John Menadue

  • Geoff Hiscock. Onus on Abbott to forge closer ties with India

    ​As a young man, Tony Abbott backpacked across India in 1981, and spent six weeks at the Australian Jesuit mission in Bihar state. He was fascinated by the country’s many contrasts, from its bullock carts to its nuclear power stations.

    His Indian exposure since then has been limited, but the Australian Prime Minister says he has always taken India seriously and has made it clear in his speeches and his interaction with the Indian community in Australia that he wants a much closer and deeper relationship.

    With Narendra Modi as India’s new leader, he has chance to do just that. Abbott was quick to call Modi and congratulate him when his Bharatiya Janata Party (BJP) scored a decisive electoral victory earlier this month, saying on May 17 that he looked forward to strengthening ties between the two countries.

    Modi’s priorities, of course, are not the same as Abbott’s. Modi lives in a much more volatile world, where relations with Pakistan, China, Sri Lanka, Bangladesh, Myanmar, Nepal and Afghanistan take precedence, and where domestic terrorism, social stability, food and energy security, job creation, infrastructure development and health issues are of overwhelming importance.

    Still, like Abbott, Modi is conservative, pragmatic and pro-business, with a mandate to get things done. Abbott and Modi may not otherwise be natural soul mates, but Abbott is eager to turn what he calls a “neglected” Australia-India relationship into something much more substantial and balance it against the other Asian heavyweight, China, in the areas of trade, strategic cooperation and people to people ties.

    India’s GDP of $1.8 trillion lags well behind China’s $10 trillion, but with an economic pick-up on the cards and a growing middle class of several hundred million out of a total population of 1.25 billion, India is a target market of considerable size.

    For Australia, there is potentially much more trade in energy and resources (including ultimately, uranium) and agribusiness, and in services such as education, engineering and finance. For India, there are opportunities in manufactures such as medicines, jewellery and motor vehicles and in services such as tourism and information technology. In terms of direct foreign investment, India already has built stakes in Australian coal mines, other metals and food.

    The raw statistics show just how much work remains.  Australia’s total two-way trade in goods and services runs at about $625 billion a year, but India accounts for only about $17 billion of this, or less than 3 per cent. That is roughly the same amount of business Australia does with Malaysia, but is way behind trade with the big four of China ($150 billion), Japan ($70 billion), the United States ($54 billion) and South Korea ($30 billion). Even Singapore ($27 billion), New Zealand ($21 billion) and the UK ($19 billion) rank ahead of India among Australia’s main trading partners.

    In his first major foreign policy speech in Melbourne last year, Abbott ascribed the relatively modest trade flows partly to “India’s long preoccupation with the non-aligned movement and statist economics; and partly because of Australia’s historical amnesia and fascination with China.”

    Certainly Australia’s economic relationship with China has rocketed ahead in the past two decades and it would be fair to say that while Abbott is a little more wary of China than his recent predecessors Julia Gillard and Kevin Rudd were, he has continued the fascination. In April Abbott led a large trade delegation to China, Japan and South Korea; at the Boao Forum on the Chinese island of Hainan, he told his hosts: “Australia is not in China to do a deal, but to be a friend. We don’t just visit because we need to, but because we want to.”

    His avowed goal is to add a China free trade agreement as quickly as possible to those already signed with Australia’s two other big North Asian trade partners. So far, we haven’t seen much sense of urgency about a free trade agreement with India, though in 2011 Australia and India did begin negotiations for an FTA-style “comprehensive economic cooperation agreement.”

    But it’s not an “either-or” thing with China and India. There is ample opportunity for Australia to grow its business ties with India without threatening anything it has with China. The first step is for Abbott to build some personal rapport with Modi and to take any residual heat out of the relationship left by past kerfuffles over perceived discrimination and the attacks on students in Melbourne.

    Unless Abbott can shuffle his packed schedule to squeeze in a visit to India in the next few months, it is likely his first chance to meet Modi as Prime Minister will be at the G20 leaders’ summit in Brisbane in November. Before that, Australia will host the G20 trade ministers’ meeting in Sydney in July, with India’s new Trade Minister likely to attend. At both these events, the focus will be global rather than bilateral.

    In Melbourne last December, Abbott observed that “no one should underestimate India now, nor its potential to be a global superpower in this century.” His challenge – and to a lesser extent that for Modi – is to expand trade, investment and defence ties, and nurture some new areas of mutual interest that go beyond the old staples of democracy, rule of law, the English language, and a love of cricket.

    Geoff Hiscock writes on international business and is the author of several books, including “Earth Wars: The Battle for Global Resources” and “India’s Global Wealth Club,” both published by Wiley

     

  • Michiya Matsuoka. Japanese collective ‘atmosphere’ and the power of the media.

    In John Menadue’s blog of 31 March, 2014, he expressed strong concern for recent events concerning Japan’s Prime Minister, Shinzo Abe, and warned that Japan was fast approaching a nationalistic agenda and revisionist view of history. (See re-post today)

    I have these same misgivings about Japan and fully agree with John Menadue’s concern, including the role and responsibility of NHK (the Japanese public broadcaster similar to the Australian ABC and British BBC).

    Although NHK is an independent corporation, its annual budget is subject to review and approval by the Diet.

    A twelve member Board of Governors oversees NHK and makes final decisions. Under the Board of Governors, NHK is managed on a full-time basis by an Executive Board.  The new Director General of the Executive Board is Katsuto Momii, a very close friend of Prime Minister Abe.  Abe also appointed another four members of the Board of Governors.

    On Katsuto Momii’s first day as Director General, 25th January 2014, he asked all members of the Executive Board to submit “a resignation paper with signature and without date” – which they did. In April, Momii withdrew the resignation papers following criticism by the public.  At the press conference on the same day, Momii said it was his personal view that the recruitment of comfort women during WWII was not a problem. He also said that current members of the Executive Board were appointed by the former Director General – and as the new Director General, he would do things in his own way.

    In February, Naoki Hyakuta, a new member of the Board of Governors close to PM Abe, spoke in support of a candidate for governor of Tokyo Metropolitan, the ex-Chief of Staff of the Air Self Defence Force. Hyakuta has been reported as saying that the Tokyo War Crimes Trial was designed to “fool people”.

    Another new member of the NHK Board of Governors, Ms Michiyo Hasegawa, a philosopher and University Professor Emeritus, whilst claiming that the public broadcaster is politically neutral, wrote an article praising a right-wing activist who committed suicide. She also attracted public dispute in January this year saying “Women’s most important job is to give birth and raise children. Women should prioritise children more than actively working outside”.

    The new Director General and members of the NHK Board of Governors are known to share PM Abe’s views on amending the Constitution, his interpretation of history and his visit to Yasukuni Shrine – among other things.

    As a citizen, I am extremely worried that NHK, the most influential public media outlet which should be politically neutral, might be leading Japan in the wrong direction.

    Why do these new members continue to speak out and take actions that do not respect NHK’s essential political neutrality? Why did all the members of the NHK Executive Board submit their resignation papers to the newly-appointed Director General Momii, without hesitation?

    We can find a key to answering these questions in a book widely read in Japan for nearly half a century.  In 1977 Shichihei Yamamoto, a prolific Japanese writer, wrote “’Kuuki’ no Kenkyuu”, usually translated as ‘The Study of the Atmosphere’ – where ‘kuuki’ or ‘atmosphere’ refers to a collective socialised mentality that Japanese people are said to feel or share without actually questioning its basis. Yamamoto pointed out that this ‘atmosphere’ is created by leaders and has the power to lead people as a group in a particular direction without any logic or contention.  I believe many Japanese people tend to make decisions influenced by this ‘atmosphere’ without thinking logically or accepting scientific data – especially if they belong to influential groups or organisations. Yamomoto’s thesis is that ‘atmosphere’ allows overwhelming emotions and group pressure to transcend logical behaviour.

    NHK’s series of incidents may well be the result of ‘atmosphere’, created by PM Abe, who has the power and authority, supported by the majority of Diet seats and the support of his Cabinet (51% as of April 2014).

    I am very concerned that NHK, managed and overseen by Director General Momii and other PM Abe supporters, will take us in a dangerous direction.  Influenced by NHK, the largest public media outlet, the Japanese people may be caught up in Abe’s ‘atmosphere’ and become incited towards war.

     

    Michiya Matsuoka is a former executive of a major advertising agency in Japan. He was also CEO of the agency in Australia from 1989 to 1993 after nine years in New York.

  • John Menadue. Australia-Japan – friends should be frank.

    Tony Abbott is shortly to visit Japan. He should be aware of the serious ultra-nationalist trend in Japan. That ultra-nationalism in the past has brought tragedy to the Japanese people and our region. The chief exponent of this ultra-nationalism in Japan is Prime Minister, Shinzo Abe,who will be his host.

    I believe that Japan is at a tipping point in its domestic politics and in its relations particularly with China and the Republic of Korea – countries that it has invaded and colonised in the past. 

    I am presently in Japan and my friends express to me increasing concern about the rising trend of ultra-nationalism. The nature of that ultra-nationalism is set out in my earlier post, which is below. My friends grew up in Japan where the majority was clearly influenced by the tragedies of the past and wanted to maintain a pacifist approach to the future. That approach has served Japan well since 1945. There is now concern however that generations of young people in Japan have never experienced the tragedy that war brought to their parents and grandparents. 

    There are encouraging signs that elements within Prime Minister Abe’s government and also Coalition partners, Komeito, are concerned about what Prime Minister Abe proposes. Hopefully they will prevail. Tony Abbott would be wise to urge caution on his host when he visits Japan. But I wonder if he understands what is at stake.      John Menadue

    Tony Abbott has told us that Japan is Australia’s best friend in the region. I don’t think the relationship with Japan should be expressed that way, but if we take what Tony Abbott says literally, a good friend should tell the Prime Minister of Japan Shinzo Abe that there is disquiet in the region and amongst Japan’s many friends about the ultra-nationalist course that Prime Minister Abe is pursuing.  His actions and those of his colleagues including the Foreign Minister are causing particular concern in China and in the Republic of Korea who suffered from Japanese occupation. This is not just a silly cultural war that PM Abe is conducting over words and with few consequences. With Japan’s history this is serious. Germany has gone to great pains to purge so much of its past. But Japan’s past keeps coming to the surface when it is bidden.

    Prime Minister Abe upped the ante in a visit to Yasukuni Shrine, the core of the discredited State Shinto of earlier years that brought tragedy to Japan and the countries of the Pacific. Prime Minister Abe says it was a private visit but it was a public denial of Japan’s wartime atrocities. Yasukuni honours the souls of 2 million war dead but also fourteen Class A war criminals. It features a museum that attempts to whitewash Japan’s war record. The US Embassy in Tokyo objected immediately to Prime Minister Abe’s visit to Yasukuni.  Julie Bishop took a month to respond and in a very lame way. “Such events (as the visit to Yasukuni Shrine) escalate the already tense regional environment”she said.

    Prime Minister Abe has clearly set out to rewrite history and provoke both China and the ROK. His actions also offend the memories of Australian service people who suffered at the hands of the Japanese Imperial Army. It is remarkable that he attacks the ROK which is led by a conservative Korean President. His ultra-nationalism blots out any affinity with a fellow conservative. In his plans to rewrite Japanese history he continues to apply pressure to the Education Ministry and teachers to ensure that their textbooks are rewritten to be more “patriotic”.

    Prime Minister Abe has made it clear that he wants to amend Article 9 of Japan’s war renouncing constitution and develop a significant counter-strike military capability. I have not yet heard any suggestion that he will discuss this with Japan’s neighbours or Australia.

    With his symbolic visit to Yasukini Shrine PM Abe can rely on a coterie of acolytes to carry on his revision of history.  He has appointed five new members out of twelve to NHK, Japan’s public broadcaster which is similar to our ABC. All the five new members are close to the Prime Minister. That is not so surprising, but one of the appointees, Naoki Hyakuta, described the Tokyo War Crimes Trials as designed to ‘fool people’. Hyakuta went on to add that the 1937 Nanjing massacre of possibly 300,000 Chinese by the Japanese Imperial Army was a fiction.

    Katsuto Momii, with the strong backing from Prime Minister Abe, has been appointed Director-General of NHK. At his first press conference Momii said that the recruitment of ‘comfort women’ was not a problem. He has refused to retract that comment. He endorsed Abe’s visit to the Yasukuni Shrine.

    The Asahi Shimbun reported this week that “books and periodicals highly critical of China and South Korea are flying off the bookshelves”. At the Tokyo Municipal election last weekend Toshio Tamogami an ultra-nationalist candidate ran fourth with 611 000 votes or 12% of total votes. He was a former Air Self-Defence chief who said during the election as reported by Asahi Shimbun that “the war of aggression, the 1937 Nanking Massacre and comfort women were all fabricated”. The Secretary General of PM Abe’s LDP party said that “Tamogawa was in complete agreement with LDP policies.” The public mood is moving to the nationalist right.  More and more people including officials will bend with the prevailing wind that PM Abe is generating.

    To show his friendship to Japan, Tony Abbott sided with Japan over the disputed islands in the East China Sea. Australia should stay out of that dispute. In respect of the dispute over the islands with China, Prime Minister Abe has suggested that war between Japan and China is possible as he made clear by likening the situation to 1914.

    One cannot visit the sins of the grandfather on the son or the grandson, but Prime Minister Abe  is pursuing the same hostile and ultra-nationalistic attitudes to the region as shown earlier by his grandfather, former Prime Minister Nobusuki Kishi. In 1935 Kishi became a top official in the industrial development of Manchuko, where he was subsequently accused of exploiting Chinese labour.  He was appointed Minister of Munitions by Prime Minister Hideki Tojo. After the war, Kishi was held at Sugamo prison as a Class A war crimes suspect.  Unlike Tojo, he was released from Sugamo prison in 1948 and was never indicted or tried. Kishi’s relationship with grandson Abe may seem unimportant but they both share similar ultra-nationalist aspirations.

    When Tony Abbott visits Japan in April he should tell Prime Minister Abe that neighbours and many friends of Japan are worried about the course on which he is set. He is the most belligerent leader that we have seen in Japan for decades. He foolishly attempts to conduct diplomacy with the US and Australia over the heads of his neighbours. Their hostile response is not surprising. We have an interest in telling the Japanese Prime Minister and being frank with him that we are concerned.

    Many countries and many people have put great effort into reconciliation with Japan and its people. I have tried to do my part. We must ensure that that reconciliation is not undermined by a reckless Japanese Prime Minister.

    John Menadue was Australian Ambassador to Japan 1977-1980. He was instrumental in the establishment of the Australia Japan Foundation and was subsequently Chair of the Foundation. He was also instrumental in establishment of the Working Holiday Agreement with Japan, the first between Australia and a country in the Asian Region. He was awarded the Grand Cordon of the Order of the Sacred Treasure by the Japanese Emperor in 1997 for services to Australia-Japan relations.

  • John Menadue.The vendetta against the ABC and the cost to Australia

    Tony Abbott’s vendetta against the ABC is prejudicing Australia’s regional diplomacy.

