John Menadue

  • Arja Keski-Nummi   Andaman Disaster – Regional Cooperation on Refugees

    Too often in Australia we go cap in hand to the region when we have an asylum seeker or refugee problem. When our problems pass, we lose interest in regional cooperation. No wonder the region often see us as fair-weather friends.

    But our region faces refugee problems alongside ours. As a good neighbour we should help with the common problems we face. It is in our interest to do so as well as in the interest of regional countries.

    On 13 November 2015, the Huffington Post carried a story that “Myanmar’s Rohingya could be the world’s next major refugee crisis”.  The story commented

    ‘After months of monsoon rains, it is sailing season again in the South Seas of Myanmar. Six months ago, the plight of Myanmar’s Rohingya minority briefly garnered international attention when they were among thousands of starving refugees and migrants abandoned in the Andaman Sea and the Bay of Bengal. Human Rights groups now say a new refugee crisis looms, as members of the Rohingya minority are excluded from the dramatic reforms taking place in their country. Amnesty International recently warned that thousands more people could set sail in the coming months, risking a repeat of the May crisis.’

    John Menadue.

    See below a post by Arja Keski-Nummi on the earlier Andaman disaster.

    The crisis in the Andaman Sea provides an opportunity for the Australian Government through our Foreign Minister Julie Bishop as Co-chair of the Bali Process on People Smuggling, Trafficking and Related Transnational Crime to give the process some teeth and credibility in the region. This is a good opportunity for us to help others just as they have helped us in the past with regard to people movements.

    Five countries that are part of the Bali Process are facing a crisis that is drawing negatively the attention of the international community on the region; unprecedented since the Indo Chinese outflows of three decades ago.

    Australia should be approaching the other Co-chair, Indonesia, to work with affected countries in examining what can be done to both tackle the people smuggling/trafficking ventures that are preying on vulnerable people in Bangladesh and Myanmar and how best to ensure the safety and security of people who have been affected by such predatory behaviour.  In its 2013 communiqué ministers “underscored the importance of addressing humanitarian and protection needs in managing irregular movement”.

    Now is the time to enliven the April 2013 communiqué of the Bali Process Ministerial meeting in which in its penultimate paragraph:

    “Ministers recognised that the root cause of irregular movements in the region were complex and multidimensional and encouraged members to continue to work with countries of origin, including through development cooperation, to address where possible underlying factors which made people vulnerable to irregular movement.” 

    This communiqué called for greater regional cooperation and work on:

    • People smuggling and trafficking. From the reporting we have seen on this latest humanitarian disaster a people smuggling venture has quickly turned into trafficking.
    • Development of a “protection-sensitive regional approach” – the aspirations of which are to have consistent assessment processes for asylum seekers, and where appropriate and possible harmonised arrangements or the establishment of regional assessment arrangements.
    • Identifying in the region the perceived increase of labour trafficking and how this might be tackled by working with civil society groups and business.
    • Working with countries to address the root causes of such movements

    All of these concerns are present in the current situation of the people on the boats in the Andaman Sea.

    We should with our Co-chair seek to convene a special high-level ad-hoc group under the Bali Process banner to pull together a practical cooperative action plan that would provide assurances to affected destination countries that the burden is not theirs alone.  This group could comprise the five affected countries, Australia as co-chair and the three international agencies UNHCR, IOM and UNODC.

    Such assistance could include:

    In Destination Countries:

    • Assistance with initial screening and identification of people with protection concerns or who are victims of trafficking. A multinational task force (comprising nationals of destination countries as well as other Bali Process countries such as Australia and new Zealand) led by UNHCR to undertake that initial screening,
    • Flying in emergency assistance for shelter and medical support with the agreement of affected countries
    • Creation of safe havens pending final determinations –where the burden of costs is shared.
    • Assistance with local integration in certain circumstances through regional social investment projects in housing, health and education services that benefit the indigenous communities as well as new arrivals.
    • Commitments to resettlement of recognised refugees over a period of time.
    • Greater support for return through assistance in innovative new labour creation projects through social investment projects and micro financing schemes.

    In Source Countries:

    For the Rohingya the solution lies with Myanmar conforming to international norms in relation to the treatment of its citizens.  While Myanmar does not recognize the citizenship of a segment of its population and actively discriminates against them through property, education, movement and marriage laws this situation will continue.  The solutions have to lie in policy changes with the Myanmar government. As Myanmar emerges out of its self-imposed isolation regional institutions such as ASEAN have the opportunity to provide a constructive environment within which Myanmar can address the policy problems of this issue.  Complementary to this an ad hoc group as proposed above could provide practical assistance to ASEAN in mapping out strategies for supporting Myanmar in improving the conditions of Rohingya in Myanmar.

    Bangladesh has been a source of labour migration for decades.   Traffickers prey on the vulnerabilities of people desperate for work where there is none. Overpopulation, corruption, lack of opportunities, international demand for cheap labour all play into the hands of traffickers.  There is no easy solution to this cocktail of misery compounded by a lack of political stability in Bangladesh. While the Bangladesh Government has created a legal and administrative infrastructure to combat trafficking – “The Human Trafficking Deterrence and Suppression Act 2012” and the “National Plan of Action for Combating Human Trafficking for 2012 – 2014” and coming out of these instruments established a number of different strategies covering training, awareness and education as well as greater law enforcement measures, the problem remains overwhelming. According to the 2014 US Department of State Trafficking in Person Report, of 215 cases initiated for prosecution in 2013, a total of fourteen people were convicted of trafficking.  There are no reliable figures on how many people were trafficked in this time but conservative estimates put it in the tens of thousands. Given these most recent developments, a Bali ad-hoc group with Bangladesh as an active participant can continue a process of working with Bangladesh in strengthening the strategies it has in place and working with civil society in the country in providing protections and safe haven for people at risk of being trafficked.

    Smugglers and Traffickers – the raison d’etre of the Bali Process is to combat People Smuggling and Trafficking. Despite many countries in the region enacting laws against people smuggling and trafficking and the imposition of ever-greater penalties for smuggling and trafficking it remains one of the more lucrative and risk free ventures in the region.  Tackling this through laws and awareness campaigns while important is not enough. These loose coalitions of interest groups and syndicates are like a many-headed hydra quickly adapting and changing techniques and operations to prevailing conditions. Again the issue must be tackled at its source – in this instance most likely Bangladesh. The proposed ad hoc group could start the development of a strategy to support Bangladesh and other countries named in the US State Department TIP reports to strengthen its approaches against traffickers and recruiters and the victim of smugglers and traffickers.

    This is a global problem, which will only increase, and we cannot isolate ourselves from it. While for the time being Australia may have stopped the boats – this policy is not sustainable into the longer term. It is in our national and regional security interests to help stabilize populations and to play our part in the region. 

    Arja Keski-Nummi was formerly First Assistant Secretary in charge of refugees in the Department of Immigration and Citizenship.

  • Victoria Rollison. The Future of Australia’s Trade Unions

    A strong trade union movement is crucial to combating growing wealth inequality in the Australian economy.

    When asked in 2014 what Australia ‘had done right’ to defend the economy against the chronic wealth inequality experienced in the US, Nobel Prize winning economist Joseph Stiglitz answered: ‘unions’. He explained that Australia has ‘been able to maintain stronger trade unions than the United States. The absence of any protection for workers, any bargaining power, has had adverse effects in the United States. You [Australia] have a minimum wage of around $15 an hour. We [the US] have a minimum wage of $8 an hour. That pulls down our entire wage structure’.

    Regardless of their comparative strength to unions in the US, Australian unions cannot afford to be complacent about their long term survival.

    Recent data from the Australian Bureau of Statistics, as analysed in The Guardian by Greg Jericho, paint a worrying picture for the Australian trade union movement. Jericho reports that ‘trade union membership in the private sector is now almost one in 10… And in a sign of further strife for the union movement, just one in 20 young workers are in a trade union’. The public sector (39.5%) and education (34.38%) industries have the highest percentage of trade union membership, but as the number of workers in traditionally strong union industries such as manufacturing decline, so too does union membership, particularly amongst male workers. In fact, Jericho points out, whereas men used to be more likely to be union members, women now make up a higher percentage of union members, with 15.9% of female workers members of a union as compared to 14.4% of men. The total percentage of trade union members in the Australian workforce is now 15.1%, and only 13.8% if you include workers in unincorporated enterprises. This compares to 40.5% in 1990.

    Commenting on these figures, former ACTU official, Tim Lyons    , says ‘Australian unions have only a few years to change or die’. Lyons is reported as blaming the ‘historic collapse in union membership’ on ‘an outdated approach that does not work across large parts of the workforce’, and admits the blame is shared by him as a ‘former senior ACTU officer’. He says that too often, unions are seen as only being concerned with their position in the political sphere and that ‘Political campaigning can’t ever be an excuse for not organising’. He goes on to argue that ‘The need for new models of membership and worker participation is long overdue’. Offering a potential way forward, Lyons suggests; ‘Strong, growing unions are ones that help give workers some power over their work and therefore their lives. There are no shortage of workplace issues to organise around, with penalty rates being only the most obvious’. Lyons sees unions’ futures in re-evaluating their value to workers and helping workers organise to help themselves, with less emphasis on political campaigning.

    Amongst their assessments of the declining membership of Australian unions, Jericho and Lyons comment on some more positive news for unions by citing polling released recently in Essential Media’s Essential Report, October 27 2015. The poll asked ‘How important are unions for Australian working people today?’ and found ‘The majority of respondents regarded unions to be important for Australian working people today (62%), whilst 28% believe that they were not important’.

    Ged Kearney, President of the ACTU, responded to the ABS’s declining union membership figures by pointing out that ‘while union membership density is hovering around 15% of workers, more than 60% of Australian workers are employed under conditions that were collectively bargained for’ and ‘Even for workers not covered by collective agreements, they still directly benefit from their broad acceptance. The ubiquitousness of such agreements has led to them becoming the de facto base rate across much of the workforce, rather than the relevant award’.

    The challenge for Australian unions is to translate the belief amongst workers of the importance of the role of unions, and the reality of unions’ benefit to wage growth, into a belief that union membership is a valuable investment for workers’ individual job conditions. A strong, united workers’ trade union movement is the best line of defence, as pointed out by Stiglitz, to defend against growing economic wealth inequality.

    Victoria Rollison is a political blogger, working in marketing and communications. This article first appeared in ‘Equality, a journal of Australian Fabians’.

  • Rob Nicholls. Ziggy’s stardust: The NBN, net neutrality and competitive neutrality

    The sound of an incumbent lobbying has the grating element of petulant mewling. When the incumbent is a state owned enterprise that is evoking arguments about net neutrality, then it’s time to ask the “cui bono?” or “to whose profit?” question. After all, the term “network neutrality” can be best summed up as a line of argument use by large businesses in their lobbying.

    In this case, it was the chair of the National Broadband Network Company, a business that likes to be known by its lower case initials nbn, that was flying the net neutrality kite. Ziggy Switkowski argued that it might be time to think about who should bear the cost of transporting streaming video from companies such as Netflix, Presto and Stan. Specifically, should the internet service provider (ISP) be able to charge Netflix and others for some of the carriage costs that it incurs? Ziggy also mentioned that access to nbn’s network might be more expensive to smaller ISPs.

    This might be a reasonable question to ask. The speech was on 16 November and attracted comments from the electronic trade press on the day and was covered by Fairfax on 23 November. Of itself, this suggests that nbn wants the question asked. However, the issue has much less to do with net neutrality that it does with the Chair of nbn seeking to change the scope of the company’s business. nbn is constrained by the shareholder ministers’ wishes expressed in a Statement of Expectations and its regulatory constraints which are imposed by law and nbn’s own Special Access Undertaking, that it gave to the ACCC. These assume that retail providers connect to nbn’s network at one or more of the 121 points of interconnection to nbn’s network. In doing so, the retail provider pays a two part tariff reflecting both the connection bit rate and the volume. The volume component is the Connectivity Virtual Circuit (CVC). This is a pure pricing construct, as there is no underlying cost for the CVC.

    The problem for Ziggy is that Australian internet users, in common with internet users all over the world, want to download more content. In doing so, they make the interconnection to nbn’s network look increasingly expensive at no additional cost to nbn. However, Ziggy’s argument on network neutrality harks back to an older era. For a start, each of the major providers of content pay for their own carriage across the Pacific. ISPs can interconnect with Netflix, Google (for YouTube) and Facebook in Sydney or Melbourne. Second, there are extensive content distribution networks to deliver the content closer to the points of interconnection and the use of these networks is paid for by the content providers. Netflix also offers ISPs the option of a no cost cache if they generate a great deal of traffic to a particular area. This Netflix Open Connect Appliance could logically sit at each of nbn’s points of interconnection (on the customer side of the CVC toll point) and Ziggy’s network neutrality issue would be resolved.

    But nbn actually wants to change its operating environment by competing with existing infrastructure providers. The argument that the smallest ISPs cannot afford to connect at every interconnection point sounds like a problem. It is not. The large infrastructure providers offer carriage services to the ISPs on a wholesale basis. However, the effect of this is also to magnify the nbn’s odd CVC pricing arrangements. Instead of letting private sector competitors provide services, the state owned enterprise would rather provide the carriage itself. This has the convenient effect of masking the CVC problem and the inconvenient consequence of lessening competition among private sector actors.

    The concept of competitive neutrality, with its origins in NSW state policy of the late eighties, its codification as a consequence of the Hilmer Review in 1993 and its role as the centrepiece of the proposals of the Harper Review last year, is a critical part of competition policy in Australia. If a state owned enterprise in another country argued that consumer demand was driving its actions in contradiction to the principles of competitive neutrality, Australian businesses would rightly complain. Using the the thin veil of network neutrality to try to justify breaching the principle when the solution to the problem is for nbn to change its pricing approach is not easily forgivable. Perhaps, like the album by David Bowie’s alter ego “Ziggy Stardust”, this line of argument should be released once and not be repeated.

    Dr Rob Nicholls is Lecturer, School of Taxation and Business Law, UNSW Business School.

  • Francis Sullivan. Learning As We Go: The Pope Models the Change the Church Needs

    Francis Sullivan ABC Religion and Ethics 12 Nov 2015 

    Ever since the conclusion of the recent Synod in Rome, I have been thinking about the signals of change that Pope Francis is sending. He does it in words and by his disposition.

    Observers at the Synod frequently commented on the informal and casual style of the Pope. He mixed easily and readily with participants. He didn’t stand on ceremony and was eager for a chat – more a “first among equals” than some sovereign ruler.

    This in itself is a marked difference from previous popes. He personifies what he extols: openness, inclusion and “learning as we go.”

    It’s not hard to see how such a disposition pays dividends in a world in which the search for truth and meaning can seem so clouded and even crowded out with competing voices, philosophies and ideologies. The fact that Francis doesn’t purport to “have it all sorted” only deepens his appeal to the rest of us who struggle at times to find certainty and a sure path in life.

