Commenting on the Whitlam dismissal, Charteris said to McDonald that ‘the Palace shared the view that Kerr acted prematurely. If faced with a constitutional crisis which appeared likely to involve the Head of State, my advice would have been that [the Queen] should only intervene when a clear sense of inevitability had developed in the public that she must act. This had been Kerr’s mistake’. A clear sense of inevitability had not been arrived at.

    In considering whether Kerr acted prematurely in a political dispute it is important to consider three points: first, the Opposition was clearly losing momentum. Whitlam was dominating the parliamentary forum and on the deferral of supply, opinion polls showed 70 per cent favoured passing the budget and the Government had dramatically improved its political standing to be running neck and neck with the Opposition. Secondly, supply would not run out until at least 30 November. The Governor-General could have waited almost three more weeks. …. Thirdly, newspapers were full of speculation at the time and confirmed afterwards that some Opposition senators were ready to break.

    Senator Reg Withers, the Leader of the Opposition in the Senate in 1975, is quite clear. Ten years later in the Australian, on 6 November 1985, he said: For all I know, my blokes might have collapsed on the 12th. I don’t know. You just hope day after day you would get through until the adjournment … There were two Senators who told me they were prepared to go … I reckon we had another week. If I had got through that week then you would look at the following week. I would have lost them some time about 20 November onwards. I know I would have lost them in the run up to 30 November, but it wouldn’t have been two then, it would have been ten.’

    In retrospect it is clear to me that John Kerr’s intervention saved Malcolm Fraser from a humiliating defeat.

    The heartfelt tributes to Malcolm Fraser since his death, including my own, should not obscure the damage that John Kerr in particular did on November 1975. We still need to address our defective constitutional and political arrangements that made the dismissal possible. And Conservatives should stop hiding their complicity in the dismissal by referring unceasingly to the shortcomings of the Whitlam Governments.

    Note:  My full account of the dismissal in my autobiography can be obtained by clicking on ‘John Menadue website’ at the top left-hand of the home page and then clicking on ‘book’ on right-hand side. The chapter on the dismissal ‘A job on the line, John Kerr’s or Gough Whitlam’s’ commences on page 139.

  • Rodney Tiffin. The university rankings no government wants to talk about.

    At a conference of university leaders in early 2013, Tony Abbott promised “relative policy stability” in higher education if he became prime minister. A year later, Universities Australia began its first Abbott-era budget submission by welcoming “the undertaking of the government to preserve funding arrangements for higher education, including the commitment not to make further cuts to the sector.”

    When it came, though, the Coalition’s first budget proposed cutting university funding by a breathtaking 20 per cent and removing the ceiling on university fees. Since then, the only stability in tertiary education policy has been education minister Christopher Pyne’s repeated attempts to have the Senate pass those measures. With the threat of financial catastrophe hanging over the sector, Universities Australia has supported the government’s proposals for deregulation, arguing rather coyly that the funding system is broken, but not indicating who broke it.

    Although the government’s continuing failure to get its way has brought great political embarrassment, the two most notable aspects of the funding controversy have been its insularity and its short-term focus. It is almost impossible to tell from the parliamentary debates and media reports that Australia’s public funding of universities is now so stingy that we have become an international outlier.

    In 2011, the last year for which full international data is available, Australia’s public funding of universities ranked thirty-third out of the thirty-four OECD member countries. Governments across the OECD spent an average of 1.1 per cent of GDP on universities; Australia devoted just 0.7 per cent. Six countries – including Canada, at 1.6 per cent – spent at least double Australia’s proportion of national income. Finland, at 1.9 per cent, tops the list.

    The Pyne proposals would make the share of tertiary funding derived from private sources even greater. At the moment, private funding constitutes 0.9 per cent of GDP in Australia, which is almost double the OECD average of 0.5 per cent and puts us among the most privatised group. The relationship between income inequality and private share of university funding is striking, with relatively equitable countries, such as the Nordic countries, having the lowest, while several of those near the top of the list (Chile, Colombia, the United States) tend towards greater inequality.

    It was not always thus. In 1975, at the end of the Whitlam government, Australian public spending on universities peaked at 1.5 per cent of GDP. Whitlam, whose government had made university education free, later said that this was the achievement for which he received the most expressions of personal and parental gratitude in the years after he left office. Under his Liberal predecessors, around 70 per cent of students had Commonwealth Scholarships, effectively making their tuition free. In The Whitlam Government, he cites survey data from the mid 1970s showing that, without his government’s changes, 20 per cent of university students and 25 per cent of college students would have been forced either to defer their enrolment or not enrol at all. Both the number of university students and, even more dramatically, the number of college students (in the binary tertiary sector of that time) increased during his government.

    The next big policy move came in 1989 under Hawke government education minister John Dawkins. Arguing that university students came disproportionately from affluent backgrounds and a degree was a ticket to much higher earnings, and faced with a perceived need for budget savings, Dawkins introduced student fees. The payment mechanism was HECS (the Higher Education Contribution Scheme), a relatively equitable loan system that only triggered repayments as students’ incomes increased.

    Dawkins also abolished the binary system, turning all the colleges of advanced education into universities. Government funding for the combined sector was set midway between the two previous systems, giving the old colleges a boost but essentially cutting 10 per cent per student from the budgets of existing universities.