    The ABC is the most trusted media organisation in the country but Tony Abbott wants to bring it to heel. He has grown used to the fawning Murdoch media.

    According to Essential Research, 70% of Australians have a lot of or some trust in ABC TV news and current affairs. For commercial news and current affairs, it is 38%; for news and opinion in daily newspapers it is 48% and for commercial TV news and current affairs it is 41%.

    In his attacks on the ABC, Tony Abbott has become quite brazen, suggesting even that the ABC is unpatriotic.

    In the recent budget ABC funding has been cut by $29 million p.a. But the real attack on the ABC was the decision to axe the $223 million contract which the ABC has to produce and broadcast Australia Network which Australia needs to project itself into the region.

    The cutback to Australia Network will not only damage our projection into the region but it will also prejudice the ABC’s already limited number of correspondents in Asia, even though the ABC’s coverage and performance in Asia is superior to other media.

    The Coalition made it clear in advance that it would axe the Australia Network. It was pay-back for the ABC even though the ABC has seven years to run on the contract.

    Yet this axing came within weeks of the ABC signing a contract with the Shanghai Media Group to broadcast Australia Network throughout China. Only CNN and BBC have been able to negotiate such an arrangement. Rupert Murdoch tried for years to get a foothold in China but not surprisingly he failed ignominiously.

    Malcolm Turnbull, the Minister for Communications, to whom the ABC is responsible, did not effectively defend the ABC. Julia Bishop the Minister for Foreign Affairs won the day.

    It is noteworthy that during Tony Abbott’s recent visit to China we were told by the embedded Canberra Gallery journalists who travelled with him that the ABC had been able to secure this arrangement in China because of the good relations that Tony Abbott had forged with China. There must be some red faces in the Canberra Gallery to now see what’s happened to the ABC in China.

    I have no doubt that the ABC is better equipped than any other media organisation to undertake this soft diplomacy in China and generally in our region. But close observers would conclude that Australia Network’s performance has been quite ordinary. It cannot be compared with the successful projection of the UK through the BBC World Service. The ABC’s performance in Asia reflects the derivative nature of all our media. Our media still perform as is if we are an island parked off London and New York.  Not one member of the eight-person ABC Board has lived or worked in Asia. Only one out of the eleven senior ABC executives has worked in Asia.

    The very ordinary performance of the Australia Network is not surprising. It has not had leadership that understands and knows about our own region. ‘Soft diplomacy’ requires a close knowledge of the nuances and sophistication of the people of our region. The ABC, along with other media in Australia, is not sensitive or seriously interested in our region. Domestic trivia invariably wins the day.

    The botched tender process and the performance of Australia Network have not helped the ABC’s case. But even allowing for that, Australia’s interests would be better served if the government had not pursued its continuing vendetta against the ABC and allowed our national broadcaster to continue and to develop its services into China and into our region.

  • Caroline Coggins. Art and prayer

    What do we pay attention to, what do we look for? It sounds like such an innocent question, yet it is a reflection of who we are, and how we have been shaped.

    I went to a Matisse exhibition when I was in London recently. What struck me was a comment the artist made as an older man, with only fourteen years of life left to him, that it was only now that he had to learnt how to ‘ see’.  And this seeing would take him on a totally other path, and would revolutionize what was considered art.

    Of course artists, poets and mystics have always been involved in a kind of stripping of the layers, cleaning the windscreens of perception, of dust. Whatever we spend time thinking about and how we have chosen to live are what we will become. And this in turn will also shape our  seeing/ hearing/feeling.

    Matisse would learn to see each object and give it its life.

    As I live my life right now, I’m away from the familiar, live and pray in a bedroom, I have few props, and no buddies. I am interested to see what this does to me. Can I stay open and flexible, change my moods, do things because I always have?  When it comes to prayer, do I begin, do I start with those so familiar processes and what will happen then?

    I hear the same things going on in my mind, and often the familiar instructions from the outside are the same. But acting on instructions is not the point as they are meant only to guide and focus the intelligence and spirit.  But subtly we can be seduced into thinking that these instructions, this knowledge, are the thing itself.

    I sit at dinner parties and conversation is about things, but rarely are our fine gifts of intelligence given any room to develop and discern. We become governed by our world of thoughts and rarely do we actually get the chance to look at the thinker of the thoughts.

    Of course this is what starting to contemplate is about. Yet the mind is very interested in what it has thought before, what it already knows and it is rarely interested in what it doesn’t know. It will be interested in unknown facts to increase the stockpile of facts, because this can appear as intelligence (aren’t we often impressed by people who know a lot about everything!). But are we really curious about entering into the wordless world?

    Not having a formula to control our movements at this time puts us at risk as we grope blindly. We often need to invite silence to hear what is initially wordless.  Our darker places inside emerge: fear of the unknown, risk of being wrong, seen as lacking.  Yet all of these qualities keep us on the wheel that spins faster and faster as we seek to be in control.

    Like Matisse, I think we are developing ourselves to become sensitive, to see from our own experience?  But the first thing is to know that we will need courage and a kind of solidarity with ourselves.  Matisse would live his whole life outside of what was acknowledged as “good art”, yet now people will queue for months to taste and see this freedom.

    The trick to finding a way forward is to recognize that we are the only ones who can do this, there is no formula, the only pointer is that others have set this course and have done it before us.  Usually people we admire can show us how. But I often wonder if we want it enough for ourselves, I mean the deeper desires, those that will really satisfy us. We may not at the time be appreciated by  our fellow travellers,  but it will certainly bring aliveness and creativity.

    The last part of Matisse’s statement is that in truly learning to see, we learn to love. That sounds like a good outcome.

     

  • John Falzon. Time to stand and fight

    There are measures in this Budget that rip the guts out of what remains of a fair and egalitarian Australia. These measures will not help people into jobs but they will force people into poverty.

    You don’t help young people or older people or people with a disability or single mums into jobs by making them poor. You don’t build people up by putting them down.

    This Budget is deeply offensive to the people who wage a daily battle to survive. The content of the Budget is offensive. The lies told to justify the Budget are offensive.

    As philosopher Slavoj Zizek explains:  “…we are told again and again that we live in a critical time of deficit and debts where we all have to share a burden and accept a lower standard of living – all with the exception of the (very) rich. The idea of taxing them more is an absolute taboo: if we do this, so we are told, the rich will lose the incentive to invest and create new jobs, and we will all suffer the consequences. The only way to escape the hard times is for the poor to get poorer and for the rich to get richer.”

    The government wanted us to believe that its first Budget was tough but fair. It has since explained that its outright cruelty to people living in poverty is actually good for them because by strengthening the economy everyone, especially the poor, will benefit. Wealth, you see, trickles down, when the wealthy are treated well and their privilege preserved. Thus goes the message it has been trying to dangle before us.

    It is still trying.

    But all we can hear is the sound of the excluded still waiting for the trickle-down to trickle down.

    Budget 2014, you see, has the wealth trickling up! Not that this is all that unusual when market forces are allowed to trample on the lives of people who bear the brunt of inequality.

    Even Pope Francis has something to say about this: “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralised workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”

    When you’ve got a rich country like ours “unable” to afford to ensure that the more than 100,000 people experiencing homelessness or the more than 200,000 people on the waiting list for social housing have a place to call home, it is not a misfortune or a mistake. It is the sound of the excluded still waiting

    When you’ve got more than 700,000 people unemployed and around 900,000 underemployed, on top of those who are set to lose their jobs due to company closures, the dismembering of the public service and government cuts to social spending, it is also the sound of the excluded still waiting. Let us not forget the woeful inadequacy of the Newstart payment, at only 40% of the minimum wage. Neither let us forget the single mums who were forced onto the Newstart payment at the beginning of last year, and let us not forget the working poor for there are some who would like to squeeze them even more by reducing the minimum wage and taking away what little rights they have.

    When you’ve got David Gonski, not generally seen as representing the vanguard of the working class, working alongside his fellow review panellists to recommend a package of education funding reforms to address the outrageous inequality that besmirches education funding in Australia, and then the government does a triple back-flip and declares it is not committed to seeing this redistribution of resources through, you loudly hear the sound of the excluded still waiting.

    The long, fruitless wait of the excluded for some of the wealth, some of the resources, some of the hope, to trickle down, is one of the most audacious and sadly successful con jobs in modern history. It is not misfortune. It is not a mistake. It is certainly not, as perversely asserted by those who put the boot in, the fault of the excluded themselves! Rather, it is an attack, sometimes by omission as well as by commission, against ordinary people, from the First Peoples to the most recently arrived asylum seekers and everyone in-between who has been residualised and demonised and made to bear the burden of inequality.  That is why there is absolutely nothing unusual about understanding this as an issue of class. And why Warren Buffett was quite correct when he said: “There’s class warfare alright, but it’s my class, the rich class, that’s making war, and we’re winning.”

    The public response to the Budget reflects the deep feeling of injustice in the community. The powerful thing about the Budget response is that people are banding together to defend our egalitarian values of fairness and respect. People are saddened not only because the Budget affects them but because it hurts and humiliates the people they love and care about: young people, older people, people with a disability, single mums, struggling families. As we can see from the strength of the response to it, now is the time not to watch and weep but rather to stand and fight.

     

    Dr John Falzon is Chief Executive of the St Vincent de Paul Society and the author of The language of the Unheard.

  • Geoff Hiscock. Economic time is right in India for Modi and his mandate

    ​Narendra Modi comes to office in India with two big advantages: the economic cycle is starting to turn up at last, and his Bharatiya Janata Party (BJP) has a clear majority in parliament that frees him from the coalition-style shackles that plagued his predecessor, Manmohan Singh.

    The timing is right for Modi. After two years of sub-5 per cent growth, it looks like India’s economy will grow 5.2 per this year and 6.0 per cent in 2015, according to the latest outlook from regional analysis firm IMA Asia.

    While that is still a long way from the 8 to 9 per cent boom days of 2010 and 2005-07, it offers hope of better times ahead for India’s 1.25 billion people, particularly for lower income earners who are eager to join the spending class.

    One caveat is that the livelihoods of many of India’s 800 million rural dwellers will depend on how much rain this year’s southwest monsoon brings. The first monsoon rain is expected in Kerala in the south around June 5, but there is also a 60 per cent chance of a strong El Nino this year, according to the Indian Meteorological Department. That could bring drought conditions, which would have a big impact on rural incomes.

    Whatever the weather, the new government’s policy settings will play a big role in how the economy performs.  Indian ratings and research agency CRISIL says the election result has created “the best environment in a long time to bite the bullet on government finances.” It says an agenda that improves India’s competitive stance by tackling inflation, introducing the long-awaited GST, reducing subsidies, recapitalising banks, fostering corporate debt markets and giving a “booster shot” to manufacturing will pave the way for a shot at 6.5 to 7 per cent annual GDP growth.

    More broadly, Modi’s decisive win and pro-business outlook should encourage multinationals and domestic companies alike to dust off their investment expansion plans. The one area where this won’t happen is in the modern retail sector, where Modi and the BJP remain opposed to foreign direct investment in multi-brand retailing.

    That is a pity, because retailing is a job-intensive business of the type India desperately needs. The services sector, along with manufacturing and construction, is where growth must occur if Modi is to make any headway against one of India’s biggest challenges: providing jobs for the 13 to 15 million young people who seek to enter the labour market every year. International retailers such as Tesco want to expand their operations in India and would bring new skills, technology and job opportunities to the table if allowed. But for now, Modi and the BJP are more concerned about protecting the livelihoods of the 13 million “kirana,” or family-owned corner stores, that are the backbone of India’s retail scene.

    Consulting firm McKinsey estimates that India needs to add 115 million new non-farm jobs over the next decade to cater for a growing population and to reduce agriculture’s overall share in employment. Labor market flexibility and more vocational training for the poor and uneducated are among the steps it says are required.

    One of India’s biggest handicaps remains its poor performance in infrastructure development. It has hundreds of road, rail, port and power projects on its books, but they seem forever mired in red tape, corruption and disputes about land zoning, jurisdiction, relocation and environmental factors. Modi brings to the table the model of his home state Gujarat, where the electricity always runs – courtesy of profitable private power stations — and where businesses such as automotive plants have been encouraged to set up. The central government’s role in state-based infrastructure development is limited, but Modi’s mantra of “minimum government, maximum governance,” should at least encourage some movement on the national infrastructure front.

    Internationally, Modi will find the existing policy settings do not require too much fiddling. Pakistan, as always, is the key security challenge, but at least Modi is amenable to a dialogue with his counterpart Nawaz Sharif, who has already invited him to visit Islamabad. Modi talks tough on China over territorial issues, yet is pragmatic enough to want expanded business ties. Likewise, China says it wants to take relations with India to a “new height.” Modi likes Vladimir Putin and got a congratulatory call from Barack Obama, so he may be able to improve India’s energy security outlook in the way he deals with Russia and the United States over oil and gas supplies and nuclear technology, though the nuclear civil liability issue is not fully resolved. He also likes Japan’s assertive leader Shinzo Abe – the pair follow each other on Twitter – with Abe tweeting this week: “Great talking to you, Mr Modi. I look forward to welcoming you in Tokyo and deepening our friendly ties.”

    And what of the man Modi is replacing, the long-serving Manmohan Singh?  Widely regarded as a good and decent man, Singh was brought low by the dynastic politics of the Congress Party, and the sheer complication of heading a fractious agglomeration of self-interested parties. His best legacy goes back to the early 1990s; as finance minister he brought in a series of reforms that allowed India to slough off the Raj-era mindset and embark on a more vigorous growth path. Sadly, too many of his colleagues at the state and federal level still believe in the “pay to play” approach to governing the world’s biggest democracy. Let’s hope Modi’s mandate cuts corruption and gives India the boost it so desperately needs.

    Geoff Hiscock writes on international business and is the author of several books, including “Earth Wars: The Battle for Global Resources,” and “India’s Global Wealth Club,” both published by Wiley.  

     

  • John Menadue. Think tanks, cash for comment and the corruption of public debate.

    In recent months we have been partly appalled and partly amused by the urgers and spivs from both sides of politics that have been paraded in Sydney before the Independent Commission against Corruption. Most recently we have seen developers and others using fronts to launder money to hand on to political parties. Even the Young Liberals have decided to get into the act with their ‘Black Ops’.

    But there are other more serious problems with think-tanks that receive large amounts of money, seldom disclose their sponsors or donors and then conduct overt political campaigns, invariably on behalf of business and the conservative side of politics. These cash for comment think-tanks hawk themselves around as ‘independent’! They are often nothing of the sort. They are propagandist fronts for the laundering of money for special interests. Yet organisations like the ABC give them remarkable free time to espouse the views of their secret funders.

    Consider the Institute of Public Affairs (IPA). In 2010 an IPA Director, Alan Moran, told the Productivity Commission ‘We’ve got about 4,000 funders … there are occasions when we may take decisions which are somewhat different from those of the funders. Obviously that doesn’t happen too often, otherwise they’d stop funding us, but it does happen occasionally.’  I could rest my case there but the IPA has a colourful record in fronting for special interests.