    Pope Francis has a mantra. He speaks often of the mercy of God, not divine judgement. He wants to remind us of the importance of the human heart, the innate urge to feel for others, understand their plight and seek to help. He wants us to see this as the first and most important of the human responses. This is a disposition that builds bridges and heals wounds; a perspective that seeks to restore relationships, nourish people and promote harmony, not division.

    Only this week he spoke of a Church unafraid to question itself, live with doubts and the discomfort of interrogating its assumptions; a place of dialogue, with a willingness to embrace the new and the awkward. A church that seeks to reform through becoming unsettled, unsure but close to people, their circumstances, sense of isolation and travail. A church more like a meeting square than a brick bastion.

    This reminds me of what Simone Weil meant by paying attention. She said that in order to get a sense of what is true we need to suspend our own agenda and concerns and shift the focus of our attention on to that we encounter. In so doing, the truth of that encounter, that dynamic within the dialogue, will be revealed.

    This is similar to the maxim that listening is the first step towards wisdom. To listen well is to be aware of the voices in ourselves that try to understand another person long before we have actually heard them. Letting go of preconceived perspectives, attitudes and even understandings is the challenge for a pilgrim church if dedication to truth is to be its hallmark.

    The irony is that, in becoming disturbed or, as the Pope puts it, “uncomfortable” – maybe even knocked off course – we are strangely on a pathway more to do with God than any human construct of the Divine.

    At one level, we should not be surprised to hear a pope speak and act like this. The fact that we are surprised speaks volumes for the institutional persona the Church has cultivated in many quarters these days.

    Critics see the Church as being harsh on human nature, uncompromising with its take on the truth and immovable in its attitudes. In its response to child sex abuse, the Church too regularly failed the test of moral leadership, hid behind institutional protectionism and sought to excuse itself as just another institution with some “bad eggs” in the basket.

    It spent too long exhausting institutional resources to justify, contextualise and even rationalise away the problem, rather than in humbly admitting its failures as far up the line as they went. The upshot has been in collapse of trust and the consolidation of the public image of a Church that not only speaks of arrogance and indifference, but that also fails to “feel with” those abused and disenchanted.

    Too often Church officials wanted understanding before they expressed mercy. We didn’t get the problem before it became a tsunami. We didn’t get what victims and their families were saying and the reach of the tentacles of abuse within the Church. We didn’t get the imperative to cry out in shame and seek atonement. And when we did, it looked too late.

    God have mercy!

    Francis Sullivan is CEO of the Truth, Justice and Healing Council, which is coordinating the Catholic Church’s engagement with the Royal Commission into Institutional Responses to Child Sexual Abuse.

     

  • An Open Letter to the Minister for Health concerning Private Health Insurance.

    19 November 2015 

    Hon Sussan Ley M.P.,
    Minister for Health,
    Parliament House,
    ACT 2600

    Dear Minister

    (I have signed this letter on my behalf and also on behalf of the people listed below. I will be posting this ‘open letter’ on my blog early next week.)

    We are pleased to see that you are canvassing community and expert views on private health insurance.

    In discussing the community survey, recently on the ABC Breakfast Program, you said “We support the public system for those who can’t afford private health”.

    That is a long way from the idea of universal mutual support that has underpinned Medicare and public hospital arrangements. It assumes, incorrectly, that private health insurance, and the associated subsidised access to private hospitals, is something Australians see as desirable if only they could afford it.

    As you know, about half of Australians do not hold private health insurance. Many are driven to hold it by the Medicare Levy Surcharge – a coercive instrument that has little to do with choice. You would also be aware that 200 000 taxpayers pay the surcharge, rather than holding private insurance, even though almost all of them would be financially better off taking the cheapest hospital cover.

    For many, the main attraction of public hospitals is not that they are “free”, but rather that they offer a high standard of care. Most importantly the funding system for public hospitals, unlike the funding for private hospitals, does not carry an incentive for over-servicing. There is growing community awareness of the risks of over-diagnosis and of over-servicing.

    Some others, particularly older wealthy people whose income is below the MLS threshold, do the sums and work out that their best bet is to draw on their savings to finance any needed private hospitalisation, secure in the knowledge that if they need acute care they are served by public hospitals. In doing this they miss out on the subsidies, the benefits of which are go to pay for high administrative costs and the cross-subsidies associated with adverse selection. Thanks in part to superannuation, households with people in the 65-74 age range, have on average $500 000 in financial assets.

    It is ironic that, in spite of your Party’s commitment to self-reliance, those who pay for their own private hospitalisation, or who pay their own dental bills, receive no support, while those who hand over responsibility to insurance corporations receive a 30 per cent subsidy or a generous tax incentive in the form of exemption from the MLS.

    Then there are those community-minded people who value the idea of sharing their health care expenses with other Australians. They are morally repulsed by the idea of being corralled into the “gated community” of private health insurance. Also some people, aware of the way “charity” systems inevitably degenerate, see it as important that people with means who hold political influence have a stake in using and maintaining a high standard public hospital system.

    You, and your fellow health ministers in the states and territories, fund and operate an excellent public hospital system. We hope you take pride in a public service that serves all Australians so well, and do not let it degenerate into a charity system.  A way to prevent such degeneration would be to remove private hospitals’ de facto dependence on private insurance, and to bring them into the same funding arrangements as public hospitals, thus allowing them to provide the same high-standard of integrated care as public hospitals, allowing for remuneration models other than individual fee-for-service, and abolishing any suggestion that Australia has two health care systems – one for the affluent and one for those who are less fortunate.

    Yours sincerely,

    John Menadue

    Kerry Goulston, Emeritus Professor, Medicine, USyd
    Ian McAuley, Adjunct Lecturer, Canberra University
    Jennifer Doggett, Health Consultant,
    Stephen Leeder, Emeritus Professor of Public Health and Community Medicine, USyd.
    Karen Willis, Associate Dean, Learning & Teaching, Faculty of Health Sciences, ACU
    Arthur Chesterfield-Evans, Medical Practitioner and anti-tobacco activist
    Sebastian Rosenberg, Senior Lecturer, Brain and Mind Centre, USYD
    Jill White, Professor of Nursing and Midwifery, USYD
    John Dwyer, Emeritus Professor of Medicine, UNSW
    Fiona Armstrong, Executive Director, Climate and Health Alliance
    Tony McBride, President, Australian Health Care Reform Alliance
    Tim Woodruff, Vice President, Doctors’ Reform Society

  • Royal Commissions for some.

    The Abbott government established a Royal Commission to harass trade unions and in the process to damage the ALP. But what we are hearing in this Royal Commission is really small beer by some union hacks. It is small scale compared with the massive tax avoidance by multinational companies in Australia that is being revealed.

    Yet the government has refused to establish a Royal Commission to examine the activities of these multinationals who are depriving Australia of billions of dollars of tax revenue. A Royal Commission would be very useful to flush out this very serious national problem.

    The government has also refused to establish a Royal Commission into large-scale financial advising scandals by the Commonwealth Bank and other financial institutions.

    In the SMH on November 18, Michael West has drawn attention to the government’s attempts to prevent exposure of activities by high income earners. Michael West said

    ‘last week, when two amendments proposed by the Senate to the government’s multinational tax reform bill were unceremoniously dumped by the government the next day. … So determined was the government to help billionaires and multinationals conceal their tax affairs that it killed its own bill. The first amendment, forcing multinationals to file proper (General Purpose) financial statements was to have thrown some light on their inter-company loans and other dealings with offshore associates designed to rip millions out before tax could be paid. The second was the preposterous “kidnapping” amendment which would have ensured greater transparency by billionaires. Both thrown out;  the whole bill nixed, presumably after some 11th hour desperate lobbying by powerful vested interests.’

    John Menadue.

    For Michael West’s full article see link below:

    http://www.smh.com.au/business/comment-and-analysis/the-multinationals-rhetoric-isnt-reassuring-on-tricky-tax-affairs-20151118-gl25c3.html

  • Bruce Wearne. Politics for Government or Politics for Politics?

    At the election of December 1975, the Australian electorate confirmed the sacking of the Whitlam Government. It was an implicit “thumbs up!” to Malcolm Fraser and those on his “side” of politics. Whatever the actual cause of the constitutional crisis that engulfed Australian politics, the result of that election meant an implicit electoral endorsement of the conduct of Malcolm Fraser and his “side” in that crisis. These were the parliamentarians who were elected to get us beyond the political instability they had engineered.

    Well may we remember “It’s time!” Those events of 40 years ago continue to resonate today. The Liberal-Country Party’s theme for that poll was: “Turn on the lights!”? But recent publications indicate that the country been kept in the dark about what went on. There is at least one other “dark secret” that needs to be brought into the light. It concerns the character of the Liberal Party itself.

    By electing Malcolm Fraser’s Coalition Government we were supposedly responding to the bright light that was to be shone on all the dark dealings of Labor’s many-sided economic incompetence. But since then responsibility for Parliamentary budget deficits and fiscal blow-outs have been shared on both sides. And the alert historian of Australian politics will also ask: how can you blame a Government for fiscal mismanagement when they have to live with persistent threats to block supply bills?

    But what was this “other crisis” of those years? After December 1972, Labor controlled the lower house Treasury Benches for the first time in 23 years. We might have expected a “crisis” of sorts among the Labor parliamentarians who must have been used to being in Opposition. Even so, we did not expect that their time in Government would end as it did.

    The Australian people voted for a Whitlam Labor Government not just once (December 1972) but twice (May 1974). After 23 years in Government the members of the Liberal-Country Party coalition were plunged into a deep crisis of their own. They knew how to apply their own party rules and governing principles to their political vocation as Her Majesty’s Government but how were they to conduct themselves as Her Loyal Opposition? It is sad to say the Liberal Party has never really learned to do so. Since losing in 1972 they have persistently seen public government in terms of their side of politics “winning”. When they are Opposition they are “losers”. Bypassing the view of parliamentary democracy enshrined in their own party constitution, they have, like Lemmings, continued to miss the opportunity to form a new style of Opposition, an Opposition for the sake of Government. Such a contribution could have been of great benefit to our parliamentary democracy. But sadly it has never emerged.

    The bumper stickers of the time said of Whitlam “He’s had his chance and he’s stuffed it!” But in truth they come back to stick it on the Liberal-Country Party coalition that failed then, and has continued to do so. Under Snedden and Fraser they reduced their parliamentary task to one political end: winning the election next time. Opposition then meant pragmatic strategic obstructionism.

    There were senior Liberals like John Grey Gorton and Don Chipp who were disgusted with the direction that the parliamentary party had usurped in the party, quite in opposition to what was implied in their party’s constitution. That then was the other “crisis”, the one that was not examined by “turning on the lights”. This is the other persistent crisis that the Australian electorate needs to hear about and discuss.

    The December 1975 election meant that the Australian people effectively endorsed this change in the Liberal Party’s conception of itself. Why should we worry? And those remaining “loyal” to the now “winning is grinning Liberal Party” also thought they need not worry and so they continued on. It would henceforth be a party in which the accountability of its parliamentary wing to the membership would be measured in terms of whether the party was winning elections. No longer was it an accountability to the party’s constitution concerning the way in which Parliamentary democracy requires principled politics, in their case the politics of Liberal principles. No. Now it was not so much a matter of publicly debating policies based on the party’s principles; victory in policy debates could only make sense if the party was either retaining its hold on the Treasury Benches, or moving towards doing so at the next election.

    And this change in the Liberal “side’s” view of its parliamentary contribution has been a decisive factor ever since in our form of parliamentary democracy. It tumbled out with the threat to block supply in May 1974. Since then the rest, as they say, is history, public relations history. The Liberal Party is a political firm for its elected candidates; the idea that it is a party in which elected members are accountable to its rank-and-file to articulate and promote a comprehensive view of public governance according to its constitution’s principles has long gone. This is the pragmatic liberalism that the country has had to endure since 1974.

    Recently we have read of the efforts of the new Prime Minister, Malcolm Turnbull, to hasten publication of the private letters of Sir John Kerr to the Queen. What is his concern? Does this canny politician have some new development in mind for his side of politics? Recent disclosures about the deceitful, if not seditious, manoeuvring of powerful politicians and jurists in bringing about the downfall of the Labor Government could not have escaped his notice.

    But then, Mr. Turnbull has also distanced himself from the actions of Malcolm Fraser in 1975. Could he have concluded that something in the underlying ethical foundations of the Liberal Party has cracked beyond repair, something that the artificial party unity he has long supported simply cannot overcome? Is his attempt to have Sir John Kerr’s correspondence with the Queen made public his attempt to stay ahead of the game?

    So the recent published revelations about the 1975 “crisis” can also help us see how the internal crisis in the Liberal Party in the 1974-1975 years was only seemingly resolved by the election of the Fraser Government. The subsequent 40 years have continued this revolution in the Liberal Party and, as well, we do have a Federal Parliament that is now dominated by contending pragmatic political machines and their aligned public relations firms, and barely a genuine political party is left.

    Obviously there is much more to discuss about restoring political parties to our parliamentary democracy. The question is not just a question for the PM. It is this: is it going to be politics for government or politics for politics? I cannot believe that such a conundrum has not at some point crossed Mr. Turnbull’s wide-ranging Liberal mind. Could he be about to embark upon a “New Liberal Party”, in order to return his side of politics to the ranks of genuine political parties rather than these self-perpetuating electoral machines? Are we going to see Mr. Turnbull try further, from his “side” of politics, to avoid complicity in the substantial political disgrace that occurred with the sacking of the Whitlam Government on November 11th 1975?

     

     

    Bruce Wearne, a PhD in sociology (LaTrobe 1987), lives quietly at Point Lonsdale, in order to contribute to political debate, while also advising students and conversing with the people he meets while walking along the coast.

  • Peter Day. Hatred won’t stop me patting the dog.

    Hatred won’t stop me patting the dog 

    By Peter Day

    New York, London, Bali, Madrid, Israel, Beirut, Egypt, Nigeria, Sydney, Paris:
    on and on it goes, the list of nations and cities left bereft
    after yet another act of terror.

    It puts one’s inner-being out of whack; could even threaten
    to derail one’s sense of humanity.

    Where to from here in the face of such deep seated hatred and barbarity?

    Where to from here as the canopy of powerlessness descends?

    The dog’s snoring in the sun next to my courtyard flyscreen …

    Must remember to keep patting him.

    Must remember to keep hugging those I love.

    Must remember to keep washing the dishes.

    Must remember to keep my head down at golf.

    Must remember to keep in mind that people are worth it.

    Must remember to sit quietly with the Beloved.

    Must remember not to let daily acts of terror undermine simple daily acts – simple daily acts of love.

    Peter Day is a Catholic Priest in Canberra.

     

     

     

  • Thanks to Jake Bailey and Christchurch Boys High School.

    Just one week before his final school assembly, Christchurch Boys High School’s Head Boy, Jake Bailey, was told that he may not have long to live.

    The 18 year old NZ student was bed-ridden and absent from school for three weeks while undergoing treatment for aggressive cancer.

    But during his final school prize-giving ceremony he managed to give an inspirational speech from his wheelchair.

    “None of us get out of life alive, so be gallant, be great, be gracious and be grateful for the opportunities you have” Jake told his audience.