    Because the Howard government didn’t attempt any major legislative changes, its policies towards the sector rarely received much attention. But this was the crucial era in driving universities towards their present plight. By 2010, federal government funding of universities was down to 42.3 per cent of institutional income, less than half of what it had been just twelve years earlier. Fee-paying international students were contributing 17.5 per cent of total university income, or one dollar in every six. For both the government and the universities, international students had much more to do with the bottom line than with the needs of the students themselves or the pedagogical challenges their presence posed.

    The 2008 Review of Australian Higher Education, instituted by the Rudd government, found that Australia was the only OECD country in which the real public contribution to tertiary education institutions in 2005 was no higher than it had been in 1995. In stark contrast, the average growth across the OECD was 49.4 per cent. The review also found that the amount of federal funding fell 12.4 per cent in real terms between 1989 and 2008, a period in which the costs of teaching and research rose sharply. The staff–student ratio in higher education, at 15.6 in 1996, had risen to 21.1 by 2008, a deterioration of about one-third in a dozen years. The real situation was even worse, because this figure takes no account of the increasing casualisation of the academic workforce.

    Kevin Rudd had promised to restore Australia’s international position on university funding, but eventually this proved another case of over-promising and under-delivering. The same review recommended an immediate 10 per cent increase in public funding, but the government instead set up a Base Funding Review to establish “enduring principles” for public investment in higher education. Far from enduring, the principles collapsed within two years. Although some advances in funding were made during Labor’s first years, a 3.5 per cent “efficiency dividend” in 2013 amounted to a substantial cut. To excuse its funding failures, the government argued that it needed to reorder spending priorities after the global financial crisis and to free up funds for the Gonski school reforms. Within Labor’s policy settings, according to higher education policy specialist Simon Marginson, public funding of universities would fall to just 0.54 per cent of GDP by 2016–17.

    The Labor government’s major policy change was to move to a demand-driven system, enabling Australian universities to admit as many qualified students as they wished. This essentially deregulated the volume, but not the costs, of university education, leaving institutions more able to compete against each other for more students. The result was that about 207,000 began in 2013, an increase of around 54,000 or 35.3 per cent on 2008. Ironically this surge in student numbers has been used to justify the need for further cuts to the sector.

    It should be stressed that no government has ever sought or secured a mandate for dramatically reducing public funding of universities. No party has ever gone to an election with a reduction in investment in tertiary education as part of its platform. Indeed, polling commissioned by Universities Australia shows public opinion strongly in the other direction: 82 per cent agreed that cutting public funding for universities could threaten Australia’s future; 87 per cent supported an increase in federal government funding for universities. But governments looking for ways to cut or redirect spending think that this is an electorally harmless area to trim, and then trim again. Prime minister John Howard is said to have once told a meeting of Fairfax editors that cuts to school education pose a danger to governments but cuts to university funding do not.

    Whatever the equity virtues of HECS, the private share of funding has significantly increased since its introduction. When it was launched, the private share of university funding was around 20 per cent. Now, although the figures are complicated by different formulas for different disciplines, it averages over 40 per cent. And if Pyne is successful it will dramatically increase again. For the past twenty-five years, the focus has been almost solely on the private benefits of a university degree, and this becomes an argument for demanding that students bear an ever-increasing proportion. The Grattan Institute’s 2012 report Graduate Winners: Assessing the Public and Private Benefits of Higher Education, for example, argued that graduates are such big winners that people would study even without public subsidies.

    Universities Australia cites several studies that seek to quantify the public benefits of university education. Modelling by the Australian Workforce and Productivity Agency in 2013 found that each extra $1 invested in tertiary education would generate, on average, $26 in economic activity in 2025 as a result of increased labour force participation and employment. The OECD estimated a real rate of return for Australia investing in tertiary education at 13.4 per cent. KPMG-Econtech put the figure at 14.1 per cent and estimated that if government raised its commitment from 0.7 per cent to 1 per cent of GDP, then productivity would be 3.8 per cent higher by 2040. The increased government investment in the university sector would have a net funding cost of 0.5 per cent of GDP, while the net gain in living standards over the longer term is 5.5 per cent. University graduates typically pay between $300,000 and $540,000 more in taxes over their lifetime, which is eight times higher than the upfront amount invested.

    Pyne’s proposals would make an already dire position much worse. But the current, prolonged impasse has put the crunch issue of funding clearly in the public spotlight. With luck it may become the moment when a generation’s drift towards ever-decreasing public support of universities is halted and reversed.

    No principle exists for determining the optimal private–public funding split, and any government would probably find it too expensive to reduce the private component radically. But political parties should commit to stopping the continual downward drift in public funding. An affordable and simple formula might be that students should contribute one-third of the cost of expensive degrees (medicine, agriculture and so on) and 40 per cent for all others.

    Political parties should promise to reverse the tendency of Australia – with public funding of universities at 0.7 per cent of GDP and falling – to be an international outlier. It may be too ambitious to more than double funds to match Canada’s 1.6 per cent; and an increase up to the OECD average (1.1 per cent) would mean increasing public funds to the sector by almost 50 per cent. Perhaps we’ll have to settle for the slogan “Let’s catch New Zealand.” Matching that country’s 1 per cent would mean increasing funds by around a third.

    Further cuts to the sector would be disastrous. It doesn’t matter how many Intergenerational Reports we have if we don’t have governments committed to building a viable future.

    Rodney Tiffin is Emeritus Professor of Political Science at the University of Sydney. This article first appeared in Inside Story on 24 March 2015.