    In his 2007 book on the PR industry ‘Insider Spin’ Bob Burton wrote ‘A little funding routed by a think-tank [like IPA] enables the policy agenda of corporate funders to be projected to a broader audience with more credibility than if it did it for themselves’.

    In 2008 the IPA wrote an article “Big Fat Beat up” questioning the relationship between obesity and junk foods. We were not told whether the junk food industry was a funder of IPA

    In 2010 the Gillard Government announced legislation to force all cigarettes to be sold in plain packages. With the help of the ABC, the IPA attacked the government at every opportunity on this issue. The ABC gave IPA’s Tim Wilson almost unending interviews. He also got a run on seven commercial radio stations. Asked by Media Watch whether the IPA received funding from Big Tobacco, Tim Wilson’s response was ‘The IPA does not disclose its membership list’.

    IPA’s John Roskam argued last year for more investment in dams and roads in the Northern Territory together with special economic zones. What IPA did not mention was that its policy proposals on the Northern Territory followed very closely what Gina Rinehart had been saying. Interestingly she was the guest at IPA’s 70th anniversary dinner last year. Asked if Gina Rinehart was a donor to IPA, James Patterson responded ‘The IPA is funded by voluntary contributions of our 3,256 … members and supporters. We are very grateful for their support and we respect their privacy’.

    IPA’s major successful campaign has been to give a platform to client change sceptics. It funded two full-page advertisements in The Australian, costing about $100,000. The advertisements attacked the government’s climate change policies.  Who funded this campaign?  The IPA did not tell us. Was it the fossil fuel industry? Was it Exxon, Shell, Caltex and BHP Billiton? With a policy of non-disclosure IPA provides a front for powerful rent-seekers.

    In the year to June 30, 2010, the IPA hosted forty events around the country against the carbon tax. I suspect that the polluters paid the cash and the IPA provided the comment.

    The IPA told us in the Drum those pub lockouts and 3 a.m.  closing where a bad idea “because the Australian public consumes a large quantity of alcohol and gets into very few fights” How much does IPA receive from the alcohol industry.

    A few years ago the IPA launched a sustained attack on NGOs as being unaccountable, unrepresentative and not worthy of charitable status. But the IPA enjoys charitable tax status. Has the Tax Commissioner examined the murky financial world of the IPA?

    Why should the ABC which the IPA so desperately wants to get rid of, give the IPA extended coverage to its ‘scholars and fellows’. The ABC does this on a wide range of its programs – The Drum, TV Breakfast, Radio National and more.

    Businesses are attracted to front organisations which will espouse and promote their views. The IPA and others are part of a rigged and prejudicial public debate. They are doing more to damage our democratic life than the shifty developers we see parading before the ICAC.

    The Free Enterprise Foundation of the NSW Liberal Party and Joe Hockey’s North Sydney Forum are small beer compared with the IPA which fronts for rent-seekers who hide behind the scenes.

    Professor Ross Garnaut has spoken of the ‘diabolical problem’ of conducting in Australia a balanced and informed debate on important public policy issues. We had such a debate during the Hawke and Keating periods of the 1980s and the early days of the Howard Government. The IPA and their ilk are a major part of the “diabolical problem” that Ross Garnaut refers to. They are debasing public debate. They will not disclose who funds them and organisations like the ABC give them an armchair ride.

    Surely at the least, the ABC should not put to air anyone from a “think tank” that does not disclose its donors because the assumption must be that they are a cash for comment enterprise.

    Think tanks are important players in the battle of ideas but this battle needs to be conducted honestly and transparently

     

    I was founding Chair and am a Fellow of the Centre for Policy Development. We disclose our major supporters and donors.

     

    I will be writing further about the corruption of public debate; the role of lobbyists, the influence of News Ltd, a rogue organisation and the public influence of “independent” business economists who are employed by vested interests and particularly the banks. Where are the independent and informed public commentators? They seem to have abandoned the field and their public responsibilities.

  • Julian McDonald. We will right this terrible wrong.

    With searing eloquence, 11 men bravely told the Royal Commission into Institutional Responses to Child Sexual Abuse in Perth of the devastating impact of physical and sexual abuse at the hands of Christian Brothers in residences at Castledare, Clontarf, Bindoon and Tardun in Western Australia more than 50 years ago.

    No one could be but moved by these men, who told of their painful experiences of stolen innocence, of being subjected to physical brutality and the depths of sexual depravity by supposedly religious men from whom they had every right to expect care, nurture and respect. Instead they were betrayed and treated as objects for sexual gratification.

    A regret I have is that every Christian Brother in Oceania was not present to hear the testimony of the men, victims of an earlier generation of Christian Brothers.

    The ongoing suffering of children so wantonly abused by those charged with their protection demands of their carers an immediate and effective response. That response is demanded from Christian Brothers for survivors now in the later stages of their lives.

    At the Christian Brothers’ Congregation Chapter held in Nairobi in March, I went on the record as saying there will be no future for the Christian Brothers unless and until we do all in our power to address the devastation inflicted on the lives of children and vulnerable adults by the sexually, emotionally and physically abusive conduct of some of our number. However, I am conscious that rhetoric is validated only by appropriate action. We have to find additional ways of engaging with those victimised so their voices are heard.

    As the representative of all the decent, committed Christian Brothers living and working throughout Oceania, I accept our shame and ask forgiveness of those whom my Brothers have harmed. I have spent the past 25 years reaching out to victims to try to address the hurt they suffer. I ­acknowledge that there have been times when my efforts have been less than perfect. I can only promise to work at doing better. However, I am confident this royal commission, at which I was a witness, will give us some direction. I pledge the co-operation of the Christian Brothers in working with the royal commission in whatever way we are able.

    And as we wait for the findings to provide a pathway for the future, the Christian Brothers commit to continuing our work with survivors each and every day, knowing that help, care and compassion are needed in the present. I commit the Christian Brothers to working with survivors now on their individual needs and circumstances in an atmosphere of care, compassion and dignity.

    I also urge the Catholic Church, of which the Christian Brothers are but part, to open itself to examining the causes and embracing the learnings from what has been a shameful episode in our history.

    We cannot delegate our ­response to others to formulate but rather must look inside ourselves for the way forward, listening to views from within, however confronting we might find them.

    The report into sexual abuse by Christian Brothers published by Brother Gerry Faulkner some 16 years ago offered some analysis of causes, some learnings and some suggested ways forward.

    Moreover, I believe that the church cannot continue to ignore the voices of people such as Bishop Geoffrey Robinson and Sister Angela Ryan, who have campaigned for decades to ­address the blight of sexual abuse by priests and religious orders. They have been the conscience for us all in this matter, but at times it would appear that they have even been punished for their courage.

    I would like to thank Judge Peter McClellan and the other commissioners and their staff for their work and dedication in pursuit of the painful truth, and I can assure them of our continuing support and co-operation.

    And to the men who continue to suffer so greatly, we will not abandon you.

    Brother Julian McDonald is deputy province leader, Christian Brothers Oceania Province. This piece was run in The Australian 12 May 2014.

  • Fran Baum and Sara Javanparast. Demise of Medicare Locals.

    Demise of Medicare Locals: impact on community health, partnership and PHC research

    Fran Baum and Sara Javanparast  
    Southgate Institute for Health, Society and Equity, Flinders University, Adelaide

    Tuesday’s budget announced the abolition of the 61 Medicare Locals and that they will be replaced with an unknown but smaller number of Primary Health Networks. Regional primary health care organisations are widely acknowledged to be vital to effective   coordination of PHC activities, reducing service fragmentation, making the health system easier to navigate for users, and reducing health care cost. Primary Health Care Trusts in England, New Zealand Primary Health Care Organisations, Canada/Ontario Local Health Integration Networks, and Scotland Community Health Partnerships are examples of overseas regional PHC organisations which support GPs and other PHC providers and plan for population health initiatives. The World Health Organization  recommends that PHC should be comprehensive and not just concentrate on clinical issues but also emphasise population-based approach, including disease prevention and health promotion, equity of access, responsiveness to community needs and community engagement.

    In Australia, various models of PHC have been established including Medicare-funded General Practice, State-funded multi-disciplinary community health centres and Aboriginal community controlled services. In 2009, the National Health and Hospital Health Reform Commission recommended that ‘service coordination and population health planning priorities should be enhanced at the local level through the establishment of Primary Health Care Organisations’. This has resulted in the establishment of Medicare Locals to fulfil the role of co-ordinating PHC services at the local level, improving access and preventing hospital admissions.

    The establishment of MLs, introduced by the Gillard Labor government, commenced in July 2011, with a total of 61 MLs operational from July 2012. Since then, the MLs have been conducting community needs assessment, identifying and building partnership with key health, community and social organisations in their region, and developing population health plans that are based on and responsive to local needs. A range of local programs and services have been designed. These include mental health, after hours care plan, Aboriginal health, E-health, aged care, and migrant health. Many resources have been spent building positive relationship with key stakeholders and community members within each ML with some good examples of collaborative work, joint planning and community engagement strategies. Taking the Pulse program in a number of ML including the Gold Coast ML, ACT ML, and Metro North Brisbane ML enabled consultation about health and wellbeing with people from all walks of life. The priorities that emerged from these consultations have been used in the formulation of needs assessment and informed the development of their strategic plans to ensure they respond to local need. The Tasmania ML is addressing social connection and other social determinants of health using strategies including community capacity building. Our local research suggests the MLs are co-ordinating with local health authorities on issues of joint concern. They have begun to fill identify and fill service gaps.

    All these programs and initiatives have taken staff and local PHC health providers’ (including many GPs) time, and cost a lot of taxpayers’ money to develop and establish.  Now is the time when Australians should be able to capitalise on this investment and see better co-ordinated local health services, community alternatives to hospital services (which will save money), Aboriginal health programs, and local mental health programs. It takes time to establish the trust and connections needed to develop and co-ordinate PHC services and this social capital that the MLs have established will be squandered by the decision to abolish them in the budget. Of course, the ML model and its programs need to be scrutinised and evaluated, but its demolition while it is still in its infancy will have many negative impacts on the community’s health and represents a failure to capitalise on investment.

    The short term life of such large national initiatives also makes it difficult for primary health care researchers to produce rigorous evidence on the effectiveness of existing models and to evaluate the programs in terms of population health and cost benefits that need to be followed through for a longer period of time. “Lack of evidence on program effectiveness” is one the key justifications for budget cuts was evident in the Review of Medicare Locals by John Horvarth (http://www.health.gov.au/internet/main/publishing.nsf/Content/review-medicare-locals-final-report) . Such evidence can hardly be produced in the current rapid changing policy environment which makes rigorous evaluation impossible.

    Undoubtedly, replacement of MLs with Primary Health Networks that are more clinically focused will move our primary health care system away from its broader mandate of disease prevention, health promotion, equity and social determinants of health. Of course, communities particularly those most in need are the ones who will suffer the most from these continuing political battles and health system changes.

    We now face an uncertain period when the work of the existing ML is undone and new Primary Health Networks are established. The budget papers say this process will be open to tender and that the new organisations will be able to “partner with private health insurance” presumably opening the ways for the privatisation of the Networks and a further move away from equitable and efficient health care. We could see big providers such as BUPA winning tenders to run these PHNs!

    As a postscript we note that had the budget taken the fiscally responsible step and abolished the private health insurance subsidies this would have released around $5.5 billion dollars for investment in PHC services and the existing MLs which would have represented a far better investment in our health.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • John Menadue. For some the age of entitlement continues.

    Joe Hockey talks endlessly that the days of entitlement are over. They may be over for the unemployed, students, the sick and pensioners – in fact the majority never had days of entitlement. But they are certainly not over for the miners and the financial sector. These two sectors survived unscathed from the budget. This tells us a lot about who is running this government.

    For the miners, the mining tax and the carbon tax will end at a cost to the taxpayer of at least $10 billion per annum. The rebate on diesel fuel will remain. The government tells us that it had to honour these promises.  The same commitment to honouring promises was easily discarded in the case of the unemployed and the sick.

    And then there were the promises to the financial sector and particularly to the superannuation industry and the private health insurance industry. Promises to them had to be honoured. There was no attempt to scale down the tens of billions of dollars in rip-offs in these sectors that benefit the rich. Not only is the government determined to protect the privileged position of the financial sector, but it is also trying to water down the Future of Financial Advice (FOFA) legislation to advance the position of the banks and AMP. Senator Sinodinis and the government are obviously determined to allow the conflict of interest by the banks and the AMP and their financial planners to continue.

    The $5b p.a. corporate welfare subsidy to private health insurance sector will continue. But not content with this corporate handout PHI will seek to get a foothold in the new Primary Health Organizations, formerly known as Medicare Locals.

    Just look at who is untouched in this budget – the miners and the financial services sector. That tells us a lot about who is pulling the strings. This is crony capitalism. As Paul Keating put it the Liberals are about business, not markets. Or as Tony Abbott put it on election night – ‘Australia is open for business’ – the business of the miners and finance sector. Their entitlements will continue.

  • John Menadue. Seven dollar GP co-payment – and an unintended consequence

    If the co-payment takes effect, it is likely to result in an increase in doctor’s fees. As Ian McAuley has pointed out, the attraction of bulk-billing for the doctor is that it removes the cost of handling and accounting for transactions. The invoice is sent directly to Medicare.

    Once the doctor is obliged to handle the $7 co-payment, another transaction occurs; either by cash or probably credit card. This inevitable patient/doctor money transaction will provide the doctor with an opportunity to charge above the bulk billing rate.

    As soon as doctors stop bulk-billing we can expect a rapid rise in doctor’s fees on top of the $7 co-payment. And the $7 co-payment may be just the beginning!

  • John Menadue. The Budget: Robin Hood in reverse.

    There was a real risk that Tony Abbott and Joe Hockey believed their windy rhetoric of the last two years about debt and deficits. Having won the election they have had to face the reality that they have been grossly exaggerating our economic problems.

    The real risk was that Tony Abbott and Joe Hockey would act on their own exaggerations and savagely attack the economy. Fortunately, the Budget tells a very different story. In terms of managing the macro-economy, the government has got it about right in the budget. It hasn’t cracked down in the way many feared.

    But what the Budget has done is to inflict pain on the poor and the vulnerable in our society; the unemployed, young people, the sick and the poor. Unlike Robin Hood, Joe Hockey robs the poor to protect the rich. And more pain is to come for the disabled and pensioners. The $80 billion cutback in health and school funding for the states will also result in severe problems. State Premiers are already protesting. This hit on the states will probably force them to press for a broader and/or an increase in the rate of the Goods and Services Tax. Perhaps that is what Joe Hockey intends.

    The most glaring example of cruel policies is the cut in our overseas development assistance program.  It is the largest single saving in the Budget. The political logic must be that the poor in the world that we should help can’t vote in Australia and can’t protest. They are an easy target, like vulnerable asylum seekers. As a wealthy country we should hang our heads in shame.

    I have written before about the need to address our revenue shortfall and the enormous advantages that flow to rich taxpayers in Australia. Our tax as a percentage of GDP has fallen steadily since 2002 from 30% to 28%. This is well below the OECD average of 34% of GDP. We need to fix our revenue base and not punish the poor and vulnerable.