    The school listened in silence as he told of his diagnosis with Burkitts non-Hodgkinson lymphoma, one of the fastest growing tumours.

    See link from The New Daily to story and video of speech below:

     

    http://thenewdaily.com.au/news/2015/11/09/dying-school-captain-speech/?utm_source=SilverpopMailing&utm_medium=email&utm_campaign=20151110%20The%20New%20Daily%20final%20(3)&utm_content=&spMailingID=23943738&spUserID=MTAyODk0Mjg4NDUzS0&spJobID=680889348&spReportId=NjgwODM2MjY0S0

  • Greg Smith- Tax Reform and Change Leadership

    If we look at the tax reforms of the past we can observe a few clear problems that are accumulating from design compromises.

    1. We replaced narrow indirect taxes with a broader GST, but the GST base is narrower than consumption and the trend over the past 15 years is for a relative decline in GST revenues. This has been partly offset for the States by higher mining royalty revenues, but these are now weakening.
    2. Other indirect taxes imposed on narrow bases have declined even more dramatically than the GST. These are structural weaknesses that will not be overcome by future economic changes.
    3. The reformed personal tax scale was not indexed and has undergone a series of changes based both on bracket creep and on ad hoc politically based changes. Forward estimates are based on an assumed increase in average personal income tax burdens.
    4. The income base is a complex compromise between a wide range of competing principles – for example between the comprehensive income and expenditure tax principles, the realisation and accrual principles, the asymmetric treatment of gains and losses, different concepts of source and residence, and different approaches to entities and income assignment. Progressivity is also pursued in a highly imperfect and incomplete way.
    5. Secondary tax layers – that is additional taxes and charges imposed on top of the broadly based taxes such as payroll taxes and stamp duties – continue to be relied upon but without clear rationales or efficient design principles.

    So here we are again. Once again we confront the problems of a compromised tax system and seek to achieve reforms that will at least for a further time set us on a more robust and effective path. We confront another change leadership task which would set us on a substantially new course, rather than one that takes us along an old and well-worn path. Can we do it?

    In 2013 I set out my thoughts on change leadership for public policy in a chapter of the CEDA study called Setting Public Policy. For this I compared what I thought were the key ingredients with those of John Kotter in his work on organisational change.

    Let me revisit the 5 main steps towards leading public policy change which I then suggested based on a part of Kotter’s model, and make some observations on where we stand today with the tax reform debate.

    It is within that framework that the main political economy issues affecting tax reform can be seen to arise.

    Change Leadership tasks

    1. Establishing a sense of urgency
      1. The version of this most common in public service circles is that a crisis is need to deliver change. The issue is whether there really is a basis for any actual or perceived sense of urgency
      2. Unfortunately, it is difficult to create a sense of crisis after 24 years of continuous economic growth. Crying wolf is also a problem, and there has been a cost of the overstatement of crisis that we experienced surrounding Australia’s levels of debt and deficit. We now probably have a more economically wary electorate than ever.
      3. So rebuilding a sense of urgency is now a great challenge for government. It needs to be based on a clear and consistent message about how, and specifically in what ways, the economy’s trajectory is now taking us away from critical goals.
      4. I think we have started on that task – but there is quite a way to go. The coming MYEFO and the other promised government initiatives in tax, the federation and perhaps innovation and cities provides a chance to reboot the required messaging. But at the moment, if anything, we have a problem of “over narration” where many stories have been begun but have not been finished nor have they been brought together in a coherent way. There is even a risk of adding more layers to the narrative confusion, with agendas like innovation or cities, before we get to sort out what has already been launched.
    2. Forming a powerful coalition
      1. The Prime Minister appears to be acutely aware of this element. He has taken immediate initiatives in calling in the classical trio – business, unions and welfare – for discussion of goals. The states are also being engaged.
      2. But the coalition required on tax reform is not yet formed. The coalition is one of many leaders agreeing on the imperative of reform but they are following many agendas and directions rather than forming a coalition sharing the same understanding.
    3. Developing a change vision
      1. Right now I do not know where we are going with tax reform or the federation. There are very mixed signals. I do not expect the answers – that is actually premature. But the principles – not at a high level but at a concrete level should be starting to form by now. There is little sign yet that this is happening or even that the Government seeks to do this before it commits to actual policies. Hopefully 2016 will change that.
    4. Communicating the change vision
      1. The government now appears to be better placed on this than before, and there is a strong sense of hope in the community that we are now facing in the right direction at least. Of course, a change vision is not the same as a political vision. It is a much more demanding thing. The key is to get beyond slogans and beyond the sort of superficial rubbish that in recent years has been commissioned from a group of issue managers, advertisers and political advisers that have repeatedly failed to cut through to the community. They have not been incompetent in playing attack or defence politics – but they have been incompetent in communicating a change vision when clearly there is some community appetite for genuine solutions. This has been a palpable advisory failure on both sides of politics.
      2. When it comes to taking a substantially new path the communication rules of oppositional politics do not work. More is being asked of the public and so the understandable public demand is for a lot more meaning and substance in the communication offering. This understanding seems to have been missing in recent years.
    5. Empowering others to act
      1. One of the reasons for opening government to wider participation and engagement during reform processes is that many change programs actually unfold over a period of years and these implementation years require a lot of heavy lifting by those affected by change.
      2. When the Government charts its course, it should be ready to facilitate the empowerment of others to act, whether that be tax professionals, state governments, the ATO or potentially a host of others.

    Into 2016

    2016 is nearly upon us. It could well be a momentous year. The many processes that have been launched could come to a head. Some sort of coherent framework hopefully can be articulated in which it all comes together.

    Part of that will be a renewed understanding of the fiscal strategy, and the probably very poor economic underpinnings of that. I suspect that it won’t change much but hopefully the implications of what is there can be better explained to people – including for example implications of forward estimates that are based on a large restoration of tax share of GDP.

    All the signs are that this could be a year of global cyclical weakness. That is certainly a widespread market and IMF view. There won’t be much room for policy error, and there may be a need for considerable short term agility.

    This puts a premium in my view on ensuring that the key institutions in Australia are fully focused on their jobs and are sustained to deliver them. There has been inadequate attention to this in recent years, and that has been part of the problem holding back reform capability.

    2016 will also bring an electoral mandate for the next three years at the Commonwealth level. I am not certain about the actual significance of mandates in Australian politics, but hopefully there will be a basis for reform at least as strong as that sought by the Hawke Governments in the 1980s and the Howard Government in 1998.

     

    Greg Smith was a member of the Henry Future Tax Review Panel. He has also been head of the Treasury Tax Policy and Financial Institutions Division and of Treasury Budget and Revenue Groups. He was substantially involved with John Howard in the implementation of the GST. The above are extracts from a speech he delivered to The Melbourne Institute last week.

  • Ian Richards. Australia’s new submarine.

    Jon Stanford’s article ‘Australia’s new submarine: what is its mission?’ is spot on.

    The trouble with Defence planning and White Papers is that they all start off with what in my early days in the Navy was called a “Staff Requirement”.  This thing, this equipment or ship is what we “require”.  The first chapter of a Defence White Paper should be “How much money have we got”!

    The bureaucratic Canberra attitude to money is that it just “comes”.  A very competent technical Admiral once said to me in my days as Deputy Chief “Ian, are you saying we can’t do this just because of money?”

    The 2009 White Paper is off in dreamland.  Structuring Australia’s forces with the objective of the South China Sea as one of our possible areas of major Australia alone defence interest is just nonsense.  For example:

    • Day One.   The “major adversary” is trembling in its shelters!  An Australian conventional submarine is threatening us in the South China Sea!!  And it has conventional cruise missiles!!!
    • Day Two.   Scratch one Australian submarine.
    • Day Three.  Scratch Perth/Fremantle.

    Planners who suggest the ADF is unilaterally going to attack a nuclear-armed adversary in Asia are away with the fairies.

    There are some simple facts.

    1. Australia has never and will never in current lifetimes operate significant military forces beyond the Australian area other than in concert with other (almost certainly more powerful) nations. Examples are WW2 to Korea, Vietnam, Iraq, Afghanistan, Syria.
    2. Australian forces in Syria and the Red Sea are providing the tip of the arrow as political support.  The shaft and the bow belong to others – without them, the arrow tips would be useless.

    Turning to intelligence gathering, I also agree entirely.  If you want to listen to any type of radio transmission, put the receiver into a ship (war or merchant), shore station, embassy or satellite.  The worst place is in a submarine.  If you want a clear picture of something, don’t enlist a blind man and put him in a dark room.

    The intelligence-gathering feature of submarines appeals to The Hunt for Red October fans.  It has a lovely emotional tang about it.  So what is the “Australian contribution to the Five Power intelligence club” if an Australian conventional powered submarine sitting off Shanghai/Vladivostok (which will have been detected by the Chinese/Russians) can tell the US that an SSK (conventional submarine) has left harbour?  The Americans will know that because they saw it on satellite.  Or perhaps our submarine will be operating in the Eastern approaches to Singapore Strait – the South China Sea choke point – where submerged submarines can be seen from the air and sonar ranges are extreme.

    Ian Richards AO was formerly Deputy Chief, Naval Staff when he retired as Rear Admiral in 1984.

     

     

  • Ian Marsh. Will privatised schools and hospital drive public sector efficiency?

    One of the first substantive announcements of Treasurer Scott Morrison concerned the privatisation of schools, hospitals and community services that are provided by State governments. He enthusiastically endorsed this 2012 Commission of Audit recommendation: ‘Given the size of the human services sector (which is set to increase further as Australia’s population ages), even small improvements will have profound impacts on people’s standard of living and quality of life.’ Morrison pointed to the greater efficiency and effectiveness that a competitive regime can deliver. There is no doubt that market mediated competition can drive performance. The private sector provides daily evidence of this.

    But the notion that these approaches can be readily transferred to public services like schools and hospitals and social services cries out for deconstruction. For a start schools, hospitals and social agencies serve many purposes that cannot be easily captured in a unified price measure. How are these more subtle and variegated outcomes, which can vary hugely between individuals and between places, to be incorporated in a contract design? No easy challenge in itself. For reasons the Harper review acknowledges, it is fanciful to imagine that consumer choice can be generally instituted. In it absence, who are the omniscient, all-knowing central agents who will define the precise outcomes that contracted services should deliver? Even assuming this is possible, in practice accountability systems that recognise these wider concerns increase the likelihood of micro-management. And then the alleged benefits of privatised or contract-based settings rapidly evaporate. Innovation or continuous improvement is stillborn. Transaction costs escalate.

    Is there an alternative to these dysfunctions? One approach might be to build on private sector practices that directly lead on to service or process innovation. Think of the Toyota just-in-time production system. Toyota deliberately jettisoned end-of-line capacities to repair or correct faults. It deliberately limited back up component reserves in case of supply chain hiccups. Production was stopped by every fault or flaw. But each of these stoppages became a key source of data in Toyota’s never ending quest for improved efficiency. This covered both the immediate production process as well as the wider system in which it nested. Unlike the aggregated information or ‘strong’ signal that is embodied in price data, this approach focused on the ‘weak’ signals that were critical to continuous improvement.

    Prices embody the outcomes of a multitude of these weak signals. Note Toyota’s rise to become the major global car company. This was an immediate consequence of the visible hand of management practice – only distantly that of the invisible hand of market forces.

    Or note the consistent stellar performance of the Finnish education system. Not one single school is privatised. Instead there is a deliberate focus on identifying obstacles to student performance at an individual level and from an early age. The system deploys more special education teachers than any comparable country. These work with mainline teachers and parents to identify under-performing or troubled children. They focus on these early ‘weak’ signals and initiate immediate remedial action. Approximately one third of the pupils in Finnish schools receive extra support in special education classes.

    So markets and contracting by all means. But if they are to work the invisible hand of the market need to be supplemented by the visible hand of ‘weak’ signals. These are the building blocks of continuous improvement. Of course the challenge to identify pertinent weak signals varies widely. The relevant indicators are not the same in routine or highly specialised surgery or in Accident and Emergency or routine hospital care.

    Translated to a contracting system, how can this be achieved? In principle the answer is simple. Contractors need to report not just on the outcomes that they believe they can achieve but also the means that they propose to use to achieve them. Then they need to be held to account for both outcomes and means. A central authority then needs to manage accountability and learning about these means. Its role is to learn and then to share this information amongst providers.

    The core ethos of such a system is learning about means as well as outcomes. Its unit of exchange is the means used by different providers who are working towards broadly similar ends. But these exchanges will typically not involve anything that could be described as ‘best practice’. Most service settings are too contextualised to allow codified or standardised service designs to be developed. Service decisions need to take into account the circumstances and needs of an individual person or a specific place. In a technical sense decisions are ‘transaction intensive’ – prioritising the needs of individuals or places and mostly blending the technical skills and the empathic judgements of practitioners. Thus a teacher must respond to the circumstances of her students, a doctor to the needs of her patients. In both instances, the hardest cases can provide the richest source of systemic learning.

    Indeed where services can be codified and standardised price mediated exchange will be a sufficient driver of performance. Where the latter is not possible, price mediated exchange will not by itself drive performance. Unless contracts or other systemic arrangements also disseminate learning about means, rhetorical promises of efficiency and continuous improvement will be misleading, indeed chimerical.

    In a justly celebrated book, The Visible Hand, the distinguished Harvard economic historian, Alfred Chandler, showed the extent to which business efficiency in the United States was the product of superior management not in the first instance price mediated exchange. In seeking efficiency and continuous improvement in the much more complex world of hospitals, schools and community services this visible hand is even more critical.

    Over the past thirty years, the discipline of economics has been a fertile source of models and frameworks for the redesign of government and of public services. But as more complex, transaction intensive services (‘wicked’ problems) have come increasingly to be the focus of attention, the limitations of price mediated exchanges need to be acknowledged. This is not the royal road to innovation and continuous improvement. Pace the Harper Review, the design of a functional innovation system is a more complex and more demanding challenge.

    Ian Marsh is a visiting professor at the University of Technology Sydney’s management school.

  • Malcolm Turnbull’s NBN is off the rails.

    Paul Budde comments in his BuddeBlog on 6 November 2015

    ‘If you abandon national FttH (fibre to the home) you also undermine the infrastructure required by the new economy. … The MTM [multi technology mix] leads to the Balkanisation of infrastructure in Australia and will favour companies such as Telstra and TPG. … The NBN Co will remain bleak from a financial position. … All of this becomes an even sadder story day by day, as at the same time it becomes clear that the trumped up costs of an FttH-based NBN were wrong. … The second rate roll out is going to cost roughly the same as the original FttH rollout.’

    See link to full article below.

    http://www.businessspectator.com.au/article/2015/11/6/technology/nbn-business-model-rails-0

  • John Taylor. Investing in Hedge Funds in Tax Havens: Legal? Ethical?

    If the aim of Labor’s attack on Prime Minister Malcolm Turnbull and his wife Lucy for using hedge funds domiciled in the Cayman Islands was to damage his credibility with the public, it appears to have missed the political mark.

    This article considers whether investing in hedge funds in tax havens is both legal and ethical.