    A major reason for our revenue shortfall is not so much our low tax rates but the high level of tax expenditures or tax deductions that we have. In 2012-13, Treasury reported that there were 363 ‘tax expenditures’ under our tax system. Those tax expenditures had a total value of $115 billion. These tax expenditures range across the field – deductions for charities, religious, scientific and community organisations. The largest of all tax expenditures is for superannuation. This ‘tax expenditure’ costs the Budget over $30 billion per annum. About 30% of these superannuation tax deductions or concessions go to the top 5% of income earners.

    The IMF has reported that Australia forgoes more revenue as a proportion of GDP from tax expenditures than all other OECD countries. It is in this area of tax expenditures that we need to direct our attention.

    Quite apart from the scale of these tax expenditures or deductions and loss to revenue, there is very little transparency. Direct welfare payments for example are easily identified. The IMF points out those tax expenditures are often granted as a result of secret lobbying. The IMF recommends regular and systematic reviews of tax expenditures in the same way we review direct government expenditures, like unemployment benefits. Parliament and the Parliamentary Budget Office would do a great service if they conducted and published such a regular review. If they did, a large number of these expensive tax expenditures like superannuation, negative gearing and subsidies for private health insurance would be brought to public attention and curbed or abolished.

    The ‘welfare cheats’ and ‘dole bludgers’ which are so much part of the stock in trade of tabloid newspapers and talk-back radio are easy game. The real rackets are run by vested interests that reap enormous benefits from tax expenditures which are often largely hidden from view.

    We badly need revenue reform and of tax expenditures in particular.

    Taxes are the price we pay for a civilised society. We need to face up to the need for adequate tax revenue to ensure that all Australians can live in a civilised way.

  • John Menadue. Health Co-payments and $7 for a GP visit!

    We do need to take action to curb our visits to the doctor. In 1984-85 we averaged about 7 Medicare services per head. By 2012-13 it had doubled to over 15 Medicare services per head. The increase was across all age groups and not just for the elderly. Bulk billing, fee for service, and the ability of doctors to generate demand for more and more visits, tests and referrals contributed to this dramatic doubling of Medicare services. It must be addressed for both fairness and efficiency reasons.

    The media seems convinced that the budget will include a co-payment of $7 to $8 for visits to GPs.

    If this fee is part of a general reform of co-payments as I set out in my blog of May 1 ‘The dog’s breakfast’ and reposted below, it should in principle be supported. But I suspect that it will not be part of a broader reform of co-payments that I suggested. I said that on its own, a $6 co-payment (or maybe $7 to $8) was a silly suggestion. On its own it would be inequitable and discourage many people from going to their GP.

    There is also no sign that the government is likely to address more glaring examples of budget problems which aid the rich, e.g. the superannuation concessions that Michael Pascoe, a business commentator on the SMH who has described these superannuation concessions as ‘on-shore tax havens for the rich’. The other benefits for the wealthy which will presumably not be altered include negative gearing, capital gains concessions, fossil fuel subsidies and the funding of rich private schools.

    I have also reposted below an article by Ian McAuley ‘Pay for a GP visit’.

    Repost: John Menadue. Health Co-payments. The dog’s breakfast will continue.

    There has been a lot of superficial comment following the thought bubble of a proposed $6 co-payment for GP visits.

    What we should be addressing is first, the chaotic nature of our co-payments and second, whether individuals and families should be making a greater direct contribution to their health expenses. The last Nielson Poll suggests that Australians are open to making a greater direct contribution.

    We already have a high level of co-payments in Australia. This has been pointed out repeatedly by Jennifer Doggett.  In this post I draw on the background which she has presented over several years .

    In Australia co-payments contribute over $A24 billion p.a. to our health sector. These co-payments are the third highest as a source of health funding – after Federal and State funding.

    This amount of $24 billion p.a. or 17% of our total health funding is high by world standards. Australians pay a higher proportion of their healthcare costs through co-payments than citizens of most other OECD countries. The Commonwealth Fund has found that when healthcare spending is adjusted for the cost of living in Australia, we pay more in direct co-payments than all other counties surveyed apart from Switzerland and the US. Our annual health co-payments per capital are about $US750 compared with Germany $US600, New Zealand $US330 and the UK $US 310.

    The problem with our co-payments is not that they are low. It is that this whole area of co-payments lacks any rhyme or reason. It is a dog’s breakfast.

    Consider how the percentage of total funding from consumer co-payments varies.

    • Public hospitals 2.5%
    • Private hospitals 11%
    • Medical services 12%
    • PBS medicines 16%
    • Dental services 56%
    • Aids and appliances 69%
    • Non-PBS medicines 92%

    In an unpublished paper Jennifer Doggett has pointed out that there is a wide variation in the impact of co-payments on people with different illnesses and disabilities. She says for example that people with conditions that can be largely treated by GPs or within the public hospital system, generally incur lower co-payments than those with conditions that require allied healthcare and over-the-counter medicines. This is the case independently of the length or severity of the illness/disability and its impact on both individuals and society. In fact, people with ongoing chronic conditions often end up receiving lower levels of subsidy for their healthcare than those with one-off or self-limiting conditions. Another result of this ad hoc and uncoordinated approach to co-payments is that some people receive almost all their healthcare free at the point of service, and others, with conditions which may be more serious or longer term, face crippling costs for their treatment. For example, someone receiving emergency surgery for, say, the removal of an appendix in a public hospital, can incur no out-of-pocket costs for their treatment, whereas someone with a long-term genetic condition such as Cystic Fibrosis can incur high ongoing costs. The result is a very inequitable allocation of healthcare resources which has a particularly negative impact on people with chronic conditions.

    The National Centre for Social and Economic Modelling has found that ‘more and more families are finding it difficult to stretch the family budget to meet the costs of healthcare’.

    This chaotic mess in co-payments is not surprising. Ian McAuley and I referred to this problem many years ago. In a paper by the Centre for Policy Development in 2007 we said ‘These co-payments have been introduced without any coherence and therefore inequities and perverse incentives abound. Some services such as public hospital services are free. Some such as pharmaceutical benefits are capped by the government. Some, such as the co-payment for medical services below the safety net thresholds are open-ended; the public subsidy is fixed, leaving the user to bear an open-ended risk. Some such as the medical safety net provisions are proportional to the price of the service. Some safety nets are set on a family basis, others on an individual basis. Some are on a calendar year basis and others on a financial year basis.

    In light of the chaotic nature of co-payments we need to restructure our co-payments.  How should these co-payments be restructured? Several years ago at CPD, Ian McAuley and I set out some criteria which should be adopted in the design of future co-payments. We suggested

    • That co-payments be controlled by the government rather than left open-ended to be set by service providers.
    • That there be only one channel of collecting co-payments, with one set of criteria rather than the separate channels operating at present.
    • That the level of co-payments relate to means, including people’s access to liquidity.
    • That means-tested compensation be separated from service delivery, rather than having service providers check the income or welfare status of users.
    • That co-payments be structured in a way not to distort resource allocation on the basis of needs.
    • That gap insurance, which is designed to evade co-payments, be prohibited.

    In summary,

    1. We already have high levels of co-payments.
    2. These co-payments lack rhyme or reason.
    3. Most Australians have much higher incomes than when Medicare was introduced. Subject to means-testing we should contribute more to our health costs. Co-payments, if well-structured, can help people make better choices with what economists call “price signals” They can provide also some relief to public budgets. A universal health service like Medicare does not have to be free. But it must be a high quality service available to all regardless of means.

    The $6 thought bubble on co-payments for visits to GPs must be considered in a much wider context.  On its own it is a silly suggestion.

  • Peter Menadue. Should corporations have political rights?

     

    There is an old legal saying that a corporation has no body to be burnt or soul to be damned.  In other words, it is just a legal fiction designed to confer limited liability upon its shareholders.

    Despite that, there is an insidious and very dangerous notion abroad that corporations have political rights and should be allowed to make political donations and engage in political advertising.  That notion is a terrible threat to the health of our democracy.

    The United States Supreme Court recently gave that idea a massive boost in the Citizens United case, when it decided (5-4) that the First Amendment right of free speech allowed corporations to engage in as much political advertising as they liked. In dissent, Justice Paul Stevens, one of the great justices in the history of the court, wrote that the First Amendment did not protect corporations.  He said that corporations were not “We the People” for whom the Constitution was established.  Rather corporate spending on politics should be viewed as a business transaction designed by the officers or the boards of directors for no purpose other than profit-making. Stevens called corporate spending “more transactional than ideological”.

    In Australia, we have recently seen what happens when corporations are allowed to engage in such transactional politics.  When the Rudd government tried to introduce a mining tax, major corporations (mainly foreign owned) funnelled huge sums into an advertising campaign to force the government to back down – which it did.

    Corporations must be pushed out of our political system and denied any political rights.  They should not be allowed to use their balance sheet to either make political donations or engage in political advertising.  Only citizens (including, of course, those who are employees or shareholders of corporations) should be allowed to do either.  Further, there should be a cap on how much individual citizens can spend (say $1,000 a year).  Indeed, one option is for the government to give each citizen a political donation voucher which he or she can direct to the party of his or her choice.

    However, that does not mean there will be no role at all for business organisations (like the Mining Council), trade unions or even corporations.  They should be allowed to collect money from citizens (up to the prescribed limit) on behalf of political parties.  However, all donors must be identified (to ensure they are citizens).  That would mean that, to fund its attacks on the Rudd Government, the Mining Council would have had to attract contributions from individual citizens (presumably in the mining community) who felt strongly enough about the issue. My guess is that the money collected wouldn’t have bought the council a 3am advertising slot on a regional TV station.  However then, at least, the citizenry would have spoken through their wallets, not major foreign-owned multinationals.

    The next time a progressive party takes power in Canberra,  the very first item on its agenda should be amending our electoral laws to exclude corporations from politics and to cap donations.  If it doesn’t, it might as well throw away the rest of its agenda.

  • John Menadue. Increasing the petrol tax is good policy.

    It may not be good short-term politics for the Abbott Government but it will be of long-term benefit to Australia if we lift the excise on petrol which has been frozen since 2001.

    The motor industry will protest. It should be faced down, just as we should have faced down the mining lobby when it was being asked to make a fair return to the public for its depletion of our national endowments.

    Our petrol prices are amongst the lowest in the world. That results in less revenue for the government, reduced fuel efficiency, increased congestion in our cities and more carbon pollution. I have reposted below a blog that I posted on November 20 last year ‘Cars are killing our cities’.

    In the December quarter 2013 our petrol prices were the fourth lowest amongst the 28 OECD countries. Only Canada, US and Mexico had lower prices. Our diesel prices were the sixth lowest amongst OECD countries.

    The action of John Howard in 2001 in freezing the indexation of fuel excise has cost us about $24 billion in cumulative losses of revenue. It has also been a contributor to the long term structural budget deficit we face. The IMF has made it clear that the Howard Governments were the major contributors to the structural deficit and not the Rudd/Gillard Governments. The Howard Government decision to freeze the indexation of the fuel excise and more importantly the income tax reductions year after year during the mining boom, were the major contributors to the structural deficit we now face. Unfortunately the Rudd/Gillard Governments didn’t act quickly enough. For example the Henry Tax Review recommended an end to the freezing of the fuel excise but the Rudd/Gillard Governments took no action.

    The increase in fuel prices does make good budgetary sense. As Dr Paul Burke from the ANU has pointed out, allowing the excise to rise with inflation could generate enough revenue to fund Gonski.

    Higher fuel prices will also encourage people to purchase smaller and more fuel efficient cars. As Dr Burke has pointed out ‘Higher fuel prices lead to consumers using less petrol and also consumers deciding to purchase cars that are more fuel-efficient’. He added that we are probably using about 3% more petrol as a result of the Howard Government’s decision in 2001.

    It would be a mistake if Tony Abbott decides to try to placate the motor lobby by building more roads. That will just increase the damage. We need more and better public transport rather than more roads and cars. We need to break free from the addiction we all have to the car and the power of the motor lobby. Cars are destroying our cities and damaging our planet.

    The Abbott Government decision on fuel excise looks like being a sensible and good start for a whole range of reasons. Can road congestion taxes be next!

    Repost: Cars are killing our cities.

    Congestion and pollution are killing our cities. The automobile is so convenient for all of us that we put aside the enormous problems that the automobile is creating. This is not just a problem for the industrialised and wealthy western countries. It is a problem for developing countries as they upgrade from bicycles to motor cycles and then to cars.

    A constant message that we all generally endorse is that public transport, particularly trains in various forms, are the answer. But it is likely to be only a partial answer. Cities like London and Paris have excellent metros or underground public transport systems, but road congestion is still horrific and it is getting worse.

    Some hard-headed political decisions will have to be made about automobile congestion and that will involve decisions to curb the use of cars in our cities. This will not please the very powerful motoring lobby. It won’t please Tony Abbott who wants to build more roads as a major plank in upgrading infra-structure.

    One inevitable decision would be severely restrict any more new freeways… Such an approach would have to be accompanied by a congestion tax with the revenue hypothecated to public transport. With a congestion tax system the higher the level of congestion the higher the rate of tax. It would provide a clear incentive/penalty for motorists not to travel at peak times.

    I just cannot see our cities surviving without congestion taxes to limit the number of cars. With such congestion taxes, we will all be forced to make decisions whether our use of the car/van is worth it, whether for private or business purposes.

    We will also need to address other options to reduce the number of cars on the road including increased sales taxes, registration fees and the fuel excise. In almost every respect these imposts are much lower in Australia. In Denmark the sales tax on motor vehicles is 143%, in Finland 53%, the Netherlands 48% and Sweden 30%.  In Australia it is 10%

    One feature of most European cities is that their cars are much smaller than ours. That reduces both congestion and pollution. To take a local example, a Toyota Hilux 4×4 emits on average 4.6 tonnes of CO2 each year compared with a Toyota Corolla of 2.3 tonnes of CO2 each year. These larger cars not only pollute more and congest our roads, but also dominate parking facilities.

    We can’t keep putting off the debate about limiting the growth of cars in our cities. They are making city life more and more difficult and unsustainable. Public transport is only part of the solution. We have to limit cars on the road. Only in quite exceptional reasons should any more freeways be built. It is a vicious circle with more freeways encouraging more car use and really only shifting the bottlenecks.

    We need to break free from our own addiction to the car and the power of the vested interests in the motor lobby.

    We need to limit cars on the roads at peak times as well as building public metro systems. Paris and London show us that we need to do both

    When the Mayor of London directly tackled the gridlock on London’s roads many years ago he gained wide support.

  • John Menadue. Penalty rates and Liberal lobbyists.

    There is a campaign underway to cut weekend and holiday penalty rates particularly in the restaurant and hospitality industries. True to form the Australian Financial Review says that weekend penalty rates are a relic of times past.

    A report leaked to the ABC indicates that the government will ask the Productivity Commission to undertake a comprehensive review of workplace laws. This will include penalty rates, pay and conditions, unfair dismissal, enterprise bargaining flexibility and union activities. It is proposed that this review by the Productivity Commission will consider the performance of the Fair Work Act. The Commission is expected to report to Joe Hockey by April 2015. He is ministerially responsible for the Commission. He makes the references to the Commission.

    What is of concern is the political relationship between Joe Hockey and John Hart, the CEO of Restaurant and Catering Australia who is pressing for a review of penalty rates by the government. John Hart is also the Chair of Joe Hockey’s North Sydney Forum which has featured prominently in Fairfax media in recent days.

    According to the SMH of May 5, 2014, membership fees are paid to the North Sydney Forum, chaired by John Hart, as part of the North Sydney Federal Electorate Conference. Joe Hockey is the Member for North Sydney. A full member pays $5,500, a corporate business member $11,000 and a private patron $22,000. Depending on the package, there are membership benefits which include board room events, end-of-year receptions, private VIP board room functions and policy forums and receptions. There is also provision for memberships of “Friends of Joe”.

    John Hart is clearly a key man for Joe Hockey and John Hart wants action by the government on penalty rates.

    Most of us would agree that we would rather not work at weekends, but if there is a need for such work, people should be fairly compensated for loss of time away from friends, family, recreation or church. Even God rested on the seventh day. Having forced governments to extend shopping hours and arguing that penalty rates were necessary compensation we now see a campaign by the same vested interests to wind back penalty rates.

    Restaurants and catering businesses say that many are going out of business because of weekend penalty rates. But how much of the problem of those businesses is due to bad business decisions rather than penalty rates? John Hart, Joe Hockey’s fund raiser tells us that there is a 20% annual turnover of restaurant businesses.  I suspect that many of them close because they have made bad business decisions and not because of penalty rates. It is tempting to blame the “system” rather than admit a business mistake.

    With changes in lifestyle, higher incomes and with two working parents, we do eat out more. Statistics from the industry reveal that restaurant business income has grown at a rate of 5.6% annually over the last five years. The Bureau of Statistics has just told us that while total retail sales were up by only 0.1% in the March quarter, restaurant sales were up by 1.8% It is an industry that is growing rapidly despite the alarm about penalty rates. There seems to be a lot of special pleading when John Hart says that we should freeze minimum wages or restaurants will shut down.

    As Ross Gittins has pointed out, many of us see the benefits of living in a market economy, but we don’t want to live in a market society. There must be limits to anti-social intrusions by markets. We should reject any suggestion that market are supreme and can invade our private lives on a 24/7 basis. Do we really need to have so many businesses open all weekend? Clearly we need people like nurses to cover for illness seven days a week, but do we need the same access to restaurants and shops?  And if we do, employees should be properly compensated.

    If the last twenty 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 Tony Abbott, Joe Hockey and John Hart want more change. We need more stability in our industrial relations framework because in the end good relations at the work level depend on effective local management and employee participation.

    Industry leaders tell us that we need to lift productivity. And we need to do this. But a lot of the productivity slow-down is a statistical mirage reflecting the massive mining investment which is just now beginning to show results in increased mining production.

    The vested interests that want to cut penalty rates claim that we have an inflexible labour market which results in high wage costs. Yet at present, the annual pace of wages growth has slowed from about 4% p.a. three years ago to a record low of 2.6% in recent months. Our labour market is showing considerable flexibility.

    Clearly we need to review penalty rates and all industrial relations from time to time, but we seem fixated with the problem, mainly for ideological reasons. . We don’t want the market to intrude into all aspects of private life. Markets are to serve people and society, not the other way around.

  • A last hurrah from Graham Freudenberg on his 80th birthday

    May Day 2014 – fittingly the day of Neville Wran’s memorial service at Sydney Town Hall – may well turn out to be the day when the Labor Party began to see its way ahead.  Not because of the event itself, although it certainly was a marvellous celebration of a great Labor era.  But it was the day of the Shepherd Audit Report. It also happened to be the day when News Ltd bared its fangs and reminded the Abbott Government just who was calling the tune. I invite students of history to file away the Sydney Daily Telegraph on 1 May 2014 and its coverage of the Shepherd Audit next day. All its hatred of Labor was as feral as ever, but in page after page, the message to Abbott and Co was clear:

    “It was us wot done it last year and we can do for you too if you don’t toe the line.”

    But what is really important for Labor is that Abbott, Hockey and Murdoch, in fomenting this spurious crisis that is supposed to engulf Australia sometime in 2024 or 2034 have drawn up clear policy and political battle lines for the rest of the decade. They are surprisingly traditional lines along the distribution of wealth and the concentration of power, but they provide a basis for the restoration of a coherent two-party system, the mainstay of our parliamentary democracy.  After the first week of May 2014, let us have none of this nonsense that there is no real difference between the major parties.

    For the past eight months the whole operation has been designed to entrench three myths (1) that Labor wrecked the economy with a six-year spending spree, (2) that Australia is living wildly beyond its means because of outrageous extravagance in welfare, health and education, and (3) that the ‘productive’ sector is crippled by taxes and debt.  There is a fourth myth behind all this – that the ruinous reality was covered up until the election and kept secret from everybody, including the international agencies who praised Australia’s recovery from the GFC, and even the editorial writer of the Australian Financial Review who as recently as 4 May wrote sensibly about the tasks and challenges facing ‘one of the world’s strongest economies’.

    The Daily Telegraph on 1 May itself illustrates the hypocrisy in its page 3 story headed “Hey Joe, cut here instead of taxing us”. If any of the myths were true, why then did Abbott go into the campaign with his parental leave promise, when Labor’s fratricide had already guaranteed a huge coalition win? Since the election, the News Ltd commentators have portrayed the National Disability Scheme and Gonski on education as two glaring examples of Labor’s ‘mad’ excesses. In order to prevent these becoming election issues, Abbott signed up to them, while persisting with his parental leave proposal. Yet, the Daily Telegraph’s own list of cuts Joe should make costs NDIS at $1.563 billion in 2016-17 and Gonski at $1.120 billion in 2016-17. But the Abbott paid parental leave would cost, on the Daily Telegraph’s figures, $5.684 billion in 2016-17 – more than twice the NDIS and Gonski combined.

    Of course you can do anything with figures. All these supposedly horrific projections are being bandied about without any context.  What does it actually mean to predict that programs inherited from Labor would cost an extra $700 billion in 2050?  The Federal Budget reached an astronomical 100 million pounds ($200 million) in 1939.  Fighting the Second World War cost us a shocking one million pounds a day and today we are the children and grandchildren presumably burdened by Curtin and Chifley’s extravagance.  By 1961 Arthur Calwell nearly won the election by calling for a deficit of 100 million pounds to end the intolerable unemployment level of less than 3%. Menzies denounced it as ‘wildly inflationary’ and ‘grossly irresponsible’.  When he survived by one seat, Menzies promptly announced new spending measures costing 100 million pounds – the nominal figure for the entire Federal Budget barely thirty years previously!

    The timing, circumstances and political intentions of the Shepherd Audit are guaranteed to nullify any objective economic merits it may have. Instead of a serious examination of the role of government in modern economies, it will be seen as a more sophisticated and therefore more menacing Australian version of the American Tea Party agenda.  How far Hockey’s budget will follow News Ltd instructions and the Shepherd Audit Remains to be seen. But for years the Audit will stand as a blue-print for right wing aspirations for Australia – a kind of ‘black light on the hill’. If Labor can’t unite against this, around the development of new programs for growth and fair shares, and in defence of its fundamental achievements in health, welfare (including superannuation) and education, it won’t deserve to survive as the chief standard bearer of the progressive, liberal and egalitarian cause in Australia.

     

    Graham Freudenberg AM (born 1934) is an Australian author and political speechwriter who worked in the Australian Labor Party for over forty years. He has written over a thousand speeches for several leaders of the Australian Labor Party at the NSW state and the federal level. These have included Arthur Calwell, Gough Whitlam, Bob Hawke, Neville Wran, Barrie Unsworth, Bob Carr and Simon Crean.  In 1990 he was appointed a Member of the Order of Australia in recognition of his service to journalism, to parliament and to politics.  In 2005 he was inducted as a life member of the NSW ALP.

    He is the author of four books to date:  A Certain Grandeur – Gough Whitlam in Politics, Penguin 1977;  A Cause for Power – the Centenary History of the NSW Labor Party, Australian Labor Party, 1991;  A Figure of Speech (autobiography), John Wiley & Sons Australia, 2005; and Churchill and Australia, Pan Macmillan, 2008.  

  • John Menadue. The cost of abolishing the Mining Tax

    Just when the mining tax looks like raising some worthwhile revenue, the Coalition proposes to abolish the tax.

    The Rudd Government made a mess of the Resources Super Profits Tax (RSPT). We know from the Henry Tax Review and other commentators that such well-designed rent-based taxes are likely to be more efficient and even out the effects of volatile mineral prices. We also know that such taxes are superior to state government royalties.

    But the mining companies advertising and public relations campaign of $22 million scuttled the RSPT. For an expenditure of $22 million in lobbying and advertising the miners were saved about $60 billion in tax over the next ten years. Despite the fact that all surveys at the time showed that the majority of Australians supported the RSPT, the combination of the miners, the Coalition and the Murdoch media forced the government to give way.

    As Ross Gittins in the SMH of March 17 this year put it ‘A great opportunity was lost for our economy and our workers to benefit adequately from the exploitation of our natural endowments by mainly foreign companies [who own about 80% of the mining industry] our government has to ensure that it gets a fair wack of the economic rent these foreigners generate.’

    But having lost the critical battle over the RSPT, the government then introduced a watered-down mining tax called the Minerals Resource Rent Tax (MRRT). In its weakened political state, the Gillard government allowed the three big foreign miners, BHP (76% foreign owned), Rio Tinto (83% foreign owned) and Xstrata (100% foreign owned) to re-design the new mining tax – the MRRT – to suit their interests.

    And what happened? The miners were allowed to deduct the market value of existing assets instead of deducting the book value over five years. In this way the miners could maximise their deductions up front. That is why the mining tax has raised far less revenue than expected.

    As Ross Gittins has put it ‘Once these deductions are used up, the [mining] tax will become a big earner’. Gittins went on to say that abolishing the tax will be ‘An act of major fiscal vandalism’.

    According to the Greens, the Parliamentary Budget Office has advised. that a mining tax of 40%, as originally proposed ,on  all minerals with fixed state royalties and a change to depreciation will raise $35b over 4 years.

    It is also interesting to see the continuing strong hold which the miners have over the coalition, indeed over all major parties. There has been media speculation that the May 13 budget would abolish the diesel fuel rebate. The miners mounted strong on the government to drop any such proposal. In a letter to the government the miners said. ‘We have run the numbers on any substantial change to the rebate and the impact would be profound. Most likely far greater than any MRRT and probably a little less than the first mining tax”. So the miners win again. The fuel rebate will be unchanged. Persons with disability, pensioners, the unemployed and the sick will not have such luck.

    See below polling which shows strong public support for mining taxes.

    (See my blogs of October 17, 2013 ‘Short-sighted miners …’ and February 18, 2014 ‘The squandered mining boom’.)

     Public attitudes towards mining taxes from Essential Research

    Re RSPT

    • In May 2010, 52% approved higher taxes on the profits of large mining companies and 34% disapproved.
    • In the same month, 43% said they supported the RSPT and 36% opposed.

    Re MRRT

    • In November 2011, 50% approved the tax and 28% disapproved.
    • In April 2012, 56% approved the tax and 28% disapproved.

     

     

  • Walter Hamilton. Yasukuni Shrine and why it matters.

    Yasukuni–Japan’s Patriotic Lightning Rod

    The Shinto shrine known as Yasukuni sprawls over ten hectares in the centre of Tokyo near the northern edge of the Imperial Palace grounds. Here are enshrined 2.47 million ‘deities’––the spirits of Japanese military personnel and civilians on war service from conflicts going back to 1853, including around 1,000 convicted war criminals. To its critics, Yasukuni is a bastion of historical revisionism, which denies that Japan waged a war of aggression between 1937 and 1945. Visits to the shrine by senior members of the government are an ongoing source of friction with China and South Korea.

    Australia has the War Memorial in Canberra; the United States has Arlington National Cemetery. Indeed every country raises monuments to remember and honour their war dead. What’s different about Yasukuni Shrine? Why the controversy?

    Yasukuni is not a cemetery, nor is it a secular monument. It is a religious institution. Prior to 1945, the shrine was a special organ of the state under the jurisdiction of the Army, Navy and Home Ministries. As ‘ritualist-in-chief’ of the Shinto religion, the god-Emperor had the final say on who could or could not be enshrined at Yasukuni. Shintoism furnished the mythologies that underpinned Emperor-worship in totalitarian Japan, such that soldiers and sailors embarking for the front, and fully expecting to die for the Emperor, would pledge to ‘meet again at Yasukuni’.

    Between 1945 and 1952, the Allied Powers set about dismantling the apparatus of Japanese militarism. The nation’s top civilian and military leaders were put on trial in Tokyo by an international tribunal (the Australian judge Sir William Webb serving as president of the court) for war crimes, crimes against humanity and/or ‘crimes against peace’ (the so-called Class ‘A’ category), which was defined as the ‘planning, preparation, initiation or waging wars of aggression’, or conspiracy to do so. Seven of these high-profile defendants were executed, including wartime leader General Hideki Tojo. Two died during the proceedings; one was declared insane; sixteen were sentenced to life imprisonment; and two others were given shorter prison terms.

    Another forty-two accused Class ‘A’ war criminals, including Nobusuke Kishi, future prime minister and grandfather of Japan’s present leader Shinzo Abe, were arrested but released without trial. After recovering its sovereignty in 1952, Japan began to reverse certain reforms of the Allied Occupation, and by 1958 all war criminals had been released from jail and politically rehabilitated.

    Yasukuni Shrine became a private religious institution in September 1946, in accordance with the principle of the separation of church and state, soon to be enshrined in Japan’s new constitution. Ten years later, however, contrary to this principle, the Ministry of Health and Welfare and Yasukuni Shrine began ‘administrative co-operation on enshrinement’, the process by which individuals were selected as kami or deities. A start was made in 1959 on the enshrinement of Class ‘B’ and ‘C’ war criminals (convicted of mistreatment of prisoners, murder of civilians, wanton destruction and atrocities). By now Prime Minister Kishi was in office. He and other conservative leaders supported the aims of such patriotic groups as the Japan War Bereaved Families Association.

    In 1966 the Ministry of Health and Welfare approved the first group of Class ‘A’ war criminals for enshrinement, but when the list went to the shrine’s head priest Fujimaro Tsukuba no action was taken. In light of subsequent events, it seems likely that the attitude of Emperor Hirohito was crucial. Tsukuba, a former marquis, was himself a member of the Imperial Family, and for as long as he remained in charge at Yasukuni no Class ‘A’ war criminals were enshrined there.