    Advantages of offshore funds in tax havens

    Investing in US companies via a hedge fund enables Australian individuals and organisations to make investments over a much larger, more diverse, and more frequently changed portfolio than would be possible by directly investing in shares in US companies.

    If an Australian invests in a US-domiciled hedge fund then the Australian investor (under the Australia – US Double Tax Treaty) would be subject to 15% US withholding tax on dividends the fund received from US companies. This is because US domiciled hedge funds are usually established using structures such as partnerships that are transparent for US tax

    The Australian foreign income tax offset system will mean the Australian investor would pay Australian tax on those dividends equal to the excess of their average rate over 15%. The investment would also be subject to Australian capital gains tax on any capital gains the fund made on its US investments when they were sold. The Australia – US Double Tax Treaty will mean that normally no US capital gains tax will be payable..

    The position changes when an Australian investor uses a hedge fund domiciled in a tax haven such as the Cayman Islands.

    Let’s assume the fund invests in US shares. Normally the fund will be organised as a Cayman Islands company. The fund will structure its US share investments so that the investments are not regarded as the conduct of a US trade or business. Hence capital gains the fund makes on realising its US investments will not subject to capital gains tax in the US. This is because the capital gain will not be regarded as being “effectively connected” with a US trade or business.

    Any dividends received by the Cayman Islands hedge fund will be subject to US withholding tax at the US non-treaty rate of 30%. There is no double tax treaty between the US and the Cayman Islands.

    There will be no Cayman islands capital gains tax payable on a realisation of the investment, no Cayman Islands income tax will be payable on dividends received on the shares, and no Cayman Islands withholding tax will be payable on distributions by the fund to the Australian investor.

    Although no Cayman Islands withholding tax will be payable on a distribution by the fund to the Australian investor, a higher level of US withholding tax is payable on the dividend paid by the US company to the fund. So looking at the dividends in isolation there seems to be no advantage in investing via a Cayman Islands hedge fund.

    The real tax advantages Australian investors gain by investing via the Cayman Islands hedge fund rather than via a US domiciled hedge fund, are in terms of the ability to defer tax on capital gains the fund makes on underlying investments.

    In the case of an investment via a tax-transparent US hedge fund, the capital gain will be subject to Australian tax as soon as the investments are sold. But in the case of the investment via the Cayman Islands hedge fund, the capital gain will only be taxed in Australia when the fund makes a distribution.

    The time value on the money will mean the real cost of the tax the investor pays on the capital gain falls for as long as the fund defers distributions to the investor.

    Over time in real terms, less Australian tax will be paid. Admittedly the investor will not have benefited from receiving the distribution in that time and will not have control of the time of distribution. But an investor can use the appreciation in value of the investment as security against other financial transactions.

    Is it legal?

    The legal question is the easiest to answer. Australia used to have rules (the Foreign Investment Fund or FIF rules) which sought to neutralise these and other deferral advantages. Those rules were repealed in 2010. In 2011 the Gillard Government proposed more targeted rules for foreign funds (the Foreign Accumulation Fund or FAF rules) but the Abbott Government in 2013 announced that it would not be proceeding with these and other related changes. So deferring Australian tax through the use of foreign hedge funds is currently not caught under Australian law.

    Is it ethical?

    How about the ethical question? This answer is harder. An investment via a Cayman Islands hedge fund results in more US tax and more Australian tax being payable on dividend distributions than investment via a US domiciled hedge fund organised.

    If we assume an ethical obligation to pay taxes both in the source and residence country, then deriving dividends indirectly via a Cayman Islands hedge fund meets that obligation.

    But the position is different in relation to capital gains the funds make on shares in US companies.

    Neither fund will be paying US tax on the capital gains but, in the case of investment via a US domiciled tax transparent fund, Australian tax will be payable on the capital gain as soon as it is realised, while Australian tax will only be payable on the capital gain derived by the Cayman Islands domiciled fund when that fund distributes it to the Australian investor.

    So back to the ethics of this. If everyone did this, there would be seriously adverse revenue consequences for Australia. But of course, not everyone can. Investing in Cayman Islands hedge funds is largely the preserve of the financially astute or those with the resources to seek advice from the financially astute.

    That could raise another ethical question – is it unethical to use your own financial acumen, or that of others, to derive tax advantages unavailable to those without access to that financial acumen?

    It depends on whether we regard taxes as a payment for the benefits a taxpayer receives from society. If so then it is arguable that those with greater financial resources receive greater benefits from society. They benefit from having their greater resources protected by law and by domestic law enforcement. As they have more assets they benefit more by having them protected by the defence force. They derive greater benefit from infrastructure through which business can be conducted.

    If we regard taxes as a payment for the benefits received from society and if we accept that those with financial benefits receive greater benefits from society then to use your financial resources or financial acumen to pay less tax than is proportionate to the benefits you receive from society can be considered to be unethical. If everyone paid less tax than was proportionate to the benefits they received from society then society would eventually be unsustainable.

    Professor John Taylor is Head of School of Taxation and Business Law, Australian School of Business, UNSW. An earlier version of this article appeared in The Conversation on October 30, 2015.

  • Bob Kinnaird. The high price of Labor’s capitulation on ChAFTA

    Labor’s capitulation in supporting the treaty-status ChAFTA has profound ramifications that go far beyond the China deal.

    Labor’s support for ChAFTA has all but guaranteed the permanent surrender of Australian sovereignty over key parts of our migration program and laws, and the permanent loss of rights of Australian citizens and permanent residents to jobs in Australia.

    The Labor and Coalition leaderships both know this but have not told the Australian people or the Australian Parliament.

    Labor’s decision to pass the treaty-status ChAFTA unchanged effectively ensures the permanent removal of the Australian government and Parliament’s right:

    • To impose any limit on the number of visas granted in the entire standard 457 visa program for skilled workers or the shorter-term 400 visa.
    • To apply labour market testing (LMT) in the entire standard 457 visa program.
    • To apply LMT in the 400 visa program to a whole new foreign worker category in binding FTAs – ‘installers and servicers’ of machinery and equipment. These include for the first time in FTAs sub-trade or semi-skilled workers, and possibly even unskilled workers, as well as skilled workers.
    • To apply other regulatory measures in the 457 and 400 visa programs that remain unspecified and ambiguous, and which the Australian Parliament has not even inquired about. What is covered by Australia’s commitment not to apply ‘economic needs tests or other procedures of similar effect’ to foreign nationals in these visa programs is not even known.
    • To make laws giving preference in redundancy situations to Australian workers over standard 457 visa workers, and likewise over the ‘installers and servicers’ on 400 visas. The ‘national treatment’ provisions of FTAs prohibit such ‘discrimination’ in favour of Australian workers, but the Treaties Committee reports to Parliament on ChAFTA said nothing about this either.

    These binding international obligations in ChAFTA on the 457 and 400 visa programs will now flow on to other countries through the plethora of FTAs the Coalition government is aggressively pursuing. That flow-on has already started, as shown below.

    As well, Labor has guaranteed that all future FTA ‘packages’ with developing countries will allow semi-skilled and other ‘concessional’ 457 visa workers access to the Australian job market under the guise of ChAFTA-style ‘investment facilitation arrangements’ (IFAs).

    Labor approved the IFAs as part of the ChAFTA package with only cosmetic changes to the migration regulations for concessional 457s under these arrangements. These provide no additional ‘safeguards for Australian jobs’, despite Labor pretending they do.

    The MOU on IFAs is not part of the treaty-status FTA, but DFAT says it is nonetheless ‘a serious bilateral agreement’ between the governments of Australia and China. Changes to the MOU require China’s agreement. Labor and the Coalition have therefore succeeded in also reducing the previously unfettered right of the Australian government and Parliament to make laws and policies for concessional 457 visa workers on major projects.

    In October Trade Minister Robb admitted the Coalition is lining up more ChAFTA-style IFAs (India is almost certainly next), saying:

    ‘This has to apply not just to China… – in the case of that issue, these major projects over $150 million – that opportunity is there for every company in every country, so we have to look beyond China; we have to make sure that this doesn’t discriminate against China and that it’s not a one-off provision just for China’ (transcript, Robb media conference on 13 October 2015).

    As well as the loss of Australian sovereignty, all this means greatly increased legal rights for employers to use temporary foreign labour, and to use these workers as industrial relations weapons against Australian workers and unions.

    The ChAFTA flow-on

    The China FTA commits Australia not to apply LMT to all Chinese citizens in the standard 457 visa program – currently around 7 per cent of the total 457 program. That is a ‘point of no return’ moment.

    Until the China FTA, the Coalition had declared that only the nationals of Japan, Korea, Chile, Thailand and NZ had a blanket 457 LMT-exemption due to Australia’s international trade obligations in FTAs. These comprise only a small fraction of the 457 visa program (around 4%) with the largest of these (Korea and Japan) in FTAs concluded by the Abbott government.

    The China FTA will take that LMT-exempt share up to 11 per cent of the 457 visa program when it comes into force before end-2015.

    Once China goes, the rest will follow. By late 2016 nearly half of the entire 457 visa program will probably be exempt from LMT due to Australia’s binding international trade obligations as the China FTA LMT concessions flow through to other new FTAs. It could be more than half.

    Having capitulated on the China FTA, Labor is now unlikely to oppose extending the same blanket 457 LMT-exemption to all the other FTA countries that the Coalition is lining up in short order. Labor will need more resolve than shown so far to resist the claims of ‘discrimination’ that will be heard from every FTA country denied the same privileges as China.

    The most important of these is India, the largest country in the 457 program with 24 per cent of all visas. Concluding the India FTA by the end of 2015 is the Coalition’s next self-imposed deadline. Having waved through the China FTA, Labor will do the same for India. At that point, 35 per cent of the 457 visa program will then be LMT-exempt due to binding international trade obligations.

    In the Trans Pacific Partnership (TPP) announced in October, Australia has committed not to apply LMT in the standard 457 program to all nationals of five TPP countries – Brunei Darussalam, Canada, Malaysia, Vietnam, and Mexico – representing a further 5 per cent of the 457 program.

    Australia has also made a standing offer to do the same for the three other TPP countries without a total 457 LMT exemption (the USA, Peru and Singapore) if they provide access to limited categories of ‘Australian business persons’ down the track – another 7 per cent of 457s.

    The ChAFTA concession not to apply LMT to ‘installers and servicers’ on 400 visas has also been extended to eight TPP countries – Brunei Darussalam , Chile, Japan, New Zealand, Peru, Canada, Malaysia and Mexico -and no doubt shortly India also.

    Waiting in the wings are other FTAs including the Regional Comprehensive Economic Partnership (RCEP), the Trade in Services Agreement (TISA) with 51 WTO members, Indonesia, the Gulf states and now the EU. The RCEP is perhaps the next most important for Australian temporary visa concessions. It includes the ten ASEAN member states and those countries which have existing FTAs with ASEAN – Australia, China, India, Japan, Republic of Korea and New Zealand. 

    Labor’s road to capitulation 

    Labor’s decision to support ChAFTA is a clear breach of commitments given by Opposition Leader Mr Shorten. In the Labor leadership contest in September 2013, Mr Shorten publicly committed to ‘opposing the removal of LMT in bilateral and multilateral trade agreements’ – as did Mr Albanese, the other candidate. (See ALP Leadership Questionnaire http://www.cfmeu.net.au/news/alp-leadership-questionnaire)

    Both candidates also committed to ‘opposing all attempts by the Coalition government to weaken sponsors’ legal obligations to undertake Labour Market Testing (LMT) so that 457 visa nominations may be approved only where a suitable Australian resident is not available to fill the position’.

    Labor failed to honour these commitments at the first test. When the Coalition brought the Korea Australia FTA (KAFTA) before Parliament in September 2014, Labor voted to support the FTA even though it removed Australia’s right to apply LMT to all Korean nationals (and permanent residents) in the standard 457 visa program.

    A few months later, Labor did the same with the Japan FTA which included identical provisions to KAFTA, removing Australia’s right to apply LMT to all Japanese nationals in the standard 457 visa program.

    Even after conceding on the first two North Asian FTAs, Labor still had good reasons to draw the line under Japan and Korea, and oppose the China FTA ‘labour mobility’ provisions.

    Labor’s own Treaties Committee Dissenting Report on ChAFTA warned ‘ there is a danger that Australia’s labour mobility commitments in CHAFTA will be used as the new baseline demand by all countries with which Australia is negotiating FTAs and all will expect Australia to offer additional concessions.’

    The 2007-13 Labor governments concluded several FTAs, with Chile, Malaysia, and ASEAN/NZ. But none of Labor’s FTAs removed Australia’s right to apply LMT in the 457 program to all nationals of the FTA parties. This was despite the fact that during this time, Labor did not withdraw the Howard government’s (non-binding) 2005 Doha Round offer in WTO GATS to remove LMT from the entire 457 program, but had actually re-affirmed it. 

    Conclusion

    The sorry truth is that both Labor and the Coalition are prepared to trade away Australian sovereign rights and the work rights of Australian citizens in binding FTAs in return for improved market access for Australian business and investment flows.

    The crude calculus dominant in the major parties and among unelected trade bureaucrats is that Australia has little to offer in trade negotiations with many countries, except greater and ‘guaranteed’ access to the Australian job market. This is because the (mostly unilateral) trade liberalisation already undertaken by Australia has left us with nothing much to offer that our FTA negotiating partners want!

    The major political parties won’t say this openly, especially when both maintain the fiction that Australia’s 457 and other temporary work visa programs are designed to meet ‘shortages’ of Australian workers.

    But DFAT admitted this to the tripartite Skilled Migration Consultative Panel in 2008:

    ‘Australia is now negotiating or planning to negotiate FTAs with a number of large developing countries….Given the degree of trade liberalisation already undertaken in Australia, and the limited ability of persons from some developing countries to take advantage of opportunities at the highly skilled end of the Australian market, temporary entry for semi-skilled and low skilled persons is one of the few areas (along with economic capacity building) where some of Australia’s developing county FTA partners have strong offensive interests. Naturally, Australia’s bargaining power in any trade negotiations with these countries will be significantly enhanced if it is able to respond favourably to their temporary entry interests.

    ’ From a trade policy perspective, therefore, it is in Australia’s national interest to ensure that its approach to temporary entry for work and business purposes is liberal, transparent, flexible and market-driven.’

    (Source: DFAT, Trade commitments and reform of the subclass 457 visa program, Discussion Paper to Skilled Migration Consultative Panel, September 2008).

    The Productivity Commission and others have shown that the alleged economic benefits of FTAs have been grossly overstated. The Commission recently noted that promotion of the benefits of FTAs and the TPP has been “characterised by a lack of transparent and robust analysis, a vacuum consequently filled at times by misleading claims”.

    The costs of FTAs – and indirectly, unilateral reform – have also been understated or ignored. The permanent loss of Australia’s sovereign right to make laws concerning temporary migration, with no public debate, is too high a price to pay for the dubious benefits of FTAs.

    Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.

  • Christmas gift idea – Pearls and Irritations in print

    Orders are now open for Fairness, Opportunity and Security: Filling the Policy Vacuum, edited by John Menadue and Michael Keating, and published by ATF Press.

    coverThe book is a collection of the special policy series of blogs that was published earlier this year.

    At last week’s launch, Fairfax economics columnist Ross Gittins said of series: ‘I hope this project of turning them into a book will make them even more accessible and more widely read. They certainly deserve to be.’

    Topics include Democratic Renewal, the Role of Government, Foreign Policy, the Economy, Retirement Incomes, Population/migration/refugees, Communications and the Arts, Security – internal and Human Rights, Security, Health, Development of Human Capital, Environment, Indigenous affairs, Welfare and Inequality.

    Among the authors are Ken Henry, Ian Marsh, Stephen FitzGerald, Cavan Hogue, Richard Butler, Stuart Harris, John McCarthy, Andrew Podger, Julianne Schultz, Kim Williams, Susan Ryan, Michael Wesley, Jennifer Doggett, Glen Withers, Chris Bonnor and Ian McAuley.

    Gittins described the book’s contribution to robust conversation about policy at this time as unique and indispensable: ‘In view of this policy vacuum needing to be filled, it’s really great to have John providing this new platform and encouraging former bureaucrats to use it. Never has their contribution been more needed. We independent media commentators do our best to evaluate the government’s performance, but there’s nothing like a former bureaucrat to be able to see through the smoke and mirrors and decipher the true position.’

    CLICK HERE to download the flyer and order form. For a limited time, the book is available for $49.95 (paperback) and $69.95 (hardback).

  • Tony Kevin. Time for review of our foreign policy.

    Why Australia need to get its head around great power multipolarity.

    Most Australians think of foreign policy as an esoteric, wonky field. Beyond special-cause activists, few Australians give much thought to our foreign policy choices. One who does is Professor Ramesh Thakur at the Australian National University. He does serious academic work on issues like UN peacekeeping, Security Council powers and responsibilities, the global responsibility to protect human rights , and changing great power balances. His opinion piece written a year ago is pertinent to this essay.

    In 1985-1990, as the defeated and dysfunctional Soviet Union eked out its sad and confused final years under Gorbachev, Western foreign policy theorists were thinking about the looming end of US/Soviet Cold War bipolarity and its replacement with a stable multipolar global system: i.e., a balanced international security system resting on several great powers, not necessarily equal in power, but in which all felt their national security was protected by a UN Security Council-based rules-based international order.

    It turned out we were around 20-30 years too early. With the breakup of the Soviet Union in 1991, the world entered a long unipolar moment of US hegemonic exceptionalism, which ended … but when did it end?

    With the ruthless and wrenching 2001 Al Qaeda terrorist attacks on the US heartland? With the final withdrawal in 2011 of US forces from Iraq after a costly and bloody eight-year military occupation?

    With Russian President Putin’s newfound resolve in 2008, when after eight years of trying to reach a modus vivendi with a triumphant United States, he began to confront US/NATO pressure to project power into Russia’s vulnerable Western borderlands, first in Georgia (2008). And then in Ukraine since 2014?

    With the coming to power in China in 2012 of the vigorous nationalist leader Premier Xi Jinping?

    https://en.wikipedia.org/wiki/Xi_Jinping

    Or now in 2015, with Russia’s so far successful military assistance to the Assad Government in Syria, and with China’s intensification of its fortification of islets and reefs in the South China Sea, despite US anger?

    Thakur (op.cit) notes that it is hard to map great power transitions with confidence while they are occurring, and that there are increased risks to peace during these transitions. We are in such a period now. Whatever the date of the ‘tipping point’, the US unipolar moment is ending and real multipolarity is upon us. Russia, China, the rest of the BRICs (India, Brazil, South Africa) , and Iran are testing new multipolar arrangements for sharing world power – initially in finance and trade, but as we will find in coming years, in international security as well.

    The former ‘indispensable’ power’ of the past 25 years hates and fears these changes, and would prefer to corral everybody – friends and adversaries alike – back into the familiar bipolar camps of the past. We are looking, at worst, at a potential new global bipolarity of the US with its loyal allies or satellites (NATO/ EU, Japan, Canada and Australia, pro-US Sunni Arab states) confronting a new Eastern continental power bloc led by an economically strong China, but with Russia’s revamped military strength providing much of the nuclear deterrent, conventional power projection forces and strategic depth.

    This would be a disaster. The world spent decades trying to escape the risks of nuclear war during the 1948 -1991 Cold War confrontation. Why on earth would Australia ever wish to go back to those risks? And why would Putin or Xi want to, unless US aggressiveness left them no alternative?

    Soviet Communism is dead, and the market-oriented Chinese version is no ideological threat. Both leaders are keen to work within a multipolar and UN Security Council-determined framework of collective global security.

    But a US ‘war party’ , influential in both Republican and Democrat parties, pines for return to a neo-Cold War: by force of habit, and because it is hard to maintain voter support to pay for the world’s leading military capability without an adversary more serious than Al Qaeda or ISIL. The US power structure – never mind the huge challenges of underclass poverty and the environment in the US – needs a big strong enemy.

    Australia doesn’t. Nor do the EU, Canada, and the rest of the world, yearning for peace and united focus on global developmental and environmental challenges. We will all benefit from a stable rules-based multipolar world, and Australian foreign policy under Turnbull or Shorten can help build it. But we are going to have to take a few calculated risks on the way.

    We can’t be a dumbly obedient janissary for the US in its prickly relationship with China. We have to strike our own balances, respecting Chinese great power security concerns in the South China Sea –  not so different to long-held US security concerns in the Caribbean.

    Similarly we have to respect Russia’s security concerns in its adjacent borderlands to the West and South. Neutrality of Ukraine could be made to work, as it works for Finland. Ukraine’s neo-Nazi extremists need to be reined in, not clandestinely encouraged by the West. NATO’s newest members Poland and the Baltic States need to accept Russia’s rights to security. (They have already done well, coming in under the NATO umbrella).

    And the West need to treat Mr Putin with the respect due to the capable leader of a great nation, with huge territory and resources and on the path, despite hiccups, to a middle-class parliamentary democracy. The pointless propaganda war and demonisation of Putin needs to stop. It is only solidifying his huge lead in Russian public opinion polls – now nearing 90% approval – and strengthening Russian suspicion of Western motives.

    Australia needs to welcome the opportunities for us in the world’s growing multipolarity. Hiding behind US skirts will not protect us in the end: we need to contribute good ideas to the ANZUS alliance. Australia needs to move towards a smarter, more adept global diplomacy. There is uncertainty about the next US President and his or her quality of strategic judgement. The US will need wisdom and frankness from its allies, not blind loyalty. The unmourned departures of Abbott and Harper, Canada’s choice of a youthful open-minded Justin Trudeau, and David Cameron’s kow-towing to Xi Jinping during his recent state visit to London, all signal to Australia that it is time for a serious foreign policy audit.

    Multipolarity will be good for Australia’s economy and security if we seize its opportunities for strengthened global and regional peace and security. We are well placed as a rich multicultural nation to contribute and benefit.

    Neither the Coalition, nor Labor, nor the Departments of Defence and Foreign Affairs, nor the assessment agencies, show much sign of beginning to think about these challenges. It is time they did.

  • Peter Gibilisco. Friendship and Service Provision Ethos for People with Disabilities

    In this article I want to discuss an aspect of the standardised procedures set by service providers in facilities that serve people with disabilities. More to the point, I am keen to explore how this affects the ethos of service delivery for people with severe or profound physical disabilities within such shared supportive accommodation.

    Let me be utterly frank. The ethos of service delivery, in this house where I live, has lacked key attributes that are necessary for caring for people with disabilities. Admittedly, I have sought to draw attention to this deficit by a constant effort to raise awareness. And an organisation’s ethos takes time to change. Nevertheless, the jury is still out with respect to whether we are experiencing a positive change. I am concerned that the friendships that I have made with support staff be respected by a form of management that recognises the benefits that arise from the personal synergies that arise from the work done.

    There is a simple need of enjoying life as an individual, in a way that is like the individual aspects of dignity that are part and parcel of the much proclaimed “freedom of choice.” I want to ask: has the “right to choose” become a ploy of many service providers? The principle is conveniently displayed in marketing and other public relations material. But is it all a matter of staying on the politically right side of the Government and public opinion?  After all, it can be argued by many living in such supportive accommodation that the self-interest of top management has been placed well beyond the reach of the people with disabilities that these facilities are established to serve. But Personal Care Attendants (PCA) are not just an abstract function;  they are people just like the people they are employed to serve.

    This state of affairs is why I am taking the opportunity of writing this article. Our friendships with PCAs need to be defended. I am a little fired up although I guess some who know me will think that is rather strange. It is true: I cannot wave my arms around and bang my fist on the table. But I am just a little concerned that the message I have been putting for many years gets through. This is serious.

    I am a severely physically disabled person with Friedreich’s Ataxia, who presently lives in shared supported accommodation. This place can fail to administer appropriate assessment of my specialist medical and social needs, one of which is human companionship. This place needs to function in ways that allow the clients with disabilities to solve individual problems pertaining to their own problems even if the house is managed under the protocols of a service provider. And the workers should be respected as our friends.

    I am quite sure that those managing this place were not expecting me, and I too never expected to be here. But even though we have to make the most of this unfortunate state of affairs, it is not going to prevent me from saying what needs to be said.

    The service provider has a real problem. Rather than looking to a set of policies that emphasise procedures that are formed individually with the needs of the person front and centre, they seem to be stuck with operating in a standardised way that at the same time keeps the self-interest of top management of service providers out of sight, and makes continuity with workers difficult.

    The standardised procedures simply do not provide adequate support. Even if the standardised approach qualifies as “best practice” under some managerial criteria we, and our day-to-day relationships that sustain us, are simply too complex for an abstract modus operandi.

    As a matter of fact, I am not a person with a cognitive, behavioural or developmental disability. I do not take kindly to being treated like one, as I am also sure many people with intellectual disabilities do not take kindly to being treated like a semi-paralyzed person who has to live in a wheelchair. Mistreatment that ignores a person’s humanity, violates the person’s right to be given due respect.

    My complaint also has to do with the ethos of the place I live in. Let me tell you what I experience all too often. My friendships with my support workers are unfairly reduced in a variety of ways by the presumptions of management that fail to respect what is going on. Support workers are the first faces we see in the morning and last faces we see at night. It is as if our friendships are simply not part of the implementation of policy. I suspect that this kind of managerial presumption of the disposability of friendship is alive and well elsewhere in social welfare delivery. But I am keen to preserve the friendships that keep me going, even as I find my body slowing down.

    I am also not wanting to identify any individual manager – there are some I have come across who come to mind that possibly should be exposed for their blindness and self-interest, but I will restrain myself.

    My aim here is to suggest some sustained soul searching among those managing service provision for ‘people with disabilities’.

    I’m writing this against the background of a service delivery context that is simply not good enough.

    Dr Peter Gibilisco was assisted by Dr Bruce Wearne in the preparation of this article.

    Special thanks to Cunxia Li, Patrick Wleh and Christina Irugalbandara.

  • Quigley, former CEO of NBN, attributes $15 b. cost blow out to Turnbull’s Multi Technology Mix.

    For comment by Renai LeMay, see link to his blog delimiter.com.au below:

    https://delimiter.com.au/2015/11/05/quigley-releases-detailed-evidence-showing-mtm-nbn-cost-blowout/

    John Menadue.

  • Ranald Macdonald. In journalism we trust – or do we?

    Journalists from the safe fortress of their own news outlets attacking the professional integrity of their competitors is a no-win situation. The consequences are far-reaching.

    Doyen of Australian journalism, Laurie Oakes got it right  recently at the Melbourne Press Club when he quoted Tom Stoppard (the noted British playwright)  who said “A free press needs to be a respected press”.

    “..I think he is right,”  Mr. Oakes said. “That’s because, if we’re going to safeguard the utmost freedom to report, if we’re going to win political arguments …., we need the public behind us.

    “Most people in the media, probably assume we’ve got that public support. But have we? We’ve seen survey after survey, poll after poll, showing a deep – and deepening – lack of trust in the media. In light of that, what basis do we have for assuming there is widespread public sympathy when it comes to press freedom questions?

    “The only way to guarantee it is to start winning back respect. Rebuilding trust. That obviously involves lifting our game. But trying to project a more positive picture of what we do and why, the significance of journalism—that wouldn’t be a bad idea either.”

    To that I say “Hear, Hear”.

    The sallies attacking the accuracy and integrity of competing journalists regularly  comes from The Australian newspaper – particularly with its Cut & Paste column – ably supported by its scarcely objective weekly Media section.

    But Fairfax Media has stupidly (in my view) fallen into the trap of reciprocating: In seeking to diminish Murdoch’s journalists whenever that opportunity presents.

    The result is – and surely it is Journalism 101 – the profession itself is further reduced from its less than lofty position in the ‘most trusted’  list where it languishes alongside real estate salesmen, used car dealers and politicians.

    Yet, credibility is what journalism needs in these testing times – and has always needed if what it reports is to impact on the decision makers.

    Leading American journalist Glenn Greenwald stated that; “a key purpose of journalism is to provide an adversarial check on those who wield the greatest power by shining a light on what they do in the dark, and informing the public about those acts.”

    But nothing will happen in a democracy where public opinion should be holding its leaders to account if reporters or the media are not trusted by the community.

    So, I join with Laurie Oakes in saying “please, please, cease and desist – because you are just lessening the impact and credibility – and probably the life – of your important calling. Leave it to the viewers, listeners and readers to determine who on their record should be believed.”

    Ranald Macdonald is a Friend of the ABC and former Managing Director of The Age.

  • Steve Hatfield-Dodds. Australians can be sustainable without sacrificing lifestyle or economy.

    A sustainable Australia is possible – but we have to choose it. That’s the finding of a paperpublished today in Nature.

    The paper is the result of a larger project to deliver the first Australian National Outlook report, more than two years in the making, which CSIRO is also releasing today.

    As part of this analysis we looked at whether achieving sustainability will require a shift in our values, such as rejecting consumerism. We also looked at the contributions of choices made by individuals (such as consuming less water or energy) and of choices made collectively by society (such as policies to reduce greenhouse gas emissions).

    We found that collective policy choices are crucial, and that Australia could make great progress to sustainability without any changes in social values.

    Competing views

    Few topics generate more heat, and less light, than debates over economic growth and sustainability.

    At one end of the spectrum, “technological optimists” suggest that the marvellous invisible hand will take care of everything, with market-driven improvements in technology automatically protecting essential natural resources while also improving living standards.

    Unfortunately, there is no real evidence to back this, particularly in protecting unpriced natural resources such as ocean fisheries, or the services provided by a stable climate. Instead the evidence suggests we are already crossing important planetary boundaries.

    At the other end of the spectrum, people argue that achieving sustainability will require a rejection of economic growth, or a shift in values away from consumerism and towards a more ecologically attuned lifestyles. We refer to this group as advocating “communitarian limits”.