    Tsukuba died in 1978. He was succeeded by Nagayoshi Matsudaira, a former lieutenant commander in the Imperial Navy, whose father-in-law, a vice-admiral, was tried and executed by the Dutch for war crimes (and later enshrined at Yasukuni). Within three months of Matsudaira’s taking over, fourteen deceased, Class ‘A’ war criminals were secretly enshrined at Yasukuni. While its defenders may claim that Yasukuni Shrine serves no other purpose than to console the spirits of the dead and honour their sacrifices, this sequence of events shows how personal and political motives have driven its use as an instrument of national policy. ‘Even before I made up my mind [to become head priest at Yasukuni], I argued that so-called Class-A war criminals should also be venerated, as Japan’s spiritual rehabilitation would be impossible unless we rejected the Tokyo tribunal,’ Matsudaira told a magazine in 1989, as quoted by the Mainichi Shimbun.

    According to Professor Yoshinobu Higurashi of Teikyo University (whose writings on the subject have informed this blog: See http://www.nippon.com/en/authordata/higurashi-yoshinobu/) the enshrinement of the Class ‘A’ war criminals ‘cannot be attributed simply to religious or filial impulses’. It was ‘a blatantly ideological and political act driven by an urge to justify and legitimize a highly controversial chapter in Japan’s history’.

    Even though, as a signatory of the San Francisco Peace Treaty, Japan formally agreed to the outcome of the Tokyo Trials, the nation’s conservative elite––most notably these days, Prime Minister Abe––steadfastly refuse to accept the burden of war guilt. They have a personal and public stake, through ties of blood and marriage, in overturning the verdict of history. On its English-language website, Yasukuni Shrine sets the tone by referring to ‘people who were labeled war criminals and executed after having been tried by the Allies’: in other words, victims not perpetrators. The shrine’s museum continues the narrative of denial of Japan’s atrocious wartime behaviour and, instead, strikes a note of triumphalism in its displays of armaments and trophies of battle.

    The Defense Ministry similarly promotes the idea of ‘victor’s justice’. At its compound in Tokyo where the auditorium used for the Tokyo Trials is preserved, the only reference to the court’s verdict is a display devoted to the dissenting judgement of the Indian jurist Radhabinod Pal, who would have acquitted all the accused on the basis that Japan was forced into war by hostile Western nations.

    The person best placed to know whether this dissenting view has any merit would be Emperor Hirohito. After the enshrinement of the fourteen Class ‘A’ war criminals, Emperor Hirohito made the decision never to visit Yasukuni Shrine again. No emperor has been there since. Not long before he died, according to a memorandum taken by an aide, Hirohito made clear that the two decisions were directly linked. ‘What’s on the mind of Matsudaira’s son, who is the current head priest?’ he is reported to have asked (the man’s father, Yoshitami Matsudaira, was well known to him as Imperial Household Minister during the war). ‘Matsudaira [senior] had a strong wish for peace, but the child didn’t know the parent’s heart. That’s why I have not visited the shrine since. This is my heart.’

    Having controversially escaped prosecution for his role in the war, Hirohito’s stand against the revisionists and deniers––albeit indirectly and by an act of omission––gives the lie to those, like Abe, who insist that Yasukuni can serve both as a symbol of peace and a shrine to warmongers. Could it be that Japan’s swing to the right is, as Hirohito feared, the blindness of the child who does not know the parent’s heart?

    Walter Hamilton reported from Japan for the ABC for eleven years. He is the author of Children of the Occupation: Japan’s Untold Story (NewSouth Press).

     

     

     

     

     

     

     

     

     

  • John Menadue. Taxes – public or private

    The Commission of Audit has recommended that a Medicare levy surcharge be applied to individuals earning more than $88,000 a year and $176,000 for families. This is designed to force high income earners to take out private health insurance. This is one of the most economically stupid and dangerous proposals that I have seen for a long time. The Commission of Audit foolishly thinks that this would reduce public taxes, but it would result in increased private taxes (premiums). Higher premiums are the inevitable result of increased reliance on private health insurance. This is what has brought disaster for healthcare in the US. Private healthcare premiums have gone through the roof and the US now has one of the worst and most expensive healthcare services in the world. 

    Furthermore, the Commission of Audit’s proposal would move us a long way towards a two-tier health system, with a high quality and very expensive healthcare service for the rich and a welfare type health service for the poor. It strikes at the heart of social solidarity and social cohesion which is essential in a good society. It would end Medicare as we know it, a high quality service available to all regardless of income.

    Below I have reposted an article of 1 February about the fallacy of assuming that public taxes are bad but private taxes (premiums) are good.

     

    It has become commonplace for opponents of government and the public sector to suggest that functions like health care and broadcasting should be moved from the public sector to the private sector in order to reduce taxes. They usually add in that the private sector is also much more efficient in performing such functions.

    There are good social and economic reasons why certain functions should remain in the public sector – defence, education and health. But there is also a great fallacy that somehow public taxes are bad and private taxes/premiums are fine.

    Let me give you two examples.

    The private health insurance industry claims that Medicare is unsustainable and that more people should take up private health insurance to reduce the demands on the public health system. The suggestion is that by doing so, governments will not have to keep increasing taxes to fund public health. But there is a fundamental error in this argument. Private health insurance (PHI) has been raising its premiums at an alarming rate and much faster than Medicare through taxation. The PHI premiums are really the same as taxes that finance Medicare, except that one is public and the other is private.

    Since 1999, when rebates for PHI were introduced, the average PHI premium (private tax) has increased 130% whilst overall prices have increased by less than 50%. These private taxes or premiums are rising dramatically for a whole range of reasons that I set out in my blog of December 26 – ‘Health insurance – here we go again’.

    The other important reason for these high private taxes/premiums by PHI is that their administrative costs, including profits, run at about 15% to 16% of total costs. For Medicare, including the cost of tax collection, administrative costs are about 6% of total costs. So with the administrative costs of PHI about three times those of Medicare it is not unreasonable to conclude that the public gets far better value for money in its taxes paid to finance Medicare than paying premiums/private taxes to PHI. Expanding the role of PHI would greatly increase the level of these private taxes. The fact that they are private taxes misses the point. They are taxes on the consumer just the same as public taxes.

    The experience of the US should also warn us about private health insurance premiums/taxes. In the US, healthcare expenditure is over 18% of GDP. It is the highest in the world. In Australia it is about 9% to 10% of GDP, as is the case for most comparable countries that have a single public insurer like Medicare. Of the 18% costs in the US( as a proportion of GDP), about 9% is due to private insurance. Private health insurance in the US has been unable to control price demands by private doctors and private hospitals. If in theory the US had a single public insurer and followed the example of other single public insurer countries like Australia, the US could reduce its health expenditure by 9% of GDP. In such a situation the 9% of GDP paid to private health insurance funds would be unnecessary. If those premiums to private insurance were then redirected into public revenue, the US budget deficit of 7% of GDP would be eliminated. I said this was theoretical and there are clearly enormous political difficulties for President Obama to wind back the mess that private health insurance has wrought. But the figures do illustrate that the US would be better off with a robust public insurer funded by taxes rather than by the grossly unfair and inefficient privatised taxes that private health insurance imposes on the community. The US experience shows quite conclusively that shifting insurance out of the government and into private health insurance would be a disaster for everyone. To finance health care through the private taxes or premiums of PHI would result in much higher imposts on the public, than paying for health care through public taxes.

    The other example of privatised taxes is illustrated in the case that is often made against the ABC and other public broadcasters that are funded by taxes or special licence fees. Yet the critics of public broadcasting like Murdoch impose their own taxes – what is in effect a sales tax on products that are advertised in the commercial media. In my blog of December 19 ‘Murdoch and Abbott and the ABC’, I drew attention to the argument by Ian McAuley about the high cost of these privatised taxes. He said ‘We are paying about $1,500 per year per household for advertising, of which $500 is for commercial TV and radio… By contrast we are paying about $120 per year for the ABC’. Commercial media collects “taxes”, but it is called ‘advertising revenue’. This revenue is a cost to the advertiser and is loaded into the costs of the products when we purchase a car or holiday travel.

    The private sector has its own forms of taxation. Just by shifting functions from the public to the private sector, does not necessarily reduce what we have to pay out of our own pockets. In many cases public taxes are much more efficient and serve a much more desirable social objective than privatized taxes

  • John Menadue. The Commission of Audit and facing the wrong way.

    Tony Abbott and Joe Hockey have been leaking confusing stories in the lead-up to the budget. A consistent theme however is that they must take tough action because of all the problems left by the previous government. They also need to justify the exaggerated rhetoric they used during the election campaign. A lot of it is confected.

    The Commission of Audit will add to the confusion in focussing on expenditure when the main problem is declining revenue. The neglected Henry review of taxation will be a better guide for the future than an ideological and partisan Commission of Audit

    In all this media static, I think there are several key issues that we need to keep in mind.

    • We do have a long-term structural budget deficit of about $60 billion per annum in current prices. That needs fixing. A lot of this structural deficit can be attributed to the policies of the Howard and Costello governments. During their tenure, we frittered away the large government revenue gains from the mining boom. We had one tax reduction after another. We should have been repairing the budget rather than reducing taxes. The IMF is quite clear that the Howard Costello governments must bear the major responsibility for the structural deficit. The Rudd/Gillard governments took some action but clearly not enough to address this structural budget problem. During the global financial crisis, the Rudd government increased spending and was successful in helping steer our way through a threatening world recession. Unfortunately the Rudd/Gillard governments ignored the report of Ken Henry about the need to reform our taxation system.
    • The structural deficit is caused mainly by a shortfall in revenue rather than a surge in spending. Our tax as a percentage of GDP has fallen steadily since 2002 from 30% to 28%. This is well below the OECD average of 34%. We need to give priority to fixing our revenue base which was what the Henry Review was largely about. Reducing tax deductions for superannuation, which benefit mainly the wealthy would be a good way to start.
    • We do not have a growing public sector. Our budget outlays have been trending downwards since the mid-1980s. We do need to further means test our welfare spending but compared with other OECD countries we have a more efficient and equitable welfare system than most. The Commission of Audit will be focussing on spending when the real problem is we need to focus on revenue. The Commission  is likely to face us in the wrong direction
    • Our overseas debt is increasing but it is very low compared with most other countries. Our overseas debt as a proportion of GDP is one of the lowest in the OECD. Our government debt is around 20% of GDP. For Canada it is 89%,France 94%,Germany 78%,japan 227%,Norway 29%,Singapore 104%,ROK 34%,UK 91% and US 102% As the CEO of the National Bank, Cameron Clyne, put it several months ago “Australia does have a debt problem. We don’t have enough of it. We have a lazy balance sheet. We are a AAA economy. We are having a very immature debate about debt.”
    • We must avoid the drastic action taken in Europe to reduce budget deficits where the consequences were disastrous for many governments and a lot of people. The fetish and obsession with deficits tipped many European countries into recession. There was low growth and record unemployment particularly amongst the young. This drastic action in Europe on deficits helped spawn ultra-rightist and anti-immigration political parties. We must learn from the European experience and not over-react in getting our budget deficit back under control.
    • This month the IMF told us that we face a period of sustained and lower growth. The Australian economy is struggling to grow at a sufficient rate to avoid significant increases in unemployment. Youth unemployment is now over 20% and growing rapidly. Joe Hockey should not go too hard in his first budget to reduce spending, despite the exaggerated and windy rhetoric we have had from him for many months. It is damaging consumer and business confidence. Reform has to occur but calamity is not around the corner. The Australian economy is one of the best performing in the world. In the current confused debate which has been triggered by Tony Abbott and Joe Hockey one would think that we faced dire problems. We don’t and we should be careful not to worsen the situation.

    The most worrying prospect is that the government looks like believing its exaggerated political rhetoric about debt and deficits.

    I have outlined in my blog of February 4 ’Do our governments spend too much or do they raise too little in taxation?’ further arguments to support the above case. This blog, which I have reposted below summarises the submission which Jennifer Doggett, Ian McAuley and I made to the Commission of Audit.

     

  • John Menadue. Do our governments spend too much or do they raise too little in taxation?

    This a repost and provides a summary of the submission that Ian McAuley, Jennifer Doggett and I made to the Commission of Audit.  John Menadue

    The Minister for Health, Peter Dutton, has said that we must reduce waste and cut costs in health. (I responded to this in my blog on 3 February “Cutting waste and costs in health”).

    The Minister for Social Services, Kevin Andrews, has said that our welfare system is ‘not sustainable’ and that we are headed down the high cost welfare path of European countries. (The ABC examined this assertion and found that it was incorrect. It found that ‘There is nothing to indicate that as the population ages, Australia is headed towards the big welfare spending of some European countries. Treasury projections to 2050 show welfare spending as a proportion of our GDP will remain steady over the next three decades. www.abc.net.au/news/2014-02-03/kevin-andrews–makes-unfounded-welfare-claims.)

    The Treasurer, Joe Hockey has said that ‘The days of entitlement are over and the age of personal responsibility has begun’. This has been interpreted by some as suggesting that government welfare and other entitlements should be reduced.

    In a submission to the Senate Select Committee into the Abbott Government’s Commission of Audit, Jennifer Doggett, Ian McAuley and I contend that the problem is not that government expenditures or that the public sector is large in Australia compared with other countries. We contend that the problem is a short-fall of revenue and that on international comparison, our tax revenues are low.

    In our summary to the Committee we say …

    The Commission of Audit’s brief is based on assumptions that Australia is burdened with “big government” and that taxes are an impediment to business investment and workforce participation.

    There is no evidence for either assumption. The trend in Commonwealth expenditure has been downwards since the mid 1980s, falling from a peak of around 28 percent of GDP to a range of 24 to 26 percent of GDP in recent years. In comparison with similar prosperous countries Australia has one of the smallest public sectors.

    The problem a body such as the Commission should address is our inadequate tax base, which is the main reason the Commonwealth has had a structural deficit for most of this century. We aren’t collecting enough revenue to fund the public services needed if the economy is to thrive.

    We should not shy away from raising taxes. Evidence from international comparisons and from surveys on competitiveness suggests that reasonable levels of tax do not impede countries’ economic performance. In fact, countries which compete on the basis of low taxes do so to compensate for competitive weaknesses, such as inadequate infrastructure and poor standards of education – in other words impoverished public sectors.

    Such evidence, however, seems hard to convey to those gripped by a zeal to cut spending and taxes. Even in a “small government”/low-tax country like Australia it is possible to find areas where private funding and provision of services can displace public funding and provision.

    But such displacement is usually at high economic cost, simply to achieve an arbitrary fiscal objective. There is no point in reducing taxes if the private costs are greater than the saving in taxes, with no improvement (and in many cases a deterioration) in the services provided. We illustrate this in the case of health care funding. This is an area of significant public outlay and where, because of ongoing growth in demand, there are voices – often the voices of self-interest – calling for a shift from public to private insurance. Such a shift would be costly on all economic criteria – technical efficiency, allocative efficiency and equity.

    The rushed and secretive processes of the Commission are not the path to good public policy. There may be areas where a change in the public/private mix is justified on economic grounds, but these are not one-way towards the private sector as implied in the Commission’s brief. Because we already have a small public sector it is likely that a proper process, with research and consultation, would find a need for a net expansion of Australia’s public sector. By shutting off that possibility those who drafted the Commission’s brief are imposing a constraint which may be contrary to the community’s wishes and sound economics.