    A third “institutional reform” approach argues that policy reform can reconcile economic and ecological goals – and is attacked from one side as anti-business alarmism, and from the other as indulging in pro-growth greenwash.

    Income up, environmental pressures down

    My colleagues and I have spent much of the past two years developing a new framework to explore how Australia can decouple economic growth from multiple environmental pressures – including greenhouse emissions, water stress, and the loss of native habitat.

    We use nine linked models to assess interactions between energy, water and food (and links to ecosystem services) in the context of climate change.

    The National Outlook focuses on the intersection of water, energy and food. National Outlook Report, CSIRO

    The project provides projections for more than 20 scenarios, exploring different potential trends for consumption and working hours; energy and resource efficiency; agricultural productivity; new land-sector markets for energy feedstocks and ecosystem services; national and global abatement efforts, climate, and global economic growth.

    While our major focus is on Australia, at the national scale, we also model what might happen globally, and at more detailed state and local scales within Australia.

    We find economic growth and environmental impacts can be decoupled − in the right circumstances. National income per person increases by 12-15% per decade from now to 2050, while the value of economic activity almost triples.

    In stark contrast to income, which rises across all scenarios, environmental performance varies widely. Key environmental indicators such as greenhouse gas emissions, water stress, and native habitat and biodiversity are projected to more than double, stabilise, or fall across different scenarios to 2050.

    As shown in the chart below, we find that energy rises in all scenarios, but that greenhouse emissions can fall at the same time – with the right choices and technologies. Water use can also rise without increasing extractions from already stressed catchments. Food output (here indicated by protein) can increase, while native habitat is restored.

    Hatfield-Dodds et al (2015)

    Many of the 20 scenarios explored would represent substantial progress towards sustainable prosperity.

    Indeed, we find that Australia could begin to repair past damage: restoring significant areas of native habitat and achieving negative emissions (net sequestration) of greenhouse gasses.

    Growth of what?

    We use the normal definition of economic growth as measured by increase in Gross Domestic Product (GDP) – the value of goods and services produced in an economy – consistent with the national accounts framework.

    Some authors use a different definition, most notably Herman Daly a leading advocate for a steady state economy. Daly defines growth as an increase in physical economic scale, such as resource extraction, and goes on to argue that indefinite (material) economic growth is not possible.

    While this may be true, for his definition, it can be confusing for people that do not realise he is not referring to GDP growth. Indeed, Daly recently acknowledged that economic (GDP) growth is possible with finite resources and steady material throughput.

    These definitions matter: we project growth (GDP – measured in real dollars, adjusted for inflation) increases by more than 160% in scenarios where domestic material extractions and throughput (measured in tonnes) decreases by around 40%.

    Choosing a sustainable future

    But here is the real crunch: we find these substantial steps toward sustainability could build on policy approaches that are already in place in Australia or other countries. This implies Australia could make enormous progress towards a more sustainable future without a major change in what we value.

    We can be confident that a values shift is not required to achieve these outcomes – at least before 2050 – because none of the scenarios we modelled assume change in values or a new social or environmental ethic.

    Instead, we show that people will make choices to change their behaviour to make the best of particular policy settings. These choices shape production and consumption.

    For instance, we consider increasing Australia’s climate effort in line with other countries would be consistent with Australian public opinion and assessments of Australia’s national interest in limiting the rise in average global temperature to 2°C. So we do not interpret this as implying a change in values.

    But we find collective choices are crucial. For example, individual choices about whether to drive or catch a train to work are strongly shaped by prior collective choices about transport infrastructure. Collective choices are often, but not always implemented through changes in government policy, legislation, and programs.

    We find collective choices explain around 50-90% of differences in environmental performance and resource use across the scenarios we model. Consistent with the institutional reform approach, we find top-down collective choices are particularly important in shaping “public good” outcomes – accounting for at least 83% of the difference between scenarios for greenhouse gas emissions.

    Bottom-up individual choices play a greater role when private and public benefits are aligned. For instance individual choices account for up to half of the difference between scenarios for energy use (33–47%) and non-agricultural water consumption (16–53%).

    While individual choices are important, we find decisions we make as a society are likely to shape Australia’s future sustainability more than the decisions we make as businesses and households.

    Sustainable prosperity is possible, but not predestined. Australia is free to choose.

    Steve Hatfield-Dodds is Chief Scientist, Integration science and public policy, CSIRO. This article was first published in The Conversation on 5 November 2015.

  • Mark Gregory. The new PM and the NBN. ‘An expensive lemon’

    The National Broadband Network (NBN) is now delayed by between five and ten years and will cost significantly more over a 20 year lifetime due to the government’s decision to shift from a Fibre to the Premises (FTTP) fixed access network to the Multi-Technology Mix (MTM) approach that includes Fibre to the Node (FTTN) and Hybrid Fibre Coax (HFC).

    The malaise that the telecommunications industry finds itself in has been exacerbated by the efforts of the Prime Minister Malcolm Turnbull who, as the Minister for Communications, spent two years doing very little whilst telling everyone that he was on the cusp of finding solutions for a variety of problems besetting the industry.

    In his time as Communications Minister Turnbull was responsible or involved with a remarkably small number of bills before Parliament, no doubt because the Senate would not support a large majority of the Coalition’s unsubstantiated justifications and rationale for legislative and regulatory change to the NBN and the broader telecommunications market.

    In a nation that appears to have an endless supply of state and federal funding for roads and hand-outs to multi-nationals that pay little or no tax, the decision by the Coalition government, that was implemented by Turnbull in 2013, to adopt the obsolete FTTN technology for a significant percentage of the NBN will, in future years, be seen to be economic madness.

    Any belief that Turnbull would, on becoming Prime Minister, take action to remedy the mistakes made with the NBN rollout over the past five years has now been shown to be nothing more than a pipe dream.

    Turnbull has clearly demonstrated that he is quite prepared to adopt the age old ploy of commissioning an endless number of reviews and audits that have been carefully stage managed to provide the answers that support his position on a range of topics. And he is quite prepared to direct government departments to take actions that appear to defy international standards and definitions if this is necessary to support his position.

    So it is unsurprising that Turnbull squelched a range of protests by prominent Australian engineering experts and Academics by resorting to name calling and failing to respond to the valid points raised.

    In what is likely to be the “greatest con in Australian history” the government promised that the NBN would be completed by the end of 2016 and it would be built for $29.5 billion. The latest projections from NBN Co indicate the NBN should be completed sometime in 2020 or possibly later and the cost for Turnbull’s MTM approach will now be at least $56 billion.

    In the lead-up to the last election the former Prime Minister Tony Abbott stated “we will deliver a new business plan for the NBN so that we can deliver faster broadband sooner and at less cost. I want our NBN rolled out within three years and Malcolm Turnbull is the right person to make this happen.”

    Turnbull was well aware that the NBN would not be completed by the end of 2016, yet he was prepared to be an active participant in what is likely to be the most expensive lemon in Australian history that was to be built with an impossible deadline as was widely pointed out by industry and academia at the time.

    There can be no doubt that Australia needs the NBN if there is to be active participation in the global digital economy, but to be more specific, Australia needs national telecommunications infrastructure that is based on an all-fiber access network in areas where a fixed access network is appropriate to ensure that the nation can compete and become a global digital economy leader.

    It is unremarkable that the success of New Zealand’s version of the NBN has not been addressed by Turnbull, the adoption of NG-PON2 FTTP in many markets around the world and it is likely that he will continue to harp on about the aging and underperforming FTTN networks operated by BT and Deutsche Telekom.

    Recently the total number of fibre broadband subscribers passed the total number of copper broadband subscribers and what this means is that as Australia rolls out the copper based FTTN or G.Fast we will fall further behind our competitors in related measures of broadband access capability.

    The recent launch of NBN Co’s Sky Muster satellite that will provide a much needed broadband access improvement to regional and remote Australia is likely to have been cancelled by Turnbull in late 2013 if it was not for the iron clad contracts put in place by the former government. Turnbull’s failure to comprehend the need for the two Ka band satellites led to his ridiculous remark in 2012 that the satellites were a “Rolls-Royce” solution that were not needed.

    Unfortunately, as Prime Minister Turnbull is in a position to turn his attention to removing monopoly infrastructure regulation from the Australian Competition and Consumer Commission (ACCC) in what can only be considered to be an effort to placate Telstra and if this decision goes ahead the telecommunications industry is set to enter a period not unlike the dark-ages.

    Turnbull’s recent support of Telstra by writing to the ACCC and arguing that the ACCC should not reduce fixed-line charges by 9.4 per cent clearly demonstrates what the priorities of the Turnbull government are and these certainly do not appear to include working for improved customer focused outcomes and lower costs, so it is likely that Turnbull will renew efforts to marginalize the ACCC.

    Telstra has had major financial boons from the two agreements with NBN Co and the associated multi-billion dollar sweeteners thrown Telstra’s way by the current and former government, but there is no doubt that if Turnbull has an opportunity to sell off the NBN then it is likely that the lions share will fall into Telstra’s hands due to the nearly $100 billion that it will be paid or save over time under the current agreement with NBN Co.

    A review of the Universal Service Obligation (USO) was announced by the former Parliamentary Secretary to the Communications Minister Paul Fletcher and it was apparent that he was taking a positive leadership role within the Coalition government for this important keystone of the nation’s social equality oriented telecommunications policy. Why Turnbull’s attention was not focused on the USO in his time as the Communications Minister is a mystery, but could provide some guidance as to his priorities.

    Turnbull appears to be in denial of his failure as a Communications Minister, and simply brushed aside demands for reasoned and justified telecommunications market reforms. Having made a mess of the NBN and brushed off the wide-spread criticism, we should not hold out hope that Turnbull will change direction.

    And now that the Coalition government believes that Turnbull’s popularity will make the next election nothing but a formality the telecommunications portfolio is likely to remain in the background as the Coalition government seeks to broaden and increase the goods and services tax to 15 per cent. Another Turnbull gem?.

    Mark Gregory is a Senior Lecturer in the School of Electrical and Computer Engineering at RMIT University.  His blog is here.

  • Erica Feller. Good democracy is challenged by mass migration.

    Mass migration in a globalised world might well turn out to become, not least from the perspective of democracy, one of the overarching and defining challenges of our time. Syria and the exodus of millions of Syrians to neighbouring states and beyond is currently bringing this home in the starkest of ways.

    The autonomous sovereign nation state is still the central feature of current political architecture, regardless of ethnicity, creed, religion or political philosophy. Borders classically mark it out. Political systems built around autonomy and sovereignty are increasingly becoming out of kilter with the changes wrought by globalisation.

    Where a state fails, is deeply fragile or is run by a government unable or unwilling to ensure to its citizens the basic necessities for a safe and secure future, what flows from this can no longer be contained within the borders of that state.

    Tens of millions of displaced-people in desperate situations.

    Statistics can be difficult to grasp, but the recent image of the drowned Syrian toddler, Aylan Kurdi, was an emotional reminder that behind every number is an individual.

    When it comes to safety, security, dignity, self-worth, realized potential and decent lives, divergences between people, within states and between countries are huge.   There are some 60 million persons in displacement situations at the moment, over 17 million of them refugees. Eighty-five per cent live in developing countries, most of which suffer human rights and governance issues of their own.

    Less than one in 40 refugee situations are resolved within three years and many continue for 10 or more, with donor funds progressively drying up and millions of people left in sub-standard living conditions with no foreseeable future prospects. There are currently some 630,000 refugees in Jordan, 84% of whom live outside refugee camps. Two thirds subsist below the national poverty line, with one in six refugees living on less than $40 per person per month. Coping strategies include children dropping out of school to work or to beg, and women selling sex for survival.

    Facilitated solutions are not on the horizon for most, with local integration not available, (with some exceptions) and with resettlement to third countries a possibility for no more than one per cent of the global refugee population. Flight has to be understood as people taking control of their own futures in the face of  grave danger or the impossibility of staying where they are.

    Not all the displaced are refugees. Many leave for reasons linked to desperation and not to persecution or grave security risks. The forces fuelling departure are various. Insecurity and desperation are driving an increasing number of refugees to flee. Opportunity is enticing others to join the mass flows, with quality services, education and work possibilities in developed countries a strong incentive.

    The prognosis on the horizon for future mass movements is not good. There is a high probability that patterns of displacement will be increasingly impacted by environmental factors such as population growth, declining resources and inequality of access to them, ecological damage and climate change. Conflict looks to be a constant, increasingly acting in combination with extreme deprivation and resource issues. Many refugees come from or find themselves in countries falling into the highest risk category for civil conflict, which also happen to be ranked amongst the world’s poorest nations and where endemic and cyclical ethnic and civil strife is compounded by low cropland and fresh water availability.

    Ten Crisis Hotspots

    In January this year the International Crisis Group released an analysis of the conflicts and crises likely to beset the world in 2015, identifying in particular ten to watch. Top of the list is the situation in Syria and Iraq.

    The rise of the Islamic State was described as a “symptom of deeper problems that are not amenable to military solutions, including sectarian governments in Syria and Iraq {and} military strategies dependent on militias that radicalize local populations…” Then there is the Ukraine, which he said “may not be the world’s deadliest crisis, but it has transformed relations between Russia and the West for the worse”.   The “top 10” list also includes South Sudan, Nigeria, Somalia, the DRC, Afghanistan, Yemen, Libya and even Venezuela which, while no war zone, is presented as a country in crisis due to falling oil prices, an unpopular Government and weakened institutions.

    What this means, among many other things, is that refugee and migrant exoduses are not solely a concern for the humanitarians. They can prove a huge burden on the economy, infrastructure, security and society of affected countries and a destabilising force for regions, and globally.

    They can also be a positive force for social change and economic advancement. It is also increasingly clear that, in our globalised, tech-savvy and interconnected world, the ability of States to forestall or halt them is seriously diminished.   Germany is confronting the probability – to its credit as a management challenge, not a disaster – of over one million people seeking sanctuary or a better life over the next twelve months.

    Democracy, human rights and the rule of law.

    One significant litmus test of the strength and resilience of the democratic system as we know it – meaning open and responsible government founded on tolerance, respect for human rights and the rule of law – is how global people movement will be managed.

    Recent developments in Australia have brought home just how much the values and processes traditionally underpinning democracy in this country are being impacted by the growing capacity of people to take their fate into their own hands and move, sometimes long distances, in large numbers and mostly irregularly, across state borders.

    Compassion and justice, international obligations and national due process requirements should frame the response in democratic societies to those who make a claim to their protection. The policies of recent Australian Governments designed to deter asylum seekers, refugees and migrants from coming by boat to lodge their protection claims are not built on such a foundation. The country whose accession brought the 1951 UN Refugee Convention into force has migration control provisions bearing directly on the treatment of refugees from which all reference to Convention arrangements has been removed.

    Australia has long and rightly prided itself on promoting and respecting internationally agreed human rights instruments. But it has put in place an arbitrary detention regime for boat people, doing some of them immeasurable physical and psychological damage. The country which has taken a strong stand internationally on fundamental civic rights like freedom of expression has put a cloak of secrecy over its contested boat policies and has even threatened legal retribution for release of information by health workers concerned about conditions in immigration detention centres.

    New thought about how democracy and government needs to be recast in Australia and beyond, to deal with the displacement in the context of globalisation is urgently called for. Philosopher Martha Nussbaum puts it well when she says: “We live in a world in which the destinies of nations are closely intertwined with respect to goods and survival itself…..any intelligent deliberation about ecology –as also about food supply and population – requires global planning, global knowledge and the recognition of a shared future”.

    Erika Feller, former Assistant High Commissioner, UNHCR; Melbourne School of Government

    This article was co-published with DemocracyRenewal

    Mass migration, conflict and democracy will be under discussion at the ‘Democracy in Transition’ conference, Melbourne, December 6-8

  • Marie Coleman. The FTB cuts have been softened, but they’re still a con

    The Turnbull Government might be trying to scale back the size of its planned Family Tax Benefit cuts, but the fact is they still hit the poor hardest and ask them to foot the budget repair bill, writes Marie Coleman.

    After a year of the Senate blocking its radical changes to parental benefits, the Government has tried another tack this week.

    On Tuesday the Turnbull Government introduced revised welfare legislation to Parliament that scales back some of the tougher Family Tax Benefit cuts first flagged in the 2014 budget.

    Under the new plan, the Family Tax Benefit (FTB) Part B payments to families would end when their youngest child turned 13 (rather than the original plan of six), and there will be a boost for those receiving FTB Part A payments.

    But the proposal still includes a number of cuts to payments that are expected to save the Government $4.8 billion over the forward estimates and leave thousands of families worse off.

    The welfare changes have always been tied (hypothecated) to overall budget savings and to funding new approaches to expand child care, and despite this new approach it is still something we need to reject.

    It still relies on punishing low income and sole parent families. It asks the poor to fund the need to bring outlays under control. And it doesn’t approach the expenditures outside the Social Security portfolio where the major inequitable expenditures exist.

    More than 130,000 single parents stand to lose family benefits under the Turnbull Government’s new family payments plan.

    Department of Social Services officials this week told a Senate committee that 136,000 single parents would see a reduction in FTB part B once their youngest child turned 13. Furthermore, single parents of teenagers would have their payments reduced from more than $3,000 a year to $1,000 and grandparent carers would also have their payments cut when their grandchild reached 13.

    According to the Australian Bureau of Statistics, in June 2012, there were 961,000 one-parent families, making up 15 per cent of all families. About two-thirds of these one-parent families (67 per cent) had dependants living with them.

    There were 780,000 single-mother families in June 2012, making up the vast majority of one-parent families (81 per cent).

    Single-parent families come into being for many reasons – death of a partner, divorce, separation, and births to unwed mothers. Many women leaving domestic violence become the heads of single-parent families.

    Not all these families live in poverty. But those reliant on our tightly targeted Australian social security system are indeed close to the poverty line. Australia has fewer children living in poverty than many comparable economies because of our system of providing benefits to all families to assist with the costs of child rearing, although there are some worrying trends.

    Many, but not all, single-parent families are reliant on financial support from the taxpayer to some degree. Some, not all, receive Sole Parent Payments. Many receive further support through the system of Family Tax Benefits (FTB).

    FTB has two key elements.

    First, the FTBB is available to all families, both two-parent and single-parent. Second, the FTBA is means tested, and available to the very poorest of families – some two-parent, some single-parent.

    The Senate estimates session heard 3,900 grandparents who are carers would be affected by the measure and that a further 76,000 couple families would lose their FTBB completely when their youngest child turned 13.

    The Government argues that the new approach will mean that parents will be encouraged to enter the workforce, and that the proposed new child care arrangements will mean that those who do will in fact be better off.

    This assumes that there is work for these adults – notwithstanding continuing strong trends in unemployment in many regions. It also assumes that the as yet announced child care details will indeed lead to beneficial outcomes. But child care policy experts Professor Deborah Brennan and Dr Elizabeth Adamson found that the draft proposal will “reduce access and increase complexity“. Many organisations commenting on the Regulation Impact Statement supported the Brennan-Adamson findings.

    Then there are the regional and national employment data from the Australian Bureau of Statistics.

    Unemployment and underemployment remain an issue. There are strong regional issues. Where are the retraining programs? Social Services Minister Christian Porter has no real answers. He suggests grandparents need to get a job. Really?

    Get real. Where are the jobs for these grandparent and sole parents and low income families?

    Senators need to look at the facts in their own areas – can sole parents or grandparents find work? This is a disgraceful con.

    Marie Coleman is the chair of the National Foundation for Australian Women Social Policy Committee. This article was first published in The Drum on 23 October 2015.

  • Next week’s launch of the Blog’s book ‘Fairness, Opportunity and Security’

    You are invited to the launch of Fairness, Opportunity and Security: Filling the Policy Vacuum, edited by John Menadue and Michael Keating, and published by ATF Press. The book is a collection of the special policy series of blogs that was published earlier this year.

    cover

    Topics include Democratic Renewal, the Role of Government, Foreign Policy, the Economy, Retirement Incomes, Population/migration/refugees, Communications and the Arts, Security – internal and Human Rights, Security, Health, Development of Human Capital, Environment, Indigenous affairs, Welfare and Inequality.

    Among the authors are Ken Henry, Ian Marsh, Stephen FitzGerald, Cavan Hogue, Richard Butler, Stuart Harris, John McCarthy, Andrew Podger, Julianne Schultz, Kim Williams, Susan Ryan, Michael Wesley, Jennifer Doggett, Glen Withers, Chris Bonnor and Ian McAuley.

    The launcher is Fairfax columnist Ross Gittins, economics editor of the Sydney Morning Herald. His books include Gittins’ Gospel, Gittinomics and The Happy Economist.

    The event takes place from 3:30 pm – for a 4:00 pm start – on Thursday 5 November, at Corrs Chambers Westgarth, Level 17, 8-12 Chifley Square, Sydney. No bookings necessary.

    CLICK HERE to download the flyer and order form. For a limited time, the book is available for $45 (paperback) and $65 (hardback).

  • Robert Brown Two concerns about the government’s response to the financial system inquiry.

    It’s been a big week for the Australian financial services industry. Firstly, there was the unusual decision by the big banks to raise mortgage interest rates in an economic environment which would normally result in no change or even a drop in rates, claiming with some justification that new capital adequacy requirements ‘forced’ them to do it. Secondly, there was the government’s generally positive response to the recommendations of Financial System Inquiry chaired by former CEO of the Commonwealth Bank, David Murray.

    While I am supportive of most of the government’s responses, there are at least two that concern me.

    The first is the decision to not support the recommendation of the FSI to ban gearing (borrowing) in Self-Managed Superannuation Funds (SMSFs). Typically, this is in the form of limited recourse borrowing to purchase real estate. This is not a marginal issue. The sector accounts for over 99% of all superannuation fund entities (of which, at June 2015, there were over 560,000). SMSFs are also the biggest single sector of the market, controlling over 30% of the $2 trillion in Australian superannuation savings.

    Gearing introduces significant risk into the system and in some cases, high risk. While the level of gearing in SMSFs is not large at this stage, the trend is clear. Eventually, there will be individual financial tragedies, if not large scale public scandals. It’s only a matter of time which is why public policy action should be taken before the inevitable financial and political pain demands intervention to clean up the mess.

    I respectfully suggest that decision makers have lost sight of why the SMSF sector was allowed to exist as a unique and relatively unregulated category in the first place. SMSFs (then called section 23F or ‘exempt funds’) were originally allowed by government in the 1980s as a simple ungeared safe harbour for Mum and Dad investors to place their retirement funds, in return for which they were promised limited regulatory intervention (in contrast to the heavily regulated APRA funds).

    So if we are going to continue to allow gearing in SMSFs (which readers may recall was an unintended consequence of poorly drafted legislation designed to allow the Howard government to sell Telstra to SMSFs via warrants), we must consider whether:

    1. a) The people of Australia should be subsiding this form of gearing (often negative gearing) through the superannuation system; and
    1. b) Whether the amount of intervention and regulation by government should be increased to ensure the system isn’t compromised or rorted.

    Having lived through 30 years of SMSF reforms, particularly in the early days when they were quite simply tax rorts with the ability to borrow and lend through all manner of direct and obscure techniques, I regret to say that increased regulation of SMSFs is inevitable. Of course, the response from supporters of gearing is simply that the regulator should get rid of the ‘rorters’, the ‘spruikers’ and the ‘bad apples’. That’s an easy thing to say, but as we’ve seen in the financial planning industry in recent years, doing so is never easy and always involves much cost which taxpayers will have to cover.

    I suppose we can be at least thankful that the government has announced that it will monitor and formally review SMSF gearing within three years. Of course, we can be sure that changing anything at that time will be much harder, unless by then the industry has come in for a very hard landing (which legislative action in 2015 would avoid). Regrettably, we rarely seem to learn the lessons of the past.

    On a more positive note, I was pleased to see the government’s agreement to the FSI’s recommendation to mandate higher education, an industry exam, a professional year and an approved code of ethics for financial planners/advisers. All of these initiatives are worthy courses of action which should be supported. However, we must not lose sight of the fact that ethics is the key to success for the new reforms. A university degree is a good idea because it makes a person more competent (I hope); but it certainly doesn’t make a person ethical and trustworthy. Adoption of (and adherence to) a set of ethical and professional standards does that.

    This brings me to my second concern. What will the approved code/s of ethics contain? If they accept the continuity of %-based asset fees (aka commissions paid by clients), life insurance commissions and other product sales incentives allowed in the Future of Financial Advice legislation (2013/14), remuneration conflicts will continue and only a limited amount will be achieved for consumers of financial advice which, after all, is supposed to be the ultimate purpose of these reforms.

    I’m reminded of the ‘agri-business’/’tree’ saga of recent sad memory. Many of the offending unethical advisers were members of my profession. That is, they were experienced chartered accountants or CPAs with relevant university degrees. All of them had done an exam (many exams actually), had undertaken a professional year (two years in some cases) and had signed up to a ‘stringent’ (but inadequate and mostly unenforced) code of ethics. So why did it all go so wrong? As always, the answer is the corrupting influence of conflicted remuneration. So this week’s announcement, whilst most welcome, is yet another case of “the devil will be in the detail”.

    Good progress has been made. However, I remain concerned that gearing of SMSFs is an accident waiting to happen and that failure to comprehensively remove conflicted remuneration will cause the proposed reforms to fall far short of consumers’ expectations. 

    Robert M C Brown AM BEc (Syd), FCA

    Robert Brown is a Sydney-based chartered accountant with over 30 years of experience in public practice. He is a member of the Australian government’s Financial Literacy Board and a director of Financial Literacy Australia Ltd, a not-for-profit company which provides grants for the development of community-based financial literacy programs. He was awarded membership of the Order of Australia for his work in the superannuation industry.  

     

  • Ranald Macdonald. The ABC and SBS are under attack.

    Now is the time to support the ABC and SBS and the reasons are clear for all to see.

    Our new Prime Minister has the chance of reversing decisions made during the Abbott leadership – but with him as the Communications Minister.

    Public broadcasting is under attack in many countries. The BBC has been particularly targeted by the Murdoch media in the UK to devastating effect by a grateful Conservative Government. In the USA support has been cut by Republican State leaderships and here in Australia – surprise, surprise – the ‘Murdoch factor’ has resulted in the ABC and SBS pondering a lean and restricted future.

    The Friends of the ABC has launched a National Campaign to ensure it has the funds to both defend the ABC and to lobby for an ABC which serves all Australians as required under its Charter.

    Already, by capricious decision of Foreign Minister Bishop who broke the Australia Network contract, the ABC has lost its ability to both report Asia and the Pacific and also to project an Australian voice to our Northern neighbours.

    The result – less of our outstanding foreign correspondents, a dismembered Radio Australia and 500 jobs lost, plus hundreds of millions of dollars in funding.

    Australians deserve better – and we are calling on both the new PM and the Labor Opposition to right the wrongs – though Malcolm Turnbull introduced the cuts and arm-twisting of the ABC  took place.

    NO CUTS, Abbott trumpeted before the election – and our new PM now has the opportunity to rectify the situation.

    The BBC is a fascinating case study for us here in Australia . PM David Cameron rewarded the Murdoch Empire (which just happens to dominate BSkyB and wants total control of it)  with a first raft of cuts immediately he reached Number 10. With his Murdoch-supported re-election, further cuts introduced of some 20% (with more in the wings) will ensure a lesser competitive corporation. (I have just returned from the UK and the pressure on the BBC is palpable).

    The parallels with Australia are obvious. In both countries, the international reporting and penetration has been heavily affected, with the suggestion from Government Ministers that the new media should be left to ‘Private Enterprise’. In other words, slow down public broadcasting with a view to its demise, while News Limited flourishes.

    Yet Russia, China and Al Jazeera are upping their television budgets – and our neighbors in New Zealand are rushing to fill the broadcasting gap left in South East Asia and the Pacific by the forced retreat of the ABC.

    That is why the National Campaign by the ABC Friends – explained in half page ads in the SMH and The Melbourne Age on next Saturday, October 31 – is crucial for democracy and for all Australians who want independent, properly resourced national broadcasting producing quality programs for everyone– children, rural and provincial, those interested in the arts, drama, sport, documentaries and who seek in-depth and authoritative news coverage and analysis.

    Once we weaken or lose our independent public broadcasters and the economic rationalists take control, we will mourn the passing of a vital part of democratic Australia. Both the ABC and SBS serve Australia’s interests.

    The battle is ideological, political and also very much driven by those who would benefit from less competition.

    Ranald Macdonald is a Friend of the ABC. He was formerly Managing Director of David Syme, the publisher of The Age.   .

     

    For those who miss the Friends ad. On Saturday – Join the Friends State organisations, Donate to the National Fighting Fund and become Supporters of the ABC NOW – through the website www.abcfriends.org.au, or by calling any hour on 0498 111 258, 0498 111 259 or 0498 111 261 and talk to friendly volunteers.

     

  • Derk Swieringa. Ka-ching – The interest of the Labor Party in poker machines in the ACT.

     

    This article is prompted by the recent ABC program ‘Ka-Ching’ which details the subtle mechanisms that are programmed into poker machines to make them addictive. It reminded me of the clever engineers at VW who were able to program software into their cars to cheat pollution testing.

    Let me also declare my personal experience of the havoc caused to families by poker machine addiction. My late mother in law blew her last $60,000 of retirement savings on mainly poker machine gambling. A close friend’s sister in law committed suicide after she gambled away her own daughters’ savings. Sadly, there are few families that have not been adversely affected by the curse of gambling addiction.

    Roughly 80% of all gambling in Australia is via poker machines. Any analysis of the problem of gambling addiction concludes that poker machines are the main problem. Many, many poker machines are located in community clubs such as the Canberra Labor Club where they are often patronised by the poor, the elderly and the lonely. The Ka-Ching program showed how these machines are cleverly programmed to turn these people into poker machine addicts. It is estimated that over 50% of all revenue from poker machines comes from people with an addiction problem.