    The full submission to the Senate Select Committee can be found by going to my website. Click on ‘John Menadue Web Site’ top left of this blog page.

  • Penne Mathew and Tristan Harley…Regional Cooperation on refugees

    In November last year Penne Mathew and Tristan Harley of the Australian National University undertook field work in Thailand, Malaysia and Indonesia to examine the treatment of refugees in those countries and to discuss the possibilities of improved regional cooperation amongst themselves and also with resettlement countries such as Australia. I am strongly of the view that shared responsibility and cooperation is essential

    The Indonesian Foreign Minister, Marty Natalegawa recently put the case succinctly. “For Indonesia, the message is crystal clear: the cross border and complex nature of irregular movements of persons defies national solutions…There is no other recourse but to take a comprehensive and coordinated approach…a sense of burden sharing and common responsibility should be the basis for our cooperation.

    .John Menadue

    The Executive Summary and Recommendations follow. This report is based on fieldwork that Professor Penelope Mathew and Mr Tristan Harley conducted in Thailand, Malaysia and Indonesia in October – November 2013. The authors gratefully acknowledge all of the participants in our research who graciously offered their time, expertise and hospitality. The purpose of the fieldwork was to examine the treatment of refugees in each of the three countries and discuss the issue of regional cooperation with respect to refugees in the Southeast Asia region. Some key findings of the fieldwork are:

     

    a)      Thailand and Malaysia remain reluctant to become party to the 1951 Refugee Convention and the 1967 Protocol because they believe that it will lead to an increase in the number of refugees arriving in their territory and they believe that there are associated security threats. On the other hand, ratification is currently part of Indonesia’s national agenda. However, there are concerns that this process has been stalled and may not be realised.

    b)      States in the Southeast Asia region have indicated a desire to cooperate with one another in the area of refugee protection, particularly through the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime (the Bali Process) and the Association of Southeast Asian Nations (ASEAN). However, states continue to act unilaterally in ways that endanger refugees and cause friction among states. Current Australian policies undermine efforts at regional cooperation.

    c)      Thailand, Malaysia and Indonesia recognise that regional cooperation is necessary in order to address the particular refugee situations that each country is facing individually and to tackle the initial causes of displacement in countries of origin. While ASEAN members adhere to the principle of non-interference in the sovereignty of other states, it was suggested that ASEAN could be an appropriate forum whereby states could assist countries of origin to minimise the need for persons to flee the country and seek asylum elsewhere.

    d)      Interviewees in Thailand, Malaysia and Indonesia suggested that resettlement programmes in the region should be increased and that states from outside the region should increase their efforts to help share the responsibility of hosting refugees.

    e)      Malaysia and Indonesia appear willing to consider granting refugees the right to work. However, there are strong concerns about how this policy would affect national migrant worker schemes and domestic labour supply. States are also concerned about the ‘pull factor’ that they perceive such a policy may produce.

    This report concludes by making recommendations for states to enhance the protection framework for refugees. These recommendations are divided into short, medium and long terms goals. Some key recommendations in this report include the following:

    a)      Skills training programmes should be established in countries of first asylum that prepare refugees for either resettlement to another country, voluntary return to their country of origin or local integration in the host county. These programmes can be funded by donor and resettlement countries;

    b)      Refugees should be granted the right to work in countries of first asylum and employment programmes for refugees should be established in areas and industries where there is high demand;

    c)      Refugees should be allowed to access health care at the same cost as nationals and refugee children should be allowed to access the public education system;

    d)      United Nations High Commissioner for Refugees (UNHCR) offices in Thailand, Malaysia and Indonesia, should be expanded and more funding allocated with the particular focus of improving both speed and fairness of refugee status determination (RSD) procedures;

    e)      Resettlement states should increase their annual intakes to provide protection to a greater number of refugees and share responsibility with countries of first asylum.

    f)       New projects and programmes should be established which simultaneously aim to support both refugee communities and local communities hosting refugees; and

    g)      The 1951 Refugee Convention and the 1967 Protocol should be ratified by states in the region.

    Penelope Mathew is Freilich Professor, ANU College of Arts and Sciences

    Tristan Harley is Freilich Foundation Research Assistant at ANU.

     

  • John Menadue. AMP excess and dud products.

    I have posted several blogs on how powerful insiders bend governments to their will. Just think of the power of the polluter lobby, the mining lobby, the health lobby, the gambling lobby and the hotel lobby.

    But the superannuation lobby is probably the most powerful and the most lucrative gravy-train of all. The superannuation industry receives over $32 billion subsidy each year through ‘tax expenditures’ or what we normally call ‘deductions’. In addition there is the tax-free superannuation income for those over 60, like me. In addition to these enormous subsidies to boost the superannuation industry, federal governments require that 9% of employee incomes must be put into superannuation. Not content with these enormous benefits the four banks and the AMP have been lobbying the government and particularly Senator Sinodinis to bury any attempts to outlaw conflicts on interests by financial advisers. Typically this conflict of interest occurs when the financial adviser also supplies the product, as is the case with the four banks and the AMP. But the superannuation industry, and particularly the retail funds, overplayed their hand and the Future of Financial Advice (FOFA) “reforms” under the guise of reducing red tape have been deferred.

    But not the AMP. In the SMH on 26 April, Michael West tears the veil from the superannuation junkets which the AMP runs to promote its products. The AMP arranged a ‘professional development conference’ in the Bosporus last week. Michael West put it quite colourfully.

    ‘In the footsteps of the Romans and the Ottoman Turks centuries before them, the hordes of AMP descended on the jewel of the Bosporus last week. Some 400 of them; the crème de la crème of AMP’s financial planners, and a host of advisers from Hillross, too, also owned by AMP. In contrast to the Romans who decided to build their empire’s new capital Constantinople there in 330 and the Turks whose troops overran the city in 1453, the throng from 50 Bridge Street(AMP head office in Sydney) descended on the ancient metropolis in planes. In the company of their spouses they overran Istanbul in five star opulence. Unlike the Emperor Constantine and Sultan Mehmed II, AMP and its grand vizier of financial services, Steve Helmich, did not underwrite their Ottoman odyssey from the fruits of empire. It was bankrolled by the ransacking of a mandatory superannuation system. Our latter-day sultans of superannuation have breezily lavished a $20 million junket on their sales force and themselves to boot. Before this year’s Byzantium bash, the AMP held its ‘conference’ in Dublin, South Africa, Amsterdam, Colorado and Buenos Aires. … Surely financial planning should be about the adviser using best endeavours to maximise the wealth of the client.  … . If this was really about education, rather than reward for flogging AMP product, and an enticement to flog more, we solemnly promise to eat our fez. … Let superannuants ponder no more that a third of their life savings can vanish in poorly disclosed fees and commissions. Their advisers are swanning around the grand bazaar like Suleiman the Magnificent, sauntering through the Blue Mosque before a spot of shopping in the ritzy boutiques of Nisantasi.’

    The bottle of Grange Hermitage which Barry O’Farrell received from a financial and Liberal Party lobbyist was nothing compared with this orgy and excess by the AMP in the name of ‘professional development’. Or as Michael put it “the ransacking of the mandatory superannuation system”

    I must confess I have more than a public policy interest in this extravagance by the AMP. I have a personal interest as well.

    About ten years ago my adviser recommended I invest about $55,000 of my super funds in a product called ‘AMP Capital Enhanced Yield Fund’. It turned out to be a dud investment, although small scale dud compared with the cost of dud investments like in Opes Prime and West Point and financial planners like Storm Financial.

    In 2008/9, during the Global Financial Crisis the AMP Capital Enhanced Yield Fund decided to limit redemptions. For over five years since then I have been attempting to redeem this investment. Capital loss has been considerable and the income return has been minimal. Over five years I have received small redemptions in dribs and drabs.

    With this locked or suspended fund, I received regular advice that ‘managed funds [like AMP Capital Enhanced Yield Fund] are suspended …Please be aware that there is no guarantee that the suspended fund will start processing transactions in the future.’

    It is not as if the AMP has been struggling over the long period that my investment has been locked. In the years 2009 to 2013 AMP has made annual profits after tax of $739m, $775m, $759m, $689m and $672m. In 2009, when my investment was locked, Craig Dunn, the CEO of AMP had a 30% pay rise. His total remuneration in 2012 was $3.157 million. Craig Meller, Managing Director of AMP Financial Services had a salary package of $1.917 million per annum. Stephen Dunne, Managing Director of AMP Capital had a salary of $2.133 million p.a.

    I have no doubt that AMP acted legally in respect of my foolish investment in a dud product, but have they any shame in the way they continue to pay their executives, or any sense of moral culpability. The payment of these excessive salaries to senior executives is quite consistent with the behaviour of the AMP in splurging $20 million to indulge the sellers of their new products. It’s all about new products. Forget about the dud products they have sold in the past.

    But some might say that the government has now set up a Financial System Inquiry to sort all this out. But we should not hold our breath. There is no indication from what I have seen that the issue of vertical integration, which allows the four banks and AMP to rip off customers through their conflict of interest, is in the terms of reference of the FSI. Furthermore Craig Dunn, the former CEO of AMP who received that remuneration package of over $3 million per annum, is a member of the FSI panel. All the panel members are from the finance sector .The public or consumer interest is not to be found. The insiders are in charge.

    Can the victims of dud superannuation products look forward to all-expenses paid “professional development conference” next year in Constantinople or some other attractive luxury tourist destination?

     

  • Walter Hamilton. Anti-climax in Tokyo

    Three words for Shinzo Abe––and for history. Three words: ‘…including Senkaku islands’ (was Obama’s omission of the definite article ‘the’, one wonders, part of a subconscious hesitation?). Thus a US president for the first time explicitly committed his country to defend Japan if it should come to blows with China in their territorial dispute.

    Barack Obama affirmed that the islands were covered by Article V of the Japan-US Security Treaty which states: ‘Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes.’

    While no different from the position enunciated previously by other members of his administration, in its language and setting––a joint news conference with Abe standing alongside him during a state visit to Japan––Obama’s endorsement of the status quo in the East China Sea was significant. It is exactly what Abe wanted to hear, after months of anguished commentary in the Japanese media suggesting the US might be turning into a fair weather ally. But the comparatively muted official response from China is also interesting: a sign that Beijing heard the president when he said he was not stating a new position. The words might be on the record, but was there is any greater will behind them?

    A visit by a US president to Japan as a state guest (the most elaborate form of diplomatic visitation) is uncommon. The last one was 16 years ago. Reportedly the Americans took some persuading to set aside the minimum three days required. Such occasions can serve to elevate a bilateral relationship to a new level, and they can draw attention to areas of disagreement as well as agreement. On the territorial dispute, for instance, the main focus was on the US commitment to fight alongside Japan. Obama, however, also stressed the importance of ‘dialogue’ to resolve the dispute, and avoiding ‘escalation’, which implicitly binds Japan to keep its power dry.

    As for the other big-ticket item on the agenda, trade liberalisation, Japan had hoped the impetus of a state visit would deliver an agreement. The strategy came up well short. Instead of sweetness and light, the impression gained in Tokyo was that the Americans were intent on extracting the highest price, in economic terms, for those three choice words on security. (Having said that, insiders already knew that Obama lacked the clearance from Congress to strike a deal with Japan, and nothing less than a trade coup would allow him to presume on Congress’s approval.)

    Abe took a gamble early in his second administration when he went against the protectionists in his governing Liberal Democratic Party and led Japan into the Trans-Pacific Partnership. While trade liberalisation is necessary for his program of economic revitalisation, the disruptive risks of increased import competition, particularly in the agricultural sector, are not inconsiderable. Japan’s farming communities are the most exposed to the effects of an aging society, and there are far fewer employment alternatives in regional and rural areas than in the big cities. Farmers are a well-organised lobby group in a country where all politics is local.

    In the TPP negotiations, the Americans are seeking a better deal on beef than was recently obtained by Australia, and they want a broader agreement to include various other farm goods, automobiles and intellectual property.

    Japan’s TPP Minister, Akira Amari, is showing signs of wear and tear, admitting publically that if he were ever asked to do the job again, he would refuse. Amari and his US counterpart Michael Froman have held 25 hours of face-to-face negotiations, continuing even as Abe and Obama were tucking into their Ginza sushi––but without result. At one point it seemed Obama’s visit would end with no joint communiqué, which certainly would have left a bad taste. Officials eventually managed to cobble together a communiqué that reiterated the president’s statement on the Senkaku dispute and supported Abe’s drive to reinterpret the Japanese constitution to embrace the right of collective self-defence (hardly surprising, since this is already assumed in the bilateral security treaty quoted above). But when it came to the TPP talks, the document turned to fairy floss: ‘Today we have identified a path forward on important bilateral TPP issues. This marks a key milestone in the TPP negotiations and will inject fresh momentum into the broader talks.’ It takes some cheek just to write that down. Japanese sources claim the Americans held the communiqué hostage, delaying its release in an effort to wring extra trade concessions from Japan––if so, all that resulted was sweet talk.

    Without a substantial trade deal soon the Obama administration risks a loss of domestic support for his much touted ‘rebalance’ to Asia. Likewise some of the gloss will come off Abe’s can-do image, particularly the credibility of his claim to want to break down structural rigidities in the Japanese economy. For all the pomp and ceremony, and three-star sushi, the two nations only managed to reaffirm the old––military––basis for their relationship rather than define the new.

    For the Japanese, an unwanted byproduct of the state visit has been to draw attention in the US and elsewhere, through media commentaries and analysis, to Abe’s pivot to the right since he returned to office in 2012. Some observers are discovering this issue for the first time, while others have looked for fresh evidence from Obama’s visit with which to refine their sense of where events might be headed.

    For the first group, it is always possible to overstate the situation––it is worth reiterating that Japan is not ‘rearming’, muzzling its news media or abandoning its democratic institutions. Nevertheless there are signs of a nationalistic revival, amid a period of heightened regional tensions. Against this background, the take out from Obama’s visit, I think, is disappointing. Having gone to Tokyo, he could not have said less than he did on the territorial issue––though he might have said more, for instance, on the mechanism by which the disputing parties might enter a dialogue. He came across more like a tourist than a statesman willing and able to engage Abe on fundamentals. If President Obama once seemed to represent a fresh, inclusive and future-oriented style of leader, he brought little or nothing of that to Tokyo. Which is more the pity, since he came at a time, without doubt, when Japanese are questioning whether what has served them well for almost 70 years can see them safe and strong into the future.

    Walter Hamilton reported from Japan for the ABC for 11 years.

     

  • John Menadue. Anzac and hiding behind the valour of our military.

    For those who may have missed this. I have reposted this earlier piece about Anzac and hiding behind our heroes.  John Menadue

    There is an unfortunate and continuing pattern in our history of going to war- that the more disastrous the war the more politicians and the media hide behind the valour of service men and women. We will see this displayed again on April 25.

    The Director of the Australian War Memorial, Brendan Nelson, drew attention to this well-honed way of distorting and excusing our strategic and political mistakes. In the SMH on October 5 last year, he said ‘The more obscene the war, the more inexplicable it seems for us today, the more many [young people] admire those men and women who went in our name’. (See my blog October 11, 2013, ‘The drumbeat grows louder’.)