    The Gillard government tried to address this problem but were beaten by a relentless campaign conducted by Clubs Australia. As a measure of this campaign I recall going into the Tomakin Social Club and seeing a life size poster of Mike Kelly, the local Labor member and minister at the time, with the caption underneath “this man wants to destroy our club”. An outrageous claim.

    Yet the Canberra Labor Club claims on its website to be ‘proud members’ of Clubs ACT, an affiliate of Clubs Australia.

    In the 1970’s members and friends of the Labor Party formed a community club. This Labor Club has now grown into a four venue corporation with assets over $60 million and a turnover more than $30 million per year. The bulk of this turnover coming from members’ losses on poker machines. Under the constitution of the Canberra Labor Club its profits go to the ACT Branch of the Labor Party. As a result the Party has received millions every year.

    A previous Labor Chief Minister, Jon Stanhope, who disliked the link between the Party and poker machines, tried to sell the Labor Club but he was blocked at the Party’s federal level. No doubt because it is the Party’s most lucrative source of revenue.

    Poker machines, brothels and tobacconists are all legal industries in the ACT but their operation requires sensitive policy settings and administration. It is therefore inappropriate for a political party in government to derive funds from any of these sources if it wants to avoid a perceived conflict of interest. Nor is it now necessary for the Labor Party to derive its money from gambling. Recent amendments in the ACT to donation rules, plus government grants to political parties, now provide ample funds for political parties to run elections fair and square.

    The Labor Club has 9 directors,6 of whom are are nominated by ACT Labor. In effect, therefore, the 50,000 plus members of the Labor Club have no say in the running of the Club. Furthermore, unlike other community clubs that publicise their constitution, annual report, financials etc on their web site, the Labor Club on its web site provides no such information and therefore keeps its members in the dark. When I recently asked for a copy of the 2014/15 annual report I was told that, under the constitution, I would have to apply in writing to the Company Secretary who would decide if I would be given a copy. This is treating members as if they belonged to the mushroom club.

    The Canberra Times, which is not known for being anti-Labor, has written numerous articles critical of this link between the party and gambling money but invariably the Club responds with a ‘no comment’. I am sure that the Liberal Party will not leave this matter alone at the territorial elections next year.

    In many respects the ACT Branch of the Labor Party is very well run. For example, pre-selections for the House of Representatives, Senate and Local Assembly are determined by members ballots and not by Party bosses as in other states. However, as a Party member, I wish we could rid ourselves of a reliance on gambling money. It is also regretted that powerful lobbying forces were able to beat a Labor Government which was proposing to implement the Productivity Commission’s recommendations. These recommendations were aimed at harm minimisation by limiting the size and speed of bets on poker machines.

    Derk Swieringa has been a member of the ACT Labor Club for some years and joined the ACT Branch of the Labor Party in 2014. He is also a strong supporter of Open Labor. Derk believes that the Labor Party must be fit for government not only in the polices it presents to the electorate but also in the integrity of its internal administration.

     

     

     

  • Sam Bateman. US muddle in South China Sea.

    Strong calls continue to be made in Washington for the US Navy to increase its freedom of navigation (FON) activities in the South China Sea. This is despite apparent differences of view between the Pentagon and the White House about the wisdom of such action. The US has done little in 2015 to ease concerns about whether it knows what it’s doing in the South China Sea. If anything, the rhetoric coming out of the Pentagon, and the US Navy in particular, has become stronger.While extensive land reclamations in the South China Sea have not helped China’s image, none of its current actions justify deliberate provocations by the United States. It’s not clear just what Washington is protesting in the South China Sea. There are three possibilities, some or all of which may apply.

    One explanation may be that the United States is protesting against China’s claim to sovereignty over disputed features. But Washington has repeatedly said that it doesn’t take sides in the island disputes. An authoritative report last year from the Center for Naval Analyses in Washington concluded that ‘[t]he absence of an unambiguous legal case in any of these disputes reinforces the wisdom of the US policy of not taking a position regarding which country’s sovereignty claim is superior’.

    But FON operations against only China’s claims suggest that the United States has taken sides. Washington hotly denies this, but it is how people in the streets of Beijing, Hanoi and Manila see US actions. Resulting surges in nationalism in these capitals are not helpful for resolving the disputes.

    A second possibility is that the United States is protesting China’s claim to a territorial sea around built-up, low-tide features in the South China Sea. But only three features fall within this category (Subi, Hughes and Mischief Reefs) and China has not actually made formal claims to any territorial sea from these features. It would be preferable to wait until such claims were made before responding with diplomatic protests rather than ‘rocking the boat’ now. In any case, it’s a fairly trifling issue on which to risk a dangerous incident between Chinese and American forces.

    Finally the United States may be protesting a general threat by China to FON in the South China Sea. But China has repeatedly denied it poses such a threat. And with so much of China’s own trade passing through the sea it’s nonsensical to suggest that it would. American commentators invariably overstate the value of US trade passing through the South China Sea. They fail to recognise that the vast majority of US trade with East Asia does not go through the area. For their part, Australian politicians also often grossly inflate the amount of foreign trade going through the South China Sea. In the event of some crisis, the trade of other Northeast Asian countries could readily be re-routed away from the South China Sea albeit at some cost in time and distance.

    At the heart of the US protests are peculiarly American concerns about FON that relatively few regional countries share. In particular, these include the freedoms to conduct so-called ‘military surveys’ in the exclusive economic zone (EEZ) of another country. Another is the right of a warship to transit a territorial sea without giving prior notification to the coastal state.

    It looks as though the United States is trying to turn back the clock on the carefully balanced EEZ regime in United Nations Convention on the Law of the Sea. American commentaries regularly fail to acknowledge that navigational freedoms are not absolute in another country’s EEZ. Military activities in the EEZ should only be conducted with ‘due regard’ to the rights and duties of the coastal state. Much of what the United States calls military surveys really constitutes marine scientific research, which is under the jurisdiction of the coastal state.

    A group of Chinese warships recently transited through the US territorial sea around the Aleutian Islands. This led to claims from the United States that China, by not seeking permission to do so, had gone against its own policies of area denial. But China’s conception of FON is different to what the United States is contemplating in the South China Sea. Whereas sending ships patrolling into another country’s territorial sea specifically to demonstrate a right of passage could be a breach of innocent passage, the Chinese ships were on a direct passage.

    US commentators also express concerns that China intends to use various facilities it has built in the South China Sea, such as airstrips, for military purposes. But this is another myth. These features have no real utility as military ‘bases’ in view of their vulnerability and the difficulties of their re-supply.

    The United States frequently condemns China for ‘militarising’ the South China Sea. But increased American naval activity in the region and the threatened FON operations constitute greater militarisation. The United States is in conflict with China on all fronts – economic, political, strategic and military.

    As a middle-power and US ally with close ties to the region, Australia needs to be cautious in getting too involved in these bilateral tensions. Its best response at this time is to maintain the established pattern of Operation Gateway surveillance flights in the area. And it should be prepared to make a diplomatic protest should China make some formal claim with which Australia does not agree.

    Sam Bateman is an adviser to the Maritime Security Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. This article first appeared in the East Asia Forum on October 20, 2015.

  • Richard Woolcott. Foreign policy priorities for Malcolm Turnbull – focus on the region, get out of the Middle East, and other ..

    This can be an exciting time for Australia in that there is a coincidence of the need for long overdue foreign policy adjustments and the appointment of Malcolm Turnbull as Prime Minister. He has said he intends to be a forward-looking Prime Minister for the 21st Century. This is indeed encouraging but success will call for skilful negotiation in Cabinet and strong leadership over time. Mr Turnbull will have much more in common with Canada’s Prime Minister, Justin Trudeau, than he would have had with defeated PM Harper. They will meet later this year at the G20 and at CHOGM.

    Understandably the pressures on the new Prime Minister will be mainly domestic and on the economy. Foreign and security policies are naturally less immediate (although evolving situations e.g. Syria, ISIS, Russia, and an overhyped TPP, which has yet to be adopted by the U S and which does not include such major economies as China, India and Indonesia, call for prompt reactions and it would be unfortunate for Mr Turnbull to lock himself into positions now which he might find uncomfortable in two or three months).

    I consider there are eight policy issues which Prime Minister Turnbull could review and update later this year, or early in 2016.

    They are: –

    1. We need to refocus on the important interests in our own region – South East Asia, North Asia and the South West Pacific in what is now generally called the Asian Century. Former Indonesian Ambassador to Australia Sabam Siagian and editor-in-chief of the Jakarta Post wrote earlier this year the blunt commentary that “Australia is still stuck in the 20th Century mode. It is a monarchy, with a Head of State in London, and its security arrangements are largely Cold War relics… Australia is out of sync with the emerging geopolitical environment of Asia today”.

    2. We do need to establish an updated and more balanced approach to the vital relationship between the US and China. There is a danger that adversarial attitudes towards China could become a selffulfilling prophecy. The present debate on China mainly assumes that Australia has no choice but to support American primacy in Asia against a perceived rising Chinese hegemony. This is a simplistic approach which has been challenged by Hawke, Keating, Fraser, most former ambassadors to China and a numbers of academics. While China can be expected to resist American ‘hegemony’ in the Asian region, it accepts a constructive and cooperative US role in Asia.

    Australia should not take sides on China/Japan disputes, or on rival territorial water claims. Our focus should be on unimpeded passage through International waters and trade routes.

    3. We should withdraw our forces from Iraq and Syria. Our presence in the Middle East will not contribute seriously to defeating ISIS, or securing stable, democratic, uncorrupt governments in Iraq and Afghanistan. Our involvement was in support of the American Alliance, although US policies are demonstrably failing. The reality is our participation is essentially peripheral and symbolic. We should move out of this very complex changing kaleidoscope of numerous factions fighting each  other and cease pretending to ourselves and overseas that we can influence the outcomes. The considerable financial savings could be much better utilised in shaping the next budget.

    There were reasons for joining the US led Afghanistan invasion in 2002 but 14 years later, with 40 Australians killed, over $500 billion spent and more than 13,000 Afghan civilians dead, objectives once deemed to be indispensable such as nation-building and effective counter-insurgency, have been downgraded or abandoned because there are no longer adequate resources, time, or the US will to achieve them. The US public is now opposed to US ground forces becoming involved in further conflicts.

    4. We should look to consult diplomatically all of the main and influential countries of the Asia/Pacific region – the US, China, Japan, Indonesia, India, Russia, South Korea, Vietnam, Singapore and New Zealand – on all regional and international issues before the UN. Terrorism must be dealt with essentially within each country, although discussions on dealing with it internationally can be useful. While cooperation between our AFP and the Indonesian Police has been good, it is strange that we have been consulting the US and the UK about dealing with Islamic extremism and the ISIS but not until very recently with Indonesia, the largest and most moderate Muslim country in the world. Nor have we consulted closely regional countries like Malaysia, Singapore and the Philippines which have substantial Muslim communities.

    Australia need a fundamental change of our national psyche focused more on Asia than on our traditional links with the United States, the United Kingdom, Canada, New Zealand ( the “Anglosphere”), and Europe. We need a much more sustained conversation with our neighbouring countries in Asia and the South West Pacific.

    We should work discretely towards the evolution of an Asia/Pacific community, of which ASEAN would be a major part. Meanwhile we should use existing organisations that meet at Head of Government level, such as the G20, APEC (although it does not include India), the East Asian Summit (which does now include both the US and Russia), the UN Leader’s Week in New York, and the Commonwealth HoG meeting (a relic of British colonialism, but some Asian leaders attend and can discuss regional issues), which will meet in Malta on 28/29 November.

    5. In the long term no bilateral relationship will be more important to Australia than that with Indonesia. The stability, unity and economic growth of a predominantly (81%) moderate Muslim peaceful nation of 250 million, stretching across our North, a distance similar from Broome to Christchurch in NZ, is vital to Australia. Despite Government ‘spin’ to the contrary, the overall relationship is not good and needs nurturing, especially at the Head of Government level. The empathy towards Australia, evident in the 1980s and early 90s, has gone and needs to be rebuilt,

    Malcolm Turnbull as a new Prime Minister will have a number of opportunities to develop a personal relationship with the relatively new Indonesian president (Joko Widodo, widely known as Jokowi) at Head of Government meetings later this year. This will be an important step forward for Mr Turnbull and Australia if he can establish close personal contact.

    6. Mr Turnbull has already emphasised in Parliament on the 19th of October the major importance he attaches to strengthening the relationship with New Zealand following his visit. He suggested that we should in future work even more closely with New Zealand on a range of regional issues.

    7. In the years ahead Mr Turnbull will have an important opportunity to address, through a number of decisions, the international standing of Australia as a more independent nation with a foreign and  security policy based not largely on compliance with American policy or fear of China, but on its own genuine national interests. In this context, he will have the opportunity to adopt a more balanced position on Israel / Palestine issues. He will also be able to develop a sound position on the major global issue of Climate Change for the high level international conference to be held in Paris in December, which he intends to attend.

    Continuing foreign perceptions of Australia as a constitutional monarchy whose Head of State is the Queen of England (quaintly called here the Queen of Australia) and whose flag is dominated by the Union Jack, are sad anachronisms in the 21st. century. The establishment of the Republic of Australia will be, like Federation, a defining moment in the history of our country. This is not only a symbolic issue. It lies at the core of our national and international identity.

    Another prospect in the longer term would be to reconsider joining ASEAN, although we would need ASEAN to welcome this. Mr Turnbull could consider private consultations at the Head of Government, Foreign Minister, Defence and Trade ministerial levels regarding possible membership of ASEAN. If New Zealand did likewise it would be mutually reinforcing.

    This will not be easy now. 41 years ago Australia became ASEAN’s first dialogue partner and I hosted the first meeting overseas of the then five ASEAN Secretaries General at my home in Canberra. One course might be to start with seeking observer status as Indonesia’s other close neighbours, PNG and Timor Leste, have already had since 1976 and 2002 respectively. This would be a logical evolution of Australia’s long-standing engagement with Asia. As early as 1970 I considered this and, as Secretary of DFAT, discussed it with then-Foreign Minister Gareth Evans in 1990. Paul Keating had also suggested we should seek to join ASAEN. Unfortunately, it lapsed, partly because of other issues and following my retirement in 1992.

    8. Another positive change which Prime Minister Turnbull could make as soon as possible would be to sign up to the Open Government Partnership (OPG). Nearly 70 countries, including Indonesia, New Zealand, the Philippines, the US and the UK have already done so. Mr Turnbull has already said he wants to have a more transparent and open government. Joining would reinforce his comments.

    Finally, if Australia is to progress its involvement with the Asian region the Turnbull Government needs to give more thought to our style. We need to demonstrate a greater degree of cultural sensitivity. We should also show we are prepared to listen more and lecture less. This is essentially a question of presentation and diplomacy. Richard Woolcott 21 October 2015

    Richard Woolcott AC was Australia’s Ambassador to Indonesia and the Philippines as well as High Commissioner to Malaysia, Ghana and Singapore. He was the Australian Ambassador to the United Nations and President of the United Nations Security Council. He was Secretary of the Department of Foreign Affairs and Trade from 1988 to 1992.