    It is not only young people who have been drawn into this distortion of history. Governments and the media have encouraged us to ignore the disastrous wars that we have been engaged in and learn from our mistakes. Rather than face the consequences of acknowledging those disasters, governments and the media then change the subject to the valour of our heroes. We refuse to face the fact that these heroes have often died in vain

    By any measure our involvement in the wars in Vietnam, Iraq and Afghanistan have been disastrous. So what do our governments, the Australian War Memorial and the media do? They avoid examining how we got into such disastrous wars. They do this by dwelling on the heroism of our service people. VC winners are an ideal way to change the subject from a disastrous war to an Australian hero.

    There is no doubt that they are heroic, but the wars they fought in were anything but heroic. These three wars were disastrous but we refuse to acknowledge that fact. The consequence will be that in the future we will continue to make foolish decisions about getting into war. That could occur over the dispute between Japan and China over the islands in the East-China Sea.

    In this cover up of failed policies, prime ministers, ministers, opposition leaders and the media have attended almost every ship taking Australian service personnel to or from war zones in the Middle East. I don’t think the Prime Minister and Leader of the Opposition have missed any funeral of a veteran of those wars. There was even a fly-over in Gippsland for an Australian soldier who had accidentally shot himself.

    Our involvement in WWI was disastrous in every way. We acted like a colony at the behest of England But we didn’t spend time dwelling on the catastrophe as a result of our strategic and political mistakes. That hopefully would discourage us from repeating them in the future. Instead we deluged ourselves and continue to do so in the valour of those who served and died in WWI.

    WWII was much more a war we had to fight in our own national interest and for the freedom of our region. But the recall of that war and the sacrifices of our military personnel is quite small at the Australian War Memorial compared with the coverage of WWI. We had a strong case for involvement in WWII but not WWI. Yet the coverage at the Australian War Memorial does exactly the reverse. Strategically Kokoda was more important to Australia than Gallipoli.

    In his excellent new book ‘Rupert Murdoch’ – a re-assessment” Professor  Rod Tiffen draws attention to the way that News Ltd in the UK covered its mistaken  support for  the appalling  wars in Iraq and Afghanistan . It just changed the subject. News Ltd never attempted to seriously  examine the fiction and mistaken policies which it supported and which led the UK into those wars. It changed the subject by attacking PM Gordon Brown for not looking after the veterans. Rod Tiffen put it this way.

    ‘In one of the last issues of The Sun edited by Rebekah Brooks, the front page consisted of the faces of the 207 British soldiers killed in Afghanistan, with a large headline across the middle, reading “Don’t you know there’s a bloody war on”. The strap at the top said “Message to politicians failing our heroes” … The multipage splash was accompanied by a cartoon of a wounded soldier with the caption “abandoned”.’

    Tiffen added ‘Responsible newspapers such as the Washington Post and the New York Times reflected publicly on their journalistic failings during the period [of the Iraq and Afghanistan wars]’.  

    But not News Ltd and Rupert Murdoch.

    What the Murdoch papers did in the UK is common amongst governments and media generally. They refuse to acknowledge their complicity in disastrous wars. To cover their tracks they focus on the heroism of service people.

    It is unpatriotic and cowardly to refuse to examine and publicly acknowledge decisions about going to war. That is surely the most momentous decision that any government can make. But by focusing on the story and the valour of service people, like successive Australian Prime Ministers, Rupert Murdoch and the Australian War Memorial, we are discouraged from looking honestly at our history.

    If we don’t learn from our mistakes we will keep repeating them. We must stop hiding behind our heroes.

     

  • We were warned about lobbying.

    In my blog of April 19 2014, ‘This is about more than a bottle of wine’ I referred to the need for major reforms in lobbying. 

    Three and a half years ago the ICAC in NSW brought forward proposals to better manage lobbying and avoid corruption. The Recommendations of the ICAC are still relevant today. If action had been taken at the end of 2010 we could have avoided many of the problems that have arisen in NSW. The ICAC report follows.

    John Menadue

    (more…)

  • Brian Howe – Raising the Retirement Age

    The Labor Government planned to lift age of eligibility for the aged pension from 65 to 67 between 2017 and 2023 and now the conservatives are considering raising it to 70 by 2029. Unless there are very big changes in the demand for older workers these changes must increase numbers on other payments such as Newstart or the Disability Pension. In the case of case of Newstart it would add to the hundreds of thousands of people living at least twenty percent below the poverty line.

    Several years ago a panel (Advisory Panel on the Economic Potential of Senior Australians) chaired by Everald Compton, and established by the Gillard government reported to that government on the potential of older Australians to make a larger contribution to the economy given the fact that people for various reasons (higher living standards, medical breakthroughs) were on average living longer. (2011)

    Successive federal Treasury reports had tended to emphasize coming pressures on budgets generated by an ageing population, but there is a more positive story that might be told.

    ‘Australia’s ageing population brings real opportunity-opportunity for the nation, for industry and for individuals. Not only are Australians living longer. Australians born in 1950 will live on average almost ten years longer than those born in 1910 but changes in society are creating unprecedented opportunity. Advances in health, education and technology provide an enormous scope for the nation and individuals to make better and more informed choices about the contribution of seniors in the workplace and the broader Australian community’

    The Advisory Panel saw extended lives, especially extended middle years, as being especially significant for the active aged. It also recognized that in Australia there were formidable constraints/barriers that would need to be overcome if that potential was to be full realized.

    • the persistence of outdated stereotypes and discriminatory attitudes towards older people
    • the lack of vision and understanding on the part of individuals, organisations, industry and governments about how to capture the potential of older Australians through creating more flexible and responsive workplaces
    • the constraints of the built environment that limit older Australians living the most fulfilling and creative lives, (very limited housing and transport choices)
    • the potential of poor lifestyle and health choices, including those that increase chronic health problems such as obesity and diabetes that threaten to undermine the health advances of previous generations. (G Hugo)

    The consequence of this analysis is that simplistic approaches to ageing by increasing retirement ages whether to 67 or 70 may impacts on future trend in social security expenditure but do not address any of the key issues that the Panel considered

    Discrimination

    For example, the Human Rights and Equal Opportunity Commission (HEROC) has identified a significant problem in the discriminatory attitude of many employers who discriminate in favour of the young and educated, especially where they have some work experience, when putting on new employees. They may also encourage older workers to ‘take the package’ often another way of terminating workers whose skills may be getting rusty rather than offering redeployment or retraining. It is very unusual for older workers in a modern economy to be kept on if they are seen to be unproductive or be offered a transition plan that will enable that person to gradually phase from paid work into retirement. Similarly older women who have caring responsibilities outside of their paid workplace may have great difficulty in nominating the hours in which they work or having the flexibility to leave work when there are special demands at home. This may be especially the case when women are working casually and have very little protections in the form of an award. Discrimination tends to affect most acutely people doing physical work e.g., cleaners, and construction workers.

    A Different Labour Market

    It is very important that there be public recognition of the very different labour market we have today to that which existed a generation ago. Along which the shift from an industrial to knowledge/service economy (80% of jobs today are in the service economy) there has been created a very different and much more dynamic and diverse labour market. This has resulted in a comprehensive movement way from standard employment contracts. There have been increasing variation in working times, working lives of working contracts.  Also there is a shift away from large employers with life time commitment to an employee to the increasing fragmentation of employment and labour markets where people are much more reliant on maintaining their personal skills to survive in today’s labour market. The rapid pace of change implies high rate of ‘technological obsolescence’ along with a redefinition of work with for many their ‘skill set ’ no longer relevant. These changes place special pressures on older people who if they do choose to remain in paid work may have to learn new skills set or create a new business or job. It is for this reason that life long learning is so important but of course that requires time and space well in advance of so called ‘retirement ages’. For most people working longer will often mean creating a new career either in the paid workforce or in the voluntary sector. The delayed retirement age suggests that there is an employer to keep an employee on. Security of employment is no longer a part of the work contract.

    Changing Cities

    Of course the changes in the economy have spatial implications in that the new economy is now focused increasingly in those places where there is the most concentrated investment taking place in the new economy and where there are maximum opportunities for creative communication. Older people are increasingly rejecting ‘sea change’ and ‘tree change’ and seeking to ‘hold’ their places in cities but with the flexibility sought by younger childless households.  The higher costs of energy are turning cities inside out and thus the importance of holding position. But for many older people there will be the demand for new housing choices whereas the market has been slow to realize the opportunity and scale of the aged housing market.  Furthermore governments have tax and social security rules that reflect a period in which older people either did not need or were not encouraged to participate in the more cosmopolitan city. Governments are still giving the highest priority to new freeways whereas for older people wanting to be active the key will increasingly be public transport. For older people the 20-minute city makes sense as they are less mobile but want to be engaged.

    Wellbeing

    Perhaps there has been a too easy assumption that aging baby boomers are all fit and well whereas they may be much less fit than we imagine perhaps for reasons that have to do with a too comfortable life style. On the other hand they will not be served well by ageist assumptions that consign older people to a retreat from life. The good news associated with ageing is certainly that maintaining activity and involvement is consistent with good health. On the other hand there are constraints that need to be addressed. Exercise does need organization and an enabling environment.

    Conclusion

    The most important message is that advancing the age at which people are able to access income support may have a limited impact on social security expenditures. However it will do very little to increase employment for older people often facing discrimination and exclusion from a labour market increasingly favouring the well and more recently educated.  The most likely impact on the aged of deferring the pension will be increasing the numbers on Disability support pensions and on Newstart, thus creating a cohort of aged people living well below the poverty line while minimizing savings to budgets.

     

    Brian Howe AO is a former Deputy Prime Minister. More recently he was a member of the Gillard Government’s Advisory Panel on positive ageing. This panel has been disbanded by the Coalition Government.

     

     

     

     

     

     

  • John Menadue. The media, our region and the PM’s visit.

    The Prime Minister’s visit to Japan, the Republic of Korea and China, highlighted for me the problems of media reporting and understanding our region.

    I have posted blogs on our media. See April 17, 2013, ‘Media failure: the tale of two bombings in two cities’; May 17, 2013, ‘Truth, trust and the media’ and January 31, 2014, ‘Murdoch and Abbott versus the ABC’. I posted a blog on April 10 this year, specifically on Tony Abbott’s visit to Japan and the political shortcomings of Free Trade Agreements which usually have more hype than substance. That continues to be the case.

    Our international media coverage is dominated by news out of London, Washington and New York. As I posted before, ‘An outsider and independent observer would conclude that Australia is an island parked off New York or London’. Our media coverage continues to be dominated by North Atlantic sources.

    Although it is inadequate, the ABC is far ahead of other media in Australia in coverage of our region. It has fully-fledged correspondents based in Jakarta, New Delhi, Port Moresby, Tokyo, Bangkok, Auckland and Beijing.

    None of our commercial TV or radio networks have full time correspondents based in Asia.

    The SMH/Age have correspondents in China, Indonesia, New Delhi and Bangkok.

    The Australian and other News Corporation publications obviously tap into the company’s foreign reporting assets such as the London Sun. The Australian has a correspondent in Tokyo. But News Ltd can hardly claim to be a serious and professional news organisation. It is the largest and least trusted media organisation in the Western world.

    As mainstream media is squeezed the trend will be to reduce regional coverage. Closures are ongoing.

    Tony Abbott’s Asian visit was principally covered by journalists from the Canberra press gallery. The gallery is increasingly fixated on politics, with very little interest in policy, let along policies in the foreign affairs, trade or defence areas. Embedded in the Abbott touring party, it is not surprising that they gave us an unprofessional coverage of the Abbott Asian visits, and particularly any understanding of Free Trade Agreements.

    The embedded gallery journalists obviously had not read the November 2010 Productivity Report on Bilateral and Regional Trade Agreements. (This is a different name for Free Trade Agreements.)

    The Productivity Commission Report concluded ’Businesses have provided little evidence that Australia’s Bilateral and Regional Trade Agreements (have to date) generated significant commercial benefits … net benefits are likely to be small … the direct economic impacts from services and investment provisions in Australia’s BRTAs … have been modest …’.

    Following the Productivity Commission Report, the Minister for Trade, Dr Emerson, told the Lowy Institute in December 2010 that he was not interested ‘in collecting trophies for the mantelpiece, empty vessels engraved with the words “FTA” if they are nothing of the sort and of only token value to our country.’

    In my blog of April 10, I drew attention to the exaggerated benefits that our embedded journalists attached to the FTAs with Japan and the ROK. The former Trade Minister said the same thing two and a half years ago.

    The conclusion of the FTAs with Japan and the ROK with their exaggerated benefits did not occur with the stroke of Tony Abbott’s pen. Ian McAuley in New Matilda pointed out those negotiations had been ongoing for many years under previous governments. If anything, Tony Abbott’s public eagerness in advance to sign the agreements weakened our bargaining position. The Australian journalists with Tony Abbott didn’t make this point.

    Further, the journalists paid little attention to the Trans Pacific Partnership (TPP) that the US is discussing with Japan and ten other countries, including Australia. The US Trade Representative, Michael Froman, in commenting on the FTA between Australia and Japan said ‘Clearly, we are looking for a level of ambition in the TPP which is significantly higher than [what Australia achieved] in access to Japan’s farm sector, notably for beef’. If President Obama achieves this concession under TPP, the short-term benefits we have achieved in beef access will be quickly overtaken by our major competitor in beef, the US. But did the journalists with Tony Abbott understand this about the TPP?

    I was in Japan immediately following Tony Abbott’s visit. The issue which struck me was not that the Japanese were so concerned about relations with China and the ROK. Their concern was the effect of the ultra-nationalist policies of Japan’s PM, Shizuo Abe, on relations with the US. I have not yet seen anything about this by the journalists who travelled with Tony Abbott to Japan. Did they speak to anyone but the public relations people working for the Australian and Japanese governments?

    In the last day or two we have seen odd comments from a media commentator, Harold Mitchell, about the agreement between Australia and China for the Australian Network of the ABC to be made available to the entire Chinese population. This is something which only the BBC and CNN have been able to achieve. Not surprisingly, after twenty years of trying, News Ltd failed to get such access. Harold Mitchell said that ‘This agreement [with China] is one of the greatest ways we can continue on the PM’s very successful visit to China last week.’

    The Abbott Government is threatening to cut ABC funding. Tony Abbott has accused the ABC of being unpatriotic. Julie Bishop has said that the government is assessing whether the $223 million contract with Australian Network in promoting Australia’s interest in the region is of value. The government has made it clear that it is seriously considering changing the contract with Australian Network and the ABC and giving a leg-up to News Ltd as an alternative to the Australian Network.

    In short, the arrangement between the ABC and China would have been achieved in spite of and not because of the Abbott Government or the PM’s visit to China. But the members of the press gallery who travelled with Tony Abbott to the region have said nothing about this quite significant breakthrough by the ABC.

    Apart from the ABC, we are not well served by the media in its coverage of our own region. That has shown up in the coverage of Tony Abbott’s visits to Japan, the ROK and China.